Management efficiency is often credited to leadership, without analyzing the role of authority, or perceived authority. In this episode, Effy uses wealth to analyze and demonstrate the role of perceived authority.

 

Difference between leadership and authority

Efficient management is not about leadership, it is about authority. Using the definition from Merriam-Webster, authority is the “power to influence or command thought, opinion, or behavior”. This slightly differs from leadership which focus on… leading. The action. The practical execution. Leadership exists without authority, it is not a necessary factor. However, I argue that having authority leads to a more efficient management. Leaders lead the way, having authority injects purpose & meaning, which fuel motivation (Effy’s take on motivation). So authority increase coherence between resources (inputs), and simplify interests to perform the process (and generate outputs).

Simple example: if I were to order you to send me your basic identification details, you probably wouldn’t. Even if I give you pen, paper, and all resources you need to perform the task, and even if I send mine to you first . However, if your boss / a policeman / tax website / a family member / your bank asked you to do so, you probably would. That’s the role of authority, it gives purpose to an order. And the greater the authority, the faster and more accurate your answer will be.

So authority increases efficiency, even more for processes heavily relying on human resources.

 

Sources of authority

Authority and authority figures are an important subject in psychology. The famous experimentation from Milgram highlighted the central role of authority to indirectly motivate people to perform tasks they would normally refuse to do (if you never heard of these, please do yourself a treat and check them out, summary from Simply Psychology).

Authority can be given, but not necessarily. It is more often derived from other attributes, such as location, behavior, costume, elocution, charisma, external appeal, and so on. It depends on the subject, and the purpose. So using all these attributes to increasing perceived marker of authority directly improve management efficiency. In other words, if you want your team to improve in speed and accuracy, or your sale network to explore new markets, or your band to kick ass in hip hop: talk and dress the part!

As always with conceptual efficiency, there’s no moral line. It means that what can be used by a priest to obtain more donations and fed the poor, can also be used by con artists… mechanisms of authority in efficiency are the same.

 

Wealth as an attribute of authority

Among all possible sources of authority, wealth has always been an important attribute. It directly link with primal needs. This is also a factor behind the widening wealth gap within companies, because higher management would argue that their authority (and management efficiency) increases with their perceived wealth. I must admit that this matches observations from my professional experiences; employees are more likely to follow people with higher perceived wealth.

It becomes a vicious circle, with wealth gap widening -> perceived authority of wealth increasing -> bigger spread in revenues allocation -> wealth gap widening…

 

So today, Effy played with Koi carps… with her perceived wealth (seeds), to ensure an efficient dance in the pond, while her own boss plays with her agenda…

 

Further reading:

Obedience, power & leadership (Principle of Social Psychology)

Our habitual responses to authority (Psychology Today)

Widening wealth gap (Inequalities)

Leadership and decision making (Effy – The living Efficiency)

 

Note: Carlos Slim has been in world richest men top 25 for decades, you can read the full list in real time on Forbes’ website.