The Process of Corporate Decision Making

Corporate decision making happens at various levels in organizations and can be top down or bottom up. The difference between these two styles of decision making is that the top down decision making is done at the higher levels of the hierarchy and the decisions are passed down the corporate ladder to be implemented.

On the other hand, bottom up decision making is done by giving autonomy to the middle managers and the line managers to take decisions based on the conditions and circumstances existing in their teams.

In many organizations, what we see is a top down decision making in the realms of policy, strategic focus, direction in which the organization has to proceed and bottom up decision making about the day to day running of the teams.

It needs to be remembered that the middle management is often called the “sandwich” layer because they have to implement the decisions made above and at the same time have to decide about how to run the teams and have to communicate them to the lower levels as well.

The point here is that in any process of corporate decision making, the actual implementers play a critical role since the best laid plans of the top management can go awry in case there is no commitment from the middle management.

Hence, many organizations organize off site meetings at resorts and other places where the senior management briefs the middle management about the decisions that they have taken and how it would impact the organization.

Corporate decision making is also characterized by consensus or the lack of it. Like in the real world, corporations often have power centers and groups that have their own agendas and hence arriving at a consensus can be cumbersome for the CEO or the Chairman of the Board of Directors. It is because of this reason that many corporations witness periodic restructurings with regards to organizational structure and with regards to turnover among the top management.

In recent months, Infosys has seen rapid and often turbulent situations in the company because of the power struggles at the top as well as lack of consensus among the top management about the direction that the company ought to take.

The other aspect related to corporate decision making is that many organizations thrive on leaders who have a “halo” around them and hence decision making is smooth because the rival power centers often concede to the leader’s charisma or his or her ability and vision.

Again, Infosys has seen this happen when with the retirement of its legendary founder, N R Narayana Murthy; the company is going through a bad phase with competing factions jostling for control.

Apple is an example of a company that relied on the halo effect of its founder, Steve Jobs and once he passed away, there is some uncertainty about the way the company should take in the market.

In conclusion, corporate decision making is successful as long as there is a “glue” to bind the organization together in the form of charismatic leaders or an organizational culture that values coherence and imposes stability. Once any of these conditions are removed, then the organizations fall into a self-defeating trap wherein the process of corporate decision making is impaired leading to the loss of competitiveness of the company.

❮❮   Previous Next   ❯❯

Authorship/Referencing - About the Author(s)

The article is Written and Reviewed by Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to and the content page url.

Decision Making