Organizational Structure Matters – Tesco embraces idea of Decentralization

 

In general, there are two types of organizational structure: Centralized, Decentralized. A centralized can be characterized by decisions taken by the senior level and central level; a decentralized structure can be defined as a structure where decisions taken by lower level.

An example of a decentralised structure is Tesco the UK supermarket chain. Each store of Tesco has a store manager who can make certain decisions concerning their store. The store manager is responsible to a regional manager.

Decision making is a form of empowerment. Empowerment can be defined as giving the employees the responsibility of what they do. Empowerment can increase motivation and hence increase the labour output. Empowerment makes it easier for people to accept and make a success of more responsibility.

However, in some industry such as the banking industry, many financial information and client information are confidential. A centralized structure can ensure a lower risk of leakage of confidential information. In addition, a centralized structure allows a faster, easier to undertake organization-wide activities.

http://www.sed.manchester.ac.uk/idpm/research/publications/wp/igovernment/documents/igov_wp07.pdf