Centralized and decentralized organizations essay

Decentralized organizational structure

Increasing the span of control can substitute for increasing hierarchical levels. Business owners should carefully consider which type of organizational structure to use in their company. Being in close proximity most times walking distance to these employment centers, via electric streetcar or horse drawn buggy made the decision of establishing residency easy for a deprived workforce Layoffs become necessary if management pays no attention to its hierarchy. Decentralization means the transfer of administrative authority from the centre to the local agencies, who function autonomously in the field. Span of control is based on the complexity and interrelatedness of tasks. In a decentralized state the administrative power may be distributed on the basis of two major rules. In earlier hierarchies organized according to theories X and Y, labor was viewed as something unreliable, sneaky, sly and disorganized Ang, Currently, the emergence of numerous software and hardware package solutions that allow decentralized functioning can serve as evidence that organizations are pursuing the goal to decentralize their processes. Tall hierarchies decrease motivation because managers, with less authority and responsibility, are less motivated. Bureaucratic Costs. Factors shape the hierarchy: horizontal differentiation, centralization, standardization, and the informal organization. Decentralization may have different implications to different sets of people.

A company with a centralized business structure is McDonalds. It enables organizations to create decentralized structures in which knowledgeable employees operate with a far higher degree of independence, solving problems that were earlier in the competence of the management.

This accountability causes top managers to drive each other to peak performance.

centralization and decentralization

Role conflict, conflicting demands on a subordinate, and role ambiguity fear of responsibility because of unclear tasks should be eliminated. This elicited mixed reactions from the employees and employers, among other stakeholders in the industry.

Centralization in management

For these reasons, lean production becomes popular, triggering accompanying decentralization. This prevents potential inconsistency in vision and helps companies deliver a common message to customers and communities. As recent as 10 years ago, an employee could very easily find 5 or 6 layers between them making it very frustrating for certain divisions to address issues and make key decisions. Written documents ensure that people can be held accountable. Ideally, this would cut the traffic by almost a half in the current CBD, as it would be divided into two separate areas. Why is the number of hierarchical levels and managers limited? Standardization Another way to flatten the hierarchy is through standardization. Tall hierarchies decrease motivation because managers, with less authority and responsibility, are less motivated. To review the factors that affect the shape of the hierarchy: horizontal differentiation, centralization, and standardization. Business owners should carefully consider which type of organizational structure to use in their company. The Planning Commission symbolizes the trend towards centralization, while Panchayati Raj epitomizes the trend towards decentralization.

Simple and less interrelated tasks call for a wider span of control. A company grows and hires managers without considering long-term costs. Currently, the emergence of numerous software and hardware package solutions that allow decentralized functioning can serve as evidence that organizations are pursuing the goal to decentralize their processes.

Centralization of authority

For instance, size, geographical separation of the departments or extended activities of the organization require decentralized structure. Centralization means centralizing performance where the operation is under one roof. Horizontal relationships are less important if tasks are not interrelated. It enables organizations to create decentralized structures in which knowledgeable employees operate with a far higher degree of independence, solving problems that were earlier in the competence of the management. McDonalds uses a predominantly centralized structure in order to ensure that control is maintained over their many thousands of outlets. Another cost-saving measure is the use of contingent workers. 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. One of the major problems of modern administration is to reconcile the compulsions of national integration, unified planning and the need for a strong and effective defense that pull in the direction of centralization, with the growing demand for regional autonomy and political commitment to take democracy to the grass roots, which pull in the opposite direction. Sales has fewer levels because it relies on standardization, not direct supervision. For these reasons, lean production becomes popular, triggering accompanying decentralization. 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. To centralize or to decentralize seems to be the dilemma facing the government today. How can information be distorted? Interrelated tasks require a narrow span of control because horizontal relationships must be managed.
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Centralization and Decentralization Essays