Question

Jojo and Jojo is a company known for its consumer business of baby oil and bandages, but many people do not know that the company also runs a medical device and diagnostics business, as well as a pharmaceutical company. With more than 1,80,000 employees worldwide the company has chosen to share decision making authority with lower levels and place it nearest to the point of action. Therefore the response does not take time. This propagates the belief that people are competent, capable and resourceful who can get a chance to prove their abilities. And enables the company in identifying those executives who have the necessary potential to become dynamic leaders, so that the checking required on decisions taken by lower levels of management is the least. This makes it possible to evaluate performance at each level and each department can be individually held accountable for their results.

By quoting the lines given above identify and briefly explain the benefits of the concept discussed above.

Answer 1

Importance of Decentralization:

1. “Response does not take time”. Quick decision making- In a decentralized organization since decisions are taken at levels which are nearest to the point of action and there is no requirement for approvals from many levels, the process is much faster.

2. “Who can get a chance to prove their abilities”. Develops managerial talent for the future- Decentralization gives managers a chance to prove their abilities and creates a reservoir of qualified manpower that can be considered to fill up more challenging positions through promotion.

3. “Identifying those executives who have the necessary potential to become dynamic leaders”. Develops initiative among subordinates-Decentralization helps to promote self-reliance and confidence amongst the subordinates. It also keeps them in a state wherein they are constantly challenged and have to develop solutions for the various problems they encounter.

4. “This makes it possible to evaluate performance at each level and each department can be individually held accountable for their results.”

Better control- Feedback from levels helps to analyze variances and improve operations.