Leading and Managing Change

REFLECTION

Bad practices

In addition, the main factors that favoured decentralization were the following (Sobotkiewicz D.^[a], 2014:188-189):

• more conglomerate economic system
• higher degree of relationship between the business and the market
• higher industry diversification
• need to distribute the functions in subsidiaries
• international placement of economic entities
• low requirements for uniformity of rules of operation
• high management qualifications of economic units
• higher personnel experience
• no staff links in firms
• firms assuming the form of public limited companies ^[b]

For instance, on private businesses it is essential that decentralization is essential when conditions such as a) customer service / contact b) diversification of operations / business activity multiple locations c) extended completion – niece markets operations and d) continuous flows of technological achievements and advances occur.^[c]

This type of decision-making often accompanies a top-down management style “where the heads of an organization make the decisions and pass them down to other members of the organization to implement”. (Stacy Zeiger). In reverse we have the Bottom-up approach where “decision-making takes the opposite approach of top-down decision-making. Instead of setting goals before determining the process to reach those goals and leaving organization heads to make decisions on their own, input from multiple levels is considered in the process”. (Stacy Zeiger)  ^[d]

 “Although the gathering and integration of this information may be more time consuming, by gaining access to information regarding a greater variety of stakeholders, firms’ decision makers are more likely to make informed decisions, consider trade-offs, and satisfy the needs of multiple stakeholders with a comprehensive corporate social performance strategy.” (Wong, Ormiston and Tetlock, 2011^[e]).

Increase CEO performance .  The CEO has the opportunity to focus on more important things , like strategy. As companies grow CEO time becomes a  very valuable commodity. (Harris and Raviv Feb 2008 )^[f]

One of the reasons organizations shift to a more decentralized decision making culture is that they become more flexible in adjusting to local conditions. Employees that focus on a specific market can identify and prioritize the needs of their stakeholders better than anyone else (Wong et al., 2011; Alonso et al., 2008). If someone can understand the needs of his customers, he is able to adjust his decisions and meet their needs in the best possible way, in correlation of course with the available resources (Alonso et al., 2008). Furthermore, with decentralization of decision making, an organization can respond to local conditions faster, in more detail and maximize customer’s satisfaction (Alonso et al., 2008). Concluding, less time consuming interactions will be needed and also the associates involved in the decision will have greater expertise on the subject (Zoghi and Mohr, 2011). ^[g]