I admit Im not much of a political junkie. But the resignation of Attorney General Gonzales today highlights some interesting shifts in the relationships between employers and employees in the broader workforce and raises questions well worth pondering.

At the heart is an inexorable shift in power as knowledge begins to trump hierarchy in an open society. In the information economy, knowledge (and reputation) really is power -- limiting the discretion of the positional authority of hierarchy. What does this mean for executive decision rights, the scope of management authority, and optimum approaches for effective management?

Lets set aside for a moment questions of incompetence and untruthfulness. The first operative issue raised by the Gonzales situation is: Would a senior executive in the private sector face such scrutiny for dismantling or restructuring a work group? Businesses have operated for years under a concept called employee at will. Essentially we accept that the boss has the right to surround him or herself with the people they want and feel comfortable can pursue their business case. Most CEOs exercise this right to some extent.

Should they? Is there anything inherently wrong in stacking your team with people who think like you do, people who are excited about pursuing your agenda? The President's political policy has always, inevitably, driven the Justice Department's broadly discretionary law enforcement agenda. Is this wrong? Not in my view. In fact, I argue that leaders should, if anything, make their values more explicit, to attract people who are engaged by the environment the leader creates and the specific business challenges he or she puts forth.

Is there a line you just cant cross? Of course. Heres where ethics and truthfulness come into play. We would not condone a private sector senior executive "restructuring" a work group if he or she did so to prevent the group from conducting its work in an ethical and legal way -- or to build a group committed to behavior that would be inappropriate. In the case of the U.S. attorneys, there is a world of difference between removing a political appointee in favor of one from your own party versus firing someone for cause based on their refusal to bring election-fraud prosecutions against Democrats on a timetable designed to help Republicans at the polls, as has been alleged

More interesting to me is the question of how executives prerogative to choose teams based largely on personal preference might change going forward. Heres where the shift to an open society -- along with questions of competence -- come into play. Will broader access to information democratize the workplace? Do recent SEC and Congressional regulations mandated for the private sector foreshadow the type of dynamics that we see in the Gonzales situation? Would the workplace be a better place if such glass house discussions take place? Maybe. But it certainly would change the approaches executives would need to employee to get things done.

And so, has the standard for executive competency changed? Some would argue that radical transparency is the new model for executive behavior. Perhaps transparency, which was surely lacking here, is the only way to handle competently the pointed questions of performance versus preference in the future.

Finally, how does the brighter spotlight on executive actions impact employees? What does it do to an organization when employees have information that appears to contradict what the boss has said in public? Our research makes clear that employees in general hold top management in less than the highest regard. Only 37% moderately/strongly agree that top management displays integrity and morality. The scores are worse in government (only 27% moderately/strongly agree, and 28% moderately/strongly disagree). When leaders loose credibility and trust, it makes people fearful and cautious, wondering what else theyre not being told. When they see colleagues capriciously fired, they spend too much time watching their back. There seems little question that the Gonzales controversy has taken a toll on the Justice Department. Reports are that employees from senior department officials to the building guards feel at some level that the doubts raised have, at a minimum, dampened the organizations effectiveness.

We are living in an age of widespread information and open knowledge, with major implications for how leaders exercise power ... if they still have any.

Many thanks to my colleagues at The Concours Group for their thoughts that contributed to this post, including Espen Andersen, Nick Vitalari, Bob Morison, Tom Casey, and Margaret Schweer. Research quoted was conducted jointly by The Concours Institute and Age Wave.

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