Decision-making in Organizations

Decisions are not made in isolation -- a network of influence affects all important decisions. Who is highly influential when important decisions are made in your organization? Is it internal people? External experts? Do some managers include subordinates' inputs, while others only seek out superiors, or external experts?

The network below shows the management hierarchy of a division in a major corporation. Each node designates a specific employee in the organization. Nodes are labeled by the person's position and color-coded by their organizational level. Dark grey nodes represent key entities outside the organization. The black links designate formal reporting relationships [organizational hierarchy].

Figure 1 is a network view of the organization chart -- a hierarchy is actually a hub-and-spoke network!


Figure 1 -Organizational Hierarchy [a.k.a. Hub & Spoke Network]

The network in Figure 2 below shows a different view of the same organization. A grey link is drawn if a person seeks out another specific person for inputs/opinions/advice before making an important decision. A --> B means that A seeks out B. The link/relationship data was collected via interviews and a survey.


Figure 2 - Hierarchy + Decsion-Making Conversations

What do the decision-making links reveal about this organization? Some advice flows along formal ties [within the hierarchy], while other advice flows along informal ties [outside of the hierarchy].

  • There is strong triangle of input and feedback amongst Directors 2 and 3 and the General Manager. These strong, trusting ties have grown and solidified over many years of working together.
  • Director 1 is new to the organization. Manager 12 was hoping to get this position, but Corporate strongly pushed for Director 1. Notice that Manager 12 is still locally influential in the decision-making network. Director 1 does not include input from direct reports in decision-making [ remember A --> B means that A seeks out B ] !
  • Director 4 is about to retire. He used to run this division when it was much smaller. Unlike Director 1, Director 4 does include inputs from his staff.
  • The decision-making patterns in the departments of Directors 2 and 3 are quite different from the pattern of links in the departments of Directors 1 and 4. Directors 2 and 3 seek information from all levels of the organization -- their departments show both vertical and horizontal flows. Several managers in these departments [23, 24, 34, and 35] are boundary spanners -- connecting to others outside of their immediate group. Departments 2 and 3 are an example of participatory decision-making -- including inputs from up and down the hierarchy, as well as inside and outside the department.
  • Using the social network measures in our InFlow software we can determine who is most influential in this decision-making network. Who do you see as the most influential person[s] in shaping decisions in this organization?


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Copyright © 2008, Valdis Krebs


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