Decentralization – Concept, types and advantages

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 decision-making to be more agile, especially when there is a problem 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 overworked information or responsibilities but focus on certain areas or issues.

Types of decentralization

Vertical decentralization
Vertical decentralization distributes power to lower levels.

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

  • Horizontal. Power is distributed among 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. It aspires to greater efficiency in financing and in the quality of public services. This type of decentralization seeks to balance expenses, taxes and transfers between the different governments.

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

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

Advantages of decentralization

Decentralization makes better use of staff time and skills.

Some of the advantages attributed to decentralization are:

  • Streamlines decision-making and encourages input from members steeped in the subject.
  • It lowers costs in relation to coordination thanks to the independence acquired by the different areas.
  • It allows decision makers to have a greater volume of information because they focus on few areas, which allows them to handle issues in greater depth.
  • It allows the top of the organization to ignore certain issues and focus on the transcendental ones.
  • Makes better use of staff time and skills.
  • 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.
  • Makes control processes more efficient.
  • Facilitates and clarifies the evaluation of the results.

Educational decentralization

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

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 at creating a more participatory, agile, efficient and effective system to obtain a higher educational quality, make public management more efficient and achieve fiscal “relief” by the central government.