Meaning of Centralization and its advantages and disadvantages

Centralization of an office organization

In any business organization, concentration of authority and powers in the hands of top management is referred to as centralization, everything which goes to reduce the importance of subordinates role in an organization is known as centralization. In such a type of office organization, the authority and powers of each and every activity lies in the hands of top few, say office manager and his immediate subordinate, and other subordinates play the second and subsequent fiddles. In fact, they are not to play any role. Instead they asked to work and only work according to the dictates of what the boss wants and orders.

Centralization of the powers in respect of planning and control in not a new thing in any management. But centralization refers to the reduction of subordinates to a naught. Thus, treatment accorded to them is only that of a machine. Subordinates are asked only to function as a machine whereas the top management functions as operators. In fact, this position has brought disrepute to the term centralization in modern management set-up.

Advantages of centralization

  • Facility for personnel leadership.There is absolutely no doubt that the centralized Office organization helps in establishing a personnel leadership which may even be able to convert a losing business house into a profitable one because of strong, efficient, purposeful and non controversial central leadership.
  • Equitable distribution of work.  In order to group together and economies the working as well as cost the grouping of two and more departments into one also placing the same under one control goes a long way in equitably distributing in workload not only between different departments but between individual worker as well. This brings economy and speed.
  • Uniformity of activities. Obviously when centralized, the activities will be either in the hand of one individual or a few one but under his (one) direct, control. This will result into uniformity of activities and thereby ensuring uniform decision and uniform process.
  • Specialization. Specialization of work as well as process and handling of the work by the staff who has specialized in the work he is handling are a few of the meaningful advantages of specialization.
  • Economy.  The uniformity of activities and specialization of work lead to economic operation and best utilization of the staff services. This brings efficiency and smoothness as well. All these bring economy.
  • No duplication of work. Centralized personal leadership, uniformity of activities and specialization leave no scope for duplication of work in the office. Thus extra labor and extra cost involved in duplication is avoided and economy is ensured.
  • Quick decision. For taking advantage of rare opportunities coming in the way, it is necessary that decision should be quickly taken lest the opportunity so available may be slipped away. Centralized office organization helps in such a quick decision.
  • Greater flexibility.  In case of any emergency arising the uniformity of activities help in adjusting the activities, procedure and decisions taken. This adjustment ensures flexibility the opportunity for which is available in centralized office organization in greater degree.
  • Standardization and training facilities enhanced. Centralized office organization helps in standardizing the work and thereby helps in extending the training facilities to everyone and every work in the organization which needs specialization, standardization and attention The new staff member can easily pick up the work and can easily be accommodated and adjusted in such a set-up.
  • Effective control. Uniformity in activities, specialization and standardization facilitates greater degree or supervision, effective co-ordination, self and departmental integration and thus ensure effective control.
  • Fixing of responsibility is facilitated. It is possible in decentralized system to locate the fault and detect the deviations and thus is able to pinpoint and take effective measures to improve by knowing and then fixing the responsibility and thereby improving the      working and efficiency.

Disadvantages of centralization

However, a centralized set-up suffers from the following disadvantages:

  • Delay in work. Quick decision is possible but only at the top level, since decision is take only by the top, it is not possible to take quick decision whenever the top is neither available nor is in a mood to take one. This results in delaying the work since it is the top who is to take decision and none else.
  • Bureaucracy. Bureaucracy leads to red tapism. A centralized set-up breads red-tapism which does not only delay the work but also sometimes helps in the raining of eye brows because bureaucracy always leads to discrimination.
  • Distinctive to subordinates. Subordinate in such a set up only is required to implement   whatever it is asked to carry out. No independent decision making authority. A mechanical working always creates mental reservation. The subordinate does not take imitative nor is he allowed to do so. Thus there remains no charm in either the work or the organization as he knows fully well that no upper ladder is there for him as he is not allowed to take any initiative.
  • No loyalty. Since the initiative is not there, charm is not there. Zeal is absent. No involvement is there. Only the implementation of job is there. This means “work like a machine as ordered.” Such a psychology always never works. Thus neither the work for the organization is treated as own one, obviously from a servant loyalty can be expected only when he is allowed to think that he is very much the part of the department and the organization. This is always missing. This brings lack of loyalty among the working force.
  • Lack of secrecy. Secrecy in a centralized set up cannot be maintained as the orders and decisions flow from one place and conveyed to all. Moreover, all work at a place, under one roof, one control and one office department. Thus secrecy even if tried cannot be maintained as effectively as might be required.

About Abey Francis

Abey Francis is the founder of MBAKnol - A Blog about Management Theories and Practices - and he's always happy to share his passion for innovative management practices. You can found him on Google+ and Facebook. If you’d like to reach him, send him an email to: [email protected]

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