Centralization and Decentralization

Authority, Responsibility &

Accountability
Span of Management
Centralization
Centralization refers to the concentration of decision-making authority
and control at a single point or within a small group in an organization.
CHARACTERISTICS
1. Top-down hierarchy
2. Limited autonomy
3. Efficiency

• Examples:
• Traditional Military: Military organizations often exhibit centralization,
with orders coming from high-ranking officers.
• Autocratic Governments: Some autocrats concentrate power on a
central authority figure.
Advantages of Centralization
Disadvantages of Centralization

Reduce Scope
Slow Down Delay Decisions Discourage
for
Operations Making Initiatives
Specialization

Lacks Overburden on
Bureaucratic Poor Upward
Adaptability to Top
Leadership Communication
Change Management
Decentralization

• Decentralization involves dispersing decision-making authority

and control across multiple levels or entities in an organization.
 Characteristics
• Distributed authority
• Local autonomy
• Flexibility

• Examples:
• Governments Democratic: Many democratic governments have
decentralized structures, with power distributed among different levels
(e.g., federal, state, and local governments).
• Tech Companies: Some tech companies adopt decentralization to
promote innovation and agility by allowing employees more autonomy
in decision-making.
Advantages of Decentralization

1. EFFICIENCY 2. INNOVATION 3. FLEXIBILITY 4. ACCOUNTABILITY 5. MOTIVATION AND

ENGAGEMENT

6. REDUCED 7. LOCAL
WORKLOAD ON CUSTOMIZATION
CENTRAL AUTHORITIES
Disadvantages of Decentralization

Coordination Inconsistent Loss of Duplication of

Challenges Policies Control Efforts

Risk of Accountability Potential for

Inequity Challenges Corruption
Factors Affecting an Organization for
Centralization and Decentralization

Organizational Task Organizational Leadership

Size Complexity Culture Style

Nature of Technological Geographic Market

Industry Infrastructure Spread Dynamics

Legal and
Resource Historical Competitive
Regulatory
Availability Factors Strategy
Requirements
 So, what do you all think about
which one an organization should
adopt for better results?

Centralization or
Decentralization?
Authority, Responsibility and Accountability
TEACHER

STUDENT
STUDENT’S
JUNIOR
Authority
TASK Authority

Responsibility Responsibility

Accountability Accountability
Span of Management
• Also known as, “Span of Control” or “Span of Supervisor” refers to the
number of subordinates or employees that a manager can effectively
supervise, guide, and control.

• Number of people directly reporting to a supervisor (generally at the lower

most level)

Large Span of Control

Span of Control = 16
Number of Levels in the Hierarchy = 2
Small Span of Control
Span of Control = 8
Number of Levels in the Hierarchy = 3
Factors Affecting Span of Management

Nature of Work

Competence of Subordinates

Manager's Competence

Technology

Communication and Information Systems

Types of Span of Management
NARROW SPAN WIDE SPAN

• Few subordinates report to • Many subordinates report to a

each manager. This creates a single manager. This results in a
more hierarchical and closely flatter organizational structure with
supervised structure. fewer levels of management.
• Also known as Tall Structure. • Also known as Flat Structure.
Advantages

WIDE SPAN NARROW SPAN

COST EFFICIENCY BETTER SUPERVISION
FASTER DECISION MAKING MORE PERSONAL ATTENTION
EMPOWERMENT REDUCED WORKLOAD
IMPROVED COMMUNICATION
Departmentalization
• Departmentalization is a framework that facilitates an
organization's continued growth while enabling management to
oversee staff and maintain standards throughout the whole
enterprise.
• The manner in which tasks are combined and allocated to
people or work groups
Types of Departmentalization

FUNCTION PROCESS PRODUCT CUSTOMER GEOGRAPHY

Based on Function
Based on Process
Based on Product
Based on Customer
Based on Geography
Mixed Departmentalization
Thank you!