Question

Decentralisation of authority implies a systematic dispersal of authority at all levels of management for decision making. In the light of the above statement, explain any four merits of Decentralisation in an organisation.

Answer 1

The four merits of decentralisation in an organisation, explained in the context of the systematic dispersal of authority for decision-making, are as follows:

1. Quicker Decision Making: Decentralisation enables for faster decision-making by distributing authority across many levels of management. Lower-level managers and staff are empowered to make decisions based on their expertise or responsibilities, without requiring approval from higher-level authority. Agility allows the company to respond quickly to changing market conditions, customer wants, and emerging opportunities, increasing its competitive advantage.
2. Promotes employee empowerment and morale: Decentralisation empowers employees by delegating decision-making authority to lower-level management and frontline people. Allowing employees to make decisions and take ownership of their work increases their sense of responsibility, satisfaction, and commitment to achieving organisational goals. Empowerment boosts employee morale, motivation, and job satisfaction, resulting in higher production and performance.
3. Fosters Innovation and Creativity: Decentralisation fosters innovation and creativity by bringing unique viewpoints and ideas from various levels of management. Lower-level managers and employees with operational expertise can provide unique insights and new ideas to handle difficulties or capitalise on opportunities. Decentralising decision-making authority allows for increased creativity and agility, encouraging an innovative and continuous improvement culture.
4. Facilitates localised decision-making: Decentralisation enables specialised decision-making for individual circumstances, markets, or regions. Local managers have a greater awareness of market dynamics, client preferences, and cultural subtleties, leading to more responsive and appropriate decisions for local needs. This customised strategy enables the business to react to changing market conditions, improve customer satisfaction, and successfully capitalise on local opportunities.