Advantages and disadvantages of decentralisation

Secures Better Co-ordination As self-sufficient departments are established with necessary service functions, all the activities are coordinated at the departmental level. First Advantage of Decentralization Top management is free to concentrate on higher-level problem-solving, company strategy, higher-level decision-making and coordinating activities.

The top management is unable to keep tabs on all organizational functions and prefer to delegate responsibility and distribute the power of making decisions. Important Facts About Decentralization Companies that are made up of more general workers, rather than specialized workers, benefit more from a centralized system.

Staff attached to the department develops a sense of loyalty to it, and also develops personal interest in the work. Advantages of Decentralization The top management Advantages and disadvantages of decentralisation promoters of the firm have distributed the decision-making authority and are therefore, left with more time to pursue the strategy for realizing the organization's long-term vision.

Only businesses that are well established should consider this type of organization structure. Decentralisation of authority is a fundamental phase of delegation and the extent to which authority is not delegated is called centralisation. External specialist consultants often need to be sought when the need arises, further adding to the costs.

In centralized businesses, there is one section of the business that holds the majority of the power over decisions and processes. Both centralization and decentralization have their extremes which is why, the key is to avoid those extremes and take the middle road.

Reduces the Burden of Top Executives It frees the top managers from the burden of taking too many operating decisions. In practice, the centralization is not practicable in pure form. In some concerns there is greater volume of work as compared to others.

Only businesses that are well established should consider this type of organization structure. Complete physical centralization or decentralization is neither feasible nor desirable in a modern office of a large scale business. External factors make this difficult, such as company wide strikes.

The Big Picture is Blurred When too much focus is put on the smaller sections of a business, the overall objective and goals of the business as a whole can be skewed.

Decentralization increases the problems of coordination among the various units. This is because, often times, the issues and decisions that must be handled involve lower areas of the business.

Top-level managers must have their eyes on the dollar and its impact on the company. Decentralized organization has to place undue reliance on the efficiency of the divisional managers. The Advantages of Decentralization 1. No uniform action — It becomes difficult to maintain uniformity in action because routine and methods differ from organisation to organisation and department to department.

Improves Motivation Decentralization provides more chances for the executives to exercise initiative without any undue interference from the top executive. Decentralizing a business allows a company to pin point the weak links in their chain and, as a result, run the company more efficiently.

This facilitate taking up quick decision. Since a worker is working, in a functional department, work can be performed promptly.

No equitable distribution of work — It becomes difficult to distribute workload equitably among different employees. Retail businesses like Walmart and hotel chains often benefit from having a decentralized style of management. It can be better performed departmentally because of the following advantages: Facilitates Diversification Diversification of products or markets is possible only by departmentalization.

Without decentralization, departmentalization is meaningless and practically impossible. There shall not be uniformity in policies and actions, since each manager will form his own genius in designing them.

In centralized businesses, there is one section of the business that holds the majority of the power over decisions and processes.

What are the advantages and disadvantages of Decentralization?

Employee Management Closer and better employee management and community relations are possible in small administrative units for business as a whole, where decentralization may mean a more widespread distribution of roles and purchases, which may reduce proportionately the unfavorable impact of sales decline.

Increase Social Net Product Decentralization may result in an increase in the managerial social net product, i.

In some cases, decentralization may not be possible at all. Decentralization increases the problems of coordination among the various units. Time for Bigger Things The top people in the company much often have bigger fish to fry, rather than spend their time making smaller decisions.

This improves the improves the morale of the employees and motivate them for peak performance. However, most disadvantages of decentralization can be overcome by controlling the degree of authority delegated to the lower levels of the organization. Office work is made up of a series of different activities such as filing, mailing, accounting etc.

A decision is usually a democratic and participative outcome and if there's a goof up in progress, chances are great that someone will spot it.Disadvantage of Decentralization. Disadvantages of decentralized arrangement are as follows: 1. The total workload of the office cannot be distributed among the personnel of different departments.

2. The quality of work may be poor because of lack of specialization and specialized machines.

What Are the Advantages & Disadvantages of Decentralization?

3. Disadvantages of Decentralisation: Decentralisation can be extremely beneficial. But it can be dangerous unless it is carefully constructed and constantly monitored for the good of the company as a whole.

Advantages and Disadvantages of Centralization Under certain conditions a centralized organizational structure can be advantageous. In a centralized organization structure, the centralized authority may have a better perspective on the big picture of the organization and how the subunits of the organization fit together and this may make.

Decentralization has advantages and disadvantages. Advantages of decentralization include better, more timely decisions and increased motivation.

Decentralization involves spreading the decision-making throughout an organization instead of a few making all of the decisions. Decentralization is a matter of degree. At one end of the spectrum, a strongly decentralized organization has lower-level managers and employees making decisions.

At the other end of the. Jun 29,  · Advantages & Disadvantages of Matrix Organizational Structures in Business Organizations Advantage and Disadvantage of .

Advantages and disadvantages of decentralisation
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