The boss knows better – doesn’t he?

How should important decisions be made in modern companies? The question of whether it is better to make decisions in a team or whether decision making should be left to the executive has been discussed by social scientists and economists for a long time.

Studies such as John Maynard Keynes’ behavior-observsations  in the so-called “Beauty Contest” speak in favour of team decisions. A study by Matthias Sutter from the University of Innsbruck shows that teams make fewer mistakes in this test than participants who decide alone. Also the results of the well-known NASA game, which we at educando sometimes use to increase  team development, lead to the assessment that group decisions almost always lead to better results than the decision of individuals.

In my experience, team decisions are particularly effective in the following cases:

the teams are heterogeneous – different experiences and perspectives deliver unerring decisions
the complexity of the project is high, different topics have to be combined
constructive discussion, individual team members can make compromises
the environment allows creative ideas, each participant can have a say and make his own assessments
group size does not lead to coordination problems or social loafing
Also high-performance team work according to these principles.

However, a current study of behavioural research reveals another problem in the implementation of these findings: Ernst Fehr from the University of Zürch has experimented with the decision-making processes in companies and found that many managers renounced the know-how of their employees and preferred to make decisions on their own to strengthen their power. The employees, who in the beginning were still motivated and took on tasks on their own responsibility, quickly learned that commitment was not worthwhile and soon worked without any initiative on their part. The feeling of not being able to have a say triggered strong negative feelings in those involved. This is a situation that can also be found in many companies and the long-term consequences of which are currently being discussed everywhere.

The realization that group decisions are generally better than decisions made by individuals can therefore only be put into practice if there is a leadership culture that is not based on the exercise of power but on constructive cooperation. For many corporate cultures, this is a path that still has to be taken.

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