How To Enable Effective Decision Making
Bia Affonso
Decisions are made every day in organisations, and yet, most leaders don't have an approach or clarity as to how to drive decisions with agility, clarity and coherence.
If you're a senior leader, I dare ask you how many strategic decisions you make a week. I bet that you're thinking about a myriad of situations such as budgeting, hiring, launch dates, supplier agreements, etc.
What is an example of strategic decision making ?
How many of these require consultation or consensus? What are the high risk and low risk decisions? And which decisions could you delegate to teams or roles that have the right information and clarity of the organisational strategy (decision rights)?
If you were not sure about how to respond to the above, you are not alone. This is because most organisations assume that the strategic decision rights come with a title in the org structure. The key word here is assumption. Individuals lead their day-to-day guessing that, because they have the authority linked to their rank, they should make most decisions.
Why is strategic decision making important?
Agility slows down because there is little decision-making clarity for leaders, let alone for their teams. The voice of the customer is also compromised in the process, as those with authority might centralise certain decisions without considering customer feedback and impact.
At Neu21, when working with a group of senior leaders, we started mapping all decisions they made. We came to the realisation that certain leaders were dealing with client-facing matters that ideally should sit with frontline teams. This centralisation made customers unhappy due to slow turnaround of outcomes as well as to exhausted leaders who were bombarded with escalation issues on top of their existing responsibilities.
What is hindering effective decision making within organisations?
To start, there is a consideration about the design of organisations - how intentionally are the different areas of an organisation built and reviewed? Is there alignment over the strategy, vision, and purpose? How clear are teams around their ways of working and decision rights? Is leadership empowering their people to unleash their potential and practise making informed, non-biased decisions?
There are various areas within an organisation that needs conscious consideration and design to avoid ambiguity. Without careful review, ambiguity leads to assumption-making, hand balling, disempowerment, poor decision making and bad outcomes for the organisations.
What are the elements of strategic decision making?
As in every system, there are multiple areas to consider, but these are a few starting points:
Alignment: Ensure everyone understands the organisational purpose, vision and strategic direction for the next quarter, third or semester – this will lead to alignment across the board and a sense of informed strategic decision making. Even over statements are a great way to represent your strategic direction. An example might be: 'Business expansion even over profitability'. This statement clearly emphasises that this organisation is compromising on profit margin in order to continue to enter new markets. We recommend creating 3-5 even over statements that represent the organisational focus and sacrifice. After all, strategic decision making is about choice, and when people are not sure what the compromises are, it's hard to make great strategic decisions.
Decision rating: Understand what strategic decisions are high-risk, therefore requiring certain skills or roles to own them, and map the decisions that are safe to try and fail. Creating a list of scenarios relevant to your organisation will help leaders delegate with confidence. We encourage you to review this list often and reduce the number of high-stake strategic decisions. Trust is a key part of making the safe-to-fail list larger and distributed.
Decision rights: Once the types of strategic decisions and situations are mapped and rated, understand what rights teams and roles have. Be specific and focus on roles, not people, as we want to remove personal bias, relationships and ensure continuity of decision making if key individuals exit the organisation. In the long term tools can be beneficial here, but don't obsess about using RACI, RAPID or other models to gain clarity.
Customer-centricity - When making strategic decisions, embed a culture of customer-centricity in everyday decision-making, not just in large institutional or product decisions as this will ensure your organisation is increasing its competitive advantage by honouring the voice of the customer.
Empowerment: Authority plays a big role in decision making. While organisations can be extremely hierarchical, power can be detached to ranking and formal structure and distributed to promote agility. Foster a culture of coaching by asking powerful questions and supporting employees to leverage their experience, skills and understanding of the organisational context to feel comfortable, confident and safe to make better decisions on behalf of the organisation. Oh, and let go of punishment mechanisms if low-risk decisions turn sour; create instead a culture of learning and feedback.
By embedding these practices, you are more likely to unlock agility and innovation, while supporting employee growth and development through increased accountability. At the end, your organisation will benefit from distributed, transparent decision making and your leaders will have more time to focus on what truly matters (and have a life in the process!).
