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Centralization & Decentralization

The document discusses centralization and decentralization in organizations. Centralization refers to higher levels of management making most decisions, while decentralization involves distributing decision-making authority throughout lower levels of the organization. Some advantages of centralization include coordination and standardization, while disadvantages include lack of motivation and delay. Decentralization advantages include developing future managers and flexibility, while disadvantages can include duplication of work and loss of control. There are many factors that determine the appropriate degree of centralization or decentralization for an organization.

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Unnati Bisani
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503 views12 pages

Centralization & Decentralization

The document discusses centralization and decentralization in organizations. Centralization refers to higher levels of management making most decisions, while decentralization involves distributing decision-making authority throughout lower levels of the organization. Some advantages of centralization include coordination and standardization, while disadvantages include lack of motivation and delay. Decentralization advantages include developing future managers and flexibility, while disadvantages can include duplication of work and loss of control. There are many factors that determine the appropriate degree of centralization or decentralization for an organization.

Uploaded by

Unnati Bisani
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CENTRALIZATION

Centralization: The process of transferring and assigning decisionmaking authority to higher levels of an organizational hierarchy. In a centralized organization, the decision-making has been moved to higher levels or tiers of the organization, such as a head office, or a corporate center. Knowledge, information and ideas are concentrated at the top, and decisions are cascaded down the organization. The span of control of top managers is relatively broad, and there are relatively many tiers in the organization.

CENTRALIZATION
Advantages
It helps in coordinating. Cost Effective Equal work load is possible. Method of work can be

Disadvantages
It does not foster loyalty for

standardized.

departments Delay in work. Less motivation Greater risk

DECENTRALIZATION
The process of transferring and assigning decision-

making authority to lower levels of an organizational hierarchy. In a decentralized organization, the decision-making has been moved to lower levels or tiers of the organization, such as divisions, branches, departments or subsidiaries. Knowledge, information and ideas are flowing from the bottom to the top of the organization. The span of control of top managers is relatively small, and there are relatively few tiers in the organization, because there is more autonomy in the lower ranks.

DECENTALIZATION
ADVANTAGES
It lessens burden of top

DISADVANTAGES
There may be duplication of

management. Future Managers. Freedom and independence in decision making. Facilitates product diversification.

work. Problem of coordination and uniform policy. Cost of training. Inadequate planning and control systems. Availability of Able Managers. Loss of control by top Management.

Factors Determining the Degree of Decentralization and Centralization


Costliness of the Decision Desire for Uniformity of Policy Size and Character of the Organization History and the Culture of the Enterprise Management Philosophy Desire for Independence Availability of Managers Control Techniques Business Dynamics Environmental Influences.

DIFFERENT PERSPECTIVE
Centralization vs. Decentralization
author unknown
Depends upon the inherent qualities and the effects of the

structure themselves.

Robbins and Coulter describes If top managers make the

organizations key decisions with little or no input from below, then the organization is centralized.

For companies who need to be stable or are facing

crisis and need one source of decision making to lead them.


These are becoming rare.

Its a risk.
Employees also feel less motivated, because they dont

have an avenue for sharing their ideas.

Decentralization allows to take advantage of division

of labor by sharing decision making across the

organization.
Empowers employees and allows them to improve

their performance
Trusting the employees

Example of Diversified food company. Decision making regarding ingredients, manufacturing

process and almost other aspects of each brand.


Centralization can be use for marketing. Allow decentralization via listening to employees. Helps to allow for more free time to focus on truly important

items like relaxing and watching sports.

Centralization vs. Decentralization in Service Organizations - Shawn


Lane
There is no one-size-fits all Management consultants hate matrix organizations. Basic premise is that they are inefficient. If your stuck, know how to manage through influence and

through clear operating principles.

Ivan Smith VP of customer Service & Worldwide Technical Support, Pitney Bowes.
Identify objectives of each function. Similar- Centralize Different- Decentralize Drive the P & l responsibility down to the Service

Manager Level
Develop effective operating principles.

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