Who Makes the Decisions?

From our newsletter of May 13, 2013, by Sheella Mierson    


Factory in Bangladesh
The April 25th headline in my local newspaper read, “At least 87 dead after garment factory collapses.” Workers at this factory in Bangladesh “had complained about cracks in the structure before it came tumbling down, but were assured it was safe.” (The News Journal, 4/25/13, Delaware) The next few days saw the death toll rise amid numerous reports of prior warnings to the factory owners of dangerous conditions in the building.  And yet those warnings were over-ridden by the people making the decisions.

Policies and decisions
Here is what I wrote in the April issue of this newsletter: Does your organization have policies that are less than effective and yet have a life of their own? There can be a variety of reasons for this. Here are a few:

  • There is no built-in mechanism to measure and evaluate the results of the policy.
  • The people with key Information about the results of a policy decision and those making the decision are in different parts of the organization, and there is no reliable way to ensure that they communicate with each other.
  • Even when the right people are in the room, some people’s voices can be overlooked.

In that issue I addressed the first reason. Now let’s look at the second reason. We could, of course, argue that greed on the part of the factory owners in Bangladesh and on the part of the global clothing companies that purchased the garments produced there, contributed to the deaths. The way that argument runs, the decision-makers and their customers had their own financial interests that took precedence over the well-being of the garment factory employees and even of the company itself that ran the factory.

Organizational structure
bossBut even assuming that were true, it would be only part of the story. Another part has to do with the organizational structure. In the usual vertical hierarchy that exists in most companies, the people directly affected by the results of a policy decision are in a different part of the organization than those with the power to make the decision. It looks like this figure, for two organizational levels. Depending on the size and complexity of the company, there may be multiple levels between the decision maker and those who carry out and/or are affected by a decision.

Command and control
We commonly know this as “command and control,” and it can be efficient. However, the current corporate landscape is littered with examples of command and control structures that went awry. One only has to think of Enron, Arthur Anderson, British Petroleum, or Bank of America to name a few. Even short of well-publicized scandals, decision makers overlook key information on a daily basis. What about an upper-level decision to install a particular IT system when people in the IT department know that there’s a much better solution? What about a customer service policy that the customer service reps hate carrying out and believe will poorly serve the customer? The consequences can go beyond frustration for the lower level employees; the decision makers are functioning on only partial information, and they are getting far less than their employees have to give in terms of problem-solving skills, creativity, and commitment. The trouble with command and control is that there is no built-in feedback. Any system, to be steerable, needs to have feedback loops that cannot be overlooked. That becomes increasingly important as the rate of change increases in the 21st century.

Another way
Dynamic self-governance offers a different way to structure organizations and make decisions, with built-in links and feedback loops from one level to another at every part of the hierarchy. Companies using the method report better decisions; alignment of efforts of all parts of the company; and increased individual engagement, commitment, accountability, and morale. Ira Chaleff, named one of the 100 best minds on leadership by Leadership Excellence magazine, says, “Dynamic governance is the best approach to organizational design that I have seen in twenty-five years of consulting.”

Please TALK TO ME if you want to know how to build in links and feedback loops in your organization for better decisions and flow of information.