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Organization and Management

The document discusses centralization and decentralization in management. Centralization refers to concentrating decision-making power at higher levels of management, while decentralization involves disseminating authority throughout management levels. The text outlines the key differences between the two approaches and their implications for organizations.

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Aisah Hadji Fahad-Solaiman
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81 views24 pages

Organization and Management

The document discusses centralization and decentralization in management. Centralization refers to concentrating decision-making power at higher levels of management, while decentralization involves disseminating authority throughout management levels. The text outlines the key differences between the two approaches and their implications for organizations.

Uploaded by

Aisah Hadji Fahad-Solaiman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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organization

& Management
Prof. Gertrudes Apas
CENTRALIZATION

VS.

DECENTRALIZATION

Irish A. Sutin
What is centralization?

-is said to be the process where the

concentration of decision making is in a few

hands. All the important decision and actions at

the lower level, all subjects and actions at the

lower level are subject to the approval of the

top management.
What is centralization?

-there is hierarchy of formal authority for

making all important decision for the

organization.
According to Allen, "Centralization is the systematic and

consistent reservation of authority at central points in the

organization."
The implication ofcentralization

1. Reservation of decision making power at top

level.
2. Reservation of operating authority with the

middle level managers.


3. Reservation of operation at lower level at

the directions of the top level.


What is decentralization?

-is a systematic delegation of authority at all levels


of management in all of the organization.
-authority is retained by the top management for

taking major decisions and framing policies concerning

the whole concern. Rest of the authority may be

delegated to the middle level and lower level of

management.
What is decentralization?

-refers to the dissemination of powers by the top

management to the middle or lower- level

management. It is the delegation of authority, at all

the levels of management.


According to Allen, "Decentralization refers to the

systematic effort to delegate to the lowest level of

authority except that which can be controlled and

exercised at central points."


Implications of decentralization

1. There is less burden on the Chief Executive

as in the case of centralization.


2. The subordinates get a chance to decide

and act independently which develops skills

and capabilities. This way the organization is

able to process reserve of talents in it.


3. Diversification and horizontal can be easily

implanted.
Implications of decentralization

4. Concern diversification of activities can place effectively since

there is more scope for creating new departments.


5. In decentralization structure, operations can be coordinated

at divisional level which is not possible in the centralization set

up.
6. There is greater motivation and morale of the employees

since they get more independence to act and decide.


Implications of decentralization

7. Co-ordination to some extent is difficult to

maintain as there are lot many department divisions

and authority is delegated to maximum possible

extent.
"Everything that increasing the

role of subordinates is

decentralization and that

decreases the role is

centralization."
Advantages
CENTRALIZATION DECENTRALIZATION
-Faster decision-making

-The organization can


and better quality of

strictly enforce uniformity


decisions.
of procedures and policies. -Improves the effectivity of

-It can help in the


managers.
elimination of overlapping
-offers a democratic

or duplicate activities and


environment where

save costs. employees can have a say

in their governance.
Advantages
CENTRALIZATION DECENTRALIZATION
-The organization has a better
-Provides good exposure to

chance pf utilizing the


mid and lower-level managers

potential of its outstanding


and creates a pool of

employees. promotable manpower with

-It offers a better control over


managerial skills.
the activities of the
-Since managers can see the

organization by ensuring
results of their own actions,

consistency in operations and


they are more driven and have

uniformity in decision-making. improved morales.


Comparison Chart
Basis for Comparison Centralization Decentralization

The retention of powers and

The dissemination of authority,

authority with respect to planning

Meaning and decisions, with the top

responsibility and accountability to

the various management levels.


management .

Systematic and consistent

Involves reservation of authority.


Systematic dispersal of authority.

Communication Flow Vertical Open and free

Decision Making Slow Comparatively Faster


Comparison Chart
Basis for Comparison Centralization Decentralization

Advantage Proper coordination and leadership


Sharing of burden and

responsibility

Multiple persons have the power of

Power of decision making Lies with the top management


decision making

Inadequate control over


Considerable control over

Implemented when
the organization the organization

Best suited for Small sized organization Large sized organization


Key Differences

Between

Centralization &

Decentralization
1. The unification of powers and authorities, in the

hands of high- level management, is known as

Centralization. Decentralization means dispersal of

powers and authorities by the top level to the

functional level.
2. Centralization is the systematic and consistent

concentration of authority at central points. Unlike,

decentralization is the systematic delegation of

authority in an organization.
3. Centralization is best for small sized organization,

but the large sizes organization should practice

decentralization.
4. Formal communication exists in the centralized

organization. Conversely, in the decentralization,

communication stretches in all directions.


5. In centralization, due to the concentration of powers

in the hands of a single person, the decision takes

time. On the contrary, decentralization proves better

regarding decision making as the decisions are taken

much closer to the actions.


6. There are full leadership and coordination in

centralization. Decentralization shares the burden of

the top level management.


7. When the organization has inadequate control over

the management, then centralization is implemented,

whereas when the organization has full control over

its management, decentralization is implemented.


THANK
YOU
See you next time!

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