Top Down Decision Making versus Bottom Up Decision Making

The previous articles touched upon the role of hierarchy in decision making. In this article, we consider whether top down decision or bottom up decision making is effective.

To consider this comparison it would be useful to think of top down decision making as being akin to someone sitting on top of a tree telling those at the bottom about how best to take care of the garden on the ground. On the other hand, bottom up decision making is akin to those at the bottom deciding on how best to tend the garden and ensuring that the other trees grow to the same height as well.

It does not take a genius to figure out that those at the bottom have a better understanding of the ground realities than those at the top.

The point here is that top down decision making is becoming redundant in these days when autonomy and decentralization are the norm.

Having said that, it is important to realize that not all decisions can be made by those at the middle or lower levels of the corporate hierarchy; Indeed, it is the case that most decision making pertaining to organizational policies, firm wise strategy and customer acquisition and customer relationship management has to be done from the top since the view from the top is unhindered as well as the top management having the experience and the foresight to take such decisions.

The point that needs to be noted is that bottom up decision making works well when the day to day running of the teams and divisions are concerned. It does not work well in cases of strategic acquisitions and firm wide policy making that is best left to the top management.

Of course, which is better also depends on the type of organization since those in the services sector operate in more democratic ways as compared to the firms in the manufacturing sector. This is because of the very nature of the work which is different in these two cases.

Since manufacturing is all about set routines and machines, the instructions have to be sent from the top since the decision making as well as the implementation operates in linear ways.

However, the services sector is driven by complexity and non-linearity and hence, decision making has to be done according to the needs of the situation and the players involved in the decision making process have to act in ways that maximize their benefits from the decision.

Finally, this is the bottom line requirement for any decision making process i.e. how much benefit that the decision brings to the firm as opposed to the costs incurred in such decision making. If the benefits far outweigh the costs, then decisions can be done in top down or bottom up manner with outcomes that are favourable to the whole organization.

There are many instances of decisions taken at the top that were not actualized and implemented properly because of incoherent communication and inconsistent transmission. On the other hand, there are many decisions that have been taken by the middle and lower levels that lack the experience and foresight not to mention the strategic depth which have resulted in short term thinking.

In conclusion, top down or bottom up decision making is effective according to the needs of the situation and is determined by several factors which we would examine one by one in the succeeding articles.