The way people in a company behave when making decisions is a key ingredient of the organization’s culture. And, as we’ve discussed in previous posts, this can profoundly affect performance.
But sometimes companies must change their approach to making and executing decisions.
Mergers, shifting competitive landscapes, the adoption of a new strategy or the arrival of new leaders—any of these can trigger a necessary change. When Merck KGaA acquired US biotech equipment supplier Millipore last year, executives faced a potential culture clash. The German healthcare company was careful and methodical about decisions; Millipore more entrepreneurial.
Whatever the reason for a change, people find it hard to learn new decision styles, which typically fall into one of these categories:
- Directive: One person has decision authority.
- Participative: One person makes each decision, but only after gathering input from others—a way of combining single-point accountability with a collaborative approach.
- Democratic: Participants vote on decisions and the majority rules.
- Consensus: All involved agree on a plan of action.
Organizations get themselves into trouble when they fail to agree on and communicate a predominant decision style for critical decisions. It’s easy enough for an individual executive to adopt whatever style feels most comfortable, but employees often work across groups and can wind up not knowing how to operate from one to the next. Employees accustomed to, say, a more directive style can be genuinely confused—even paralyzed—by a more participative approach.
Sometimes, too, a company itself simply has the wrong style. Several years ago, Boeing Commercial Airplanes revisited how it handled pricing. At the time, a handful of executives knew how airplanes were priced and how much money the company made on each one—a directive style that excluded information from lower-level executives. Boeing’s shift to a participative style under Alan Mulally helped the company make better pricing and other commercial decisions and turn around performance.
Leaders of an organization that aspires to such a change can take four critical steps:
- Explain the rationale for the change.
- Identify the biggest gaps between today’s behaviors and those required in the future.
- Identify how behaviors need to change.
- Embed new behaviors through role modeling, reinforcement, communication and feedback.
The key to getting people past their discomfort to actual behavior change is persistence: a behavioral change initiative will fail if it is no longer a priority six months later. Long-term commitment will reap long-term rewards. Merck and Millipore, for example, concluded a remarkably successful merger and turned in excellent operational results in the period immediately following the merger—thanks in large part to a new decision style that allowed people from both companies to make good decisions quickly and implement them effectively.
A major change in your company’s organizational life can also be a success if you create a path to better decisions and better performance.
This article was written by Karim Shariff, Partner based in Dubai and Head of Middle East Organization Practice, Bain & Company and Jenny Davis Peccoud, Senior Director, Global Organization Practice, Bain & Company.