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 statement that in order to make decentralization successful, decision making should be pushed down to the lowest organizational level capable of making timely, informed and competent decision. In that case, it helps to achieve the goal of agility by quickly making decisions as per market demand. Moreover, it helps to build the next line of leaders who may run the organization in future. If the decision making doesn’t reaches to lowest level of organization, it will remain to be centralized in spirit. Example: Let us consider an MNC firm say General Electric. The headquarters is in United States and is present in over 100 countries. In India, they have the MD to take care of local operations. Also, they have manufacturing plants in India from where goods are exported to other countries. If at any point decision needs to be taken to change layout of the plant in order to improve flow and efficiency, it needs to be taken by plant manager running the Operations. If the decision making power is not vested to plant manager, then it will not help to make decision quickly. Hence, it becomes important to vest power of decision on people who are competent and directly associated with work. Seeking approval from India leadership team may delay the activity and lead to loss of efficiency. Moreover, it may negatively impact morale of plant manager as he will have to justify the proposal at different levels in the organization. So, it becomes important to give decision making power to lowest organizational level capable to make decisions.