Summary
Finding the right balance for a central management team in its relationship with local entities—between support, expertise, guidance, and oversight—is difficult, yet it is a key driver of performance for both subsidiaries and the group, one that is too often overlooked in favor of purely relational considerations. This stance results from structural factors (the group’s history, business model, and local performance) but can be adjusted by leveraging concrete measures: scope of operations, industry coordination, performance management, and process governance.
Finding the right balance is the first step to take in order to sustainably improve central-local relations and, ultimately, everyone’s performance.
Contents
It is never easy for central management to determine the right approach toward its local operational units, given the complex balance between support, challenge, direction, and oversight.
In reality, most central administrations are adrift. Either they micromanage—and local entities circumvent their authority, resist, or become demotivated—or they position themselves as mere “service providers” but struggle to gain recognition. A balance is rarely achieved and even more rarely sustained over time.
Four perspectives, not a single right answer
There are four main approaches to central management. These four approaches are generally structured along two axes: one related to the level of standards and the other to the “build vs. run” distinction.
The approach of a central leadership is never monolithic and will not be limited to a single stance. It will always involve a combination of these four main modes of intervention in varying proportions.
Furthermore, this positioning is never set in stone: it can—and indeed must—evolve in response to changing challenges or periods of transformation.
What Really Influences Your Ranking
The positioning of a central management team is often the result of internal and external factors.
The Group’s history (organic growth or growth through acquisitions), its business model (which drives the P&L?), the performance of local entities (whether they are underperforming or not), the actual skill set at headquarters, and current regulatory issues directly influence the positioning of corporate management.
Ways to move the cursor
Positioning is not set in stone. It requires concrete effort across several dimensions:
- The scope of activities handled —what is managed centrally and what is left to local offices—is the most fundamental and visible factor.
- How the sector is managed says a lot about the actual relationship: whether to work collaboratively with the entities or impose standards on them, and whether to be physically present in the field or remain at headquarters—these are strong signals that local teams pick up on immediately.
- Performance Management reveals the true nature of the organization’s approach: does it focus on outcome metrics (trust in business units) or input metrics (monitoring of practices)? Work and Team Organization
- Finally, defining and monitoring processes is often the source of the most intense tension: To what extent does headquarters set the standards? How detailed should they be? How much room is there for local adaptation? And who monitors compliance with these processes—and how?
3 Types of Central Management
's "Strategist" Central Division
A central “Strategy” department will have fairly sporadic interactions with the various units and little presence on the ground.
's "Process Maker" Central Division
"Expert" Central Division
If communication between headquarters and local offices isn't going smoothly, or if you feel that the strategy needs to change but aren't sure exactly how, contact us to learn more and benefit from our practical insights on this topic.
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Why are relationships between central management and local units often difficult?
What factors determine the effective positioning of a central business unit?
What are some practical ways to change the positioning of a central management team?
There are four main levers that can be used to shift the balance:
- the scope of activities handled (what remains at the central level versus what is delegated to the local level);
- the methods used to coordinate the program (level of collaborative planning, on-site presence);
- performance management (outcome indicators versus input indicators);
- and process governance (which defines standards, determines the level of detail, and ensures compliance). These levers work in tandem and must be consistent with one another for the repositioning to be credible in the eyes of local entities.
