A decentralized Management Structure means separation of decisions within a same Company. Departments, Regions, Territories have their freewill and are able to assess a particular situation on their own and taking their own decisions in relation to this. The most common word associated to a Decentralized Management Structure is Autonomy.
What are the advantages that Companies get from a Decentralized Management Structure?
Flexibility
A department operating in a foreign country has to decide whether to buy a new production. Actual one is out dated and competition has already invested in new technologies, decisions are needed fast in order not to lose grip of their loyal customers. By the time information are escalated to the top management (taking in consideration ease of communication available in today's world) customers would have already moved to the competitor when Managers would have decided that indeed an investment is needed. Decentralized Management on its side would have given Junior Managers the ability to consider the situation and act accordingly. Time saved would have saved customers from going to the Competition.Human Resource Issue
Maslow's Theory of Needs talks well about the needs of employees, after getting a contract, his salary to fulfill his basic needs, he will need to fulfill those self esteem needs. And what is better that giving the possibility to take decisions and get the all the praise for a nice performance? The staff gets a boost in motivation and next time will perform even better to get more praise for his good performance. Besides the Employee's motivation is the experience he will acquire on a long term basis. Junior Managers will be able to take strategic decisions. In short they would have been trained on the job. So some costs already cut out.Marketing Issue
It is well known that each and every region, town, country in the world has its own culture and way of life. And this takes a more important aspect when dealing with marketing issues. We have to develop the right product, the right method, the right advertising for a given culture or community. Let's take as example a Centralized Management Structure within a Business, Products development decisions are taken by the Head Department. Investment is done, product launched, unfortunately market research has been carried by Top Management and targeted country doesn't need or is not acquainted to this type of product. A big loss for the Company. However to let local Managers take decisions regarding Marketing Issues will allow to have a clear overview of what the customer needs and wants. How they should advertise? Local managers will know best about local features and characteristics.
Nevertheless adopting a decentralized management Structure over the night can bring more drawbacks than advantages, untrained staff, inexperienced would surely take catastrophic decisions rather that rapid ones.
A decentralized Management Structure is very valuable both for Employees and the business, but it should be well prepared. In terms of culture, training and financial resources.
