Decentralization of authority in management. Decentralization and Centralization in Organization 2019-03-01

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Centralized Vs. Decentralized Organizational Structure

decentralization of authority in management

Proper communication means giving information about some special decision taken by a particular department to all other departments so that they can take advantage of the experience of other departments in similar situations. But total decentralization with no coordination from the top would be undesirable. Authority once delegated can be withdrawn or revoked by the delegator. It promotes Motivation: To quote Louis A. This gives an opportunity to plane expansion and achieve the same without much of difficulty. Motivation of the Subordinates: Decentralisation motivates the lower level ma­nagers by increasing their chances of recognition, improving their status and offering them a feeling of accomplishment. History of the enterprise: Enterprises which have always worked as centralized organisations continue to do so in future also.

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Centralization and Decentralization

decentralization of authority in management

Similarly, certain activities need information directly from the leader. Diversification of Activities—Decentralisation helps in diversification of activities. Vital and crucial decisions in­volving investment of huge capital funds are taken at the top level, because top officials are better trained and more experienced and, hence, the authority is not decentralised. This reduces the quality of the decisions also. It is within the overall planning that various units make sub- plans to synthesize with the broader plans.

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Centralized & Decentralized Organizational Structure

decentralization of authority in management

This increase in the morale of the employees helps them in making any sacrifice for the success of their unit. Size of the Organisation: Decentralisation depends on the size of the organisation. Each manager will work and frame policies according to his talent which will never be common. This unnecessarily duplicates the work performance. Technological Complexity: As a result of technological developments, the top management is unable to make all decisions alone and therefore, the movement towards decentralization. The larger the size of the concern, the greater shall be the number of decisions and the need for decentralisation of authority.

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Centralized Vs. Decentralized Organizational Structure

decentralization of authority in management

Relief to the Top Executives: Diminishing the work-load of the senior executives who are already over-burdened, decentralisation helps to reduce the volume of their routine affairs. The chief executive should retain with him the power to coordinate the activities of all divisions and departments. Two types of organizational structures are found in the business environment: centralized and decentralized. That is why sometimes completely opposite decisions are taken in different departments to handle a similar problem. Some degree of decentralisation is essential.

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Centralization and Decentralization

decentralization of authority in management

Decentralisation can be accomplished to a certain extent in a functional type of organisation structure. For example, Bit Torrent downloads a part of the overall file from numerous computers spread across the globe. No equitable distribution of work — It becomes difficult to distribute workload equitably among different employees. On the contrary, the enterprises created through combination, amalgamation or merger tends to be more decentralised. Louis Allen observes that centralization is the systematic and consistent reservation of authority at central point within an organization.

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Decentralization of Authority in Management

decentralization of authority in management

Availability of Capable Executives: The degree of decentralization in an organization is influenced by the availability of competent managers. If there is 100% centralisation, then it must be only one-man organisation and it is beyond our study ; and if there is total decentralisation, it would be anarchy and again beyond the realm of our study. The technological development, political factors, availability of managers also affects the degree of decentralisation. In some cases, managers delegate work without delegating authority necessary to carry out the work. It reduce the scope for specialisation as the persons taking decisions at the top level with regard to various fields are not all round experts. A decentralized management structure is one in which decision-making authority is delegated to the lower level throughout the organization rather than limiting it to a few top executives.

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Decentralized decision

decentralization of authority in management

Quite often emergency situations like declining sales, introduction of a highly sophisticated competitive product, government policy changes may force the organization to cut down costs, maintain inventories at an optimum level, utilize resources effectively and instantaneously. The facility to make decision and function independently acti­vates strong drives among the individuals and, thus, results in increased productivity. Regulation of the Government: If Government has strict policies and procedures for business firms, managers cannot take the risk of delegating decision-making powers to people at lower levels. It was deliberately created to overcome the limits of a centralized military command and the threat of missile attack. Decentralization is also advisable when the acceptance of the decision by subordinates is important and especially when the subordinates function independently in implementing the decision in the organization. It is certain that an executive with traditional rigid outlook hardly contemplates delegating substantial authority.

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Centralization and Decentralization

decentralization of authority in management

Decentralisation is possible only when the services of capable and competent managers are abundantly available. Human Resource Development In a centralized system, the managers' performance cannot be correctly evaluated as they are not given much latitude. It gets divided among various persons and thus helps in taking quick and good decisions. Through decentralisation, routine decisions can be delegated down the scalar chain and important decision can be retained at the top. In this way the problem of communication is reduced as the information happens to be where decisions are to be taken. Wholesome authority means giving authority to one person only to solve the problem. Types of Authority : 1.

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Decentralized organizational structure — AccountingTools

decentralization of authority in management

About the Author Shilpi Singh has been working as a freelance writer since 2009. The employees are motivated to work. It is considered as a general policy of top management and is applicable to all departments. Middle and lower level managers feel frustrated and hesitant to take any initiative. .

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Centralization and Decentralization

decentralization of authority in management

Delegation of Authority : Concept of Authority : Since authority is the crux in distribution of authority. The subordinates have the authority to take some important decisions along with the authority to take decisions on works of daily routine. Decentralisation enables them to search new markets. Structural Disadvantages Centralized organizations can suffer from the negative effects of several layers of bureaucracy. Fear of failure and consequent reprimand or criticism; iv.

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