Meaning and Definition of Centralisation
Centralization means the situation in which all the activities to be carried out in the undertaking
The decision-making authority should be with the higher officials to perform such types of tasks. In other words, centralization means staying close to the center and decentralization means moving away from the centre. Thus, the preservation of authority over central points in an organization in a systematic and permanent manner is called centralization. Most of the decisions regarding the work to be done in centralization are not taken by the persons who are working but are taken at a higher point in the organisation. In this, the scope of delegating authority is limited and decisions are taken at a higher level.
According to Henry Fayol, “All the steps which are taken to increase the role of subordinates, they all come under centralization and on the contrary those which reduce it, they come under decentralization.” Koontz and O. According to Donnell (Koontz and O’Donnell), “centralization and
The difference between decentralization is exactly the same as that of centralization between hot and cold water.
Under this, the centralization of powers remains with the top level managers. ,
Lewis A. According to Allen (Louis A. Allen), “Centralization means
Most of the decisions regarding the work being done are not taken by the persons who are doing the work.
but are taken at a higher point in the organisation. ,
features of centralization
Merits of Centralisation
Centralization of authority has the following major advantages/qualities
(1) Uniformity in actions- There is lack of uniformity in the activities of decentralization, because different officials exercise rights in different ways. On the contrary, in centralization, due to the completion of all business activities by a single person, the activities are completed.
There is uniformity. Even in decisions, there is uniformity instead of difference.
(2) Facing crisis situations easily, in centralization, since the decision is taken by only one person, hence the decision remains simple. This format is especially suitable for emergency situations, as there is a need for quick decision making in critical situations.
(3) Promoting Integration – To provide uniformity and unity to the efficient operation of the enterprise. Central operation is necessary for this. If the decentralization is increased to a great extent then it is difficult to establish such homogeneity and unity.
(4) Effective inspection is possible – in centralization there is only one central officer, so his testing is effective and his orders are followed quickly. Thus the observers Does not get unnecessary load.
(5) Facilitation in control – Under centralization, all the work is done under one roof and the clerks are directly related to the highest authority. So there is effective control and all the work is done well with responsibility.
Demerits of Centralisation
Following are the major drawbacks of centralization of authority power
(1) More paperwork centralization leads to authentication of rules, procedures and procedures etc. Every task gets bogged down in the process and paperwork gets increased unnecessarily.
(2) Conflict with departmental officers – In centralization, there is always a situation of conflict between the top management and the departmental.
(3) Dissatisfaction-centralization among young officers leads to feelings of dissatisfaction, frustration, struggle among young officers.
(4) Relaxation in control – In small enterprises, effectiveness can be maintained on the basis of centralization, but due to centralization in large enterprises, the expansion of control increases, which leads to laxity in control.
(5) Delay in works – Due to centralization in the work of high level management, due to which there is a possibility of delay in the works.
Meaning and Definition of Decentralization
When a higher authority delegates a relatively greater amount of authority to his subordinates, it is called decentralisation. Generally, through decentralization, the higher authority transfers all the functions (except the more important ones) to the subordinate officers. In short, it can be said that decentralization is a form of weighting which is more comprehensive than weighting.
According to Koontz and O’Donnell, “Decentralization of authority is a fundamental aspect of delegation of authority, and the extent to which that authority is not delegated becomes centralized.”
E. F. Ale. The breach (E. F. L. Breech) is the size of the liabilities to be met.”
According to, “Decentralization as a result of the burden of
According to Henry Fayol, “to increase the importance of the role of the subordinate class
Whatever steps are taken for this, they all come under decentralization.
Principles of Decentralisation
The main principles of decentralization are as follows:
(1) The right to take decisions related to decentralization should be given to higher officials.
(2) Decentralization will take effect only when the rights are actually conferred.
(3) Decentralization is based on the belief that the officials who have are being assigned, they should have the ability to make their own decisions.
(4) For decentralization it is necessary to have such mutual sharing that the staff
Major Contributor Provides support and counseling to Line staff through some experienced people so that they can take decisions and make corrections on their own.
(5) Decentralization is also based on a feeling that many individuals taken by Decisions are better than the decisions made by one person.
(6) Decentralization is possible only when higher officials are genuinely lower level. Empower the officers and assign responsibilities.
(7) Decentralization will benefit only when decision-making authority along with a sense of responsibility arises.
Factors affecting of Decentralization
The following are the common factors affecting the degree of decentralisation.
(1) Size of Organization – Generally, the larger the size of an organization, the greater the degree of decentralization is found in it because in such an organization the higher authority cannot do all the work alone. In contrast, there is relatively little need for decentralization in a small organization.
(2) Stability – Decentralization is encouraged in the state of stability in the business, while the tendency of centralization is found when there is instability and uncertainty.
(3) Managerial Policies – Managerial policies or managerial approach also affects the degree of decentralization. Managers with modern and broad managerial approach accept and encourage decentralization, whereas managers with narrow and traditional approach prefer centralization more. It is noteworthy that centralization is adopted more when similar policies are followed in the organization.
Whereas in the case of diversity in policies, it becomes necessary to follow decentralization.
(4) Importance and Nature of Decisions – If the nature of business is such in which decisions of important and permanent nature are taken, then the degree of decentralization will be less because there is always this fear while delegating authority to subordinates to higher officials. It will be ensured that in case of error, the business does not have to suffer a great loss. The tendency of centralization is found more because of the special importance of decisions in the financial situation. In the case of decisions of daily nature and general importance, decentralization is preferred.
(5) Ability of the Subordinates – The more capable and capable the subordinate, the greater will be the degree of decentralization in the organization. If the subordinates are not capable, skilled and experienced, the higher officials are hesitant to delegate authority to them, as a result the degree of decentralization is reduced.
(6) Availability of Managers – Availability of managers at higher level encourages centralization and non-availability encourages decentralization.
(7) Dispersion of Business Activities – Decentralization becomes necessary in the event of business activities being spread in different areas because it is not practically possible to take all the decisions by the central or higher management. Similarly, the tendency of decentralization is encouraged even in the case of different types of business and business activities in the same organization.
(8) Modern Techniques – Modern techniques which are helpful in decision making, promote the tendency of centralization. For example, computer technology discourages decentralization and promotes centralization.