Centralization and Decentralization Definition of Centralization A pivot
- Slides: 6
Centralization and Decentralization Definition of Centralization A pivot location or group of managerial personnel for the planning and decision-making or taking activities of the organization is known as Centralization. In this type of organization, all the important rights and powers are in the hands of the top level management.
Definition of Decentralization The assignment of authorities and responsibilities by the top level management to the middle or low-level management is known as Decentralization
Differences between Centralization and Decentralization • 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 management. • Centralization is the systematic and consistent concentration of authority at central points. Decentralization is the systematic delegation of authority in an organization. • Centralization is best for a small sized organization, but the large sized organization should practice decentralization. • Formal communication exists in the centralized organization. Conversely, in decentralization, communication stretches in all directions
• 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. • There are full leadership and coordination in Centralization. Decentralization shares the burden of the top level managers. • 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.
• Departmentation • Pearce and Robinson: “Departmentation is the grouping of jobs, processes and resources into logical units to perform some organizational task. ” • Terry and Franklin: • “Departmentalization is the clustering of individuals into units and of units into departments and larger units in order to facilitate achieving organizational goals.
• Importance of Departmentation 1. Organisation structure: 2. Flexibility 3. Specialisation: 4. Sharing of resources: 5. Co-ordination: 6. Control: 7. Efficiency: 8. Scope for growth : 9. Responsibility: 10. Development of managers:
