The need of decentralization of authority for an organization presented by the following points:
- Reduce the burden of the top executive: Decentralization is the distribution of power and authority. It relieves top executives from routine and day-to-day time-consuming works. This enables them to devote greater attention to other important organizational issues such as planning, policy, strategy formulation and decision making.
- Facilitate diversification: Decentralization facilitates diversification of products, activities and market. Eaxh department is given sufficient autonomy for innovations and creativity. It increases both productivity and profitability.
- Permits quicker and better decisions: The decentralization facilitates quick decisions as authority to make a decision is placed in the hands of those who are really responsible for executing the decisions. As a result, more accurate and faster decisions can be taken and avoids red tap ism and delays.
- Management development: Decentralization encourages managers to exercise freedom in decision making. They learn to exercise judgment. They get the opportunity to utilize their ability and talent. This develops managerial competency. This also promotes innovation and creativity.
- Environmental adaptation: Decentralization helps an organization to adapt to fast- changing environment because the subordinate’s personal thinking are also given due priority.
- Improved teamwork: Both managers and employees share the decision-making authority which integrates the employees as one team and develops team spirit among them.
- Motivation: The subordinates or managers, receive rights, powers and prestige and status through this decentralization of authority. They have greater opportunity of leadership and participation, which increases their morale and motivates them in achieving highest productivity. This also improves team spirit and group cohesiveness among the subordinates.
- Effective supervision and control: It is said and accepted in many cases and circumstance that the greater degree of decentralization, the more effective is the supervision and control. Supervision and control can be made effective by evaluating the per