Organising
Decentralisation
Decide when and how far to decentralise.
Decentralisation means spreading decision-making authority through all levels of the organisation, so that decisions are taken close to the point of action. Centralisation means keeping that authority at the top.
They are relative: no organisation is completely centralised or completely decentralised. Every firm balances the two. Major policy decisions usually stay at the top, while routine decisions are pushed down.
Why decentralisation matters:
- it develops initiative among subordinates;
- it develops managerial talent for the future;
- decisions are quicker, since they need not travel up to the top;
- it relieves top management of routine decisions;
- it helps growth, because each unit acts with some independence;
- it gives better control, as each level's performance can be judged.
Delegation versus decentralisation:
| Delegation | Decentralisation | |
|---|---|---|
| Nature | compulsory: no manager can do all the work | optional: a policy decision of top management |
| Scope | narrow: between one superior and a subordinate | wide: across all levels |
| Purpose | to share work | to give autonomy |
Decentralisation without balance can lead to disintegration, so it must be used with care.
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