Decisions are the atoms of every organization. Every new product launched, every new service offered, every process made more efficient and reliable is a result of hundreds of decisions. Effective leaders view their worlds through this lens, rather than through the lens of hierarchies, org charts, or chains of command. To build high levels of trust, teamwork, and innovation, effective managers focus on clarifying decision-making responsibilities. (Note that I didn’t say “roles and responsibilities,” a common mistake.) Once you know the decision-making responsibilities, you’ve defined the role.
This means difficult conversations often need to occur. First of all, it means clarifying for people their precise decision-making role, which sometimes translates into less responsibility than they think they have. The manager of a large publishing company asked me to lunch one day and said: “I need help learning how to be a better leader. What do you see as the most important thing I need to do?” Without missing a beat, I replied: “Be clear about delegation. Which decisions do you want to make? Which are you delegating to others? You can’t be afraid to have those discussions.”
They don’t know the appropriate vocabulary—for example, they confuse collaboration with consensus. They fail to design decision processes with the right sequence of goal setting, data collection, input gathering, stakeholder engagement, and brainstorming. As a result, they fail to leverage themselves as leaders. Either they go too far or not far enough in empowering others. They fail to achieve the optimum balance of engagement and efficiency in making the decision.
There are five types of decisions: autocratic, consultative, consensus, delegated, and democratic. Each implies dramatically different roles for the people involved. See our tool, The Five Types of Decisions.
Complex decisions are typically “nested”—meaning that several different types of decision processes feed into one final decision. It’s like a set of wooden Russian dolls that slip neatly one inside the other. In deciding to purchase a new IT system, for example, a team may be delegated responsibility to reach consensus on a recommendation to forward to the senior management team, where the decision will be made “consultatively” by the CEO, who will, in turn, take the plan to the board for a final, ratifying, democratic vote.
To manage the decision well, this process needs to be well understood by everyone. By being transparent about the process, you can help people be more effective and efficient. In the example above, the team of engineers may figure that it doesn’t need to spend time reaching consensus on a single option, knowing that the final decision will be up to the CEO and the board. Rather, it can reach consensus on the two best options and forward those for their consideration.
Consider the decision to open a new store in an international chain like Starbucks. A location scout is delegated responsibility for identifying potential new locations. The scout forwards these potential locations to a regional manager. The regional manager delegates to a planning team the job of studying these locations and developing business plans for sites the team thinks are worth pursuing.
This planning team is composed of three people. A market analyst determines sales projections. A budget analyst prepares a budget for the location, showing both projected revenues and costs, including labor, rent, equipment costs, etc. A financial analyst develops a financing and ownership plan for the store.
Each member of the team takes responsibility for his or her area. As individuals, they consult with their team. They can reject the scouts’ sites or pursue them. The team is directed to reach consensus on any recommendation to open a new store. The team develops a business plan that includes all the information related to projected sales revenues, costs (both capital and operating), plus an ownership and financing plan.
Once its recommendation is complete, the team forwards the business plan to the regional manager for her to review and approve (or disapprove). At that point in the process, the team plays a consultative role. Once the regional manager approves the plan, she forwards it to the regional vice president for a final decision. That’s another consultative decision. When he’s approved the plan, the decision is complete and the process is complete.
Decision maps are a powerful tool. Every nested decision can be depicted visually so people can grasp the multiple steps in the process and their particular role in it. Sometimes the same person may wear two hats: one as a team member, another as a boss. Clarifying the decision process—and continuing to manage the communication during the decision—is the essence of managing decisions well.
Defining the roles of external stakeholders in a decision is also important. By using a decision map, you can build trust by managing people’s expectations. In many of our planning processes, we gather input from stakeholders at the beginning of the process and then bring a draft plan to stakeholders for further input before it is finalized. They reciprocate by taking more responsibility for their part of the process.
Want to learn more about how to effectively manage decision processes? Purchase our online training (includes team access): The Art of Managing Decisions.