3 August 1998
Your Boss Is Clueless
The results of a new study published in the Journal Of Management Studies confirm what many of us have suspected for ages - our superiors make bad decisions. And it's not just private firms that suffer from hapless decision-making, government departments and non-profit organizations feature in the research as well.
Researcher Paul Nutt, of Ohio State's Fisher College of Business, carried out the research by examining 376 business decisions and then interviewing the decision-makers involved. Decisions included buying a new computer, launching a new product, and modifying an employee bonus policy. Decisions were considered completely successful if they were adopted and continued to be used for two years.
From the interviews, Nutt identified four decision-implementation techniques: intervention, participation, persuasion and edict. In general, intervention and participation were the most successful techniques - but they were also the least used.
He found that the most successful technique - called intervention - led to successful decisions about 90 per cent of the time, but was used in only about 8 per cent of the decisions examined. The least successful tactic for making decisions - issuing edicts - was used in nearly 40 per cent of the cases. Overall, 37 per cent of the managers' decisions failed - they were never put to use.
"Managers would be more successful if they used better tactics to implement their decisions," said Nutt, a professor of management science at Fisher College. "The problem is that the best tactics take time to implement and many managers are looking for quick fixes. However, poor decision making costs more time in the long run."
Intervention involves first establishing standards or expectations for performance (by making comparisons to similar organizations), and then measuring current performance against those standards. After identifying the gap between expectations and current performance, managers help identify realistic and justifiable ways to close the gap.
"Intervention is a subtle approach, but its record is so strikingly successful that it merits wider use," Nutt said.
However, it takes some time to properly use the intervention approach, which Nutt says explains why it was used in only 8 per cent of the decisions by top managers.
The other beneficial technique was participation, which was successful in about 80 per cent of the decisions studied. However, it was used only 13 per cent of the time by top managers and 16 per cent of the time by middle managers. As the name implies, participation involves having those affected play a role in the decision-making process.
"Everybody has heard of participation, but hardly anyone really uses it in making decisions," Nutt said. "When it is used, it tends to be a token effort, involving just a few people, that is not effective."
A third technique is one in which a manager makes a decision by issuing an edict. Top managers used this tactic 30 per cent of the time, and middle-managers 39 per cent of the time. But this tactic was successful in no more than 38 per cent of the cases.
The most-used tactic was persuasion, in which managers cite the benefits of a proposed change to influence those affected to adopt the decision. This was used in 49 per cent of the decisions by top managers and 31 per cent of the decisions by middle managers. It was successful less than half the time.
Nutt also examined the decisions based on how much opposition they initially galvanized within an organization and how much the decisions would disrupt the organization. Results showed that intervention and participation remained the most successful tactics, regardless of the levels of opposition or disruptiveness.