Chapter 4 » Meaning and Needs of Decentralization | Business Studies – XII




Meaning of decentralization of authority.

Decentralization is delegation of and dispersion of authority from top executive to the low level administrator or it may be geographical dispersion of authority from central to many branches. It is not possible without delegation of authority. It prepares the organizational participants of the organization. It is both philosophy and technique of management. Relationship is between top level, management, departments and units. It involves all managers at all level and relates relationship between departments, sections and units. Withdrawal of authority is not simple in this case. It is optional and situation as per the need of the organization. Control system is also delegated and decentralized to the departmental managers. Superior is relieved from responsibilities too.

Needs/ advantages of decentralization of authority


1. It provides relief to top executives from routine and time consuming work and helps them to devote greater attention to organizational level works

2. It ensures executive developmentof capable managers because subordinates get opportunity for exercising their own judgment, makes own decision, deal will difficult situations, handle the risk and be trained

3. It facilities growth and diversification of the organization because it helps to expand their production and diversifies production through conversion of centralized structure to decentralized structure.

4. It permits the managers, close to work and knowledgeable, to make quick and better decisions about circumstances of problems, details of work and so on.

5. It provides rights, power, and authority, prestige to middle and low level management which helps in getting opportunity for leadership and participation and higher motivation.

6. It leads to effective supervision and control by evaluating the performance of each unit.

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