Final answer:
Decentralizing authority refers to the process of distributing decision-making power to lower-level managers and non-managerial employees in an organization, allowing for more adaptability and quicker responses to challenges.
Step-by-step explanation:
Giving lower-level managers and non-managerial employees the right to make important decisions about how to use organizational resources is referred to as Decentralizing authority. When organizations decentralize authority, they distribute decision-making closer to the point of service or action. Unlike a centralized authority structure, where major decisions are made by a small group of individuals at the top of the hierarchy, decentralizing authority allows for more flexibility, quicker decisions, and increased innovation and responsiveness from different levels of the organization.
Using the example from Walmart, if the company were to practice decentralization, the shift manager, store manager, and even frontline employees might have more autonomy to decide on matters directly affecting their work. This reduces the burden on higher levels of the chain of command and encourages a more dynamic and adaptable organization.
In terms of coordination problems, decentralizing authority is seen as an approach that could potentially increase transaction costs due to the need for more communication and negotiation among decision-makers. However, it could reduce conformity costs by allowing different parts of the organization to adapt and respond to the unique challenges they face without waiting for directives from a central authority.