When I speak with people in large organizations, a fairly common complaint is that it takes too much time to make decisions.
A key source of delay is slow management approval.
Sometimes, there may be perfectly valid reasons to delay the approval of a decision.
Managers may see the decision as part of a larger set of decisions, and may not want to commit themselves too early to a given course of action. So they wait to see how things turn out.
But when this is not the case, and the delays are mainly caused by the complexity of the internal organization, one needs to consider how to improve the system.
A lack of speed in decision making may cause the firm to loose out to competitors, for example, by introducing new products or services too late, or in failing to implement needed changes internally.
Eberhardt Rechtin, former president of the Aerospace Corporation in the US, claimed that the time that it takes to reach a final decision doubles with each added approval required. So, as an example, if the time it takes to get the first approval is 30 days, it will take 240 days to reach the final decision if there are four levels of management that need to get involved.
In general, the more management layers, the more approvals are required, and the slower the decision speed.
But the solution is not always to “de-layer” by removing one or more management layers. The formal reporting structure may not correspond very well to how decisions are made. In most large organizations, there are multiple decision forums, including steering comittees for projects, forums with union representatives, and so on. Multiple units at the same hierarchical level may also be involved in a decision process.
So one needs to consider more closely how different types of decisions are made.
The key thing is to ask whether the approvals are really necessary, and whether they add value. For example, does the decision to hire a new manager need to be approved by the divisional president (as I once observed), or may it suffice that it is approved by the business unit leader?
As suggested in a white paper published by Action Technologies, one should try to focus as much as possible on auditing on the back-end, with true consequences, instead of requiring approval up front. In other words, empower people to make decisions, but ensure that there is accountability for results.
In the same white paper, they also suggest that organizations establish a rule that reads:
“Reject by MM-DD-YY or your approval is automatic”
I found this one intriguing. Decision makers may need a bit of pressure to make up their minds in time.