How to Know If Company Decisions Should Be Public or Private

It’s like the wild west in the workplace these days. Mass layoffs continue to make headlines, employees are more burned out than ever, and inflation is causing businesses to make tough decisions about headcount and new hires. Just like in spring of 2020, we need leaders to step up and lead with strength, transparency, and vulnerability.

In times of uncertainty and constant change, people are looking for strong leadership to keep them inspired, focused, and informed. In addition, employees are demanding (professionally, of course) that they are heard, understood, and supported.

But how transparent is too transparent? Where is the line between public and private decision making for leaders? What necessitates closed-doors conversations, little to no transparency, and autonomous decision making? What sort of decisions should involve broader input, committees, and consensus?

It’s not so much about the decision itself. Most decisions have to be shared to a group of people (employees, customers, stakeholders, the leadership team, etc.) at some point. It’s more about the decision-making process. Who is privy to the thought process behind the final decision? Who is brought into the conversation? And how much information is shared once the decision is made?

For the sake of this conversation (and the following examples), I will be talking about decisions being made by the CEO, Chairman of the Board, Founder, and/or the equivalent. These frameworks and questions can certainly be applied to any division or leader throughout your company.

How to Know If Company Decisions Should Be Public or Private

HOW TIME SENSITIVE IS THE ISSUE?

There are some crises in an organization that are simply happening too quickly to bring committees or working groups together to formulate feedback before making a final decision (i.e. the decisions many companies had to make about shutting down their offices during the first few weeks of the pandemic).

In these cases, a leader must make the best decision possible, knowing that they may need to back-track or make a different decision within the next day or week. Strong leaders will be transparent about that too. They will share what they can, and acknowledge what they don’t yet know. But following that up with either a timeline or how the next decision will be communicated is key. Employees don’t always need to have all the answers, but they do need to know that the decisions are being discussed and when they will hear more.

On November 17, 2022, Andy Jassy, CEO at Amazon, issued an internal memo to his company about the upcoming role eliminations. This is great example of transparent leadership on a time sensitive issue. Jassy addresses the tough decision they had to make and why (the economy and rapid hiring in the past few years). He also shares as much detail as he can about what will happen, but also acknowledges that they don’t have all the decisions finalized yet, but he does tell them how those decisions will be communicated once they are made. Jassy acknowledges the impact that these decisions have on the lives of his employees and how they will be supported during their transition. He then ends the note with words of gratitude and encouragement, recasting Amazon’s vision to “obsess over customers and invent relentlessly on their behalf.”

WHO DOES IT IMPACT?

Who will your decision impact? If we’re talking about a decision that only impacts a handful of people (and only marginally), it may be easy to make that decision quickly and without input from anyone else. However, if the decision being made impacts a wide range of employees or customers, it would behoove you to bring other people into the conversation so that you aren’t missing anything from their perspective. A recent decision from Rivian’s CEO would have benefited from some additional input. But, I will give him kudos for issuing an apology and being transparent about the mistake that was made – that is strong leadership too.

In March 2022, CEO of Rivian, RJ Scaringe, issued a letter of apology to customers about how they handled recent pricing updates. Scaringe wrote, “We made a mistake in how we approached our pricing changes, and what is important now is that we fix it.” He went on to explain the logic behind the decision, but admitted that even so, it was wrong and they broke their customer’s trust with Rivian. They also were transparent in sharing that they didn’t manage communication well. Scaringe outlines their solution to fix the mistake and their focus and plans for the future. He ends the letter thanking customers for their feedback.

DO YOU HAVE ENOUGH INFORMATION?

Former Secretary of State, Colin Powell, created the 40/70 Rule that states that leaders should make decisions when they have between 40%-70% of the information needed. If you make a decision with less than 40% of the information you’re shooting from the hip. But, if you wait until you have more than 70% of the information you could get stuck, overwhelmed, and you may risk the productivity and effectiveness of your entire organization.

If you are trying to decide whether or not your need to bring other people into the decision-making conversation, analyze your percentage and weigh where you are at. If you’re at 20%, you have to get more information. If you’re at 80%, then you may have waited too long. If you are between 40% – 70% then you and your team will have to rely on your intuition and prior experience to make the final decision.

Bottom-line, if you need more information before making a final decision, you will likely need to open the conversation to a wider audience – board members, internal committees, or customer test groups – before coming to an actionable decision.

IS IT A TYPE 1 OR TYPE 2 DECISION?

In a 1997 letter to shareholders, Jeff Bezos explains the methodology that Amazon uses to make decisions:

“Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.

As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention. We’ll have to figure out how to fight that tendency.”

First, you and your organization need to be clear on what kind of decisions fall into the Type 1 vs. Type 2 for your company. Perhaps any capital expenditure over a certain dollar amount or product line elimination are Type 1 decisions. Maybe a new marketing campaign or company off-site are Type 2 decisions. They will differ from organization to organization, but get clear on what they are for your company and who will lead the decision-making process.

Either type of decision may be made publicly or privately depending on time sensitivity, who the decisions impact, and how much information is needed to make the decision. The key here is to be clear on the type of decision for your company and whether you are going to employ a careful, slow, deliberate process (likely more public) vs. a quick and lower impact decision (which could be made autonomously or privately).

Leaders must consider many different angles when deciding who to include – and when – in the decision-making process. How time sensitive is the issue? Who will it impact? Do we have enough information? And is this a reversible or irreversible decision? From there, it is all about communication, communication, communication.

Leaders are in a tough position. No matter what decision is made or who ultimately made the decision, they must be willing to accept blame for anything that goes wrong, and be okay with not taking any credit for the decisions that go right. That’s all part of leadership. And strong, transparent, vulnerable, and successful leaders understand that it’s all part of the job.

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