Hierarchical decision making isn’t fit for the future
People often think that being a leader is about knowing more than others, having all the answers, and therefore making all the decisions.
However, this fixed mindset is fraught with danger.
When leaders make decisions in isolation they have disengaged teams and stakeholders that don’t support the outcome. There’s also increased likelihood they’ll make an ill-informed decision because they don’t have all the relevant points of reference.
This is the case for leaders working in financial services and advisory – regardless of the size of their practice or the organisation they work for.
In today’s world, a different approach is required. An approach which nurtures a culture of collaborative decision making.
This decision making approach is focused on involving the right people, at the right time by considering:
- What’s the level of buy in needed for the decision?
- Who has the knowledge needed to help make this decision?
- How will the information or data gathered be clarified to discern the relevant points?
- What steps will be taken to remove bias from the decision making process?
Decision making is imperfect
This approach recognises that decision making is an imperfect science, which requires diversity of thought to improve its effectiveness.
Humans are tribal creatures, who like to fit in and be part of the pack. This can create a pressure to conform that stifles questions and challenge of the status quo. It can also lead to people making decisions and taking action with little more reason than the fact that everyone else is doing it.
This is more likely to happen in groups which are homogeneous, which is why involving a diverse range of people is an essential element of a collaborative decision making process.
Research by Associate Professor of Management and Organisations at the Kellogg School of Management, Katherine Phillips, and colleagues found that diverse teams often make better decisions as they ensure different views are considered. The research showed that the better decisions were not the result of new ideas, but because the diversity caused more careful information processing than in the homogeneous groups.
It was the French anthropologist, Claude Levi-Strauss, who said: The wise man doesn’t give the right answers, he poses the right questions.
Diversity of thought is generated not just from the information that is shared, but by the questions that are asked.
Therefore, for this approach to be effective the leader needs to encourage people to be curious, to inquire and to challenge. By doing this the leader shows they are genuinely interested in encouraging debate and discussion.
In adopting this approach, the leader doesn’t silence the dissenting voice or the person raising questions as they recognise that it’s often that person who will help them see the issue from a different perspective.
Collaboration isn’t hierarchical
In a collaborative culture, the leader recognises that it’s important to talk to people at all levels of the organisation so they have a clear picture of what’s really going on.
This is because hierarchy can interfere with the information they receive. In an effort to not look bad to senior management, people may sanitise information that moves up the hierarchy.
Central to this is establishing a trust based culture where there is ‘good will’ amongst stakeholders and genuine intent to find the best outcome. In this type of environment, it becomes not so much about winning the argument, but about finding the best solution for all concerned.
As the financial advice sector continues to evolve and face many challenges and opportunities, it needs more leaders equipped to do that.
Michelle Gibbings is a change and leadership expert and founder of Change Meridian. Michelle works with global leaders and teams to help them accelerate progress. She is the Author of Step Up: How to Build Your Influence at Work.