Decentralization of authority
the extent of distribution of power from management to subordinates determines whether an organization is centralized
or decentralized. when a part of a manager's work and power is assigned to subordinate, this is called delegation. the latter involves the granting of responsibility, authority and accountability. responsibility is a duty to do the job. authority is the power to do the job. accountability is an obligation to do the job.
there is decentralization of authority when authority is widely spread in the lower levels of the organization. On the other hand, if authority is concentrated at the upper levels, there is centralization of authority. there are several factors which require decentralization of the enterprise. One is the external environment of the enterprise. If it is complex and unpredictable, lower management should be allowed to make the decisions. Another is if the decisions are not risky, then it can be delegated to the lower levels of management. Also, if the lower level-management is competent in decision making skills, top management is encouraged to decentralization authority.