Page 121 - DMGT402_MANAGEMENT_PRACTICES_AND_ORGANIZATIONAL_BEHAVIOUR

Management Practices and Organisational Behaviour

Notes 4. When less checking is required on the decision. Decentralisation is greater when no check
at all is made; it is less when superiors have to be informed of the decision after it has been
made; still less if superiors have to be consulted before the decision is made. When fewer
are consulted and if they are at a lower level in the organisation's hierarchy, the degree of
decentralisation is more.
It is, therefore, clear that the application of the two concepts is greatly influenced by factors
more than one.
In modern times when we have a multiplicity of administrative and political organisations,
there is a need to use the centralised and decentralized patterns of authority for the maximum
benefit of the people.

Example: Functions such as accounting and purchasing may be centralised to save costs.
Whilst tasks such as recruitment may be decentralised as units away from head office may have
staffing needs specific only to them.
That is a pre-requisite of a welfare or service state. There has been a growing public opinion in
favour of decentralisation but at the same time some political forces and the bureaucracy do not
favour a decentralised system for obvious reasons. Pfeiffer and Sherwood comment,
"Decentralisation will always experience a certain amount of epidemic conflict between those
whose purpose is to coordinate and those who resist coordination. What is needed is to learn a
way of life in which the coordinating process will be least restrictive, in which people can
pursue their individual goals to the maximum and yet work in harmony toward group goals
with others who look upon things differently."
Certain organisations implement vertical decentralisation which means that they have handed
the power to make certain decisions, down the hierarchy of their organisation. Vertical
decentralisation increases the input, people at the bottom of the organisation chart have in
decision making.
Horizontal decentralisation spreads responsibility across the organisation. A good example of
this is the implementation of new technology across the whole business. This implementation
will be the sole responsibility of technology specialists.

Advantages of Centralised Structure for Advantages of Decentralised Structure for
Organisations Organisations
Senior managers enjoy greater control over the Senior managers have time to concentrate on the most
organisation. important decisions (as the other decisions can be
undertaken by other people down the organisation
structure.
The use of standardised procedures can results in Decision making is a form of empowerment.
cost savings. Empowerment can increase motivation and therefore
mean that staff output increases.
Decisions can be made to benefit the People lower down the chain have a greater
organisations as a whole. Whereas a decision understanding of the environment they work in and
made by a department manager may benefit their the people (customers and colleagues) that they
department, but disadvantage other departments. interact with. This knowledge skills and experience
may enable them to make more effective decisions
than senior managers.
The organisation can benefit from the decision Empowerment will enable departments and their
making of experienced senior managers. employees to respond faster to changes and new
challenges. Whereas it may take senior managers
longer to appreciate that business needs have changed.
In uncertain times the organisation will need Empowerment makes it easier for people to accept and
strong leadership and pull in the same direction. make a success of more responsibility.
It is believed that strong leadership is often best
given from above.

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