The Rise Of Decentralized Leadership: Do Self-Managed Teams Perform Better?

Changing market demands and increasing global competition have led to a greater emphasis on organizational commitment to innovation. Companies seeking to adopt more progressive management strategies may shift to an agile and decentralized decision-making model to foster a culture of collaboration and innovation.

Decentralized leadership distributes the responsibility and authority of work among team members, effectively creating self-motivated and self-directed work teams that independently execute tasks and take complete ownership of their decisions. Due to the greater autonomy, improved communication within teams, and a collective commitment towards organizational goals, empowered teams can drive adaptability and respond effectively to changing market conditions. According to the World Economic Forum, this organizational agility leads to increased innovation, customer satisfaction, and cross-collaboration.

In work environments where leadership is decentralized and employees lead, business leaders can concentrate on empowering teams rather than defining processes and guiding outcomes. However, this shift requires emotional intelligence and a willingness to relinquish control on the part of leaders. Employees, too, must be willing to pick up the additional responsibilities that ownership brings.

This article discusses employee empowerment in detail.

What Are Self-Directed Work Teams?

Self-managed teams move away from the centralized, top-down approach of hierarchical models and instead work by sharing responsibility, accountability, and authority over decision-making and outcomes. 

Unlike traditional teams, where managers typically define processes and oversee progress, self-managed teams set goals, execute tasks and make decisions independently, and deliver outcomes—often more efficiently and with higher satisfaction. This sense of shared ownership within self-directed work teams paves the way for initiative and innovation. According to a study published on ResearchGate, self-directed work teams are closely tied to organizational innovativeness.

For self-managed teams to work effectively, there should be clarity regarding expectations, trust between members, and the desired skill sets within the team. 

Elements of Decentralized Leadership

The key elements of autonomy, authority, agility, and psychological safety define self-managed teams.

• Autonomy

Decentralized leadership is driven by trust. Teams are assigned autonomy and control over decision-making, allowing organizations to derive their collective potential. The intent behind doing so is not to eliminate managerial oversight but to devise a work structure where employees feel empowered to make decisions independently. This autonomy over decision-making leads to accountability.

• Authority and accountability

The authority in decentralized leadership structures is distributed among team members, unlike traditional teams where it resides in a single management figure. Therefore, there may be a greater sense of accountability within self-managed teams, which can make collaborative decision-making (such as recruitment or budget decisions) more efficient. This heightened sense of accountability and improved collaboration is driven by an awareness of every member's strengths, roles, and importance in achieving outcomes.

• Organizational agility

In a fast-paced world, companies need to be capable of responding to changing market demands swiftly to sustain themselves. This responsiveness can be achieved by fostering organizational agility. However, hierarchical team structures may not be adaptive or even equipped to respond to change effectively. Self-managed teams, on the other hand, are flexible and can pivot with evolving priorities. 

• Psychological safety

Self-managed teams operate within open cultures where transparent communication, mutual respect, and innovation are prioritized. Team members may share ideas and feedback, and foster learning and growth. The strong interpersonal relationships between team members and shared ownership of roles may eliminate judgment and competition, ensuring psychologically safe work environments.

Why Use Self-Managed Teams?

There are a few key reasons why organizations may use self-directed work teams.

• Driving innovation: Decentralized leadership offers the freedom to experiment and innovate due to greater autonomy over task execution and decision-making. It leads to a collaboration- and innovation-driven work culture, where employees feel empowered to think independently and contribute with diverse perspectives. Self-managed teams may drive innovative problem-solving due to better communication within teams, greater autonomy, and shared ownership of decision-making functions.

• Reducing costs: By flattening organizational structures, business leaders can reduce and, often, entirely eliminate the management and administrative overhead. Further, since responsibilities are distributed across a broader group of employees, it leads not just to lower operational costs but also to increased engagement and satisfaction as more employees have ownership over outcomes. With fewer hierarchical barriers and more empowered teams, companies can operate more efficiently and reinvest those savings strategically.

• Driving engagement: Encouraging employees to take up decision-making roles can ensure they are meaningfully engaged. According to a Gallup study, engaged employees produce better outcomes than other employees, regardless of external factors or economic uncertainties. Self-managed teams have greater autonomy and flexibility over their work and processes, which lead to higher levels of engagement and satisfaction.

• Improving performance: Self-managed teams may also improve performance due to a shared ownership of roles which drives a collective commitment to achieving strategic goals. Compared to hierarchical teams, they may collaborate more effectively, leading to improved performance.

• Enhancing collaboration: In work environments where cross-functionality across departments is the norm, hierarchical approaches to management are generally less effective in fostering a collaborative work culture. Self-managed teams, on the other hand, can improve the collaborative capacity of organizations. They rely on a distributed and autonomous approach towards decision-making, which enables collaboration and innovation.

• Skills diversity: Self-managed teams comprise highly skilled experts in multiple areas, which makes them more efficient at solving complex problems and reducing bottlenecks. A multi-skilled self managed team may also be less reliant on external leaders for specialized skill sets and support.

• Promoting leadership: According to a study published on ResearchGate, individuals in high-performing teams, such as those in self-managed teams, display more leadership traits and initiative than team members of low-performing teams. It prompts individuals to apply varied leadership styles to successfully navigate the complexities of self-directed teams, which ultimately leads to increased performance, flexibility, and innovation.

Should Organizations Adopt Self-Managed Teams?

Business leaders may decentralize specific functions, such as decision-making and management processes, to drive a more adaptable and growth-oriented work culture. By distributing ownership and autonomy to self-directed work teams, companies can ensure an increased commitment from employees, resulting in increased innovation, improved performance, effective decision-making, and continuous learning.

However, employees are likely to exhibit resistance to implementing self-managed teams, often due to a preference for a top-down structure or inexperience with decentralized leadership frameworks. Many employees may be unwilling to commit to the increased ownership and workload of being part of self-directed teams at work. 

The role of leadership here would be to clearly communicate the reasons and benefits of self-management teams for organizations and employees themselves. Beyond this, leaders may consistently provide guidance, praise, and support to empowered teams since expectations and objectives will typically continue to be set from the top.