Centralised & Decentralised Organization Essay Example

The advantages and disadvantages of centralized versus decentralized organizational structures lies greatly in the inherent qualities and effects of the structures themselves. Robbins and Coulter describe this very well, "If top managers make the organization’s key decisions with little or no input from below, then the organization is centralized." Companies which wish to consolidate power and decision-making abilities at the top of the organizational chart, tend to be centralized organizations. If the CEO of a corporation has a particular vision and wishes for it to remain pure to his/her perspective, he/she will centralize the organization so that he/she is able to control as much of the company as possible. As the textbook states, this is helpful for companies who need to be stable or are facing a crisis and need one source of decision-making to lead them. These sort of organizations are becoming more rare, as employees become smarter and organizations become larger, however a few do still exist. Consider the Oakland Raiders, a team which is widely acknowledged as being run completely (but poorly) by its owner, Al Davis or a monarchy such as Saudi Arabia, or an absolute theocracy, such as the Vatican City. Centralized structures are becoming rare because of their many disadvantages. Due to power being consolidated at the top of the organization, risk is great if the top of the organization becomes incapable of leading the organization (death, illness, or massive organizational size causing a weak span of control). Employees also will feel less motivated to perform for the organization as they will not have an avenue for sharing their ideas on how to improve the organization.
Decentralized organizations are becoming more popular as the ability for organizations to decentralize increases. Decentralization allows organizations to take advantage of division of labor by sharing decision-making across the organization. It also empowers employees and allows them to