Centralization &De-centralization Prepared by: Jay Raval
CENTRALIZED Top Managers Hold Most Decision Making AuthorityDECENTRALIZED 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 thatif you have ever called a company’s with a complaint or a special requestand been told by the customer service representative ,’’ I will have to askmy manager” or “ I am not authorized to do it but I understood yoursituation yet I can not do it.”so you are aware about such type situation’s answer.
HeadquarterProduction Marketing Finance Personal Therefore, in this type of organization managerstake most decisions even the small one also, that whythe customer service representative you called couldn‟tmake a decision without first asking the manager. so, in a centralized organization, head officerwill retain the major responsibility and power.
For an example, reserve bank of Indiatakes every decision, about C.R.R. (cash reserveratio) , inflation rate, printing money, interestrate 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 indecision 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.
DecentralizationIncreasing the role of subordinates indecision making is decentralization &simple meaning is that the location of asignificant amount of authority in thelover levels of the organization.
A organization is decentralization, if it has a highdegree 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
Customer care 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 .
How to be a more effective decentralization1. Trust your staff2. Avoid seeking perfection3. Instruction4. Know your interest5. To help identify potential problems6. Praise the effort of your staff7. Routinely decentralization work8. Provide resources9. 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.
Disadvantages Expensive Lack of Uniformity Difficulty in Co-ordination lack of specialization Hard to make decisions as a whole
DIRECTOR MARKETINGFINANCE PRODUCTION MANAGER PERSONNELMANAGER MANAGER MANAGER 2 3 1 4