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Friday, November 23, 2007

Centralized verses Decentralized Design

The debate over the centralization versus decentralization of operations within a large enterprise is a never-ending one. It is an age-old battle of standardization versus autonomy, corporate efficiency versus local effectiveness and pressure on costs and resources versus accommodation of specific local needs. A popular theory states that organizations vacillate between a strong centralization philosophy and a strong decentralization philosophy in roughly three-year cycles. The scenario works like this:
A group of decentralization proponents will analyze a key centralized operation within the organization and discover gross inefficiencies. The centralized system is perceived to be too slow to react to problems in the field or to issues within a particular company department or division. The obvious solution is decentralization. Responsibility for decisions, actions and record-keeping is then moved out to be closer to the source. The result, it is hoped, will be quick reaction and speedy solutions.

Some three years later, a group of centralization proponents will analyze this decentralized operation and discover gross inefficiencies. The decentralized operation is perceived as fragmented and inconsistent. The employees in one division are operating according to their own procedures and policies with little or no regard for company goals and objectives. Company headquarters can’t even get any consistent organization-wide reporting, for goodness sake. The obvious solution is centralization.

Organizations looking toward implementing or revitalizing an effective learning management and human capital development operation will do well to take a hard look at this phenomenon. Vacillation between centralization and decentralization is both non-productive and unnecessary. Once an organization’s initiatives, goals and strategies are established, the issues surrounding centralized versus decentralized learning come into focus.

All organizations are confronted by a similar challenge as regards corporate learning: How do we get the right learning to the right people at the right time? Implicit in this question are several subordinate questions. Who determines what that learning should be? What is the best method of delivering various learning solutions to employees and to others in the enterprise? What records, including certifications and competencies, should be maintained? Where should those records reside? What compliance issues must be addressed? What are the implications for software and hardware requirements?

While certain learning challenges are similar among virtually all organizations, other specific challenges are special or unique to a particular enterprise. Obviously, the basic characteristics of an organization, including size, domestic or international scope and the diversity of products and services provided, must be considered in the development of any corporate learning and human capital development strategy.

These are but a few of the many questions and organizational characteristics to be considered as a part of the decision-making process that leads to the successful implementation of a learning management and human capital development system. But they also point toward the process involved in answering the initial question: For my organization, which is better, centralized or decentralized learning? Let’s begin by examining the benefits of each methodology.

Benefits of Centralized Learning
To achieve centralized learning, an organization will utilize one central learning management system with one central database. Such a system can manage many functions. In general terms, the main benefit of centralized learning is the cost savings that result from standardization, central reporting and record keeping and quality control. The advantages of such a system include:

Reduction in number of systems required to handle corporate learning.
Reduction of infrastructure requirements via consolidation of IT resources.
Immediate population of the company’s central database with course completions and certifications.
Promotion of standardization via reduction in the number of duplicate courses.
Realization of significant cost savings advantages.
Reduction in number of administrators.
Standardization of content.
Standardization of certifications and competencies.
Ability to easily align employee objectives with corporate objectives.
Simplified reporting (from one system versus many).
Accuracy in reporting (from one system versus many).
Benefits of Decentralized Learning
To achieve decentralized learning, an organization may utilize several learning management systems, each with its own database. These systems can also manage many functions. In general terms, the main benefit of decentralized learning is the ability to deploy and manage large amounts of content, all of which can be localized. The advantages of such a system include:

Increased control at the local level.
Local training departments tend to understand the specific needs of their areas of responsibility much better than corporate.
Local training departments see efficiencies in creating their own courses versus depending on corporate.
Local training departments can manage their own costs.
Ease of creation of desired local reports.
Control over local resources.
Ability to manage more content.
Ability to localize courses and learning events.
Ability to add spot training instantly when needed.
Obviously, the advantages of each model for corporate learning management are, in essence, the disadvantages of the other.

Choose the Hybrid Model
Based on TEDS’ years of working with large corporations, we feel that the best model is one that captures the strengths of both models while effectively managing the relationship between corporate and local training functions. In order to reap the benefits of a strong centralized learning management and human capital development system as well as the advantages of localized learning, two challenges must be addressed: the technical infrastructure of the system and the execution of the plan.

The learning management system (LMS) a company selects must be robust enough, through its technical infrastructure (architecture) and depth of functionality, to centrally manage reporting and record keeping while pushing out content for localization and management. For example, our LMS uses four-tier architecture, which allows for centralizing the database while decentralizing the Web servers that store course content.

Online content puts the largest demands on servers and pipelines. Once that content is pushed out to local management via localized content servers, two problems are solved. Content no longer flows from a single central server through restricting pipelines, and control of content is where it should be, at the local level. Having the ability to control the content locally permits the accommodation of local culture issues, languages and customs—a great advantage to global enterprises.

The LMS should be capable of managing multiple courses on multiple servers. It should allow users to choose what server they want to launch from and what language they want the course to be delivered in. And it should be able to recognize, track and record localized courses via a global course name and number. That is, it must have the capability of assigning a global number to a course or learning event that is delivered in multiple locations and in multiple languages.

In the competency arenas, centralized learning management allows companies to start getting a true picture of human capital assets within the corporation. Most corporations must be able to manage human capital globally and shift that capital as needed.

Centralized systems tend to force dialogues, or the sharing of similar data, in regard to skills, competencies and certifications. Therefore, standardization of employees’ skills, competencies and certifications is much more likely to happen in a centralized management system. In a true human capital LMS, courses and other learning events can be local, but competencies can be tracked and measured against global standards.

Several TEDS’ customers follow this “local content/global competency standards” model. They push their content out to users in various countries in several languages from many servers, but they use a centralized server for tracking, record keeping and certifications. They also realize huge time and cost savings by upgrading one centralized learning and human capital development system versus upgrading many systems at multiple global locations. The reduction of cycle times for software version upgrades is significant.

Corporate and Local Cooperation
When implementing this very productive hybrid of centralized/decentralized learning management, some caveats are worth noting.

Corporate generally controls the purchase and maintenance of the system, the management of the enterprise’s standard courses or courses shared by multiple locations, and the creation and maintenance of corporate reports. Corporate may also initiate and control the process for creation and maintenance of local reports. This yields efficiencies in cost and resource utilization. The company’s local training groups generally have the authority and ability to create and maintain those courses specific to their areas of responsibility (either through corporate or via privileges within the system), have control over when those courses are taught via sessions and have the ability to create unique reports, thus taking advantage of the local group’s ability to better manage specific local training.

The most critical issues in this combined model are the continual management of expectations and the relationship between corporate and local. There is a tendency for corporate to take away more control than necessary from local groups at the outset to establish dominance, which can lead to resentment from local training managers. Such resentment is difficult to overcome once it has occurred. If not careful, corporate may alienate local groups by not including them in the design and implementation of the new learning management model. It is critical that corporate include the needs of local groups in the final solution before implementation begins. The mission and focus should be clearly established so that the movement to the new model is perceived as corporate and local groups working together for a common goal—the good of the company and of its employees. The importance of open communication and buy-in from all affected groups cannot be understated.

From the local side, there is a tendency to agree with the corporate initiative on the surface, but to undermine the desired efficiency gains through noncompliance with the implementation plan. Local groups will see the solution as giving up power if they are not actively involved in the new plan and its implementation. Even with local involvement and communication, the loss of local power may still be perceived. Local groups may begin to erode efficiencies by taking on their own versions of corporate courses to manage. To be sure, there are courses and learning events that should be managed locally to meet specific goals. However, once the local group assumes management of these courses, it is tempting to move into unauthorized management of corporate courses. A telling sign that the model is breaking down is often the creation of local spreadsheets to capture completion data, thus defeating the purpose of centralized reporting.

Making It Work
The suggested hybrid model can be very effective and highly productive when the proper infrastructure is in place and when both corporate and local groups have agreed upon common learning management and human capital development goals and continually work together to meet those goals. In today’s cost-sensitive environment, there isn’t room for the inefficiencies produced by multiple systems or even multiple autonomous administrators in one system. The inability to get accurate completion data quickly and therefore impact the learning paths across a company are simply not options any more.

Centralized versus decentralized learning? The most effective enterprise learning management and human capital development system is the right combination of both.

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