In startup companies, the chief executive officer typically makes all the big decisions, but as companies grow, managers often make decisions collectively. Group decision making is a formal process by which several managers work together to make a decision. Groups can use different methods to arrive at decisions, such as voting, consensus and electing a leader to make the final decision, but all methods have advantages and disadvantages.
A strength of group decision making is that it gives managers the opportunity to share knowledge about a decision that needs to be made. A single manager might not be aware of all the different considerations that could impact a complex business decision; by including several people in the process, managers can form a well-rounded view of a problem that can lead to a more sound decision. Even if a group leader ultimately makes the decision, sharing of information can help the leader choose more wisely.
Group decision making can allow a business to generate more ideas and facilitate greater creativity in problem-solving. It is difficult for a single person to approach a problem from many different angles and to generate numerous good ideas. With group decision making, managers can bounce ideas off one another and take advantage of differences in knowledge and perspectives to come up with more possible solutions.
A weakness of group decision making is that it generally increases the amount of time it takes to make decisions. A single executive can make a decision in minutes, while a group decision requires meetings and discussion. These can take hours or much longer, depending on the formal decision method used. A group decision made by an elected group leader or expert may happen relatively quickly, while it can take much longer for a group to arrive at a consensus.
Disagreements and Groupthink
If managers have fundamental disagreements about how to approach a decision, it may be difficult -- if not impossible -- for a group to reach a consensus, which is a result that everyone can agree to even if it represents the lowest common denominator of all ideas offered. The desire for consensus also can cause decision makers to avoid conflict and the presentative of alternatives. The tendency to conform to the group and avoid raising potentially unpopular ideas is called groupthink. Groupthink can reduce knowledge sharing and creativity, thereby diminishing some of the key benefits of group decision making. When you understand the advantages and disadvantages of group decision making, you can more easily choose a course of action that's best for your company's growth, which ultimately is the top priority.
Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.