Organizations, authority, and accountability
Clarify who decides, who contributes, and when a business decision needs escalation.
Assign decision rights for a cross-functional business problem and identify when a manager should decide, consult, or escalate.
Overview
A customer asks Northline Furniture to deliver an order two days early. Sales wants to say yes. Operations would need overtime, and finance is protecting cash for supplier payments.
The team needs a decision about the promise, the spending, and who can authorize both.
Both businesses, company policies, and figures in this lesson are fictional teaching assumptions.
Recall Lesson 010: Why did Riverton need an explicit assumption connecting its materials check to improved on-time shipments? Hold your answer for the debrief.
Work and decision rights
An organization coordinates people's work toward shared purposes. A reporting chart shows who reports to whom, but may leave unclear who can approve a particular customer commitment.
Decision rights specify who may make a decision and within what boundaries. Those boundaries can concern spending, delivery promises, staffing, or required approvals.
For this lesson, distinguish three related ideas. Responsibility is the work assigned to someone. Authority is permission to make decisions or commit resources. Accountability means being answerable for the decision or assigned result, including explaining problems and following through.
A supervisor might be responsible for the shipping schedule without authority to approve overtime. Holding that supervisor accountable for an earlier delivery requires either sufficient authority or a clear route to obtain approval.
Decide, consult, or escalate
A cross-functional problem affects more than one function, such as sales, operations, and finance. Each sees different consequences. Sales knows the customer; operations knows capacity; finance knows payment commitments.
Consulting means obtaining relevant facts and judgments before deciding. It does not automatically give each contributor a veto. Bain's RAPID framework separates recommending, providing input, required agreement, deciding, and executing. Its useful lesson here is that contributing to a decision and having final authority are different roles. Source: Bain & Company.
Decide within your assigned authority once you have enough information for the stakes involved. Consult people whose knowledge or work the decision affects. Escalate when the proposal exceeds your authority, conflicts with another commitment you cannot change, or needs an exception you cannot approve.
These actions can occur in sequence: consult operations, discover that a commitment exceeds your limit, then escalate with a recommendation. Escalation should identify the choice, consequences, deadline, and missing approval.
For today's examples, name one final decision maker. Some organizations use committees or require separate sign-offs. In either arrangement, specify how disagreement is resolved.
Worked example
Northline's sales manager may offer an earlier date only after operations confirms capacity. The operations manager may approve up to $500 of additional cost per order if existing delivery commitments remain intact. The general manager must approve larger spending or any change to an existing customer promise.
The proposed acceleration requires 12 overtime hours at an additional cost of $40 per hour, including all employer costs. Additional spending is 12 × $40 = $480, within the $500 limit.
However, operations finds that accelerating this order would delay another customer's shipment by one day. Being within the spending limit is insufficient. The proposal crosses the commitment boundary and must go to the general manager.
Sales gathers the requesting customer's reason and flexibility. Operations explains both schedules. Finance checks when the $480 must be paid and whether cash is available. The general manager chooses whether to keep the existing schedule or pursue acceleration, including any agreement needed from the affected customer. Internal approval alone does not change what that customer was promised.
After approval, operations owns the revised schedule and sales communicates confirmed dates. The general manager reviews whether both commitments were met. Record the decision, implementation owner, deadline, and review measure so the meeting leads to action.
Exercise
Allow 7–9 minutes. You own Pine Catering. Its manager, Rosa, receives a request for an extra event on Friday. The kitchen lead confirms that both the new event and existing orders can be delivered on time with temporary help.
Company policy lets Rosa accept additional work when delivery is confirmed and additional cash payments before customer collection do not exceed $600. The owner must approve any exception. Rosa cannot change customer payment terms without the owner's approval.
The new event brings $1,200 after Friday's delivery. Ingredients cost $360 and temporary help costs $280, both payable Thursday. All other costs remain unchanged. The owner has $800 available after reserving cash for existing obligations. Assume reliable collection and no other additional cash movements.
- Calculate the additional spending and the amount the event contributes after those costs. Can Rosa approve the event herself?
- Identify the final decision maker, two people to consult, and the person who should coordinate execution.
- Write a three-sentence escalation stating the choice, financial consequences, and recommendation. State one condition to confirm before promising delivery.
- Name one implementation check and explain why approving the event does not finish the owner's job.
Try answering before reading on.
Answer
Additional spending is $360 + $280 = $640. The amount remaining from the new revenue is $1,200 − $640 = $560. This is the improvement before any omitted costs, not the company's total profit.
Rosa must escalate because $640 exceeds her $600 limit by $40. The available $800 makes the proposal affordable under the stated assumptions; it does not expand her authority.
The owner decides whether to approve the exception. Consult the kitchen lead about capacity and temporary staffing, and the person handling payments about cash timing. Rosa can coordinate execution, with the kitchen lead responsible for preparation and delivery.
A suitable escalation is: “The Friday event requires $640 before collection, exceeding my authority by $40. It adds $560 after the stated costs and leaves $800 − $640 = $160 available until the $1,200 collection. I recommend approval once temporary staffing is confirmed, because the kitchen expects to protect existing delivery commitments.”
After collection, the available expansion funds become $160 + $1,200 = $1,360. This calculation excludes cash already reserved for existing obligations.
Confirm staff availability before committing. Check both events' readiness against promised times. The owner should ensure the approval is communicated, an execution owner accepts the work, and results are reviewed. Delegating tasks still requires appropriate oversight.
Recall answer: Riverton's action could improve shipments only if shortages were detectable and fixable early enough. Naming an action or an owner does not establish that the plan will work.
Applying this lesson
For the next decision that crosses teams, write down who decides, whose input is needed, who carries it out, and what boundary triggers escalation. Check that the person accountable has the authority or approval route needed to deliver.
Sources
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