Question

With the help of any four points,explain the importance of 'Decentralization' in an organization.

Answer 1

Decentralisation refers to the dispersal of the decision making power among the middle and lower level managers. The following points highlight the importance of decentralisation.

(i) Initiative: Decentralisation allows a sense of freedom to the lower managerial levels as it lets them take their own decisions. It gives them a higher degree of autonomy to take initiative. Moreover, it promotes a feeling of self-confidence and self-reliance among them.When the power is delegated to the lower level managers , they learn to face new challenges and find solution for the problems themselves. This helps in spotting those potential managers who can take the needed initiative.

(ii)Managerial competence: Once the authority is delegated to the managers at lower levels, it provides them the needed opportunity to develop themselves. It provides them with the opportunity to gain experience and thereby, develop the skills and knowledge to face new challenges. Decentralisation gives them a chance to prove their talent and get ready for higher positions. It also helps in pre-identification of the future managers who are well-equipped with the necessary talent required to deal with managerial problems.

(iii)Control: Decentralisation helps in evaluating the performance of the organisation in a better manner. Decentralistaion helps in analysing and evaluating the performance of each department separately. Thus, the extent of achievement of each department and their contribution to the overall objectives of the organisations can be easily evaluated.

(iv)Active decision making: Since through decentralisation, the authority of making decision is passed on to lower levels of management, decision are taken quickly and timely. This is because the decision can be taken at the nearest points of action which thereby, helps in easy adjudication of the problems.