Major business decisions require careful analysis, detailed research, a plan of implementation, an evaluation protocol, and a clear set of objectives. Unfortunately, many business decisions lack some of these key elements. Mistakes are made. Sometimes very costly mistakes.
In some small businesses, decisions are often made by top-tier management. In really small companies, everyone may be encouraged to offer their opinion. It’s called decision by committee, in which decisions are made based on input from a large group of people – people who tend not to agree. Over the years, decision by committee has been considered a time-waster. Sure, every committee member has the right to an opinion, but not all opinions are equal. In fact, many uninformed opinions are dead wrong.
So what are the negatives and positives of making decisions by committee? It’s not ALL bad when used judiciously.
The Positives of Business Decisions by Committee
Not all committee decisions are wrong-headed. There are some excellent reasons to encourage decision by committee.
Avoiding extremes is often a benefit of decision by committee. As the stakeholders discuss options, the voices of reason discard the most extreme positions. Too risky. Too sketchy. Too many variables. Too much or too little something.
Decision by committee delivers numerous opinions from many different points of view. A committee can put on the brakes if it looks like a critical decision is going to take the company over the cliff. Moderate voices become louder and more influential as the risks of change are discussed and analyzed.
Decision by committee encourages input. Sure, you own the company, or manage it. You’re the boss, the decision-maker. However, you may not be the best one to make a specific decision, especially one that involves something highly technical. It’s usually best to get feedback from people in your company who are most familiar with the issue and/or will be most affected by it.
Example? “Should we invest $50,000 in proprietary software designed for our company?” The employees who’ll feel the impact of the new software are likely to be the most vocal. Get all the input you need and make the decision based on your team’s expertise. Chances are, you’ll take a moderate course forward and avoid unforeseen mistakes before they’re even made.
The key is to control participation, to set the rules for discussion, to direct the conversation to avoid going off on a tangent. The boss will usually make the final decision based on the expert advice from the staff.
You’re more likely to get buy-in for the decision. Decisions reached after discussions and input from many different areas are more likely to be accepted than decisions that come down from “on high” without a vetting process. Those who were involved in the decision-making process can become advocates to support the decision that was reached.
The Negatives of Decision by Committee
There are a lot of them.
First, employees are more likely to suggest outrageous, reckless solutions because the responsibility for the decision is spread across the entire committee. This dilution of individual responsibility can generate some very bad decisions without fear of retribution.
Missing the best advice. If opinions are flying around the conference table, you and the team may miss the one suggestion that makes absolute, unqualified sense, lost in the discussion babble.
Often, there will be a lone voice of reason willing to stand up and say what should be done. If the other 15 attendees disagree, that suggestion dries up and blows away.
Decision by committee can be a waste of time. It’s easy to get bogged down when committee factions take opposing views and attempt to convince the other side of the table of the wisdom of their position. This can suck up time like a vacuum cleaner if you don’t manage committee meetings.
Peer pressure comes into play quite frequently. At least some members of the decision committee are likely to go along with the consensus to avoid standing out, or worse, looking like a trouble maker.
Competing positions may lead to disharmony. There’s a tendency for committee members to take positions and hold on to those decisions and defend them no matter how bad that decision is. Getting these hard-liners to budge can waste time and create ill-will. You hear both sides, make your choice, and annoy the heck out the committee members who felt the other “way” was better.
It’s Up to You
Gather information from committee members. Listen to how each manager is impacted. Ultimately, it’s your decision as the business owner.
Don’t let decision by committee bog down business operations. Used properly, decision by committee may prevent costly mistakes and lead to a moderate solution to the topic of discussion.
Make the choice based on sound, impartial advice from your staff, consultants, even your business bank specialist. Take ideas from everyone. Then, make the best decision for the company.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.