Q.Decentralisation is an optimal policy. Explain why an organisation would choose to be decentralised.
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Start your 14-day free trial to unlock the full solution →Decentralisation means delegating decision-making authority down to the lowest levels of management. Organisations adopt it because it develops future managers and their initiative, speeds up and improves decisions taken near the point of action, relieves top management for strategic work, provides better control through smaller units, and increases growth and employee motivation.
Decentralisation refers to the delegation of authority throughout all levels of the organisation, so that decision-making power is spread down to the lowest levels rather than concentrated at the top. It is 'optimal' because a completely centralised or completely decentralised organisation is impractical; a balanced spread of authority gives the best results. In the Plus Two Business Studies (Organising) chapter, the following reasons explain why an organisation would choose to be decentralised.
1. Develops initiative and managerial talent among subordinates. When authority is pushed down, lower-level managers get freedom to take decisions and to act on their own judgement. This develops their confidence, initiative and problem-solving ability, and identifies and trains future managers for higher positions.
2. Quick and better decision-making. Decisions are taken by the managers who are closest to the point of action and who understand the situation best. There is no need to refer every matter up the hierarchy, so decisions are faster and usually more accurate and practical.
3. Relief to top management. By handing routine and operational decisions to lower levels, top management is freed from day-to-day details. It can concentrate on important policy matters, planning and coordination, which improves the overall effectiveness of the enterprise.
4. Facilitates growth and better control. Decentralisation gives departments and divisions the autonomy to function as self-sufficient units, encouraging healthy competition and expansion. It also allows performance of each unit to be measured separately, giving better control and clearer accountability.
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