1. The following advantages are attributed to a decentralized organizational structure:
• The manager making the decisions is closer to the situation and can make better and faster decisions.
• Top management has more time for strategic decisions and long-range planning because operational decisions are made at lower levels.
• Greater freedom and responsibility provide greater opportunity for individual development, innovation, and creative decisions.
• Excellent training in decision making is provided for lower level managers resulting in a pool of trained managerial talent.
2. The following disadvantages of a decentralized structure and their effect on RNB are as follows.
• There is an increased risk of loss of control. RNB does not have sufficient control over its individual banks as evidenced by the unique “packaged” accounts, inter-bank competition, and conflicting advertising.
• There is less information flow to top levels. The individual banks sometimes failed to notify the executive office of their plans and programs.
• Duplication of effort may result. This is the case at RNB as evidenced by advertising campaigns for the state-wide group and for the individual banks.
• An important advantage of centralized structures is the opportunity to more effectively employ internal accounting controls systems to prevent and detect errors and fraud. These types of systems are especially important in financial service companies where the assets are so liquid.