Centralization &

Decentralization
Meaning of Centralisation
When the Authority to make all
decisions is vested in a single person
in the organisation it is centralisation.

Koontz & O’ donnell : “ To the extent

that authority is not delegated, it is
centralisation. “
Factors affecting
centralisation
Leadership
Need for integration
Uniformity of action
Emergencies
Scarcity of managerial manpower
Expensive and important decisions
External factors
Meaning of Decentralisation
Decentralisation is delegating authority
to the employees at different levels in
the organisation in the context of
duties assigned to them.
Decentralisation is dispersal of the
centers of decision making throughout
the organisation.
Joseph Massie : “ Decentralisation is
an organisational concept which takes
decision – making to the lower levels
of organisation
Factors affecting
decentralisation
Burden on top executives
Need for diversification
Need to preserving grip on the market
Need for development of managers
Need to improve motivation
Common Definition
Henry Fayol : “ Everything that goes to
increase the importance of of the
subordinates’ role is decentralisation,
everything which goes to reduce it is
centralisation.