Centralisation & Decentralisation

Delegation of authority is closely related to the concepts of centralisation and decentralisation of authority. Let us learn them in detail.

Centralisation: Centralisation is the reservation or withholding of authority by individual managers within the organisation. According to Henry Fayol, ‘everything that goes to increase the importance of the subordinates role is decentralisation, everything which goes to reduce it is centralisation'' In centralisation little delegation of authority is the rule; power and discretion are concentrated in a few executives. Control and decision making reside at the top levels of management. However, absolute centralisation is untenable because it would mean that subordinates have no duties, power or authority.




Centralisation may be essential in small organisations to survive in a highly competitive world. But as the organisation becomes more complex in terms of increasing size, interdependence of work-flow, complexity of tasks and spatial physical barriers within and among groups, a function requisite for efficiency is to move decision-making centres to the operating level. Thus, the larger the size of an organisation, the more urgent is the need for decentralisation. This does not mean that decentralisation is good and centralisation is bad.

Decentralisation: Decentralisation is the systematic effort to delegate to the lowest levels, all authority - except that which can be exercised at central points. It is the pushing down of authority and power of decision-making to the lower levels of organisation. The centres of decision-making are dispersed throughout the organisation. The essence of decentralisation is the transference of authority from a higher level to a lower level. It is a fundamental principle of democratic management where each individual is respected for his inherent worth, and constitution.

As you know, decentralisation is a correlate of delegation; to the extent that authority is not delegated, it is centralised. Absolute centralisation decreases the role of subordinate managers which in turn encourages decentralisation. Absolute decentralisation is also not possible because managers cannot delegate all their authority. If he does so, his status as manager would cease and his position would be eliminated.

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