How closely people can communicate with decision-makers changes both the way an organisation works and the atmosphere within it.
In Brief
As an organisation grows, the person who understands an issue and the person who can make the final decision are often different people. When decision-makers also feel difficult to approach, communicating an idea can become a longer process. The flexibility I experienced at startups owed much to people’s ability to speak directly with one another.
One difference I noticed between large corporations and startups was how close the decision-maker was. Sometimes an issue had been fully explained but still had to wait for an internal review. At other times, the direction could be agreed during the conversation.
Part 1 explored why security and reporting increase as organisations grow. This article considers how the information and ideas communicated through those arrangements lead to actual decisions.
1. Decision authority
At a large corporation, an employee may know the transaction and its records well but still be unable to decide the company’s response on the spot. Understanding and agreeing with an explanation is different from having the authority to approve the necessary action.
That distinction matters to an accountant. Even after a thorough discussion with the employee handling the work, some matters may still require a manager’s judgement. Continuing to ask the same employee for an answer will not always resolve them.
In smaller organisations, the person explaining the issue and the person able to decide were often in the same room. When the CFO or CEO joined the discussion, we could consider both what else needed checking and how to proceed. There was less need to pass the issue on internally and wait for a response.
2. Psychological distance
The difference I felt went beyond the reporting levels shown on an organisation chart. There was also a sense of distance between people. In a company with many employees, it is practically impossible for the CEO to communicate directly with everyone. From an employee’s perspective, the CEO may become someone encountered through formal reporting rather than someone to speak with regularly. Even with a good idea, it is not easy simply to approach that person and discuss it.
A startup’s smaller workforce creates more opportunities for contact. People can exchange ideas over a meal or a brief conversation as well as in meetings. A decision-maker has a chance to hear the idea and ask questions before it becomes a formal agenda item.
This was part of the flexibility I felt at startups. Being able to speak directly with the people involved influenced both the pace of the work and the atmosphere in which we worked together.
The communication routes can be simplified as follows.
| Example of communication through several levels | Example of direct discussion among those involved |
|---|---|
| Employee → team leader or manager → decision-maker | Employee ↔ CFO, CEO and relevant managers |
| Background and findings are explained at each handover | Background and questions are discussed in the same conversation |
| Further questions from senior management return to the employee | Participants agree together what else needs checking |
3. The role of review
There are reasons for involving several reviewers. A decision that looks appropriate within one department may affect another department’s work or the allocation of resources across the company. The information an employee holds and the range of matters a manager must consider may differ.
The number of review stages alone therefore says little about efficiency. A stage has a role if it examines a further implication or exercises the necessary authority. But if the same explanation is repeated while it remains unclear who must decide what, time can pass without resolving the issue.
As an external accountant, it helps to understand what the person I am speaking with can decide and what must be passed to someone else. That affects both the explanation needed and the process I should expect to wait for.
Even when a decision is reached quickly through direct conversation, keeping a record of the decision and its reasoning helps with the work that follows. Someone who was not involved can take it forward, and a change of personnel is less likely to mean explaining everything again from the beginning.
Key Takeaways
- The person who understands an issue may not be the person who can decide the company’s response.
- Opportunities for direct conversation and the sense of distance from a decision-maker also affect how ideas are communicated.
- Each stage of a review should be clear about what it examines and what it decides.
These differences also appear during an audit. Who takes part in interviews and how much importance the company attaches to the audit can change the atmosphere of the work. Part 3 looks at the differences I experienced as an auditor.