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What is Organizational Structure?
Key Elements of Organizational Structure
Work Specialization
Departmentalization
Chain Of Command
Span Of Control
Centralization and Decentralization
Formalization
Forms of Organizational Structure
Matrix Organization
Virtual Organization
Organizing Process
Bureaucracy
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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 From

Centralization to Decentralization

 

A.         Considerable company growth- 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.

 

 

C.          Technological complexity- 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.

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