Does An “Approvals” Culture Slow Down Organizations?

We had just regularized two of our short term contract employees into our FTE headcount. Both the employees were happy that we were able to recognize their efforts, their hiring managers were satisfied to see the addition of good talent to their team on time. Looked like a happy morning till I opened my inbox, my boss had shot out an email that I had not sought his approval while regularizing these 2 employees.

Though it was not the norm to take approvals as long as it was in the plan, he felt that he should have been consulted. That was the first time I experienced this organisational bump called approvals. I just checked the LinkedIn profiles of those 2 employees now, one of them is a VP of a trading company in Middle East and the other one a DGM HR in a large automobile firm 🙂

Few years from then I was in a turnaround assignment, it was the 3rd quarter and the numbers looked challenging to achieve. The signs and energy from my colleagues wasn’t encouraging. I thought it was important to take them out for a day or two and revive the energy levels outside office settings and align them to one last push (oh’ yeah it’s called offsite). So we made arrangements, just the day before the event my Finance Head called me to say that this event is not in the approved list, I told him “you guys took a long time to revert, now it’s too late to cancel this” and went ahead, those days this event was costing about 1200 US $. Luckily I used to work in an organisation which did not penalize me, but I am sure I crossed some line that day. But imagine cancelling an event last minute after having announced in advance and preparations almost done. Sitting at the forefront of action I felt only I knew the importance of getting my team together. For my HQ it was another line of expense which they had to approve.

All organizations have a chain of approvals system, some are put in place to have control mechanisms to ensure decision making happens at the appropriate level. But most of them are used to Delay and Deny the pace at which things should happen due to inefficient leaders/managers. Picture this, we appoint senior people who can take decisions on million dollar deals relating to customers and deny them the authority to hire people critical to their business or spend a measly amount! Many well run organizations have an authority matrix in place where things are defined in terms of decision making. Only exceptions have to go through the approval system. But the world is full of exceptions, the customer comes up with new situations, your suppliers ask for some exceptions, your employee puts you under an extraordinary situation, many a times the pre-defined approval systems don’t cover them and ask for new decision making thought process which only the leader/manager in line of fire can envisage. The old way of “Has it been approved yet” hampers organisation progress.

It would also help organisations to analyze the exceptions that come up frequently and put them in the preapproved list on a periodic basis. In the world of analytics is somebody looking at decision making speed yet? Too many approval layers or approvals for multiple processes in any organisation denotes stress in the organisation performance and lack of trust in its managers/leaders. Yes, we all have read about accounting scandals in the past and it suits to say ‘better be safe than sorry’ on many financial aspects of doing business. But to load approvals across the hierarchy of organisations where every layer is busy approving one thing or the other is bound to frustrate the frontline of the organisation who service our paying customers.

The “Approval Culture” could be more frustrating if you have line managers who are either disorganized or incoherent to the needs of their staff below. Some of the approvers need multiple reminders before they approve, few ask for explanations after reminding, which means going back to the drawing board and reworking which makes you ask ‘what were you doing when I sent the request the first time’. When you find yourself in an organisation which has multiple approval loops, you are working in a culture of “command and control”.

Many organisations think they have covered it all when they have multiple approval systems for employee hiring, customer acquisitions and employee expenses. But they fail to forget that this only increases bureaucracy, unnecessary power with leaders, managers and finance departments when not monitored by top leadership. Imagine if you have to take approvals to hire (even if you are hiring a mediocre person), but you wouldn’t need to get an approval to fire a performing employee or deny possibly a lucrative customer acquisition. Ever read an approval matrix which said please take an approval before you put your top talent on PIP?

With all the benefits and good night sleep the approvals system provide to management of organizations, it’s important to note that it also slows down organisations. Let’s not forget the frustration it causes at the frontline and the agility loss in a fast paced world.

Approval loops are not only scary but also a thing of the past!