What is Centralization and Decentralization in Management (Explained)

Centralization and decentralization both are principles of management.

Centralization: Meaning and Definition

Centralization is the reservation or withholding of authority by individual managers within the organization.

“Centralization is the Systematic and consistent reservation of authority at the Central point within the organization” – Louis Alien

Thus, in centralization, the little delegation of authority is the rule. which means that power and discretion are concentrated in Few executives. Control and decision making are withheld and reside at the top level of management.

The Centralization may be Essential and Practicable for small organizations to survive in a highly competitive world. but as the organization grows more Complex in terms of its increasing size, The interdependence of work-inflow-completeness of tasks and Spatial physical Barriers within and among Groups.

It is necessary that the decision-making Centre should be moved to the operating level for achieving Efficiency.

Thus, the largest the size of an organization, the more urgent is the need for decentralization.

However, this does not mean that centralization is bad and decentralization is good.

Bonus article: The Modern Theories of Motivation on Employees Relations.

Decentralization: Meaning and Definition

Decentralization means consultant delegation of authority throughout the organization. It is pushing down authority and power a decision making to the lower levels of the organization.

The centers of decision making are dispersed throughout the organization.

The Essence of decentralization is the transference of authority from a higher level to a low level.

Some important definitions of decentralization are reproduced as follows:

Decentralization is the tendency to disperse decision making authority in an organized structure. – Weihrich and Koontz

Merits or Advantages And Limitations of Decentralization.

Differences between Delegation and Decentralization

Though decentralization is closely related to the delegation the following are some points of difference between the two concepts:

Delegation refers to the transfer of authority from one individual to another, while decentralization refers to the systematic delegation of authority to all units in an organization widely. It means that the decentralization is consistent and wide dispersal of authority throughout the organization.
The Delegation Can take place from one person to another and be a complete process. However, decentralization is complete only when the fullest possible delegation is made to all or most of the people up to the lower level in the organization.
delegation is between a superior and a subordinate, while decentralization is organisation-wise delegation as between top management and departments of divisions.
delegation is necessary for effective management because no individual manager can afford to look after everything. However, decentralization is optionally necessitated by the growth of the organization.

Thus, You are here What are Centralization and Decentralization in Management.