Decentralization is the process of distributing or dispersing functions, powers, people or things away from a central location or authority.
Importance of Decentralization are:
1. Develops initiative among subordinates: When lower managerial levels are given freedom to take their own
decisions they learn to depend on their own judgment and develop solutions for the various problems they
encounter. So, decentralization policy helps to identify those executives who have the necessary potential
to become dynamic leaders.
(2) Develops managerial talent for the future: Decentralisation gives the subordinates with skills a chance
to prove their abilities and creates a reservoir of qualified manpower that can be considered to fill up more
challenging positions through promotions.
(3) Quick decision making: In a decentralized organization, decisions are taken at levels which are nearest
to the points of action and there is no requirement for approval from many levels. So, more accurate and
faster decisions can be taken as the subordinates are well aware of the realities of situations.
(4) Relief to top management: Decentralisation leaves the top management with more time which they can
devote to important policy decisions as they decentralize authority for routine operational problems.
Further decentralisation diminishes the amount of direct supervision exercised by a superior over the
activities of a subordinate because they are given the freedom to act.
