Decisions made and disregarded or overturned… Decision paralysis… Over-escalation of decision making to management… Disagreement and conflict over impacts… Reducing engagement levels.
Sound familiar? We call this ‘decision shock’ and it is all too common a phenomenon. And considering that most businesses are now operating in markets and environments that punish indecision, rework and inertia, it is a phenomenon that necessitates a re-think about how decisions are guided, made and communicated within organisations.
Broadly speaking, there are three main types of decisions encountered in most businesses…
Strategic decisions – These decisions are reasonably infrequent, but significantly impact the direction of the organisation, have major and long-term implications to how the business operates every day, and once made, are not easily undone.
Operational decisions – These decisions require leaders and staff to interpret a scenario or inputs, contextualise and take a position in order to maintain operational momentum… often in response to unforeseen scenarios, or changes in the environment. Decisions around product design, pricing, purchasing, marketing, project planning, campaigns and promotions or risk management are all examples of operational decisions. These decisions are far more frequent and are critical in ensuring the organisation stays true to its strategic intent.
Cumulative BAU decisions – These decisions are most often based upon pre-determined policies, procedures and delegations. In theory, the sum total of every one of these smaller scale decisions should reflect a broader policy direction or strategic position.
Whilst Strategic decisions invariably receive the greatest amount of consideration and thought, a lack of relatable context and linkage of these decisions to the operational layers of the business often contribute to decision shock that stalls the understanding and adoption of change, delays progress and halts momentum.
When viewed in isolation, the impact of each smaller Cumulative BAU decision can seem less significant, but given the high volumes, the cumulative effect of these decisions can dramatically alter the outcomes for the organisation. In theory, these decisions should be simple… follow the policy and the end result should line up as you planned, right?. However, often businesses find themselves way off course due to minor deviations from policy and discretionary exceptions that seem perfectly legitimate in isolation, but when combined with every other exception made, drive the operation miles away from the intended destination. The results of this phenomenon often only become apparent when reviewing quarterly or annual results long after the damage is done. A death by a thousand painless cuts.
“…In many cases, the right decision will be plainly obvious as the operating model principles paint a clear picture of what success looks like for the decision maker…”
Arguably the most difficult decisions however, are the Operational decisions. More often than not, your operational staff and their leaders are expected to take responsibility for these decisions. The reality is however that most leaders and staff are simply not equipped with adequate strategic context and therefore lack the confidence to make the critical decisions expected of them, leading to the types of issues I mentioned at the top of this post. Worse still, many experience damaging blowback when their decisions are perceived to be incorrect or ill-conceived. The negative impacts to self-confidence, performance appraisal and engagement can be long lasting, and sadly the real cause of the issue is seldom recognised.
Getting any of these decisions right, relies on those making the decisions to:
- have a clear understanding of how to interpret and operationalise the business strategy and vision,
- be in perfect alignment with all other linked or impacted areas of the business, and
- formulate the decision based on the insights and information available.
The critical, and often missing element within many businesses, is a clear, agreed and relatable set of operating principles that articulate how your vision and strategy should come together successfully across every layer of the business. Once in place, decision makers can more effectively contextualise every decision required to be made by applying previously agreed principles to their thinking and decisioning process. This ensures that decisions can be made more autonomously and with significantly less, post-decision conflict and shock.
Conflict resolution, when it does arise, ceases to become an argument of whether the individual decision (or the decision maker) was right or wrong, but becomes a more rational discussion of the validity of the previously agreed principle/s upon which the decision was based. In this regard, decision reviews become more strategic, and encourage organisational planning and direction setting processes to evolve to ensure that operating principles continue to be reviewed and refined.
The benefits of this approach are significant and self-perpetuating:
- Opportunities to delegate decision making to leaders and staff increase significantly,
- Leaders and employees have greater confidence to make faster decisions,
- Customers receive a superior experience and decision escalation to Management is greatly reduced,
- Management have greater confidence in delegating decisions to their employees, and benefit from increased discretionary time,
- The momentum and continuity of the operation is maintained as decisions are made faster and with far greater consistency,
- Organisational harmony and alignment of thinking is increased as all employees are reading from the same page,
- Employees experience greater empowerment and autonomy to execute the skills and roles for which they been employed,
- Engagement levels are elevated as staff have a clearer understanding of how to relate their work and contribution directly to the successful achievement of the organisation’s strategy,
- Decisions are easier to make, align and understand.
Effective, organisation-wide operating model principles do not have to be complex or difficult to establish, but once in place will significantly reduce the complexity and difficulty of decision making, keep your business on course, and unlock the confidence and potential of your staff.