In non-violent communication, the needs (broadly) are: connection, physical well being, honesty, play, peace, autonomy, and meaning. Hard to argue against someone needing those.
That's part of being a senior, leader, and/or manager. Their need doesn't go away. You work with the employee around how much of any of the following are appropriate: choice
freedom, independence, space, and/or spontaneity. You help them grow. If the need can't be met because of mental issues, that is different.
Their need is not in alignment with the company’s needs, and often yes it does seem to be a mental issue, some unfilled need elsewhere leaking into their professional life.
Should I actively make decisions that increase the chance of the entire company failing, if it helps one individual feel more ownership? I will not do that.