A company’s performance is the sum of the decisions it makes and the actions it takes. Structuring your organisation to optimise decision-making and execution will achieve better results – but how do you do it?
Organisational structures are designed to simplify decision-making, so when the lines of communication fail we focus our attention on the organisational chart. However, many reorganisations fail to deliver meaningful improvement in performance, so it is clear that the link between structure and performance lies beyond rearranging who sits where. Changing a company depends just as much on improving the quality and execution of decisions as it does on the redistribution of people. When we view organisations in this way, the focus for change management must move away from structures and systems, and towards understanding how to make decisions more quickly and effectively than those around us. Whether your organisation needs to innovate, consolidate or simply adapt – the change challenge must be aimed at enabling decision makers to make and execute the decisions that matter. There are three key elements to successfully structure effective decision-making:
- Identify the ‘critical decisions’ – work out which are the decisions that matter, and focus change efforts on them.
- Identify and enable your high achievers – find them, and get them into the roles that make the critical decisions.
- Measure and repeat – ensure you have a repeatable model to help people develop the new behaviours and reward people who are making a difference This is not a simple sequential process – often steps 1 and 2 need to be done iteratively until identifying the critical decisions and the best people to be the decision-makers becomes ingrained in the company culture. Once you have the best structure to optimise decision-making, we need to revisit these elements as the model is developed and as major changes or strategic choices arise.
The critical decisions
Organisations cannot immediately focus on every decision that needs to be made – the resources, time and finances never stretch that far. To drive successful initiatives and a successful business, we must start with the decisions that matter most – the critical decisions. Many organisations struggle to create a clear context for the decisions employees must make and fail to define their priorities specifically enough to allow people to make trade-offs. To know what to execute, we need to measure what is most important for success. A simple approach to measuring what is most important is to analyse the two key factors of decisions – value and leadership.
We can measure the value of a decision and how important it is by asking the question – “What’s at stake?” Every decision involves risks and opportunities. To understand value we must analyse what will happen if the organisation gets the decision right – and equally; what will happen if we get it wrong! Importantly, this is not just about strategic choices, but also involves the key operating decisions that are made frequently and that generate huge value over time. For example, key initiatives to improve processes at an operational level in industries such as manufacturing often add up to enormous savings over time. Getting this type of critical decisions right can be just a valuable to an organisation as decisions on new market entry or downsizing.
Leadership focuses on analysing what capabilities and management influence is needed to make a decision effective. This helps us understand who needs to be involved in terms of both seniority and the appropriate spread of expertise and influence across the organisation. Most organisations understand that decisions take multiple people and a clear set of roles and responsibilities needs to be developed when understanding the impact of leadership on the decision making process. It is critical to separately consider what level of leadership is required to get the decision right, and what leadership is required to successfully deliver on that decision. Remember, just because a decision has the potential to create enormous value does not mean the CEO is the right person to make the choice and won’t always be the right person to deliver on the decision.
Once the value of the decisions and leadership required to make and implement the decisions are analysed and understood, we can communicate the top priorities for the organisation to succeed. The goal is to be clear and explicit about the top priorities and what that means for everyone in the organisation.
Identify and enable
Implementing critical decisions requires the right people making a big impact. Key decision-makers are required throughout the organisation and must be enabled to make the right decisions and execute them quickly. Most organisations have models for identifying high achievers and it is important these people are aligned with the decision making process for all critical decisions. How many high performers are in the key roles for your organisation’s critical decisions? When we look at our organisation from this perspective it changes the way we think about talent and radically improves the utilisation of the best people. However, getting the right people in the right place can only be effective if an organisation enables its key decision makers to make quick and good decisions in whatever place in the organisation structure they exist. Two key areas to focus on are ownership of delivery and decision roles.
Ownership of delivery
Ownership of delivery is a straightforward concept but poorly executed in many organisations. If those who make the decision are not responsible for delivering on that decision, then the chances for success are dramatically reduced. Ownership of delivery works when we align decision-making with decision execution to ensure accountability. A classic example of this problem occurs when a group of experts is introduced to make significant change and improvement, create a set of recommendations and walk away before anything has been successfully changed or improved.
Traditional job descriptions and reporting lines often say little about who should play particular roles in major decisions. Developing clear decision roles for each decision is complex, but is a critical step to changing the culture of decision making in an organisation. Companies need to spell out decision roles explicitly and design simple accountability guidelines — broad principles that help.
Companies need to spell out decision roles explicitly and design simple accountability guidelines — broad principles that help managers know where decisions should sit. This can be a standalone set of principles, or more effectively, integrated into the choices made in the leadership of critical decisions.
Decision roles must reflect a company’s balance between leadership across divisions with autonomy in execution. When coupled with clear ownership of delivery, this enables any member of the organisation to quickly understand a decision’s progress and support the decision execution all the way through to delivery.
Measure and repeat
For our approach to be effective we cannot glaze over the people issues – change has to stick. The proof of this method is being able to apply the model to the most contentious decisions at the highest levels. This requires communication of why the changes are occurring, successfully measuring and aligning incentives, and focusing people on making and executing the right decisions for the business again and again. The aim is to develop a repeatable model for decisions over the long term, while also setting targets throughout the journey that people can only achieve by changing their behaviour.
A repeatable model
Consistently getting the best people having the biggest impact on the key decisions requires a repeatable model for decision execution. To develop this model we need to learn lessons and share best practices while developing a clear understanding of decision roles. All this must happen in the context of adapting to the specifics of our organisation and the ever-present forces of our external environment. Here are a few classic change management techniques applied to decision execution to help guide us towards a repeatable model for decisions:
- Pilot programs – Pilot programs help the organisation learn from real decisions and see the frameworks and tools being applied rather than just hearing about them.
- Champions – To help the change stick it is important to develop decision “champions” charged with working with business leaders to identify and improve key decisions along the way.
- Leadership support – Ensure regular check-ins for senior leadership meetings to measure what processes have changed and how, what tasks have been eliminated, and what new work has been added.
Once good decision behaviours are in the forefront of people’s minds, decision effectiveness must be firmly rooted in the overall cost and effectiveness efforts. The success of the change is in guiding people at all levels to learn new decision capabilities, share best practices and allow the organisation to adjust and adapt to support a new decision-oriented culture.
Measuring decision effectiveness enforces the need for continuous improvement and helps highlight the challenges being faced with any organisation. It is critical to measure both the overall progress of decision-making and the individual decisions themselves. Overall progress towards improved decision effectiveness needs to cover the quality, speed, and effort required to make and execute all decisions. Individual critical decisions should be tracked using timetables, deadlines and accountability guidelines.
The key driver for change using this approach is to show improvement in decision quality, the speed decisions are executed and a reduction in unnecessary effort.
Improving the decision-making process at an organisational level is a complex undertaking. However, a culture of fast, effective decision-making and action throughout the organisation enables true flexibility and responsiveness. In a rapidly changing business landscape, executing the right decisions better than those around us is the key to success.