DECENTRALIZATION — MEANING, ADVANTAGES AND DISADVANTAGES

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Decentralization is a management technique in which top management transfers the majority of decision-making authority to middle-level or low-level management.

It is the delegation of duty and decision-making authority from top management to bottom management.

Decentralization may also refer to the management philosophy that relates to the top-level management's belief that all employees should be given the chance to develop their skills as responsible individuals

It entails transferring control over decision-making from the central authority to numerous peripheral authorities.

Advantages of decentralization 

1. Relieves top management: Whenever there is decentralization, the workload and burden on top management are reduced.

Decentralization allows lower management to make operational decisions that would have otherwise been made by top management, allowing top management to focus on strategic tasks and responsibilities.

2. Quick decisions: Decentralization facilitates quick decisions by empowering lower-level employees to make operational decisions and other relevant decisions on their own, without always consulting top managers.

3. Means of training and development: Decentralization is a technique for preparing employees for managerial positions.

When the organizational structure is decentralized, tasks are delegated to subordinates and managers can gain insight on subordinates skills and abilities, which they can used to train employees in the future.

Lower level management can also develop their decision-making skills and possibly receive on-the-job training when organization is decentralized.

4. Better management: A decentralized organization allows managers to concentrate on other important areas of the business because workload is reduced.

This way, there are able to effectively and efficiently manage other strategic activities.

5. Promotes motivation: Decentralization contributes to staff motivation by enabling middle and lower level managers to take on more responsibility and make their own decisions.

This way, they get to use their initiative in making decisions.

Disadvantages of Decentralization

1. Cost: The administrative cost of running a decentralized organization is very high.

Decentralization causes staff efforts to be duplicated because top management and low level management are likely to perform the same tasks.

2. Difficult to coordinate: When the organizational structure is decentralized, it will be very difficult to coordinate the overall activity of the organization.

This is because it is very difficult to synchronize the different activities of the organization towards organizational goals when the organization is decentralized.

3. Possibility of poor results: Decentralization may lead to the delegation of power to unskilled workers who may not be able to meet the objectives of the organization.

4. Workload on subordinates: Decentralization increases the workload of the subordinates since decisions will be decentralized.

Subordinates who have an excessive amount of work to do may become unmotivated and perform poorly.

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