Most organisations know where decisions are supposed to be made. Fewer know where they are actually made.
Delegated authority matrices and RACI charts set out who should decide what. But in a growing PE-backed business, decisions have a habit of drifting upwards, often to the CEO.
As more decisions move up, the CEO gets busier, decisions take longer and the work that depends on them waits.
Consider a business that has grown quickly under a hands-on CEO. In the early years, the CEO made most of the important decisions, and that worked.
The business is now three times the size, with an executive team and a Value Creation Plan that runs to a dozen initiatives. On paper, decision rights have been delegated. In practice, pricing changes, senior hires, supplier choices and project priorities still reach the CEO’s desk.
There can be several reasons. The CEO may be holding on to decisions. Authority may not be written down outside a few areas such as expenses. Functions may be unable to resolve issues between themselves, so disagreements are escalated. And where decisions made lower down are later reversed, people learn not to make them.
In an illustrative case we have modelled, four in five decisions on plan work went to the CEO. Those that were settled took a median of 11 working days, against two for decisions made lower down. At day 100, half of the 100-day plan’s actions were late or not started, and six of those eleven named the CEO as an owner.
The weekly leadership meeting, where many of these decisions should have been taken, ran in only half the weeks and spent most of its time on status. And the CEO saw it differently: asked whether decisions stick once they are made, the CEO’s rating was more than two points higher, on a five-point scale, than those of managers and staff.
It is tempting to treat this as a CEO workload problem: add a chief of staff, delegate more, clear the diary.
In the modelled case, the CEO’s workload was real, but it did not explain why decisions waited. Leaders below the CEO had time to decide. What they lacked was written authority to do so.
If the organisation keeps sending the same decisions upwards, a lighter diary won’t last. Unclear authority needs written decision rights. Disputes between functions need a forum that settles them. Where reversals have taught people not to decide, decisions need to stick. Written authority also only works when people use the process that goes with it.
In a McKinsey survey of more than 1,200 managers, only 20% said their organisation excelled at decision-making, and 61% said most of their decision-making time was used ineffectively.
The way to find out is to look at real decisions rather than the organisation chart: which decisions were made, who made them, how long they took and which work is waiting on them. Asking leaders what gets in the way of deciding, and comparing the CEO’s view with the views of those below, helps explain why.
Execution Radar traces real decisions through records, surveys and interviews to show where they land, how long they wait and why.
We help investors and leadership teams identify execution problems, understand their causes and make changes that improve delivery.
