Disadvantages of Decentralisation:
Decentralisation is, no doubt, good .But it is not free from drawbacks or limitations. The various
drawbacks or disadvantages of decentralisation are:
- Decentralisation requires competent managers to run the various departments independently. But it is difficult to find competent managers.
- Decentralisation requires the employment of highly-paid managers. The employment of highly-paid managers will increase the administrative costs of the enterprise.
- In a decentralised enterprise, every unit may try to maximize its performance at cost of the other units. This may lead to unhealthy competition among the different units of the enterprise.
- In a decentralised enterprise, authority lies dispersed widely throughout the organisation. Each division or department enjoys complete freedom in the formulation of policies. This may increase the problem of co-ordination.
- Decentralisation may result in duplication of functions and wastage of resources.
- Decentralisation may, sometimes, become a handicap in the case of quick emergency decisions.
- Decentralisation is not suitable for the development of specialised services, .such as personnel, accounting, statistical departments, etc.
- In a decentralised enterprise, establishment of adequate and effective controls over the various divisions or departments becomes difficult.