What is the difference between Delegation and Decentralization?
Posted in Delegation of Authority |
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Sometimes the terms delegation and decentralization are used interchangeably but they are not the same. Even if in both the cases, dispersal of authority is involved, but decentralization can be described as the extension of delegation. The major points of difference between the two can be described as follows.
| Delegation | Decentralization | |
| Nature
|
Delegation is individualistic. In this case there are two persons involved, superior and subordinate. | The process of decentralization is totalistic in nature. In this case, delegation from the top level management to the department or divisional level is involved. |
| Control
|
In case of delegation, the control lies with the superior or the person delegating the authority. | In case of decentralization, the top level management of the organization has minimum control. All the powers are given to the concerned departments or units. |
| Need
|
The process of delegation is necessary to get things done by others. Unless the authority has been delegated, it becomes difficult to assign responsibility. | The process of decentralization is optional because it can be described as the philosophy adopted by the management. Therefore it is up to the top level management of the organization to disperse authority or not. |
| Responsibility
|
In delegation of authority, the responsibility remains with the person delegating the authority. If it needs to be noted that while authority can be delegated, responsibility cannot be delegated. | In this case, the head of the department is held responsible for all the activities taking place in the department. The head of the department as the show better performance by the whole department. |
Maintaining a Balance between Centralization and Decentralization
The processes of centralization and decentralization can be described as two opposite ends in the organization. However in practice, it is true that it is not possible to achieve complete centralization or decentralization in the organization. In case of a highly centralized organization, the process of decision-making becomes costly and delayed. At the same time, the operations of the organization also suffer as a result of lack of authority and different levels of management. In case of a decentralized system, the authority a separate throughout the organization and the control is given to functional managers. For the purpose of keeping abreast with the working, the top-level management retains some powers and controls. Some level of centralization and decentralization needs to be decided for the purpose of maintaining a balance between the two. In this regard, there are certain factors which need centralization, while there are certain other factors which require decentralization. These factors impact a decision regarding the level of centralization and decentralization. These factors can be mentioned a follows:-
1. Communications system: When a good communication system is present, the top-level management of the company can control the operations of the company and in such cases, centralization is preferred. In the present era of technological advancements, the managers who was sitting in different countries can also control the process of decision-making and the operations of the company. On the other hand, if the communication system of the company is slow and ineffective, decentralization needs to be preferred.
2. Size and complexity: When the organization is quite large in size, the authority needs to be decentralized to the lower levels management. Such a situation facilitates decision-making and control. On the other hand, in case of a small organization, centralization may prove to be useful. In case the operations of the organization are complex, decentralization should be preferred because in case of simple operations, centralization needs to be preferred.
3. Competence of employees: When sufficient numbers of competence employees are available with the organization, then the powers need to be delegated to different levels of management so that the proper use of the expertise of these employees will be made. On the other hand, when sufficient competence employees are not available with the organization can share the responsibilities of the top management, then the process of decision-making needs to be retained at the high level of management.
4. Spread of activities: When a particular organization has different plans or units that are located at various places, then it will be essential to adopt the centralization in order to effectively carry out various activities. In such a case, the function of finance needs to be centralized so that effective control over the assets and the capital expenditure can be ensured.
5. Level of standardization: The both the level of standardization in operations, the greater will be the centralization in the organization. The reason is that in such cases it will be easy to control operations from the top. The centralized structure will result in uniformity of action in the organization.