The reasons for the decentralisation of authority in an organisation are:

According to Allen, “Decentralisation means the systematic effort to delegate to the lowest levels all authority except that which can only be exercised at the central points”. Everything that goes to increase the importance of the sub-ordinates’ role is decentralisation. In a large and complex organisation, management cannot centrally control for everything.

Decentralisation of office means each department of the concern possesses its own office. There is no central office. Each department has supervisors, clerks, typists, etc. There is a delegation of authority to the lower levels.

Thus the authority to take decision is delegated to the managers, Purchase Managers, Sales Managers, Works Managers, etc. The Managers are responsible to their superiors.

The reasons for the decentralisation of authority in an organisation are:

1. Larger size of an enterprise needs decentralisation. It is difficult for the top management to make all the decisions at a time.

2. Growth and diversification of activities leads to overburdened work. It is difficult to have an effective direction when the work is unwieldy.

3. The increase in competitive market calls for decentralisation.

4. Training of executives leads to decentralisation.

5. External and internal factors lead to decentralisation.