CONTIGENCY FACTORS IN DECENTRALISING

CONTIGENCY FACTORS IN DECENTRALISING

  18:04    Rahul R

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Ø  Purpose and goals of an organization.

Ø  Knowledge and experience of executive.

Ø  Organization size.

Ø  Geographical dispersion.

Ø  Technical complexity of tasks.

Ø  The time frame of decisions.

Ø  The importance of the decision.

Ø  Views of subordinates.

Ø  Planning and control procedures.

Ø  Environmental factors. 

DELEGATION VS DECENTRALISATION

       Delegation of authority is the process by which managers legitimise and empower the work of    subordinates.

 Decentralisation infact,is a fundamental phase of delegation.

DIFFERENCE B/W DELEGATION  & DECENTRALISATION

DELEGATION

•       Pushing  authority down to  subordinates

•          Concerned with sharing of either managerial work or operating work b/w a manager & a   subordinate.

•       Common  philosophy.

•       Occur on individual basis.It is the process

DECENTRALISATION

•       Determine what authority      to push down to subordinates.

•       Concerned with sharing of managerial work.

•        managerial philosophy.

•       Organisation as a whole.

•       It is the result

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CENTRALISATION AND DECENTRALISATION

CENTRALISATION AND DECENTRALISATION

  17:59    Rahul R

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CENTRALISATION

• The process of systematically retaining power and authority in hands of higher level managers.
• According to Allen,centralisation is the systematic and consistent reservation of authority at central points within the organisaton.

THE CIRCUMSTANCES FORCING MANAGERS TO RESERVE AUTHORITY AND CENTRALISE DECISION MAKING POWER

• To facilitate personal leadership.
• To provide for integration.
• To handle emergencies.

DECENTRALISATION

•       Decentralisation is the pushing  down of authority and power of decision making to the lower levels of an organisation.

•       Decentralisation is said to be greater because

v  When more important decisions are made at lower  levels

v  When more functions are affected by decisions made at lower levels.

•       When the checking on the decisions made at lower levels is minimal

TYPES  OF DECENTRALISATION

1. PROFIT CENTRES

               It is a responsibility centre whose budgetory performance is measured by the difference between revenues and costs –in otherwords ,profits.

v  Responsibility centre is a subunit headed by a manager who is responsible for achieving

      one or more goals.

            2. COST/EXPENSE CENTRES

      It is a responsibility centre where budgetary performance depends on  achieving goals by operating   within standard cost limits.

.  3.  INVESTMENT CENTRES

             It is a responsibility centre whose performance is evaluated on the basis of return on investment.

ADVANTAGES OF DECENTRALISATION

It reduces the workload of an overburdened executive.

 -It brings the decision making process closer to the scene of the action.

-It facilitates product diversification.

-It gives  individuals an oppurtunity to learn by doing.

-It often results in effective controls  and performance measurements.

-It is associated with the profit centre principle.

DISADVANTAGES OF DECENTRALISATION

• Conflict
• Cost
• Profit centre concept 

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