In most businesses, responsibility for the most critical decisions is generally left to the highest-paid person’s opinion — the Hippo effect.

But what is a HIPPO Effect?

HiPPO is an acronym for the highest-paid person’s opinion” or the highest-paid person in the office.” The acronym is used to describe the tendency for lower-paid employees to defer to higher-paid employees when a decision has to be made”. Taken from Wikipedia

The recent example of the European super league was a prime example of this case in point. At no point were the key stakeholders’ views like the management team, employees, and importantly fans are taken into account. Yes, football clubs are run as a large business, but it appears on the surface that the owners of the 12 clubs decided among themselves to push forward with this. After a massive backlash from fans and the media, the decision was made to pull out of the agreement.

A business owner or manager may not fully understand what is going on across the firm. If they are involved in overseeing and developing the business, their exposure to what is happening across lower levels may be limited. The result can be a blind spot.

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Unfortunately, when business owners or managers lack insight into the entire firm, there may be negative effects. Their limited perspective can reduce the quality of their decision making and business planning, leading to disengaged staff, less productivity and critically impacting customer service.

Planning is a team effort, which is why it’s a good idea for management teams to take the time to step back and examine their business through employees’ eyes.

The importance of engaging staff for business planning

Good people are essential to any business’s ongoing success and have the business’s strengths and weaknesses first-hand. Their insights can shed light on issues that may be compromising the firm’s profitability and productivity. Just talking to staff to find out their thoughts about how the business is run can help build trust and also help towards:

  • highlighting where the business is performing well
  • identifying potential operational areas that could be made more efficient
  • gathering ideas to run a more profitable business

Another benefit of engaging all employees in business planning is that it can motivate them to become more involved in their future direction and success. When staff contribute to finding answers for challenges within a business, they may also become more willing to take ownership for implementing solutions.

Making improvements to the business, such as better use of the resource, can allow a firm to create the additional scale and capacity needed to take it to the next level.

Support with business planning

When it’s time to make changes and incorporate a new and modern approach to planning, it can be challenging to know where to turn. An unbiased third party can help management take a fresh look, highlighting areas of strength and identifying weaknesses that could hinder future success and profitability.

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Working with an external business adviser to develop new approaches can give firms a greater chance of success — and make sure that critical decision making draws upon the wisdom and expertise of the staff at all levels, instead of immediately defaulting to the highest-paid person’s opinion.

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