When every important decision returns to the top, a manager’s mandate can mean less than the role suggests. What needs to change in leadership practice?
A manager can agree to their targets, understand how performance will be assessed and feel fully responsible for the outcome. Yet decisions that materially affect that outcome may still require someone else’s consent. When performance falls short, the conversation returns to the manager’s responsibility. It does not always return with equal care to what they were actually able to decide.
That gap matters to a leadership team. It affects the quality of choices, the development of managers and the credibility of performance assessment itself. If accountability is assigned without corresponding decision rights, it becomes difficult to distinguish an individual’s judgment from the constraints imposed by the organization.
A general invitation to take more initiative will not resolve this. It requires a specific understanding of the choices a person can make, whose advice they must seek and the circumstances in which a decision moves to another level.
Authority extends beyond the organization chart
Managerial authority has a formal expression and an everyday reality. The formal expression appears in role descriptions, approval limits and signatures. Its everyday reality becomes visible in who can stop a proposal, whose opinion carries the force of an instruction and where people turn when they disagree.
In their 1997 theoretical paper, Aghion and Tirole distinguish the formal right to decide from effective control over decisions and examine how information shapes that relationship. Their analysis offers a useful distinction. It is not empirical evidence that greater decentralization always improves performance.
The practical situation can also be the reverse of what the chart suggests. A senior manager formally approves a recommendation but lacks the information needed to assess it independently. The choice has already been shaped elsewhere. The signature preserves the appearance of control without necessarily adding the judgment that the approval was intended to provide.
It is therefore useful to examine a few recent decisions as they actually unfolded. Who shaped the alternatives? Who could say no? Following those decisions can reveal more than another revision of job descriptions, particularly where formal responsibility and informal influence have developed along different paths.
Consultation is not the same as permission
Consider a hypothetical business unit leader who is responsible for its financial performance and authorized to negotiate commercial terms within defined boundaries. Before a significant agreement, that person appropriately consults finance about credit exposure and operational colleagues about delivery commitments.
If every person consulted can informally block the agreement, however, the mandate has changed without anyone acknowledging it. The business unit leader is accountable for a choice that, in practice, required unanimity. Collaboration becomes a search for universal consent, while responsibility becomes harder to locate.
Consultation should carry weight. The decision maker must listen to consequences that may be less visible from their own position and explain how those consequences were considered. That is different from satisfying every functional preference. Where a function has a legitimate right to block a decision on specific grounds, that right should be understood from the outset.
Leaders also need to distinguish disagreement from a breach of an agreed boundary. Disagreement can remain after a legitimate decision has been made. A breach requires intervention. If both produce the same response, the safest course for a manager is to seek approval repeatedly, including in areas where they are supposedly authorized to act.
Boundaries should be agreed before the outcome is known
A useful mandate describes decisions, not just monetary amounts. Financial limits may be necessary, but they are incomplete. A modest expenditure can create a long dependency. A larger one may concern a readily reversible choice already covered by the approved business plan.
The mandate should therefore address the duration of a commitment, consequences for other units and circumstances requiring independent review. A manager needs to understand when they can proceed and when the choice belongs elsewhere. Ambiguity does not provide additional protection. It leaves the interpretation of authority until the moment pressure is greatest and can add time when a decision unexpectedly returns for approval that was not originally required.
There is also a question of fairness. A decision can be made responsibly, using the information available and within the agreed authority, yet still produce a disappointing result. If leadership then says that the matter should have been escalated, it has retrospectively changed the agreement. The next decision is more likely to be passed upwards.
None of this removes accountability. It makes it more precise. The review can examine the quality of judgment, the care taken in assessing the information and whether the agreed boundaries were respected. The outcome remains important. Knowing it afterwards, however, does not change what could reasonably have been known when the decision was made.
Intervention changes the agreement
Some decisions should remain central. A choice affecting the liquidity of the whole business, or creating significant commitments across several units, cannot be assessed solely from the perspective of the person closest to it. Coordination and independent scrutiny have value, and central authority can be the appropriate way to provide them.
Previously distributed authority may also need to be concentrated temporarily. In a 2026 comparative qualitative study, Lee and Young-Hyman examined four US organizations with established decentralized structures as they responded to centralization pressures during the COVID-19 pandemic. In three of the four cases, centralization was explicitly and collectively authorized and then enacted through open, transparent communication, while the organizations preserved their decentralization commitments. The fourth case followed a different path, with centralization imposed through leader fiat and enacted more opaquely. These four selected organizations, studied in an exceptional crisis context, do not establish a universal management rule.
The study nevertheless raises a useful management question. When leaders take a decision back, do they explain what has changed and for how long? Or are people left to conclude that their autonomy applies only while senior management agrees with them?
An exceptional intervention should have a specific rationale and a condition for review. Otherwise, decisions may keep returning to the same office long after the immediate pressure has passed. The formal structure can remain decentralized while everyday behavior has already adapted to a different arrangement. Restoring the original mandate then requires more than announcing that the crisis is over.
Judgment develops through consequential decisions
Decision rights also influence management development. Someone who always prepares the analysis while another person makes the choice gains experience in recommending. They have less opportunity to weigh the commitment involved in a final decision and follow its consequences through the business.
Gradually extending authority can be more useful than granting complete autonomy at once. A manager can begin with a defined class of decisions, agreed limits and a discussion after implementation. The scope can expand with experience. Support remains available, without every difficult situation automatically resulting in the authority being withdrawn.
This demands time from the person delegating. Giving an answer directly may be quicker today. Doing so repeatedly, however, keeps the team dependent on that person’s availability. The immediate convenience affects who will be ready for greater responsibility later, and how much attention senior leaders can devote to matters that require their own judgment.
It also changes the quality of a request for help. Within a credible mandate, a manager can ask for advice without implying that they are surrendering the decision. Where that distinction is absent, people may avoid seeking support because they expect the conversation to become an approval process. The organization then loses both timely support and the opportunity to develop the judgment of the person who holds the responsibility.
The next difficult decision will test the agreement
To assess whether accountability is working, leaders can choose one significant decision expected in the coming weeks. They can agree who will make it, what information is needed, who will be consulted and what would require escalation. Afterwards, they can examine whether that agreement was respected, including by senior management.
If the decision was ultimately made elsewhere, the discussion of responsibility should acknowledge that. If it was made within the mandate, assessment should recognize both the result and the process through which the choice was reached. Accountability becomes something people can understand and reasonably regard as fair.
A business needs people willing to take responsibility. Developing and retaining those people requires a consistent answer about which decisions belong to them, and that agreement must still be respected when the choice becomes difficult.
Sources
Philippe Aghion & Jean Tirole, Formal and Real Authority in Organizations. Journal of Political Economy, 1997.
Michael Y. Lee & Trevor Young-Hyman, Democratic Deviations: How Organizations Sustain Decentralization Commitments in the Face of Centralization Pressures. Administrative Science Quarterly, 2026.
