3. Greater need for control at policy level:
The independence generated by decentralisation requires
adequate establishment of policies at the centralised level. Too much of such control may result in
less decentralisation. Inadequacy of controls have forced certain organisations to recentralize the
operations.
15.13 FACTORS DETERMINING THE EXTENT OF DECENTRALISATION
The following are, therefore, the important factors which determine the extent of decentralisation of
authority which is considered desirable for a particular organisation.
1. Size and complexity of the organisation:
Large organisations with diverse product line and
conglomerates with companies involved in different fields would find centralisation to be more effective
due to limitations in managerial expertise as well as increased executive work load.
2. High costs of decisions:
The more expensive or costly the action to be decided upon, the chances
are that it will be decided at the higher levels of management. Thus the decision of whether to have
another factory or not would be taken at the top levels, whilst the question of purchasing of stationary
would be taken at an extremely low level.
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