What is meant by decentralisation? State any four points of importance of decentralisation.
Decentralisation refers to the systematic effort to delegate to the lowest levels, all authority except that which can only be exercised at central points. The centre of decision making are dispersed throughout the organisation. The essence of decentralisation is the transference of authority from a higher level to the lower level. The authority of taking major decisions and framing policy is retained at central point, that is, at the top and the authority to the lower levels with respect to the tasks assigned or responsibility is delegated to lower levels.
The decentralisation is important due to the following reasons:
(i) Develops initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates. It also keeps them in a state wherein they are constantly challenged and have to develop solutions for the various problems they encounter.
(ii) Develops managerial talent for the future: Formal training plays an important part in equipping subordinates with skills that help them rise. Decentralisation gives them a chance to prove their abilities and creates a reservoir of qualified manpower who can be considered to fill up more challenging positions through promotions.
(iii) Quick decision making: In a decentralised organisation, since decisions are taken at levels which are nearest to the points of action and there is no requirement for approval from many levels, the process is much faster.
(iv) Relief to top management: Decentralisation reduces the amount of direct supervision exercised by a superior over the activities of a subordinate because they are given the freedom to act and decide within the limits set by the superior. Thus it leaves the top management with more time which they can devote to important policy decisions rather than occupying their time with both policy as well as operational decisions.
