Page 3: Business Philosophy
For this rapid process of growth to take place Morgan Crucible had to change the way it operated. In a complex fast-changing business environment, operating at the frontiers of scientific development, they needed the speed and flexibility which enable specialists to take decisions on the ground. The answer was decentralisation.
Decentralisation is a philosophy of management which involves the passing down of authority and responsibility for the taking of decisions. Delegation is the process of assigning responsibilities and decentralisation is the end result. The process of decentralisation gets decision-making closer to markets, where separately costed units such as subsidiary companies, can respond quickly to market changes. There are many reasons for decentralisation:
- it is difficult for all situations to be understood in detail by people at the top of an organisation. Information forming the basis for these decisions may be complex, varied and specialised and only understood by people on the ground.
- decentralisation cuts the cost of maintaining large central operations. It also creates flatter structures and reduces the number of layers of authority.
- decentralisation allows a swift response to local needs and conditions.
- an organisation which is highly centralised does not allow for individual initiative. A highly centralised organisation is inflexible and involves constant supervision of subordinates.
- decentralisation helps to motivate employees by providing them with more responsibilities and a feeling of involvement with the decision making process.
Today Morgan Crucible operates a very decentralised organisational structure, with subsidiary and associated companies having a considerable degree of autonomy. People are viewed as the Group’s greatest asset and Morgan’s business philosophy is simply - ‘small is beautiful, driven from the top’.
This enables the Group to develop a global perspective, but within this framework the separate companies can act locally with a high degree of flexibility and autonomy for managers. In fact this autonomy is an ownership autonomy, providing individuals with a sense of involvement and tasking decision-makers to operate the separate businesses as if they were their own.
Two measures of any company’s success are the profits it produces and the return it achieves on shareholder’s funds. On the latter basis, Morgan is placed amongst the top companies in the UK. Each of the Product Divisions is headed by a chairman who is a member of the Group Executive and each company within the Morgan Crucible Group has a clearly defined strategy and budget. Three quarters of the subsidiaries are strategically located outside Britain in order to serve their markets more efficiently. Individual profit centres within companies are an important part of the Morgan business philosophy. This structure ensures that accountability in the marketplace is pushed well down the line. A very small head office team at Windsor co-ordinates this worldwide business development.