Here are the final three of my 10 rules to effective CEO decision-making, which have guided me for many years. These three entail working with and supporting your staff to ensure the best decision possible is made.
Rule 8: Support your people, unless they are wrong. If you force your team to propose a solution for any problem they bring to your desk, then you will find yourself in one of three positions:
- You will agree with their proposed decision
- You will not agree but not have a better answer
- You will disagree and go with your own decision
The first case is easy, so you will go with the decision as proposed. At this point it becomes your decision and all responsibility for failure is on your shoulders. However, if the decision is successful, you should give credit to the people who proposed the solution. This is what I mean by supporting your people. You agreed with their proposal, so now you have their back if things don’t go well. Only if they lied or intentionally withheld information can you blame them if things turn out badly.
In the second case, you don’t think the answer is correct, but you don’t have a better answer. Again, you must support your people and take responsibility for the decision. If you don’t have a better answer, you must support their solution.
In the third case, you will clearly make a different decision than proposed. It is important in these cases to be clear with the team on why you are making the decision, so they understand how to approach future problems.
Rule 9: Overrule your people rarely. If you find yourself constantly making decisions different than those proposed by your executive team, then there is a problem. Decisions are made by understanding and applying the vision, values and goals of the organization in combination with market conditions. If an executive cannot consistently make good decisions, first ensure that they clearly understand the vision, values and goals. Second, do they have the appropriate knowledge and experience to be an expert in their area? Training your executive team to make good decisions is a key requirement for building an organization that can support rapid growth.
While overruling people constantly is not desirable, achieving consensus – though valuable – is not always possible. The problem is that true consensus is not easy to obtain, and it often slows down the decision-making process.
On the other hand is the idea of a benevolent dictatorship. My dad used to say: “The most efficient form of government is a benevolent dictatorship, where I am the dictator!” Dictating is more efficient, but if the CEO is constantly dictating decisions without getting input from all involved, he can alienate his team and run off his best performers.
I think balancing these two extremes is critical for success. There will be times when the CEO must make a dictatorial decision and move on. Where the decision is not as time sensitive or important, the CEO should look for ways to build consensus.
Rule 10: Conduct an official post mortem. It is important to reexamine the big, strategic decisions as a matter of process. Without a formal post mortem process, it is easy to never reexamine the issues, and the organization never learns anything from the decision or improves. A formal post mortem should answer questions such as: What factors should we have considered in making the decision? What assumptions did we make that turned out not to be true? How could we have implemented the decision more effectively?
That wraps up my 10 rules. Here they are again in all their glory:
- Don’t take on every decision.
- The quicker the decision the better.
- Have a devil’s advocate for every big decision.
- Bad decisions should be changed just as quickly as they were made.
- Communicate your decision.
- Communicate why you made your decision.
- Make your people take a position.
- Support your people, unless they are wrong.
- Overrule your people rarely.
- Conduct an official post mortem.
Decisions are the fuel of the organization and making better ones can dramatically increase the productivity of your organization. Being aware of the common biases and issues in decision-making can make you more effective in your process. Constantly seek out information from other CEOs and companies on their past decisions and how they could have been better.
Did I miss any tips/practices/policies that have served you well?