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Article Review

Decentralization
Decentralization is the process of delegating decision-making authority down to
the lower levels in an organization, relatively away from and lower in a central
authority. A decentralized organization shows less hierarchy in the organizational
structure, wider span of control, and a bottom-to-top flow of decision-making and
flow of ideas.

Decentralization and centralization are themes that have played major roles in the
history of many societies. An excellent example is the gradual political and
organizational changes that have occurred in European history. During the rise
and fall of the Roman Empire, Europe went through major centralization and
decentralization. Although the leaders of the Roman Empire created a European
infrastructure, the fall of the Empire left Europe without a strong political system
or military protection.

The author quoted decentralized hierarchy of East India Company, as there was a
lack of communication means. In a centralized organization, the decisions are
made by top executives or on the basis of pre-set policies. However
decentralization process is still in operation not even in private sector but in
government too. In 20th century centralization become more dominant in private
sector especially in banks. The writer pointed out both theories as equal
importance because now a days most of governments are in competition to
decentralized most of its department. Decentralization is most effective in
organizations where subunits are autonomous and costs and profits can be
independently measured. The benefits of decentralization include decisions made
by those who have the most knowledge about local conditions. Decision-making
has a desirable motivational effect; and managers have more control over results.

In context of decentralization in Pakistan be implemented with the partial funding


support of Asian Development Bank, to carry forward reforms in the areas of
decentralization, fiscal restructuring and local governance. It is an innovative,
demand-driven and output oriented program. Under the old system of government,
the provinces administered the districts directly through the bureaucracy. This old
system of administration lacked democracy and accountability at the local level.
Governance was centralized so that decisions about local level planning and
development were taken higher up, with little reference to local needs and
priorities. Because civil servants were not answerable to the public, there was little
incentive for them to ensure high quality service delivery.
In a more decentralized organization, the top executives delegate much of their
decision-making authority to lower tiers of the organizational structure. The wider
spans of control also reduce the number of tiers within the organization, giving its
structure a flat appearance. One advantage of this structure, if the correct controls
are in place, will be the bottom-to-top flow of information, allowing all decisions
among any official of the organization to be well informed about lower tier
operations. For example, an experienced technician at the lowest tier of an
organization might know how to increase the efficiency of the production, the
bottom-to-top flow of information can allow for this knowledge to pass up to the
executive officers.

At end we can conclude that decentralization and centralization have a parallel


importance and it varies from organization to organization even among states.