When I was CEO of NetQoS, some of my executive team members would kid me about carrying around an org chart with me wherever I went. I had managed to fit more than 250 employees on a double-sided piece of 11×17 paper that I personally updated with each new hire. Maybe it seems eccentric, but I had learned that a clear, continuously updated org chart is a surprisingly effective tool for fostering great decision making—the fuel on which every organization runs.
One of the core responsibilities of the CEO is to make good decisions. It is critical that he not only makes good decisions personally, but also that he teaches the rest of the company how to make them. When I look back at the bad decisions made in my organizations, most of the time I can trace the problem to one thing: The wrong person drove the decision.
Wrong Role = Wrong Decisions
In an organizational context, the person who should make a given decision is the one who has positional responsibility for the full scope of the question. A clear org chart (with written job responsibilities) provides an easy way for employees to know exactly which role should be responsible for the decision.
For example, imagine a company considering what standard price to charge for its software offering. While pricing is certainly a component of marketing, I would expect sales and finance to also have a strong interest in the price. Because this issue crosses multiple departments, we must move up the org chart to find the person all these various groups report to: This is the appropriate decision maker. This person should referee any disagreement and make the ultimate call.
Ramifications of Bad Decisions
Problems arise when issues don’t reach the appropriate level, which often happens because the organizational structure isn’t clear. A person who doesn’t have the positional responsibility might make the decision, and employees, not wanting to escalate the issue, may go along even though they disagree.
This causes several problems. First, the decision is a poor one, because the person making the determination doesn’t understand the broader issue. Second, the employees who disagree with the decision feel slighted, and if it happens consistently, they will often disengage. Third, it often takes months for the leader to understand that someone made a bad decision and to see the damage it caused.
However, just providing the org chart doesn’t always lead to the right behavior. You also have to empower people to rapidly escalate decisions to the appropriate spot on the org chart. This is one of the hardest things to teach managers and even executives.
Teach Staff to Escalate Decisions Appropriately
Too many people have heard that they should never bring a problem to their boss without a solution. While this makes some sense for issues within their span of responsibility, it doesn’t apply to broader issues that affect multiple groups. For this reason, teaching every employee to quickly escalate issues outside their span of control is critical, especially in fast-growing organizations. It also helps to have feedback systems in place where employees can communicate issues, anonymously if they wish.
Finally, good decision making depends on the level of credibility and competence you build among employees. Lack of trust can result in decisions either not being made at all or made by the wrong person. This is why major changes (reorgs, acquisitions, layoffs, etc.) cause organizations to almost stop: proper decision making becomes impossible until the appropriate level of trust in leadership is built up.
Keep It Current
Have you trained your organization on how to make quality decisions and who should make them? If not, get started on creating a clear and accessible org chart and explaining when and why it’s okay to escalate decisions to the right person. And keep it current. Don’t let the org chart become just another outdated document that no one bothers to view.