Centralised and Decentralised

In this topic, you will learn about, Centralised and Decentralised.

Centralised and Decentralised:

In today’s globally competitive environment any business organisation of any size the importance of centralisation and decentralisation cannot be ignored. Every business organisation has different levels of executives who perform various functions.
Centralisation and decentralisation describe the manner in which decision-making responsibility is divided among different executives in different hierarchy levels.

  1. Centralisation: In the systematic and consistent relationship of the authority at the central level which deals in an organisation. Every manager must reserve certain authority for overall planning, organising, controlling and monitoring. The advantages of centralisation are it promotes uniformity of actions, it provides for integration; it makes possible successful handling of all types of situation in the business. It helps in decision making, (quick decision making) conducive to the establishment of a personal relationship.
  2. Decentralisation: Decentralisation refers to departmentation of activities, decision division of responsibility or dispersal of central authority. Decentralisation of authority helps the organisation in not only developing a cordial relationship among the different employee but also it increases the efficiency of the business organisation. In decentralisation, it is not simply a matter of dividing up managerial works and assigning certain responsibility and duties to various executive levels.

Thus, from the above, we can see that decentralisation is concerned with decentralisation of the power of decision making to lower level in the management hierarchy. A good organisation actually has both that is centralisation and decentralisation. It should be used in a relative rather than absolute terms.

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