Factors Affecting Degree of Decentralisation

The degree and the nature of decentralisation in any organisation will be generally influenced by the following factors:

History of the Organisation

Whether it has developed as a set of departments and divisions and the control still resting with the top management.

Philosophy of the Top Management

Whether the top management believes in centralisation or delegation of effective powers of planning and controlling.

Availability of Competent Subordinate Managers

Whether competent executives are available to take effective decision to carry out the job passed down by the top management.

Dispersion of Operations

Whether the operations of the organisation are mostly concentrated at one place or in a region or dispersed over different territories.

Costliness and Significance of Decisions

Whether the decisions generally involve heavy cost or investment making it risky to delegate.

Uniformity of Policy

Whether the uniformity of policy is of critical importance, if so, decentralisation may be limited.