Structuring Comprehensive Separation Releases to Nullify Unwritten Executive Authority
A separation release nullifies unwritten executive authority by explicitly revoking apparent agency, integrating prior custom, and conditioning severance.
unwritten executive authority
Meaning
Informal powers allow leaders to make decisions outside of codified policies or bylaws. This unwritten executive authority is often based on the trust and history between the founders and the board. It allows for quick action in situations where the formal rules are too slow or do not apply.
While useful in a crisis, this type of power is difficult to transfer to a new leader.
Informal Power
Customs and habits within a leadership team create a set of expectations about who can do what. An unwritten executive authority might allow a founder to sign off on a new project without a formal vote. As long as the results are good, the board might not object to this practice.
However, it creates a risk because the power is not documented and can be challenged at any time.
Structural Weakness
Organizations that rely on informal rules are vulnerable to internal conflict. When the unwritten executive authority of a founder is not recognized by a new investor, a struggle for control often follows. The lack of a written record means there is no objective way to resolve the disagreement.
Codifying these powers is necessary for the long term health of the company.
Transition Conflict
Changing the leadership team is much harder when the rules of the game are not in writing. A new chief executive will struggle to operate if the unwritten executive authority of the founder still lingers in the organization. The staff may still look to the founder for approvals that they no longer have the formal right to give.
This confusion slows down the business and frustrates the new management.