Centralization and Decentralization
Centralization is the retaining of power
or authority to upper-levels of management. The advantages to centralization involve a closer control of company operations-including
policies and practices. By retaining power at the top, those decisions that directly affect a company will be made by the
proper governing board.
Decentralization is the degree to which
authority is dispersed throughout the lower levels of an organization. One of the main advantages to decentralization is that
decisions can be made considerably faster, without having to seek approval from upper levels of authority. Also, the presence
of decentralization acts as a motivational tool for employees to work their way through the ranks. Decentralization also eases
the workload for busy executives who may not have time to oversee all aspects of the company.
Reasons to Move
Centralization to Decentralization
A. Considerable company
a company may find it advantageous to switch to a decentralization model in order to keep organized. In this manner, a company
may establish new divisions or departments to keep track of its growth.
B. Geographic- decentralization could involve the dispersing of power from a centralized
headquarters to localized branches. This designation of power is most commonly used in the situations where a domestic company
has offices in a foreign country.
a company may also choose to decentralize its chain of command in order to better facilitate its technological departments.
This maneuver may also indirectly demonstrate a sense of confidence to the technology employees, as it proves a company has
confidence in their actions. A positive
side effect could be the creation of an environment where ideas can be freely
explored and where they may flourish
D. Time- decentralization is sometimes necessary as a time solution. For instance,
a company might experience a time limit to finish a project, and the most feasible solution would be to appoint lower-level
mangers that are more directly involved in the project to supervise.