Common Citizenship under Decentralization

Decentralization, whether federal or functional, requires a common citizenship throughout the enterprise. It is unity though diversity. The most autonomous product business is still not independent. On the contrary, its very autonomy is a means toward better performance for the entire company. And its managers should regard themselves all the more as members of the greater community, of the whole enterprise, for being given broad local autonomy.

Actually decentralization des not create the problem of achieving common citizenship. It is to exist in such worse form in a functionally centralized organization, where the local loyalties to the engineering department or to the manufacturing department are apt to degenerate into cliques and feuds and to come into head on collision with the needs and demands of the business. Under federal decentralization these local loyalties are in harmony with the demands of business performance. A man is likely to be a “better General Motors man” for being stoutly devoted to Buick.

Management has three means at its disposal to build common citizenship and to contain centrifugal forces, whether resulting from functional clannishness or from product business parochialism

The first lies in the decisions which top management reserves to it self. At General Electric, for instance, only the president can make the decision to abandon a business or to go into a new one. At General Motors, top management at the central office sets the price ranges within which each automobile division’s products have to fall, and thus controls the competition between the major units of the company. At Sears, Chicago headquarters decide what kinds of goods hard goods, appliances, fashion goods, and so forth each store carry.

In other words, there must be a kind of “general welfare clause” reserving to central management the decisions that affect the business as a whole and is long range future welfare, and allowing central management to override local ambitions and pride in the common interest.

Secondly, there should be systematic promotion of managers across departmental and unit lines. It has said that the United States will not have a unified defense service until there is only one ladder of promotion and one career for all the services. Until then, each service will tend to think of its own needs and interest and will see in the other services rivals rather than partners. The same holds true in a business enterprise. A man who knows that one unit – let us say the AC Spark Plug Division of General Motors is his career will become an “AC Spark Plug man” rather than a General Motors man. A man, who knows that his promotion depends entirely on the powers that run the accounting department, will emphasize “professional accounting” rather than contribution to the company. He will have a greater stake in the expansion of the accounting department than in the growth of the company. Both men, knowing only a corner of the enterprise, will become parochial in their vision.

There is not much point to shuttling very junior people around a great deal. But once a man has risen above the bottom positions in management, once he has shown exceptionally good performance, he should be considered a candidate for promotion out of his original unit. In General Motors, where this practice is followed fairly consistently, most of the men in the senior management of a division manufacturing managers, sales managers, chief engineer and so on have been service in another division though usually in the same function sometimes during their career in management. And the decision of General manger who has not earlier held a senior management job in another division is exceptional.

Common citizenship requires adherence to common principles, that is, common aims and beliefs. But practices should have no more uniformity than the concrete task requires.

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