Decentralisation refers to systematic delegation of authority through all the levels of management and in all departments of the organisation. Decision making authority is shared with lower level of management. The importance of decentralisation in an organisation are :
(i) Relief to top management: In adecentralised organisation, top level managers are not burdened by common day to day problem. Therefore, they have enough time to plan ahead, develop new strategies and concentrate on coordination and control.
(ii) Develop initiative amongst subordinates: Decentralisation helps to promote self reliance and confidence amongst the subordinates. This is because when lower level of management is given freedom to take their own decision, they learn to depend on their own judgement.
(iii) Develop managerial talent for future: In decentralised organisation even lower level managers learn the art of exercising decision making authority. This prepares them for promotion to higher level i.e. development of future executives.