Centralization & De-centralization
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.
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 PRODUCTION
MANAGER PERSONNEL
MANAGER
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