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How Corporate Decision-Making by Consensus Can Work

The Pros and Cons of Making Decisions as a Team

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How do big decisions get made at your company? Through consensus of a team or from the top down? John Mackay, the CEO and founder of Whole Foods told the Harvard Business Review that he's a consensus builder because, "I found that when you make decisions by consensus, and you let all the disagreements get expressed, you make better decisions. If you don't do that, there is a natural human tendency on the part of whoever didn't get their way to want to be proved right."

There are definite pros and cons to decision making by consensus.

Pros

  • Consensus builds support: As Mackay points out, the people who have to implement decisions are more likely to be on board enthusiastically if they had a hand in making the decision. We can all recall a time when someone else decided on a course of action and we had to go along with it. Did you do your part with complete commitment if you opposed the idea? Probably not.
  • Consensus reduces risk: Through consensus, you are more likely to arrive at a decision or strategy that takes into account more of the risks that a particular move will encounter. If you as the boss decide to enter a new market, buy a competitor, make a big pricing move or change ad agencies and you consult key stakeholders first, hear all the costs and benefits of the decision and then act, you may hedge your bet in a positive way. Maybe you increase (or decrease) price a little less severely to test the market; bring in a new ad agency on a project basis while retaining the old one; or do a joint venture instead of an acquisition -- all because some other managers had input that would not have been heard had you made the decision solo.
  • Consensus builds your bench strength: When you let other people participate in the decision-making process, you build management muscle. Sharing the decision means also sharing the consequences, which sometimes are unintended and negative. You can make mistakes by consensus as easily as you can be right. But mistakes (generally) aren't fatal for a business, provided all the participants that dug the hole are committed to helping each other climb out.

Cons

Of course, there's the "B" side to this consensus record:

A Balanced Approach

So what's the trick to consensus decision-making? Here's the secret: the boss or other executive builds consensus just like a legislator in government. Sometimes it takes more than one meeting to change someone's mind. Here are some ideas to keep in mind to build consensus the right way:

  • Don't rush it. Most deadlines are artificial. Don't position a decision as "do or die/right now" unless someone is on an operating table. There really is always tomorrow.
  • Work the hallways. Consensus gets built in places other than the meeting room. Buttonhole people privately. Get out of the office to a place where a key influencer is more comfortable and it's really private.
  • Let a bad decision happen once in a while. Not all decisions are make-or-break. If something might be right or might be wrong, and you don't agree with it, let it go forward. Everyone will learn from it if it turns out to be a bad consensus and be better for it next time around.

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