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HomeBusiness TheoryStrategyDelegation and decentralisation

Delegation and decentralisation

Delegation involves handing out responsibility to individuals in an organisation to make decisions rather than everyone having to be told what to do by top managers in a hierarchical way. This is coupled with the decentralisation process whereby instead of all decisions being made at the centre (e.g. Head Office) of an organisation, they are made throughout the organisation. In the modern competitive business world, big companies have to accept the paradox that to stay big they have to act small.

In this new way of viewing the organisation, self-contained teams are responsible for a specific part of the business or for a particular project. They work to targets set by central management. They take advice and assistance as necessary from the specialist departments such as Research and Development, Finance, Personnel and Public Relations – although sometimes they may have their own specialists. They also take goods and services from outside suppliers when these are judged to be more cost-effective. Occasionally, central management, or one of its teams, may decide to subcontract an entire project to an outside supplier.

Top-down structure

Organisations have tended to move away from old hierarchical, top-down structures to ones in which employees are empowered to make decisions and think for themselves, often in matrix type structures.

Hierarchy – a pyramid-like personnel structure in which people mainly or only report upwards.

Matrix – a personnel structure based on ‘teams’ across specialist boundaries, with upward reporting reduced to a minimum. Individuals take responsibility for improving their own work and helping fellow team members improve the quality of their work. The role of senior management is to guide and integrate rather than direct.

The Inland Revenue has changed the way that it is run and structured to become far more customer focused. Extensive training has been carried out within the organisation to improve internal and external communications. For external communications, it expects its employees to:

‘be open to customer problems and try to understand the situation from their perspective’,

Internally, this translates into people being:

‘approachable and understanding at all times’ e.g. in their dealings with colleagues.

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