This document discusses the principles of centralization and decentralization of authority as introduced by Henri Fayol. Centralization involves reserving authority at central points in the organization, such as reserving decision making power at the top level. Decentralization involves systematically delegating authority at all levels of management. The document outlines factors that influence centralization, such as size and diversity of operations, as well as factors that affect decentralization like size of the organization and availability of efficient managers. Advantages of centralization include reduced costs and uniformity, while disadvantages include delay and lack of loyalty. Advantages of decentralization comprise increased motivation and efficiency, while disadvantages include increased costs and lack of uniform action.

1. CENTRALIZATION AND’
DECENTRALIZATION
OF AUTHORITY

2. • Henri Fayol (was a French mining engineer and director
of mines who developed a general theory of business
administration.
• He and his colleagues developed this theory
independently of scientific management but roughly
contemporaneously.
• He was one of the most influential contributors to
modern concepts of management.
• Fayol has introduced the 14th principles of
management which are very dynamic in nature.
• Among those the 8th principle is CENTRALIZATION AND
DECENRALIZATION.
INTRODUCTION

3. “Centralization” is the systematic and consistent
reservation of authority at central points in the
organization.

4. • The implication of centralization can be :-
 Reservation of decision making power at
top level.
 Reservation of operating authority with the
middle level managers.
 Reservation of operation at lower level at
the directions of the top level.

5. “Decentralization” is a systematic
delegation of authority at all levels of
management and in all of the organization.

6. DECENTRALIZATION

7. • “Everything that increasing the role of
subordinates is decentralization and that
decreases the role is centralization”
• Authority in retained by the top management
for taking major decisions.
• Decentralization pattern is wider is scope.

8. Advantage of Centralized
Organizational Structure
• Reduced cost
• Uniformity in action
• Personal leadership
• Flexibility
• Improved quality of work
• Better co-ordination

10. Dis Advantage of Centralized
Organizational Structure
• Delay in work
• Remote control
• No loyalty
• No Secrecy
• No special attention

11. Advantage of De Centralized
Organizational Structure
• Distribution of burden of top executive
• Increased motivation and morale
• Greater efficiency and output
• Diversification of Activities
• Better Co-ordination
• Maintenance of Secrecy
• Facilitate effective control and quick decision

13. Dis Advantage of De Centralized
Organizational Structure
• More cost
• No specialization
• Need more specialists
• No uniform action
• No equitable distribution of work
• Control Systems
• Types of Business
• Branches of organization
• Type of organization

14. WHAT ARE THE FACTORS INFLUENCING
CENTRALIZATION?
• Size and dispersal of operation
• Level of diversity of product-lines
• Nature of growth
• Nature of Business
• Quality of Executives
• Management by Exception
• Effective Control System

15. WHAT ARE THE FACTORS AFFECTING
DECENTRALIZATION?
• Size of the organization – large or small
• Cost and Importance of decisions
• Uniformity
• History of organization
• Management Philosophy
• Availability of efficient managers
• Type of business
• Branches of organisation

16. WHAT ARE THE FACTORS AFFECTING
DECENTRALIZATION?
• Size of the organization – large or small
• Cost and Importance of decisions
• Uniformity
• History of organization
• Management Philosophy
• Availability of efficient managers
• Type of business
• Branches of organisation