Centralisation: Introduction, Advantages and Disadavantages

 According to Louis A Allen, "centralisation is the systematic and consistent reservation of authority at central points within the organisation."

Power and authority are concentrated at the top levels only. It facilitates in the early stages of organisational growth to provide for integration among all the departments to achieve a common goal.

The top management is responsible for making key decisions and subordinates and lower departments are only into the implementation of rules. The lower department does not have authority over its functions. However, they are accountable to the higher management. The top-level formulates policies, middle-level managers operate the policies and lower-level management performs the work in reality.

Advanatges of Centralisation:

  • It provides an opportunity for new managers to develop personal leadership.
  • It facilitates the integration of efforts of all parts of the organisation.
  • Duplication of efforts and activities are avoided.
  • Emergencies can be handled fastly by quick decisions and prompt actions.
  • It helps in reducing wastage of efforts, hence bring the economy in operation.
  • It facilitates product growth and diversification. Proportionate and balanced emphasis can be given to all products.

Disadvantages of Centralisation:

  • It s not appropriate for organisations where there a large scale of operations, with various branches, locations and departments.
  • The top-level manager is overburdened and overloaded with responsibilities as he does micromanagement.
  • The subordinates will be less motivated as they do not participate in decision making.
  • The organisation will not be able to adjust to the changing environment as there are less flexibility and more control in decision-making.
  • The manager is not able to focus on core activities and spends time performing non-programmed activities.

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