Are companies more effective if they operate on a centralized or decentralized structure, and how do they determine which one works best?

Asked on by stlda

1 Answer | Add Yours

readerofbooks's profile pic

readerofbooks | College Teacher | (Level 2) Educator Emeritus

Posted on

This is an excellent question and part of your answer is embedded in your question. Sometimes a centralized structure is needed for a company to function properly. When things are in disarray and decisions need to be made, a centralized structure might be the better approach. For smaller companies, this might be a good approach, especially if you have a great head. However, at times, a decentralized structure is more necessary. As you can imagine, a lot of red-tape and bureaucracy can be circumvented and this can make things more expedient and creative. 

In terms of what is best for a given company, this is a complex issue. There are several factors to consider. First, size is important. The larger a company, the less centralized it should be, even for practical reasons. Second, talent is important. The more talented people you have, the more autonomy you might want to give. 

We’ve answered 319,999 questions. We can answer yours, too.

Ask a question