Delegation and control in organizations with varying degrees of decentralization

Abstract

The concepts of decentralization, delegation, control, participation, and responsibility are defined operationally for the analysis of hierarchically structured large organizations or service systems. These include hospitals, libraries, or governmental agencies, all of which involve the coordination of several resources or activities. Costs and benefits are examined from a client centered point of view. We take into account cost‐benefit considerations for the organization or service agency and for its clients, as well as for the larger community by which the agency may be sustained. Delegation of certain classes of decisions to a particular agent or echelon is translated into providing this agent with the means to make decisions at tolerable levels of error and delay. That is, the agent must have adequate communication channels, memory facilities and other information processing capacities. The change in the utility of the decision performance of the organization after the delegation has been made is compared to the change in costs caused by providing or shifting the requisite facilities. The effects of a long‐term increase in service loads upon the optimum levels of decentralization and delegation are examined. Eight dimensions of decentralization are specified and four general principles are proposed.