Wednesday, December 2, 2009

Myths that Undermine Decision-Making

When executive teams find themselves less than satisfied with their decision making process, many turn to the psychological remedy of exercises in teamwork, trust and communication. But sometimes the solution lies not in the psyche, but in dispelling the widespread myths about the teams themselves. CEOs and their teams should take a hard look at these misconceptions. By doing so, an often flawed decision making process can be improved.

Myth 1: A Single Team Makes All of the Big Decisions

Most organizations have a top executive team that consists of the CEO and direct reports. The rest of the company expects that all the big decisions are made by that group. In fact, decisions made at the highest levels might involve the CEO, CFO, head of business development or the president of an operating unit. The nature of the decision often determines which people are involved. A different set of minds may be used for each decision.

But if who is making the actual decision is not completely clear to everyone, confusion on authority can result. For example, Executive Team members who are repeatedly presented with completed deals they had no input on may feel disempowered, leading to trust issues and dysfunction in the office.

Myth 2: The Executive Team is a Body of Equals

Because executives are peers, members on the team might believe they have the same decision rights as operating executives, much like the U.S. Senate, where for example, Rhode Island carries the same weight as California. In actuality, some executives’ functions carry more weight than others. Compare this to the House of Representatives where California has more votes than Rhode Island.

Problems arise when the team isn’t clear how the decision making process is going to work. Are they being asked to decide? Are they being asked to advise? Are they being informed about a decision that has already been made? Is it "majority rule"? Are the more powerful members brokering a decision? You’d be surprised how often there is confusion among top team members as to what kind of input they are being asked for.

The solution is to not decide on one decision making model, but for the CEO to let everyone know exactly where the group is in the decision making process and what is expected from the discussion before the meeting takes place.

Myth 3: Team Members Should Always Adopt a CEO Perspective

Many times during a meeting, a CEO expects team members to leave behind their function hats and adopt a companywide perspective. But asking everyone to always think like a CEO can be counterproductive. The head of Human Resources for example, may not have much input for a new plant proposal but will have great ideas for hiring or labor relations.

The answer is to not choose the generalist perspective, but to recognize which model is useful for different types of decisions.

By recognizing all three myths and addressing them, CEOs can build a decision making process that can unleash the full power of their team.

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