Centralization Versus Decentralization

Centralization

• The holding of formal authority and decision making at the higher echelons of management hierarchy.

Decentralization

• When a larger part of authority is delegated down the level of management &

• Decision making is near the source of information

Salient Points

(1.0) Two important tests whether an organization has its authority centralized or decentralized are

• (a) place of decision making authority in the management hierarchy

• (b) degree of decision making at lower echelons of the organization.

Therefore, the greater number of decisions made and the more function affected by decisions at lower level, we can see a higher degree of decentralization.

(2.0) Note that decentralization is a systematic effort to delegate.

(3.0) Remember that decentralization is not merely a handing over process of authority to subordinates but is really all about the attitudes and philosophy of the organization and management.