Subject: Business Studies
Decentralization of authority means, dispersion of authority from top executive to the low-level administrator or it may be geographical dispersion of authority from center to many branches. Decentralization is the systematic and consistent delegation of authority to the level where the work is performed.
Decentralization is the process of equal distribution of decision-making power to the operating level of staff for better performance. This philosophy emphasizes that the top level of management should keep minimum right and power and all decision-making powers are to be provided to the operating level of staff, manager or superior. It is optional and suitable for the research-oriented and creative jobs where the employees are disciplined, skilled and trained.
According to Louise A. Allen,” Decentralization is the systematic and consistent delegation of authority to the level where the work is performed.”
Similarly in the word of Dale S. Beach,” Decentralization means placing the authority and decision-making power as close as possible to the level at which the work is done.”
In conclusion, we can say that the decentralization of authority is the process of systematic and scientific delegation of authority to the operating level of staff for better performance.
The decentralization of authority is a blessing to organizational success. While designing or determining the organization structure, one should be clear about the degree of concentration and dispersion of authority in the organization i.e. centralization and decentralization of authority. While determining decentralization of authority, the following factors should be considered as they affect much in determining the amount of decentralization appropriate for an organization:
Basis |
Delegation of authority |
Decentralization of authority |
Meaning |
It is the process of assigning work to subordinates and giving the necessary authority to do the given jobs effectively. |
It is the process of equal distribution of decision-making power to the operating level staff for better performance. |
Essence |
Delegation is an essential organizational structure. |
Decentralization is optional i.e. the top management may or may not decentralize authority. |
Nature |
It is a primary concept which involves in developing organizational structure. |
It is the secondary concept and also ends the result of the delegation process. |
Relationship |
It shows a relationship between a superior and subordinates in the management hierarchy. |
It shows the relationship between top-level management and various departments of the enterprise. |
Responsibility |
Superior delegates or transfers some rights and duties to a subordinate but his responsibility in respect of that work does not end. |
Sub-ordinates become liable for the work. |
Liberty of work |
Sub-ordinates do not have full liberty. |
A substantial amount of freedom is there. |
Control |
Here, superior exercises total control over a subordinate. |
Here, superior exercise general control over a subordinate. |
Purpose |
Its purpose is to reduce the workload of authority. |
Its purpose is to encourage employees to participate. |
References:
Pokhrel, Dhurb Raj et.al., Business Studies-XII, Asmita Book Publication, Kathmandu
Poudyal, Santosh Raj et.al., Business Studies-XII, Asmita Book Publication, Kathmandu
Bhandari, Kedar Prasad, Business Studies-XII, Bundipuran Prakashan, Kathmandu
Factors affecting decentralization of authority
- The size of the organization
- Organization history
- The cost of decentralization
- Philosophy of management
- Control technique
- Nature of decision
- Competencies of a subordinate
Describe the concept of decentralization.
Decentralization of authority is based on the philosophy that the systematic and scientific delegation of authority to middle and lower levels of management. In other words, it is the systematic delegation of decision-making power to the concerned level where the work is to be performed. Decentralization refers to the participation of employees in the decision-making process. It is optional and suitable for the research oriented and creative jobs where the employees are disciplined, skilled and trained.
According to Louise A. Allen,” Decentralization is the systematic and consistent delegation of authority to the level where the work is performed.”
Similarly in the word of Dale S. Beach ,” Decentralization means placing the authority and decision-making power as close as possible to the level at which the work is done.”
In conclusion, we can say that decentralization of authority is the process of systematic and scientific delegation of authority to the operating level of staff for better performance. It is the process of placing the decision-making power to lower level subordinates is called decentralization of authority.
Describe the need of decentralization of authority.
The need of decentralization of authority for an organization presented by the following points:
Discuss the factors affecting decentralization of authority.
Various factors affect decentralization of authority. These factors are discussed below:
Differentiate between delegation and decentralization of authority.
Decentralization and delegation of authority differs in the following ways:
Basis |
Delegation of authority |
Decentralization of authority |
Meaning |
It is the process of assigning work to subordinates and giving necessary authority to do the given jobs effectively. |
It is the process of equal distribution of decision-making power to the operating level of staff operating the level of staff for better performance. |
Essence |
Delegation is the essential organizational structure. |
Decentralization is optional i.e. the top management may or may not decentralize authority. |
Nature |
It is a primary concept which involves in developing organizational structure. |
It is the secondary concept and also ends result of delegation process. |
Relationship |
It shows a relationship between a superior and subordinates in the management hierarchy. |
It shows the relationship between top level management and various departments of the enterprise. |
Responsibility |
It means not to delegate the responsibility of superior. |
It provides relief to superior. |
Technique |
It is the technique to get a job done by a subordinate. |
It is management philosophy, as well as technique, are involved. |
Control |
Here, superior exercises total control over subordinate |
Here, superior exercise general control over subordinate. |
Purpose |
its purpose is to reduce the work load of authority |
It's purpose is to encourage employees to participate. |
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