centralization and decentralization.docx

centralization and decentralizationToday, perhaps more than ever, organizations of all sizes and across all industries face significant pressures as they grow their businesses in a competitive and increasingly global economy. These organizations are constantly reorganizing and restructuring in response to economic conditions, global expansion, an onslaught of new technologies and other factors beyond their control. Fortunately, recent advances in technology and the ubiquity of Internet access are eliminating geography and time-zone barriers, which have historically limited an organizations ability to conduct business anytime and anywhere. As a result, however, employees are becoming more distributed, and organizations are becoming more decentralized. The trend toward decentralization, whether geographically dispersed or split among business units or divisions, has fueled the debate over centralization versus decentralization, with organizations feeling forced to support corporate goals at the expense of accommodating local requirements. An organizations structure and its degree of centralization or decentralization depends on a number of factors, including the size of the organization and its geographic dispersion. In a very large and diversified organization, it is unlikely that a handful of people will possess all the resources to achieve all goals and objectives of the enterprise. As a result, it becomes impractical to concentrate power and decision-making authority at the top. Similarly in a geographically-dispersed organization, a centralized approach will not be the most efficient, as the people with the most authority will be unable to directly supervise operations on a day-to-day basis. The most apparent advantages of centralization are an organizations ability to closely control operations, provide a uniform set of policies, practices and procedures throughout the organization, and better use the knowledge of centralized experts. In a small organization, operations are likely to be not as diversified, and top management may realistically possess the skills and expertise required to manage all facets of business. In such a centralized environment, actions of individuals are also better aligned with managements prescribed policies, as the rules emanate from a single source, and there is little ambiguity. However, decentralization is a common trait of forward-thinking organizations. A decentralized organizational structure allows faster decision-making and better adaptability to local conditions and context. In a large organization, a high degree of centralization would lead to inefficiency as all actions would have to be approved and cleared by top management. Decentralization also enables an organization to better adapt to conditions by delegating authority to those who are physically present and active in a particular project or operation. Another important advantage is management grooming. In a decentralized organization, managers at lower levels gain relevant experience, which improves quality of human resources. While there are compelling pros and cons on both sides, the reality is that most global organizations are embracing both centralized and decentralized philosophies and are incorporating elements of both in their approaches to HR and talent management. Because HR data feeds into and is leveraged across applications that span the entire organization, regardless of business unit or geography, most organizations find it most effective to centralize HR data and associated talent management applications including learning management, career development, performance management, succession planning and compensation management while allowing for localization of learning content. While decentralization, both in terms of management structure and physical employee distribution, is gaining in popularity and adoption, especially across global organizations, it also can lead to unique talent management challenges. Already strained HR professionals must ensure that employees have access to proper training, adhere to appropriate regulations and receive the necessary feedback and guidance to help them advance their professional careers, regardless of their physical location or time zone. As employees gain autonomy under a decentralized structure, companies must continually roll out centralized solutions that ensure corporate compliance and consistency. Because managers within distributed organizations often make decisions that could impact the overall business, the solution must provide the ability to train and regularly update employees on corporate vision and philosophies so that employee decision making supports these ideals and objectives. For decentralization to succeed, employees must have the right tools to conduct their jobs successfully. Appropriate, accessible and relevant training and development is critical to this success. By providing employees with the requisite skills, experience, training and recognition, organizations will develop a more confident workforce. The challenge, of course, lies in an organizations ability to deliver consistent training and development to all employees anytime, anywhere while respecting and accommodating any language, custom, legal or other requirements specific to locations, geographies and cultures. Todays talent management solutions provide, or should provide, robust learning management systems (LMS) capable of meeting the basic needs of enterprise organizations in terms of tracking employee training, development and performance. While many available talent management solutions or stand-alone LMSs can support the basic requirements, only a few are able to deliver the scalability, performance and configurability necessary for supporting decentralized workforces looking to balance localized training and performance needs against an organizations overall business objectives. This is a need for many organizations, as the success and effectiveness of training and development activities is linked to and dependent on the quality and availability of relevant learning and training content.As companies weigh the limitations and costs of technology related to purchasing, distributing administering and managing their learning and training content, many are considering next-generation talent management solutions to streamline and simplify their current processes, which are proving to be time and cost intensive. In addition to providing a single place where organizations can browse and purchase content, these solutions should provide hosting and managed services for updating, validating, storing and administering an organizations custom-developed or third-party content. Such systems also ensure consistency and compliance with overall corporate goals by allowing organizations to roll out consistent, standard training and development initiatives throughout the entire organization, at the same time. Encouraged by the emerging breed of flexible talent management applications and solutions, organizations are finding it easier to centralize and standardize their critical learning and talent management data and systems, while also accommodating local talent management requirements and functions, specifically around employee learning, training and development. Todays organizations demand real-time visibility into the talent that resides within their organizations, and with global competition intensifying, corporations must be able to manage and shift employee talent globally when needed. As such, global organizations that are highly distributed are best served by centralizing critical talent management information, such as data related to regulatory compliance or competency-related data, in a system that spans the entire enterprise. Centralized management of this information ensures consistency, reduces redundancy and simplifies tracking and reporting. Organizations also are realizing the time and cost benefits of upgrading one centralized learning management system versus upgrading many systems across multiple locations. While most enterprise-class LMSs provide strong functionality around a centralized system for tracking, record keeping and certifications, it also is becoming increasingly important for todays organizations to support localized learning and training. By allowing content to be managed locally, organizations can address and accommodate culture issues, languages and customs, a critical requirement for any global organization today. Similarly, on the content side, organizations are finding that solutions and managed services offerings that reduce the time, cost and complexity associated with updating, managing and distributing content are addressing a huge pain point and filling a significant void within the HR community. With research reports indicating that organizations spend as much as 15 percent of their e-learning budgets on content management and integration, this represents significant savings. Moreover, todays organizations can avoid the hassle of upgrading their LMS and content altogether by selecting software-as-a-service (SaaS) talent management solutions or deploying hosted LMS solutions in tandem with other systems. Global organizations are increasingly adopting a blended approach that leverages an LMS for accessing learning content, managing the learning workflow, administering assessments and tracking employee certifications, while supporting localized learning within the context of an overarching talent management strategy. The following example demonstrates how centralized talent management solutions are successfully supporting decentralized organizations across employees, teams and business units. Regulated industri