Do you know what centralized management is and the difference to decentralized management? It can be very efficient for small businesses that want to grow consistently organically.
In this post, we will explain what centralized management is, its benefits, its objectives, the differences to decentralized management and how technology can help with this model. Come read!
What is centralized management?
Centralized management, as the term suggests, consists of centralizing process management and decision-making in the hands of a specific area or group of people in the company.
This is a management model that can be advantageous for small businesses, due to the reduced number of employees, which facilitates communication between them.
The idea is that some responsibilities are concentrated in certain managers, which helps control productivity and centralize communication, avoiding errors.
However, to achieve this, it is important that leaders are equipped with important information for the business, such as accurate and organized reports .
Furthermore, centralized management can be in relation to any process and area of the company, such as sales, marketing and HR. In other words, you can, for example, centralize the entire process of monitoring productivity and hiring new employees in the Human Resources sector.
Another example is to centralize the communication process with your customers in the hands of marketing. Therefore, all contact with the consumer, regardless of the channel, must follow the guidelines established by marketing, even if this contact is made through support.
Now that you understand what centralized management is, let’s see its main differences from decentralized management? Check it out in the next topic!
What is the difference between centralized management and decentralized management?
We have separated 3 main differences between these two management models. The idea is that you evaluate each of them and the advantages they offer to decide which one best fits your business model. Come and see!
Role of leaders
The role of leadership is very different in each type of management. In the case of centralized management, decision-making power is concentrated in the hands of leaders, while in decentralized management, decisions can come from different areas or employees, not necessarily from leaders.
Therefore, in this last situation, employees have more autonomy of action, and decisions are made more quickly, without depending on the approval of other responsible areas. Additionally, as decisions involve more views, this can mean more creative solutions to problems. This management model may be interesting for larger companies, with more employees, where communication is more difficult.
Focus on strategic planning
Strategic planning is important in any management model, but in the case of decentralized management, it can be more fragmented compared to centralized management. In this case, leaders decide what steps the team should take in the future and delegate the functions to those responsible for each task to achieve the established goal.
In both models, it is important to establish goals and metrics to check whether the objectives are being achieved. However, in decentralized management, care must be taken to ensure that this type of verification is not lost.
After all, if many people have the autonomy to make decisions and monitor the results, this can generate cross-data, for example. So, even in decentralized management, it is necessary to establish some criteria, such as which will be the official source of data to be consulted.
Control of internal processes
In large companies, process control can be more complicated. In this scenario, decentralized management can help. In the case of small businesses, where processes are leaner, centralized management can be a good option, as organization and control are concentrated, facilitating decision-making.
Decentralized management ends up making it a little difficult to establish criteria for decision-making , for example, which can generate some noise in this process and make it difficult to control operations.
Furthermore, companies that adopt decentralized management need to be careful with duplication and lack of updated information.
Now that you understand the difference between the two models, let’s talk a little more about the benefits of centralized management for small businesses. This gives you more elements to evaluate whether this model is appropriate for your company.
What are the benefits of centralized management?
We have separated 4 reasons for you to consider adopting centralized management in your business. Check out!
Greater control
As centralized management works with a leaner organization, it is easier to have control over processes and productivity. This control is a great management ally, because it allows decisions to be made based on concrete information about the business.
However, to do this, you need to have tools that measure your results and provide updated data.
Although centralized management already brings some benefits in itself, leaders need to create an environment of constant learning and growth, which involves well-structured and organized processes for greater control.
Standardization
Centralized management allows you to standardize processes and communications . From a customer experience point of view, for example, this is positive because you prevent consumers from receiving service that is very different from one another. The same goes for your employee experience.
Furthermore, with the standardization that centralized management brings to your business, teams have a more certain path to follow, which prevents employees from getting lost, not knowing what to do in different situations.
However, it should be noted that standardization is not synonymous with inflexible processes. The aim is to define some criteria that must be met and to give a guide for employees on how to respond in specific situations while also enabling them to add a personal touch to their work.
Good communication
Centralized management facilitates communication between teams and establishes criteria so that it is fluid and efficient.
This eliminates noise and prevents your customers from receiving conflicting information. If, for example, you centralize the company’s communication in the marketing team, everything that involves contact with the customer must be evaluated by the team.
This way, the team has control over the messages that are passed on to customers and knows exactly what has already been said and how it was said. After all, the language used is also part of communication and, in the case of centralized management, it also follows a series of criteria.
The impression the customer gets from this is one of fluid and homogeneous communication, positively impacting the experience they have with the brand.
Assessment control
Centralized management allows you to create accurate reports, without duplicate or outdated information , which helps monitor results to be more efficient and guide decisions in the best possible way.
This evaluation control is essential for managers to define what should be reviewed in the company and which initiatives should be preserved, as well as to identify which employees are overloaded and need additional support.
The idea is to have greater control over business productivity to act more quickly and efficiently, saving resources and avoiding important financial losses in actions that do not work.
Furthermore, leaders must have in-depth knowledge of the business and, with centralized management, they are able to base all their decisions on this knowledge, reducing the chances of errors.
This aspect is also essential for establishing the company’s goals and directing initiatives towards better results, bringing a return on the investments made.
But it is important to count on the help of technology to create truly efficient centralized management. In the next topic, we’ll talk a little more about the subject, come and see!