Decentralization of Organizations

The structure of organizations is an important factor in whether they can respond appropriately to challenges that arise. The traditional, centralized organization has long been favored as offering standardization and efficiency, while the newer decentralized organization is being touted as more flexible and effective. This paper examines the advantages of each and asserts that the decentralized organization is more advantageous for organizations in the new globalized marketplace, supporting this assertion with references to the literature. Concepts related to decentralized organizations, such as boundaryless organizations, the management of uncertainty, and self-managed teams are also discussed as central to the success of the new decentralized organization.

Today's organizations are more decentralized having multiple small, autonomous groups instead of one large group with a central locus of control than organizations of the past, and this has raised a controversy between those who believe that organizations should be centralized and those who believe they should be decentralized. On the centralization side, proponents point to the benefits of standardization and efficiency, while on the decentralization side, proponents tout flexibility and effectiveness. Every organization values all four of those benefits, so the argument over which type of organization is best continues. By analyzing the changes in today's global marke

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rience he needs to draft some concepts that might provide a solution Jill from Accounting, Bob from Information Systems, and Carol from the product design group. Working intensively with them on a self-managed team develops a concept for repurposing the widget. With only a few inexpensive adjustments, the widget can be manufactured to perform a completely different function. Even better, it will be virtually alone in its new market, virtually guaranteeing that profits will now go up instead of down. In the time it takes the centralized organization to change the job descriptions, Joe's organization is already producing its new product. Proponents of the old centralized organization can see the advantages of decentralization after the success of Joe's organization in meeting its crisis, but they still harbor serious misgivings about the concept. They find it hard to give up the usual way of doing business planning for the future, and then working the plan, with every employee sticking to a defined job description. They see a decentralized organization as chaotic, and they find it hard to believe that such an organization especially one of any size could possibly survive by operating that way. Yet, some of today's most succes

Category: Business - D