How Structural Choices Influence Decision-Making Speed and Quality

My previous entries over the last few months have centered around the first part of my book which is focused on how structure influences power, and how both structure and power are upstream from organisational culture and strategy. Part 2 of the book takes these ideas further. This section is taken from Chapter 5 and discusses the relationship between the structure of organisations and the speed and quality of decision-making. 

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The structure of an organization significantly impacts both the speed and quality of decisions. The contrast between hierarchical and flat structures reveals how power dynamics can either hinder or enhance organizational performance (Galbraith, 2014). 

Speed of Decision-Making

In hierarchical organizations, decision-making is often slower due to the need for approvals and the hierarchical flow of information. For example, in a highly centralized company, a decision regarding product development or marketing strategy may need to pass through several layers of management, from project leads to department heads and, ultimately, to executives. This not only delays the process but also risks the decision becoming disconnected from the original issue (Mintzberg, 1979).

In contrast, decentralized or flat structures enable faster decision- making because power is distributed. Teams have the autonomy to make decisions without seeking approval from higher-ups, allowing them to act quickly in response to changing conditions or market demands. In industries where agility is critical—such as technology or consumer goods—this can provide a significant competitive advantage (Hamel, 2011).

Quality of Decision-Making

While speed is important, decision quality can suffer in hierarchical structures. In these environments, top-down decision- making may lead to a disconnect between decision-makers and those with the most insight into the issue. Information is often filtered as it travels up the chain of command, which can result in incomplete or inaccurate data being used to make decisions. As a result, decisions made at the top may not fully address the complexities or nuances of the situation (Kotter, 1996).

In flat organizations, however, decision quality is often enhanced because those making the decisions are directly involved in the work and possess the most relevant knowledge. By distributing power to those closest to the problem, organizations can ensure that decisions are based on firsthand insights, leading to more effective outcomes. Additionally, the increased collaboration and communication within flat structures typically foster a deeper understanding of the issues at play, further improving decision quality (Edmondson, 2012).