July 24, 2014

Small biz advice

You Must Have Decision Authority Set For Each Employee

"A man, as a general rule, owes very little to what he is born with -- a man is what he makes of himself." ~ Alexander Graham Bell

Jerry Osteryoung | 4/16/2012
Ensuring staff knows the extent of their decision-making authority is so important for every business, otherwise, chaos can reign. So often, managers assume their staff knows how much authority they have, but this is just not the case.

We were working with the general manager of a manufacturing company who, according to the organizational chart, had more than 80 people reporting to him. In reality, though, he was a manager in title only because he never made any decisions. Every time a decision had to be made, he took it to the owner.

When I asked him why he did not make any decisions, he said, "I have never been given any authority to make decisions." When questioned if he had ever asked about it, he responded, "I just figured they would tell me if I had authority to make decisions. I did not think I would have to ask."

My next conversation was with the owner who told me that the GM had almost unlimited authority with regard to personnel. He added that the only time he withheld authority was when an expense exceeded the budget by $10,000 or more. The owner wanted to have final approval on those decisions.

My next question to the owner was if this had been communicated to the general manager. As I suspected, the owner had never laid it out clearly for the GM because he thought the expectation for a position like that would just be understood.

This lack of communication was having a devastating impact on the business. The staff was not sure who to go to with problems, and the owner was being overwhelmed by the number of people who were coming to him for decisions.

In another example, a manager kept making decisions without regard to the limits of his authority. His supervisors knew he was always pushing the envelope, but again, no one thought to explain his authority to him.

In both of these cases, management's failure to spell out the decision limits for their managers and employees was having a very damaging effect on the business. It was costing them dearly, both in terms of dollars and employee morale.

It is imperative that you make sure each of your employees clearly knows how much authority they have to make decisions about both budget and personnel issues. Then you must ensure they have the information they need to make good decisions.

To illustrate this final point, I once worked for a boss who said, "Jerry, you have authority to spend any amount you need to as long as it is within your budget." That was great, except she never told me what my budget was! As a result, I never felt as if I had any budgetary authority and was very uncomfortable making decisions that impacted the budget.

Now go out and make sure you have clearly articulated authority limits to each of your employees and managers. Next, you need to implement a process that ensures these limits are not breached.

You can do this!

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