These days, the two most significant concepts of business management are Centralization and Decentralization. No corporation is completely centralized or decentralized. Each has its own positives and negatives, based on some principal factors. A completely decentralized organization will cease the existence and significance of its senior most executives in the hierarchy of directorial systems. Whereas, a completely centralized organization with all its pre-eminence, bureaucracy and control will not be successful in formulating a formal organization.
Both these concepts should be treated as relative and not extreme concepts. In other words, any corporation cannot be totally centralized or totally de-centralized. Both have individual characteristics that when put to effect together would function effectively. For example, a few organizations couldn’t run effectively with just centralizing the company i.e., if all authorizations were to be made only by a selected panel of top managers; nor could it do with just decentralizing i.e. if all authorizations were entrusted to the least level in the hierarchy. Hence, any company of any size would demand the application of a combination of both these concepts in a relative manner. Both centralization and decentralization concepts involve a variety of training strategies and methodologies.
Let’s identify the difference in results on both collective and individual application of the two methods.
|Centralized Organization||Decentralized Organization|
|Environment steadier and more secure.||Environment is multifaceted, comprehensive and tentative.|
|Subordinate level executives are inexperienced in decision-making. Hence, there is purely a concept of dictatorship.||Subordinate level executives are inexperienced in decision-making but are given an opportunity to voice their opinions and suggestions.|
|Decisions are more noteworthy and momentous.||Decisions are relatively trivial and inconsequential.|
|There is a risk of Company breakdown or of encountering crisis.||The communal work culture allows subordinate level employees to lend a hand in the decision-making process by voicing their viewpoints in any situation.|
|Company is by and large outsized.||Company is geographically branched out.|
|Effectual execution of the strategies in an organization is based on the agreement of the subordinates over the occurrence of an event or happening.||Effectual execution of the strategies in an organization is based on the availability of a range of decisions made by subordinates due to more involvement and flexibility.|
Thus, instead of being judgmental on whether or not to implement centralized or decentralized approach, an organization should craft different strategies that have a combination of the two, in order to prove beneficial to the organization. And the most incredible phase faced while blending the two concepts is that the organization does not require giving a face-lift to its structure.
Do share your thoughts on the same.