Authority vs. Responsibility

by George Grace on December 16, 2016

Authority vs. Responsibility by George Grace

Authority vs. Responsibility

Throughout my career, I have seen many situations in which doing business is made difficult by a dysfunctional power structure, but there are two that are particularly vexing:

1. A person has all of the authority, but none of the responsibility; or

2. A person has all of the responsibility, but none of the authority.

Authority: Landlord

Responsibility: Project Manager

I once worked on a project that was overseen by a tenant’s project manager and the landlord. The two did not get along, which is very typical because the project manager is usually holding the landlord’s feet to the fire. The project manager was highly professional, having been in business for 30 years, but when he initially got onboard, the landlord didn’t like him and refused to talk to him. The problem was that the project manager wasn’t given the authority by the tenant, which undermined his ability to do his job.

The tenant—instead of saying, “No, you don’t understand. We signed a lease. This is our representative and you have to deal with him”—acquiesced to the landlord’s demands. I do not normally get involved in construction, but the lines of communication got so blurred that I was called upon to mediate between the landlord’s broker and the tenant’s project manager to discuss ongoing construction issues.

That’s when I knew there was something wrong with this picture. I don’t usually get involved in what color the paint should be, or whether a wall is built crooked—or whatever construction problems might arise. The inaction of the tenant, who should have corrected the landlord from day one, resulted in incredible complications in terms of the tenant communicating with the landlord.

Authority: Landlord’s Representative

Responsibility: Division Head

I’ve run into the opposite situation. I was negotiating a deal for a nonprofit tenant with an owner that was a division of a corporation, ABC Company. In this case, ABC’s representative, with whom I was negotiating, had the authority to negotiate on behalf of ABC Company and make recommendations to the division. ABC’s representative had the authority to recommend a deal but had no responsibility for it. The division head had the absolute responsibility for the asset and leasing it, but would not act unless ABC Company’s representative agreed. This gave the division head cover if anything went wrong.

This was another authority vs. responsibility crisis. I would negotiate with the party in authority, who had no responsibility, and the person with the responsibility had relinquished his authority. And it devolved into a Keystone Cops type of situation (which might have been funny had it not been necessary to renegotiate the deal 10 different times). We eventually negotiated a deal, and we made an offer subject to us receiving a commission based on the rents we negotiated.

Unfortunately, that wasn’t the end of it. The deal was signed and I sent the division a bill, and the division refused to pay for it. Evidently, the division head would not pay commissions and told us to seek our compensation from ABC Company’s representative. ABC’s representative did not own the asset, nor were they a party to the agreement. They told us to seek our compensation from the division. Even though the party with whom I dealt (had the authority) agreed that a commission was due, he had no responsibility for paying it. Eventually, the division acquiesced, under much duress, and agreed to pay a discounted commission.

Is the power structure in your organization dysfunctional? Contact us to see if we can help you make sense of it.

George Grace

George E. Grace
Mohr Partners, Inc.
232 Madison Avenue
New York, NY 10016
646-312-6800

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