QUESTION
Briefly
analyse the merits and demerits of centralisation and decentralisation.
Centralisation is a
management approach in which the top level of an organisation makes all the
material decisions.
Advantages
of centralised management
·
The command framework is clear. There is
little confusion as to who directs what activity.
·
In times of emergency, response can be
quick owing to plainness of authority and responsibility structure.
·
Employees tend to concentrate on
developing a smaller skill set, which they tend to polish up well. They do not
have to master any real management skills, which could simply be a strain on
their obviously scarce time.
·
It is more likely the firm will operate as
a single unit with minimal pulling in different directions.
Disadvantages
of centralised management
·
Where a situation needs detailed
information from a specific locality, top management
may
not fully understand the situation. As a result, any action taken may also not be
good enough.
·
Workers may not have enough motivation to
work if everything appears dictated down to them by top management.
·
Repetitive and limited scope of work can
be a disadvantage to employees interested in grown by way of learning and
management responsibilities, especially as the organization expands.
·
Overall company performance may go down
when workers feel they are simply carrying out someone else’s instructions and
not what they are part of.
·
Total centralisation may deny the organisation
valuable input from talented people in lower echelons.
This is when top
management and lower-levels share management authority and responsibilities.
Advantages
of decentralisation
·
Overall organisational levels of knowledge
and effectiveness are raised because of marrying central and local-level
perspectives.
·
Workers are more motivated because they
feel they have a say in the running of the firm.
·
It reduces the potential of top management
being overloaded.
·
Lower level employees become more alert as
they feel they could be partly responsible as well if anything went wrong.
Disadvantages of decentralisation
·
Reporting lines can cause uncertainty and
frustration as to who is in charge of what domain.
·
Passing the buck. More managers means the
blame-game is easier to play.
·
Complex processes. It takes long for
decisions to move through the established stages: in business, it is said that
time is money.
Conclusion
Centralised and
decentralised management each have positives and negatives. The best situation
is probably leaving it to managers to decide whether their unique business
situation will work better with centralisation or with decentralisation. This means looking at such factors as type of
business, size of organisation and capacity of human resource.
