The average entrepreneur or businessperson has expertise insome mixture of the following:
- a function (Accounting, Information Technology, Engineering, Human Resources, Customer Service, etc.),
- a skill (craft, programming, speaking, writing, cooking, interviewing, etc.) or,
- a particular trait (detail-oriented, perseverance, good humor, etc.)
What is not as likely to be resident in the businessperson or entrepreneur is the approach used to make decisions within the company. There are few entrepreneurs/businesspeople that have ever analyzed or assessed how they make decisions and when put in a position to work in roles that are not simply “individual contributors,” they do not always recognize how their decision-making approach impacts others within the organization.
The Decision-Making Approaches
There are four primary organizational decision-making approaches employed in most businesses (this applies equally to both Fortune 100 and smaller organizations in towns and villages serving the local market):
The Autocratic approach is the one where there is one person in charge and that person makes the majority (all?) of the decisions without soliciting input from others. This approach is often seen in smaller businesses where there may not be other resources that are capable of “seeing the big picture” or the owner has perhaps grown the business to a point where those resources exist; but the owner is not ready psychologically to “give up” control.
The benefit to this is that the owner is aware of all decisions and can be certain that decisions are made consistent with the goals and strategies that s/he has laid out. The downside is that it is time-consuming, may distract from other roles that the owner could be taking, and may result in slower decision-making and lost opportunities.
Democratic decision-making style employs a majority rules. People have a vote and the votes are tallied and the decision that secured the greatest support is the decision made. The benefit is that all feel like they have a role in the future of the business’s direction and can contribute to the accomplishment of that goal. The downside is that it is time-consuming, can lead to strife between peers, and allows for “lobbying” and trading of favors between “voters” to support one’s initiative and “win.” Those wins may not be in the best interests of the company and may value individual achievements over the company.
Participatory decision-making is where people are consulted, allowed to share their views, but ultimately the decision is made by a single person. The benefit of this approach is that it is a blend or a hybrid of the other approaches so that one person still has the ability to align decisions with strategic goals while also gaining the benefit of the contributions of others. The downside to this approach is that those consulted may feel marginalized or ignored if their recommended approach is not followed and they may lose the interest of contributing to the organization’s goals.
Consensus is where everyone is required to be in agreement and there is unanimous support for the decision. This is an approach used that can ensure that all are committed to a decision, but obviously is also likely to be much more time-consuming and may never actually happen as real differences of opinion exist and so decisions become bogged down and do not move forward.
For a good synopsis of the different decision-making approaches, see the following link: http://www.leadershipmanagement.com/html-files/decision.htm. However, be aware that it is the dominant or most common approach employed that is being discussed. This is not to infer that EVERY decision is reached in one particular way.