What Is The Difference Between Power and Authority in Family Owned Businesses?

Business Leader Post, January 16, 2013

Thomas D. Davidow, Ed.D.

Over the last few decades, the environment surrounding the dynamics of power and authority has shifted and evolved. Perhaps Dr. Spock initiated the change—his books not only included specific information about children’s problems, but also introduced the idea that the relationship between parents and children was critical to the overall development of the child.

Parents had it “easy” when power and authority were one and the same. Now, exercising pure power corrupts relationships and causes people to react against the individual who is exercising that power. Authority implies knowledge, wisdom, and reciprocal respect. For example, a power figure answers the question “Why?” with “Because I said so,” while an authority figure answers the same question with an explanation.

One might think that in a family business the combined roles of boss and parent would be enough to hold the next generation accountable without their questioning it. On the contrary, the expectations that come from today’s parent/child relationships involve the execution of authority, not power. It is not enough to have the power/authority to make decisions. It is incumbent upon the authority figure to bifurcate the issue of power and authority. It is his/her responsibility to make sure that decisions are explained and understood.