Question

For decentralized decision making to be successful, it should be predicated on a belief that decision-making authority should be pushed down to the lowest organizational level capable of making timely, informed, competent decisions. Do you agree or disagree? Why? Cite an example that helps defend your position

Answer 1

I agree with the above statement. When the centralization of authority is devolved to lower levels, it is termed as Decentralization of authority. Decentralization pushed down to the lowest organizational level capable of making timely, informed, competent decisions for various reasons. First being that owing to more autonomy across all levels of the Organization, it benefits the span of control of the Top level managers which is minimum in number thus ensuring more efficiency in management without the top management always have to be bothering itself to the lower levels, especially when the work is routine and operational in nature. Secondly, it is to be noted that the flow of authority gets devolved across the organization under Decentralization such as to the Branches and Departments; or to various divisions and subsidiaries where in apart from the reporting technique, various other knowledge-related information flows from the lower levels to the upper levels of the management. This encourages open communication within an organization, thereby faster responses and actions taken thereupon. It further helps to establish better and cordial relations with the employees at all levels of the management. Moreover, with such democratic participation in the work environment, sense of accountability on the part of the employees as well as more transparency into the system is ensured, which is why predicating on the above belief is pragmatic. In addition, with willing cooperation solicited from the employees due to their significant role in the decision-making process, the overall efficiency of the Organization also increases thus boosting the earning capacity of the same.

For example, Mc Donald’s Franchise business in India is one of the most popular fast-food chain in the country. McDonald’s was once popular for its turnaround time. Therefore, it would not take more than 2 minutes a time to serve per customer request. This was so because customization in the menu was limited, that gave more space to the McDonald’s kitchen to produce the items in bulk and that to keep the common materials across the items almost ready to be added in the servings at all times. The standardization of the process would make the operations thus faster and need not any supervision from its San Bernardino’s office. Decentralization would hence be feasible in this case and therefore when decision-making authority is pushed down to the lowest organization level in India, it made the operations smoother, faster and informed decisions by the lower level competent parties.