An age-old debate has been revisited. It pertains to the right moment when to decentralize decision-making. Most business executives during bouts of structure redesign, opt for a decentralized approach. The belief here is that front-line employees are closer to the actual customers and competitors so have an innate understanding of the market, in a way the top brass would lack. There are four qualities most associate with properly functional organizations. These are- responsiveness, efficiency, reliability and perennity or the ability to remain perennial. There remain four situations as well on when to decentralize. The first is when responsiveness is sought through immediacy. Here decentralization would be the ideal route. Reliability is sought through compliance, which can only be provided by a central hierarchy deeply rooted in the corporate strategy. Such a system works best at finance based organizations. Efficiency can be achieved through syndication of tasks. This allows several advantages such as economies of scale and avoidance of duplication. The principle of perennity meanwhile is best served through sheer detachment. This detachment occurs from a central authority, away from the frontline. It works best with radical innovations, knowledge and talent management schemes, product portfolio planning, withdrawals and brand capital. A one-size-fits-all principle does not work when it comes to decentralization and its opportune moment.

Source:https://hbr.org/2017/12/when-to-decentralize-decision-making-and-when-not-to

Uploaded Date:19 January 2018