Decentralisation refers to the dispersal of the decision making power among the middle and lower level managers. The following points highlight the importance of decentralisation.
(i) Initiative: With the help of decentralisation lower level of managers has sense of freedom and makes their own decision. It gives them a freedom to take initiative. Moreover, it promotes a feeling of selfconfidence and self-reliance among them, thereby encouraging them to take initiative.
(ii) Managerial competence: Once authority is delegated to the lower level managers, it provides them with an opportunity to develop their competence. Decentralisation allows them to gain experience and thereby develop the skills and knowledge to face new challenges. It gives them a chance to prove their talent and prepare for higher positions. It facilitates the identification of future managers who are well equipped with the necessary talent required to deal with managerial problems.
(iii) Control: Decentralisation helps in analyzing and evaluating the performance of each department individually and separately. Thus, each department's achievements and contribution to the overall objectives of the organisation can be easily determined, to facilities better control.
(iv) Quick decision-making: Since through decentralisation, the authority of making decisions is passed on to lower levels of management, decisions are taken quickly and timely. This is because the decision can be taken at the nearest points of action which thereby, helps in easy adjudication of the problems.