3 reasons to decentralize your management team
Joseph Frost a member of the Entrepreneurs Organization (EO) of Nebraska, is a decentralized entrepreneur, college professor of entrepreneurship, and three-time founder. He is the founder of yorCMO, the first decentralized leadership franchise company, and leads the Fractional Professionals Association, the first and only community for decentralized and fractional executives and leaders. We asked Joe to explain the benefits of decentralized leadership. Here is what he shared:
The world is changing at a faster rate than ever. From these changes emerges a new model of leadership and hiring: fractional.
Split hiring involves an executive leader joining an organization on a flexible, part-time basis, spending a fraction of the time of a full-time executive – at a fraction of the cost.
After speaking on the subject at EO’s annual One Canada conference called “The Great Rethink”, I was struck by how fascinated entrepreneurs are with new hiring models. Not only do new hiring models have a profitable impact on a business, but many entrepreneurs (more than I thought) are feeling the “pain points” of the repeating hire-onboard-leave cycle. nausea with permanent full-time employees.
Entrepreneurs want alternatives, and now is the time because the market has officially changed.
The split leadership model has become a more viable reality post-pandemic. Propelled into the future of work, we are constantly changing the way we run businesses and the types of businesses we run.
Research confirms it: in the next five years, 52% of the American adult workforce will work or have worked as a freelance contributor. And 63% of executives say they would become independent contractors if given the opportunity. The independent economy is one of the fastest growing phenomena in the country.
Then, the “Great Resignation” happened. So many entrepreneurs I know panicked: retention, hiring, workforce ROI, ability to raise capital – it was all up in the air without the right people in place.
I realized that the “Great Resignation” would become our greatest opportunity.
The “fractional” model implies smallness, fragmentation and incompleteness. However, the leaders who join an organization in a fractional capacity are anything but small or fragmented – and neither is the impact they bring to a company.
The new hiring model is not fractional, it is decentralized.
If decentralization reminds you of the governance philosophy behind Blockchain, you are right. You remember the Blockchain: a few years ago, every entrepreneur talked about it and wondered how to integrate the Blockchain into their business.
Blockchain popularized it, but “decentralization” is emerging as the dominant philosophy for the future of work.
A decentralized hiring model flattens hierarchies and creates a deeper sense of interdependence, rather than authority, between leaders and teams. Decentralized leadership comes with flexibility, relinquishes control, and brings creative ideation — and is ready for the future of work.
Here are three main advantages that decentralized companies enjoy:
1. Diversity of thought
Decentralized hiring, the strategic implementation of split and part-time leadership within the C-suite, is not geocentric. In a world of remote work, organizations have access to a larger and more diverse talent pool.
With traditional geographic boundaries eliminated, companies have more options to bring in niche expertise from within their industry or from outside their industry. Expertise within the organization can reach new heights and diversity increases, both in terms of cultural background and thought. Hidden biases from an all-local talent pool, like conformity bias (AKA groupthink), are eradicated.
2. A culture of decision-making
Decentralized leaders are often only physically (or virtually) present for a fraction of the work week. As a result, decentralization engenders a culture of decision-making: mid-level teams are empowered to take ownership of their decision-making without looking to a pervasive leader for ongoing approvals. It has been said that “meaning is new money“. If nine out of ten people are willing to make less money to do more meaningful work, tomorrow’s companies should encourage meaningful work, empowered decision-making and satisfaction at the heart of the operational culture.
As a result of a shift in decision-making hierarchies, the C-suite is freeing up, with more time to focus on strategic planning. Micro-management is systematized; strategic thinking is systematized there.
3. Enhanced equity
Decentralization promotes a more equitable culture by flattening the structure of an organization. Split executives, as part-time or freelance leaders, often bring a genuine and deep enthusiasm for a company’s success – an enthusiasm that is totally different from the traditional employer-employee work dynamic.
The paradigm shift from “You work for me” to “I work for me and you,” connecting everyone’s success, creates an environment where all employees and leaders share common goals and aligned incentives. Teams feel more supported and a strong sense of belonging is created. Power dynamics change when aggregate control centers, as with Blockchain, are eliminated.
Ultimately, decentralized work environments allow employees to make their own decisions on local issues and take more ownership of their roles.
Entrepreneurs and management teams benefit from increased efficiency, faster decision-making and a more diverse work culture. Overall, organizations become more creative, more flexible, save more costs, are energized, and have access to talent and ideas they wouldn’t normally come across.
Are you still hesitating about the power of decentralized and fractional hiring? Consider one of my favorite famous quotes from Seth Godin: “Change rarely fails because it’s too early. It almost always fails because it’s too late.”