Final answer:
The term used to describe the assignment of decision-making power to lower-level employees is delegation, which is part of a shift towards flatter organizational structures and increased teamwork.
Step-by-step explanation:
The word used to describe the giving of decision-making and problem-solving authority to lower-level employees is delegation. This concept involves transferring the responsibility for certain tasks or decisions from managers to their subordinates, empowering them to act independently within defined limits. In a traditional hierarchy of authority, a clear chain of command exists where each level of the organization has someone above them to whom they must answer. However, recent organizational trends favor a flatter structure, encouraging more teamwork and collaborative decision-making processes.
Delegating authority can help in reducing transaction costs associated with centralized decision-making. Nevertheless, businesses might experience increased conformity costs, as individual decision-making can lead to variations from group or organizational norms. On the other hand, when decisions are made collectively, the transaction costs can be higher, but it may reduce conformity costs as decisions tend to be more inclusive and representative of the group.
Many modern organizations are shifting away from rigid hierarchies and embracing a partnership approach, wherein employees at all levels are seen as valuable contributors to the organization's success. Flat organizational structures can enhance employee engagement, innovation, and responsiveness to changing market conditions. They encourage interactions across different levels of the organization, from entry-level employees to directors, who work together to achieve the organization's broad goals.