Let’s be clear about who is making the big decisions in your company.

Time to get clear on who's making the decisions in your company.

I’m always on the lookout for articles, podcasts and videos that address my passion: the art and science of decision-making. Who makes the decisions in organizations and why? How are decisions made? Why do some decisions work and why do some go bad? Some people are fascinated with the Twilight series. I think about decision-making.

This month I opened up my copy of the Harvard Business Review (HBR) and found an article entitled,  “Who Really Makes the Big Decisions in Your Company”  by Bob Frisch. In this article Frisch makes the case that, “… nameless decision-making teams exist (within companies) and (that we should) ask how you can make more deliberate use of them.”

In my experience the author is unfortunately correct. In every setting CEOs have the ability to draw people together in an ad hoc fashion so that he/she can secure advice, but is this the optimal way of doing business? I think not. Certainly, not as an ongoing approach. Keeping secret who is responsible for decisions is hardly a strategy for success.

Why does Frisch seem comfortable encouraging this “reality”? He acknowledges the costs of doing business this way:

  • Teams and individuals are, “ brought in too late in the process for their input to matter”

  • The staff, “appear to have power to protect the interests of the departments they oversee—but they really don’t”

  • The way the CEO actually makes decisions is unacknowledged” in the environment

Frisch acknowledges the folly of unclear decision-making and yet his solution is to tell us that we should try to get comfortable with these unacknowledged teams of decision-makers. This simply legitimizes the status quo.

I often see organizations hesitate to expand the decision-making responsibilities of their staff. In our work we find organizations that consist of 1% decision-makers and 99% implementers. This isn’t the ratio that will drive innovation. And, of course, this practice brings unintended consequences in the form of increased attrition, reduced leadership development, decreased innovation and muted results. One of the people cited in the Frisch’s article laments that, “others make the big calls in private and the rest of us are out of the loop.” This is all too common and not productive.

In this difficult economic time organizations don’t have all of the financial resources they need. Unfortunately, these same organizations often under-utilize the decision-making capabilities of their employees. They are wasting human capital at a time when no resource should be wasted.

Can’t we aspire to a different and improved way of decision-making? What if we deliberately and clearly drove decision-making down to the people who are actually closest to the issue? What if we were clear about who can make decisions in our organizations? What if we trusted the people who are closest to the decisions to make the decisions?

2 Responses to Let’s be clear about who is making the big decisions in your company.
  1. Bob Frisch
    December 12, 2011 | 3:29 am

    Thanks for the thoughtful and considerate comments on my article in the December HBR.

    I’m glad we’re in agreement on the diagnosis – that there is a pervasive presence of these informal decision making teams, and that their influence can be quite negative.

    Looks like our disagreement is in the treatment. I agree that clarity of decision making, and driving accountability deeply into the organization is a very good solution. However, I don’t believe that it’s teams that should always receive that accountability – I believe the most important decisions in most organizations ultimately rest with individuals, and that situation is unlikely to change.

    Teams are terrific for many things – coordination, communication, making tradeoffs, managing dependencies – but making decisions isn’t necessarily one of them. And since responsibility tends to ultimately rest with individuals, the use of informal teams to advise individuals as they work through tough decisions will undoubtedly persist.

    Am I legitimizing the status quo? Perhaps. But does the status quo really foster an open and honest dialog about the role individual managers have in the decisions their bosses are responsible for? I don’t think so, which is why I was hoping that this article would stimulate conversation.

    Thanks for opening up your blog to having part of that conversation take place.

    Bob Frisch
    http://www.WhosInTheRoom.com
    twitter – @OffsiteGuy

    • Scheier
      December 12, 2011 | 11:33 pm

      Thanks very much for your comment to my post. I’m very pleased that you responded and that we can both advance the need for more clarity in decision-making in for-profit and social sector organizations. One point of clarification. I completely agree with you, I do not advocate that teams make decisions. My apologies for any confusion on this matter and I firmly believe decision-making accountability needs to fall to specified individuals and not to teams. Informal decision-making teams, as you outlined them in your article, do have their role and while CEO’s will continue to use these groups, individuals will and should make the decisions. We completely agree. My concern in commenting on your article is that I would prefer that the ex-officio teams that you cite, be more the exception than the rule and that whenever possible organizations be committed to publicly driving decisions to the right level of their organization and that the people in these organizations feel free to advocate for decision-making responsibility. My goal at Empowering Work Practices is to make certain that the entities I work with are clear about the decisions before them and that they proactively assign these decisions to the appropriate staff level within their respective organizations. Thank you for taking the time to comment on my post.

      Steve Scheier

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