Decentralization

Meaning of Decentralization

Decentralization is a developed form of delegation. When an executive or a high official delegate gives more than the expected amount of responsibility and rights or powers to his subordinates, it is called Decentralisation. Thus, decentralization is a form of distribution of responsibilities, in which the lower level employees are entrusted with almost all the rights, except those which can be undertaken only by the top management in the best way.

Comparison with Delegation of Authority

The above discussion clarifies that decentralization is the result of delegation (transfer of workload) of authority and responsibilities. Under both decentralization and delegation of authority, the lower employee accepts the responsibility of a job and gets special rights for its performance. Still, there are some points of difference between the two:

1. Delegation precedes decentralization because it is not possible without delegation.
2. Under delegation, no individual can pass on his responsibility to another whereas in decentralization the responsibilities are also delegated along with the rights, to another person.

Merits of Decentralization

1. Prompt Decision

   The subordinates can make decisions immediately without obtaining permission from the above. This helps in prompt decisions.

2. Relieves the Burden of Management

   The task of decision-making is undertaken by the lower-level employees, hence the management gets more time for other important functions, like planning, coordination, and control.

3. Best Decision

   The decision maker under this system is the one who is nearest to the work area and has full knowledge. of the needs and expectations of the job. This leads to better and suitable decisions.

4. Team Spirit

   It promotes the spirit of teamwork among its employees, thus, the management can unite them into a better-organized team of workers.

5. Training to Managers

   The junior employees in a decentralized unit get training on making decisions and coordinating their activities, which makes them more adaptable at accepting more responsible jobs.

Demerits of Decentralization

1. Lack of Secrecy

   If decisions are taken by a few top-level executives then it is easier to maintain secrecy but under decentralization, decisions are taken at lower levels in which there is more possibility of leakage of secrets.

2. Lack of Unanimity

   Since each employee has the freedom to choose his own, method of working there remains no unanimity in the decisions of the unit as a whole.

3. Lack of Coordination

   Due to decentralization, it becomes very difficult to coordinate the activities, of the unit at various levels, which sometimes poses complex problems before the management.

4. Ineffective Control

   Allowing almost all the rights relating to decisions to the lower level employees makes impossible effective control. Due to this, the higher management fails to make quick and effective decisions to control the activities of the organization.

5. Increase in Expenses

   Under Decentralization, the administrative expenses are increased due to specialized staff which is required and secondly, trained staff has to be recruited even at lower levels too.