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Centralized Vs Decentralized Hierarchical Structures – Which One To Go For


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Work practices and Hierarchical structures go hand in hand and change together. Hence, hierarchical structures influence your organization’s productivity and work culture. Which organizational structure do you choose is your choice? There needs to be more clarity on centralized and decentralized organizational structures.

Yes, your chosen structure depends greatly on your organization and its values. However, I prefer a more decentralized organizational structure. They increase productivity and help in decision-making.

In this blog, I elaborate on the benefits of a decentralized structure over a centralized organizational structure.

Hands-on Decision Making

One of the biggest benefits of a decentralized organizational structure is the benefit of quick decision-making. Since a decentralized structure means decisions making happens at the bottom, this is good for the organization.

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Unlike a centralized structure, where decision-making is done from top to bottom, decision-making is easy in decentralized structures. Employees don’t have to ask their bosses before making decisions. This makes decision-making fast. Fast decision-making means high productivity and better output.

Also Read: Burnout: 3 Ways How You Can Deal With It

Think of it this way; you think something is good for your organization and want its fast implementation. However, the problem is that your manager has absolute power. This means you wait for their approval, which is bad because managers need to be made aware. They need to consult a lot of people before a final verdict. You, on the other hand, are aware of what is right. This is the problem with a centralized structure; therefore, it’s demotivating for employees.

Trains Future Leaders

I disagree that leadership skills are inborn. A person gets these skills with time. There is a saying that goes; learning by doing. This is the role decentralized work structures play within the organization.

In work environments with a decentralized work structure, the decision-making is in the hands of the subordinates. This trains subordinates with the necessary leadership skills they need for the future.

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When employees learn these skills, they can handle many situations and are emotionally intelligent. Hence, empowered employees can tackle situations and help in teamwork. This increases productivity. Thus, decentralized organizations create good leaders for the organization.

Makes The Expansion Process Easier

Making decisions for expansion is a very hard process. For someone new, the question arises; How decentralization of business operations helps in expansion or upscaling? Here is how; when you enter a new market, the first goal is to identify a target market.

This is where the main issue comes in. In a structure where decision-making power rests in the hands of the top authority, decisions move from the top to the lower level. This lengthens the decision-making process.

Also, top managers need to be aware of what is happening at the ground level. This makes expansion strategies hard for them. For example, if you are a business expanding in another market, top managers need first-hand insights into the business. In most cases, people associated with sales are the ones who know the likes and dislikes of the customer. This is why they know better which type of advertising and positioning is best to promote the product.

Therefore, when decision-making power rests with the lower levels in the organization, this process becomes easy. Sales and marketing representatives collect the feedback and send the information to their top managers. And then, the information provides valuable of the possible options which are feasible. Therefore, sales and marketing can design tailor-made campaigns for the target market.

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Moving from sales to manufacturing. Compared to top operation managers, floor supervisors have a better knowledge of how work is done and which aspect could be better in the manufacturing area. Hence, if a company expands internally, floor supervisors easily decide which products or machinery are required and are cost-effective.

Creates Capabilities To Help Deal With Unexpected Situations

Furthermore, decentralization also helps employees deal with unexpected situations. Now, why is this good? Imagine you are a large business CEO and away on holiday. If an unexpected situation arises, you’ll expect your employees to handle it, right? But how can they handle it if they don’t have the skills?

Also Read: Do You Know These Power Skills? How To Instill Them In The Employees

Tackling skills come from empowering your employees, and employees are empowered in a decentralized organizational structure. Managers need to realize that decentralization of work is for their good. Employees trained and empowered to handle unexpected situations do so without the manager’s presence. This leaves managers more relaxed about what is going on in their absence. This keeps the business operations independent of the availability of one person. hence, decentralization is a great way to create such an empowering environment.

Happy Employees

Decentralization isn’t only beneficial in terms of administration and productivity. It also keeps employees happy. An autocratic work culture could be better for organizations with centralization of work. Autocratic work culture means employees only act on what their heads say. There is no room for input or opinions. This creates a bad work environment, which leads to high labour turnover. This means more cost for the business.

Also Read: Why Is It Necessary To Keep Your Employees Happy – Tips To Keep Employees Engaged

High labour turnover creates a negative image of the organization. Hence prospective candidates avoid such organizations. This is not a preferable state. On the contrary, employees who have creative freedom and are empowered have the willingness to work. Hence, such employees are more productive and stay longer with the organization.


The Ending Note

Which work culture you prefer is your choice; However, the benefits of a decentralized work culture outweigh the disadvantages. Hence, it’s preferable going with a decentralized work structure rather than one which is centralized.

Decentralized cultures improve productivity and keep employees happy. They also groom employees with their leadership and creativity skills. This helps them deal with sudden situations. Hence, decentralized structures are the best option for the changing business world.

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Erum Ali
Erum Alihttps://mbeforyou.com/
She is a graduate of human resource management. She has several years of working experience in the human resource management sector. Currently, she is doing resource development and management for one of the leading fintech companies. Her role is to complement the recruitment process with strategic human resources consulting to promote long-lasting professional relationships.

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