Optimizing decision authority for better business outcomes.
If you are looking for ways to improve your organization's performance, efficiency, and agility, you might want to take a closer look at your decision rights. Decision rights are the formal or informal rules that define who can make what decisions, when, and how in an organization. They are essential for aligning strategy, structure, and culture, and for empowering people to act quickly and effectively in response to changing customer needs and market opportunities.
However, many organizations struggle with decision rights. They may have unclear, inconsistent, or overlapping decision rights that create confusion, conflict, and bureaucracy. They may have too centralized or too decentralized decision making that leads to poor quality, slow speed, or missed opportunities. They may have outdated or misaligned decision rights that do not reflect the current realities and goals of the organization.
These problems can have serious consequences for an organization's competitiveness and growth. According to a recent article by Bain & Company, organizations with effective decision rights practices can achieve up to 40% higher revenue growth, 30% higher profitability, and 36%greater employee engagement than their peers. The article also provides a framework and a set of best practices for improving decision rights in any organization, based on decades of research and experience.
Insights from Deloitte in an article titled "Getting organizational decision-making right" by Tiffany McDowell, PhD, and David Mallon, explores the crucial role of effective decision-making in organizations and its impact on business performance. It further emphasizes that many organizations lack clarity on decision rights, leading to delays and compromised decision quality. They present research showing that high organization design maturity, which includes well-defined decision rights, is strongly associated with better business outcomes, such as 23% greater revenue growth over three years for public companies.
Five key attributes are highlighted for effective organizational decision-making:
- Simplify and clarify decision rights across the organization: Clear and simple decision rights are essential. Tools like the RACI framework can help define roles and responsibilities indecision-making.
- Establish strong, transparent accountability for decisions made: It involves defining clear outcomes and metrics for decisions, and openly sharing this information within the organization.
- Align individuals in decision-making groups to a common mission: This can be achieved by creating charters for groups with a common mission and establishing incentives aligned with this mission.
- Encourage distributed authority frontline workers to make routine decisions can increase adaptability and responsiveness, provided accountabilities are clearly defined.
- Prioritize the customer voice in decisions to customers and giving customer-facing workers more decision-making authority can improve understanding and responsiveness to customer needs.
Improving decision rights and ensuring clarity across an organization is an achievable goal but requires engaging leaders and stakeholders to create transparency and delegate decision authority to lower levels in the organization. However, traditional approaches to delegation of authority policies and authority matrix spreadsheet leave much to be desired in terms of effectiveness and adoption inside an enterprise. Aptly can help.
How Aptly can help you optimize your decision rights
One of the key challenges of improving decision rights is to make them visible, accessible, and consistent across the organization. Traditionally, decision rights have been documented in cumbersome and static documents and spreadsheets that are hard to maintain, update, and communicate. This makes it difficult for employees to know who is responsible and accountable for what decisions, and for leaders to monitor and evaluate the effectiveness of their decision rights practices.
That's where Aptly comes in. Aptly is a delegation of authority management software as a service that helps companies digitize and streamline delegated authority and decision rights across a company. Aptly transforms traditional documents and authority matrix spreadsheets into an always up-to-date delegation framework, leveraging best practice RAC framework, and syncs to HRIS systems so that it always matches organizational charts.
