Create a Culture of Disciplined Empowerment: New Thinking Is Needed on the Relationship between Corporate Centre and Business Units

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Large complex organisations are struggling to reconcile two imperatives. On the one hand, the compliance duties of the corporate centre have become more exacting as successive scandals have rocked the confidence of shareholders and the public in the integrity of the corporate world. On the other, the corporate centre must allow business units sufficient empowerment in order to meet the market demand for speed and flexibility and to unlock the benefits of employee motivation.

The key to ensuring compliance without violating the principle of empowerment lies in the nature of the relationship between corporate centre and business units. It needs to be an open relationship of mutual trust in which compliance is assured through self-discipline rather than bureaucratic checks and measures. Self-discipline, in turn, is inspired by a shared vision or set of values. This state cannot be achieved purely through strategy, process or metrics. Our research suggests five factors which can create a self-reinforcing culture of disciplined empowerment.

Empowerment and compliance

Empowerment is about decentralising decision-making power into the hands of the people most familiar with the details of the business. It implies a two-way relationship between corporate centre and business units whereby the corporate centre relinquishes some of its traditional decision-making power, and business units in their turn accept the challenge of greater responsibility. The growing need for speed and flexibility is a major factor forcing organisations to put decision-making power nearer the customer and market. Meanwhile, a greater awareness of the psychological benefits of empowerment is filtering into accepted …