Principle of Subsidiarity - Subsidiarity is among the most constant and characteristic directives of the Church’s social doctrine and has been present since the first great social encyclical. It is impossible to promote the dignity of the person without showing concern for the family, groups, associations, local territorial realities; in short, for that aggregate of economic, social, cultural, sports- oriented, recreational, professional and political expressions to which people spontaneously give life and which make it possible for them to achieve effective social growth. (Compendium, 185)
“Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them." (Quadragesimo Anno, 203).
Subsidiarity, understood in the positive sense as economic, institutional or juridical assistance offered to lesser social entities, entails a corresponding series of negative implications that require the State to refrain from anything that would de facto restrict the existential space of the smaller essential cells of society. Their initiative, freedom and responsibility must not be supplanted. (Compendium 186)
This makes a lot of sense to most CEOs. But it's not just a way to cut costs, it's a moral directive! "It is gravely wrong to take from individuals what they can accomplish by their own initiative..."
Do we have a top-down command-and-control management style, where even the simplest organizational changes require approval from the top? This is contrary to the principle of subsidiarity, which requires us to adopt a system that pushes decision-making as low in the organization as possible, assuming the competence exists to make the decision.
This principle is widely abused by government, which should avoid laws and regulations if the competence to decide exists in the family, the neighborhood, or the community.
But it is also abused in business, where line employees are not trusted to make decisions about how they do their work. Their dignity demands that we permit them more leeway to make decisions, and our organizations will probably function better (and at less cost) as a result.
There are many business cases that describe the economic success of subsidiarity, my favorite being Nucor Steel. Nucor had just three levels of management, which kept their costs low and their agility high. They went from a tiny scrap processor to the largest steel company in the United States in just a few decades.
Subsidiarity is not just a principle of CSD. It is a good plan to organize a business.