Risks
You have to be careful of being overly directive with people who are capable, and who are able to contribute at a higher level than what you're allowing them. Such a person will become disaffected very quickly, and is likely to seek other employment. Remember also that an overly directive environment is unlikely to be a pleasant one; it is more likely to be one that causes people to wish they were somewhere else. And 'pulling rank' simply to gain an advantage for yourself will send a very hostile message. Finally, as noted above, being excessively directive can cause you to make decisions on the basis of partial or incomplete information, as you may be missing key insights and perspectives that other people may have.
Being overly consultative also carries risks. It can create the impression in people's minds that the workplace is more of a democracy than it actually is; a certain sort of person sometimes gets the idea that he or she is the one in charge. And if not done correctly, it...