Pic: IMAGESBAZAAR

It is very common that organisations and their leaders often operate like feudal lords of pre independence era by micro managing their team members and putting themselves in the path of decision-making, no matter how insignificant the decisions are. Looking back at history, several centuries of evolution of humankind into structured and hierarchical society have conditioned us to create centralised autocratic organisations.

Do we have more centralised and autocratic organisations in one country than others? A study done by Dutch researcher Geert Hofstede based on the survey of 54 countries indicated that on Power Distance Index (PDI) India scored 77, compared to an average of 50. PDI is an indication of how members of organisations are willing to accept unequal distribution of power within the organisation's hierarchy. It means people seem to be accepting centralisation of decision-making much more than their counterparts in the rest of the world such as USA (40), UK (35), Australia (36), Taiwan (58), South Africa (49) and many others.

What does this mean for organisations? It means in some countries an organisation relies more on directive and controlling behaviour of their leaders, as workforce becomes obedient, submissive and seeks frequent direction. Leaders need to decide whether they want a highly structured organisation where a few direct the masses, or whether they want to create a vibrant organisation where all members are empowered to think and contribute. To get to the later, delegation and decentralisation of organisational power base is crucial. In recent times, the equation has vastly changed as many organisations are adopting a decentralised approach and delegate more to their teams.

Many leaders who recognise the importance for empowered teams and executives, have helped their organisations flourish both in the local and global marketplace. There is growing evidence, particularly in new industries that companies are shifting from centralisation to decentralisation of organisations, as they delegate and empower their people more. Simply defined, delegation of authority means a conscious and systematic effort to bring dispersal of decision-making power to the lower levels of the organisation. In decentralisation, only broad powers such as power to plan, direct and control rest at the top. Decentralisation is a natural and necessary development when teams grow large and complex, especially in today's market scenario where teams are spread across geographies and locations. Here, centralisation of team management is neither possible nor desirable.

Often leaders proclaim that they want to empower their teams but in reality, they are unable to practice what they preach. It is very difficult for some to give up the illusion of importance, increased self-worth and their indispensability when countless people line up seeking all sorts of approval. Such leadership behaviour creates dysfunctional organisations where trust in the leadership erodes. Therefore, decentralisation/delegation should be diligently planned and executed to leverage the complimentary skill sets of team members and roles. This requires an in-depth understanding of every team member's skills and motivations.  

If done right, effective decentralisation yields innumerable benefits to the organisation and the teams that operate within them. There are three significant benefits that directly contribute to organisation's growth. Firstly, it forces organisations to hire leaders who can think and run teams on their own and achieve goals, without direction and control from the top, creating a more productive and robust business. Secondly, empowered teams can foster innovation and enable organisations to expand into new products and services. Last but not the least, organisations tend to mitigate the risk of excessive dependence on a very small group of senior people as decision-making in decentralised and organisations have the collective wisdom of all groups who can contribute.

A move towards empowerment and effective delegation to teams enables better team dynamics where people understand their interdependencies and build trust and mutual commitment. There is great ownership and as a result team members show greater passion and energy to achieve personal and organisational goals.  In result, delegation, if done properly improves accountability of people.

India has one of the most intelligent workforces that has excelled for its quality of service and professionalism and has enabled creation of companies that are considered global leaders, particularly in the Information technology industry. There is no doubt that through effective delegation and optimal leverage of the talents, we can create global leaders in all industries.

The author Kumar Parakala is Partner & COO, Advisory in India, KPMG