Centralization & decentralization

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Centralization & decentralization

  1. 1. DECENTRALIZATION & CENTRALIZATION
  2. 2. DECENTRALIZATION <ul><li>Everything that goes to increase the importance of the subordinates’ is decentralization and everything which goes to reduce it is centralization. </li></ul><ul><li> - Henry Fayol </li></ul>
  3. 3. CHARACTERICS OF DECENTRALIZATION <ul><li>Extended form of delegation </li></ul><ul><li>Gives importance to the role of subordinates </li></ul><ul><li>Process applicable to entire organization </li></ul><ul><li>Reduces the work-load of the managers in the top hierarchy </li></ul><ul><li>Decisions are taken by those employees who implement them. </li></ul><ul><li>Under it along with authority, responsibility is also transferred. </li></ul>
  4. 4. Principles or Factors making decentralization more effective : <ul><li>Principle of Good Delegation </li></ul><ul><li>Principle of Proper Communication </li></ul><ul><li>Principal of Adequate Control </li></ul><ul><li>Principle of Centralized Decentralization </li></ul><ul><li>Principle of Proper Motivation </li></ul><ul><li>Principle of Minimum Interference </li></ul>
  5. 5. Advantages of decentralization <ul><li>Relieves the Top Executives of Excessive Workload. </li></ul><ul><li>Managerial Development </li></ul><ul><li>Increase in morale of employees </li></ul><ul><li>Quicker and better decisions </li></ul><ul><li>Improvement in Industrial Relations </li></ul><ul><li>Expansion of Market </li></ul><ul><li>Increase in Initiative </li></ul><ul><li>Reduces problem of Communication </li></ul>
  6. 6. Disadvantages of decentralization <ul><li>Dependence on the ability of subordinates </li></ul><ul><li>Lack of cooperation </li></ul><ul><li>Lack of uniformity of decision </li></ul><ul><li>Costly set- up </li></ul><ul><li>Lack of control </li></ul>
  7. 7. CENTRALIZATION <ul><li>Centralization is the systematic and consistent reservation of authority at central points in the organization. </li></ul><ul><li>- Louis A. Allen </li></ul>
  8. 8. Characteristics of Centralization <ul><li>Almost all the authority to take decision is kept reserved at the top level. </li></ul><ul><li>Role of subordinates is to implement decisions. </li></ul><ul><li>Process of delegation of authority is used to the minimum. </li></ul><ul><li>Distance between the place of work and the place where decisions are taken. </li></ul>
  9. 9. Advantages of Centralization <ul><li>Independent set-up </li></ul><ul><li>More Coordination </li></ul><ul><li>Uniformity of decisions </li></ul><ul><li>Cheap set-up </li></ul><ul><li>Advantages of Expert’s Services </li></ul><ul><li>More control </li></ul>
  10. 10. Disadvantages of Centralization <ul><li>Excessive work load for top executives </li></ul><ul><li>Diversification impossible </li></ul><ul><li>Decrease in the Morale of Employees </li></ul><ul><li>Delay in decisions </li></ul><ul><li>Industrial Disputes </li></ul><ul><li>Decrease in Initiative </li></ul><ul><li>Expansion of Market Impossible </li></ul><ul><li>Problem of Communication </li></ul>
  11. 11. Factors Affecting the degree of Centralization & Decentralization <ul><li>Size of the organization </li></ul><ul><li>Managerial Outlook </li></ul><ul><li>History of the organization </li></ul><ul><li>Availability of competent subordinates </li></ul><ul><li>Control Technique </li></ul><ul><li>Riskiness of Decisions </li></ul><ul><li>Extent of Diversification </li></ul><ul><li>Government Interference </li></ul>
  12. 12. Delegation Vs. Decentralization <ul><li>Transfer of Accountability </li></ul><ul><li>Control </li></ul><ul><li>Compulsion </li></ul><ul><li>Permanency in Transfer of Authorities </li></ul><ul><li>Scope </li></ul><ul><li>Relations b/w Delegator & Delegant </li></ul><ul><li>Deliberate Policy </li></ul><ul><li>Dependence </li></ul>
  13. 13. Centralization Vs. Decentralization <ul><li>Delegation of Authority </li></ul><ul><li>Quickness of Decisions </li></ul><ul><li>Dependence </li></ul><ul><li>Uniformity of Decisions </li></ul><ul><li>Cooperation </li></ul><ul><li>Work-load of Executives </li></ul><ul><li>Development of Employees </li></ul><ul><li>Industrial Disputes </li></ul><ul><li>Suitability </li></ul><ul><li>Expansion of Market </li></ul>

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