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Benefits of Centralized Learning

To achieve centralized learning, an organization will utilize one central learning


management system with one central database. Such a system can manage many
functions. In general terms, the main benefit of centralized learning is the cost savings
that result from standardization, central reporting and record keeping and quality control.
The advantages of such a system include:

• Reduction in number of systems required to handle corporate learning.


• Reduction of infrastructure requirements via consolidation of IT resources.
• Immediate population of the company’s central database with course completions
and certifications.
• Promotion of standardization via reduction in the number of duplicate courses.
• Realization of significant cost savings advantages.
• Reduction in number of administrators.
• Standardization of content.
• Standardization of certifications and competencies.
• Ability to easily align employee objectives with corporate objectives.
• Simplified reporting (from one system versus many).
• Accuracy in reporting (from one system versus many).

Benefits of Decentralized Learning


To achieve decentralized learning, an organization may utilize several learning
management systems, each with its own database. These systems can also manage many
functions. In general terms, the main benefit of decentralized learning is the ability to
deploy and manage large amounts of content, all of which can be localized. The
advantages of such a system include:

• Increased control at the local level.


• Local training departments tend to understand the specific needs of their areas of responsibility
much better than corporate.
• Local training departments see efficiencies in creating their own courses versus depending on
corporate.
• Local training departments can manage their own costs.
• Ease of creation of desired local reports.
• Control over local resources.
• Ability to manage more content.
• Ability to localize courses and learning events.
• Ability to add spot training instantly when needed.

Obviously, the advantages of each model for corporate learning management are, in essence, the
disadvantages of the other.

Overview
The emergence of the debate over decentralization vs. centralization as a
contemporary facilities management issue comes to us in a era where an
organizations efficiency, speed, and usage of time have never been more
critical. The demands on an organizations ability to rapidly respond to change
while maintaining a sense of stability rests heavily on the combined application
of the these strategies. The debate is not concerned with which strategy is
better however - rather it is concerned with the extent to which the strategies
should compliment one another. Decisions to decentralize or centralize a
company's operations, facilities, or management policies must be derived from
a careful analysis of the company's existing state, immediate needs, and future
goals. This web site seeks to clarify the distinction between these seemingly
opposing strategies and stress the importance of their coexistence within
organizations.

Centralization and Decentralization


defined
Centralization refers to the union and consolidation of departments into one
center. Within the center, standardization may occur on operations ranging
from computer systems to networked resources, from employee policy and
conduct to furniture layout and space allocation. Obvious advantages are
increased organization, cost reduction due to bulk purchases, and increased
efficiency. Disadvantages are that organizational flexibility is often
compromised and necessary changes in structure become difficult and slow to
implement. Decentralization refers to a shift in organizational structure that
distributes more administrative control to local centers or groups. Main
advantages of decentralization are increased communication among local
sectors of the organization and less of a reliance on formal communication.
Disadvantages are many and make this strategy slightly more risky than the
former. They include possibilities of neglect, mismanagement, and the loss of
objectivity. Below are diagrams illustrating each strategy. Notice the
decentralized diagram features communication hubs for each branch where the
centralized diagram has a single communication center.

Decentralization

Centralization

Contemporary Examples
One way to better understand the difference is to consider the following
examples of each strategy.

Centralization
It makes sense to centralize a town's library system. By having a main library
with divisions in neighboring areas, a system of inter-library loans and
standardized service procedures can be easily implemented. With a centralized
library, a specific book that is in one library can be easily tracked and checked
out by a patron in any part of town. A decentralized strategy might not be
appropriate in this situation as it would be much more difficult to keep track of
where materials were located.

Decentralization
For many fast food restaurants across the United States, decentralization plays
an important role. While many cooking procedures and furniture layouts are
standardized and monitored, individual restaurant owners are responsible for
tasks such as hiring, maintaining adequate food supplies, and facility
maintenance. With the love of hamburgers and french fries and other greasy
foods that the American public seems to have, thousands of fast food
restaurants are needed across the United States. In order to meet this demand,
McDonald's chose to implement decentralized strategies for individual owners
to follow. Since a franchise owner's profit is contingent upon their individual
franchise's success, owners can be trusted to make decisions based on their
particular facilities needs.

Centralization

Benefits Costs
 Greater efficiency  May lessen internal communication
 May lessen involvement with organizational
 Increased professionalism
image
 May lessen the extent of "team member"
 Less parochialism
feelings
 Uniform corporate image  Possible loss of innovation
 Standardization of space allocation
 Delayed response time
and furniture distribution
 Cost Savings on bulk purchases of  Manipulation of zoning, space allocation, and
building services and materials lease requirements probable
 Minimizes company's dependence  Dependence on centralized authorities may
on outside consultants and vendors discourage the development of local skills and
talents
 Allows for company wide
 Necessary changes become slow to implement
databases

Decentralization

Benefits Costs
 Enhances communication and
 Loss of objectivity may occur
interaction among employees
 Promotes project prioritization  Possible loss of budget control failure
 Creates a need for less formalized  Possible loss of ability to address cross-
communication therapeutic issues
 Facilitates a more comprehensive  Limited opportunity and ability to think
understanding of individual units more broadly
 Less formal restrictions promote  Need for constant employee training since
innovation and creativity operations are separate
 Increased input from local hubs  Veteran knowledge easily lost with turnover
 More difficult to ensure and monitor
employee compliance with company policies
Organizational Design For Multinational Companies
Overview: The focus of this presentation is upon organizational design. It
discusses how organizations structure subunits and coordination and control
mechanisms to achieve their strategic goals. The basic question, which is
addressed, is how to divide work among the organization's subunits? Designing
of the organization could be done through matrix structure. It discusses about the
Hybrid and Worldwide matrix structure, which supports strategies that include
local adaptation and concern for globalization and mix geographic units with
product or function units. The article also discusses about structures of
multinational operations and coordination and control.

Organization Design
Organization design is central to an enterprise’s ability to be market driven,
adaptive, innovative, and more – in short, to be able to compete effectively.

Hay Group works with clients to design and implement organizations that deliver
on their strategic vision and business results. Our approach is guided by the
following core principles:

Organization design is more than just structure – it is the integration of


structure, processes, people, culture, systems and technology
Strategy is the starting point – organization design must be driven by, and
supportive of, overall strategy
Clarity and accountability underpin sound organization design –when good
people know what to do and are held accountable, they achieve results
Transitioning to a new organization end-state requires an integrated approach
to change management

Our expertise is focused on helping clients get the most value from their work
structures. We advise on the design of overall organization “architectures”, e.g.,
structures, processes and culture. We also assist with the supporting
components of those architectures – ensuring that individual jobs are well-
defined; and, accountabilities, interrelationships and reporting relationships are
clear and logical.

By focusing, equipping and engaging client staff in the organizational planning,


design and implementation stages, Hay’s unique “Rapid Change
Implementation”™ approach accelerates and sustains the benefits of
organization change.
Problem
A meeting of 5 executives was held to review the business organizational structure to
improve its effectiveness. The boss's recent visits with customers had uncovered a
number of dissatisfactions. He believed that we were not providing our customers with all
of the leading edge solutions that we were capable of delivering. Some problems were:

1. Being referred to too many 3rd parties to implement the entire solution for their
organizations and hence choosing to go to our competition.
2. Could not understand why we were unable to make small changes quickly to our
solution for them.
3. The product was powerful but hard to learn.

We needed a dynamic organization that could understand customers’ real problems and
put together prototypes and solutions quickly.

The meeting lasted about 1 hour. Many ideas were discussed, but no direction or pattern
emerged. In the end, we were asked for proposals by the next morning.

Organization Design
An organization's design includes more than its formal structure—the boxes on
an organization chart and the lines connecting them. It encompasses
work practices, culture, processes, and staffing, which together comprise
the organizational architecture. Using our proprietary tools and
methodologies, we help leaders align their organizational architectures
with their business strategies.

Publications Related to Organization Design

Competing by Design
David A. Nadler and Michael L. Tushman
Total integration of corporate structure, workplace culture, and employee motivation can help companies
achieve a competitive advantage. Bringing all such processes together into one unified organization is as
important to a company's future as the architectural unity of the building that houses it. (Jossey-Bass
Publishers, 1997)

Strategic Organization Design:


Today, the last remaining source of truly sustainable competitive advantage is a company's “organizational
capabilities”—the unique ways in which an organization structures its work and motivates its people to
achieve clearly articulated strategic objectives. Designing a truly effective organization is a never-ending
process. By applying a set of powerful yet fairly simple tools, leaders and managers alike can redesign their
organization to maximize its core competencies, whether they are in technological innovation, customer
focus, or low-cost manufacturing.

Too frequently, co-development relationships are left to chance

Companies often identify and select partners in an ad hoc manner as the need arises, and
once initiated, these relationships are not actively managed to ensure they deliver
maximum value. Given the complexities of co-development, this is a recipe for failure.

Ask yourself:

Do we identify, evaluate, and select partners in a disciplined manner?

• Do we have a robust process in place, or is each partner selection a one-off exercise?


• Are the appropriate personnel involved in partner selection at the right time, and are they filling
the right roles?
• Do we use an appropriate evaluation methodology based on the role the partner will play, and
are the criteria grounded in our business mission and strategy?

How effectively do we manage our partner relationships?

• Are standard partnering agreement templates readily available?


• Do we have mechanisms for tracking collaboration performance and acting on the results?
• Do we actively identify areas to further leverage our relationships?
• Do we manage relationship end-of-life as a distinct phase in the relationship lifecycle?

PRTM offers a broad range of Partner Selection and Management services to address the preceding
questions and ensure you achieve maximum value from your partnerships. We work closely with our clients
to:

• Design and pilot partner selection processes


• Design effective partner management organizations
• Develop and implement robust partner management tools and processes

Client results

PRTM’s hands-on approach to Partner Selection and Management delivers significant results to our clients:

• At a diversified manufacturer, PRTM defined a structured yet flexible partnering process


including roles, responsibilities, evaluation frameworks, and guidelines to direct partner
selection and management
• For a market leader in medical devices, PRTM developed the processes and tools required to
manage partner relationships, enabling them to shift from a traditional design and development
role to a systems integration strategy.

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