How Does Top Management Make Decisions?

Many CEOs assume that making and publishing an organizational chart is enough in order to answer the structure and some relates matters like company style. However, there are some key questions like the style question “How does top management makes decisions?” that are not answers with an organizational chart.

According to Bain & Company there are mainly four decision styles (directive, participative, democratic, and consensus). Nowadays that we live in the democratic and team work age, we could think that the most collaborative styles (consensus or democratic) bring out the best results for firms. Nevertheless, research and experience of Bain & Company have found that participative style uses to perform better than the other styles. Be aware that even having primarily a participative style, it does not mean that all decision fall into this specific style.

Bain & Company explains that participative styles improves decision quality because takes advantage from collaborative styles that at the same time get employees engagement via participation. Additionally the decision-making process is accelerated because just one person takes responsibility for each decision avoiding bureaucracy. It having one person in charge of every decision brings single-point accountability as well.

We would like to stress that there is another important advantage not mentioned for Bain & Company from having one single-person taking the responsibility for each decision; we get a consistent and coherent decisions direction because the same person is in charge of decisions. We mean we get decisions alignment.

From the turnaround perspective we cannot sacrifice the speed of decision, neither the quality. So we could say that we are almost forced to use the participative decision style.

Finally, we have to mention that it is essential that the CEO decides and communicates the primary decision style for the company. This can avoid internal conflicts. For instance, if the firm decides to use a participative style and there are people who feel most comfortable with other more collaborative decision styles (democratic or consensus) communicating formally the participative style decision will help that staff to embrace the decision style and avoid unnecessary internal conflicts. We must be aware that people from primary activities of the company can feel most comfortable with the participative style, while people from support activities can prefer consensus style. So again we have to highlight the importance of defining and communicate the decision style to avoid conflicts and get people much better aligned.