Senior Professional in Human Resources (SPHR) Certification Practice Exam

What is a primary characteristic of a decentralized organization?

1. Centralized decision-making

2. Delegation of authority

3. Strict adherence to procedures

4. Hierarchical structure

The correct answer is: Delegation of authority

A primary characteristic of a decentralized organization is the delegation of authority. In a decentralized structure, decision-making power is distributed among various levels and departments within the organization rather than being concentrated at the top. This delegation empowers lower-level managers and employees to make decisions that affect their areas of responsibility, allowing for greater responsiveness to local needs, faster decision-making, and increased employee engagement. The focus on delegation fosters a more agile organization, as teams can react swiftly to changes and challenges without relying on approvals from upper management. This create a work environment where individuals feel a sense of ownership and accountability, which can enhance motivation and innovation. In contrast, centralized decision-making consolidates authority at the top levels of the organization, which is not a characteristic of a decentralized system. Strict adherence to procedures and a hierarchical structure may exist in both centralized and decentralized organizations, but they do not define the fundamental characteristic of decentralization, which is the empowerment through delegation.