Although centralized decision-making can be effective, the ongoing trend of decentralization and empowerment of employees that we’ve seen in the past few decades has allowed for a greater focus on employee engagement. While disengaged employees can be oblivious to changes in their environment, employees who are empowered are better positioned to understand local conditions and are thus better able to respond in a timely manner.
Because creativity and initiative tend to improve the more they’re used, empowered employees become more productive over time, offering a continually increasing return on investment.
But that’s not the only reason you should put employees in the driver’s seat. Here are the top five reasons that your business should put more decision-making power into your teams’ hands:
Delegating decision-making to employees helps them develop valuable skills such as initiative and leadership. Over time, empowering employees will result in a strong pool of candidates for management positions, who can be promoted up the chain of command as the need arises. Inside candidates are often preferred over outsiders because they already understand the business’ culture, and can easily navigate within it.
2. Effective Decision-Making
Greater effectiveness in decision-making comes from being able to make the right decisions at the right time: When employees aren’t in the driver’s seat, they can’t respond as well to changing traffic conditions. Decentralized decision-making ensures faster results because there’s no need to consult with someone else (and then wait for a response) before acting.
Rigid and hierarchical businesses tend to be less flexible and less able to adapt to changes. When decisions come from the top, actions tends to be standardized, lacking the subtle adjustments needed to adapt to local nuances. Employees who are empowered to effect change can react to local conditions, any time of day, any day of the year.
Giving employees the authority to make meaningful decisions helps to boost morale and build their senses of loyalty and belonging. Employees with high morale are more productive, more enthusiastic, and more industrious. Increasing employee investments (emotional, financial, etc.) in a business can even promote word-of-mouth advertising and employment referrals, while decreasing rates of turnover.
Not every market is the same, so different segments of a business need to be able to tailor their approaches to the needs and tastes of different localities, different demographics and different industries, in order to secure the best chances of success. When employees are in the driver’s seat, they can not only help businesses react to changing circumstances, but also react faster in order to seize new opportunities for revenue and prevent revenue churn due to competitive offerings.
Of course, the decentralization of decision-making is not a universal cure for problematic businesses. Just like any other management philosophy, there are downsides and limitations. Many decisions should still be left to higher tiers of management, who are more prepared to understand the big picture. Despite this, businesses are increasingly finding success by ensuring that employees are empowered to handle day-to-day operations, while higher tiers of management are accountable for bigger-picture strategic decisions.