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Could you please help me explain why “decentralisation will not work if information is not communicated downwards?” Thank you very much, sir!
In a centralised organisation, heat office takes decisions and tells branches/departments/subsidiaries what to do. This at least means all the sub0units should be acting in coordination, but also means that HO might be making decisions where it has little information or expertise. There’s also likely to be delays in the communication process.
Once decentralisation is introduced, the sub-units can become un-coordinated. For example, the sales department wants to sell 10,000 units but the production department has decided to make only 8,000 units. Certainly, lateral communication is needed.
However, the sub-units should ultimately be acting in the best interests of the organisation overall. Eg head office might have noticed that cash-flow is tight so will require all sub-units not to incur capital expenditure. Therefore, downward communication is needed for both coordination and to ensure everyone is aimed at the strategic objectives of the organisation.
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