Dear Colleagues! This is Asrar Qureshi’s Blog Post #1037 for Pharma Veterans. Pharma Veterans Blogs are published by Asrar Qureshi on its dedicated site https://pharmaveterans.com. Please email to aq.pharmaveterans@gmail.com for publishing our contributions here.
Preamble
In recent years, tech-based companies like Google, Meta, and Netflix are experimenting with doing away with the traditional hierarchical model and redistributing authority more evenly and horizontally. Bayer, the crop sciences giant and a well-known pharma company, last year went for radical decentralization. The jury is still out on how beneficial it is because more time is needed to analyze its pros and cons.
This post is in continuation of previous discourse on the subject and invites open discussion.
What Does It mean?
Two models have been experimented with decentralization.
First was rotating hierarchy. It meant that the leadership changed from task to task, like in training workshops where different leads are selected for different activities. We also did it for a limited time in a limited segment for a short time. It did not work out well because of the changing nature of leadership work. Secondly, everyone may not be ready for taking up the task of leading. So, we abandoned it.
The other model, which is more appropriate and is in practice, is to distribute authority among several people rather than concentrating it with few senior leaders.
To understand this, we need to see what authority means in a corporate setup. Simply put, it is Decision Making. Decisions are to be made for several major and minor matters. Strategy, budgets, and staff hiring/promotions/separation are major matters. The list of minor matters runs long.
It is understood that the managers’ job revolves mainly around communication and decision making. Looking at this, the idea of present hierarchical structure seems the only logical thing to do.
A flatter hierarchy does not mean abolishing of hierarchy altogether. Rather, it means distributing it among various layers more evenly. It is common observation presently that even small irrelevant things are sent to senior managers for approvals. This takes away their time and attention which should be put to better use.
How Can It Be Implemented?
Arguably, it is not as easy as switching off one system and switching on the other. We shall see the challenges later.
It should be understood that this must be a gradual process done over a certain period. The related actions to decentralize hierarchy should be well thought and planned before rolling out. Another critical step is to take the senior leadership into confidence, convince them on the benefits, and include them in the implementation process. Their ideas should also be invited on the process of decentralization as to how to do it in the best possible manner.
Junior tiers of management who would be included should be primed and prepared to take over new responsibility.
All along, people should be supported from the top to make the process run smoothly. Minor adjustments and track changes will be necessary and shall be done on regular basis.
Challenges
The biggest challenge is to convince senior leadership to let go of their exclusive hold on decision making, even for petty matters. It is more or less the same all over the world, but we in Pakistan are extra sensitive to authority. Our hunger for power in all forms is huge and insatiable, and this is at all levels. The lowliest officer will also use his authority to the hilt and would like to make others’ lives miserable.
The second big challenge is the learning curve which will vary for different people. Some will be able to adapt early while others may take longer. Taking everyone together and keeping them on track will be a challenge, but it can be handled.
The third challenge is the quality of decision making which may be compromised transiently and in some cases. A system of oversight for the initial period can help avoid problems in decision making. Training of concerned people on an ongoing basis is a good way to make people improve and perform better.
Opportunities
The question arises that if there are so many issues involved in changing the hierarchical structure, why go for it? It is a logical question which can only be understood by considering the benefits and opportunities decentralization can offer.
The most important benefit is that it offers the staff greater autonomy. People feel more empowered and therefore are more engaged with their jobs. Engagement inspires innovation and quality along with achievement sensitivity.
The other benefit is that it will accelerate decision making and accelerate processes thus bringing overall improvement.
Another benefit is that it will create greater job satisfaction among staff and will increase their output. The Gen Z is particularly more sensitive to job satisfaction and engagement.
Yet another benefit is that the empowerment to take decisions will bring ownership among staff which otherwise is always an issue. When decisions are thrown down from above, these are not owned and accepted heartily, even when these are good. Ownership is also a major concern of staff these days.
Sum Up
The discussion on changing vertical, centralized hierarchy to flatter, decentralized one is going on. The more progressive companies are opting for it while conservative ones are contented with the traditional model. Putting it in perspective, centralized hierarchy is not a monster. It has definite benefits and some pitfalls. Similar can be said for decentralized hierarchy. The organizations should decide based on their trade and business model. For example, in IT related trades where innovation is the lifeline, decentralized model shall work much more effectively. On the contrary, in repetitive, design-based tasks like assembly lines and packaging lines, centralized hierarchy is likely to be more beneficial.
Concluded.
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For most blogs, I research from several sources which are open to public. Their links are mentioned under references. There is no intent to infringe upon anyone’s copyrights. If, however, it happens unintentionally, I offer my sincere regrets.
