Centralization and decentralization of authority. What is centralization and decentralization of authority? 2022-11-04
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Centralization and decentralization of authority refer to the distribution of power and decision-making within an organization or system. Centralization refers to a concentration of power in a single entity or group, while decentralization refers to the dispersal of power among multiple entities or groups. These concepts are important to consider when organizing a company, government, or other type of system, as they can have significant impacts on efficiency, accountability, and other aspects of operation.
In a centralized system, power is concentrated in a single entity or group, such as a CEO or board of directors. This can be efficient in certain situations, as it allows for quick decision-making and a clear chain of command. However, it can also lead to a lack of accountability and a lack of participation from other members of the organization. Additionally, a centralized system is vulnerable to the actions and decisions of a single individual or group, which can be problematic if those individuals or groups are not acting in the best interests of the organization or its stakeholders.
On the other hand, decentralization refers to the dispersal of power among multiple entities or groups. This can be seen in democratic systems of government, where power is distributed among elected officials and branches of government. Decentralization can also be found in organizations where power is distributed among various departments or regions. Decentralization can promote participation and accountability, as it allows for multiple perspectives and voices to be considered in decision-making. It can also be more resilient to the actions of a single entity or group, as power is distributed among multiple parties.
However, decentralization can also be inefficient, as it may lead to a lack of coordination and conflicting decisions. It can also be more difficult to hold parties accountable in a decentralized system, as power is dispersed among multiple entities.
Overall, the appropriate level of centralization or decentralization of authority will depend on the specific goals and needs of the organization or system in question. A balance between the two may be necessary in order to achieve the desired level of efficiency, accountability, and participation.
Difference Between Centralization and Decentralization
In centralization of authority is the reservation of deciding authority at the top level. As all activities are coordinated at the lower level, any sort of adjustment can be made at lower level itself. You can become objective through critical thinking, which makes it easier for you to make decisions that are in the interests of the majority rather than ones that may be biased or self-serving. Systematic dispersal of authority. Routine issues normally draw most part of the time pay due attention on strategic and policy issues.
Centralization and decentralization of Organization
An organization based on the principle of centralization provides for central direction both in the formulation and the execution of policies and programmes. Effectiveness of Communication System: The degree of centralization or decentralization is highly determined by the adequacy or otherwiseness of the communication system. Instead, small groups of employees work on projects that utilise specialised technology. Communication and Co-Ordination: Though co-ordination of different activities is the task of top management, departmental managers must also ensure co-ordination of different work units. To do so, the organizational structure must enable the firm to quickly change and capitalize on possibilities.
However, if the organisation has a history of gradual development, the extent of decentralisation will be less because of the interference of the superiors which becomes a habit with them. Many businesses operate in extremely competitive markets and industries. Hence, maintaining a balance between the two is equally important. Many centralise parts of their decision making processes which affect the strategic direction of the organisation, and delegate decision making power to the experts for those areas which require knowledge of a particular issue, technology, product or market. Such decisions carry the chance of being least risky.
Know About The Advantages and Disadvantages of Centralization and Decentralization
Thus, they can be expected to contribute to decision-making and organisational growth at increasingly higher levels. Proliferation of personal staff by the executives is an indication that he is tired of his job and would like to get assistance from his colleagues to complete part of his workload. Centralization Centralization refers to a central location or managerial personnel responsible for planning, decision-making, and action-taking activities. As a result, many firms adopt a decentralized management structure to maintain a competitive advantage. . It helps to meet the challenges and complexities of big enterprises and provides scope for growth and development. The lower the rank of executives who make given decisions, the greater the degree of decentralization.
Advantages And Disadvantages Of Centralization And Decentralization
Other Organisational Conditions: Centralisation and decentralisation affect a number of other organisational conditions. In centralisation authority is retained by the top management. Promotes Integration and Co-Ordination: Organisational activities and business process is divided into parts for the purpose of convenience. Every manager should reserve certain amount of authority for those decisions which are of strategic nature and which cannot be taken by the managers at the lowest level objectively and perspective. But it cannot be denied that it is a costly arrangement. Each decision point gets the necessary and accurate information quickly.
Centralized and Decentralized Management Explained
Decentralization guarantees the dynamic work of the staff and stimulates their enthusiasm. Innovation and Creativity: With the help of decentralization, it is possible for the top management to extend its lead over such a large enterprise; It is possible to create a sense of competition among divisions or departments; It is possible to grow and diversify the enterprise. This leads to a situation where either employees at lower levels of the organisation must defer to managers who are frequently out of touch with the situation, or the organisation must delegate some of the decision making to those employees with the necessary expertise to address the situation. The lower management has to follow instructions. Top management takes relatively more time to perform all the sub functions of decision making. Complete centralization is possible only in a one-man enterprise. ADVERTISEMENTS: So the degree of decentralisation is to be decided by the authority given.
Difference Between Centralization and Decentralization (with Comparison Chart)
Geographic Dispersion: Top executives of the firm whose activities are spread over different geographical areas will be unable to take decisions with respect to all the functional areas and, there is the tendency to decentralize. It results in industrial disputes. That is why the mutual competition among the managers is reduced along with their work efficiency. In earlier times, centralization policy was the most commonly practiced in every organization to retain all the powers in the central location. ADVERTISEMENTS: In this way, under centralisation, the executive reserves work for himself instead of delegating to his subordinate and ultimately reserves authority; but where he is forced to delegate work, he may do as by not delegating adequate authority so that the subordinate must approach him to arrive at approximate decision. Consequently, there is less expenditure on administration. On the other hand, decentralization shows to be more effective in decision-making because decisions are made closer to the actions.
It gives added responsibility to managers at all levels below the top. Some degree of decentralization is a must. From one point or place only. If a manager reserves work, he has to reserve the authority also. This leads to disloyalty, and they tend to leave when they receive a better opportunity. Centralized management is when only the executives at an organization manage the planning and decision-making responsibilities. Some Unsuitable For Large Organization Centralization is impractical in large business organizations having various branchesin severallocations.
What is centralization and decentralization of authority?
What are the Advantages of Centralization? Control Techniques: If better control techniques are used, the scope for decentralization is more. Enhances Employee Job Satisfaction: Decentralisation increases authority and decision making points. When the managers at lower levels are able and experienced there is more chance for decentralisation. Degree of Decentralization: After analyzing the various advantages and disadvantages of decentralization, the important question that arises is not whether to centralize or decentralize but how much to centralize or decentralize. These benefits include: i. Actions at the lower levels are subject to the approval of the top managers. ADVERTISEMENTS: Read this article to learn about Decentralisation.