Making Managerial Decisions – Setting Business Procedures and Policies

July 3, 2012 by  Filed under: Management 

Running a business is all about decision making. Each and every day we are faced with many challenges requiring decisions that can impact our businesses. Some decisions will be routine. Others will be more critical. If we can delegate routine decision making to subordinates, then we will have more time to focus on strategic decision making and ensuring that the correct decisions are being taken at the top of our organizations.

The first step in delegating managerial decisions rests in setting out clear parameters for subordinates to follow. Some organizations write lengthy procedures and policies documents. My personal preference is the creation of workflow maps or decision trees. These are visual in nature, easy to understand and avoid ambiguity. That said, one size shoes don’t fit everybody. Choose the method of documenting procedures and policies that work best in your organization.

So where do you start? In my view, the first step involves separating your business into logical functions or departments. You need to invite key employees in each functional area to discuss key decisions affecting their area of responsibility with you and/or the senior management team. Then document a comprehensive list of decision points that are frequently met in that function and add the options that are usually considered before decisions are taken. Finally, decide on the preferred decision choices for each of the decision points based on custom and practice within your business.

During this review process, decision points may arise that are outside the scope of the norm and require escalation to senior management level. This is perfectly normal. You cannot legislate for all eventualities in procedures and policies documentation. Rather, show how decision points that are outside of the norm are to be handled. Critical decisions must have a mechanism that allows for escalation all the way up the management hierarchy and even to the CEO.

You may also decide to give delegated authority on decision making to key managers and individuals up to prescribed levels. For example, you might consider giving authority to the person responsible for purchasing in your business to sign-off on any individual purchase with a value of less than $500. Anything above $500 might require escalation to a department head for confirmation of the purchase before it can proceed.

Decision making does not have to be difficult once all of the rules are in put in place and they are fully documented. However, if you want decision making to operate like clockwork, then you must ensure that staff members have access to this documentation and that the rules are followed as a matter of course. Periodic checking of decisions will confirm if the rules are being followed or not. An annual review of documentation will tell you if the procedures and policies remain fit for purpose and that the logic behind the decision making criteria still holds true.

Setting agreed levels of delegated authority for individuals or managers, and formally setting out your organization’s key procedures and policies, will ensure that routine matters requiring decisions are dealt with routinely and don’t need to be put in front of a busy executive or the CEO for a decision. This means that log jams are avoided and managers and key employees are freed up to focus their entire time on matters of importance to the business.

Niall Strickland is an MBA with more than 20 years of business and management consulting experience working with entrepreneurs in small and medium companies. He delivers lots of business tips and tools in his many free videos and articles at

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