Pioneering Organizations Use The Advice Process For Everything—Including Salaries and Investments
The Burden of Decision Making
Making group decisions can be a terrible burden. Even the word “decide” itself literally means to kill off or cut off (from de- ‘off’ + caedere ‘cut.’).
Typically, one person makes the call in an autocratic fashion, we vote in a democratic fashion, or we seek to gain consensus.
All of these have pretty extreme drawbacks—placing the power in the hands of one person, giving power to the tyranny of the majority, or giving power of the veto to any single person’s feelings whether or not they are based on rationality.
Yet how else can we decide?
“The Advice Process”
A few pioneering organizations have all independently stumbled across another decision making process, which they all invariably call “The Advice Process.”
The concept is simple, but implementing it can be a challenge. It requires people to paradoxically give up power and take more responsibility. It paradoxically honors the individual and collective at the same time.
Not Even the CEO can Override the Process
The groundbreaking book Reinventing Organizations goes into detail about this process, and how organizations have used the process for everything from determining everyday decisions, to salaries, to strategy:
It is very simple: in principle, any person in the organization can make any decision. But before doing so, that person must seek advice from all affected parties and people with expertise on the matter. The person is under no obligation to integrate every piece of advice; the point is not to achieve a watered down compromise that accommodates everybody’s wishes. But advice must be sought and taken into serious consideration. The bigger the decision, the wider the net must be cast―including, when necessary, the CEO or the board of directors. Usually, the decision maker is the person who noticed the issue or the opportunity or the person most affected by it.
Dennis Bakke [Then CEO of AES—a 400,000 person global energy company that used the advice process during Bakke’s tenure] recounts a story that exemplifies the advice process in action. One day Shazad Qasim, a recently hired financial analyst at AES, consulted with Bakke. He was intending to leave his role to go back to his native Pakistan and research the opportunity for electricity generating capacity there on behalf of AES. Bakke remembers his reaction:
I told him I was skeptical. Several years earlier, Agency for International Development (AID) representatives from the U.S. Department of State had encouraged us to expand into Pakistan. We had told them that we hardly knew what we were doing in the United States, let alone a place like Pakistan. Besides, it ranked as one of the most corrupt countries in the world for doing business. The ethical standards at AES probably ensured that we would never get any business there.
Despite the CEO’s recommendation, the advice process meant the decision was Shazad’s. He decided to go to Pakistan, effectively creating a new position for himself as business developer, retaining his previous salary. Six months later, the former financial analyst invited Bakke to Pakistan to meet the prime minister. Two and a half years later, a $700 million power plant was running. In line with AES’s principles, the decision that AES would invest $200 million of its equity wasn’t made by Bakke or the board, but by Shazad and people with less seniority (who of course, given the amounts at stake, asked Bakke and the board for advice).”
To Sum it Up
Most of us naturally do a form of this for decisions about our personal lives—asking trusted friends and advisors for their opinions without feeling beholden to their advice. Yet putting it in place in a more systemic fashion can be difficult.
In practice, organizations that use the advice process have cultures that support this kind of decision making—including clear conflict resolution techniques, policies, and training. Nevertheless, it is worth investigating. Here’s a nice summary of how the advice process works (from http://danieltenner.com/2014/11/06/the-advice-process-definition-and-usage-tips/)
“Anyone can make any decision they feel comfortable making. However, before they make that decision, they must ask those who will be impacted by that decision, and those who are experts on that subject, for advice. They are free to disregard the advice and make the decision the way they wanted to anyway, but they must first ask for advice.
Important: this is about getting feedback/input into your decision, not about building consensus. Do not use the advice process to try and browbeat people into agreement or to build political support for your decision. You don’t need people to agree. You don’t need political support. You just need input to make sure that you make the right decision.”