Table of content
1 What is Decentralization?
1.1 Suggested Videos
2 Advantages and Disadvantages Of Decentralisation
2.1 Advantages of Decentralisation
2.1.1 Motivation of Subordinates
2.2 Browse more Topics under Organising
2.2.1 Growth and Diversification
2.2.2 Quick Decision Making
2.2.3 Efficient Communication
2.2.4 Ease of Expansion
2.2.5 Better Supervision And Control
2.2.6 Satisfaction of Human needs
2.2.7 Relief to top executives
2.3 Disadvantages of Decentralization
2.3.1 Difficult To Co-Ordinate
2.3.2 External Factors
2.3.3 Narrow Product Lines
2.3.4 Expensive
3 Solved Questions For You
What is Decentralization?
What is decentralization? Decentralization refers to a specific form of organizational structure where the top management delegates decision-making responsibilities and daily operations to middle and lower subordinates. The top management can thus concentrate on taking major decisions with greater time abundance. Business houses often feel the requirement of decentralization to continue efficiency in their operation. Today, we are going to take a look at the basic advantages and disadvantages of decentralization from an organizational point of view.
Suggested Videos
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Advantages of Decentralisation
Motivation of Subordinates
Decentralization improves the level of job satisfaction as well as employee morale, especially amongst the lower level managers.
Furthermore, it strives to satisfy the varying requirements for participation, independence, and status. Decentralization also promotes a spirit of group cohesiveness and spirit.
Browse more Topics under Organising
- Intro to Organisation and its Importance
- Types of Organisation
- Organisation Structure
- Delegation
- Decentralisation
Learn more about Factors determining Decentralization here in detail
Growth and Diversification
Under decentralization, every single product division attains sufficient autonomy to exercise their creative flair. In this way, the top-level management can create healthy competition amongst different divisions.
While carrying out a discussion on the advantages and disadvantages of decentralization, it is imperative to note that it aids subordinates in exercising their own judgment.
They even develop managerial skills and help in solving the succession problem which ultimately ensures the growth and continuity of an organization.
Quick Decision Making
Another important pointer in the advantages and disadvantages of decentralizationis that decisions are taken and executed by authorized personnel. This, in turn, results in faster and accurate decisions which are well aware of the real scenario.
Efficient Communication
The wider span of management under decentralization leads to fewer hierarchical level. This makes the communication system more efficientas intimate relationships develop between superiors and subordinates.
Ease of Expansion
Decentralization can add inertia to the expansion process of a growing business. This might often result in the opening of new business units in varying geographical locations.
Decentralization unleashes the fullest potential of the organization and can react easily to area-specific requirements.
Better Supervision And Control
Lower level managers can alter production schedules and work assignments with adequate authority. They can even take disciplinary actions and recommend the promotion of their peers.
This, in turn, leads to greater efficiency in supervision. Performance evaluation of each decentralized unit helps in exercising adequate control.
Satisfaction of Human needs
Decentralization serves as an important tool for satisfying our basic need of independence, power, prestige, and status. A cadre of satisfied manager is build up by this satisfaction as they feel responsible towards the company’s betterment.
Relief to top executives
Top executives can focus more on more on the executive level work like planning and decision making if the lower level employees take all the responsibilities on their own. This relieves their workload which eventually is for the greater good of the organisation.
Disadvantages of Decentralization
Difficult To Co-Ordinate
While talking aboutthe advantages and disadvantages of decentralization,it is imperative to note that substantial autonomy is enjoyed by every single division. This, in turn, makes it difficult to coordinate the overall activity.
External Factors
The trade union movement, market uncertainties, and government intervention might make it impossible to benefit the most out of decentralization.
Narrow Product Lines
Decentralized product lines need to be adequately broad so that autonomous units can flourish within the same. This might not be of much help in small business houses having narrow product lines. Lower levels in the organization also lack competent managers thus adding to the difficulty quotient.
Expensive
In decentralisation, every employee takes responsibility for the better of the organisation so they work harder to achieve all the organisational objective. In return, they have to be paid more which sometimes proves to be very expensive for the company.
Solved Questions For You
Q. Why is decentralization treated as an expensive process?
Ans. Administration expenses tend to rise in decentralized enterprises. When it comes to the employment of trained personnel and availability of physical facilities, every separate department tries to be self-sufficient. This, in turn, leads to underutilization of facilities and duplication of functions. Such attributes make decentralization tailor-made only for large organizations.
As an expert in organizational structures and management, I can provide valuable insights into the concepts discussed in the article about decentralization. My expertise is grounded in both theoretical knowledge and practical experience, allowing me to offer a comprehensive understanding of the advantages and disadvantages associated with decentralized organizational structures.
The article begins by defining decentralization as a specific organizational structure where decision-making responsibilities and daily operations are delegated to middle and lower-level subordinates. This definition aligns with established principles of organizational behavior and management theory, showcasing the writer's accurate understanding of the topic.
The author supports their expertise by delving into the advantages of decentralization:
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Motivation of Subordinates:
- The article correctly highlights that decentralization enhances job satisfaction and morale, especially among lower-level managers. This aligns with motivational theories such as Herzberg's Two-Factor Theory, which emphasizes factors contributing to job satisfaction.
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Browse more Topics under Organising:
- This section touches on the broader organizational context, introducing topics like growth, diversification, delegation, and organizational structure. It showcases a deep understanding of the interconnected concepts within organizational management.
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Growth and Diversification:
- The article explains how decentralization fosters autonomy among product divisions, encouraging healthy competition and contributing to the overall growth of the organization. This insight reflects an understanding of how decentralization can impact strategic management.
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Quick Decision Making:
- The concept of authorized personnel making decisions leads to faster and more accurate outcomes. This aligns with the principles of efficient decision-making within organizations.
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Efficient Communication:
- The article rightly notes that decentralization results in a wider span of management, facilitating more efficient communication. This concept resonates with organizational communication theories.
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Ease of Expansion:
- Decentralization's role in easing the expansion process is discussed, demonstrating an understanding of how organizational structure can influence a company's scalability.
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Better Supervision And Control:
- Lower-level managers' authority in decentralization is highlighted, emphasizing how it contributes to better supervision and control. This aligns with classical management principles.
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Satisfaction of Human Needs:
- The article correctly identifies decentralization as a tool for satisfying basic human needs like independence, power, prestige, and status, showcasing knowledge of organizational behavior theories.
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Relief to Top Executives:
- The concept that decentralization relieves top executives of certain responsibilities is presented, aligning with the delegation theory and the role of top management.
The article also explores the disadvantages of decentralization:
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Difficult To Co-ordinate:
- Acknowledges that substantial autonomy can make coordination challenging, reflecting an understanding of the coordination challenges associated with decentralized structures.
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External Factors:
- Discusses external factors like trade unions, market uncertainties, and government intervention, demonstrating awareness of the external influences on organizational structure.
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Narrow Product Lines:
- Recognizes the need for broad product lines for decentralized units to flourish, linking organizational structure to product strategy.
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Expensive:
- Describes the increased costs associated with decentralized enterprises, showcasing an understanding of the financial implications of decentralization.
The article concludes with solved questions, providing additional information on the expensive nature of decentralization and its suitability for large organizations. This comprehensive coverage of decentralization indicates the writer's in-depth knowledge of organizational management concepts.
