After reading this article you will learn about the centralisation and decentralisation of authority.
Centralisation of Authority:
Centralisation of authority means systematic reservation of authority at central points in an organisation. Hence the majority of the decisions regarding the work are taken only at higher levels and not by those who actually performs the work.
Following are some of the points in favour of centralisation of authority:
1. Uniformity of Action:
As the major management decisions are taken by a central authority, a uniform policy in the whole of the concern can be adopted.
2. Helpful in Emergency Decisions:
This type of system is helpful in taking the emergency decisions affecting whole of the concern (i.e., all the units of concern).
3. Centralisation of Specialised Services:
Centralisation is suitable for proper development of specialised services. Work of specialised nature can be handled by the specialists of those fields.
Decentralisation of Authority:
Decentralisation is the systematic delegation of authority in an organisation. Decentralisation is said to be complete only when the fullest possible delegation is made to the persons who are delegated with any kind of responsibility.
Some of the advantages of decentralisation are given hereunder:
1. Relief in Work Load of Chief Executive:
Centralisation leads to too much load of work on the chief executive from all parts of organisation. This means that he cannot plan for the advancement of the concern. While decentralisation relieves the work load of the management so as to enable them to devote more time and energy for the overall plans etc.
2. Initiative and Responsibility:
Decentralisation of authority for making decisions is delegated at points where work is actually done, which promotes initiative and responsibility in the persons incharge of taking the work, which will help in the development of good managers. This will also lead to better efficiency.
Decentralisation also leads to better motivation to its managers to achieve higher productivity. It improves the morale by establishing intimate relationship between the executives and supervisors and other employees because of the better participation and communication.
In this way, it is clear that centralisation and decentralisation have their own advantages. No concern follows either wholly centralisation or decentralisation. Really speaking both these systems can be found in each of the big concern.
However small enterprises adopt centralisation system. But in a big or medium size concern planning, organisation, command, financial and legal matters, research etc. are kept under centralisation system, while other functions are kept under decentralised system.