What’s the Right Number of Approvals?

In a recent piece by ChainLink Research on how a legal department can add value, the author noted how gaining efficiencies is not only about technology, but about process. Referencing Cisco’s big push to get to “one-approver per function”, the article noted that it’s important to ask what is the real ROI of having additional approvers and what is the related impact on revenue and customer satisfaction. It’s important to ask how much time the extra approvals take and what the time-value of money is for holding up orders for that many extra days. And what is the cost to the organization if approver number 17, who is the least affected by the purchase, decides to reject the order 7 days into the process when the product is needed on day 10?

While it’s probably impossible to build some hard and fast rules that will always apply, it is important to set some ground rules as to when another approval is needed, and when an approval can be skipped or automated. For example, does every order over $10,000 need to be signed by three approvers? What if the order is for four new servers at a cost of $20,000 and the purchase has already been approved in principle in the budget (for an amount up to $25,000)? Should not the CTO’s approval alone be sufficient once the product has been selected (provided proper procurement policies have been followed)?

At most there should be one approver per function, and the approval of functions that are minimally impacted should probably not be required at all if at least one of the approvers is a senior manager or the purchase is not high dollar and at least one of the approvers has deep product and/or service knowledge. And any approvals that can be automated should be. For example, a $500 spend on office supplies for approved products from an approved supplier should probably not require three manual approvals.

Any thoughts as to what the right number of approvers is?

Share This on Linked In