Disadvantages of Decentralisation

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:

1. Decentralisation requires competent managers to run the various departments independently. But it is difficult to find competent managers.
2. Decentralisation requires the employment of highly-paid managers. The employment of highly-paid managers will increase the administrative costs of the enterprise.
3. 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.
4. 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.
5. Decentralisation may result in duplication of functions and wastage of resources.
6. Decentralisation may, sometimes, become a handicap in the case of quick emergency decisions.
7. Decentralisation is not suitable for the development of specialised services, .such as personnel, accounting, statistical departments, etc.
8. In a decentralised enterprise, establishment of adequate and effective controls over the various divisions or departments becomes difficult.