centralization and decentralization by Jay Raval

Centralization & De-centralization

Prepared by: Jay Raval

“DO OR DIE EITHER NOW OR NEVER”

CENTRALIZED

Top Managers Hold Most Decision Making Authority

DECENTRALIZED

Lower Level Managers Hold Significant Decision Making Authority

CENTRALIZATION

The amount of authority and autonomy given to a multinational divisional manager.

In short, the simple meaning is that the location of most authority at the upper levels of the organization, it’s called centralization.

Some times you would face this situation in many companies that if you have ever called a company’s with a complaint or a special request and been told by the customer service representative ,’’ I will have to ask my manager” or “ I am not authorized to do it but I understood your situation yet I can not do it.” so you are aware about such type situation’s answer.

Therefore, in this type of organization managers take most decisions even the small one also, that why the customer service representative you called couldn’t make a decision without first asking the manager.

so, in a centralized organization, head officer will retain the major responsibility and power.

Headquarter

Production Marketing Finance Personal

For an example, reserve bank of India takes every decision, about C.R.R. (cash reserve ratio) , inflation rate, printing money, interest rate etc.

Advantages of Centralization Better co-ordination

Focus on the most important decision

Improved quality of work

Flexibility

Personal leadership

Uniformity in action

Reduced cost

Thus, decreasing role of subordinates in decision making is calling centralization.

Disadvantages

Delay in work

Remote control

No faithfulness

No secrecy

No special attention

Politics

Centralization organization we can see that Adolf Hitler & Benito Mussolini leadership, all people against his leadership and result is that they were lost, so in centralization, decision will be taken by one person & it may be correct or wrong, therefore centralization is not good for organization.

Increasing the role of subordinates in decision making is decentralization & simple meaning is that the location of a significant amount of authority in the lover levels of the organization.

Decentralization

A organization is decentralization, if it has a high degree of delegation at all levels

you may have talked to customer service representative at call center who said “I can take care of that for you right now.”

It’s mean a person was able to handle your problem without any input from or consultation with company ‘s management

In this organization workers closest to problems are authorized to take the necessary decision to solve the problems on their own the best way to develop and retain a close relationship with the customer .

Customer care

How to be a more effective decentralization

1. Trust your staff

2. Avoid seeking perfection

3. Instruction

4. Know your interest

5. To help identify potential problems

6. Praise the effort of your staff

7. Routinely decentralization work

8. Provide resources

9. delegate to the lowest possible level.

Advantages

Reducing senior manager’s burden Increased motivation Maintenance of Secrecy Quick decision Local knowledge Proximity to the market

As manager in many organization consider greater decentralization

The important question is not whether an organization should be decentralized but to what extent to it should be decentralized.

Expensive

Lack of Uniformity

Difficulty in Co-ordination

lack of specialization

Hard to make decisions as a whole

Disadvantages

DIRECTOR

FINANCE MANAGER

MARKETING MANAGER

PRODUCTIONMANAGER

PERSONNELMANAGER

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