Someone is handed a critical assignment with no defined authority, which lets the person who assigned it call any bold move an overstep and any cautious one a failure.
An example
During a six-month search, a private-equity-backed commercial cleaning company made its controller acting chief financial officer. The chief executive told her she had "full responsibility" and never issued a written delegation of authority. The board was split: the sponsor's operating partner wanted every spare dollar on debt, and the founder's seat wanted capital for two new regions. In her second month she renegotiated a covenant on the revolving credit line, saving a quarter point. The operating partner called it beyond her mandate. In her fourth month she held a refinancing for the chief executive's sign-off, and the founder's seat said finance lacked command. Both times the chief executive declined to say what her authority had been. When the permanent chief financial officer arrived, the covenant saving was cited in the board deck as the chief executive's work.
Why it works
Undefined scope lets the person who granted it decide afterward what was in bounds. Caution looks safe for the holder, since no one can accuse them of exceeding authority when every decision went upstairs, and the manager becomes a buffer. Decisive action loses its value, because any success can be recast as overreach and claimed by someone else, and every bold choice becomes a possible exhibit against the holder. Grantors get away with it when they can stay vague without looking negligent, when asking for written scope reads as weakness or distrust, and when the holder has no allies to back their reading. Sometimes it is unintended: job descriptions are always incomplete.
The thinking behind it
Oliver E. Williamson Williamson's Markets and Hierarchies (1975) holds that bounded rationality makes contracts always incomplete, and that some people exploit the gaps. A delegation of authority left unwritten is an incomplete contract that the grantor can fill in afterward, ratifying or repudiating the holder's reading as it suits them. A written charter with dollar limits and named decisions closes the gap at the point where the holder still has the power to insist on it.
Jonathan Baron Baron and Hershey's Outcome Bias in Decision Evaluation (1988) found that people rate the same decision, made with the same information, as better thought out when its outcome happens to be good. Without a defined scope, the holder's choices are judged by results alone: a success can be claimed by others and a setback becomes an overstep. Judging decisions against the authority that existed at the time is the correction.
Warning signs
High-stakes assignments are made verbally, often with a phrase like "full responsibility." Requests to document decision rights are brushed off as unnecessary or as a sign of nerves. The same kind of decision is praised one month and called an overstep the next, depending on who it helped. Counterparties are unsure who can sign. Credit for results drifts upward while criticism for process stays with the holder.
How to defend yourself
Ask for scope at the moment you accept. That is when you have the most power to refuse, and asking later reads as distrust.
- Request a written charter or delegation of authority with dollar limits and named decisions.
- If none comes, write your own reading of the scope, send it to the grantor, and copy the people who will need to rely on it.
- Name witnesses when the grant is made, in a meeting or an email.
- Before each major decision, state in writing what you are about to do and under what authority.
- Ask peers who share the confusion to raise it with someone above the grantor, such as the board chair or the audit committee, who can impose clarity.
How a leader shuts it down
Issue a written delegation for every acting or high-stakes assignment, with limits and named decisions, and treat a request for one as ordinary diligence. Boards can ask to see the delegation whenever an interim officer is named. Judge decisions afterward against the authority that existed when they were made, and keep a record of who granted what.