I have always believed that the majority of the operational decisions of a company need to be made from a set of core philosophies, precedent of past decisions and guidelines—those that guide the rationale behind nearly every decision. This is called principle-based decision-making, as opposed to situational-based models that make one decision at a time without a repeatable philosophy or rulebook. I have seen companies where situational-based decision making is dominant, creating erratic “one-off” decisions dictated by personality, familiarity and the last lobbyist. Mr. X receives a different decision than Ms. Y because of who they are or when they ask, not based on the principle of the issue.
Inconsistency of decision-making confuses those within the company, often giving way to a process of “game-playing” to get the desired answer. This is particularly an issue in technology-oriented companies due to the genetic personality type of the leadership. The natural tendency of the technology-trained decision maker is not to elevate to principle, but rather to dive into more detail. These individuals feel that somehow, by obtaining more detail, enlightenment eventually becomes evident and custom decision-making is a more sophisticated approach. But detail mining can also be used as justification for inconsistent answers on issues. When situational-based systems dominate, people within the organization start to game the process. They plot the timing. They selectively choose the sequence of who to asks last. And they usually tell their friends how to beat the system to get the answer they want.
If situational decision-making takes over, layers of the company’s management create added variation. One unit’s answer to a common problem/issue may be totally different than another unit. Soon the rank and file of the company categorizes the managers into “liberal” or “conservative,” each issuing different rulebooks. Sometimes people move their career assignments in order to report to a more liberal manager. Without top-level philosophy being the dominant rulebook, interpretations to company policies are unpredictable, most likely being personality-driven.
Not only does situational decision-making result in unpredictable answers, it slows a company’s decision-making process altogether. More details have to be considered, which takes time. The consequences of the decision need to be evaluated, which also delays the process. There tends to be a string of lobbyists, each wanting to be most memorable, so they keep cycling for the next audience. Finally, it is almost easier for leadership to ‘kick the can down the road’ as more data and opinions are gathered than make any decision. In this era of fast moving events, slow decision-making can be a fatal cultural flaw to a company.
When companies get it right, nearly 80% of the daily decisions can be predicted because they are based on principle, not personality or details. When decisions are philosophically based, they are so predictable that lower levels can understand and feel safe that their decisions will not be overturned. Because they are unlikely to be overturned, appeals to higher levels are minimized. Decisions are carried out rather than appealed, resulting in additional time saving. The politics of the company are less and new employees quickly understand the culture and can contribute more quickly.
In some ways, using a consistent company rulebook or philosophy can be comparable to parenting or a school administration. Core values and consistency of decisions should dominate, rather than the situation. That is not to say there cannot be an appeal system established or that 100% of the decisions are pre-determined, but successful companies have most of their decisions made by the precedent of the philosophy rather than a person or detail.
Without a predictable set of principles, companies become Byzantine political structures—energy is wasted, decisions are pushed to the top level and the process is ‘glacier slow.’ The managers at any level in an organization are in their jobs temporarily at the delegation of the stockholders. They are retained as custodians of a corporate enterprise and common set of operating principles, not to run their own mini-companies that change again when they are transferred or retire. Sustainability is in the culture and rulebooks, not the person.
© 2015 Robert Uhler and THE UHLER GROUP. All rights reserved.