Wednesday, May 18, 2011

Depth of Analysis Inversely Related to Importance of Decision

On Monday, while teaching an executive leadership program, an executive made a terrific observation.  He said, "Often, it seems that the rigor and depth of our analysis is inversely to the importance of the decision."  He meant that the finance organization seemed to scrutinize investment proposals by lower level managers quite extensively.  Yet, when the CEO or a member of the top team wanted to make an acquisition or embark on some other major investment initiative, the proposal often received less scrutiny.  I was taken aback, because that observation rings true given my experience with many organizations from across a range of industries.

Why does that happen in organizations?  In many cases, lots of analysis does take place on the proposals put forth by senior executives, but those initiatives are essentially fait accompli.   The analysis cannot stop the deal from moving forward.  It may even simply be rationalizing decisions that have already been made.  Meanwhile, for lower level managers, their proposals get put through the ringer, because they don't yet have the senior level sponsorship. 

3 comments:

Dr William J McKibbin said...

Hear, hear...

Keith B Murray said...

Mike,
I would venture to say that the little decision get more time and attention because it reflects most of the participants familiarity and confidence surrounding the little deals, but a lack of info and perceived immediate competency with the big ones! So we end up being masterful about the little stuff and basically vote present on the big stuff. KBM

Daniel said...

The little decisions get more scrutiny because there is more hierarchy to scrutinize them. But decisions made at the top are only scrutinized by those at the top.