The Hidden Costs of Unilateral Decision-Making: A Look at The Real-World Consequences

Silenced Voices and Missed Opportunities: The Downside of Decision-Making in Isolation.

Navigating the waters of organizational change management is never easy but it can be made a lot easier when a thorough and thoughtful approach is taken. When transparency and communication are at the center of any change, disruption will be lessened and you can limit the potential for negative downstream impact. This article aims to put a finer point on the often-overlooked costs of unilateral decision-making, with a particular focus on the ripple effects that such decisions can generate throughout an organization.

The Ripple Effects

The Organization Becomes Misaligned

During my time in corporate America, particularly at a specific media company going through a relatively hostile takeover, I was left “down-sized from the org. The newly instated management team made quick decisions in isolation with no transparency or communication about the impact these decisions would have on its employees. Ironically, the people who would ultimately be responsible for the execution of the new plan were left in the dark. Making it worse, the management team was largely unaware of the unique challenges of our company, resulting in a misalignment between their decisions and the recent organizational change management work we’d completed during the previous 6 months. Which by the way had both activity and revenue data that pointed to the forward progress that had already been made. 

The impact of my experience is echoed in this research from a 1999 study by Paul C. Nutt, which concluded; roughly "half of the decisions made in businesses fail" not because of the decisions themselves but because of "an ineffective process for making and communicating the decision." Nutt particularly emphasizes that failing to consult those responsible for implementation is often "wasteful, causes delays, impacts performance, and worse."

Employee Morale Takes a Hit

A standout moment that left a lasting impression on me was the absence of context or any employee consultation during the decision making process. This quickly led to the creation of an internal rumor mill which was wrought with worst-case scenario speak. As you can imagine, employee morale took a big hit. A 2012 Harvard Business Review article by Gretchen Spreitzer and Christine Porath validates this point. Their research revealed that "employees who felt included in decision-making processes were 1.3 times more likely to be fully engaged at work," further reducing their intent to leave by 27% and increasing performance by 19%.

Trust Erodes

After the abrupt "downsizing," my Gmail account was inundated with messages from bewildered colleagues in search of guidance. Of course my system access was cut off roughly 15 minutes after I received the details of my severance package from HR. The message was delivered via Zoom with neither my superior or HR feeling it necessary to turn on their cameras. I mean how awkward would that have been for them? This experience drove home the pivotal role of transparent communication in fostering trust within an organization. A 2003 study by Edelman and Berman corroborates this point, stating that "transparency is the most significant predictor of employee trust," and can influence "up to 76% of employees to align their actions and attitudes according to the communicated decision." Adding to this, a Harvard Business Review article titled "The Neuroscience of Trust" by Paul J. Zak found that transparency is one of the eight key management behaviors that foster trust in the workplace. Zak's research highlights that organizations with high levels of trust experience 74% less stress among employees, emphasizing the profound impact of transparent communication on the overall well-being and productivity of the workforce.

Collaboration Is Impacted

One very negative outcome that I’ve experienced in times of turbulence is that collaboration takes a significant hit. One of the biggest reasons why this happens is because employees go into self-preservation mode while they wait out the storm. A study by Smidts, Pruyn, and Van Riel in 2001 found that effective communication during times of significant change is positively correlated with a 29% increase in collaboration. Further reinforcing this point, a paper published in the Journal of Business Research by Andrew C. Inkpen and Eric W.K. Tsang highlighted the relationship between effective communication and collaborative innovation, noting that firms with open lines of communication are 70% more likely to engage in successful collaborative endeavors. 

Seeds of Skepticism are Sown

When I’ve been a part of sweeping organizational change that was not properly communicated, it had a psychological impact on me. Negative thoughts began to creep in and I started to lose faith in those tasked with leading me. The ineffective implementation of any decision has repercussions far beyond the immediate outcomes. For me, it also cultivated a growing skepticism regarding the leadership's overall ability. Research by Finkelstein, Hambrick, and Cannella in 2009 substantiated this experience, revealing that poor execution leads to a 60% increase in skepticism toward executive leadership. Furthermore, a Harvard Business Review article by W. Chan Kim and Renée Mauborgne on the trust crisis in leadership found that failed execution could significantly erode employee faith in their leaders, leading to a decline in overall organizational performance. Examples of the profound impact that failed execution can have, not only on specific initiatives but also on the broader perception of leadership quality.

Strategic Alignment Falls by The Wayside

A critical lesson learned was how detrimental the impact of unilateral decisions can be. Particularly those that affect the entire organization. Top-down decisions that lack a clear plan hamper strategic alignment, the very backbone of organizational success. Kaplan and Norton's 2001 research on strategy mapping strongly supports this point, showing that when strategic objectives are clearly communicated, employee alignment can improve by up to 40%. Therefore, decisions made without collaborative communication not only risk misalignment but also miss the opportunity for enhanced organizational cohesiveness and effectiveness.

My 2-Cents

Both personal experiences and academic findings confirm the critical importance that effective communication has on any organization's success or failure. Organizations stand to gain immensely by adopting transparent, communicative, inclusive, and strategically sound decision-making processes. Doing so can spare them the cascading consequences of a poorly executed change management plan.

My ask of all leaders is to always consider and openly discuss the potential psychological human impact of the changes you’re about to embark upon. Both research and personal experiences serve as cautionary tales, emphasizing the need for organizations to pause, reflect, and most importantly, involve those who will bear the consequences of these decisions.