Should we centralise our functions?

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Many of our clients at Able and How are looking to centralise their business or corporate functions from across their organisations. Centralising functions is the trend at the moment. However, this trend regularly shifts between pro-centralising to pro-decentralising, leading to the question: ‘which approach is right?’

Our experience is ‘it depends’.  We recommend a mix – centralising some functions while retaining autonomy and independence for others.

In this post, we will be looking at the centralisation of functions.

To help you determine whether centralising functions is appropriate for your organisation, we will share with you three key reasons why people centralise corporate functions.

Three key benefits for centralising corporate functions…

  1. Streamline your processes

In many organisations, each business area has their own support teams who are responsible for corporate functions such as finance, legal, marketing and HR. In many cases, each of these support teams have developed their own processes for managing these activities which may be at odds with each other – resulting in duplication of effort. Consolidating these functions into a central unit removes duplication by eliminating workarounds and ensuring one consistent process is followed, leading to significant savings for the organisation. For example, instead of multiple marketing teams with multiple budgets, there will be one central marketing team with one consolidated budget resulting in economies of scale and consistent branding through aligned campaigns. Additionally, it will be easier to ensure that this single streamlined process complies with any business rules and relevant regulations.

  1. Sharing knowledge

Decentralised arrangements can mean that knowledge and information is only retained in isolated support units. This ‘siloed’ approach prevents support unit employees from learning best practice methods from one another, thereby slowing down the development of new corporate initiatives from across the organisation. Consolidating support units will provide corporate employees with opportunities to work closely together to effectively exchange knowledge and information.

  1. One strategy driven from the centre

Centralising corporate functions shifts corporate decision making back to the centre of the organisation.  There is ‘one’ corporate strategy, driven and controlled by one business agenda. One business agenda will enable transparent prioritisation of work tasks and will allow project dependencies to be easily identified. For example, it will make it easier for employees to make informed and cost-effective investment decisions on new or upgraded corporate systems and equipment.

In addition, working together under one corporate strategy prevents the creation of competitive agendas in different business areas. One clear business strategy will provide the basis for a stronger, cohesive organisational culture with clear direction for employees.

With streamlined processes, increased access to information sharing and the creation of a solid and consistent business strategy to effectively guide employees, there are many benefits associated with centralising functions.

Now is a good time to consider whether this approach will be of benefit to your organisation.

Get in touch with us to chat about whether this is the move you should make.

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