Global employee engagement fell to 20 percent in 2025, and manager engagement slid from 27 to 22 percent in a single year (Gallup, 2025). If the people tasked with authorizing and arbitrating work are checking out, the system is straining. Rather than add more oversight, the smarter fix is to redesign how decisions get made. The best field evidence from a major downturn shows that delegating authority pays off when conditions turn rough, and the organizational research on team behavior explains the climate such delegation needs to work at scale.
What the last crisis taught about where decisions should live
During the Great Recession, firms that had pushed more decision-making power down to local plant managers before the shock outperformed more centralized peers in the sectors hit hardest (Aghion, Bloom, Lucking, Sadun and Van Reenen, 2021). The study, a quasi-experiment using two large micro datasets, combined the World Management Survey spanning firms in ten OECD countries with the U.S. Census Bureau’s Management and Organizational Practices Survey of establishments. The authors traced the advantage to a simple mechanism: in turbulence, local information becomes more valuable. They operationalized turbulence through measures such as product churn and stock market volatility, and the decentralization premium persisted even after testing alternative explanations like fear of bankruptcy or shifts in coordination costs (Aghion et al., 2021).
The lesson is precise. Decentralization is not a cultural slogan. It is an operating choice that converts dispersed knowledge into faster, more fitting responses when conditions change quickly. Centralized models are not universally bad. They can align execution in stable environments. The question is when the value of local knowledge exceeds the value of central control.
Structure matters: why fewer gatekeepers can help
That trade-off is at the heart of research on self-managing organizations, which decentralize authority in a formal and systematic way and eliminate the traditional manager–subordinate relationship altogether (Lee and Edmondson, 2017). Their synthesis makes a clear distinction: managerial hierarchy tends to perform well for reliable execution of known tasks in stable settings. The same structure inhibits complex, cross-functional problem solving, fosters rigidity, and reinforces status differences that stunt development. The evidence here is conceptual and integrative rather than experimental, and it does not claim that radical decentralization fits every context. It does, however, frame distributed decision-making as a design variable that can be adjusted to match the work.
This is where Gallup’s data on disengagement becomes operational, not just alarming. In the best-practice organizations Gallup tracks, 79 percent of managers are engaged, nearly four times the global average of 22 percent (Gallup, 2025). That gap suggests engagement is largely a function of organizational design rather than an unavoidable macro trend. If the manager’s job is built around policing decisions that could be made closer to the facts, disengagement is a feature of the job, not a flaw of the people in it.
The glue of distributed authority is psychological safety
Pushing decisions out only works if teams can surface bad news, ask for help, and correct course without fear. Psychological safety, defined as a shared belief that the team is safe for interpersonal risk taking, is the social infrastructure for that learning (Edmondson, 1999). In a field study of 51 teams inside one manufacturing firm, teams with higher psychological safety showed more learning behavior. Team efficacy did not predict learning once safety was accounted for, and learning behavior mediated the link between psychological safety and performance. The sample was limited and cross-sectional, so the results should be read as associations rather than causal proof. Even so, the pattern is consistent with the practical requirement of distributed decision-making: local actors must feel able to surface information and adapt in real time.
Put the strands together and a design emerges. Aghion and colleagues describe when decentralization pays. Lee and Edmondson describe structures that can carry more distributed authority. Edmondson’s earlier work explains the team climate that allows local information to flow and be acted upon without paralysis by fear. The finishing piece is what the manager does in such a system.
The manager as platform
In a distributed model, the manager’s role shifts from gatekeeping to platform-building. The work is to set guardrails, reduce friction, and make local decisions legible to the rest of the system.
Three practical moves follow:
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Publish decision rights and thresholds. Make explicit which decisions sit with teams, which require consultation, and which trigger escalation. Use clear thresholds such as spend limits, customer impact, or regulatory exposure. This preserves coordination while capturing the value of local information in volatile conditions, the mechanism highlighted in Aghion et al. (2021).
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Build short learning loops. Require teams to record decisions, expected outcomes, and post-mortems in a common place. Psychological safety is more than being nice. It is the condition that lets teams admit uncertainty, run small tests, and update quickly, behaviors linked to performance through learning in Edmondson (1999).
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Re-scope the manager’s time. Shift effort from approvals to coaching, from scheduling to clarifying interfaces. If engagement is sensitive to how work is designed, as the spread between average and best-practice organizations suggests, redesigning the manager role is a lever, not a perk (Gallup, 2025).
None of this argues for a management vacuum. It argues for management as system design. Formal delegation before a shock appears to matter more than ad hoc empowerment after one, which is exactly what the Great Recession data imply (Aghion et al., 2021). Radical self-management is not a universal prescription, and the research base on its limits is still developing, which Lee and Edmondson (2017) note. Yet the direction of travel is clear enough to act on: treat decision rights as an operating system, build a climate where teams can learn visibly, and reframe managers as the maintainers of that system.
The practical implication is direct. If your dashboards show manager engagement sliding, do not add another layer of sign-offs. Redesign the flow of decisions so that the people closest to the work can act within crisp boundaries and be heard when reality changes. In calm seas you may centralize more. In rough water you will want authority where the facts are. The time to wire that flexibility in is now, not at the next squall.
Sources
- Aghion, Bloom, Lucking, Sadun and Van Reenen (2021). Turbulence, Firm Decentralization, and Growth in Bad Times. Firms that had delegated more before the Great Recession outperformed centralized peers in harder-hit sectors, with the advantage linked to the value of local information under turbulence and robust to alternative explanations. https://www.aeaweb.org/articles?id=10.1257%2Fapp.20180752
- Lee and Edmondson (2017). Self-managing organizations: Exploring the limits of less-hierarchical organizing. Defines self-managing organizations and synthesizes why hierarchy fits stable execution but inhibits complex problem solving, framing distributed authority as a design choice. https://static1.squarespace.com/static/5b3cd0cb1137a6d4c0c877c9/t/5c919b0afa0d60694eebc96b/1553046287400/Final+ROB.pdf
- Edmondson (1999). Psychological Safety and Learning Behavior in Work Teams. In a field study of 51 teams, psychological safety was associated with more learning behavior and mediated the link to performance, underscoring the team climate needed for distributed decisions. https://journals.sagepub.com/doi/10.2307/2666999
- Gallup (2025). State of the Global Workplace 2025. Reports global engagement at 20 percent, a sharp decline in manager engagement to 22 percent, and a 79 percent manager engagement rate in best-practice firms, indicating design choices shape engagement. https://www.gallup.com/workplace/659610/state-global-workplace.aspx