3 common limitations of decentralisation

3 common limitations of decentralisation

(1) It measures cost:

Decentralisation results induplication of staff and may like the cost of administration, unless the business size is large enough, the overhead costs of decentralisation would be too heavy. Each division is expected to carry large group of staff at heavy cost.

(2) Conflict of interest:

The interest of division heads will not coincide with company objectives. Too many division pose problems of coordination and control.

(3) Need for Generalist Manager:

For success in decentralisation, we need capable managers will general management ability. Often capable managers may not be available.

As pointed out by Davis ‘Decentralisation should be halted before right orders go to wrong subordinates and right subordinates report to the wrong superiors’.