Power to take decision in an organizational or managerial context refers to the freedom to decide on tasks to be performed in the organization as well as how to perform these tasks. Allocating resources to specific activities and people in the organization, and authority to instruct or gives orders to others in the organization are some important aspects of such power operating within the organization. Freedom to make commitment on behalf of the organization to outsiders is an aspect of power that has impact outside the organization.
In an organization the individual or a small team of individuals at the top of the organization has complete power or authority to take decision in all matters of the organization within the limits imposed by the legal framework within the organization operates.
Lower down the organization the power enjoyed by managers is delegated to them them by higher level managers. At each level, managers retain some of the power for themselves and delegate the rest to the lower level managers. This does not mean that the lower level manager looses the power delegated. The supervisor still retains authority over the matters delegated to subordinates by way of power to overrule the decision of subordinates, and other supervisory mechanisms. Thus in an organization the decision making power of managers is highest at the top level of organization and goes on decreasing with lowering level of organization structure.
The exact extent to which the power diminishes at lower levels of management t is expressed as degree of centralization or decentralization. IN centralized organization, the power and authority is highly concentrated at higher levels of management. In contrast, decentralized organization have much more power delegated to the lower levels of management.