Understanding decision making in organizations to focus its practices where it matters

Purpose – The ability to make good decisions is the defining attribute of a high performance organization. The challenge is to ensure that good decision‐making practices permeate the entire organization. As organizations grow, employees make decisions in an increasingly complex, ambiguous, and uncertain environment. Formal practices enable employees to make decisions that are meaningful to the firm's stakeholders and guide their behaviours to align with the strategic intent of the firm as well as its values and norms. Design/methodology/approach – Through case studies and consultancy work the author has developed an approach to focus on management decision making and improved effectiveness. Findings – This paper describes a diagnostic tool which helps companies understand how well their management systems support decision making and where CEOs should invest to focus leadership time and attention. The decision‐making scorecard and tools help CEOs design effectiveness management systems and focus its use to drive their specific business agenda. Originality/value – With formal decision‐making practice in place, CEOs rely on delegation and control practices to ensure that employees make decisions in line with the organization's vision and values. Using the described approach, CEOs and employees focus their attention on the relevant control levers and use their time for interaction and learning rather than control. Furthermore they successfully apply more relevant decision‐making practices than before, and have abandoned extensive and expensive performance management projects in favour of more differentiated and focused initiatives that support their immediate goals with a direct impact. The tools have been used to ensure that the next strategic move delivers the expected value. In summary, good decision‐making practices translate the CEOs' power and responsibility into higher performance, growth and lower risk.