Centralization & Decentralization Of Authority

Centralization is the systematic and consistent reservation of authority at central points in the organization. The implication of centralization can be : Reservation of decision making power at top level. Reservation of operating authority with the middle level managers. Reservation of operation at lower level at the directions of the top level.

 Decentralization is a systematic delegation of authority at all levels of management and in all of the organization. Everything that increasing the role of subordinates is decentralization and that decreases the role is centralization Authority is retained by the top management for taking major decisions. Decentralization pattern is wider in scope.

Implication of Decentralization
Less burden on the Chief Executive as in the case of centralization. Subordinates get a chance to decide and act independently. Operations can be coordinated at divisional level. Co-ordination to some extent is difficult to maintain.

Advantage of Centralized Organizational Structure

Focused Vision Fast Execution Reduced Conflict Control and Accountability

Advantage of Decentralized Organizational Structure

Empowering Employees Relieving the Burden Preparing for Emergencies More Efficient Decision-Making Ease of Expansion

Bureaucracy
A bureaucracy is a form of organizational structure in which people can be held and accountable for their actions because they are required to act in accordance with rules and standard operating procedures. Pros: effectiveness, careful operations Cons: dehumanizing, red tape Max Weber is the sociologist most closely associated with bureaucracy theory.
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Principles of Bureaucracy
A Bureaucracy is founded on the concept of rational-legal authority Organizational roles are held on the basis of technical competence A roles task responsibility and decision making authority and its relationship to its other roles should be clearly specified. The organization of roles in a Bureaucracy is such that each lower office in the hierarchy is under the control and supervision of higher office. Rules, standard operating procedures, and norms should be used to control the behavior and relationship between roles in an organization Administrative acts, decisions and rules should be formulated and put in writing

Advantages of Bureaucracy
Lays out the ground rules for designing an organizational hierarchy that efficiently controls interactions between organizational levels. It separates the position from person.

Harmful effects of bureaucracy

Robert Merton identified what he saw as the dysfunctions of bureaucracy. Bureaucracy stifles creativity with its sea of rules and SOPs. It is also overly pragmatic and lacks a visionary element. Occasionally rules dominate goals.

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