Among factors influencing the decision-making of a leader are the people and groups involved in the process and their levels of influence on the final decision.
You may have worked in organizations where decision-making is well-and-truly top-down. I’ve done work for two of them, both in need of transformation for various reasons (including rapid, technological changes in their industries and a need for succession planning).
The way the patriarchal leaders of these two organizations reflect on their decision-making vis-à-vis their advisors and staff will play a big part in their ability to transform their organizations.
In Organization 1—a publishing company—decisions come from the leader alone, with some information and suggestions provided by a small, trusted advisory group or sometimes just one lieutenant—workers are expected to accept the decision or leave. In Organization 2—a logistics company—the chief executive also makes autocratic decisions, but tellingly he struggles with whether or not his ideas will be accepted by his staff.
Incidentally, the Vroom/Yetton Normative Decision Model is often used to define the alternatives available for a leader when making decisions:
• A leader may make simple decisions with no assistance, using whatever information is available.
• He or she may obtain information from staff or consultants. (The leader may also decide not to reveal the reason for requesting information, and the information supplier may or may not have influence over the decisions.)
• Or the leader may decide to involve a group in the process, delegate the decision, and so on.
Decision quality often is affected by impersonal aspects (I’m paraphrasing management theorist NF Maier here) and is driven by three types of outcomes: 1) quality/rationality; 2) acceptance or commitment by individuals and teams; and, 3) the amount of time available to make the decision.
Any time a decision can be made without involving others is ideal; however, consideration must be made as to whether the organization supports the approach.
In Organization 2, when the chief executive attempts to make even the simplest decisions without consulting his team, he is often met with resistance. The reason for this brings up possibilities for managerial improvement—the executive rarely communicates clearly with his organization, and he is not aware of, or sensitive to, his staff’s ability to execute his decisions.
The logistics industry, you see, is one where workers typically are only trained on specific tasks, and often they do not know how to perform outside them. Although the chief is somewhat aware of this, he still allows his staff to think outside their tasks. Unfortunately, they have no training along these lines, and failures to properly execute diminish their trust in their leader and their willingness to commit to more of his decisions.
Organization 1 is solely led by its chairman’s decisions alone, or with input from a very small group of executives who are not involved in production. In this case, workers are freely told how the chairman makes decisions and that they are expected to execute them without resistance. The organization is very polite about all this, although resistance to decisions is not tolerated and resistors are removed.
Helpfully, the human resources manager has an open-door policy. In this office concerns and ideas can be shared, although this openness is a method to identify resistors. While this type of organization may not appeal to many professionals, it has been successful in achieving its goals, partly by strictly controlling its decisions.
In recent years the firm has had to grow by acquisition to maintain the same revenue base. Despite these acquisitions the chairman has successfully maintained his strategy because the creativity that comes with open participation, devil’s advocacy, and autonomous teams is not to be found.
The company acknowledges that creative individuals will not tolerate the atmosphere, but its planned approach maintains equilibrium and steady revenue generation. Creative talents have ideas that can lead to risk and the company is risk adverse. Additionally, the company makes money on labor hours, and “steady grunts” billing by the hour are more profitable.
However, Organization 1’s chairman, his second-in-command, and members of the board are aging, and there is no apparent succession planning in place. The organization therefore needs to aggressively plan its future strategy in order to remain relevant. In fact, more pressingly than succession planning, the firm must address how to innovate in the rapidly changing publishing world. Since there is little creativity in-house, strategic re-orientation may have to come from outside, a prospect that may be difficult to accept.
Reviewing both cases as a consultant, the greater opportunity for transformation lies with Organization 2.
That’s because its chief executive realizes his business environment has become too complex to manage autocratically. Importantly, he’s seeking assistance to determine what the organization needs to look like in order to get decisions accepted and to learn how to innovate in order to remain relevant in a virtual economy. Such honesty and self-reflection has yet to be found in Organization 1!
I have recommended the culture change theories of John Kotter to the chief executive of Organization 2. In fact, he knows Kotter’s theories, and although he is suspicious of theories in general, he appears to accept Kotter due to his consulting background.
Furthermore, Kotter’s steps are easy to understand and use as a framework. The primary ways to create a culture change, according to Kotter, is to speed up decision-making and reduce bureaucracy, while empowering workers to make more decisions.