Why Global Bosses Should Give Away Some Power

(By Nastaran Tavakoli-Far)

If you permit people to start doing things to a different model around the world, you just blow away your economies of scale,

“Too big to rule” is one reason often cited for Emperor Diocletian’s decision to split Rome.

While continuing to rule over the western part of the Roman Empire, he handed control of the western part to Maximian.

Many historians believe these co-emperors ruled effectively, with power struggles occurring only after Diocletian stepped aside.

The world of business is short on examples of big bosses deciding to split power.

But with companies increasingly operating in different countries with different laws, cultures and demands, there are some who believe it’s time to follow Emperor Diocletian’s example.

Whole Foods Market is one of few large companies with two chief executives.

In 2010 founder John Mackey was joined in the chief executive position by Walter Robb.

Mr Robb says he and Mr Mackey get on and share a vision, but he acknowledges the confusion their power-sharing relationship can create.

“Some folks are challenged by the fact that there’s two leaders,” he says. “They think, ‘Who’s in charge?’

“The answer is we’re both in charge.”

Mr Robb says this works only because he and Mr Mackey are both experienced and, more importantly, they share the same values.

In addition, Whole Foods caps the salaries of its highest board members.

No-one is paid more than 19 times the average wage at the company.

But it’s not just about sharing the top spot. Mr Robb believes it’s important for the head office to devolve power to regional hubs.

“Ultimately you’re distributing the intelligence and the decision making and the responsibility to the places where the business is actually occurring,” he says.

“You are creating a culture of empowerment that then takes that distributed intelligence or responsibility, and gives them the power to make real decisions.

“Every market that you’re serving is a little bit different.

“The market’s looking for… something tailored to that community or to those specific individuals.”

The chief executive of Starwood Hotels, Frits van Paasschen agrees.

“The idea is to think of ourselves not as a US-based company with headquarters in New York and hotels in international markets but a global company that happens to be based in the world city of New York,” he says.

In a bid to learn from each hub’s unique experiences, Starwood Hotels briefly moved its headquarters to Dubai earlier this year.

“We weren’t there to oversee our business,” Mr Van Paasschen says.

“We were there to ask questions and to learn what our team needed to continue its success.”

But some chief executives think that with increasing complexity in life, it is essential for companies to keep things simple.

“We keep it simple by keeping it the same,” says Rupert Soames, the chief executive of energy supplier Aggreko, whose main factory remains in the Dumbarton, Strathclyde.

He says there will inevitably have to be some regional specialisation, as each country has different laws and regulations, but it is important to keep operations as similar as possible across hubs to take advantage of one of the main strengths of big companies.

“If you permit people to start doing things to a different model around the world, you just blow away your economies of scale,” he says.

(Source: BBC News)

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