Tuesday, 13 September 2016

Transparency versus democracy in decision making

One of the key lessons of the Brexit vote was that important decisions should not be made by direct democracy. On the one hand, the referendum showed that voters had lost confidence in 'the experts'; on the other hand, it showed that they were ill-equipped to make the decision themselves.

That is the very reason why most democracies are representative democracies and not direct democracies. (In a representative democracy, the people vote for 'experts' to represent them in making the important decisions. In a direct democracy, the people vote directly on the important decisions themselves. The challenge, in a representative democracy, of course, is for the representatives to retain the confidence of the electorate - which they clearly failed to do during the Brexit referendum!)

It is the same in organisations. Whilst much has been written about increasing employee participation in order to increase engagement, it remains management's responsibility and prerogative to make the important decisions.

Where does that leave employee engagement? A better way to increase employee engagement is through transparency. That is, by explaining to employees how and why important decisions are made, both before, during and after the fact.

Of course, this assumes that management is making high-quality decisions in an informed and reasoned basis in the first place. If this is not the case, then increasing transparency will just expose these flaws to employees, which will decrease engagement and confidence.

The models we typically use in strategy development and execution play two roles in this regard.

Firstly, by using the appropriate models well, decision makers are able to increase the quality of their decision making. The models help decision makers to develop richer pictures of the organisation and its competitive environment, to ensure that a wider range of alternatives is considered before making a decision, and to ensure that the alternatives are evaluated against all of the appropriate criteria before a final decision is reached.

Many leaders continue to make important decisions based on intuition. This is appropriate for less critical decisions: intuition is, after all, the sum of all of our experiences. However, research has shown the importance of visual cognitive artefacts (such as mind maps, SWOT analyses, and decision matrices) that extend the capacity of the brain to process information (see Stop jumping to solutions!). That is, clearly articulating your thinking on paper (or a screen) using models improves everyone's abilities.

Secondly, the models facilitate communicating those decisions to employees, and therefore promote transparency. Because the analysis has been both thorough and explicit, it is more easily revealed to employees. Employees in turn will see that management really has understood the issues and evaluated all of the alternatives and will be less likely to assume that decision makers are living in ivory towers, out of touch with what is really going on in the business, and pursuing their own hidden agendas for personal gain at the expense of the organisation as a whole.

For example, almost all options have both pros and cons. An important part of transparency is revealing both the cons of the alternative selected, and the pros of the alternatives not selected (rather than simply presenting the selected alternative as being unambiguously positive). By understanding the cons of the alternative selected, employees will be better able to recognise and minimise any downsides as they arise.

Of course, there will be some decisions where management cannot be transparent. This might occur, for example, where there is market sensitive information in a complex negotiation. However, if decision makers are transparent wherever they can be, employees will be more likely to accept where the decision makers explain that they cannot be.

The judicious use of models can significantly improve the quality of decision-making whilst also improving transparency and employee engagement. StratNavApp.com, the purpose-built online environment for collaborative strategy development and execution was developed with just that in mind. Why not give it a try now?

Post-script: I have used the terms 'management', 'employees', and 'decision-makers' rather loosely as if they are discreet groups of people. In truth, most organisations exhibit some form of hierarchy and specialisation with at least some devolution of decision-making. That is, the same individual may be 'management' and a 'decision-maker' with regard to some decisions, whilst simultaneously being an 'employee' with regards to others. Whilst this may make the flows of communication and transparency more complex, the principles outlined above will still apply.