Centralization in any business organization is the spotlight of pre-eminence and control which lies in the hands of very few people. Implementation of this abstract notion will bring out both positives and negatives, just like in any concept. Let’s look at the various advantages and disadvantages of implementing the idea of centralization within an organization.
Advantages of centralization:
- Unbiased allocation of work: Being fair and just in assigning a particular amount of work, not only between different units but also between responsible individual employees will increase momentum within the Company.
- Standardization of work: By implementing centralization, one of the outcomes would result in equality of behavior that guarantees unvarying judgment and standardized progression.
- Area of specialization: There is an immediate advantage if a leader who handles a particular area is an expert in the same field. This will ease the work distribution process within the other levels of the team.
- Replication of work: Centralized training and standardization of work leave no scope for replication of tasks or actions. This eliminates additional expenditure on excessive labor for duplication of work.
- Flexibility: In a crisis or an emergency, standardization of work takes just one step to revise all the activities at once. This guarantees a greater degree of flexibility in an organization than a Company with no centralized training.
Having stated all the advantages of centralization, it is also important to be acquainted with the negatives before putting the concept into effect.
- Administrative system: A centralized administrative system gives way to inequity through the instigation of excessive regulations or strict conformity to official norms which is redundant or bureaucratic and that hinders decision-making and delays work.
- Dictatorship: An employee is always expected to work according to what has been dictated to him. No employee at the subordinate level is given the authority to take a decision on a particular issue, in the absence of the lead. This causes psychological reluctance and the employee sees no growth or motivation within the corporation and hence results in him being disloyal towards the Company.
The system of centralization, thus, cannot be easily upheld. There is a thin line between every norm and its outcome that is adapted in this concept. Centralization requires a clever yet delicate way of handling in order to help sustain for a longer period of time as the most important factor, secrecy, cannot be easily maintained in a system that is centralized to all.
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