Watlow Electric is a large Manufacturing Company that employs 2000 employees and conducts its operations in nine manufacturing facilities and three technology centers located respectively in; United States, Mexico, Europe, and Asia. For large corporations and/or businesses with operations being conducted in different geographic areas, the decentralized organizational structure has its benefits; a decentralized organization is able to make decisions more quickly than it would if using a centralized structure, decentralized organizations also free up time for executives to concentrate on other aspects of the business, and it allows for the decision making about daily business operations to take place at the lowest levels of a business, this structure also empowers employees by delegating autonomy to employees to make their own decisions. “This in turn will foster a sense of importance and make employees feel as if they have a say in the direction of the organization” (Garrison, Noreen, & Brewer, 2015, p. 478). It will also motivate employees and encourage them to do the best they can to make the organization successful.
Even though companies that use the decentralized organizational structure experience a number of benefits, this structure also presents a number disadvantages such as in the situation experienced at Watlow Electric; recent mishaps have occurred due to a perceived lack of control over manufacturing processes and marketing decisions. The underline causes of the mishaps can however also be a result of the manager not being properly trained, lack of mentorship from more senior managers, poor communication from lower-level decision makers to the upper echelons of the company, or a company culture that creates an environment the fosters poor performance. Other disadvantages of decentralization includes: “lower level mangers making decisions without fully understanding the company’s strategy, mangers making independent decisions without coordination with other managers, managers may making decisions based on their own objective without considering the objective of the organization, and innovative ideas made by one part of the company not being adopted by the entire organization” (Joseph, C., 2017).
I would recommend to Watlow Eletric to continue to use this structure. This structure works well for large dispersed companies by delegating the decision making authority where it is needed and where it will be more effective. This structure also encourages and motivates employees and creates an environment where employees are encouraged to do their best to make the company successful. The decentralized organizational structure also free-up company executives or upper echelon managers to focus on other aspects of the company. Decentralized companies that are experiencing some of the disadvantages that can be associated with this structure should incorporate processes or approaches that will eliminate or lessen the possible effects of the structure such as with, mentorship, training, and better communication. Watlow Electric can also set-up a responsibility accounting system.” This system links lower level managers’ decision making authority with accountability for the outcomes of those decisions” (Garrison, Noreen, & Brewer, 2015, p. 479).
Garrison, R., Noreen, E., & Brewer, P. (2014). Managerial accounting (15th ed.).Columbus, OH: McGraw-Hill Education.
Joseph, C., (2017). The Advantages of a Decentralized Organizational Structure Retrieved May 2, 2017 from http://smallbusiness.chron.com/advantages-decentra… to an external site.