W. L. Gore and Associates Radical Approach - Case Study Example

? W. L. Gore & Associates W. L. Gore & Associates radical approach of devolving decision making to the lowest levels of its organization is also referred to as decentralization (Shipper, 1998). Decentralization refers to the methodical effort to dispersal of decision-making authority to the subordinate levels of an organization (Burton & Obel, 1995). In decentralization, the extensive powers are bestowed to the top management such as planning, control, directing, organizing whereas maximum powers are delegated to the lower levels of the organization. Decentralization is a development that ensues naturally once companies begin to grow complex and intricate. In this case, the organization is divided into decision-making entities and affording them powers to undertake routine forms of decisions with respect to the operations of those entities (Grindle, 2007). This paper will look into the W. L. Gore & Associates radical approach of devolving decision making to the lowest levels of its organization. In decentralization, methodical efforts are made to give power to subordinate levels. The delegation of power in decentralization is not from one person to another but to each entity in an establishment (Grindle, 2007). An organization is deemed extremely decentralized, when entrustment is company-wide within all divisions and functions. Decentralization differ from centralization since in centralization, decision-making power rests on one individual only. Additionally, centralization is a type of traditional supervision in India whereas decentralization is a standard practice in professional management (Burton & Obel, 1995). Everything, which attempts to upsurge the significance of subordinate’s duties is decentralization and everything, which reduces it is centralization (Burton & Obel, 1995). It is clear that entrustment of power to the subordinate levels in a company in decentralization is not complete since the basic operations in managing procedure are (Grindle, 2007). Devolution of power is an essential stage of delegation as well as the degree to which power is not given is called centralization. Devolution with respect to office means dispersal of office activities and services. The need of devolution of office operations ensues when official undertakings are executed at performing departmental level. Therefore, devolution with respect to office may comprise departmentation of operations. When power is dispersed, devolution is present (Burton & Obel, 1995). The requirement for devolution is manipulated when the company develops in its scope, which demands broadening of office operations. Devolution ensues during decision formulating of routine kind but if verdicts are crucial, the power is not dispersed (Burton & Obel, 1995). The political factors technological development and accessibility of administrators also influence the extent of devolution. Devolution does not occur in its wholesome sense. There exists a combination of the two since some operations are integrated and some are devolved (Grindle, 2007). What are the strengths of this approach? Decentralization aids to enhance the quality of decision-making at top-level management. Decentralization of power among subordinates at each level within a firm releases the top management the excessive responsibilities saving them time to devote to more crucial and long-term glitches (Burton & Obel, 1995). This enhances the quality of top management decisions with respect to such problems. Devolution, therefore, provides top managers with chances of looking into other new methods of improving their companies by engaging in managerial forums (Grindle, 2007). The approach of devolving power to the lower levels in an organization accelerates diversification of operations in an organization. It is a subject of common knowledge that a company with departments upon the footing of its products accelerates diversification of market or products even when the power is centralized. Decentralization takes this procedure a footstep further. Administrators of semi-independent product units are able to employ their abilities and experienced shrewdness (Burton & Obel, 1995). This holds a bearing upon the market and their products. The firm also achieves maximum imaginable growth. Decentralization is favorable when new commodity lines or fresh activities are initiated in a company. Such strategy creates self-sufficient divisions under overall supervision of top-level management. In other words, devolution encourages innovation since new minds with incredible talents are permitted to oversee the operations of the company (Grindle, 2007). Decentralization inspires development of supervisory personnel: Most firms find deficiency of managerial aptitude as a limiting aspect within their organizational growth. A firm cannot develop efficiently beyond the abilities and scope of its supervisory personnel. Proficient managers, conversely, can be improved only by allocating supervisory jobs to appropriate persons and entrusting them the power to make crucial decisions (Burton & Obel, 1995). Such extensive exposure affords them chance to grow as well as attain self-development for upper positions in the company. The more capable and talented persons will improve and learn, as well as qualify for upper managerial positions in a company (Shipper, 1998). Only a devolved corporation can provide such prospects to future administrators without encompassing additional expenses. A devolved company also allocates its supervisors adequate autonomy to undertake new ideas, techniques or methods. In brief, devolution generates a unit of competent leaders at the company’s disposal (Grindle, 2007). Devolution enhances motivation: Research piloted by social researchers has verified that the organizational structure itself exerts some influence upon the enthusiasm of the persons working in it (Shipper, 1998). An organization structure that expedites delegation, participation and communication also affords greater drive to its leaders for higher production. Devolved organizational structure is utmost favorable for nurturing the motivation and morale of subordinates that is observable through improved work performance. Motivated personnel tend to give their all into the work allocated to them. Additionally, motivated personnel are loyal to the company, work hard, and look forward to working in new projects (Burton & Obel, 1995). Devolution renders decision-making enhanced and quicker: Since verdicts does not need to be checked up throughout the hierarchy, better and quicker decisions at subordinate levels can be appropriate (Sharma, 2006). Divisional leaders are inspired to formulate such verdicts, which will generate the maximum profit since they are held accountable for the efficiency of their verdicts on profits (Burton & Obel, 1995). The freedom of decision-making speeds up a company’s functional operations since a divisional leader does not require validation from the upper management. Therefore, devolution accelerates rapid and result-oriented verdicts by affected persons (Shipper, 1998). Devolution affords prospect to learn through acting: Devolution offers an encouraging environment in which there exist freedom to formulate decisions, sovereignty to employ judgment as well as liberty to act (Burton & Obel, 1995). Devolution gives hands-on coaching to middle-level supervisors as well as facilitates supervision development on the innovativeness level. Such opportunities are not available in a centralized firm and it saves as well the company the expenses of hiring new mangers when the need arises since the middle-level supervisors will take up those positions (Furniss, 1974). What are the weaknesses to this approach? As much as decentralization enhances efficiency in a company, enhance better decision-making, provide learning and training for subordinates, it has some of its limitations. Devolution may result to the difficulty of co-ordination since the decision-making power is not converged. This lack of coordination may result in resources conflicts since each department will be fighting for its stake in the resources (Sharma, 2006). Lack of a converged decision-making authority will steer to unresolved conflicts in the organization, thereby, plunging the company into a pool of inefficiency and un-productivity if the conflicts are not resolved (Burton & Obel, 1995). Devolution may steer to inconsistencies (for instance, lack of uniformity) on the organizational level (Furniss, 1974). For instance, uniform procedures or policies might not be adhered to for the similar nature of work within different units (Sharma, 2006). It becomes problematic to sustain uniformity in facilitating operations in an organization since methods and routines are different from department to department (Burton & Obel, 1995). Moreover, with devolution it becomes hard to dispense workload equitably amid different personnel. These inconsistencies within various departments will make reduce the company’s production capacity and result in reduced sales (Shipper, 1998). Devolution is expensive as it increases administrative expenditures because of the need for trained workforces to take authority at subordinate levels. Yet the expertise of such exceedingly paid work force might not be exploited fully since they are large in numbers, predominantly in small companies (Sharma, 2006). Moreover, devolution fosters duplication of processes, equipment and functions. This duplication of activities within an organization will only add to increased expenses that the company might not be able to bear or meet (Grindle, 2007). This is because the company might already be undergoing non-productive phase, mean its output is insufficient to keep the company in business (Burton & Obel, 1995). Institution of devolution may be problematic or might not be feasible where commodity lines are not extensive and sufficient for the formation of independent units for managerial purposes. In case of such a scenario, this approach will only incur losses for the company (Burton & Obel, 1995) and (Furniss, 1974). Devolution generates special complications predominantly when the company is encountering number of indecisions or emergencies (Shipper, 1998). The decision- formulating process is hindered and even accurate verdicts as per the altering circumstances might not be conceivable. In case of emergence of a change, it becomes hard and expensive to implement change in devolved company (Furniss, 1974). Change takes a lot of time and resources to implement and with a devolved company, which is operated under distinct units with different processes and routines, it becomes problematic to implement change effectively and efficiently (Burton & Obel, 1995). In what types of organizations might this approach not be very effective? The devolution approach is not effective in organizations that are small (Burton & Obel, 1995). Decentralization is effective in organizations that are large-scale enterprises that are structured in various departments or units (Furniss, 1974). Small firms might not be structured into different divisions, thereby, rendering devolution process hard to employ. Small firms might not have wide-ranging and adequate product lines that will encourage them to create independent units for management purposes. Small firms might also lack the resources to undertake a decentralized form of governance (Shipper, 1998). Conclusively, devolution means dispersion of power and it is evident in the W. L. Gore & Associates as seen in the case study by Shipper (1988). W. L. Gore & Associates regard its personnel as agents of creative change. It involves the spreading of power of decision formulating to the subordinate level controlling (Burton & Obel, 1995). Decentralization has its strengths and weaknesses. Decentralization encourages diversification of organizational operations in a company. Decentralization also encourages development of managing personnel though providing subordinates with opportunities for training, coaching and hands on experience (Furniss, 1974). Decentralization offers the top management with time to look into other matters that may be affecting the company thereby enhancing decision-making by the top management in an organization (Grindle, 2007). Devolution motivates personnel by placing managerial roles on their hands. Motivated personnel tend to be productive, loyal to the company, and in return result to the company overall productivity, growth and development (Shipper, 1998). Devolution of power has some limitations that include lack of coordination because of lack of a centralized power (Sharma, 2006). The in coordination can lead to resource conflicts and eventually lower the company’s overall productivity. Devolution is also very costly because of the need to diversify the company’s operations, activities and functions (Burton & Obel, 1995). Another limitation to devolution decision formulating approach is that it leads to inconsistencies and lack of uniformity because of differing departmental routines and functions. Devolution approach renders it difficult to implement change in an organization (Grindle, 2007). An organizational change takes time and many resources to implement, and a devolved company is difficult to transform because of the differing departmental routines and functions (Shipper, 1998). Devolution is only effective in companies that have grown and developed in scope and size (Burton & Obel, 1995). Small firms are difficult to devolve because they lack the departmental units for managing purposes. Devolution, therefore, requires good governance for it to be effective (Sharma, 2006). An organization with commendable work ethics and organizational culture that promotes these work ethics can employ devolution more efficiently and effectively to enhance its productivity (Shipper, 1998) and (Grindle, 2007). References Furniss, Norman (1974). "The Practical Significance of Decentralization". The Journal of Politics 36 (4): 958–82. Grindle, Merilee S. (2007).Going Local: Decentralization, Democratization, And The Promise of Good Governance. Princeton University Press. Burton, Richard M. & Obel, Borge (1995). Design Models for Hierarchical Organizations: Computation, Information, and Decentralization. Springer. Sharma, Chanchal Kumar (2006). Decentralization Dilemma: Measuring the Degree and Evaluating the Outcomes, The Indian Journal of Political Science. Shipper, Frank (1998). Classic Case 6 WL Gore & Associates, Inc. pp. 528-542 Read More