Leadership: Leaders, Followers, Environments

Institutional checks and balances

The general proposition here is that weak or ineffective organizational settings and institutions further divorce leaders from outside scrutiny and oversight. This isolation often leads to poor group results. An important consideration is the extent to which central power is “checked” by controls and influence from other internal and external organizational sources. Managerial discretion and presidentialism, as noted previously, imply centralization of decision making and freedom from the oversight of others.²² In extreme cases of presidentialism, most of the power is at the top and nothing of consequence gets done without the boss' approval. Certain follower and environmental characteristics (e.g., a culture of dependence, poverty, low levels of education, ineffective legal institutions, absence of checks and balances) often contribute to or exacerbate tendencies toward centralization of power.²³ Although leaders need discretion to do their jobs, discretion allows destructive leaders to abuse their power. The concept of managerial discretion indicates that poor leadership outcomes are most likely at the senior managerial levels (where there is less supervision), in younger and smaller organizations with limited governance mechanisms, and in high-growth and rapidly transforming industries.²⁴ These conditions characterized Enron at the height of its popularity on Wall Street.²⁵

Checks and balances apply to any sort of group, from the smallest business ...