How to find a balance between feedback & free-for-all
Collaboration on strategy is great, writes Director Andrew Rowell, but eventually someone has to make the call.
Can too much of something be bad for you? Of course, we know this is true for sugary and fatty foods, but what about planning and decision making? Organisational and group decision-making is one such area where there is a fine balance between decisiveness and inaction. For some organisations, an autocratic style of decision making may work just fine, with those down-the-line knowing exactly who is calling the shots. For many governments and public companies, cabinet and board decisions tend to be made on the basis that the majority view is the right one (or at least the ‘righter’ one). While minority views are often considered it is the majority that normally carries the day.
The pros of encouraging input
For large strategic decisions like mergers and acquisitions, group decision-making is critically important in determining as many of the pros and cons as possible. While there will always be unexpected surprises, an experienced group of decision makers is likely to have considered more of the risks than an individual. However, there is a significant risk if an organisation adopts extreme group decision-making practices, also known as ‘decision by committee’. In these cases, the group will spend endless time looking at the issues, either making the process extremely complex and convoluted or even worse, never arriving at a decision. For public companies, we see this type of behaviour rear its head when dealing with announcements or media requests. There is a tendency to allow each and every board member to contribute to the process, through edits or restrictions on who management can talk with.
The cons of encouraging input
For some boards, this process works well, in that non-executive directors read announcements for obvious errors or just to be informed. Comments are kept to a minimum and are not pedantic. Unfortunately, there are some groups that feel that they need to mark up every single announcement and agree talking points before any media request can be agreed to. This approach tends to signal to management that they don’t have faith in their ability to write or speak publicly. It also slows down the process, meaning that media requests may lapse or announcements go out later than planned. We recommend that boards adopt an agreed process for reviewing announcements and media requests, so that all parties understand what their role is. Board approval is critical for a properly functioning organisation — just don’t let your quest for collaboration undermine the point of your collaboration in the first place.
Andrew Rowell is an expert in Investor Relations and leads a Cannings Purple team that has advised on more than 115 M&A transactions with a combined value of US$130 billion over the past 12 years. We placed first on Business News’ PR League Table in 2017-18 and are again leading the field this year. Contact Andrew