“Decentralisation refers to tire systematic effort to delegate to the lowest levels all authority except that which can only be exercised at central points.” —Louis A. Allen
“Decentralisation means the division of a group of functions and activities into relatively autonomous units with overall authority and responsibility for their operation delegate to time of cacti unit.’—Earl. P. Strong
Definition of Decentralisation
Decentralisation is referred to as a form of an organisational structure where there is the delegation of authority by the top management to the middle and lower levels of management in an organisation.
In this type of organisation structure, the duty of daily operations and minor decision-making capabilities are transferred to the middle and lower levels which allow top-level management to focus more on major decisions like business expansion, diversification etc.
Delegation refers to the assigning a portion of work and the associated responsibility by a superior to a subordinate. In simple words, when delegation is expanded on an organisational level, it is called decentralisation.
Also read:What is Entrepreneurship?
Example of Decentralisation
Good examples of decentralised business are Hotels, supermarket, Dress showrooms and etc. Because it is not possible for one person to focus on more than 100 branches which have branches throughout the world, take an example of a hotel. When a particular person holds a chain of hotels as his business, he particularly focuses on using decentralised structures so that local hotel managers and assistants are empowered to make on-the-spot decisions to handle customers – problems, complaints and requirements.
Do you know? What are theCharacteristics of Entrepreneurship?
Importance of Decentralisation
- Rapid decision making –Most of the decisions are taken on the spot, and approval from the higher authority is not required. The ability to make a prompt decision allows an organisation to function its operation quickly and effectively.
- Administrative development –The decentralisation process questions the manager’s judgement and techniques, when responsibility and challenges to develop solutions are given to them. This questioning method grows confidence, encourages self-reliance, and make them a good decision-maker resulting in the development of the organisation.
- Development of executive skills –It allows the employee to perform task individually, giving them invaluable exposure. This individual performance creates an environment where an individual can enhance their expertise, take ownership & more significant responsibilities, and be suitable for promotion.
- Promotes growth –Decentralisation also allows the heads of the department to work independently. This independence helps the department to grow, have a healthy competition between other departments. Ultimately, the competition will lead to an improvement and enhancement in productivity.
- Higher control –It also evaluates and reviews the performances of each department and gives them a comprehensive perspective of their work. However, controlling is the biggest challenge of decentralisation and stabilised management and scorecard are being developed.
You might also want to know:What is Marketing Mix?
Advantages of Decentralisation
- Reduces the burden on top executives
- Facilitates diversification
- Executive Development
- It promotes motivation
- Better control and supervision
Disadvantages of Decentralisation
- Uniform policies not Followed
- Problem of Co-Ordination
FAQs
Decentralization is the process of shifting control from one main group to several smaller ones. The decentralization of government, for example, gives more power to the individual states, rather than concentrating it at the federal level.
What is the best example of decentralization? ›
Example of Decentralisation
Good examples of decentralised business are Hotels, supermarket, Dress showrooms and etc. Because it is not possible for one person to focus on more than 100 branches which have branches throughout the world, take an example of a hotel.
What is an example of decentralization in the real world? ›
Some notable examples include applications that provide immediate foreign or emergency aid to those who need it most, without the mediation of a bank, government or third-party entity. Or applications that give people the ability to manage their own digital identities and data.
What is an example of decentralization structure? ›
Nike is a great example of a company that has embraced a decentralized organizational structure. By empowering employees to make decisions and take ownership of their work, Nike has been able to respond quickly and effectively to changes in the athletic apparel industry.
What is the short answer to decentralization? ›
Decentralisation is the process of transferring authority from the Supreme and state levels to the local level. The process of distributing functions and power away from a central place or authority is known as decentralisation.
What is decentralized system example? ›
An example of a decentralized system is Bitcoin blockchain, a decentralized ledger of transactions that uses a peer-to-peer network and a consensus algorithm to verify transactions and maintain a distributed ledger. Bitcoin does not have a central authority or server that controls the network or the currency.
What are some examples of decentralization in nature? ›
One of the most well known examples of a "natural" decentralized system is one used by certain insect colonies. In these insect colonies, control is distributed among the hom*ogeneous biological agents who act upon local information and local interactions to collectively create complex, global behaviour.
Which is the best example of a decentralized operation? ›
A cost center is an example of decentralization in which authority to track controllable expenses is given to subordinates in an organization. In a decentralized organization, every department is a cost center.
What are the three types of decentralization? ›
Types of decentralization include political, administrative, fiscal, and market decentralization. Drawing distinctions between these various concepts is useful for highlighting the many dimensions to successful decentralization and the need for coordination among them.
Is decentralization a good thing? ›
Compared with centralisation, decentralisation contributes to better accountability because it alters the incentives of the authorities who serve local populations. In a decentralised model, the elected local authorities are accountable to residents who finance and consume the services.
Decentralized processing implies that each location may be doing the same type of processing but on different data; for example, each branch in a large company processing orders for its local customers. In contrast, the world of decentralized finance (DeFi) and crypto does not have that meaning.
What is an example of decentralized control system? ›
Programmable Logic Controllers (PLCs) are another example of a decentralized control systems, which interpret signals from sensors and generates and transmit control signals to the actuators according at fixed intervals.
What is decentralization in simple words? ›
Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision-making, are distributed or delegated away from a central, authoritative location or group and given to smaller factions within it.
What is an example of a decentralized network? ›
Decentralized social networks operate on independently run servers, rather than on a centralized server owned by a business. Mastodon is one example of a decentralized social network. It is based on open-source software and functions a lot like Twitter. Another example is Steem, which runs on a social blockchain.
What are the two main types of decentralization? ›
There are two types of desensitization: hom*ologous desensitization, which is defined as the agonist-induced reduction in cellular response that occurs when the receptor is stimulated only by this particular agonist, and heterologous desensitization, which is defined as the reduction in response of a particular receptor ...
What is another word for decentralization? ›
On this page you'll find 18 synonyms, antonyms, and words related to decentralize, such as: disperse, distribute, scatter, broadcast, circulate, and disseminate. decentralize (verb as in distribute over a less concentrated area) Strongest matches. disperse distribute scatter.
