Among the rapid organisational changes happening across industries, decentralisation has emerged as a revolutionary force — and rightly so.
Surviving and thriving in competitive markets requires quick decision-making. To grab the fleeting but profitable opportunities, your team has the power to make certain decisions without taking them up to the management.
That’s where decentralisation helps. It shifts the power dynamics and empowers employees to be more autonomous. This organisational model lets teams solve problems, fostering out-of-the-box ideas and innovations.
But what is decentralised decision-making, and how can it help your team drive better business results?
decentralised decision-making
Decentralised decision-making is a new-age organisational model that distributes responsibility and authority down the hierarchy. In this framework, the stakeholders who directly face the problem are the ones who decide how to approach and solve the challenge at hand.
In short, instead of the leadership and top-tier executives, those with the most situational awareness of the issue are empowered to pass mandates about its solution.
7 ways decentralised decision-making empowers employees
It’s an established notion in the corporate world that only the top-ranking executives are supposed to make crucial organisational decisions. However, employees who have the best local and technical information on the issue may be the best ones to make on-spot resolutions.
Why? Because from enhancing workforce autonomy to improved employee engagement, decentralised decision-making has numerous benefits. Here are some notable ones:
enhanced autonomy
In top-down workplace cultures, employees are told what to do while facing an issue or solving a problem. But when you assign them reasonable authority to make decisions independently, you give them ownership.
Decentralised decision-making removes the managerial hand-holding of employees. It empowers them with authority, responsibility, and autonomy, which lets them unlock their full potential.
For example, suppose an employee faces a business problem that requires prompt decision delivery. Giving them the authority to choose without consulting their superiors prepares them to handle the fast-paced business world. It encourages ongoing learning and pushes employees to be more independent in their job roles.
Equipping employees with the right tools, such as a learning content management system, is vital to support this independence. This enables them to access and engage with learning materials relevant to their immediate needs and decision-making processes, further enhancing their autonomy and capability.
While distributing authority among your employees, clearly define the boundaries. Don’t put a lot on their plate at once. Instead, ease them into the decentralised system by gradually increasing their role in the decision-making process.
Take a cue from HubSpot. They have created a work culture prioritising autonomy, flexibility, and transparency. Ashley Jeffress shared that her favorite part about working there is the autonomy since she feels empowered — a sentiment shared by most of their employees.
increased innovation
Autonomous employees are more likely to contribute fresh ideas and innovative, creative paths to meet project demands.
In the traditional decision-making structure, employees are often constrained by their superiors, which may limit their potential to innovate. They may feel like it’s not their place to propose out-of-the-box solutions.
However, a decentralised decision-making framework gives them a platform to experiment and take risks. Your front-line workers making decisions about an issue where they have the most situational awareness enables them to explore unconventional ways to resolve problems.
Getting authority makes them feel more confident to come forward with unique ideas. This culture of innovation benefits individual employees and contributes to the overall growth and adaptability of the organisation.
The best example of this is Netflix. Their flat organisational structure has brought about continuous innovation in media since their employees have freedom and can make quicker decisions.
Train your managers to be supportive without micromanaging the employees. Ensure they have sufficient tools and resources to innovate solutions. You can also arrange focus groups for employees to explore and prototype new ideas.
faster response time
An organisation must deliver fast resolutions to foster customer loyalty and maintain a streamlined workflow. But with top-down mandates, it takes a lot of back-and-forth between each stratum of the hierarchy before reaching a decision. This can cause bureaucratic delays.
Decentralisation in authority allows decision-makers at lower levels of the organisation to make choices about their situation. As they have direct access to localised information and the context of the problem, they can handle the issue on the spot. This enables quicker decision-making because those closest to the situation can respond swiftly without waiting for approval from higher-ups.
However, before implementing decentralised decision-making in your organisation, train your employees to hone their communication and problem-solving skills. This will empower them to make the best decisions according to the situation without any superior’s intervention.
improved employee morale
Decentralised decision-making lets employees feel a stronger connection with their job role and the organisation. They feel like valuable stakeholders in the company. It also gives them the confidence to navigate even the most complex challenges without their superior’s help.
Such a sense of ownership improves workplace morale. It makes employees believe leadership trusts their skills and judgment to handle issues. It validates their experience and talent, encouraging them to give their best consistently.
Besides giving them the decision-making authority, praise the employee’s independent contributions in handling a business situation. Run a reward program to acknowledge innovative solutions. This materialises your appreciation for your workforce and improves their morale further.
Holger Sindbaek, the founder of Online Solitaire, says, “In our evolution, embracing decentralised decision-making led to a significant shift in our workplace dynamics. By empowering our employees with the autonomy to make critical decisions, we observed a 20% increase in employee morale. This change fostered a sense of ownership among our team and resulted in a 15% improvement in operational efficiency. It demonstrated that employees who feel trusted and valued contribute more passionately, directly impacting the company’s growth and success.”
flexibility and adaptability
With rapidly changing customer preferences and industry trends, companies must demonstrate strategic agility. But, when a decision has to trickle down through many layers of the hierarchy, the organisation takes more time to adapt and implement improvements.
Decentralised decision-making allows employees to respond quickly to the changing circumstances in their area of expertise. Frontline employees or teams can adjust according to challenges or opportunities in real time without waiting for approval from higher-ups. The greater innovation rate also helps your team to adapt to complex situations collectively and handle emergencies and disasters in the workplace.
Such a framework allows them to leverage their knowledge and experience in the area, leading to more informed and contextually relevant decisions.
For example, your customer service executives are the most familiar with your clientele’s common problems. Dispersing decision-making authority to them will let them deliver more personalised care and adapt your approach to evolving customer needs.
higher accountability
Specific employees or teams are assigned decision-making authority for particular tasks or areas. This makes them feel a greater sense of responsibility for the outcomes.
It clarifies everyone’s stake and ensures that those responsible for making decisions are also accountable for the outcomes. It makes them more mindful of their actions as they are aware of their direct contribution to the successes and failures of the company. This accountability drives them to give their best in all areas of their job.
Opt for a CRM solution that offers performance-tracking features to foster individual accountability. This will let managers keep an eye on their team’s performance without checking in on employees every 30 minutes.
Learn from Coca-Cola — they put their employees in the driver’s seat so they can take charge of their careers and get on a path that is best suited for them at the company.
greater job satisfaction
Asking for approval before dealing with every small circumstance is one of the most frustrating parts of an employee’s workday. Such a cumbersome structure can make employees feel undervalued and negatively impact their engagement. It creates roadblocks for professional growth, stopping employees from going beyond their mandated responsibilities.
Entrusting your workforce with decision-making authority removes the frustration of running to the high-ups and waiting for their approval. Employees feel like they have a say in the company’s decision. It fosters mutual respect in the workplace, creates a culture of collective progress, and makes your workers more receptive to conflict resolution.
All these positive changes enhance job satisfaction. The employees stop treating their role as just a source of income and start working toward the company’s greater good.
Results of decentralised decision-making
Now let’s look at the results you can achieve by implementing a decentralised decision-making framework:
- Dynamic work culture
Decentralisation of organisational authority creates a workplace culture of innovation, agility, team activities, and adaptability. It refines your workforce’s existing skills and encourages continuous improvements. This expands the employees’ expertise and makes them capable of responding to diverse problems, creating a dynamic workplace.
- Higher employee satisfaction and retention
Involving employees in the decision-making process makes them feel appreciated. Besides that, trusting your frontline workers with responsibilities lets them improve their proficiency. Such opportunities for professional growth enhance their satisfaction further, fostering employee loyalty. This way, employees will be less likely to leave your organisation, boosting retention.
As we shared earlier, Netflix has a flat organisational hierarchy. This helped them achieve an exceptional 95% employee retention rate and earned them the #1 spot on Fortune’s “100 Best Companies to Work For” list in 2018 and 2019.
- Better operational efficiency leading to customer satisfaction
Decentralised decision-making lets your employees control the situation in the best possible way without going through multiple stages of approval. It lets all teams streamline their tasks and achieve better operational efficiency.
Faster response time and strategic agility allow your teams to accommodate customer needs as they see fit. They can adapt to market trends faster and improve customer satisfaction. High employee engagement impacts customer experience positively as well.
Conclusion
Decentralised decision-making may be an unconventional approach. But if implemented through proper boundaries, they can work wonders for your workplace morale, innovation, and operational efficiency.
To reiterate the benefits of decentralised decision-making, let’s sum up today’s discussion:
- Distributing authority throughout the lower levels of the hierarchy makes your employees more independent.
- It creates a more dynamic workforce and builds your team’s resilience to face challenges.
- Employees with decision-making powers feel higher accountability.
- They innovate and come up with unique solutions.
- Decentralised decision-making drives improved employee morale, job satisfaction, and retention.
Remember that you can’t decentralise your company’s decision-making structure overnight. Small but diligent steps will lead to major positive changes.
Author: Juned Ghanchi – Co-Founder and CMO, Indian App Developers.
Photo credit: SHVETS production
