Decentralization is influenced by some factors that are as follows:
1. Philosophy Of Top Level Management
Decentralization of authority is known as the philosophy of scientific management. If the management is supportive, decentralization will prevail.
2. Size Of The Organization
Decentralization is suitable for large sized organization with multiple operations. Large firms with various departments and employees should practice decentralization of authority. Small organization with limited resources cannot afford decentralization.
3. Dispersal Of Operation
Decentralization Of Authority is highly influenced by the dispersal of operation. It is very necessary if the coverage area of the organization is wide.
4. Caliber And Capacity Of Lower Levels
Decentralization is not necessary if lower level managers are capable to handle jobs and make decisions effectively. So, skill, knowledge and capacity of low and middle level managers affect the decentralization process.
5. Environmental Influence
5. Environmental Influence
It is another key factor that affects decentralization of authority. Technical environment, competition, government policy, tax policy etc. influence decentralization.
6. Cost Factors
Cost is very important factor that directly influence decentralization of authority. If decision related cost is higher, it is not wise to delegate authority to the subordinates.
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7. Availability Of Managerial Manpower
If there are more capable and skill managers, it is easy to practice decentralization of authority. Shortage of managerial manpower forces the organization to practice centralized authority.
8. Control Technique
Decentralization of authority is possible of there is effective and scientific control system in the organization. In the lack of effective control, it is not possible to practice decentralization.
