Boards routinely review financial performance, strategic priorities, capital allocation, and risk. Those discussions are essential, but I believe one of the strongest predictors of future performance often receives far less attention: whether decision rights remain clear as an organization grows.
As companies grow, decision-making naturally becomes more complex. Additional layers of leadership, more formal governance, and greater specialization all bring value, but they also create new opportunities for accountability to become fragmented.
In many industries, competitive advantage is becoming less about having better ideas and more about how quickly and consistently organizations can turn those ideas into decisions and execution. Without clearly defined decision rights, organizations can shift from ownership to coordination.
Ownership does not automatically survive growth. As companies become larger and more complex, accountability must become more intentional. That means governance, incentives, and decision rights must evolve with the business rather than lag behind it.
Boards are uniquely positioned to recognize when those mechanisms begin to weaken, and to challenge management on whether the organization is structured to continue to support timely, accountable decision-making.
Growth Changes Decision-Making
In the initial stages of growth, ownership is reinforced through proximity. Founders work closely with their teams, decisions move quickly, and trust fills many of the gaps that formal governance and process will eventually need to address.
As organizations expand through new markets, acquisitions, additional product lines, and larger teams, the challenge is ensuring that decision-making evolves as intentionally as the business itself.
Without clear decision rights, companies often become more coordinated but less decisive. Leaders grow less certain about where authority begins and ends, and additional approvals and slower execution become natural consequences of growing complexity rather than individual capability.
A decision that once involved one executive now involves three. Someone adds another stakeholder “just to be safe.” Escalation gradually replaces ownership. None of these changes seem significant on its own, but together they slow execution in ways that are difficult to recognize until momentum begins to fade.
At what point does prudent governance become unnecessary friction?
It is a question that every leadership team and every board should revisit as the organization evolves.
The Earliest Signals are Behavioral not Financial
Financial performance is often a lagging indicator of weakening ownership. The earliest signals appear in the way decisions are made, escalated, and executed across the organization.
Research published by McKinsey found that only 37% of executives believe their organizations consistently make decisions that are both high in quality and made quickly. The same research found that organizations that excel at decision-making are twice as likely to report superior financial returns from their most recent strategic decisions.
Boards have a unique vantage point because they observe patterns across strategy, leadership, incentives, succession, and risk over time. That perspective allows directors to recognize organizational drift that may not yet be visible within any single function or reflected in the financial results.
Rather than attempting to diagnose operational issues themselves, boards should evaluate whether management has the visibility, discipline, and governance mechanisms to identify and address them.
That starts with asking questions like:
- How does management ensure executive incentive structures reinforce enterprise-wide outcomes rather than functional optimization?
- How does management assess whether decision rights remain clear as the organization grows?
- What evidence gives management confidence that decisions are consistently being made at the appropriate level? And when they are not, how are those issues identified and addressed?
The answers often provide a much earlier view of organizational health than the financial statements alone.
Governance Should Reinforce Decision Rights
When boards begin to see signs that ownership is weakening, it is worth looking first at how the business is organized to make decisions. Slowing execution often reflects unclear accountability before it reflects a leadership issue.
Boards should expect management to articulate the small number of enterprise outcomes every executive is collectively accountable for achieving and to demonstrate that decision rights, operating rhythms, escalation paths, and incentive structures reinforce those priorities. Those outcomes establish the context for the tradeoffs leaders make every day.
Incentives deserve particular attention because they reveal what an organization truly values. Boards should periodically evaluate whether those incentives reinforce enterprise-wide performance or unintentionally reward functional optimization at the expense of company outcomes.
Those priorities help shape the decisions leaders make every day. They also provide boards with a practical way to evaluate whether governance is supporting the business or creating unnecessary complexity.
Closing Thoughts
As organizations grow, complexity should increase. Confusion about who decides should not.
Ownership culture rarely fades because people stop caring. More often, it weakens because the systems surrounding them no longer reinforce the behaviors that made the company successful in the first place.
Boards do not make management decisions, nor should they. Their responsibility is to ensure management has built a governance system where the right decisions can be made by the right people at the right time.
Three Questions Every Board Should Ask
- How does management know decision rights remain clear as the company grows?
- How are executive incentives encouraging leaders to work toward shared business goals rather than individual functional priorities?
- Where does the business require approvals today that it did not require 18 months ago, and was that change intentional?
The answers to those questions may reveal more about an organization’s future performance and whether the organization is positioned to sustain growth as it becomes more complex.
Author Bio
Francesca Molinari is a six-time Chief Human Resources Officer with more than 30 years of experience helping organizations scale through stronger leadership, governance, and organizational effectiveness. She has led human capital strategy for public companies, private equity-backed businesses, and entrepreneurial growth companies, including GE, Adobe, eBay, and most recently Boomi.
Francesca has partnered closely with private and public company boards on executive succession, executive incentives, governance, and organizational effectiveness. She currently serves as a Trustee of the Academy of Notre Dame de Namur and is a Member of Executive Leaders for Advisory Boards (ELAB).
Her work focuses on helping boards and executive teams build organizations that scale without sacrificing speed, accountability, or leadership effectiveness.