We all love freedom. Freedom is great! Unlimited choices sound awesome!
But we also know people need limits and roles. An organization is built by having people specialize in certain roles. The organization is stronger due to these limits.
Not everyone is going to be a great accountant, but we need the accounting done correctly. Not everyone should be buying raw materials or hiring people. So we need to make clear who should be.
Many times, several people are part of the purchasing or hiring process in an organization.
Having several people involved in a process actually reduces the risk of theft or bad decisions.
The bigger the decisions, the bigger the risks to the company.
Not everyone has the experience and information to make these decisions.
So how do we handle this challenge?
We want to have flexible, adaptable and responsive teams to stay ahead of the competition.
But the two major enemies of speed and flexibility are fear and uncertainty.
When people are not sure whether they can make a decision or not, they typically freeze, ignore the situation or make a bad decision. All bad outcomes.
What can we do about it?
The solution is actually very simple, but rarely seen in smaller companies.
Write down the limits of authority for each person.
Let’s keep it short and simple. What dollar amount does each person have the authority to spend either as an operating expense, or to acquire an asset on behalf of the company? Similarly, what amount can they approve?
Take the time to write down and share this information and you will make your organization ten times more responsive, adaptable and less stressful too!
Are you ready to make your company more flexible and responsive?