Question

Six Mark Question:
What is meant by 'decentralisation'? Explain any four points which highlight the importance of decentralisation in an organisation

Answer 1

Decentralization of authority means conscious/systematic efforts to bring dispersal (spreading) of decision making power to the lower levels of the Organisation. In decentralization, only broad powers will be reserved at the top level. Such powers include power to plan, organise, direct and control and maximum powers will delegated to the authority at the lower level.

Importance of Decentralization:

• There is less burden on the Chief Executive as in the case of centralization.
  
• In decentralization, the subordinates get a chance to decide and act independently which develops skills and capabilities. This way the organization is able to process reserve of talents in it.
  
• In decentralization, diversification and horizontal can be easily implanted.
  
• In decentralization, concern diversification of activities can place effectively since there is more scope for creating new departments. Therefore, diversification growth is of a degree.