Sometimes a leader may reverse a key decision or hold fast to the chosen course. Knowing what do to and when defines a leader's legacy.
Examining a decision in context is essential to determining its efficacy. Asking four questions will help a leader gain perspective.
1. Why is this decision important? Big decisions require deliberation over time. Typically, part of the equation involves testing assumptions, as in, “What is the cost of not doing what we propose doing?” Revisiting why a decision was made is a good first step because it will confirm why you did what you did. Sound decisions affirm the organizational mission.
2. Who benefits from the decision? There are winners and losers in every decision because decisions provoke change. Consequences of the decision may mean some people gain power and influence; others may lose it. Or many more may suffer inconvenience. Resistance is to be expected; how to deal with resistance is a measure of leadership. It may require more active participation by the leader to ensure that everyone pulls together for the good of the organization.
3. What is the cost of reversing the decision? There are risks in reversing a significant decision, especially if time and resources have been invested in its implementation. This can make the organization look unfocused, even wishy-washy. At the same time, pulling back might be prudent because it may save the company from throwing good money after bad or from alienating stakeholders.
4. What is best for the organization? The challenge leaders face every day is doing what the organization needs them to do. When a decision proves unpopular, it may make sense to hold the course because the long-term pain outweighs the short-term gain. We see this often with corporate reorganizations.
These questions will help the leader get to the heart of the decision to determine what should happen next. There is one other aspect to consider: the effect on the leader. Sometimes a reversal would mean the end of a job, especially if the decision has proven to be wrong and has done harm to the organization. In parliamentary systems, this is what happens to party leaders who are given a vote of no confidence.
Reversals can also illuminate a leader's ability to be an honest broker. This can be a sign of strength as well as intelligence because it demonstrates that the leader understands what is best for the organization. This is precisely what Roberto Goizueta did as CEO of Coca-Cola when it became evident that the reformulation of New Coke was wrong-headed. The company reversed its decision and, in the process, grew market share for what became known as Classic Coke.
There is one area in which leaders cannot reverse course: integrity. You can change policy, but you cannot compromise principle. As straightforward as this seems, all too often we have seen companies short-change employee relationships due to a shift in business conditions. Cutting back to save a company going through a tough patch is part of business. Exacting those cuts only on employees while sparing management is unprincipled.
Reversing a decision because it is not working is what good leaders do when the decision proves unworkable or impractical. In this way the leader puts the organization first and ego second. At the same time, holding fast to an unpopular decision because it is good for the organization in the long run affirms the mission as well as the resilience of the leader.
This article was originally published in Washington Post, 11-22-10.