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Marketing Organization
A View on Centralization versus Decentralization
Ronald Bouwmeester - February 16, 2014
"Competence gap might
create disengagement"
BATENBORCH INTERNATIONAL
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The road up or down?
In the aftermath of economic pressure we see a strong tendency for centralization. In
an effort to increase strategic and operational control, to enforce alignment and to reduce
costs. This drive for centralization also occurs in many marketing organizations and can
be seen on local level but more often on international level. Multinationals restructure
their marketing organization on central global head quarters and sometimes in addition
on a regional level.
In a phase of centralization, more task are being defined and handled by the central
office. The local organization will be organized and
optimized for execution and activation. Consequently
the roles of the marketeers on both levels change.
The last time we encountered a strong tendency for
centralization was in 2003. So we have had a relatively
long period without strong centralization drives. This
might be the reason why today it is being perceived as
(very) hard by most local marketeers.
Functions to centralize or decentralize
We distinguish three levels. A central level, a local level and a level where where
strong collaboration between local and central level is needed.
Functions we often see centralized can be summarized under brand book, the
marketing strategy, competence development, tv, online and print. On the local level,
decentralized, we see promotion, point of sale development, category management,
portfolio management, trade marketing, market research, sponsoring, pr and social media
response.
Functions where we see strong
collaboration between local and central
level are innovation, pricing,
packaging.
The subjects / functions mentioned
above are certainly not all. Other
marketing functions and
responsibilities can and should be
considered.
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Advantages or Disadvantage?
At all times, choosing one model over another will bring advantages and
disadvantages. Depending on the economical situation, the market, the strategy, the
brands, the geography, etc. companies choose their organizational structure (see annex on
criteria for centralization vs decentralization).
Advantages of Centralization
Main advantages of centralization
are a better alignment of marketing
processes, creating more (global)
consistency. It also creates an
increased competence level of the
marketing organization and gives a
better leverage of best practices. It
increases synergies and a better
addressing of strategic issues.
Disadvantages of Centralization
Centralized marketing
organizations are often confronted
with a more diffuse structure of
ownership. The time to market is
more difficult to manage and tends
to increase. Through strong focus
on the (big) strategic issues, local
opportunities often remain
untouched and create
opportunities for niche players.
And last but not least
centralization often creates a competence gap between local and central organization. BATENBORCH INTERNATIONAL
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Competence Gap
The level of competences required for the tasks and therefore the level of people
differs enormously between local and central organization. And this gap tends to
widen when centralizing the organizations.
It is the competence gap which is most difficult to manage. And in the meantime
it is the factor which limits the sustainability of the structure. A natural, coherent,
connection between the ranks is essential for constant (internal) development in the
marketing organization. A disconnection between the ranks, limits the development
and natural flow of talent from local to central level. Is might even create
disengagement. The answer should be found in close collaboration between the ranks.
Only than the way up can found in a sustainable way.
◼ ️
BATENBORCH INTERNATIONAL
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Annex
Filip Wouters, marketing vp at
Microsoft and former marketing vp at
Heineken, has nicely laid out the criteria
to consider for centralization versus
decentralization.
Paul Magill from McKinsey argued in
an article in Forbes in 2012, that
marketeers should reject the central
versus de-central debate. The answer
according to Magill is both.
A close cooperation between the ranks.
Batenborch International is a leading company in the field of executive search,
recruitment and interim managment specialized in Sales & Marketing. With
offices in Brussels, Casablanca, Dusseldorf, Paris and Utrecht. www.batenborch.com, Ronald Bouwmeester
BATENBORCH INTERNATIONAL
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