Once upon a time the business world was dominated by hierarchical organizations that derived both their structures and mechanistic management philosophies from military thinking that traces its lineage through Frederic the Great all the way back, literally, to the Roman legions. And by “once upon a time,” of course, I mean “at this very minute.”

The truth is that way too many American companies today act as though their employees are some combination of robot and peasant foot soldier. (Hopefully we’re not talking about the company you work for, but I imagine we’ve all been there at some point – I know I have and so have most of the people I know.) For all the talk we’ve heard over the last generation about flattened org charts and mining employees for wisdom and cross-functional, empowered teams and cultivating learning organizations, many people still work in places where orders flow from top to bottom, where there’s precious little communication flow up the ladder, and where the value of an idea is judged by the title of the originator.

One of the artifacts of this kind of organization is that it’s very good at fostering fear. Fear can arise from a variety of sources, of course, some of which have nothing to do with corporate organization. Many managers attempt to use fear as a motivational tool, for instance. If you’ve worked for terror-based bosses in the past it’s possible that you’re simply never gotten over it. Also, when the economy tightens and jobs are harder to come by, external dynamics can drive fear, no matter the realities of the workplace. And so on.

Regardless of the cause, though, fear is the enemy of engagement. Workers driven by fear may be good at toeing the line and obeying the company’s list of Thou Shalt Nots (in fact, this is probably what they’re best at), but humans instinctively seek to escape the causes of fear, and if you’re tense and seeking release, you aren’t putting your heart and soul into your work. Fear dampens creativity and it motivates a variety of behaviors that are antithetical to the company’s best interests.

In addition, fearful workers instinctively seek to bend any source of power to a personal advantage instead of investing it in the good of the organization. They use their ability, their influence, their leverage and their knowledge of the organization to weave for themselves a cocoon that will hopefully shield them from the source of their fear.

This is bad.

Fear and Power

How people use their power is an especially important concern for leadership. Researcher and consultant Gareth Morgan, whose Images of Organization is the most valuable resource on organizational strategy and behavior I’ve ever encountered (I’ve used it as the central text in a couple of graduate classes I’ve taught in recent years), talks at length about the importance of understanding power dynamics. Take a second to consider Morgan’s sources of power, and as you do, imagine the effect on your business as fear causes your people to begin using these tools against you. (Morgan’s categories are in bold; the italicized comments are mine.)

1. Formal Authority: Rank and official position in the organization.

2. Control of scarce resources: In organizational politics, as with any other sphere of life, control over something that other people need is power.

3. Use of organizational structure, rules and regulations: In general, rules are written to protect the people who wrote them. However, in most organizational environments today there are any number of rules and regulations surrounding HR, compliance and the like, and some of these rules work in your favor – in many cases, they may as well carry the weight of law.

4. Control of decision processes: What are the organization’s established processes for making decisions? In many cases the ability to dictate how a decision will be made can significantly influence the outcome itself.

5. Control of knowledge and information: It’s trendy to say that “information is power.” It isn’t, although control of information is. Control allows you to dispense and withhold important resources in ways that can shape internal debates, support particular initiatives, and further personal agendas.

6. Control of boundaries: You’ve heard terms like “silo,” “turf war,” “empire building” and “gatekeeping,” probably. These refer to processes whereby people use the organization to build their personal power and keep others away from it. The ability to draw boundaries and control access are significant sources of power.

7. Ability to cope with uncertainty: Especially in our current environment, where external factors weighing on the organization are in constant flux and where those organizations are in turmoil trying to address those external factors, there’s no substitute for being able to stay calm and function purposefully under fire.

8. Control of technology: Related to #2 above. People whose control over any mission-critical technology allows them to disrupt the flow of operations, or whose control allows them to enhance the power of one person or group over another, have a potentially daunting ability to influence the direction of the organization.

9. Interpersonal alliances, networks and control of “informal organization”: The formal organizational chart rarely described the real structure of relationships and power in an organization. A manager who’s the CEO’s brother-in-law, for instance, may have stroke that other managers don’t.

10. Control of counter-organizations: Unions are the most common example.

11. Symbolism and the management of meaning: In Morgan’s formulation, this category includes the use of imagery, the use of theater and the use of gamesmanship. In essence, organizations have ideologies and self-images that go a long way toward defining how they function. Those who can shape the organization’s vision and the stories it tells about itself and its market will control its heart and soul in ways that go well beyond the formal power indicated on the org chart.

12. Gender and the management of gender relations: Once upon a time most organizations were boy’s clubs. Some still are. On the whole, though, American business cultures have evolved a great deal in the past 30 years. Women are still fighting for equitable treatment, but the glass ceiling isn’t as impenetrable as it once was. A person’s power in an organization can vary significantly depending on the gender landscape, and this dynamic affects both men and women.

13. Structural factors that define the stage of action: A complex consideration, this source of power refers to the ability to control one’s context. A manager may have amassed a good bit of power in Company X, but now they’re facing a takeover by Company Y, an event that could potentially destroy the manager’s power base. Other factors that can affect the stage of action might include legislation or regulatory action, litigation, innovation by competitors, the hiring of a new CEO, etc.

14. The power one already has: Most of us have at least some measure of power (in light of the previous 13 items, we may have power we’ve never even thought about). And power is the most important tool for the acquisition of more power. Our ability to leverage the influence we already possess can make a huge difference in our future fortunes.

This probably goes without saying, but those who have power and use it in ways counter to the interests of the organization (or the other people in it) will quickly make enemies and become targets themselves. Since having power and having all the power are different things, we’re all advised to think carefully about how we wield our influence.

Fear and the Locus of Expertise

In addition to the cocooning dynamic, fear also generates another dysfunctional behavior in an organization. While it seems less dire at a glance, viewed in big-picture terms it can have an exceptionally unhealthy effect on how the business operates in the longer term. Here’s how it works.

Have a look at the following org chart cross-section for ABC, Inc.

This group – Marketing – is working a new social media campaign aimed at strengthening the company’s overall brand position, and in particular they want to promote a new product they’re launching. Kumar, a Director of Marketing, is the project lead. As it turns out, Kumar doesn’t know much about social media, but there is some expertise in his group. Carlos and Briana are in their 20s and more or less live on social media, and Jillian has some experience with social media marketing applications.

The group lives on pins and needles, though. The job market is tight and the company has already had a couple rounds of layoffs (resulting in a 25% decrease in Marketing headcount). In addition, Kumar’s boss (Cynthia) has a bad temper and doesn’t handle stress very well. Her boss, Bob, the VP of Marketing, isn’t known for his people skills, either, and has made it clear that if the group doesn’t show results, more heads will roll. All of this adds up to a work environment that’s fairly charged with stress on a daily basis.

Kumar’s team has done its research and has a proposal ready to go. The proposal outlines the project strategy, details a variety of tactics and makes a recommendation for an outside vendor (needed to build a microsite and integrate a mobile platform for the campaign). As always, there are budgetary concerns.

The team has the requisite expertise to make the call on the project at this point. It has younger members who are familiar with the technology and who also understand the social behaviors of the target market. Kumar doesn’t know social very well, but he understands the larger company strategy and has lots of experience riding herd on successful campaigns. Allan and Jillian are talented bridge managers – they have enough experience with the company to get the big picture and they work closely enough with the rest of the team to understand how the campaign serves the larger corporate goals.

So – where is the locus of expertise on this project (the place in the organization where the greatest amount of relevant knowledge is clustered) and who should make the final decision on the proposal? In a perfect world, that call probably lives with Allan. Kumar is too far away from the street level reality of the target audience and he wouldn’t know a Facebook if it tweeted him in the blogger. Carlos and Briana know the nuts and bolts of the tech, but aren’t nearly seasoned enough to be entrusted with a decision of this strategic magnitude.

But Allan doesn’t make the decision. Instead, this is what happens.

You’ve heard the old adage that “nobody ever got fired for buying IBM,” perhaps. Here’s one that you probably haven’t heard, but it’s every bit as true: nobody ever got fired for getting his/her boss’s approval. There’s a lot on the line here. The market is terrible (which means jobs are hard to come by). There have already been layoffs (and nobody on the team has any reason to think they’re immune the next time the axe falls). Success is imperative (and Bob has been very matter-of-fact about the price of failure). And every time Cynthia walks down the hall blood pressures rise throughout the office.

Allan is “just a manager” and doesn’t have the institutional authority to make the decision. So it falls to Kumar. But Kumar isn’t stupid – he can’t afford to get laid off, and he knows that this project doesn’t play to his strengths. So Kumar walks the CYA path down the hall to Cynthia’s office, even though she knows less about the core issues that should drive the decision than he does. Cynthia is in dangerous territory at this point – she’s in a no-man’s-land that lies outside both the locus of expertise and the senior executive layer, which means she has neither the knowledge to make an informed decision nor the power to insulate herself from blowback if the project fails.

She realizes this, to some extent, and perhaps feels both trapped and obliged all at the same time. On the one hand, she realizes that her subordinates know more about the project, but when push comes to shove is she really comfortable entrusting such a big project decision to people with far less experience than she has with the company’s strategic planning?

Still, she doesn’t want that target on her back, so she takes it upstairs to Bob, who’s only recently heard of the “Internet.” She’ll make the recommendation on the proposal, perhaps (or maybe she’ll change some stuff – like hacking the budget a bit and insisting that they hire a vendor that she has more experience with), but she needs Bob to own the final call. Bob may be the least qualified person in the company to make this decision, but he has C-level power, meaning he can fiat his knowledge. (And if the project fails, well, he already promised that he’d fire people, didn’t he?)

The result: the final sign-off comes three organizational layers away from the locus of expertise.

Maybe the campaign succeeds and maybe it fails, but over time an organization that pushes key decisions further away from the locus of expertise is going to get its lunch eaten by a competitor that’s structured to make decisions at the locus. A variety of factors can move the locus around in an organization, but fear is the one that’s the hardest to control.

Smart leaders and mangers might spend some time thinking about fear, and in particular whether or not their organizations incubate it. Perhaps they employ the old militaristic model, which historically used fear intentionally. Or maybe they have the structure right, but they’ve nonetheless been infected by other sources of this engagement-slaying virus.

In any case, nobody invests their heart and soul out of fear, and you don’t win in today’s marketplace with an army of Thou Shalt Notters.