The Need for Organisational Resilience - Chapter 4

Both approaches to Centralisation and Decentralisation may thrive in their own right,

providing distinctive benefits as shown in Table 4.2.

Benefits of Centralisation

Benefits of Decentralisation

Single point of contact

Greater local speed and flexibility

Easier to coordinate

Relieving top managers from day-to-day

operational/tactical decision-making

Use of less skilled subordinates

Reduction in bureaucracy

Easier implementation of standard practices

Empowerment leads to greater job

satisfaction

Avoidance of duplication of roles

Table 4.2: Advantages of Centralisation and Decentralisation

The benefits of centralised ways of working are efficiency in the form of economies of

scale. Strategies are broken down into repeatable rules, processes and routines. Such

consistency and transparency in operational/tactical ways of working offers cost effective

standardisation. Those who are compliant to these standards ‘only’ require minimum skills

and knowledge to carry out tasks in a standardised manner. Hence, depending on the

availability of these skills and knowledge, these resources can be replaced without requiring

substantial time and cost to shed one resource and set up another.

The concept of decentralisation promises greater speed and adaptiveness at a local

level. In addition, top managers are relieved from day-to-day decision making, so they can

focus on strategising. Such local resilience comes at a price, though. Top Managers and

‘Front-line’ employees must invest in establishing the conditions in which decentralisation will

flourish. The enablers necessary to make decentralisation work are costlier. Decentralisation

encourages situated human cognition. People ‘close’ to problems are equipped with skills

and capabilities to deal with uncertainty and complexity in a mindful manner; to be creative

and agile, although within the boundaries of an intent.

Towards Organisational Resilience: The Fallacy of Centralisation

Centralisation appears to be a simple, clear-cut approach to producing organisational

resilience. ‘Front-line’ employees receive ‘orders’, that contain detailed instructions about

‘what’, ‘why’ and ‘how’. Being compliant to these ‘orders’ is paramount. Situated thinking in

the form of creativity is discouraged. Disobedience is followed by some form of punishment.

Nevertheless, in a famous economics essay of 1958, Leonard Reid (1958) argued that no

single person on earth had all the knowledge even to make something as straightforward as

a pencil. This seemingly simple artefact − just some wood, graphite, printed labelling,

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