October 20, 2008

When economic downturn comes, there is a natural tendency to tightly pull the strings of management. This includes more centralization in decision making and curbing the powers of managers down the line. The line of thought that goes into all this is – crisis requires bringing in a sense of stability and for that, wisdom of experience matters more that creativity and talent of lesser experienced people. But this may not be the right line of thinking!

Even in situations of economic crisis, perhaps the better option would be to go for higher decentralization and empowerment of the people. The reasoning is simple. Better decision making is always done by –
  1. People who are closer to where the action lies.
  2. Small groups which bring in diversity of thought to analyze the situation and solve the problem.
Since economic crisis often requires nimble footedness and quick action orientation to react to ever changing market dynamics, it is important to empower the people down the line to call the shots. Apart from speed of action, people who are at the front are more likely to come up with innovative ideas to tackle a given situation. During bad times, out-of-the-box ideas are vital for survival and an empowered rank and file is a healthy breeding ground for such ideas. If decision making is too centralized, it is bound to take time and by the time decision is taken it is highly likely that damage has been done.

Another thing to keep in mind is that people deliver better when they feel a sense of ownership. Tightening the strings to bring in more centralization would result in people becoming mere implementers down the line. This may impact the motivation level. At times of crisis, motivation level of your people can be a differentiating factor in delivering results and surviving the crisis. By keeping people empowered you can bring in the sense of ownership and boost the motivation level of your workforce. This, in turn, would a long way in navigating the rough waters with courage and conviction to not only survive but thrive too.

It is said that tough times call for tough decisions. Perhaps a correction is required in this belief. Tough times call for bold decisions. Empowering your people and discouraging the natural desire to increase control is one such bold decision in managing through turbulent times. It may not go well with the rational mind but then all bold decisions don't go well with rational mind.


  1. Anonymous // October 20, 2008 at 10:10 AM  

    Well, I have been hearing of and have observed lots of centralization in last few weeks but I agree to your viewpoint..its totally a wrong strategy. Not only the managers feel lack of ownership and motivation rather they are not able to control their team motovation level as well. Its utmost important right now to keep your employees motivated and engaged to have increased productivity and better output.