Decision Decentralization

The decentralization of decision making is essential for each company. This article deals with the concept of decentralization and the reasons for carrying out this process. Concept For a moment, consider a company formed by a person, the decisions taken at the same we can say without fear of error, which are fully centralized. From the moment that increases the number of people, began a process of decentralization may be greater or lesser extent depending on the decisions taken at a higher hierarchical level or low within the organization. In practice, you can not give a complete decentralization, there must be a balance in the delegation of decisions that must be the most appropriate for the size and structure of the company. Distribution of roles in an organization the existence of various tasks within the business process, which require a degree of specialization, forcing companies to develop a functional organizational structure, just let chelae undertake the tasks of production, sales, administrative, managerial, financial, research, etc.. However, it is not always organized in a functional way, can also be structured by line of business, products, processes or geographic areas.

The distribution of functions depend on the strategy of the company, and the degree of decentralization that want to have. For example, if you opt for a decentralized company can create divisions, facilitating decision-making process. This comes well in the case of establishing profit centers, they meet the two functions at once, something which, on the other hand, taking into account the controllability criterion implies that the divisional director shall have authority over income and expenses of the division, because if not, could not be responsible for creating a division beneficio.Aunque automatically think of decentralization involves decision making at the lowest level, while the creation of the division usually means that is establish an organizational unit around which to calculate profit on that unit can operate. Let’s see how decisions are produced centrally and decentralized, and the reasons you might have an organization to centralize or decentralize their decisions. Business decision-making process centralized and decentralized company in any normal process of decision making is to identify the variables to measure, collect data, grouping them so that we provide the information necessary to perform the analysis first and then making of the decision.

This would be normal, but a centralized company has the following casuistry: The unit or responsibility center performs the data collection. They are classified and subsequently transmitted to You (Director of the business). It analyzes and takes the decision. Finally, the decision passes to the center of responsibility and it takes appropriate action. In a decentralized company would be similar to the process originally outlined, probably concentrated in one person, but trying to duplicate the process that are small businesses. However, this process will depend on two important aspects: first, the Senior Management will forward the directions and objectives and inform the general rate policies, so that you can run the process within a fully defined and action bounded. On the other hand, after running the process, must inform the Senior Management of the decision and its outcome. The preference for one or the other system must be determined by the size of the organization, the degree of centralization of decisions, the possibility of formalizing the business, personal and cultural characteristics of the organization and its behavior and environmental characteristics.