Anna Olczyk Part 3: Problem : to Choose Between Centralization and Decentralization Authority When You Think About Centralized Organizational Structure, You Have to Know That Decision-Making Authority Is

Anna Olczyk

Part 3:

PROBLEM : to choose between centralization and decentralization authority

When you think about centralized organizational structure,you have to know that decision-making authority is concentrated at the top, and only a few people are responsible for making decisions and creating the organization's policies. In a decentralized organization, authority is delegated to all levels of management and throughout the organization. An organization's degree of centralization or decentralization depends on the extent of decision-making power that is distributed throughout all levels.

An organization's structure and its degree of centralization or decentralization depends on a number of factors, including the size of the organization and its geographic dispersion. In a very large and diversified organization, it is unlikely that a handful of people will possess all the resources to achieve all goals and objectives of the enterprise. As a result, it becomes impractical to concentrate power and decision-making authority at the top. Similarly in a geographically-dispersed organization, a centralized approach will not be the most efficient, as the people with the most authority will be unable to directly supervise operations on a day-to-day basis.

Advantages of Centralization

The most apparent advantages of centralization are an organization's ability to closely control operations, provide a uniform set of policies, practices and procedures throughout the organization, and better use the knowledge of centralized experts. In a small organization, operations are likely to be not as diversified, and top management may realistically possess the skills and expertise required to manage all facets of business. In such a centralized environment, actions of individuals are also better aligned with management's prescribed policies, as the rules emanate from a single source, and there is little ambiguity.

Advantages of Decentralization

Decentralization is a...