ADVERTIsem*nTS:
We can establish definite sequence for accomplishing effective decentralisation in an enterprise. It calls for the following steps:
1. Establishing appropriate centralization:
There should be centralised management which becomes the nerve centre of the enterprise. All the plans are formulated and communicated for the overall guidance and direction of each part of the company’s activity. Organisation structure is planned, major activities are coordinated and control is exercised in terms of plans developed.
ADVERTIsem*nTS:
Diversification requires effective management. Without the strong element of long term planning, organisation, co-ordination and control, the diversified company is in danger of break down at any time. Just as complete authority is seldom delegated, it is rarely centralised. The centralised management makes policy decisions while the operational and routine decisions are left to be made at the lower levels.
2. Developing managers:
In a centralised management, there is a need of few top managers who make ultimate decisions. But in decentralised management, there is a need of management personnel at every level of the organisation.
Companies that favour decentralisation may face shortage of managers. Thus, there is a need for the development of managers who possess independent thinking and capabilities for making decentralisation effective.
3. Providing for communication and co-ordination:
ADVERTIsem*nTS:
Managers in a decentralised organisation tend to frame the policies according to their own likings without regard for the needs for the other units. As such there is need for
communication and co-ordination. Managers are required to know the thinking of both centralised and other decentralised managers, only then they will be in a position to achieve uniform plans in an organisation. Their time of action should be planned so that it matches and integrates with other company units.
4. Establishing adequate controls:
Decentralisation implies entrusting responsibility to each manager according to his capacity i.e., he should be able to do it without harming the purpose and integrity of the enterprise as a whole.
The autonomous manager is given authority to act independently to the extent which can be checked by the centralised management. In order to make decentralisation effective, management must develop system to evaluate their performance.
5. Providing appropriate dispersion:
When there is dispersion or physical separation of headquarter offices from the product plant (operating plants), interference by central staff and top management can be considerably avoided. Small dispersed plants tend to promote motivation and yield higher productivity.
