What are the Advantages and Disadvantages of Decentralization?
Delegation of authority and responsibilities is commonly referred to as decentralization, in which the organization is divided into different sections and departments to help the organization grow scientifically and with a purpose of direction, resulting in harmony in relationships and a healthy environment, which is typically absent in centralized systems of organization. The term "decentralization" refers to the dispersal of power, and it is the process of assigning specific responsibilities to subordinates. When such a responsibility is delegated to subordinates, it is always accompanied by an appropriate authority, which is also empowered to the executive and other lower-level assistants. As a result, decentralization refers to the assignment of responsibility and delegation of management to various executives and other subordinates at lower levels to make the lower level more accountable and capable of doing the task committed to them.
Advantages of Decentralization
1. Distribution of the Executive's Burden
The decentralized setup allows the executive to share his burden with others at a lower level, freeing him to focus on more pressing and critical tasks that require his full attention. This smoothens the job, speeds it up, provides a friendly atmosphere, improves comprehension, and fosters team spirit among all individuals who work for the company.
2. Greater efficiency and output
Because the responsibility comes with authority and power, everyone entrusted with it takes great care to fulfill it to the best of his ability. This level of attention and caution and the enthusiasm they approach their work to ensure greater efficiency and productivity.
3. Expansion Facility
It allows for further corporate expansion because the decentralized setup frees up top management personnel from routine and other responsibilities, focusing on fresh thinking and ideas. This provides for plane expansion to be achieved with little difficulty. The development of modern business houses directly results from the decentralized organizational framework.
4. It breeds innovation and flexibility.
More creative individuals can make their thoughts and be encouraged to develop and develop out-of-the-box solutions because there is less bureaucracy and obstacles to the open flow of ideas. Aside from that, those in specialized or local departments have a greater awareness of their work and the market's unique needs and challenges, allowing them to deliver appropriate solutions to react to changes in their area or market more quickly.
Disadvantages of Decentralization
Despite the benefits of decentralization, there are specific difficulties in applying it to all circumstances and under all conditions. The actual hurdles to decentralization are as follows:
1. Issues with Coordination
Decentralization allows for the management of highly competent individuals to be carried out by highly skilled individuals. Because of the fragility of their financial holdings, it is probable that such individuals will be unable to come to an agreement.
2. Factors from Outside
Decentralization exacerbates the problem of inter-unit coordination.
3. Increase the cost of administration
Decentralization isn't always possible. External forces, such as widespread strikes, make this difficult.
4. Operational costs are high
It computes the authoritative expenses on the basis of the assumption that well-paid administrators must be selected for the position.
FAQs on Advantages and Disadvantages of Decentralization
1. What is Decentralization?
Decentralization is a type of organizational structure in which top management delegates authority to the middle and lower levels of management.
Daily operations and minor decision-making capacities are delegated to the middle and lower levels of the organization in this structure, allowing top-level management to concentrate on significant issues such as corporate expansion and diversification.
2. Mention some examples of Decentralization?
Hotels, supermarkets, dress shops, and other decentralized businesses are good examples. Take, for example, a hotel. One individual can't focus on more than 200 branches with branches worldwide. When a person owns a hotel chain, he concentrates on decentralized structures that empower local hotel managers and assistants to make on-the-spot decisions to handle customer problems, complaints, and requirements.
3. What are the advantages of Decentralization?
The advantages of decentralization are as follows:
1. Top executives are relieved of some of their responsibilities.
2. It promotes motivation
3. Diversification is made more accessible
4. Better monitoring and control
4. Why is Decentralization regarded as a costly procedure?
When businesses are decentralized, administration costs tend to rise as well. Every department strives to be self-sufficient in terms of recruiting qualified personnel and having adequate physical facilities available. As a result of these qualities, decentralization is only appropriate for large organizations.
5. When is it appropriate to implement Decentralization?
When the authority to make decisions and develop policies is not concentrated in the hands of a single person at the top, but rather distributed among numerous levels, this is referred to as centralization. Besides being more numerous, lower-level decisions should also have a higher priority in terms of importance.
