CENTRALISATION AND

DECENTRALISATION

NAME- KHUSHI JAIN

CLASS- BA II YEAR
ROLL NUMBER- 3384
SUBMITTED TO- MEENAKSHI MAM
MEANING OF CENTRALISATION:
By centralization we mean: where all the office
services, i,e., recording, computing,
communicating, etc., are carried on in the central
office and managed by the General Manager. The other
departments have not to do any office work except that
which is directly concerned with their own
departments
ADVANTAGE OF CENTRALISATION:
1. Equal Distribution of Work. In the centralized office, whole
of the work is done in the Central place. The supervisor
distributes the work equally amongst the members of the staff.
The moment any employee gets free, he is assigned more work.
Thus there is an equal distribution of work
2. Elimination of Duplication of work. Under centralization,
the work can be done by the common set of staff and equipment.
Thus there will be no duplication of work and equipment.
3. Economy. Double set of typists, machines, etc., will not be
necessary. which means less expenditure of the office
4. Better Supervision. When all the members of the staff will be
at place, they can be supervised by one person as against many
Supervisors under decentralization. Therefore, there can be
better supervision and coordination
 5. Specialization. Under centralization, each worker will be required to
perform a particular type of work over and over again and thus becomes a
specialist in his work. The result will be better, quicker and efficient
performance. It will mean higher production at a lower unit cost. As a
matter of fact, specialization has become a necessity now-a-days.
 6.Standardization: All the workers will be under the supervision of one
person who will evolve a particular method of work in the department.
Same type of machines and methods will be in use. Thus, Hence there is a
standardization of business methods and equipment. Thus no difficulty will
be felt if any member of the staff is absent as another clerk can be deputed
in his place because everyone in the office knows the procedure and system.
 7. Handling of Peak Loads. Generally it is seen that in the evenings there
is more work when the mail has to be sent. If there is centralization, the
work at the peak hours can be easily performed by the central office where
there are many clerks who will handle the work without any difficulty.
 8. Greater Flexibility in the use of the staff. If the supervisor finds that
some additional work has to be completed in a particular period he may
transfer any worker to help others.
DISADVANTAGES OF CENTRALISATION:
1.Delay in work: Whenever a Departmental Manager requires any information,
he will have to get it from the Central Office as all the records are maintained
there. It is possible that the Central Office may be at a distance and thus it may
take some time to get the necessary information.
2.Possibility of Errors. The Central Office may commit mistakes as it has
second hand information which it gets from the Department head and,
therefore, the information may be misunderstood by the Central Office as it is
over-loaded.
 Departmental heads feel inferiority complex as they think that it is the Central
Office which is considered supreme to which they have to send necessary
records and information.
 The Central Office takes its own time to furnish the information required by
the Departmental Manager.
 A too rigid central control may cause frustration.
 There is no direct contact by the Central Office with the departments.
 Each department has its own technicalities or specialization which may not be
understood by the Central Office which has to maintain departmental records
and to furnish them whenever so required by the departments. The Central
Office may not understand these technicalities.
Factors Determining Centralization of
Authority:
In small organizations, the owner or the top management is
responsible for making all the business decision solely.
Whereas, the delegation of work among the subordinates takes
place; therefore, centralization persists in these business units.
The following factors result in the centralization of the
organization:
 QUES.What is the need for centralization of authority in an
organization? Why can’t all the organizations be decentralized?
ANS. Yes, centralization and decentralization are equally crucial for a
business. The reasons for which some o organizations mainly
centralizes its structure are as follows:
MEANING OF DECENTRALISATION:
Decentralization- It refers to a specific form of
organizational structure where the top management
delegates decision-making responsibilities and daily
operations to middle and lower subordinates. It
describes the way in which power to take decisions is
allocated among various levels in the organisational
hierarchy.
 Example of Decentralization—The transfer of
authority and responsibility for public functions from
the central government to subordinate or quasi-
independent government organizations and/or the
private sector—is a complex multifaceted concept.
 Advantages of
Decentralisation:
1. Motivation of Subordinates
Decentralization improves the level of job satisfaction
as well as employee morale, especially amongst the
lower level managers.
Furthermore, it strives to satisfy the varying
requirements for participation, independence, and
status. Decentralization also promotes a spirit of group
cohesiveness and spirit.
 2. Growth and
Diversification:
Under decentralization, every single product division
attains sufficient autonomy to exercise their creative
flair. In this way, the top-level management can create
healthy competition amongst different divisions.
While carrying out a discussion on the advantages and
disadvantages of decentralization, it is imperative to
note that it aids subordinates in exercising their
own judgment.
3.Quick Decision Making
 Another important pointer in the advantages and disadvantages of
decentralization is that decisions are taken and executed by authorized
personnel. This, in turn, results in faster and accurate decisions which are
well aware of the real scenario.
4 .Efficient Communication
 The wider span of management under decentralization leads to fewer
hierarchical level. This makes the communication system more efficient as
intimate relationships develop between superiors and subordinates.
5. Ease of Expansion
Decentralization can add inertia to the expansion process of a
growing business. This might often result in the opening of new business
units in varying geographical locations. Decentralization unleashes the fullest
potential of the organization and can react easily to area-specific
requirements.
6. Better Supervision And Control
Lower level managers can alter production schedules and work assignments
with adequate authority. They can even take disciplinary actions and
recommend the promotion of their peers. Performance evaluation of each
decentralized unit helps in exercising adequate control
7.Satisfaction of Human needs
Decentralization serves as an important tool for satisfying
our basic need of independence, power, prestige, and status.
A cadre of satisfied manager is build up by this satisfaction
as they feel responsible towards the company’s betterment.
8. Relief to top executives
Top executives can focus more on more on the executive
level work like planning and decision making if the lower
level employees take all the responsibilities on their own.
This relieves their workload which eventually is for the
greater good of the organisation.
DECENTRALISATION:
 DISADVANTAGES OF DECENTRALISATION:
1. Difficult To Co-Ordinate
While talking about the advantages and
disadvantages of decentralization, it is imperative to
note that substantial autonomy is enjoyed by every
single division. This, in turn, makes it difficult to
coordinate the overall activity.
2. External Factors
The trade union movement, market uncertainties,
and government intervention might make it
impossible to benefit the most out of
decentralization.
3. Narrow Product Lines
Decentralized product lines need to be adequately
broad so that autonomous units can flourish within
the same. This might not be of much help in small
business houses having narrow product lines. Lower
levels in the organization also lack competent
managers thus adding to the difficulty quotient.
4. Expensive
In decentralisation, every employee takes responsibility for the better of the
organisation so they work harder to achieve all the organisational objective.
In return, they have to be paid more which sometimes proves to be very
expensive for the company.
5. Bureaucratic leadership
Centralized management resembles a dictatorial form of leadership where
employees are only expected to deliver results according to what the top
executives assign them. Employees are unable to contribute to the decision-
making process of the organization, and they are merely implementers of
decisions made at a higher level. When the employees face difficulties in
implementing some of the decisions, the executives will not understand
because they are only decision-makers and not implementers of the
decisions. The result of such actions is a decline in performance because the
employees lack the motivation to implement decisions taken by top-level
managers without the input of lower-level employees.
 6. Remote control
The organization’s executives are under tremendous pressure to formulate
decisions for the organization, and they lack control over the implementation
process. The failure of executives to decentralize the decision-making process
adds a lot of work to their desks. The executives suffer from a lack of time to
supervise the implementation of the decisions. This leads to reluctance on the
part of employees. Therefore, the executives may end up making too many
decisions that are either poorly implemented or ignored by the employees.
7. Delays in work
Centralization results in delays in work as records are sent to and from the
head office. Employees rely on the information communicated to them from
the top, and there will be a loss in man-hours if there are delays in relaying the
records. This means that the employees will be less productive if they need to
wait long periods to get guidance on their next projects.
8. Lack of employee loyalty
Employees become loyal to an organization when they are allowed personal
initiatives in the work they do. They can introduce their creativity and suggest
ways of performing certain tasks. However, in centralization, there is no
initiative in work because employees perform tasks conceptualized by top
executives.
IMPLICATIONS OF DECENTRALISATION:
 There is less burden on the Chief Executive as in the case of centralization.
 In decentralization, the subordinates get a chance to decide and act independently
which develops skills and capabilities. This way the organization is able to process
reserve of talents in it.
 In decentralization, diversification and horizontal can be easily implanted.
 In decentralization, concern diversification of activities can place effectively since
there is more scope for creating new departments. Therefore, diversification growth
is of a degree.
 In decentralization structure, operations can be coordinated at divisional level
which is not possible in the centralization set up.
 In the case of decentralization structure, there is greater motivation and morale of
the employees since they get more independence to act and decide.
 In a decentralization structure, co-ordination to some extent is difficult to maintain
as there are lot many department divisions and authority is delegated to maximum
possible extent, i.e., to the bottom most level delegation reaches. Centralization and
decentralization are the categories by which the pattern of authority relationships
became clear.
CONCLUSION:
Centralization refers to a setup in which the decision-
making powers are concentrated in a few leaders at the
top of the organizational structure. Decisions are made
at the top and communicated to lower-level managers
for implementation.
The degree of centralization and
decentralization will depend upon the amount of
authority delegated to the lowest level. According to
Allen, “Decentralization refers to the systematic effort to
delegate to the lowest level of authority except that
which can be controlled and exercised at central points. 
THANKYOU
EVERYONE
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