Following are the important advantages of decentralization which are helpful in business management.
Creation of Good Atmosphere and Development of Morals
Job satisfaction is an important essential of a good management. A worker who likes his job and is satisfied with its nature puts more efforts to attain the objective. On the contrary dissatisfied worker is disinterested consequently his efforts are at its minimum. Since decentralization takes ego and vanity of human beings into consideration it is helpful in raising the morals of the workers. The result is more work, no dispute and good working atmosphere. Decentralization relieves a worker from the tension with which he suffers when he knows that he has to wait longer for even smallest decisions, this reliving of mental tension help in creating good atmosphere.
Reduction in the Burden of Top Executives
Decentralization helps in reducing the burden of the top executives and they delegate their power to their subordinates and make them free for more important work requiring their urgent attention. Policy framing, programme scheduling and important decision making are a few of the important jobs which top executives have to undertake and give proper attention. Time is short at the disposition of the top executive. He has to fruitfully utilize every minutes on his disposal. For this he has to delegate. Decentralization make him more alive, alert, smart and sharp. His efficiency and output both increase in decentralized organizational structure.
Importance to Production and Marketing Functions
There is no denying of the fact that the main objective of an enterprise is to increase its profitability. For this production as well marketing functions have to show best results. Human element is involved in both. Decentralization touches this very human element in order to maximize the efforts on the part of those who are at work. Obliviously production and marketing functions gain importance in decentralized form of organization.
Decentralization makes diversification effective. Diversification of products in particular helps in taking the advantage of market conditions. This helps in increasing both the productivity and profitability. Labor stands benefited since there is more chance of specialization and standardization.
Development of Managerial Faculties
Each one has managerial skill and talents in his own sphere. Even an ordinary worker at the lowest level knows how to manage his own affairs in best possible manner. The skill is acquired and faculties are developed. Decentralization helps in the development of such faculties if authority is properly delegated and accepted by the delegates in right earnest.
The more the decentralization the more effective becomes the controls as open of control is reduced with every decision of decentralization.
Decentralization reduces the need of co-ordination in the enterprise as a whole. Co-ordination efforts are needed only in the segments created by decentralized system of organization. This makes the co-coordination more effective.
Though decentralized organization is costlier and often quick decision is not possible particularly in emergency when the lower level worker wish not to take the decision of their own but the decentralization surely leads to progress and prosperity. Last but not the least decentralization does not mean “Loose authority”.