Decentralization (Meaning and Explanation)

We explain what decentralization is and the types that exist. Also, what are its advantages and educational decentralization.

Decentralization - economy — Decentralization helps make decision making more agile.

What is decentralization?

Decentralization is the atomization of power within a company, State or organization. This necessarily implies that responsibilities are also dispersed.

The objective of decentralization is that power (and decision making) is not concentrated in a few people or areas and is delegated to areas with less hierarchy granting them greater autonomy and freedom.

Decentralization helps make decision making more agile especially when a problem arises that must be solved quickly. In addition, it works as an incentive for lower-ranking employees, who feel more involved in the organization.

Decentralization, on the other hand, implies that higher-ranking employees should not be overloaded of information or responsibilities but rather focus on certain areas or topics.

Types of decentralization

Vertical decentralization distributes power to lower levels.

There are different types of decentralization. Some of them are the following:

Horizontal Power is distributed between areas that have the same level.
Vertical Power is distributed to lower levels (delegation).
Territorial Decision-making is granted to an entity or area that decides on a delimited territory.
Functional Certain competencies of a certain sector of activity are recognized in a certain area.
Fiscal The aim is to achieve greater efficiency in the financing and quality of public services. This type of decentralization seeks to balance expenses, taxes and transfers between different governments.

Within the business environment, two types of decentralization can be identified:

Macroeconomic The distribution of power occurs towards other countries and results in the consolidation of regional administrations that acquire economic and political authority.
Microeconomic Decision making is distributed among different areas and hierarchical levels of the company or organization.

Advantages of decentralization

Some of the advantages attributed to decentralization are:

It speeds up decision-making and encourages the contribution of members steeped in the topic.
It reduces costs in relation to coordination thanks to the independence that the different areas acquire.
It allows decision makers to have a greater volume of information because they focus on a few areas, which allows them to handle issues in greater depth.
It allows the leadership of the organization to ignore certain issues and focus on transcendental ones.
It makes better use of staff skills and time.
Provides training and education to the middle ranks.
It motivates middle-ranking personnel, who feel part of the decision-making processes and can plan a career within the organization with growth expectations.
It makes control processes more efficient.
Facilitates and clarifies the evaluation of results.

Educational decentralization

Educational decentralization refers to the transfer of resources and control of the educational system from national states to provincial or jurisdictional states.

With decentralization, educational institutions are transferred to the orbit of each province or jurisdiction and their financing, control, teachers, management, school plans and titles depend on them.

The decentralization of education aims to create a more participatory, agile, efficient and effective system to obtain higher educational quality, make public management more efficient and achieve fiscal “relief” from the central government.