I used this term a lot as a COO because getting this balance right is critical. At the “federal” level, certain requirements I defined for the organization were non-negotiable (“we are reporting our financials on this date, this way”) …other decisions were better left to the people on the ground  (“what’s the best way to thank Joe’s employees who worked crazy hours last weekend for the system cutover?”)

Companies often grapple with this issue because getting the balance is hard, but not getting this balance right can lead to real problems.

I define “states’ rights” as issues which you’d want the divisions/departments to deal with.  These are issues which require specificity, latitude, and a local perspective.  The litmus test is “would this be something we’d want the whole organization to do?”. If the answer is no, then it’s states’ rights.

“Federal” tends to define what you need everyone to do in the same way when there’s no defined method. Organizations define the non-negotiable: a code of conduct, how  bills are processed, what’s the budget process, data requirements. But there’s often a gray area on the  “how”: e.g. how is everyone going to report metrics on a monthly basis?  You can’t have everyone defining their own way of doing things because it becomes impossible to aggregate numbers in a meaningful way. That’s where the federal approach steps in.

Companies which lean towards the states’ rights approach remind me of  fiefdoms, run by princes. The princes have the power…the king is more of a figure head.  But those companies tend to struggle with control issues because that’s the one place you can’t have everyone defining their own approach….but they usually do well on revenue because they are nimble.

Companies which lean toward federal rights tend to be bureaucracies. There is one way of doing things…no matter what the circumstances might be. You need approvals for any deviation from procedure. Process is paramount, but it can be stifling.

Obviously, the best option is a mix of the two. “Federal” is necessary: (ever try to roll up the actuals for the month if everyone is inconsistent?). But “state” is necessary too (I wouldn’t want to try an develop one employee engagement plan that’s meant to work for Tokyo, London, Mumbai, and NY).

Think about the organization you work in: which way do they slant?  What are the kinds of things needed to get the balance back?