Values and Decentralization

When people are held personally responsible in the decision making process they are more likely to make a more ethical, well thought out plan of action. Decentralization in an organization creates an environment of value, and is important for the success of a company. Decentralization involves a non-hierarchical management structure which means employees are able to make quick decisions based on what they feel will benefit the company. This type of management structure proved to be successful when Jim Burke, the CEO of Johnson and Johnson, was out of the country when a product containing cyanide killed seven customers. The Johnson and Johnson team was able to make a quick decision to recall $125 million worth of products off the shelf to protect the customer and the company’s image from being tarnished. This decision was costly to the company, but proved to be successful in the long run because it showed compassion for the customer as well as the value system of the company. Companies are still leaning from this type of management strategy; in fact it is referred to as “the gold standard in crisis control.”

http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/28/100033741/index.htm

http://www.jnj.com/home.htm