CENTRALISATION

Vs
DECENTRALISATION
 CENTRALISATION Vs DECENTRALISATION
• Depending on size of the organisation,
certain degree of decision making authority
and controlling function has to be dispersed
throughout the organisation.
• It varies considerably over different phases of
the evolutionary cycle of organisation.
• Depending on degree of decision making
authority and controlling function dispersed,
it is termed as centralisation
decentralisation
 CENTRALISATION
• It is the process by which the decision
making authority within an organisation
centralised in a particular location or group,
usually at the top level management.
• Decisions are generally by the top
management on the basis of pre-set policies
and then enforced through different levels
of management.
 CENTRALISATION
• Organisations at their initial stages have a
high degree of centralisation.
• Absolute centralisation becomes
inefficient when the organisation
becomes more complex in terms of size,
tasks and in terms of more products to
offer.
• In centralised organisations, skills and
innovation are underutilised
 DECENTRALISATION
• Decentralisation is the managerial
approach of dispersion of authority
throughout the organisation to enable the
managers at all levels to play assigned
roles optimally.
• It empowers the lower level management
where the work is actual performed
• It facilitates them to take quick decisions
to serve the customers effectively.
 DECENTRALISATION
• Requirements of decentralisation
- Developing policies that include setting broad
controls and guidelines to help managers make
effective decisions.
- Appropriate budgeting and control system will
provide freedom within boundaries.
- Selection of competent persons who can work
without much supervision.
- Developing proactive behaviour among
existing employees through encouragement.
 DECENTRALISATION
• Benefits of decentralisation
- Results in increased motivation of
employees at all levels of management in
organisation
- Top management is relieved from day to day
administrative issues and can focus on
strategic issues diversification, new
opportunities etc
- Ensures professional growth and leadership
qualities down the level of hierarchy.
 DECENTRALISATION

• Benefits of decentralisation
- By decentralisation employees can take
ownership organisation’s business
processes, decisions and results
- Helps in faster adaption to the fast
changing business environment