I’ve worked in various management structures during my professional career which has the benefit of seeing some of the ins-and-outs of each style. Management structure in this context is not necessarily the management style of your direct supervisor. It’s more directed at the enterprise level management culture that is setup by organizational and executive management designs. Most often, writers talk about centralized versus decentralized organizations.
Process of simple parts, but as a whole is a complicated system. How do we best manage the system?
At the highest level they are referring to where decisions are made. Are they made at the corporate office with C-Level executives and pushed down to each organizational unit? Or are they made closer to the point of sale with general managers of each division?
Within the centralized/decentralized framework lies the question of employee empowerment and decision making authority. Organizations decide how much authority they give mid level managers to make decisions for the day-to-day operations of their area. As I mentioned in the beginning of this post, I’ve worked in both types of organizations and I’ve come to observe a few things about each. Which style is better is subjective and most definitely influenced by the position of the person forming the opinion. My own opinions are formed from the vantage point of a front line worker and mid level manager.
Centralized Management and Process Workers
The centralized operating structure tends to create what I call “process workers”. Process workers are put in place to follow a set of rules, procedures and guidelines. They are expected to follow instructions from upper management which are aligned to the core business objectives of the organization. For most workers in this type of environment the work is just a job as they are not rewarded for thinking too much outside of their assigned area. Now don’t hear me saying that I think following process is a bad thing. Standardized process within an organization has its reasons and business value to produce consistent and repeatable results. What I am saying is that a centralized management style tends to create a culture of process followers which minimizes organizational risk.
Decentralized Management and Knowledge Workers
The decentralized operating structure tends to create “knowledge workers”. Employees are given authority to make decisions within their work unit as long it fits within the objectives and strategy of the corporation. Workers in this environment often become experts in their general area because they encouraged and rewarded to think creatively about process improvement and customer focus. It’s more common to find passionate employees who see their work as more than a job with this management structure. The job in this sense becomes an extension of the person, an identity.
The centralized approach has its challenges in that you must make sure the employees can handle the level of responsibility and that the mission of the organization is fulfilled. If the output of the group needs to be consistent, efficient, and methodical, then a centralized approach may be better suited at the ground level. The best approach may be a combination of the two methods which utilizes the advantages of each based on the particular functional group and its mission.
My personal work preference is for a decentralized organization because I think it has the ability to draw more out of its people. I find knowledge workers add more business value and deliver better results than simple process workers. My feelings agree with the principals of Jim Collins as written in his book Good to Great: Why Some Companies Make the Leap… and Others Don’t
“The good-to-great companies built a consistent system with clear constraints, but they also gave people freedom and responsibility within the framework of that system. They hired self-disciplined people who didn’t need to be managed, and then managed the system, not the people.”
What are your observations? Do you feel a mix of the two styles is appropriate in your environment? Does one style deliver better results than the other?