You may have heard the word autonomy in an economics class before, but autonomy also has an accounting definition. In accounting, autonomy usually refers to a style of management or corporate business structure where managers have the freedom to make decisions in the normal course of business.
What Does Autonomy Mean?
Some companies are set up to only have one class of management make decisions. This management style, often referred to as “the man”, has failed over and over. This centralized management system of handing down orders from above is non-autonomous—meaning the degree of management freedom in decision-making is low.
Many business management textbooks call this top-down management because nothing can happen and no decisions can be made within the company unless it comes from the top.
An autonomous corporate management structure is the exact opposite. It consists of a decentralized management system where many different managers have freedom to make decisions on their own operations. This high degree of management decision-making autonomy leads to new innovations and improvements. This makes sense. I’m sure you have heard the saying, “you can’t be great at everything.”
Well, this is true with management as well. An owner of manager can’t know and be able to do absolutely everything in a company. This would be inefficient. Instead, top management should train qualified and intelligent people to different departments of the company. This not only frees up the top executives time, it also gives each managers a specific area of the business to focus on and improve.