In the last column on April 10, we discussed how an organisation's decision-making processes predict its capacity for innovation. We learned that organisational creativity and innovation tend to thrive in environments with devolved and consensual decision-making, while concentrating decision authority at the top of the hierarchy tends to kill initiative and innovation.
How can you move your organisation towards delegated and consensual decision-making? Clearly, there is no one-size-fits-all approach when it comes when it comes to restructuring decision-making. When my company works with organisations, we help them to identify what approaches best fit their industry, scope of business and cultural environment. Here are some of the things that we ask them to consider:
1. Prepare your workforce for devolved decision-making: Before you can delegate decision authority and make decision-making more consensual, you need to enable your workforce to do so by investing in human development to build up the technical, conceptual and human skills of your employees.
In particular, good decision-making requires training in basic modes of decision-making; an introduction to the range of different decision types; familiarisation with a solid decision-making process and its associated tools that are to be used for important decisions; training in choosing which decision-making types to use in various business situations; and last but not least, instruction in how to avoid the most common thinking and decision-making traps such as groupthink and confirmation bias.
2. Create a decision log: Identify and map out typical decisions and decision situations that occur in your organisation at different levels (e.g., within a team, a department or a division). These might be how to respond to particular customer requests, how to invest scarce resources such as time and money or how to minimise business risks.
For example, a sales team has to decide what to do in these situations: a customer asks for a discount, a customer requests additional features, a customer asks for a kickback in exchange for the business.
Creating a decision log for a business unit not only brings typical decision situations and dilemmas out into the open but also provides the unit manager with an opportunity to coach the team members dealing with each situation based on the firm's vision, mission, strategic goals, and values and principles.
3. Classify decisions by type: In order to identify different types of organisational decisions, we suggest considering these questions: how important is this decision for our organisation? How many people need to be involved in this decision? How much agreement do we want to have for this decision?
For the first question, create four or five categories (e.g., very low, low, medium, high and very high importance; or operational, tactical, strategic and "bet the company").
For the other two questions, you may distinguish decisions based on the number of people involved and the level of agreement they need to reach into four subtypes: individual decisions; buddy decisions ("the four-eyes principle"); group decisions with simple consensus (e.g., simple majority or qualified majority); group decisions with true consensus (i.e., every member can veto a decision).
4. Create a decision-making and delegation map: Now you can put it all together. Create a matrix by putting the different decision types (e.g., solo, four eyes, simple consensual, true consensual) on the horizontal axis and the levels of importance of decisions (e.g., VL-L-M-H-VH) on the vertical axis. Then link each box in the matrix to a place in your company or business unit's structure.
Optionally, consider placing financial caps on each of the various organisational levels and/or on each box in your decision-making and delegation matrix. For example, you may say that up to a certain amount of money, a tactical decision can be authorised by two middle managers following the "four eyes" principle and that once this cap is surpassed, it needs to be decided by consensus in a middle-manager committee following a simple or qualified majority. Of course, the details of such intricate financial authorisation policies depend heavily on the industry, size and maturity of your business.
Next, work your way through the matrix and decide on what hierarchical level (front line, lower management, middle management, upper management, top management) you want decisions of varying importance be dealt with and in what way.
Last but not least, go back to your organisational decision log and position each typical decision situation of each business unit within your decision-making and delegation map. This defines who can make each decision and what style of decision-making should be used.
While doing this, keep in mind your overall goal, which is to push decision-making as low as possible in your organisation to empower your people, free up managers to take care of more important things, and lay a structural foundation for a creative organisation.
Dr Detlef Reis is the founding director and chief ideator of Thinkergy Ltd (www.thinkergy.com), the ideation and innovation company in Asia, and lectures in business creativity and innovation leadership at Mahidol University's College of Management (www.cmmu.mahidol.ac.th). He can be reached at dr.d@thinkergy.com