Decentralisation means diffusion of authority. The dispersal of authority of decision-making to the lower level management is termed as decentralisation. Decentralisation of authority is a fundamental phase of delegation and the extent to which authority is not delegated is called centralisation. According to Fayol "Everything that goes to increase the importance of the subordinate's role is called decentralisation."
Decentralisation in relation to office denotes disperse of office services and activities. The necessity of decentralisation of office services occurs when official activities are performed at functional departmental level. Thus, decentralisation in relation to office may include departmentation of activities. When authority is dispersed, decentralisation is present.
The need for decentralisation is felt when the business grows in its size which necessiates diversification of office activities. Decentralisation occurs at the time of decisions of routine nature but if decisions are vital, the authority is not decentralised. The technological development, political factors, availability of managers also affects the degree of decentralisation. Decentralisation does not exist in its pure sense. There is a mixture of the two because some activities are centralised and some are decentralised. Advantages of Decentralisation
Advantages of Decentralisation:
1. Distribution of burden of top executive—Decentralisation enables to its executive to share his burden with others at lower levels because here authority is delegated. The top executive is relieved of some burden and concentrates his activities to think for the future of the organisation.
2. Increased motivation and morale — The morality of the employees are increased because of delegation of authority. Decentralisation helps to increase employees morale because it involves delegation. The employees are motivated to work.
3. Greater efficiency and output—Decentralisation gives emphasis on care, caution and enthusiastic approach to the work which in turn results in increased efficiency and output. This is possible because it involves delegation of authority and responsibility.
4. Diversification of Activities—Decentralisation helps in diversification of activities. It crests more employment opportunities because new managers are to be entrusted with new assignments.
5. Better Co-ordination—The various operations and activities are co-ordinated in a decentralised set up.
6. Maintenance of Secrecy — Decentralisation enables to maintain secrecy without much cost and unnecessary trouble.
7. Facilitate effective control and quick decision-Decentralisation enables to measure the work according to standard easily and quickly. This facilitate taking up quick decision.
Disadvantages of Decentralisation:
A decentralised organisation suffers from the following disadvantages:
1. More cost—Decentralisation is costly because it encourages duplication of functions and equipments. As it is costly, it cannot be adopted by small organisations.
2. No specialisation — Specialisation suffers in decentralisation because everyone becomes jack-of-all-trades but master of none. So specialisation is affected.
3. Need more specialists-In decentralisation more specialists are needed. The services of specialists are not utilised effectively and efficiently, as they are large in numbers.
4. No uniform action — It becomes difficult to maintain uniformity in action because routine and methods differ from organisation to organisation and department to department.
5. No equitable distribution of work — It becomes difficult to distribute workload equitably among different employees.