Decentralization

Decentralization denotes a specified form of an association’s structure where executive responsibilities are delegated to the employees by the management of the company. Henceforth allowing the management of the company to focus on critical matters. In so doing, the business promotes maximum participation from the employees thus increasing profits. Similarly, decentralization encourages team work, which is responsible for maximum work output from the employees. As such, this form of governance has aided most companies in dealing with obstacles, through comping up with new ideas of dealing with the challenges they face. On the other hand, decentralization also has its own drawbacks for instance, some employees may joyride on the effort of others. This consequently brings up the issue of underperformance from some employees within the company. For that reason, this paper will basically focus on the benefits as well as problems associated with decentralization.

Decentralization is significant particularly in a company whose leader is a dictator, simply because it reduces the chances of making mistakes. This is so because solutions generated by more than one person are better as compared to those generated by a single person. A group of people working together to solve a common problem are very effective as opposed to one person. A single person may have limited remedies to the problem, whereas a group of people will have multiple solutions to the problems. This in turn helps in improving customer service and the quality of products or goods being sold by the company.

Secondly, decentralization, leads to the delegation of power, from the top level to the lower level of the company’s management. This brings about the distribution of tasks from the manager to the employees, thereby giving them the authority to come up with different ideas of improving performance. The director of the company, is then allowed to deal with critical issues facing the company, such as competition from other companies, raising essential finance, and starting new businesses. Delegation of tasks boosts the morale of the employee, which encourages maximum cooperation from the employees. In addition, this improves employee supervision, since all the employees will be busy with the tasks assigned to them, thus allowing the company to run smoothly.  

In case of an emergency, in the event that the owner of the business is far from the office, the employees can come up with a common idea of handling the situation. Employees in a decentralized company are well adapted to decision making thus they may not rely wait for orders from their manager. This consequently enables the company to tackle issues of urgent concern within the shortest time possible, hence wasting limited time in handling disasters. The manager’s absentia may not therefore affect day to day running of activities in the company. The productivity of the company may not be compromised under any circumstance.

Time management in a company is critical, as it enables the company to achieve its goals. Delegating tasks to the employees enables the management of the company to manage time, through allowing them to focus on key issues facing the company. For instance, the employees may focus on improving customer services, thereby coming up with multiple solutions, since they deal with clients directly. As a matter of fact, the issue of customer satisfaction will be dealt with on a single day, in that way the company improves the delivery of services, which leads to increased profits. The management of the company is also able to point out the challenges facing different departments in the company, through analyzing the performance of each teams.

In as much as decentralization may be advantageous to the performance of a company, it has a significant number of drawbacks, which include the following.  Among the drawbacks associated with decentralization is horizontal dilemma (Sanford, 2). Horizontal dilemma, is whereby decision making is delegated from the manager right to the lowest department in the company. As was the case wit Sears and Roebuck, the store managers ended up making decisions which negatively impacted the future of the company. In a bid to show the management of the company how effective they were, the store managers would advertise a product at a cheaper price. Afterwards, they would stock limited amounts of the products, hence selling out in the morning hours. Clients would then arrive at the store only to find the products sold out, and they would then opt to purchase expensive products.

Horizontal dilemma consequently depicted the desperation of the store managers, since they were tasked with the mandate of producing great results. This move was however not beneficial to the company, as it led to a bad reputation. In addition, this displayed incompetence from the managers, since they did not take part in the implementation of such decisions, which eventually led to huge losses. Similarly, this may lead to conflicts within the company, due to divisions between heads of different teams. Managers in different teams within the company may come up with decisions which may undermine the decisions of their counterparts, hence negatively impacting the general performance of the company.

Decentralization leads to the replication of staff effort, consequently each team must be independent, with its own purchasing and marketing staffs. This increases costs within the company, since the company will be required to pay more employees. Furthermore, the cost of running employees’ teams may also be high, thus interfering with the with the company’s budget. In order to run such teams highly paid managers should also be appointed, a process which makes it costly for the company. In addition, this leads to problems with hierarchy whereby managers on the lower level may abuse their powers. Employee-employee relationship may consequently be at risk, since some employees may feel superior to others a move which leads to underperformance.

The company may also experience poor coordination since even procedures may not be followed. Low level managers tend to come up with their own rules and guidelines, which may conflict with those of top-level managers. The flow of information from the manager to different departments within the company may therefore be affected, a process which eventually affects work output. Finally, in situations where the market changes rapidly, it is difficult to adapt decentralization. This is so for the reason that tactical decisions can only be made by the top-level manager. Henceforth decentralization of power within a company, requires a careful consideration of factors which matter the most within the company, in order to protect it from incurring unwanted costs. In general, employees in different teams may not have a common goal which may eventually affect the flow of ideas in the teams.