DEFINITION of Separation Of Powers
The separation of powers is an organizational structure in which responsibilities, authorities and powers are divided between groups rather than being centrally held. It is most closely associated with political systems, in which the legislative, executive and judicial powers of government are vested in separate bodies.
BREAKING DOWN Separation Of Powers
Separation of powers refers to the division of powers into distinct branches of government, each with their own responsibilities. The intent of separation of powers is to prevent the concentration of unchecked power and to provide for checks and balances, in which the powers of one branch of government is limited by the powers of another branch — to prevent abuses of power and avoid autocracy.
The most well-known example of separation of powers is the tripartite system found in the United States and the United Kingdom, in which there are three individual branches of government: the executive branch, the legislative branch and the judicial branch. Each with distinct powers — although some states in the U.S. use the bipartite system, which assigns powers to two separate groups.
In the U.S., the powers afforded to the judicial, legislative and executive branches are defined in the Constitution. Governmental authority is divided between the executive branch, controlled by the President; the legislative branch, controlled by Congress; and the judicial branch, controlled by the Supreme Court. For example, in the U.S., the executive branch nominates judges, the legislative branch confirms the nominations, and the judicial branch can declare laws passed by the legislature unconstitutional.
Separation of Powers in Business
While the separation of powers is most closely associated with politics, this type of system can also be used in other organizations. For example, there are good reasons to separate the positions of chief executive officer (CEO) and chairman, in order to increase checks and balances and give corporate governance real integrity. Because the board of directors’ main job is to oversee management on behalf of shareholders, CEOs who holds both roles are effectively monitoring themselves – which leads to potential to abuses of power and reduced transparency and accountability.
In 2018, Elon Musk came under increasing criticism for holding both the CEO and chairman roles at Tesla, the electric vehicle and clean energy company – and making outlandish claims about the potential of Tesla’s technology, which led to concerns that Musk might be misleading investors. After the Securities and Exchange Commission charged Theranos with massive fraud, for deceiving investors about the company's performance, the claims made by Silicon Valley companies, both public and private, have come under greater scrutiny. As Tesla struggled to contain cost and ramp up production of its Model 3 sedans, activist investors asked the board to consider a motion to fire Musk from his chairman of the board position and replace board members who lack independence from chairman and CEO Elon Musk. For more, read Is Elon Musk Making Things Worse for Tesla?