Archive for July 2010

Why Don’t We Train Our Managers, part two: Decision-making models

July 2, 2010

Over 20 years of management experience (and countless books, several well-written), this is the most concise-yet-useful definition of decisions, and how they are made in organizational settings, that I have found.  While the broader issues of Governance can be complex, there are three basic decision-making models appropriate to this discussion:

  • Direct decisions (executive declaration, appealed only to the Board of Directors)
  • Delegated decisions (management declaration, by the accountable parties designated by the executive)
  • Consensus decisions (consultative decision by identified team of experts)

Some of the myths about these models that should be addressed in one-on-one or group management training sessions are:

  1. Every decision is ultimately a direct decision of the CEO as the ultimate party accountable to the Board.  In dysfunctional organizations, large and small, every issue is brought to the CEO (like kids who run to daddy or mommy because they can’t agree).  Not true.
  2. Delegated decisions are rarely effective because someone always runs to daddy when they disagree with the intermediate manager’s call (leading to countless “appeals”) Not true.
  3. Consensus decisions are time-consuming and can slow down any progress (one juror prevents the verdict)  Not true.
  4. No model works in a) companies that are in rapid growth mode where “Just do it…” reigns, b) large institutions with political fiefdoms, c) teams in which passive resistance is prevalent, or d) during major transitions such as merger/acquisition initiatives involving two different corporate cultures. Not true.

There is a corollary to these models, and herein lies “the trick:”

Few companies/organizations use only one model.  The key is to utilize the correct approach for each issue, and to do so, there must be a “framework discussion” among all stakeholders in advance of any specific issue.  This framework discussion occurs before any debate, and agreement is reached before anyone’s vested interest emerges.

By agreeing in advance upon how the decision will be made, the members of the team commit to an approach.  The framework discussion might only require a one-hour meeting, while the absence of any framework often leads to delays, detours, disputes that may add weeks* of unplanned confusion.

* I have recently observed a single technology decision (estimated for three weeks to review/decide) that ultimately consumed nine months of counter-point , arguments that cost thousands of hours of lost productivity, all of which could have been avoided by holding a single, one-hour framework meeting at the outset of the review period.

Yes, politics and urgency and new leadership and corporate culture all play mitigating roles, and few significant business decisions meet unanimous approval.

However, if all managers/directors/VP’s in a company were offered an initial training course in these models (with vocabulary appropriate to the company), the leaders would have a shared constitutional process, a basic mechanism that can be optimized for 80-90% of the issues they will face in their teams and departments.

Where models are defined and framework agreements occur with regularity, organizations operate effectively.  Without any constitutional discussions, and lacking any similarity of approach at the executive level, projects fail.  Schedules slip.  Initiatives drift off course, and most importantly, our finest employees (the ones who should be spending their time building and fixing things) are left waiting in the hallways while their managers argue endlessly.