I need help analyzing the advantages and disadvantages of decentralized organizations based on decision-making, include examples of performance measurement in decentralized organizations.
Decentralized organizations enjoy more diversity to explore opportunities, can optimize local conditions and can earn more rewards for individual performance. Managers in decentralized units are given the charge to try to figure it out for themselves. For instance, in a decentralized retain chain, the local manager can decide what products to carry since they have more detailed information about the local area and so may be able to make more responsive decisions than a central remote decision maker. Decentralized settings are seen as more motivating because the local manager believes they can impact profits (because they can make critical decisions about how to serve the market, what products to sell, what advertising to buy and so forth) (Rajan, 1992) and so will work harder than if the benefit of all their hard work accrues to everyone evenly. For instance, local managers did a better job selling warranty plans when they were responsible for warranty claims (Dai, Zhou & Xu, 2012). Decentralization also permits the organization to evaluate local managers based on the performance of their ...
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