Role of Decision Rights in Decision Governance

Decision rights are entitlements to act in a certain way and have access to specific information and resources required to make decisions. An executive may be asked to decide if an investment should be made or not, a manager may be deciding between candidates to hire – both are entitlements to make a decision. 

The counterpart to decision rights are decision responsibilities. Being entitled to choose one of the options, as well as influencing which options are being chosen from, comes with the responsibility for the outcomes actions that the decision leads to. 

There is no single source of truth for decision rights in a firm. They are allocated through jobs, policies, and processes, and when these are not clear, ad hoc. When designing decision governance, it is better to avoid having it spread across many places, and focus on capturing it through the three mentioned above – jobs, policies, and processes.

The definition of a job will outline responsibilities, and usually mean that the person taking the job will be making and participating in decisions required to discharge their responsibilities. If a job says that a person is responsible for developing a plan, the implied decision right is that the person can decide what the plan will be – whether that plan will be in fact executed may not be a decision they can take, their decision right might be limited to recommending the plan.

The definition of a job is never comprehensive enough to cover all kinds of decision situations in a firm. The organizational chart comes into play, in that any decision where rights and responsibilities may not be clear, can be escalated up, given the general principle that if an individual is in a management job, they also inherit decision rights and responsibilities of all staff reporting to them directly and indirectly; it does not matter what level of manager they may be – director, executive, or other.

Policies will be used when decision rights need to be clarified without specifying the details of the exact steps to realize them. A policy will also be specific to a topic – such as who decides about investments of which scale, who determines if information is confidential or not, and so on. They are needed when decision rights are assigned across different jobs, and when it is important to clarify how rights across these jobs relate to each other – which job may have broader rights and responsibilities than another.

Processes, by defining and assigning actions across jobs, define in much more detail how decision rights are realized. A process might indicate that individuals in a specific set of jobs will need to review and jointly decide on something, before some subsequent actions can be executed. Processes can be thought of as a way to ensure jobs and policies are implemented as intended, including that it is clear when decisions are made.

You can learn about how decisions are governed by looking at how jobs, policies, and processes have been defined, and you can trace decision governance issues to gaps or inconsistencies in these same management tools. This also implies that changes to how decisions are governed will lead to changes to jobs, policies, and processes.