Decentralization In Business Explained
“In the complex world of ours there is a stringent need to decentralize every system as it takes care of the diversification that every business venture is concerned with. Decentralization gives enough authority to persons at various levels for carrying out their duties. ”
Whenever there is distribution of decision-making power decentralization is said to have taken place. This distribution of power normally takes place at the lower level of management. In other words, when the power to take decisions and formulate policies does not lie with one person at the top but is passed to different levels, it is a case of decentralization.Under this system top-level management retains only that work, which requires their personal attention otherwise every thing, is assigned to persons at appropriate levels. This is very beneficial to the top management because now it is able to devote ample time to the planning side of business.
Under decentralization decision-making powers are delegated to lower level executives. If it so happens that an immediate decision is to be taken, the executive need not seek permission from his superiors. Because power is delegated to him, he has full authority to decide as per his own capability. There is no need to make reference to the top level for most of the work. It quickens the process.
In the complex world of ours there is a stringent need to decentralize every system as it takes care of the diversification that every business venture is concerned with. Decentralization gives enough authority to persons at various levels for carrying out their duties. The centralized system of authority does not allow diversification beyond a certain level because one man reserves decision-making only.
The organization becomes more and more complex with the addition of new products and setting up of more units. Decentralized system is more suitable for expanding enterprise. The subordinates also feel free and competent under such a system because it gives them the much needed respect as well as entrusts them with a feeling of responsibility..
This fulfills the human need for power, independence and status. Subordinates realize their importance in the organization. The efforts of the lower staff get a new impetus and they feel as if they belong to the business like never before. They get a chance to take initiative and to try new ideas. Under this system different departments are made separate profit centers.
All the more, a health competition develops between different departments of the same business. The sense of competition improves the performance of all departments.
Author - DeeKay
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