Decisions determine performance. If you want to outstrip your competitors, your company has to make better decisions than they do – and make them faster and execute them more effectively.
But people at every level make important decisions, so a company’s decision capabilities ultimately depend on its organisation. Every element of the organisational system – the people, the processes, the incentives, the culture and so on – must explicitly reinforce good, quick decision-making and execution.
If you accept these premises, then you have at your disposal a wholly new way of approaching organisational change. You no longer have to rely on hopes and prayers that your organisational initiatives will somehow have a positive impact. Instead, you can focus specifically on the changes to the organisational system that will most affect decision-making and execution – and you can be confident that these will improve both financial performance and employee morale.
The key to the new approach is to replace traditional questions about organisational change with questions focused squarely on decisions.
- Traditional question: Do we have a clear and compelling mission and vision?
- Decision-centred question: Are we clear on our top three to five business priorities and on what they mean for decision-making and execution in each part of the organisation?
When people understand a company’s priorities, they can make good decisions about what to do.
- Traditional question: Do we have effective internal communications?
- Decision-centred question: Are we helping everyone in the organisation understand our objectives and strategy so that they have the context they need to make and execute decisions?
Though executives talk a lot about alignment, it’s hard to align a leadership team that is spread out over regions, functions and business units. Even harder – yet even more critical to effective decisions – is ensuring alignment throughout the organisation so that people at all levels can make and execute decisions in line with the company’s top priorities.
One key to this is good communication: spreading the word about goals and priorities through clear, simple messages, usually repeated many times through many different methods.
- Traditional question: Who should report to whom?
- Decision-centred question: What are the specific roles and accountabilities for our critical decisions?
Today, traditional job descriptions and reporting lines often say little about who should play particular roles in major decisions. That’s why many companies find it valuable to spell out those roles with a decision-rights tool.
- Traditional question: Is our structure aligned with our strategy?
- Decision-centred question: Does our structure support the decisions most critical to creating value?
Structure is rarely the chief culprit behind poor decision-making and execution. Senior leaders should scrutinise other organisational elements before shouldering the expense of a reorganisation. But if such a step is necessary, the key to success is aligning the structure with the business’s most important decisions.
- Traditional question: Are our core business processes effective and efficient?
- Decision-centred question: Are our processes geared to produce effective, timely decisions and action?
Most companies spend a lot of time engineering and reengineering their business processes, but they often fail to consider the decisions involved.
- Traditional question: Do our information systems support our business objectives?
- Decision-centred question: Do the people in key decision roles have the information they need when and how they need it?
In theory, every improvement in a company’s IT systems provides more or better information. But it’s easy for managers to get overloaded. So, the real key is to think through exactly what’s required for critical decisions and figure out how to make that information available in a systematic way.
- Traditional question: Are we winning the war for talent?
- Decision-centred question: Do we put our best people in the jobs where they can have the biggest impact on decisions?
The key positions in any organisation are those with the biggest impact on critical decisions. Since some critical decisions involve everyday operations, key positions can be anywhere in the organisation, including on the front line.
The individuals who can best fill key positions are people who have the skills to make and execute decisions well and quickly – and the will to do so. Looking at your organisation from this perspective may change how you think about talent.
- Traditional question: Is our compensation competitive with our peers?
- Decision-centred question: Do our performance objectives and incentives focus people on making and executing the right decisions for the business?
Nearly every well-run company translates company goals and metrics into performance objectives and incentives for individual managers and employees. But the incentives have to encourage good decision-making and execution.
- Traditional question: Do we have an effective leadership team?
- Decision-centred question: Do our leaders at all levels consistently demonstrate effective decision behaviours?
An organisation’s leaders set the tone for handling decisions. Some may second-guess assigned decision makers or make snap decisions without adequate information. To avoid these traps, high-performing organisations define the behaviours they want to see and support people as they adopt those behaviours.
- Traditional question: Do we have a high-performance culture?
- Decision-centred question: Does our culture reinforce prompt, effective decision making and action throughout the organisation?
Lasting improvements in decision effectiveness often require changing a company’s culture. Though every high-performance culture has its own unique personality, all of them seem to encourage a remarkably similar set of behaviours – and all of those behaviours support decision effectiveness. People care passionately about winning. They orient themselves outward, focusing on customers and competitors rather than on internal politics. They think like owners and have a bias to action. They build teamwork, and they bring enthusiasm and energy to their jobs.
A company that attacks its organisational weak spots will soon find that its decision-making and execution improve significantly.