Tag Archives: centralization

Random thoughts – keeping you on your toes

Divide and Conquer

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Bureaucratic organizations are typically complex structures with many departments and divisions that are administered by lots of people.

These kinds of organizations are a product of decentralization.   Focus areas or silo’s of expertise are created.  This results in multiple groups each with a very narrow focus, which can be easier to oversee but suffers from lack of integration.

Division of Labor

A side effect of creating specializations and divisions of labor is turf wars and acting in self-interest.   The central areas which govern the whole often end up participating in political skirmishes both between silos and with themselves directly.

Centralization can result in a diminishing focus, which can affect the overall quality, but will almost also increase efficiency resulting in quicker turnaround with fewer hoops to jump through.

Centralization

Centralizing functions within large complex organizations is often a change strongly resisted by the organization’s stakeholders.    This change can dramatically affect the accountability and control of de-centralized areas.

Moving to a more centralized structure does need to be done with caution.  The potential for passive-aggressive resistance must be both recognized and planned for.

Solidly entrenched positions can be torn asunder and the incumbents are likely to become roadblocks without working collaboratively to overcome this.

Motivation

From the start of any centralization exercise, it is critical to highlight the value of reducing the bureaucracy together with associated personal benefits (i.e., what does it mean to me).

Working carefully consulting throughout with all impacted stakeholders restructuring and organization can improve it’s ability to accomplish its goal.  If the change is simply rammed through though the results can be catatrosophic.

 

 

 

 

 

Random thoughts – keeping you on your toes

Centralized or Decentralized?

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Medium to large organizations can centralize some operations ( or even all of them) or they might be totally decentralized.  Or there could be some balance between the two concepts .

My own preference is a balanced approach focused on the goals (What is the purpose of the structure, what do you want to achieve?) Unfortunately the organizations culture often dictates the preference.

Rather than design the operational approach for effectiveness it defauts to the cultural bias.

For Example

Consider the six main Canadian Financial Institutions.  Their reputation for having risk averse conservative bureaucratic cultures is definitely a stereotype and a bit of a broad brush .

That being said, on the whole most would agree there is some basis of truth to that characterization.  Conservative, risk averse organizations tend to have  strong central governance tied to underlying operations with some autonomy, but limited.

Those familiar with the Canadian F.I.’s operational structure know this is exactly the case for these organizations.

Similarly, post secondary educational institutes generally have cultures espousing academic freedom and individual initiative .  In turn this often equates to decentralized operational structures.

Culture or Goals

Operational processes aligned primarily with the organizations culture can serve a valuable purpose (supporting and reinforcing the culture), however, there may be some disconnects with alignment to the corporate goals.

Operational centralization and decentralization impact cost, service quality and overall efficiency.  One size does not fit all and alignment with organizational goals, versus culture is often more effective although can be harder to implement.