Key Highlights
- Informal power often outweighs formal authority in real decision-making
- Trust, credibility, and experience shape influence more than titles
- Boards must recognise informal dynamics to avoid blind spots
- Ignoring informal power can distort governance and accountability
- Healthy boards acknowledge influence without letting it dominate
Organisational charts suggest clarity. They show who reports to whom, where authority sits, and how decisions are meant to flow. Yet in practice—especially at senior levels—decision-making rarely follows these clean lines.
In boardrooms and executive committees, influence often operates independently of formal titles. Certain voices carry more weight, some opinions shape outcomes before they are spoken aloud, and a quiet comment from the “right” individual can redirect an entire discussion.
This is informal power—and it frequently matters more than the org chart.
Why Formal Authority Loses Precision at Senior Levels
Formal authority works best where tasks are clear and execution is structured. As leaders move higher, problems become less defined and outcomes more ambiguous. Decisions shift from “what should be done” to “what should be prioritised, delayed, or challenged.”
At this level:
- Authority becomes shared
- Expertise becomes situational
- Influence replaces instruction
Board members may have equal voting rights, but not equal impact. Executives may hold the same title, but not the same credibility. Over time, informal hierarchies emerge—shaped by experience, reputation, and relationships.
The Sources of Informal Power
Informal power does not arise randomly. It is built—often quietly—through patterns that repeat over time.
Credibility Earned Through Judgment
Leaders who consistently demonstrate sound judgment during uncertainty gain influence. When stakes are high, others listen—not because they must, but because they trust the outcome.
Institutional Memory
Those who “have seen this before” often shape conversations early. Their historical perspective frames risks and possibilities, even if they speak less than others.
Access and Relationships
Proximity to key stakeholders—founders, regulators, investors, or major clients—creates leverage. Information access becomes influence.
Emotional Authority
Some leaders stabilise rooms. They lower temperature, resolve tension, or create psychological safety. Their presence subtly guides group behaviour.
None of these appear on an org chart.
How Informal Power Manifests in Boardroom Decisions
Informal power reveals itself in small, repeatable signals:
- When discussions pause to gauge one person’s reaction
- When dissent dissolves after a quiet comment
- When certain concerns are raised early—or avoided entirely
Often, decisions are effectively made before formal votes occur. The meeting becomes confirmation, not deliberation.
This is not inherently negative. Informal influence can accelerate clarity and prevent unproductive debate. The risk emerges when it operates invisibly and unquestioned.
The Governance Risk of Ignored Influence
Boards that focus only on formal structures miss how decisions actually happen.
Risks include:
- Overreliance on dominant informal voices
- Marginalisation of contrarian perspectives
- Reduced accountability when influence is unofficial
- False consensus masking unresolved concerns
When informal power goes unacknowledged, boards may believe they are aligned—while critical risks remain untested.
Good governance requires understanding not just who decides, but who influences decisions before they are finalised.
When Informal Power Strengthens Governance
Informal power is not the enemy of effective boards. In healthy governance environments, it is recognised and balanced.
Strong boards:
- Invite quieter voices deliberately
- Separate influence from authority when evaluating decisions
- Encourage challenge regardless of seniority
- Periodically reflect on who shapes outcomes—and why
When informal influence is visible, it can be managed constructively rather than denied.
Reading Informal Power as a Boardroom Signal
For observant directors, informal power provides valuable insight:
- It reveals where trust truly sits
- It shows how culture operates under pressure
- It exposes whether governance is resilient or performative
Boards that learn to read these signals make better decisions—not because they eliminate influence, but because they understand it.
Closing Reflection
Organisational charts describe structure.
Informal power describes reality.
The most effective boards are not those that pretend influence does not exist—but those that recognise it, question it, and ensure it serves sound judgment rather than silent dominance.
