Definition of Decentralization | advantage and disadvantage, types

In this session, we will discuss the definition of decentralization, and the advantages of Decentralization, the disadvantages of Decentralization, types of Decentralization, factors of Decentralization, and the importance of Decentralization.

Definition of Decentralization

Decentralization is that type of character display in the business organization. Which is the opposite of centralization. centralization means the only one management has authority to make the decision but in decentralization, as whole employees have authority to make decisions. (definition of decentralization)

Decentralization is referred to as a form of an organizational structure where there is the delegation of authority by the top level of management to the middle level of management and lower level of management in the organization. Decentralization is the transfer of decision-making authority and responsibility downwards. Every organization practices some degree of decentralization. it is autonomy in decision-making.

According to Louis A. Allen, “Decentralization refers to tire systematic effort to delegate to the lowest level all authority except that which can only be exercised at central points.”

Earl. P. Strong defines the definition of decentralization, “Decentralization means the division of a group of functions and activities into relatively autonomous units with overall authority and responsibility for operating delegate to time of cactiunit. Decentralization pushes down decision-making to managers who are closest to the action. The authority is distributed throughout the organization. (definition of decentralization).

In the session on the definition of decentralization, we will also discuss the advantages of decentralization.

The advantages of the decentralization process can be dedicated to the following points.

• Quick and better decision
• Growth and Diversification
• Relives executive burden
• Management Development
• Higher motivation and morale
• Better supervision and control
• Satisfaction of human needs

Quick and Better decision

According to decentralization in the organization. If in the mind of the managers any idea, then they don’t have to take approval by the top level of management. They can execute quickly and better decisions. Whereby decentralization disperses decision-making authority close to unit managers who execute decisions. it reduces problems of communication and red tape. this leads to quicker and better decision-making. Risk can be sprea out.

Growth and Diversification

Decentralization facilities diversification of product, raising the necessary finance, obtaining licenses, and starting new lines of production and solving crucial problems of the business concern. while less important and routine may be left to the middle and supervisory levels. Profit centers can be established with independence in decision-making. local conditions can be addressed. (definition of decentralization)

Relives executive burden

According to decentralization. it relieves the top level of management of the burden of performing various functions in the organization. But in the organization centralization play that role whereby authority puts the whole responsibility on the shoulders of the top level of management and his whole group of members. Decentralization reduces the time at the disposal of top-level management who should concentrate on other important issues of strategic relevance. So, the only way to lessen their burden is to decentralize the decision-making authority to the subordinates.

Management Development

When the authority is decentralized in the organization. The organizational managers will get to develop their skills by taking initiative, which will also make them ready for managerial positions also develops managerial competency. it also promotes innovation and creativity. The growth of the organization greatly depends on talented managers.

Higher motivation and Morale

Decentralization is an amazing character display in the life of organizational subordinates. Which provides power, prestige, and status to organizational subordinates. it increases the motivation and morale of organizational subordinates that’s because of more changes in the organizational climate. (definition of decentralization)

Better Supervision and Control

According to decentralization in the organization, there is better supervision and control as the whole organizational subordinates. The lowest level of organizational management will have the authority to make independent decisions. As a result, they have a thorough knowledge of every assignment under their control and are in a position to make amendments and take corrective action.

Satisfaction of Human needs

Decentralization is an amazing tool in the organization. Which is critical for satisfying human needs of independence, prestige, power, and status. This satisfaction helps in building a cadre of satisfied managers. they feel responsible for the organization’s betterment. (definition of decentralization).

In the session on the definition of decentralization, we will also discuss the disadvantages of decentralization.

The disadvantages of the decentralization process can be dedicated to the following points.

• Difficult to Coordinate
• Uniform policies not followed
• More financial Burden
• Require qualified personnel
• Conflict

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