This post is about decision-making. One of my clients sent me the following article years ago. I just stumbled upon it again and realized how much wisdom there is in it.
Take a hard look at how decisions get made within your organization. What team myths are getting in your way of making good decisions? How can you apply better decision-making models to your business and projects?
Myths that Undermine Decision-Making
By Bob Frisch
“When executive teams find themselves unhappy with the dynamics of decision-making, they often seek psychological solutions, going through exercises in teamwork, trust, communications, and the like. But through the course of a career spent facilitating these teams, I’ve found that most of the problems aren’t in their psyches, but in the widespread myths about the teams themselves. CEOs and their teams need to take a hard look at these myths, recognize reality, and fix the way they make decisions.”
Myth 1: A Single Team Makes All of the Big Decisions
“Most corporations have in place a top executive team that typically consists of the CEO and direct reports. The rest of the company assumes that all major decisions are made or ratified by that august group.
“The reality is that decisions at the highest levels of companies are made in many forums, formal and informal. For example, the go or no-go for an acquisition may be made in ad hoc meetings involving the CEO, chief financial officer, head of business development, and the president of an operating unit. Many decisions don’t require the entire executive team—only a handful of executives, depending on the nature of the decision.
“But when the real decision-making teams and processes aren’t overtly recognized, confusion about the locus of authority often results. Executive team members who are repeatedly presented with ‘done deals’ feel disempowered. Before you know it, the group is undergoing trust-building exercises when they should be coming to a common understanding about how various types of decisions will be made.”
Myth 2: The Executive Team Is a Body of Equals
“Because executives are peers, functional heads on the executive team might believe that they have the same decision rights in meetings as operating executives. Consequently, small operations could expect the same voice at the table as large ones—much like the U.S. Senate, where Rhode Island carries the same weight as California.
“But in reality, some people and some functions carry much more weight than others. It’s more like the House of Representatives, where California has more votes than Rhode Island, and the Speaker of the House has more influence than a freshman congressman. Often, the executive team isn’t serving as a deliberative body at all, but as an advisory one, much like the president’s Cabinet.
“Problems arise when the team isn’t clear about which model of decision-making is in play—Senate, House, or Cabinet. Are they being asked to decide? To advise? To be informed about a decision that has already been made? Is it majority rule? Are the more powerful members brokering a decision? Is buy-in really needed from the smaller constituencies? Was a decision brokered before the meeting started? It’s surprising how often members of a top team involved in a discussion have entirely different views of what kind of input they’re being asked for and, afterward, different views of what purpose the discussion served in coming to a decision.
“The solution is not to choose one model of decision rights, but simply for the CEO to make clear in advance of a meeting where the group is in the decision-making process and what is expected from the discussion. This simple step improves discussion quality and heads off confusion and dissatisfaction among team members.”
Myth 3: Team Members Should Always Adopt a CEO Perspective
“Many CEOs expect members at top-team meetings to take off their functional hats and adopt a holistic, companywide perspective. Top executives owe it to the CEO to offer insights shaped by their general business experience and their understanding of the company’s goals.
“But asking everyone to always think like a CEO can be counterproductive. The head of human resources, for instance, may not have much to contribute from a generalist’s perspective about a proposal for a new plant. However, he or she may have valuable insights about hiring or labor relations at that plant. Raising those issues is often perceived by the CEO and other team members as parochial, leading to the HR leader being viewed as an ineffective team member—thereby losing much of the value of functional expertise.
“As with models of power, the solution isn’t to choose between a generalist or functional perspective, but to recognize which perspective is needed for which type of decision, make it explicit, and manage it intentionally.”
By dispelling all three myths, CEOs can establish a structured yet adaptable set of decision-making environments. Teams can be formally recognized, clearly chartered, and guided by explicit roles at each stage of the process. With the ability to select the right configuration for the moment, CEOs can unlock the full potential of intentional decision-making—and enable the top team to operate with clarity of purpose, process, roles, and expected outcomes.
Bob Frisch is the managing partner of the Strategic Offsites Group in Boston.
Kathleen