Which structure works best: centralized or localized?

AuthorHall, Robert
PositionMarketing Solutions

Have you ever walked into a business that felt dead? Perhaps it was a restaurant, a retail store or a bank branch that had a total lack of energy--where the sales and service people appeared to have had a collective frontal lobotomy.

I am increasingly intrigued by how organizations structure themselves to do business--and by the resulting impact of this structure on worker delivery and the accompanying "feel" of customer experience.

For governments, global corporations, nonprofit agencies/ministries, armies, churches, federations, athletic teams, franchises--and yes, even terrorist organization ways of doing business are highly varied. No question is more important in the structure debate than the "central vs, local" question. Where does top-down central control stop and local autonomy begin? What are the trade-offs of between the chaos of too little central control and the enervated compliance of too much?

Organizations with strong central control and governance are designed to eliminate chaos, reinforce consistency, execute a singular set of head office strategies and follow the roles. That structure intends efficiency and rationality and often scales well to establish regional, national or even global reads. In the process it may stifle creativity, deflate the energy the work force and respond slowly to market change, particularly local market change.

Conversely, organizations with lots of local autonomy run on a local strategy that adjusts quickly to local conditions. This approach maximizes uniqueness, flexibility and innovation. Whereas healthy central control is a corporate bureaucratic model, the local organizational model operates more like a "community." The needs and preferences of the community become de facto rules for the organization. In a perfect world, the organization would march in lockstep to the requirements of local customers. The corporation intends uniqueness; and, in the process, it may be leas efficient and less able to scale to national or global reach.

In the world d governments when organization become overly centralized and controlling the collective work force lacks initiative and energy, productivity suffers, and sooner or later anarchy arises to ovearthrow those in control who have not responded to the needs and preferences d the governed. Ironically, control breeds chaos.

Yet in the world of corporations we say, "Its not a democracy, its a business." "It's just business, nothing personal."

Seeking the right...

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