Reinsurance and Foreign Exchange Risks
All insurance companies face foreign exchange risks to some extent. However, all insurance companies are not equally concerned about foreign risks. This is because, for most insurance companies, the risks as well as the premiums are collected in the same currency. Generally, the business of an insurance company tends to be managed locally. However, this […]
Self Assessment for Leadership: Assessing the Strengths and Vulnerabilities for Improving Leadership Effectiveness
Leaders are responsible for creating and realizing the vision by encouraging the followers to work towards the fulfilment of a common goal. Effective leaders should be able to have a perfect assessment of their strengths/weaknesses and deal with it efficiently. By adopting remedial measures, they should reinforce their areas of strengths and overcome their deficiencies. […]
Writing Effectively to get a Job/Potential Client
In today’s competitive world, a good writing must engage a reader. Whether it is a proposal or a resume, the reader must feel involved in the write-up. Read on to get tips on how to write better while applying for a job or for a business…. Start with something interesting: In today’s market scenario where […]
Hersey Blanchard Model
According to this model, the leader has to match the leadership style according to the readiness of subordinates which moves in stage and has a cycle. Therefore, this theory is also known as the life-cycle theory of leadership. The theory, developed by Paul Hersey and Kenneth Blanchard, is based on the ’readiness’ level of the […]
Challenges in Global Insurance And International Claims
Multinational organizations have become extremely powerful entities in the 21st century. There are many companies which have business interests that are spread across hundreds of countries. Given the global nature of such companies, it is only rational for some of these companies to want a global insurance provider. These companies want to standardize the insurance […]
In many organizations, it is often the practice to give autonomy to many teams and let them take the decisions that affect their day to day affairs as well as some strategic issues. These are the so-called self-directed teams that exist in all organizations where the managers of these teams take the decisions regarding the management of the team with greater autonomy than the other teams.
These self-directed teams are liked by many managers since there is greater freedom and greater say over their affairs and the rank and file employees also like these teams because it gives them greater control over their work. However, senior management in most cases does not like to cede autonomy and hence there is often a tussle going on between senior management and middle management as far as these self-directed teams and their functioning goes.
The previous articles have discussed how many transnational corporations cede autonomy to regional and divisional heads and let them run their regions or divisions as they see fit. It is the case that within these divisions and regions there is often the tendency to not pass the autonomy down the ranks and instead be as authoritarian as possible. This is indeed a travesty but something which happens in practice in many organizations.
The standard defense that the senior managers in these divisions and regions offer is that the passing down of the autonomy to the rank and file might not be practically possible given the lack of strategic focus and direction that individual teams have which makes them take orders instead of deciding for themselves.
Of course, the intra-organizational tussles that go on between the senior management and the rank and file employees along with the middle managers might make for interesting gossip but in reality these tussles have negative effects on the organizational fabric.
Hence, a possible solution to this issue would be to ensure that sufficient autonomy is ceded to the middle managers without compromising on the strategic imperatives. This can be done if the decision making is decentralized in some functions like HR, Admin, Finance, Operations and Project Management and Project Delivery and at the same time retain control over the overall strategic direction and focus that the company must take.
Though this solution might sound simplistic, in reality this is something that has been actualized in many organizations especially in Fidelity and Unilever where functional and divisional heads as well as regional heads take decisions regarding these activities without interference from the higher ups.
Though there are bound to be some issues that crop up from time to time because of this arrangement, there are some positive benefits to this arrangement. These benefits are to do with the way in which the regional and divisional autonomy manifests in better decisions made about the day to day operations based on local conditions instead of centralized decision making that is top down and done without knowledge of ground realities.
In conclusion, decision making in self-directed teams must be encouraged without ceding complete control over the larger areas of policy and strategy. This can be actualized with some deft planning of the organizational structure and reorienting the organizational culture.
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