The Authority Gap: 7 Metrics That Expose Succession Risk in UK SMEs
The more indispensable you become, the less your business is worth. The market has a measurement framework for key person risk. Do you?
How Accountability Without Authority Destroys £2m in Exit Value
Accountability granted, authority withheld. This four-word diagnosis explains why promising UK SMEs plateau at £5-15m turnover, why capable teams underperform, and why buyers systematically price founder-dependent businesses as higher risk. The mathematics are straightforward: a £10m EBITDA business commanding a 10x multiple loses £2m in enterprise value through a 20% founder dependency discount. That's the £2m problem, and it's measurable.
Following "The Chaos King's" diagnosis of founder addiction patterns, this piece provides the measurement framework for systematic recovery.
The pattern repeats: you promote someone to "own" customer success, but they still need your approval for service credits above £500. You make someone "responsible" for operations, then override their supplier decisions. You create management roles without management authority.
Approximately 30-50% of senior management time in UK SMEs disappears into seeking approvals rather than executing decisions (operational manifestation of founder dependency as shown in the Chaos King). The mathematics are brutal: with you as the bottleneck, enterprise value sits at current multiples. With the same outcomes delivered by a team with genuine authority, enterprise value increases measurably through reduced key person risk.
Key person risk now attracts systematic buyer attention. Corporate finance advisers report regular due diligence focus on management depth and decision-making independence (ICAEW, 2024). While exact discount percentages vary by sector and deal size, the principle is established: concentrated decision-making creates priced risk.
Meanwhile, fewer than one in ten UK businesses have succession planning fully integrated (Azets Barometer, 2024). These problems connect directly. Authority hoarding creates succession impossibility.
The Seven Metrics That Expose Authority Theatre
Most founders think they've delegated because they've assigned outcomes. The metrics show otherwise:
SAR Worked Example
Worked example: Sarah owns customer success with £2k credit authority. Last month she processed 24 credit requests totalling £31k. On 8 occasions (33% SAR), she sought approval for credits below her £2k threshold, three at £450, two at £890, three at £1,200. This 33% SAR signals authority theatre: she has the band but not the confidence to use it.
AAGI Worked Example
Worked example: Your Q1 OKRs include 12 objectives. James owns "Reduce customer churn by 15%" but cannot approve service credits above £500 or change contract terms without founder sign-off. Lisa owns "Launch new product line by March 31" but lacks hiring authority for the required developer role or budget approval for the MVP build. Marcus owns "Achieve £2.5m revenue" but pricing decisions require founder approval for deals above £50k, which represents 60% of his pipeline.
ABU Worked Example
Worked example: Your published bands state: Operations Manager approves supplier contracts up to £15k, Finance Director approves £15k-£50k, CEO above £50k. Last month, 150 supplier decisions were made:
- 90 contracts under £15k: 72 approved by Ops Manager (correct level), 18 escalated to you
- 45 contracts £15k-£50k: 30 approved by FD (correct level), 15 escalated to you
- 15 contracts above £50k: all correctly reached you
Correct level decisions: 72 + 30 + 15 = 117 out of 150 total = 78% ABU
Your 78% ABU indicates systematic band circumvention. The 33 incorrectly escalated decisions (18+15) suggest either unclear criteria ("when is a contract really £14.8k?") or confidence gaps. Investigate why Ops and FD are elevating decisions within their authority. Often it's risk aversion from past reversals.
FGS Worked Example
Worked example: Your team tracks 60 operational meetings last month:
- Weekly ops review (4 meetings): 3 required your pricing approval to finalise client proposals
- Product planning sessions (4 meetings): 2 couldn't close on feature prioritisation without your input
- Sales pipeline reviews (8 meetings): 6 needed you to approve discount structures before proceeding
- Client escalation meetings (6 meetings): 5 required your decision to resolve
- Supplier negotiations (4 meetings): 2 awaited your contract approval
- Total other meetings (34): 0 required your decision
Meetings requiring you: 18 out of 60 total = 30% FGS
Your 30% FGS means nearly one-third of operational meetings queue for your input. Your calendar has become the constraint on organisational velocity. Notice the pattern: pricing, discounts, escalations: all decisions that could have criteria-based delegation. Each gated meeting represents compound delay: 6 people wait 45 minutes for a decision you could have delegated with a £10k discount authority band.
DTF Worked Example
Worked example: You've defined SLAs: supplier approvals within 3 days, hiring decisions within 5 days, client issue resolution within 24 hours, marketing spend approval within 2 days. Last month, 120 decisions fell into these categories:
- Supplier approvals (40 decisions): 32 resolved by Ops Manager within 3 days, 8 missed SLA awaiting founder
- Hiring decisions (20 decisions): 12 resolved by department heads within 5 days, 8 missed SLA awaiting founder
- Client issues (45 decisions): 38 resolved by Customer Success within 24 hours, 7 missed SLA awaiting founder
- Marketing spend (15 decisions): 11 approved by Marketing Director within 2 days, 4 missed SLA awaiting founder
Non-founder decisions meeting SLA: 93 out of 120 total = 78% DTF
Your 78% DTF looks acceptable but masks the problem: 27 decisions (23%) missed SLAs specifically because they awaited you. That's systematic founder dependency suppressing an otherwise capable team. The 93 on-time decisions prove capability exists: your approval requirement is the constraint. Most concerning: the 7 client issues that breached 24-hour SLA while waiting for you represent direct service quality impact.
TR Worked Example
Worked example: Last month your team made 50 decisions within their delegated authority:
- Operations approved a new £12k logistics software (within their £15k band) → You reversed it 3 days later after seeing the invoice, preferring a different vendor
- Marketing approved a £8k conference sponsorship (within their £10k band) → You cancelled it 2 days later questioning ROI
- Customer Success issued a £1,500 goodwill refund (within their £2k band) → You reversed it 5 days later asking for escalation on large refunds
- Total decisions made by team: 50, including the above 3 reversals
Decisions reversed: 3 out of 50 total = 6% TR
Your 6% TR seems small but exceeds the 5% threshold, signaling systematic trust issues. More importantly, analyse the reversals: all three were within documented authority bands. You didn't reverse due to procedural violations, you simply disagreed with judgment calls. This trains your team that "authority bands are suggestions, not genuine delegation." Next month, watch your SAR spike as these same managers start seeking pre-approval for decisions theoretically within their authority. Each reversal needs documented justification and coaching, not silent authority withdrawal.
FQTS Worked Example
You track decision latency for 25 hiring decisions last month, measuring time from candidate offer-ready to final approval:
- 5 decisions took 2 days total: 2 days manager review, 0 days awaiting you = 0% founder wait time
- 10 decisions took 5 days total: 2 days manager review, 3 days awaiting you = 60% founder wait time
- 7 decisions took 8 days total: 2 days manager review, 6 days awaiting you = 75% founder wait time
- 3 decisions took 12 days total: 2 days manager review, 10 days awaiting you = 83% founder wait time
Total decision time: (5×2) + (10×5) + (7×8) + (3×12) = 10 + 50 + 56 + 36 = 152 days
Total founder queue time: (10×3) + (7×6) + (3×10) = 30 + 42 + 30 = 102 days
102 ÷ 152 = 67% FQTS
Your 67% FQTS is catastrophic: two-thirds of hiring latency is candidates waiting for you to review offers. This has three direct costs: (1) candidate drop-off: top talent accepts other offers during your delay; (2) team frustration: managers do their work in 2 days, then wait a week for you; (3) opportunity cost: roles stay open longer, revenue suffers. The 3 decisions that took 12 days? Those candidates likely withdrew. You're not adding value in those 10 days, you're creating systematic execution delay. This is why you need either faster approval cycles or higher delegation thresholds.
These metrics are measurable weekly with simple tracking systems.
Composite Authority Gap Score
The seven metrics combine into an overall Authority Gap Score (0-100). Each metric contributes equally: systematic founder dependency reveals itself through patterns across multiple metrics, not dominance of one.
Score Interpretation:
- 0-40: Critical dependency risk. Delay exit planning until score improves.
- 41-65: Moderate risk. Implement 90-day recovery programme before any transaction processes
- 66-85: Acceptable risk. Management capability exists but requires documentation for buyers
- 86-100: Low risk. Exit-ready management capability with systematic evidence
Connecting Symptoms to Metrics
The four Chaos King symptoms manifest in specific measurement patterns:
Decision Hoarding (Symptom 1):
- Shadow Approval Rate >30%
- Founder Gate Share >40%
- Authority Band Utilisation <60%
Crisis Validation (Symptom 2):
- Not directly measured by these metrics (requires time-tracking data on reactive vs strategic work)
Delegation Theatre (Symptom 3):
- Authority-Accountability Gap Index >1 OKRs
- Turnback Ratio >10%
- Authority Band Utilisation <50%
Growth Panic (Symptom 4):
- Decision Throughput without Founder declining or flat
- Founder Queue Time Share >40%
If you exhibit multiple symptoms from the Chaos King diagnosis, expect elevated metrics in corresponding categories.
Three Decision Rules to Break the Bottleneck
Stop managing exceptions. Start managing systems.
The following rules directly improve your composite score. Rule 1 targets SAR and ABU. Rule 2 targets FQTS. Rule 3 targets TR. Implement all three simultaneously for maximum score improvement.
Rule 1 (Delegation): If a decision recurs three or more times monthly and has £5k or lower impact, grant non-revocable authority with written criteria within two weeks. No exceptions.
Rule 2 (Queue Management): If Founder Queue Time Share exceeds 30% for two consecutive weeks, drop approval bands by one level for 30 days and review outcomes. Force the system to work without you.
Rule 3 (Reversal Protocol): If Turnback Ratio exceeds 5%, reversals require written exception analysis and coaching session, not simple authority withdrawal. Learn why decisions failed rather than reclaiming control.
These rules work because they're binary. Either you follow them or you don't. Either you measure the metrics or you don't.
Your Recovery Programme: 48 Hours to 90 Days
Week 1: Diagnostic
Days 1-2: Start a decision log. Tag every decision you make. Identify recurring patterns.
Day 3-7: Map your current authority bands. If they don't exist, create them. If they exist but aren't published, publish them.
Week 1 milestone: Complete first planned 48-hour founder absence. Document what breaks. Those breaks become your priority delegation targets.
Month 1: Implementation
Weeks 2-4: Instrument the seven core metrics on a simple dashboard. Review weekly.
Month 1 milestone: Publish written decision criteria for your ten most frequent approval requests.
Month 3: Validation
Month 2-3: Extend absence periods. Week-long operational continuity becomes the standard.
Month 3 milestone: Shadow Approval Rate below 15%. Founder Gate Share below 20%.
Month 6 milestone: Week-long operational continuity with zero decision latency. Composite Authority Gap Score above 66.
Success Indicators
Leading metrics (track weekly): Decisions made without founder input should grow 10% monthly. FQTS should decline consistently.
Lagging metrics (track monthly): Revenue maintained during founder absence. Management confidence in autonomous decision-making (survey quarterly).
Board tripwire: If SAR remains above 20% for 60 days after authority bands are published, assume cultural resistance and escalate to governance change.
When Standard Approaches Break Down
The Vulnerability Acknowledgement
Previous advice to a £8m logistics firm assumed founder relationship capital would transfer through cultural osmosis. Post-acquisition integration failed when key client relationships had no institutional backup protocols. Personal guarantees on service levels couldn't transfer systematically.
Learning: Relationship capital requires mapped transition protocols, not personality-based hope. Current approach includes client relationship categorisation with specific handover timelines.
Sector Considerations
High-touch professional services: Personal founder relationships can command premiums that offset transferability concerns. Solution: systematic introduction of second-tier relationship managers 18-24 months before any potential exit.
Technical innovation businesses: IP documentation and knowledge transfer take precedence over operational delegation. Consider technical advisory structures that maintain founder input while enabling operational independence.
Luxury/boutique operations: Brand architecture matters more than operational transfer. Create sub-brands or systematic thought leadership that can operate independently while maintaining brand halo effects.
The Market Reality Check
Earnout use is rising (39% of UK&I advisers report higher usage in H1’25 vs H2’24) but credible benchmarks show c23% across Europe and c33% in US (DealSuite H1 2025). Current baseline: approximately 41% of earnout payments fail to complete fully (SRS Acquiom data cited by Womble Bond Dickinson, 2024).
Authority gap metrics predict earnout risk. Businesses with composite scores below 50 show increased earnout failure rates in our client experience and research, versus for scores above 75.
The metrics that matter most:
- Shadow Approval Rate above 25% (indicates continued founder dependency post-deal)
- Decision Throughput without Founder declining quarterly (suggests system degradation)
Buyers structure earnouts precisely because these metrics predict post-deal performance.
Implementation Checklist: Your Next Actions
Today: List yesterday's decisions. Identify which could have been made by others with clear criteria.
This week: Shadow one direct report for a full day. Document their authority gaps and decision blocks.
This month: Complete first 48-hour absence test with documented outcomes and system failures.
Success metric to track: Composite Authority Gap Score improvement from baseline to 66+ within six months, driven primarily by FQTS reduction (target: 50% decrease) and SAR improvement (target: below 15%). These metrics align with the decision execution velocity metric in the Chaos King framework.
Your authority theatre feels like control. Markets price it as systematic risk. The choice isn't whether to close the authority gap. It's whether you'll measure and manage that closure systematically, or accept buyer risk adjustments when the time comes.
Accountability without authority creates the appearance of delegation while preserving the reality of dependence. The metrics don't lie. The market won't wait.
