Decentralization is a type of organizational structure in which daily operations and decision-

making responsibilities are delegated by top management to middle and lower-level mangers.
This frees up top management to focus more on major decisions. For a small business,
growth may create the need to decentralize to continue efficient operations. Decentralization
offers several advantages, though relinquishing control may be difficult for a business owner
accustomed to making all the decisions.

Greater Autonomy Empowers Employees

Employees can be empowered by having more autonomy to make their own
decisions, giving them a sense of importance and making them feel as if they have
more input in the direction of the organization. It also allows them to make better use
of the knowledge and experience they have gained and implement some of their own
ideas. Empowered employees can cut the "red tape" of an organization by taking the
initiative to get the job done with a minimum of managerial approvals.

Relieving the Burden

Decentralizing takes some of the burden of daily business operations off the business
owner. When the owner allows others to perform such tasks as hiring new employees
or ordering supplies, this frees her up to spend more time on big-picture items, such
as planning for expansion or meeting with important clients. Though it can be hard for
some owners to allow this type of flexibility, the rewards can be substantial for both
employees and business owners.

Preparing for Emergencies

A situation may arise where the business owner must be away from the business for
an extended period time because of illness or another type of emergency. A
decentralized structure provides a better chance that the organization will maintain
self-sufficiency because managers and employees are accustomed to working
autonomously. Give the process a test run by leaving the business for a week or two –
a vacation, perhaps – and evaluating the results when you return.

More Efficient Decision-Making

A decentralized organization is able to make decisions more quickly than one with a
centralized structure. A manager often can make a decision without having to wait for
it to go up a chain of command, allowing the organization to react quickly to situations
where fast action can mean the difference between gaining and losing a customer.

Ease of Expansion
For a growing business, decentralization can facilitate the process of expansion. For
example, if expansion results in opening a new business unit in a different geographic
area, decentralization allows the new unit to operate as an independent entity,
meaning it can react more easily to the specific needs of the area, such as deciding to
sell products that appeal to the local market

Advantages of a Decentralized Organization

The primary advantage of a decentralized organization is that managers are able to
make quick decisions that can save your company money. By empowering your
managers, you trust their instincts and abilities, because you know they understand
the daily work process better than you do. Another advantage is that it lightens your
workload and frees you up to develop strategic plans for the future of your business.

If you’re constantly having to micromanage the daily activities of your company, you
will quickly become overloaded with problems and conflicts, which leaves you little
time to deal with the major strategies that will guide your organization. When you
empower your managers, you also motivate them to work harder, because they want
to prove that your trust in them is well-placed. Increased motivation can lead to better
communication between managers and staff members, and greater morale in the
workplace.