With the help of any four points, explain the importance of decentralisation in an organisation

CBSE Class 12 CBSE Class 12 Business Studies
,
1

With the help of any four points, explain the importance of decentralisation in an organisation.

or
What is meant by 'decentralisation of authority? Explain any four points, why decentralisation of authority is important?
or
What is meant by decentralisation? State any four points, why decentralisation is important?
or
Decentralisation is an optional policy. Do you agree? Explain why an organisation would choose to be decentralised?

2

Yes, decentralisation is an optional policy, yet it is important in the organisation.
It refers to systematic delegation of authority at all levels of management and in all departments of organisation to take decision.
Importance of decentralisation :

  1. Develops Initiative Among Subordinates
    It helps to promote self-reliance and confidence amongst ’ the subordinates. This is because, lower managerial levels have been given freedom to take their own decisions and they learn to depend on their own judgement. It also helps to identify those executives, who have the potential to become dynamic leaders.
  2. Develops Managerial Talent for the Future
    Formal training along with experience of handling independent assignments helps to create a reservoir of qualified and capable managers, who can take up more challenging positions in the upcoming ventures of the organisation.
  3. Quick Decision-making
    Under decentralisation, authority to make decisions is placed in the hands of those, who are responsible for executing the decisions. Since, decisions are taken at levels nearest to the point of execution, there is no delay or distortion of information.
  4. Relief to Top Management
    It helps to reduce the amount of direct supervision over subordinates by giving them freedom to take decision and act on their own. This reduces the workload of top executives and they can devote their time and attention to important policy matters.
  5. Facilitates Growth
    It provides greater autonomy to lower level managers and departmental heads.
    This encourages them to function more efficiency to prove their supremacy, and facilitate expansion and growth of the organisation.