Noah Healey HR Centralisation and Decentralisation 25/03/2022

Centralisation and Decentralisation

Where decisions are made in an organisation they can be Centralised or Decentralised

Centralised
All decisions are made by senior managers at the centre of the organisation and passed down
through the chain of command.

Decentralised
Businesses spread decision-making across managers in branches and smaller divisions of the
business so that more employees are involved in the decision-making process.

Centralisation
Pro Con
Clear chain of command Inflexible
Reduced costs Encourages dictatorship
Improved quality of work Limits communication

Decentralisation
Pro Con
Facilitates diversification Co-ordination difficulties
Motivation promotion Waste of resources
Quick decision making Lack of qualified managers

Do managers want to keep control of decisions?

 Yes = Centralised
 No = Decentralised

Are staff lower down capable of making good decisions?

 No = Centralised
 Yes = Decentralised
Noah Healey HR Centralisation and Decentralisation 25/03/2022

How quickly do decisions need to be made?

 Slower = Centralised
 Quicker = Decentralised

Do decisions need to be consistent, e.g., to protect the brand image

 Yes = Centralised
 No = Decentralised