Question

Decentralisation has both costs and benefits. What are some reasons why organisations may choose to decentralise? What are some benefits and costs of decentralisation?

(b) There are many purposes for having performance measures and these include driving future improvements, lifting the skill level of managers and employees and to communicate the priorities of the organisation. However, there are negative behavioural effects of performance measures. Outline some of the steps that can be taken to minimise these negative behavioural effects.

Answer 1

Decentralization refers to a specific form of organizational structure where the top management delegates decision-making responsibilities and daily operations to middle and lower subordinates. The top management can thus concentrate on taking major decisions with greater time abundance. Business houses often feel the requirement of decentralization to continue efficiency in their operation.

Benefits of decentralisation are:

*Decentralisation relieves the top executives of the burden of performing various functions.

*When the authority is decentralised, executives in the organisation will get the opportunity to develop their talents by taking initiative which will also make them ready for managerial positions.

B)

Negative side effects produced by the performance measures process include a rise in unethical behavior, a practice whose incidence has increased recently times. Unethical behavior, influencing results through unapproved means in order to ensure target achievement.

cheating goes up in environments where target failure is severely judged.

setting unrealistic targets that most likely will lead to negative behaviors.

steps that can be taken to minimise these negative behavioural effects are:

Measure the right things: It is important to make sure that only the right things are measured, especially if the performance results are linked to reward and punishment.

If failing to meet the targets is seen as a temporary part of a learning process – a practice observed in high-innovative organizations – then employees will be more open to accept the risks in setting challenging targets that will eventually enhance performance.

especially if the performance results are linked to reward and punishment when it comes to target setting, especially when it is linked to rewards systems, as if it leads to negative behaviors it will negatively influence the working environment. This results in unhappy employees, low productivity, and most importantly, it may even lead to the loss of human lives.