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The "command and compliance" culture is giving way to the "trust and commitment" one...In an article published in the February edition of "Financial
Management", David Allen suggests that today, effective management means
replacing a "command and compliance" organisation culture with one
built on "trust and commitment" or "devolution". Is this a new challenge or is it a 'flavour-of-the-month' fad? Could
'devolution' be one of the answers we are seeking or should it be filed in
'permanently-pending' to gather dust? Is David Allen correct? He says; "Traditionally,
most large organisations have had a "command and compliance"
management culture - all major decisions are made at the centre, at
predetermined intervals. Generally, this was reinforced by a "once a year
for a year" budget, expressed in the language of accounting. Such
an approach made a lot of sense in a stable environment,
where the tactical level of control dominated. Success was seen to depend on how
well an organisation did whatever it had chosen to do. But, as the rate of
change has increased, centralisation has become inappropriate. Today, the
strategic level is paramount, and success is seen to depend on the decision
about what the organisation should do. Specifically, firms have to be able to
adapt rapidly to meet customers’ changing needs. But
therein lies a problem: centralised organisations are too slow on their feet
and are losing business to their more nimble competitors. This has a lot to
do with the fact that people at the centre of organisations rarely have any
meaningful contact with customers." and "The
main benefits cited by boards of directors announcing a shift in this direction
(towards 'trust and commitment') are that it encourages enterprise, harnesses
innovation and accelerates decision-making. In practice, it is usually
accompanied by a cut in the number of people employed at the centre. But this
approach makes it much easier for the enterprise to adapt to the environment. Needless
to say, such a change has enormous implications for the structure of the
organisation’s financial controls. The emphasis under the old regime was
on checking that subordinates had done what they were told to do. Under the
new regime, staff will not have detailed instructions - they will do what they
believe to be right in the situation." Read more about this culture change through the full text of this short
article in the Ron Wells |
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