Technological advancements have revolutionized almost every sphere of our lives. Even workplaces have been hugely affected by these developments and a change in the pattern of business management is the outlying consequence of this process. Crypto currencies, Web3 and various decentralized autonomous organizations have been adamant upon the benefits of a decentralized management system which is better suited to the industry of today.
Decentralization in business refers to the process in which the day-to-day MO is delegated by the top management to the middle and lower managers of the company. Sometimes this delegation can directly be given to the team members, hence giving time to the higher ups to focus on major decisions. A decentralized business gives authority to those who are closer to stakeholders making their organizations self-sufficient. This results in a faster decision-making process. However, this structure proves a bit costlier than the centralized structure but amply compensates for it in the form of increased creativity of the individuals.
One of the most common problems faced by a business is the exacerbation of minor issues into major ones before ‘competent’ authorities have the chance to take a look and decipher the issue. Ideally, these crises should be tackled right at the start but due to the largely central character of decision- making authorities, such decisions remain delayed. A centralized structure of the organization is necessary for maintaining control over its different aspects. However, too much of rigidity in this arrangement can lead to lengthy decision making. A decentralized organization helps to prioritize experts in their respective fields and opinions of those closest to stakeholders, not in a bid to undermine the higher up’s authority but to increase the efficiency of the organization altogether. Such an attempt might also help free up the time of the higher authorities to do more value-added work. When lower-level employees are given the right to take a decision in a particular situation, it instils a sense of responsibility in them towards the organization. As mentioned in Harvard Business Review-“Decentralized organizations work best when responsiveness is the top priority.”
A highly centralized organization also somehow fails to realize the full potential of its employees, as employees are busy in impressing their immediate managers. They are not able to think about the company’s future in the long run. A lack of power in their hands fails to instil a sense of leadership skills in these employees which is of utmost importance for an organization’s future.
Another advantage a decentralized organisation possesses is that it can respond to changing business conditions quickly and scale according to the changes. This promptness is possible only because every team and employee functions as a separate cell. This gives a boost to efficiency owing to the lack of lengthy approval times. This is also possible because the higher executive maintains conditions that help lower-level employees to fully express their creativity. Hence the possibility of micromanagement is reduced. The executive can then focus on the bigger picture and future goals of the company can be determined.
Discuss more of such topics at the Business Management College at Amrapali Institute, Haldwani. Amrapali Educational Institute is a top ranked institute in Uttarakhand.