Creating Value Through Decentralizing Your Business

A quiet revolution is taking place in the workplace. Centralized hierarchal corporate structures are out, and decentralized management is in. Instead of top-down management, day-to-day decisions are delegated to those closest to the task at hand, and often with the most knowledge.

Here are four reasons to move to a decentralized structure in your business:

1) Self-sufficiency

A centralized organization places an enormous amount of power in the hands of a few leading to lengthy time gaps in decision-making. If a problem develops, it takes forever to fix, allowing it to do more damage while top management gathers data.

Management closest to the problem has all the data and, therefore, can resolve it before it becomes a more significant issue. 

2) Leadership

Organizations face employee churn all the time, and typically it is not because of higher-paying jobs. Instead, it’s because of a lack of purpose and fulfillment that cause employees to look elsewhere. When power is consolidated in the hands of a few, leadership is limited and lost when one person from top management leaves. Decentralizing spreads leadership across many to help minimize the gaps if an employee decides to leave.

3) Scaling

All companies want to scale. But every company has a ceiling if it depends on a few in leadership. Decentralizing allows employees to pool their gifts and talents together to respond quickly to changing business conditions and scale accordingly. In essence, the team is better together, and the company will likely not hit a leadership lid.

 4) Vision

Although some business owners envision decentralizing as giving up power, it’s actually the opposite. A decentralized company finds a way to allocate power more appropriately. For example, top management may now be free to work on the future, providing a clear vision and direction for moving forward. On the other hand, if top management is consumed at the ten-foot level, it will be hard to see the future.

How do you know if you are a Dependent Owner versus an Independent Owner? The Exit Planning Institute recommends the following to assess the status of your business.

If your business is still dependent on you to be successful, succession is nearly impossible. If you’d like to discuss business transition, we would be happy to walk with you through the process.

*Any opinions are those of Artisan Family Advisors and not necessarily those of Raymond James.