Professional in Human Resources (PHR) Practice Exam

Decentralization in an organization refers to distributing decision-making authority to lower levels within the organization. This concept emphasizes empowering employees at various levels to make decisions, which can lead to more responsive and effective operations since those closer to the issues can often make better-informed choices.

By granting decision-making power to lower levels, organizations can foster innovation and quick responses to challenges, as well as enhance employee engagement and accountability. Such a structure may help in improving customer satisfaction, as frontline employees can address concerns promptly without needing to seek approval from higher management.

In contrast, consolidating decision-making authority (the first choice) would indicate a centralization approach, which centralizes control at the top levels rather than distributing it. Increasing the number of management layers (the third choice) tends to complicate the decision-making process and can lead to delays, while delegating administrative tasks to non-managers (the fourth choice) does not inherently pertain to decision-making authority but focuses on task execution without necessarily empowering those individuals in a decision-making context.