Decentralization is a systematic effort to delegate to the lowest levels of the authority except that which can be expected that can be exercised at central points. It is the pushing down of authority and power of the decision-making to the lower levels of the organization and the essence of decision making is dispersed throughout the organization. The essence of decentralization is the transference of authority from a higher level to a lower level. It is a fundamental principle of democratic management where each individual is respected for his inherent worth and constitution as Newman and Summer rightly said “Decentralization is simply a matter of dividing up the managerial work and assigning specific duties to the various executive skills”.
FEATURES OF DECENTALISATION
The following are the chief characteristics of decentralization:
- It is an extended form of delegation.
- It gives importance to the role of subordinates.
- It reduces the work-load of the managers in the top hierarchy.
- It is a process applied to the entire organization.
- Under it its decisions are taken by those employees who implement them; and
- Under it along with authority, responsibility is also transferred.
Centralization is the reservation or withholding of authority by individual managers within the organization and according to Henry Floyd “Everything that goes to increase the importance of the subordinate’s role in decentralization, everything which goes to reduce it is centralization”.
In centralization a little delegation of authority is the rule; power and discretion are concentrated in a few executives. Control and decision-making are in the hands of top-level management, however, absolute centralization is untenable because it would mean that the subordinates have no duties, power, or authority.
Centralization may be essential in a small organization to survive in a highly competitive world, but as an organization becomes more complex in terms of increasing size, the interdependence of work-flow, complexity of tasks and spatial physical barriers within and among groups, a requisite for efficiency is to move decision-making centres to the operating level. Thus, the larger the size of an organization, the more urgent is the need for decentralization and this does not mean that denaturalization is good and centralization is bad. According to Allen “ Centralization is the systematic and consistent reservation of authority at central points in the organization” and according to Fayol “Centralization is that organization where the role of subordinates is reduced”.
FEATURES OF CENTRALIZATION
On the basis of the properties, the following are the characteristics of centralization:
- Right of decision is centralized and withhold with the top level of the management.
- The lower level of management executives only follows the decisions and necessary actions taken by top-level management.
- There is the least use of the process of delegating rights as it brings down the taken for making a decision and reduces the number of people involved as there is the direct involvement of the top-level management.
- There is reduction in the role of subordinates.
- There are a great distance work site and the decision-making place.