An organisation would choose to be decentralized because of the following importance of decentralization:
1. Develops Initiative among Subordinates:
Decentralisation helps the managers at the lower levels to take all those decisions, which are for the betterment of organisation, on their own and to develop solutions for solving the various problems they face. This helps in enhancing confidence and self-reliance among the employees.
2. Develops Managerial Talent for the Future:
Decentralisation provides a chance to the employees to prove their abilities by handling various assignments independently. Such opportunities to take decisions increase their knowledge & experience at all levels. It also provides qualified manpower for fulfilling the top positions through promotions.
3. Quick Decision Making:
Decentralization promotes independent and quick decision making by subordinates as they are close to the operations and are in constant touch with all activities of their departments. Approval from various levels being not required, decisions can be taken much faster on their own.
4. Relief for Top Management:
It relieves the top executives of excessive workload as the common and day to day routines are assigned to the subordinates. The saved time can be utilized by them in making strategic plans and providing direction to the organisation for further growth.
5. Facilitates Growth:
Decentralisation enables the managers at the lower level as well as the departmental heads to perform to their full potential and also develops a sense of competition among the departments. Such competitive spirit obviously contributes a lot towards growth of the enterprise too.
6. Better Control:
Decentralisation helps in ascertaining the contribution of each department in meeting the objectives of the organisation by using various control techniques like balance score card, management information system etc. Thus, in case of shortfalls, corrective decisions can be taken promptly at the right time.