GM543 Unit 5 RAPID Decision Rights Map Example

The Policy Says Fifteen Percent: A Unit 5 Decision Rights Map of Six Recurring Decisions

[Student Name]

Purdue University Global

GM543: Strategic Organizational Design and Architecture

Unit 5 Decision Rights Map

[Instructor Name]

[Date]

Harrow Contract Furniture, its policies, the twenty orders and every figure are composite and illustrative; the frameworks and studies cited are real.

Method

Paul Rogers and Marcia Blenko describe five roles in any important decision: those who recommend a course of action, those who must agree before it goes forward, those who give input, the one person who decides, and those who perform the decision once it is made (Rogers & Blenko, 2006). They argue that most decision problems come from confusion about who decides and who only gives input.

Six decisions were chosen because each recurs every week at Harrow Contract Furniture: a discount beyond list price, acceptance of customer's own material, a promised ship date, an engineering deviation from standard, an installation date, and acceptance of an order below the plant's minimum run. The first map was built from the discount approval policy, the order handling procedure and job descriptions. The second was built from twenty orders placed in the last quarter, all above $100,000, by reading the email record and interviewing the coordinator on each order. For every decision, the second map records who recommended, who could stop it, and whose word ended it.

Decision rights belong in an organization design study even though they never appear on a chart. Galbraith treats the distribution of power to decide as part of structure itself, alongside the grouping of units and the number of layers (Galbraith, 2014). Two companies with identical charts can behave very differently if one lets the plant set dates and the other lets sales set them.

The Map as Policy Assigns It

Discount beyond list. The territory manager recommends, the regional sales director decides up to 15 percent, and the sales vice president decides above that. Finance gives input on margin.

Customer's own material. The coordinator recommends, special products engineering must agree that the fabric meets performance standards, and the plant manager decides whether the plant will accept it.

Promised ship date. The plant scheduler recommends a date from capacity, the territory manager gives input on the customer's need, and the plant manager decides. The procedure says no date is promised before the scheduler has checked it.

Engineering deviation. The special products engineer recommends, quality must agree, and the seating or tables engineering director decides.

Installation date. The installation manager decides after input from the coordinator and the customer.

Order below minimum run. The plant manager decides, with input from finance on cost.

The Map as Twenty Orders Show It

Discount beyond list. In practice, discounts above 15 percent were common, appearing on 9 of the 20 orders. In 7 of those, the regional director approved them alone, often by text message, and the sales vice president learned of them at month end. Finance gave input on none.

Customer's own material. The coordinator recommended on every order, but in 4 of 6 cases with customer's own material, the territory manager had already promised acceptance to the customer before engineering tested the fabric. Engineering's agreement became a formality.

Promised ship date. This was the largest gap. On 14 of 20 orders, the territory manager gave the customer a date before the scheduler checked capacity. The scheduler then performed the date if possible and escalated if not. In practice, sales decided and the plant performed, the reverse of the policy.

Engineering deviation. Mostly as written. On 2 orders, a plant supervisor made a small deviation on the floor without engineering approval.

Installation date. As written, except that the installation manager often learned the ship date only from the coordinator's email, and so decided late.

Order below minimum run. Small custom orders were accepted by territory managers and then argued over by the plant manager. On 3 of 5 such orders, the plant manager tried to stop them after the customer had been told yes.

On fourteen of twenty orders, sales decided the ship date and the plant was left to perform it, the reverse of what the policy says.

Commentary in Order of Cost

Promised ship dates. This gap costs the most. When sales decides a date before capacity is checked, the plant either breaks a long run, raising unit cost, or misses the date. Of the 14 orders with dates set by sales, 6 shipped late, compared with 1 of the 6 orders where the scheduler set the date first. Late shipments at Harrow carry penalty clauses on large projects, and those 6 orders cost about $48,000 in credits. The deeper cost is the strategy, which promises reliability of delivery.

Discounts. Unreviewed discounts above 15 percent reduced margin on 7 orders by about $61,000 compared with the policy limit. Some may have been needed to win the work, but no one checked.

Customer's own material. Accepting fabrics before testing led to 1 order in which the fabric failed abrasion testing after the customer was promised acceptance, delaying the order by three weeks.

Orders below minimum run. Arguments after the fact cost goodwill with customers and several days of management time each.

Rogers and Blenko note that a clear assignment of the decide role is the most important single step, and that the people who must agree should be few (Rogers & Blenko, 2006). At Harrow, the policy assigns roles clearly, but the incentives push decisions toward the people who meet the customer. Territory managers earn commission on booked orders, so they decide dates and discounts quickly to book them.

Proposed Revisions and Likely Objections

Ship dates. The scheduler keeps the decide role, but the order system will not issue a quote with a date until the scheduler has entered a confirmed date, within one working day. Territory managers will object that they lose deals while waiting. The answer is a set of standard lead times for catalog items that territory managers can quote on their own.

Discounts. Discounts above 15 percent go to the sales vice president through the order system, with finance's margin estimate attached. Regional directors will object to losing authority, and the limit could rise to 18 percent for orders above $250,000 to meet them partway.

Customer's own material. No acceptance is communicated to a customer until engineering's test is recorded. Coordinators will need a standard message telling customers the test takes five working days.

Orders below minimum run. Territory managers recommend, the plant manager decides before the customer is told. Sales will object, and a monthly allowance of small runs could reduce the conflict.

Gary Neilson, Karla Martin and Elizabeth Powers found that clear decision rights and information flow matter more to strategy execution than structure changes (Neilson et al., 2008). These revisions change no boxes on Harrow's chart, only who decides.

References

Galbraith, J. R. (2014). Designing organizations: Strategy, structure, and process at the business unit and enterprise levels (3rd ed.). Jossey-Bass.

Neilson, G. L., Martin, K. L., & Powers, E. (2008). The secrets to successful strategy execution. Harvard Business Review, 86(6), 60-70.

Rogers, P., & Blenko, M. (2006). Who has the D? How clear decision roles enhance organizational performance. Harvard Business Review, 84(1), 52-61.