Leaders make decisions. But there are lots of leaders, making lots of decisions. Which leaders are supposed to surface which decisions? As a leader, which decisions should be “keeping me up at night”?
“Good fences make good neighbors”
Good organizational design creates boundaries for decision authority. Seen in a negative light, this might appear to be establishing “turf boundaries'', but in a positive light, it helps clarify accountability for decision making in a way that improves organizational decision velocity. We know that decision velocity improves when decision authority is decentralized to the people closest to the work (and/or closest to the customers).
There are many good models (e.g. RAPID, RACI/DACI) that help decision makers establish clear roles and responsibilities in the context of a specific singular decision, but they do not cover where these decisions originate!
How do leaders know where they should direct their attention? Where should they be staring down the cone of uncertainty?
A goal of organizational design is to establish specific responsibilities through leadership roles across the organization. These specific responsibilities should empower leaders to connect strategy to execution with some degree of autonomy. This empowerment is drawn from the decision authority that implicitly comes with the responsibilities.
Organizations tend to assign leadership to strategic elements like:
- Business units
- Functional silos
The issue is that many organizations feel that setting roles and responsibilities (e.g. defining the org chart and adding some process and workflow) should be sufficient - that the resulting (implied) decision authority is enough to empower their leaders.
But sometimes it’s not so clear.
In enterprise settings, symptoms like these can indicate that decision authority is not clear:
- Leaders are unsure who can make what decisions
- Leaders attend meeting-after-meeting-after-meeting, with no decisions made
- Leaders feel a need to socialize decisions beyond what is necessary, “just to be safe”
- Leaders feel friction in cross-functional or cross-team settings about work or handoffs
Decision authority can be clarified by defining the Decision Rights for leaders, groups, or teams.
When Bain & Company outlined “Five Steps to Better Decisions”, the first step addressed getting these decision rights in place:
- Simplify and clarify decision rights across the organization
- Establish strong, transparent accountability for decisions made
- Align individuals in decision-making groups to a common mission
- Encourage distributed authority
- Prioritize the customer voice in decisions
A decision right is a declaration of the specific choices a leader can make, without the approval of others. It is allocated decision authority, applied to a subset of the organizational scope. The intent is to empower people to make the decisions that drive outcomes.
“Decision rights models help outline an organization’s hierarchy of decision-makers or decision making groups. When decisions must be made in groups, decision rights models specify which cross-functional leaders must belong to each decision-making body. (The term governance is often used to refer to decision rights related to cross-functional decision-making.)” - Bain & Company, “Five Steps to Better Decisions”
Roles and teams often define their responsibilities in vague terms. Decision rights supplement these responsibility descriptions by clarifying the specific choices that they are responsible for making.
- When they can spend money (and how much)
- When they can modify specific assets
- When they can change targets or plans
- When they can hire
- When they can select partners
When decision rights are able to describe specific choices explicitly, it offers practical support to improve organizational decision velocity. With less confusion in the leadership ranks, the organization can move forward as one, with more speed and confidence, and less political wrangling.
The allocation of decision rights is not a land grab. It should not be treated as a power play. Leaders with decision rights must still seek advice from others, and effectively partner when collaboration can improve buy-in and commitment on the decision.
Good decision rights also help leaders know when to go alone with a decision, and when to emphasize collaborative buy-in. They are well aware of the tradeoff between speed and wider participation. As Deloitte says in “Getting Decisions Right”:
“A major institutional challenge is often the tension between getting something done quickly versus collaborating, integrating, and bringing the whole company along—with ‘getting it done quickly’ frequently taking priority.”
Leaders with decision rights still need to balance this tradeoff between speed and buy-in. In “Defining Clear Decision Rights to Reduce Drama”, the Conscious Leadership Group shows how leaders can match the approach to the needs for speed and buy-in.
A quality decision is one where leaders can recognize that it’s not worth doing any more analysis or investigation before making a choice. This approach to quality will vary with the context of the decision itself, as shown above.
When an organization sets out to clarify the decision authority by allocating specific decision rights to each leader, group, or team, the result doesn’t have to be comprehensive. The exercise doesn’t have to anticipate every kind of decision that will be needed in the future, it just needs to make things a little more clear than they had been.
When decision rights are hashed out in a workshop setting, leaders from related parts of the organization can “build their fences” together with their neighbors. Usually, this dialog is tremendously valuable, in and of itself.