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Observation of Informal Decisions

To understand an organisation, you must always ask the question as to how informal decisions are handled, i.e. how these are observed and evaluated within and outside of the organisation. There are many names and forms of informal decisions: favouritism, cronyism, nepotism, insider dealings, bribery, backhanders, extortion, patronage (collusion), price cartels, backroom deals, political dialogue, horse-trading, under the table deals, to name just a few. Whether one calls some of these corruption or political expediency, whether one finds it normal that the college friend of the boss receives the contract or whether this triggers a scandal – this is dependent upon time, culture and one’s definition of what is customary.

An important differentiation, in this area, consists of whether the informal influence takes place from within or outside the organisation. It makes a difference whether it revolves around the external interests of family ownership, politics, representatives of the authorities, the Mafia, shareholders etc., or the interests from within, such as departments, hierarchies or union representatives.

From the lists alone one can already see that a completely transparent, formalised organisation without wiggle room to make informal decisions could not exist. At the same time, it is also recognisable that if there were no public surveillance and thus, no danger of exposure, the formal side of the organisation would succumb. Therefore, this phenomenon is also not objectively measurable, but requires smart decisions.

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