Paradoxically, the points in the organizational structure at which effective control is exercised depend upon the degree to which management adheres to the philosophy of “decentralization.” In a decentralized sales organization, greater control is exercised by executives lower in the hierarchy than is true in a centralized organization. Executives higher up in the organization, have to deal with “policy’’ or “control” exceptions more frequently than with the control mechanism itself. At all organizational levels, except the top, situations falling outside the control limits are handed up to that executive who has authority to deal with them. To escalate the initiation of corrective action, the power to make decisions is delegated as far down in the organizational structure as is consistent with the caliber and experience of executives.
Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.