Centralisation and decentralisation are very important concepts of prganisation. They explain the manner in which the decision making authority' is distributed or delegated among various levels of the organization. The concept of centralisation and decentralisation deals with the distribution of overall organizational authority. Centralization is that condition where in much of decision making authority is retained at the top of management authority. Decentralization on the other hand is that condition where in much of the decision making authority is pushed downwards to the lower management levels.
Centralisation refers to systematic reservation of authority at central points within the organization.
Centralisation means the concentration of formal authority at the top levels of an organization. It is a tendency aimed at centralized performance. Hence, it is the’ Opposite of dispersal and delegation of authority: It has an important bearing on the Processes of policy formulation and decision-making. these two major areas of Management or administration are the! reserves of the top management in a centralized organization. The lower levels of the organizational hierarchy always look upwards for direction, advice, clarification, interpretation, etc.
Need For Centralisation
Centralisation is needed to achieve the following objectives: * Establishing Personal Leadership
* Personal leadership is effective function of small organizations. Success in such organizations depends on “aggressiveness, singleness of purpose and flexibility”. The leader can take quick decisions without losing time in discussion and arriving at a consensus which prove not only time consuming but also wasteful.
* Forgoing Integration
* The functions of unification and integration may best be performed if a single person is endowed with centralized authority. It will help to keep different components together and move harmoniously toward achieved the common objective. * Uniformity Of Action
* Personal or departmental goals have to be subordinated to the major goal of the organization. To ensure uniformity of action there is the need for centralized authority; only then uniformity is planning and control may be possible. * Handling Emergency
* Emergency demands quick decision; any loss of time in decision making may prove suicidal to the enterprise. In a decentralised decision making lot of time is wasted in making people to agree to then common approach. This situation is averted in centralized system of authority. Merits Of Centralisation
* Centralisation offers a more flexible base for organizational structure. * Higher level people in organization can take more effective and intelligent decisions. * The benefits of higher specialization can be secured.
* Having a uniform policy and coordination of all activities are possible. Demerits Of Centralisation
* Loser and middle level management will not have interest and initiative in the job. * It hampers effective communication
* Top management unnecessarily has to waste a lot of time and energy on unimportant and routine matters.
As organizations grow bigger these days, the power is distributed at different levels to be able run the organization more efficiently. This is called decentralization. Thus, decentralization can be defined as the delegation of authority at all levels of an organization. In a decentralized organization, a lot of the decision-making is delegated to the lower levels of the organizational structure. Due to the shared decision-making, the chances of being able to make improvements increases. A decentralized structure follows a bottom-to-top approach. Thus, if the lowest tier faces an issue, they are in a better position to suggest improvements and, with a few approvals, can apply changes. This allows the application of...