Centralisation

&
Decentralisation
TABLE OF CONTENTS

01 02 03
Introduction Benefits Limitations

04 05 06
Examples Fusion Conclusion
01

Introduction
CENTRALISATION
Centralization refers to the process in which activities
involving planning and decision making within an
organization are concentrated a specific leader or
location. In a centralized organization, the
decision-making powers are retained in the head
office and all other locations are directed from this
main office resulting in communication flowing in a
top-down manner. In contrast, a decentralized setup
empowers teams or departments to make decisions,
promoting communication in all directions.
DECENTRALISATION
Decentralization refers to a specific form of organizational
structure where the top management delegates decision-making
responsibilities and daily operations to middle and lower
subordinates. The top management can thus concentrate on
making major decisions with greater time abundance. Businesses
often feel the requirement of decentralization to continue efficiency
in their operation.
Decentralization in management can be understood as the orderly
assignment of authority, throughout the levels of management, in
an organisation. It describes the way in which power to take
decisions is allocated among various levels in the organisational
hierarchy. In other words, it refers to the dissemination of powers,
functions and responsibility, away from the central location.
 Delegation of Authority

01 02 03
Develop your skills as Increasing
Collective success
a manager communication
Hierarchy between you and your In delegation, when reaching
By delegating, you give yourself
team will diminish by delegating. goals, the success will be the
more time to work on your skills
They will notice that you brought one of the whole team and not
and capacities. This will help you them to your level, which will
achieve your goals in less time an individual. A collective
make communication easier for
and set up higher goals to reach. success will make the person
you and them. In addition,
You will become more efficient explaining tasks and sharing
feel as an entity with the
as the stress will be less, which ideas together will lessen the company, and it will empower
means that your vision will be distance between the team’s the team to look forward to
wider. workers. You will all be one unit another success and another
doing its best for the benefit of challenge to break!
all!
Delegation of Authority

04 05
Increase your team’s
Delegate to save time efficiency
Actually, time is one of the most valuable
resources a company has in today’s world.
Effective delegation allows you the ability to When delegating duties to your
maximize this that your company strives for – as team, be sure to distribute the
they say, ‘Time is Money’! As it decreases work across the members of
delays in achieving tasks, and it also decreases
delays on those who are waiting on you, as a
your team. As a result, your
manager, you are able to take more actions or team’s flexibility will expand,
make more decisions. Therefore, an investment and everyone’s abilities will
in the effective delegation process needs to be grow, which is beneficial to the
seen as an investment not only in your people
organization and each
but also in the long term’s health and success
of your association. member’s professional abilities.
02

Benefits
 Centralization
❏ Centralisation facilitates coordinations
❏ Centralisation can help ensure that
decisions are consistent with
organisational objectives
❏ Centralisation can avoid duplication of
activities by various subunits within the
organisation
 Decentralization
❏ Motivational research favors
decentralisation
❏ Top management can become
overburdened when decision making
authority is centralized
❏ Decentralization can result in better
results
03

Limitations
 Centralization
❏ Development of low level managers are
hampered. Opportunity given to exercise
initiative and judgement is negligible
❏ It is a costly affair and delays of decision
making
❏ Centralisation can avoid duplication of
activities by various subunits within the
organisation
 Decentralization
❏ It creates problems in coordination
between different units of the organisation
❏ May result in higher administrative
expenses as qualified managers are
needed for different divisions
❏ Due to different policies and procedures of
each unit in a decentralised organisation
inconsistencies may arise in the
organisation
04

Examples
 Centralization
DICTATORSHIP:
Dictatorships are usually ruled by a single powerful figure, the
easy-to-go sign of a centralized organisation

MILITARY:
Traditionally military has been the classic example of
top-down or hierarchical management. The general orders the
captain who then orders the lieutenant and so on….
Decentralization
OPEN SOURCE SOFTWARE:
There are two decentralized organisation examples in
the computing world the first is open source
management. Think linux, it’s a freely available
thousands of volunteers update it and nobody owns it
PEER TO PEER SOFTWARE:
Uses bits of information contributed by many people.
For example, Bit torrent downloads a part of the overall
file from numerous computers spread across the globe
05

Fusion
Fusion
As far as we are concerned with different business organizations,
Centralization and Decentralization are two relative terms.
Centralization focuses all the decision-making functions at the top
of the management hierarchy. Such a situation would get rid of the
need for a management hierarchy. In other words, the
decision-making authority lies with the higher management.
Decentralization implies assigning all the decision-making
functions to the lower level of the hierarchy, and that would
remove the need for higher management, i.e., the decision-making
authority is divided between all the levels of the hierarchy. Both of
these situations are unrealistic, and therefore both centralization
and decentralization are needed in the working of an organization.
 FUSION
Interdependence between Centralization and Decentralization
An organization is both centralized as well as decentralized. In many
organizations, all the major decisions are taken by the top level, while in some
organizations that power is vested in the lower organizations. The organization
whose decisions are taken by the top management are known as centralization,
whereas the organizations whose decision-making responsibilities are distributed
between the lower levels are termed decentralization. It is more likely for an
organization to make decentralized decisions because of its constant growth and
complexity. In larger organizations, the employees who are at the lower levels are
usually more involved in different kinds of operations and tend to have more
knowledge and understanding about the working of the organization. Therefore,
there is a need for both forces in an organization. Thus, there should be a balance
between centralization and decentralization in every organization.
Example
06

Conclusion
Conclusion
A Centralized organization may not be stable
comparatively because of conflicts of the thought
process of lower authorities to higher. A collective
decision is taken in decentralisation, and proper
discussion and analysis make better and appropriate
decisions.
Conclusion
 THANKS!

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