decentralization and centralization
76Decentralization is the
tendency to disperse decision-making authority in an organization structure,to
know whether authority should be contracted or dispersed in the
organization.
Centralization is the tendency to restrict delegation of decision making in an organization,usually by holding it at the nearest top of the organization structure.Also,it is a situation where the top management is the people who take all the organization decision.
Advantages of decentralization.
-Decentralization encourage under consultation i.e no department in the organization is neglected inthe decision making process.
-It increases efficiency of the organization.
-Quick development is achieved in a decentralize sytem because there is opportunity for development in this system(every unit has the tendency to develop even faster than others.
-It speed up operational decisions in the organization:For example,species working in the production sector of the organization goods can take major decisions about local matters without further reference.This is especially relevant for diverse product groups.
-It brings spirit of belonging:i.e junior managers are happy because they can delegate authorities.
-It encourages initiative and motivation:Middle management can exercise power for greater authority in a decentralized situation.Also, it stimulate managers and supervisors to use their initiative.
-It copes better with change:Organization that are operating in a highly flexible market(rapid changing technology) can cope more easily if they decentralize decision to those in touch with the immediate problems of adaptation.
Factors affecting the degree of decentralization are listed below:
1.The need for control for mistakes which may occur.
2.Requirements for uniform products policy
3.Specialization:These helps where an organization needs specialization services which could be uneconomical to duplicate in decentralization units,there will be specialist staff in department under the control of head office.
4.Diversity of the market:This is where an organization deals widely with diversified market decisions at the top management level which are likely to be uninformed,with an ignorance of 'local' condition.
5.Technology: The technology of an industry will affect the extent of it's decentralization
6.Geographical dispersion of the organization:This creates pressure for decentralization with junior managers using their local knowledge to take better decision
7.The quality of middle and junior managers in their subordinates i.e centralize authority if middle and junior managers are well educated they may want authority to be delegated and their superiors will be more prepared to allow such decentralization to continue
Centralization is the tendency to restrict delegation of decision making in an organization,usually by holding it at the nearest top of the organization structure.Also,it is a situation where the top management is the people who take all the organization decision.
Advantages of decentralization.
-Decentralization encourage under consultation i.e no department in the organization is neglected inthe decision making process.
-It increases efficiency of the organization.
-Quick development is achieved in a decentralize sytem because there is opportunity for development in this system(every unit has the tendency to develop even faster than others.
-It speed up operational decisions in the organization:For example,species working in the production sector of the organization goods can take major decisions about local matters without further reference.This is especially relevant for diverse product groups.
-It brings spirit of belonging:i.e junior managers are happy because they can delegate authorities.
-It encourages initiative and motivation:Middle management can exercise power for greater authority in a decentralized situation.Also, it stimulate managers and supervisors to use their initiative.
-It copes better with change:Organization that are operating in a highly flexible market(rapid changing technology) can cope more easily if they decentralize decision to those in touch with the immediate problems of adaptation.
Factors affecting the degree of decentralization are listed below:
1.The need for control for mistakes which may occur.
2.Requirements for uniform products policy
3.Specialization:These helps where an organization needs specialization services which could be uneconomical to duplicate in decentralization units,there will be specialist staff in department under the control of head office.
4.Diversity of the market:This is where an organization deals widely with diversified market decisions at the top management level which are likely to be uninformed,with an ignorance of 'local' condition.
5.Technology: The technology of an industry will affect the extent of it's decentralization
6.Geographical dispersion of the organization:This creates pressure for decentralization with junior managers using their local knowledge to take better decision
7.The quality of middle and junior managers in their subordinates i.e centralize authority if middle and junior managers are well educated they may want authority to be delegated and their superiors will be more prepared to allow such decentralization to continue
