Question

Explain the importance of decentralisation of authority.

Answer 1

The importance of decentralisation is reflected in the following points:

1. Relief to top management: Because operational decisions are made at lower levels, decentralisation gives top management more time to make crucial policy decisions. There is also less need for direct supervision and less need to verify judgements made at lower levels.
2. Quick decision-making: Decisions can be made more quickly in a decentralised organisation because they are made at the levels closest to the action, without requiring approval from higher levels.
3. Development of managerial talent: Lower level managers have the opportunity to learn and gain experience in leadership and decision-making through decentralisation. It encourages self-assurance and independence in them. Finding executives with leadership potential is another benefit of decentralisation.
4. Growth and expansion: Lower levels of management are given autonomy through decentralisation, which also encourages healthy departmental competition and makes it easier for the company to grow and expand because the management load is shared.
5. Better control: Decentralisation makes it easier to evaluate performance at all levels, hold departments individually responsible for their output, and gauge how each department contributes to the goals of the business.