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Chapter: Principles of Management : Organizing

Centralization and Decentralization: Characteristics, Advantages and Disadvantages

It is the process of transferring and assigning decision-making authority to higher levels of an organizational hierarchy. The span of control of top managers is relatively broad, and there are relatively many tiers in the organization.

CENTRALIZATION AND DECENTRALIZATION

 

 

CENTRALIZATION:

 

It is the process of transferring and assigning decision-making authority to higher levels of an organizational hierarchy. The span of control of top managers is relatively broad, and there are relatively many tiers in the organization.

 

Characteristics

 

          Philosophy / emphasis on: top-down control, leadership, vision, strategy.

 

          Decision-making: strong, authoritarian, visionary, charismatic.

 

          Organizational change: shaped by top, vision of leader.

 

          Execution: decisive, fast, coordinated. Able to respond quickly to major issues and changes.

 

          Uniformity. Low risk of dissent or conflicts between parts of the organization.

 

Advantages of Centralization

 

            Provide Power and prestige for manager

 

            Promote uniformity of policies, practices and decisions

 

            Minimal extensive controlling procedures and practices

 

            Minimize duplication of function

 

 

 

Disadvantages of Centralization

 

            Neglected functions for mid. Level, and less motivated beside personnel.

 

            Nursing supervisor functions as a link officer between nursing director and first-line management.

 

DECENTRALIZATION:

 

It is the process of transferring and assigning decision-making authority to lower levels of an organizational hierarchy. The span of control of top managers is relatively small, and there are relatively few tears in the organization, because there is more autonomy in the lower ranks.

Characteristics

 

          Philosophy / emphasis on: bottom-up, political, cultural and learning dynamics.

 

          Decision-making: democratic, participative, detailed.

 

          Organizational change: emerging from interactions, organizational dynamics.

 

          Execution: evolutionary, emergent. Flexible to adapt to minor issues and changes.

 

          Participation, accountability. Low risk of not-invented-here behavior.

 

 

Three Forms of decentralization

 

De-concentration. The weakest form of decentralization. Decision making authority is redistributed to lower or regional levels of the same central organization.

 

Delegation. A more extensive form of decentralization. Through delegation the responsibility for decision-making are transferred to semi-autonomous organizations not wholly controlled by the central organization, but ultimately accountable to it.

 

Devolution. A third type of decentralization is devolution. The authority for decision-making is transferred completely to autonomous organizational units.

 

Advantages of Decentralization

 

            Raise morale and promote interpersonal relationships

 

            Relieve from the daily administration

 

            Bring decision-making close to action

 

            Develop Second-line managers

 

            Promote employee’s enthusiasm and coordination

 

            Facilitate actions by lower-level managers

 

 

Disadvantages of Decentralization

 

            Top-level administration may feel it would decrease their status

 

            Managers may not permit full and maximum utilization of highly qualified personnel

 

            Increased costs. It requires more managers and large staff

 

            It may lead to overlapping and duplication of effort

 

 

Centralization and Decentralization are two opposite ways to transfer decision-making power and to change the organizational structure of organizations accordingly.

There must be a good balance between centralization and decentralization of authority and power. Extreme centralization and decentralization must be avoided.

 

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Principles of Management : Organizing : Centralization and Decentralization: Characteristics, Advantages and Disadvantages |


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