Power in companies: What role does it play?

An interview with three leaders about the role of power in companies:

christavanderburgh stephangrabmeier hansjoergfetzer
Christa van der Burgh Stephan Grabmeier Hansjörg Fetzer


What role does power play in leadership? And how does it affect followers?


Christa: “Leadership” and “power” are essentially inextricably linked: I don’t believe that there can be disempowered or powerless managers within hierarchies — their position automatically gives them power, and they ask for it themselves to a certain extent. It’s such an established concept that no-one really questions it. From my experiences over recent years, I would say it is vital to have a strong leader providing direction, particularly in times of change and uncertainty.


Hansjörg: I would even go one step further and say that people exercising power are not only tolerated, they are absolutely essential, for example, when it comes to making fast decisions and taking responsibility for the company and its employees. Some people like to wield power, but others find it difficult. Power is not a bad thing, per se, as long as it is used in a positive manner. What is important is to ensure mutual trust between the manager and their employees. Without trust, a person who leads through power alone is just a “superior”, not a “leader”.


It becomes particularly difficult when power is abused. Power becomes negative when managers, either consciously or unconsciously, use their decision-making authority concerning promotions, salary increases, assigning projects and resources to get people to follow them. Or, when managers create a system where the people who work as “yes-men” and their opinions will be the only ones to succeed. In that situation, employees don’t do what they believe is right, but rather what (they assume) will benefit their careers. It’s not a good way to ensure that people will continue to follow you over the long term. Employees have to see the sense in following, and that only comes through sensible leadership.


Stephan: I don’t quite agree with this viewpoint. Because a fear of power being abused should not lead people to be silent and afraid to speak out. Without decision-making power, a manager is just an empty, inefficient shell. Employees have to accept that power will be exercised within the team or company. Let’s be honest, without power it doesn’t work. It exists in every leadership system, and in all social systems for that matter — from the power of information and formal and informal power, to the power of knowledge and power through reward and punishment. We know how leaders and followers interact from self-organized collaboration, like you often get in open source development such as Linux or ubuntu. There, you don’t speak of having a leader, but rather a “gentle dictator”. This person is accepted, and followed, as the manager. In mature systems — under which I include modern companies — there has to be a good relationship between leaders and followers. A manager should exercise their power to move things along. Anything else wouldn’t work in reality, and wouldn’t help to achieve anything in the business world. But the manager does need the trust of both the organization and their employees.



You all agree that leadership and power are inextricably linked. What do you think people need to bear in mind about the relationship between the two?


Stephan: A leader needs to have the commitment of their team. Only when everyone is dedicated to achieving the same, shared objectives will they also agree to accept the accompanying power distribution. This also applies to elected leaders like we have here at Haufe-umantis. It’s not about grassroots, democratic decisions, but rather about ensuring a good balance between participation and our capacity to act, through leadership. If this balance isn’t right, you can wear yourself into the ground in the system without generating performance. So, managers and employees have to be able to adhere to a leadership culture and principles. If a manager cannot exercise their power, you have a so-called employee dictatorship, which is a real problem. The more democratically an organization operates, the more likely it is that chaos and inefficiency will reign as people believe that decisions can only be made collectively. It’s a fallacy, there has to be clear rules and a shared understanding of leadership. For a participatory and democratic culture to generate performance there needs to be a high level of maturity amongst all employees. If you don’t have that, power is given in a paralyzed system. This then leads to fatal mistakes and negative consequences.


Hansjörg: I’d like to cut in here; to me this sounds like the maturity of the employees is a prerequisite for good leadership. But my obligation as a manager is to create an appropriate culture and to enable employees to work sensibly within agile structures. To do this, I sometimes have to exercise my power. Particularly when fast, clear decisions are needed. Managers must not shy away from this due to a misunderstanding of democracy or flat hierarchies. I see power more as a situational or selective leadership tool, not as a sword of Damocles hanging over everyone’s head. When power is exercised for too long and too vehemently, a power-filled climate is easily created, or even abused, and employees then quickly turn into yes-men. They no longer trust themselves to make decisions, try things out or make mistakes. That is, I believe, exactly what Stephan means when he talks about a lack of maturity, but I have control over it. I train even immature employees through a climate of power without creating a paralyzed system.


Christa: There’s not a lot more to add. But what I do find important is that managers, who exercise their power very forcefully, run the risk of making poorer decisions. Firstly, they don’t take every option into consideration, because they tend to focus predominately on their own beliefs, and secondly, and this is what Hansjörg was talking about, the employees begin to no longer trust themselves to question the decisions their manager has made, and may, in a worst case scenario, even completely resign themselves to their supervisors. So yes, I would say that you need power to lead, but it needs to be the right amount.

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