Importance and Significance of the Decision: One of the important factors determining the degree of decentralisation of authority is costliness of the decision. Decentralization means dispersal of powers and authorities by the top level to the functional level management. During a crisis decentralisation creates its own problems. Under this arrangement the manager is in touch with all operations, makes all decisions, and gives all instructions. This is probably the most important benefit, particularly in our country where shortage of competent managers is the major limiting factor of the rapid growth of our economy and principal industries.
Thus, decentralisation provides a better means of developing future managers and executives. The larger the size of a concern, a decentralization set up is suitable in it. On the other hand, there cannot be absolute decentralization, for if managers should delegate all their authority, their status as managers would cease, their position would be eliminated, and there would, again, be no organization. There is a criminal law department, a civil law department and a real estate law department, and within each of these departments there are smaller groups of employees like paralegals, secretaries and file clerks. But if the top managers is conservative and prefers centralised control, there is likely to be centralisation of authority. In this lesson, learn about the centralized organization, where authority is top-down through a chain of command. In case communication system is effective, centralization should be advocated.
There will always be consistency and stability in decision-making. By using this authority the branch managers solve their local problems themselves. On the other hand, Decentralization refers to the dissemination of powers by the top management to the middle or low-level management. Decisions will also be democratic and acceptable as these are made by the people who are responsible for implementing them. He passes orders from top managing partners to the employees below him. In this way one department cannot benefit from the experience of a successful decision of another department.
But it cannot be denied that it is a costly arrangement. Decentralisation facilitates faster decision-making in case of growing organisations. Improved Teamwork: In decentralisation the superiors and subordinates share the decision-making process with subordinates monitoring all activities and taking decisions under the guidance of their superiors. Better Distribution of work in the Group since every employee gets adequate authority to act, it also leads to prompt decision making 5. I disagree with Facebook being a fusion organization.
It is considered as a general policy of top management and is applicable to all departments. For this the superiors should be given some training. Vital and crucial decisions involving investment of huge capital funds are taken at the top level, because top officials are better trained and more experienced and, hence, the authority is not decentralised. For example- if an organisation is manufacturing and selling any products at the same time, under decentralisation separate departments for all the products will be established. Decentralization requires the employment of trained personnel to accept authority. In centralization little delegation of authority is the rule- power and discretion are concentrated at the top levels.
This is a problem of geography: a business characterized by centralized performance operates in a single location or under a single roof. This decision improves the morale of store managers and improves the and at those stores embracing the change. This results in delayed decision-making which can be costly for the firms. Centralisation hampers the growth of development of subordinates as they are not given any authority to take independent decisions. Successful handling of all types of situations in the business. Development of managerial personnel through exposure which provides the opportunity to grow. Since they cannot be careless, it has a direct effect on the control in the enterprise.
To ensure accountability, managers at all levels should be allowed to participate in budget formulation. Others, who want the decisions to be taken at lower levels, to improve their creative skills, decentralise the decision-making authority. Essentially, decentralization and participative management are different matters. At present, most of the organisation are equipped wth both the features, as absolute centralization or decentralization is not possible. Process of Decentralisation of Authority : The following steps make the decentralization process : 1.
There is no duplication of efforts and resources. For this reason, decentralization must be viewed as a relative concept, not as an absolute one. Process of Decentralization: The following steps make the decentralization process: 1. Decentralization is wider in scope and the subordinates responsibility increase in this case. Excessive burden of workload on the top executives. Quite often emergency situations like declining sales, introduction of a highly sophisticated competitive product, government policy changes may force the organization to cut down costs, maintain inventories at an optimum level, utilize resources effectively and instantaneously.