Putting an end to pathologies of power: 10 necessary practices of good governance in every company

Every asset has its liability. So it is with power. The exercise of power is not free from risks. Among others, the corruption of whoever exerts it and the beginning of personal and institutional deterioration. The need for measures to avoid greater evils will be the focus of this article.

Prevention is better than the cure. Power seduces and almost no one sees the point of leaving it, especially when it becomes a toy for an executive acting in a “primate” way. In those cases, the odds are that the sick person will safeguard his power, pass on his illness to the institution and make his way out a traumatic experience for everyone. History is fraught with examples of this sequence of events.

Prevention of power pathologies can take place in two contexts: the institutional and the personal one. In the former, the focus can be a better application of good governance practices. In the latter, the personal one, prevention can be channeled through the improvement of personal leadership skills.

To be effective, prevention must tackle with the heart of the problem: curbing possible arbitrary actions and bad practices in the exercise of power. How? Being more transparent and abiding by the rules of the game. The rules of the game should make clear what good exercise of power is and what is not and to reward or penalize accordingly.

The companies that want to prevent their executives from suffering from power pathologies should take on these 10 practices of good governance:

1. Do not allow a person to take up the responsibilities of Chairman and CEO simultaneously. It is very healthy for companies to have at the top of their hierarchy a healthy counterweight between complementary people who know how to build a good tandem.

2. Check candidates applying for positions of responsibility better. Go beyond their experience and former achievements to make sure that there are no serious symptoms of power pathology in their behavior.

3. Work out a management team made of people who know how to exercise from their loyalty and independence, a healthy discrepancy. This means betting on diversity within the Executive Committee, incorporating professionals who think and feel things from different angles and who have the criterion and personality to disallow overstepping the red lines that protect reputation and integrity.

4. Strengthen the board of directors and its more important commissions with competitive and independent people from the intellectual, emotional and economical points of view. That is to say, people able to resign without feeling they “lose” something.

5. Avoid unreasonable salaries and privileges of top executives. High-level salaries create conflicts of interests, buy silences and attract people more likely to use power as a means of personal enrichment.

6. Hire the most effective and demanding auditors with fewer conflicts of interests.

7. Turn the Annual report into a genuine exercise of transparency and accountability.

8. Impregnate the company’s culture with the more practical contents of the codes of conduct to inhibit conflicts of interest and avoid the use of insider information for personal benefit.

9. Limit power practices periods of top executives to avoid that they entrench themselves in their position; prohibit amendments in the articles of association when the beneficiary is the one promoting the change; ask the CEO on the day of their appointment to plan their possible successor.

10. Make every effort to avoid that the decision-making process of asset allocation be used capriciously by CEOs. Asset allocations are the real “toy” of CEOs, that is why full precautions must be taken.

All these measures help to put an end to pathologies of power but the key to solve the problem is in the mind of the executives. Those desiring to use power inappropriately will find the tricks to get their way.

Hence, the last power battle is in the conscience of the executives, in their values and beliefs, in their way of thinking. Also in their ability to be critical with themselves, in their will not to become a prey both of their ignorance and arrogance.

The great hope to prevent the effects of the pathology of power in companies lies on new findings on the brain and its mental activities. Let’s hope that this new knowledge will allow us to definitely boost the development of the four most suggestive elements of leadership: personal leadership, one-to-one leadership, team leadership and institutional leadership.