Overreaching Your Authority

You may be operating under the incorrect impression that you have the authority to make major decisions.  You may be able to authorize sizable purchases, make high dollar value capital expenditures, hire high priced talent, negotiate the price for acquisitions, or manage an enormous budget.

But all of these thing occur only because they have been delegated to you by the CEO -- and that's not a "forever" thing.  Even the CEO gets his authority from the Board of Directors -- all of which can be retracted at a moment's notice.

Boards and senior management delegate authority primarily because they have limited time.  Not generally because they think you're brilliant.  Or exceptionally good.  Or even because you have deep expertise in a particular subject.  It would be a rare senior manager indeed, that didn't believe that, given enough time to fully understand the subject matter, he or she could personally make a better decision than any of their subordinates.

Nowhere in corporate life have I seen this phenomena more evident than when pursuing a "deal."

For the purposes of this post, a deal could be any kind contract, partnership, joint venture, or acquisition -- something with an agreement that isn't standard day-to-day business.

Signing the deal, or even a letter of intent, is something to leave to the CEO and only the CEO.  Unless, that is, you've been pre-authorized to sign on her behalf.  Even then, you better have reviewed all the critical parameters of the agreement in advance and have an "understanding."  Even then, I recommend you check and double check with someone higher up (either the CEO or someone in the chain of command) before you sign anything.  In addition to avoiding the signing of an agreement that the big boss may later look at and reject -- with obvious negative consequences for you -- it helps to "get her fingerprints" on the deal.  That way, if something goes off the rails later, it is less likely (although hardly impossible) that the CEO will be an armchair critic.

I can think of two times I violated this rule, both of which had a significant negative bearing on my reputation.

In the first instance, I authorized the signing of a distribution agreement that reallocated territories in a foreign country.  That part of the deal was fine.  What wasn't, however, was the $200K payment to one party as recompense for territory lost.  Within twelve hours (the authorization happened the night before), I was summoned to the CEO's office and summarily dressed down by both the CFO and CEO.  Later (as I didn't directly report to the CEO at that time), one of my corporate allies told me he asked the CEO why he didn't have my boss (a Group President) reprimand me.  His answer:  "Because I didn't want him to quit."  It was abundantly clear to me after that comment just how far over the line I'd stepped.

Of course, I didn't completely learn my lesson as a few years later, I signed a letter of intent for a joint venture before reviewing the deal with anyone.  In my defense, it was the second go-round with this negotiation, and I had successfully resolved all the first round problems -- at least the ones I knew about.  When I mentioned to the CFO over the phone that I'd signed the letter, his immediate response was:  "No you didn't."  He proceeded to tell me that I needed to immediately call the other party and "rescind" that signature.  It was never clear if he was protecting me from the CEO, or simply objected to my overreach on his own.  Fortunately, I was able to "undo" the deal, probably saving my skin in the process.

While most companies have informal, unwritten "rules" you need to understand and follow, it is a categorical corporate imperative that those rules that are written must be followed.  Overreaching those rules is a surefire way to invite harsh discipline, up to and including termination.

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If you are intrigued by the ideas presented in my blog posts, check out some of my other writing.

Montage of my novel covers, in order of publication.

Montage of my novel covers, in order of publication.

Novels: LEVERAGEINCENTIVIZEDELIVERABLES and now HEIR APPARENT (published 3/2/2013) -- note, the ebook version of DELIVERABLES (a prequel to HEIR APPARENT) is on sale for a limited time at Amazon for $2.99.

These novels are all based on extensions of my experiences as a senior manager in the world of public corporations.