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How can organizations successfully navigate the challenges of decentralization and avoid reverting to traditional hierarchies?

Image courtesy of interviewee. October 31, 2024

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This video discusses a research study focused on the trend toward decentralization in organizational structures, where decision-making authority is shifted from higher management to lower levels within companies. This video shift is driven by several factors, including increased complexity and technicality in work, the need for agility in response to rapidly changing market conditions, and evolving employee expectations, particularly among knowledge workers who desire more autonomy and engagement in their roles.

The speaker highlights that while a complete elimination of hierarchy is rare, there is a growing trend towards more decentralized practices across various industries. The research emphasizes that decentralization is a dynamic process requiring active participation from both leaders and employees: leaders need to step back from traditional decision-making roles, while employees must confidently take on new responsibilities.

The study identifies three key practices that can support decentralization:

1. **Publicly Codified Work Roles** - Clearly defining and making visible the roles and responsibilities of employees to create clarity around authority.

2. **Working from Work Role Boundaries** - Encouraging individuals to respect their defined roles, which promotes confidence in decision-making among employees and helps leaders refrain from overstepping their authority.

3. **Relating through Work Roles** - Framing interactions in terms of roles rather than personal identities, which helps depersonalize conflicts and reinforces the structure of authority.

This video concludes by discussing the implications of decentralization, suggesting that organizations need to establish clear boundaries and structures to facilitate this transition, contrary to the common belief that less structure can lead to greater freedom. Future research opportunities are also mentioned, including exploring who thrives in decentralized environments and the broader impact of such systems on organizational outcomes.

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Here are five key points from the video regarding the trend of decentralization in organizational structures:

1. **Shift from Centralized to Decentralized Structures**: Organizations are increasingly moving from traditional centralized hierarchical structures to decentralized models. This shift allows for decision-making to be distributed among lower levels of the organization, aligning expertise with the authority to make relevant decisions.

2. **Driving Trends**: Several factors contribute to this trend, including the increasing complexity and technical nature of work, the need for faster and more agile decision-making in response to disruptive market conditions, and changing employee expectations. Knowledge workers, particularly from newer generations like Gen Z, are demanding more autonomy and engagement in their roles.

3. **Dynamic Nature of Decentralization**: Decentralization is portrayed as a dynamic and ongoing process rather than a static structure. It involves continuous engagement and adjustment from both leaders and employees, where leaders may need to relinquish control and employees must step up to assume decision-making responsibilities.

4. **Essential Practices for Effective Decentralization**: Successful decentralization involves specific practices, such as clearly codifying roles and responsibilities, ensuring individuals are aware of their boundaries of authority, and framing interactions based on these roles. These practices help to clarify authority, reduce anxiety around decision-making, and create a sense of equality within the organization.

5. **Importance of Structure in Decentralization**: Contrary to the common belief that reducing structure promotes decentralization, the video argues that establishing clear structures and boundaries is crucial for successful decentralization. Properly designed structures provide the necessary support for individuals to operate effectively within their new roles and responsibilities, promoting a healthier organizational dynamic and reducing power imbalances.

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Here are some key quotes extracted from the video, capturing the central themes and ideas discussed regarding the trend towards decentralization in organizations:

1. **Broader Trend**: "This research is really looking at this broader trend that organizations are moving from centralized hierarchical structures more and more to increasingly decentralized structures."

2. **Decision Making**: "By that I mean, decision making that is getting distributed from sort of higher levels in the organization to lower levels in the organization."

3. **Driving Forces**: "There's a number of trends that are driving this shift... right work is becoming more technical and complex."

4. **Expertise Gap**: "It is reasonably expected to have, sufficient, perhaps even superior expertise to the workers that they manage today... that assumption increasingly is untenable."

5. **Market Conditions**: "The sort of shift in market conditions towards faster moving, kind of more disruptive, to be more agile and quicker in their decision-making obviously traditional hierarchies, with their centralized decision making often slows decision making down."

6. **Employee Expectations**: "Shifting expectations of employees, especially now that work is much more dominated by knowledge workers... are seeking more autonomy, more engagement."

7. **Autonomy and Engagement**: "Often what they want is they want more freedom, more autonomy in their work as well."

8. **Dynamic Process**: "Decentralization is something that requires individuals and groups to actually do something. It requires leaders to not make certain decisions that they used to make, and it requires workers to start making decisions."

9. **Micro Dynamics**: "Organizations need to be attentive to the dynamic processual nature of decentralization... and do... always be on the watch out for reversion."

10. **Bound Authority**: "They made sure that authority is clearly bounded, which supports decentralization through the mechanisms I described."

11. **Ground Authority**: "Authority becomes grounded in something outside of the person, something impersonal, and it gets grounded in a set of rules that apply equally to all people."

12. **Flexibility in Centralization**: "Organizations need to centralize sometimes... but they don't necessarily need to structure authority by rank."

13. **Need for Structure**: "You need to create structure in order to help and support people in making a shift towards greater decentralization."

14. **Authority and Autonomy**: "My research suggests at least my experience in researching these firms is that... some people really take to these systems and structures and other people struggle with them."

These quotes highlight the central themes of decentralization, the importance of employee autonomy, the complexity of decision-making, and the dynamic nature of organizational structures.

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This research is really looking at this broader trend

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that organizations are moving from

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centralized hierarchical structures more

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and more to increasingly decentralized structures.

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And by that I mean, decision making

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that is getting distributed from sort

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of higher levels in the organization

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to lower levels in the organization.

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Um, and there's a number of trends that are driving,

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this shift.

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Um, just a few off.

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Uh, you know, a few of those include the fact

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that right work is becoming more technical and complex.

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And so whereas in the past, managers could be

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reasonably expected to have, sufficient,

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perhaps even superior expertise to the workers

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that they manage today,

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that assumption increasingly is untenable.

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And so in order to match decision making closer to

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that expertise, decentralization is becoming more

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and more common, more and more desired.

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Also, the sort of shift in market conditions,

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towards faster moving, kind of more disruptive,

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market dynamics that are pushing organizations

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to be more agile

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and quicker in their decision-making obviously traditional

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hierarchies,

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with their centralized decision making often

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slows decision making down.

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And then the last thing I'll say is that, you know,

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I think some of it also has to do

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with employee expectations.

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Shifting expectations of employees, especially now

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that work is, you know, much more dominated

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by knowledge workers who, who, you know, who are,

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are seeking more autonomy, more engagement,

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and more ownership of their work.

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And, and that that's also driving, some of these trends.

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You know, there's a lot of talk now about Gen Z

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and what, what, what do they want from work?

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Um, and often what they want is they want, more freedom,

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more autonomy, in their work as well.

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So I think there are a variety of forces

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that are pushing organizations in this direction.

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Obviously, hierarchy has been around for a really long time,

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and it's gonna be around for a long time to, to come.

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But, but, but this is a, a trend that, that we're seeing in,

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in, in, in the organizational sphere.

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This is very much a kind of spectrum.

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And so, you know, there's, there's research showing that

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across the whole sort of field of, you know,

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I think this was a study recently of, of,

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of public corporations, that they're seeing a,

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a trend towards decentralization across the full sample

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of these corporations, across industries.

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Now, in my research, I study, kind of an extreme cases

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of organizations adopting decentralization.

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Those that are trying to do, basically do away

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with traditional managers

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and traditional hierarch, hierarchical authority,

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essentially getting rid of that altogether.

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Now that is still quite a, a sort of small subset

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of organizations that are really experimenting

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with those sort of radical forms of decentralization.

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But, I would say

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that the broader shift towards incrementally more

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and more decentralization is, is widespread.

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What I find interesting about this is that it is so hard,

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and we can think about the different forces.

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So structurally, obviously, you know, one

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of the big ones is that in most, for most firms,

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at least privately held firms, legal ownership is held,

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by, at the top.

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And authority is tied to that ownership.

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And so even if those leaders

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or owners decide they want to delegate some authority

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and decision making, legally,

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the authority still resides at the top,

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and they can always reclaim that authority

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and centralize that authority at any moment.

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Um, and so that always makes decentralization tenuous.

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Um, but I think, you know, some of the more,

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I think even the more, maybe less tangible,

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but I think more, kind

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of powerful forces are psychological.

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And so there's a, a lot of research across the fields

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of social psychology and sociology that show

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that even when there is no formal hierarchy

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in a group, in an organization, that people unconsciously,

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take up ways of interacting

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and relating with each other that are hierarchical,

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where they sort of anoint and identify someone

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and put them in a dominant position,

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and they act in subordinate,

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subordinated ways to that person.

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Um, and, you know, it can be based off of, you know,

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rational criteria like, like intelligence or expertise

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or experie experience, but often it's based off

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of less rational criteria.

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Like, you know, what are they, who talks the most?

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Or, you know, are they a male? Are they a white male? Right?

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Sex, gender, race play into this as well.

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Just a temporal element in terms of,

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you say it's not a one time thing,

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there's a, it's all ongoing. What do you mean by,

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Yeah, so, so I think one of the, the, the kind

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of contributions this paper makes is that, historically

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or, or traditionally research in kind

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of organizational structure

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and design has tended to view decentralization hierarchy

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as, as static, structures

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that organizations adopt or change

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or, you know, switch between.

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Uh, now what the, the, the kind

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of perspective I take is actually

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that decentralized decentralization is something that,

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requires, individuals groups to actually,

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do something.

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It, it requires leaders to not make certain decisions

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that they used to make,

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and it requires workers to start making decisions

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that they didn't used to make, right?

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And so this is a very dynamic, process,

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and it can change, and it's an ongoing, kind

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of contested process, where, you know,

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in one moment we could see workers stepping up

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and making decisions that they didn't use to make,

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or leaders stepping back and letting go of some control

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and say, the next moment we could see, workers

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and leaders reverting back

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to the previous hierarchical patterns.

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And so, when we talk about decentralization, one

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of the things that, you know, I think my paper,

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shows is that organizations need to be attentive to the,

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the dynamic pro processual nature of decentralization,

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and do, in a sense, always be on the watch out for

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reversion, for how do we maintain this?

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How do we continue to enact, decentralization

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embedded in an organization that,

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was pri previously hierarchical,

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and then decided to adopt this radically

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decentralized sort of system.

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Um, and so I followed them for 18 months observing,

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you know, these micro dynamics

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and micro interactions of individuals

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and teams as they tried to shift.

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And what I found

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and discovered was that there were certain practices

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or what I call practices,

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but essentially their behaviors,

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so like collective behaviors that they engaged in

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that either supported when they were present,

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it actually supported, moments of decentralization.

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Uh, and then when they're absent,

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it actually supported reversions back

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to the old hierarchical way of relating.

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And so those three, you know, practices briefly,

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and then we can get into these in more detail.

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Uh, the first was really around, that they,

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that they did what I called publicly

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codified their work roles.

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So prior, kind of

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before the, they adopted this,

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in their prior hierarchical structure, you know, they had,

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job titles like the average organization had.

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Um, but, but most, you know, they, they weren't

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that detailed and most people didn't really think about them

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in the day-to-day, kind of, process

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of work after this.

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The, what I observed is that they started, codifying

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everyone's roles and responsibilities in much greater

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detail,

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and then also making it visible, so it was public.

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And so anyone, they had an online platform

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where anyone could go and see, okay, what am I res?

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What's my role? What are my roles?

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What am I responsible for? What are other people's roles?

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And authority was linked to those roles.

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So people knew that if I have a certain role

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or a responsibility, then that also granted me authority,

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or that person granted them authority to make a decision.

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And so what I found is that the clarity of those roles

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and created clarity of authority,

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and that clarity of authority was really crucial

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to actually, implementing

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and ensuring that decentralization was occurring.

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Uh, because,

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and that sort of happened through the fall,

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the subsequent two practices, one of which was

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what I call working from work role boundaries,

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which just meant that individuals were paying attention

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to these roles that were codified.

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So they actually were paying attention going onto this

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online platform

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and becoming really aware of, okay,

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what are the boundaries of my role?

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What are the boundaries of my authority?

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And the way that actually supported decentralization was

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that for leaders, it actually helped

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constrain their exercise of influence.

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So I observed leaders saying, okay, well actually,

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I'm not supposed to be making that decision

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because that falls outside of my role.

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Um, whereas for workers,

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having those clear boundaries actually made them more

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confident in exercising their new found authority,

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because, now they were very clear about it.

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And so because they were very clear about

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what those boundaries were, as long

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as it fit within those boundaries,

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they felt much more comfortable, kind of going forward

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and actually making those decisions.

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And I think one thing that's worth emphasizing here is

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that even after this change,

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workers were still nervous about

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taking on this decision making power, right?

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They were still nervous in certain cases of exercising

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and making decisions that they didn't make

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before, even though the company had adopted this change.

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And so having that clarity really put them at ease

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and reduced their anxiety and made them more confident.

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Um, and then the last practice, which is related, is

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what I call relating through work roles.

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And basically what that meant is that individuals started

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to frame their interactions with each other

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through these impersonal roles.

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So they actually even started calling each other,

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not just their name, but also their role name.

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So they would say, you know, I'm, my name is Mike, you know,

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Mike in my role as this, I'm coming to you in your role as

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y and you know, can you do this for me

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or in my role as X, you know, I'm gonna make this decision.

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And it was a way of both legitimizing kind of authority,

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but also as a way of depersonalizing those interactions.

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Because, oftentimes right,

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when you shift power in an organization, what's likely,

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you know, what, what emerges is there's a lot of potential

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for new conflicts to emerge.

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Uh, things that used to be done in a certain way now are

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being done in a different way.

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And so this was a way of, I think, addressing

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or mitigating these potential conflicts

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and depersonalizing them.

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Um, and so together, you know,

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those are the three practices.

246
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Um, and the last thing I'll say is that essentially that

247
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what these practices do in, in

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what I say in the paper is they do two things.

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They bound authority, right?

250
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So they make sure that authority is clearly bounded,

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which supports decentralization through

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the mechanisms I described, but also they ground authority.

253
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So they depersonalize the, the attributions people make of

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where authority comes from.

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And in many organizations, authority is a, is a,

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is a winner take all type of,

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dynamic in that leaders are granted

258
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a great deal of authority.

259
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Um, in fact, you know, there's, there's, in, in the,

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in the research, it's often viewed as a kind

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of mystification of authority process where, where

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because someone is in a certain position, they're viewed

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as having special expertise

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or experience that grants them that authority

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that is in a sense, inaccessible to other people,

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to the average person, right?

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It's sort of, it's sort of particular to that person,

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and that's why they're in that position,

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and that's why they have that authority.

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Um, and what, what the practice of sort

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of both codifying work roles

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and then starting to use these work roles

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as interactions like depersonalizing,

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these interactions did, is instead it,

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it grounded authority not in the kind of special,

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unique characteristics of the individuals holding the role,

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but rather just in the fact

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that they were holding a particular role.

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And so if someone else were in that role, the idea is, well,

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then they would have that authority, right?

281
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So then authority becomes grounded in something outside

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of the person, something impersonal, and it,

283
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and it gets grounded in a set of rules

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that apply equally to who?

285
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To, to all people, right? So you have authority.

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I have authority because I have a certain role, not

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because of who I am.

288
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And so essentially what that did kind

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of at a very practical level is it it created a sense

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of equality in the organization.

291
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So even though, you know,

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some people had bigger roles than others,

293
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so it wasn't a completely egalitarian, you know, context

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where everyone had the same authority.

295
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There were some people that had more authority than others

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based off of their role,

297
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but it created a sense that, you know, we're all operating

298
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by the same set of rules.

299
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There's a difference between centralization

300
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and decentralization and hierarchy,

301
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and hierarchy itself, right?

302
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We often associate hierarchy with centralization,

303
00:14:35.665 --> 00:14:37.425
where we also, we associate like rank,

304
00:14:37.545 --> 00:14:39.225
I call it rank based authority, right?

305
00:14:39.225 --> 00:14:41.785
So authority based off of your rank

306
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or position in the hierarchy, we often associate that with,

307
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with centralization.

308
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Um, but in reality, I think what, what's what's true is

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that in a rank based authority structure,

310
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in a hierarchical authority structure,

311
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decision making can be centralized in one moment,

312
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but it could also be decentralized, right?

313
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Leaders can delegate their authority down the hierarchy,

314
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and it's in a particular moment,

315
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but the hierarchical authority structure

316
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still sits in place.

317
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Authority is still ultimately based off of

318
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where you sit in the hierarchy.

319
00:15:15.385 --> 00:15:18.925
Uh, whereas when you create a structure of authority

320
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that is based off of someone's role, which is

321
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what I observed in my setting

322
00:15:24.395 --> 00:15:27.615
and is, you know, was a result of these various practices

323
00:15:27.615 --> 00:15:31.575
where, you know, what people's authority, was,

324
00:15:31.635 --> 00:15:34.415
was based more on what work they did, right?

325
00:15:34.485 --> 00:15:38.095
What they were responsible for, not where they sat in, in,

326
00:15:38.155 --> 00:15:41.175
in, in the hierarchy, then,

327
00:15:41.885 --> 00:15:44.895
then you can actually have centralization, right?

328
00:15:44.955 --> 00:15:48.255
You can actually, so in one instance, in my,

329
00:15:48.675 --> 00:15:52.535
in my research site, they actually,

330
00:15:53.415 --> 00:15:55.455
actually centralized strategic decision making.

331
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So initially when they adopted this, they had decided

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to decentralize strategic decision making.

333
00:16:01.315 --> 00:16:03.615
But then afterwards they realized, actually, no, they,

334
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they needed to centralize this.

335
00:16:05.165 --> 00:16:08.135
This was something that was important for creating kind

336
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of clarity and alignment in the organization.

337
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And so they created a new role for some of the senior

338
00:16:14.285 --> 00:16:18.335
leaders to, to, to make and set strategy.

339
00:16:18.875 --> 00:16:20.415
Uh, but they made it really explicit,

340
00:16:20.795 --> 00:16:22.575
and it was also bounded, right?

341
00:16:22.575 --> 00:16:25.775
So it was like a bounded role, a bounded set of authorities,

342
00:16:26.315 --> 00:16:27.375
for strategy.

343
00:16:27.915 --> 00:16:30.135
And I view that as a case, as sort of an instance

344
00:16:30.135 --> 00:16:31.295
of centralization, right?

345
00:16:31.295 --> 00:16:33.735
They sort of centralized that, that decision making,

346
00:16:33.875 --> 00:16:36.695
but they did it in a way that preserved kind

347
00:16:36.695 --> 00:16:40.415
of authority based off of the role rather than the rank.

348
00:16:40.795 --> 00:16:45.255
And so I think what the implication of that is

349
00:16:45.255 --> 00:16:48.335
that you can still be quite flexible in, you know,

350
00:16:48.335 --> 00:16:51.015
organizations need to centralize sometimes, right?

351
00:16:51.205 --> 00:16:54.335
Some functions, some at some moments,

352
00:16:54.355 --> 00:16:57.735
but they don't necessarily need to,

353
00:16:58.175 --> 00:17:00.255
structure authority by rank.

354
00:17:00.355 --> 00:17:04.135
And the reason why that's a problem, the reason why,

355
00:17:04.635 --> 00:17:06.695
or what that gets you, you know, what does it get

356
00:17:06.875 --> 00:17:09.735
by organizations to avoid structuring authority by rank,

357
00:17:09.755 --> 00:17:14.455
is you avoid a lot of the sort of power dynamics, the sort

358
00:17:14.455 --> 00:17:17.095
of unhealthy power dynamics that come

359
00:17:17.125 --> 00:17:19.055
with rank based authority, right?

360
00:17:19.075 --> 00:17:21.855
The sort of dominance, dynamics,

361
00:17:21.875 --> 00:17:25.615
the subordination dynamics, the fear that comes when,

362
00:17:25.795 --> 00:17:28.375
you know, with, with people,

363
00:17:28.435 --> 00:17:30.215
who are lower in the hierarchy

364
00:17:30.215 --> 00:17:33.655
and how they engage the sort of, hesitance to speak up.

365
00:17:34.395 --> 00:17:38.575
Um, all of those dynamics that we know are,

366
00:17:39.235 --> 00:17:42.735
are unhealthy and ineffective for organizations.

367
00:17:43.055 --> 00:17:45.535
I think that the problem with most hierarchical structures

368
00:17:46.155 --> 00:17:50.225
is that they, they, they sort of bundle a, a,

369
00:17:50.385 --> 00:17:52.625
a huge set of decisions all together

370
00:17:52.805 --> 00:17:54.585
and decide they're gonna centralize them all

371
00:17:54.825 --> 00:17:55.905
together, right?

372
00:17:55.905 --> 00:17:57.185
And what this type of system

373
00:17:57.185 --> 00:17:59.505
and what kind of this type of approach does, it allows you

374
00:17:59.505 --> 00:18:03.225
to centralize very discreet kind of functions

375
00:18:03.225 --> 00:18:07.705
and very discreet types of decisions, so that,

376
00:18:08.165 --> 00:18:10.585
you can sort of centralize in some domains,

377
00:18:10.585 --> 00:18:11.705
decentralize in others,

378
00:18:12.205 --> 00:18:14.025
and it allows a lot more flexibility.

379
00:18:14.305 --> 00:18:16.065
I think that one of the practical implications,

380
00:18:16.245 --> 00:18:19.855
and one of the things that I think is counterintuitive about

381
00:18:20.525 --> 00:18:25.035
what I found was that when I've talked to organizations

382
00:18:25.035 --> 00:18:27.635
that are interested in decentralizing,

383
00:18:27.765 --> 00:18:29.995
interested in distributing decision making,

384
00:18:29.995 --> 00:18:33.195
interested in empowering their employees, oftentimes

385
00:18:34.215 --> 00:18:38.835
the kind of impulse is to, is to,

386
00:18:39.015 --> 00:18:41.275
do so with less structure, right?

387
00:18:41.275 --> 00:18:43.675
It's to sort of get rid of structure, get rid of rules,

388
00:18:44.575 --> 00:18:46.115
get rid of formalization,

389
00:18:46.855 --> 00:18:49.475
and just sort of give people the idea being

390
00:18:49.475 --> 00:18:52.515
that you give people more sort of space, less structure

391
00:18:53.135 --> 00:18:54.555
that's gonna give them more freedom

392
00:18:54.735 --> 00:18:56.755
and gonna allow them the ability

393
00:18:56.815 --> 00:18:58.235
to start making more decisions.

394
00:18:59.485 --> 00:19:03.185
And I think what, in fact, what I find is that oftentimes

395
00:19:03.185 --> 00:19:05.185
that doesn't work, right?

396
00:19:05.185 --> 00:19:06.865
Giving people less structure

397
00:19:07.705 --> 00:19:10.385
actually doesn't necessarily lead to decentralization often.

398
00:19:10.885 --> 00:19:14.305
In fact, you need to create kind of boundaries, you need

399
00:19:14.305 --> 00:19:15.745
to create containers.

400
00:19:15.745 --> 00:19:18.545
You need to create structure in order to help

401
00:19:18.725 --> 00:19:21.865
and support people in making a shift towards

402
00:19:22.015 --> 00:19:23.345
greater decentralization.

403
00:19:23.365 --> 00:19:26.905
So I think that's one of the, the kind of, sort

404
00:19:26.905 --> 00:19:29.825
of practical implications of this for leaders

405
00:19:29.965 --> 00:19:31.665
and managers who are thinking about this.

406
00:19:32.525 --> 00:19:34.785
Um, I mean, I think in terms of future research areas,

407
00:19:34.865 --> 00:19:37.905
I think there's a, there's sort of a, a, a bevy of,

408
00:19:37.905 --> 00:19:41.465
of research areas when it comes to decentralization around,

409
00:19:42.245 --> 00:19:45.905
you know, what, who are the types of individuals

410
00:19:45.905 --> 00:19:49.185
that are likely to thrive in these, in these types

411
00:19:49.185 --> 00:19:50.265
of contexts, right?

412
00:19:50.285 --> 00:19:54.625
We sort of assume that, maybe everyone would like sort

413
00:19:54.625 --> 00:19:56.185
of more authority and more autonomy.

414
00:19:56.445 --> 00:20:00.105
But you know, my, my research suggests at least my,

415
00:20:00.165 --> 00:20:04.745
my experience in my, researching these, these firms is

416
00:20:04.745 --> 00:20:06.185
that no, it's not the case, right?

417
00:20:06.255 --> 00:20:09.745
Some people really, take to these, systems

418
00:20:10.005 --> 00:20:12.265
and structures and other people struggle with them.

419
00:20:13.085 --> 00:20:15.825
Um, so examining things like that,

420
00:20:15.855 --> 00:20:17.905
obviously there's a whole host of questions around,

421
00:20:18.605 --> 00:20:22.065
you know, what are the context in which, these types

422
00:20:22.065 --> 00:20:24.105
of systems are more beneficial?

423
00:20:24.215 --> 00:20:28.265
What are the ultimately the consequences of this for the for

424
00:20:28.285 --> 00:20:31.145
for outcomes, both for individuals, employees,

425
00:20:31.145 --> 00:20:32.345
and also for organizations.

426
00:20:32.345 --> 00:20:34.305
Those are hard questions to answer in a kind

427
00:20:34.305 --> 00:20:35.585
of rigorous scientific way,

428
00:20:36.205 --> 00:20:38.425
but they're really important questions to look at.

Trends in Organizational Decentralization

00:00:00 - This research is really looking at this broader trend that organizations are moving from centralized hierarchical structures more and more to increasingly decentralized structures. And by that I mean, decision making that is getting distributed from sort of higher levels in the organization to lower levels in the organization. and there's a number of trends that are driving, this shift. just a few off. you know, a few of those include the fact that right work is becoming more technical and complex.

00:00:37 - reasonably expected to have, sufficient, perhaps even superior expertise to the workers that they manage today, that assumption increasingly is untenable. And so in order to match decision making closer to that expertise, decentralization is becoming more and more common, more and more desired. Also, the sort of shift in market conditions, towards faster moving, kind of more disruptive,

00:01:10 - to be more agile and quicker in their decision-making obviously traditional hierarchies, with their centralized decision making often slows decision making down. And then the last thing I'll say is that, you know, I think some of it also has to do with employee expectations. Shifting expectations of employees, especially now that work is, you know, much more dominated by knowledge workers who, who, you know, who are, are seeking more autonomy, more engagement,

Trends in Workplace Decentralization: The Influence of Gen Z

00:01:40 - And, and that that's also driving, some of these trends. You know, there's a lot of talk now about Gen Z and what, what, what do they want from work? and often what they want is they want, more freedom, more autonomy, in their work as well. So I think there are a variety of forces that are pushing organizations in this direction. Obviously, hierarchy has been around for a really long time, and it's gonna be around for a long time to, to come. But, but, but this is a, a trend that, that we're seeing in,

00:02:15 - This is very much a kind of spectrum. And so, you know, there's, there's research showing that across the whole sort of field of, you know, I think this was a study recently of, of, of public corporations, that they're seeing a, a trend towards decentralization across the full sample of these corporations, across industries. Now, in my research, I study, kind of an extreme cases of organizations adopting decentralization.

00:02:47 - with traditional managers and traditional hierarch, hierarchical authority, essentially getting rid of that altogether. Now that is still quite a, a sort of small subset of organizations that are really experimenting with those sort of radical forms of decentralization. But, I would say that the broader shift towards incrementally more and more decentralization is, is widespread. What I find interesting about this is that it is so hard, and we can think about the different forces.

Challenges of Decentralization in Hierarchical Organizations

00:03:21 - of the big ones is that in most, for most firms, at least privately held firms, legal ownership is held, by, at the top. And authority is tied to that ownership. And so even if those leaders or owners decide they want to delegate some authority and decision making, legally, the authority still resides at the top, and they can always reclaim that authority

00:03:51 - and so that always makes decentralization tenuous. but I think, you know, some of the more, I think even the more, maybe less tangible, but I think more, kind of powerful forces are psychological. And so there's a, a lot of research across the fields of social psychology and sociology that show that even when there is no formal hierarchy in a group, in an organization, that people unconsciously,

00:04:23 - and relating with each other that are hierarchical, where they sort of anoint and identify someone and put them in a dominant position, and they act in subordinate, subordinated ways to that person. and, you know, it can be based off of, you know, rational criteria like, like intelligence or expertise or experie experience, but often it's based off of less rational criteria. Like, you know, what are they, who talks the most?

Dynamic Nature of Decentralization in Organizations

00:04:57 - Sex, gender, race play into this as well. Just a temporal element in terms of, you say it's not a one time thing, there's a, it's all ongoing. What do you mean by, Yeah, so, so I think one of the, the, the kind of contributions this paper makes is that, historically or, or traditionally research in kind of organizational structure and design has tended to view decentralization hierarchy as, as static, structures

00:05:30 - or, you know, switch between. now what the, the, the kind of perspective I take is actually that decentralized decentralization is something that, requires, individuals groups to actually, do something. It, it requires leaders to not make certain decisions that they used to make, and it requires workers to start making decisions

00:05:59 - And so this is a very dynamic, process, and it can change, and it's an ongoing, kind of contested process, where, you know, in one moment we could see workers stepping up and making decisions that they didn't use to make, or leaders stepping back and letting go of some control and say, the next moment we could see, workers and leaders reverting back to the previous hierarchical patterns. And so, when we talk about decentralization, one

Navigating the Challenges of Decentralization

00:06:33 - shows is that organizations need to be attentive to the, the dynamic pro processual nature of decentralization, and do, in a sense, always be on the watch out for reversion, for how do we maintain this? How do we continue to enact, decentralization embedded in an organization that, was pri previously hierarchical, and then decided to adopt this radically decentralized sort of system.

00:07:05 - you know, these micro dynamics and micro interactions of individuals and teams as they tried to shift. And what I found and discovered was that there were certain practices or what I call practices, but essentially their behaviors, so like collective behaviors that they engaged in that either supported when they were present, it actually supported, moments of decentralization. and then when they're absent,

00:07:35 - to the old hierarchical way of relating. And so those three, you know, practices briefly, and then we can get into these in more detail. the first was really around, that they, that they did what I called publicly codified their work roles. So prior, kind of before the, they adopted this, in their prior hierarchical structure, you know, they had, job titles like the average organization had. but, but most, you know, they, they weren't

Enhancing Role Clarity for Effective Decentralization

00:08:08 - in the day-to-day, kind of, process of work after this. The, what I observed is that they started, codifying everyone's roles and responsibilities in much greater detail, and then also making it visible, so it was public. And so anyone, they had an online platform where anyone could go and see, okay, what am I res? What's my role? What are my roles? What am I responsible for? What are other people's roles?

00:08:38 - So people knew that if I have a certain role or a responsibility, then that also granted me authority, or that person granted them authority to make a decision. And so what I found is that the clarity of those roles and created clarity of authority, and that clarity of authority was really crucial to actually, implementing and ensuring that decentralization was occurring. because, and that sort of happened through the fall, the subsequent two practices, one of which was

00:09:11 - which just meant that individuals were paying attention to these roles that were codified. So they actually were paying attention going onto this online platform and becoming really aware of, okay, what are the boundaries of my role? What are the boundaries of my authority? And the way that actually supported decentralization was that for leaders, it actually helped constrain their exercise of influence.

Empowering Decision-Making Through Clarity and Role Definition

00:09:42 - I'm not supposed to be making that decision because that falls outside of my role. whereas for workers, having those clear boundaries actually made them more confident in exercising their new found authority, because, now they were very clear about it. And so because they were very clear about what those boundaries were, as long as it fit within those boundaries, they felt much more comfortable, kind of going forward

00:10:14 - And I think one thing that's worth emphasizing here is that even after this change, workers were still nervous about taking on this decision making power, right? They were still nervous in certain cases of exercising and making decisions that they didn't make before, even though the company had adopted this change. And so having that clarity really put them at ease and reduced their anxiety and made them more confident. and then the last practice, which is related, is

00:10:46 - And basically what that meant is that individuals started to frame their interactions with each other through these impersonal roles. So they actually even started calling each other, not just their name, but also their role name. So they would say, you know, I'm, my name is Mike, you know, Mike in my role as this, I'm coming to you in your role as y and you know, can you do this for me

Legitimizing Authority and Depersonalizing Interactions in Organizations

00:11:18 - And it was a way of both legitimizing kind of authority, but also as a way of depersonalizing those interactions. Because, oftentimes right, when you shift power in an organization, what's likely, you know, what, what emerges is there's a lot of potential for new conflicts to emerge. things that used to be done in a certain way now are being done in a different way. And so this was a way of, I think, addressing

00:11:48 - and depersonalizing them. and so together, you know, those are the three practices. and the last thing I'll say is that essentially that what these practices do in, in what I say in the paper is they do two things. They bound authority, right? So they make sure that authority is clearly bounded, which supports decentralization through the mechanisms I described, but also they ground authority. So they depersonalize the, the attributions people make of

00:12:18 - And in many organizations, authority is a, is a, is a winner take all type of, dynamic in that leaders are granted a great deal of authority. in fact, you know, there's, there's, in, in the, in the research, it's often viewed as a kind of mystification of authority process where, where because someone is in a certain position, they're viewed

Grounding Authority in Organizational Roles

00:12:51 - or experience that grants them that authority that is in a sense, inaccessible to other people, to the average person, right? It's sort of, it's sort of particular to that person, and that's why they're in that position, and that's why they have that authority. and what, what the practice of sort of both codifying work roles and then starting to use these work roles as interactions like depersonalizing, these interactions did, is instead it, it grounded authority not in the kind of special,

00:13:25 - but rather just in the fact that they were holding a particular role. And so if someone else were in that role, the idea is, well, then they would have that authority, right? So then authority becomes grounded in something outside of the person, something impersonal, and it, and it gets grounded in a set of rules that apply equally to who? To, to all people, right? So you have authority. I have authority because I have a certain role, not

00:13:54 - And so essentially what that did kind of at a very practical level is it it created a sense of equality in the organization. So even though, you know, some people had bigger roles than others, so it wasn't a completely egalitarian, you know, context where everyone had the same authority. There were some people that had more authority than others based off of their role, but it created a sense that, you know, we're all operating

Distinguishing Authority: Centralization vs. Decentralization in Hierarchical Structures

00:14:24 - There's a difference between centralization and decentralization and hierarchy, and hierarchy itself, right? We often associate hierarchy with centralization, where we also, we associate like rank, I call it rank based authority, right? So authority based off of your rank or position in the hierarchy, we often associate that with, with centralization. but in reality, I think what, what's what's true is that in a rank based authority structure,

00:14:56 - decision making can be centralized in one moment, but it could also be decentralized, right? Leaders can delegate their authority down the hierarchy, and it's in a particular moment, but the hierarchical authority structure still sits in place. Authority is still ultimately based off of where you sit in the hierarchy. whereas when you create a structure of authority that is based off of someone's role, which is what I observed in my setting and is, you know, was a result of these various practices

00:15:31 - was based more on what work they did, right? What they were responsible for, not where they sat in, in, in, in the hierarchy, then, then you can actually have centralization, right? You can actually, so in one instance, in my, in my research site, they actually, actually centralized strategic decision making. So initially when they adopted this, they had decided

Centralization for Clarity: Role-Based Authority in Organizations

00:16:01 - But then afterwards they realized, actually, no, they, they needed to centralize this. This was something that was important for creating kind of clarity and alignment in the organization. And so they created a new role for some of the senior leaders to, to, to make and set strategy. but they made it really explicit, and it was also bounded, right? So it was like a bounded role, a bounded set of authorities, for strategy. And I view that as a case, as sort of an instance

00:16:31 - They sort of centralized that, that decision making, but they did it in a way that preserved kind of authority based off of the role rather than the rank. And so I think what the implication of that is that you can still be quite flexible in, you know, organizations need to centralize sometimes, right? Some functions, some at some moments, but they don't necessarily need to, structure authority by rank.

00:17:04 - or what that gets you, you know, what does it get by organizations to avoid structuring authority by rank, is you avoid a lot of the sort of power dynamics, the sort of unhealthy power dynamics that come with rank based authority, right? The sort of dominance, dynamics, the subordination dynamics, the fear that comes when, you know, with, with people, who are lower in the hierarchy and how they engage the sort of, hesitance to speak up.

Rethinking Decentralization: The Role of Structure in Empowering Decision-Making

00:17:39 - are unhealthy and ineffective for organizations. I think that the problem with most hierarchical structures is that they, they, they sort of bundle a, a, a huge set of decisions all together and decide they're gonna centralize them all together, right? And what this type of system and what kind of this type of approach does, it allows you to centralize very discreet kind of functions and very discreet types of decisions, so that,

00:18:10 - decentralize in others, and it allows a lot more flexibility. I think that one of the practical implications, and one of the things that I think is counterintuitive about what I found was that when I've talked to organizations that are interested in decentralizing, interested in distributing decision making, interested in empowering their employees, oftentimes the kind of impulse is to, is to,

00:18:41 - It's to sort of get rid of structure, get rid of rules, get rid of formalization, and just sort of give people the idea being that you give people more sort of space, less structure that's gonna give them more freedom and gonna allow them the ability to start making more decisions. And I think what, in fact, what I find is that oftentimes that doesn't work, right? Giving people less structure actually doesn't necessarily lead to decentralization often.

Balancing Structure and Autonomy in Decentralization

00:19:14 - to create containers. You need to create structure in order to help and support people in making a shift towards greater decentralization. So I think that's one of the, the kind of, sort of practical implications of this for leaders and managers who are thinking about this. I mean, I think in terms of future research areas, I think there's a, there's sort of a, a, a bevy of, of research areas when it comes to decentralization around,

00:19:45 - that are likely to thrive in these, in these types of contexts, right? We sort of assume that, maybe everyone would like sort of more authority and more autonomy. But you know, my, my research suggests at least my, my experience in my, researching these, these firms is that no, it's not the case, right? Some people really, take to these, systems and structures and other people struggle with them.

00:20:36 - obviously there's a whole host of questions around, you know, what are the context in which, these types of systems are more beneficial? What are the ultimately the consequences of this for the for for outcomes, both for individuals, employees, and also for organizations. Those are hard questions to answer in a kind of rigorous scientific way, but they're really important questions to look at.

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