Accounting technicians scheme west africa
C.13 Centralisation of Authority
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- C.13.1 Advantages of Centralisation
- C.13.2 Disadvantages of Centralisation
| C.13 Centralisation of Authority Centralisation is the process of systematically concentrating decision-making in the hands of managers at the higher levels of the organisations. Here, the locus of authority is concentrated at the top levels of the organisational hierarchy. In centralisation, little delegation of authority is the rule power and authority are concentrated in the hands of top executives. Centralisation maybe essential in small organizations for them to survive in a highly competitive industry. But as the organisation becomes more complex due to increasing size, interdependence of workflow etc. continued centralisation results in inefficiency. Hence decision-making authority tends to devolve to operating levels of the organisation. Thus, the larger the size of an organisation, the more there is the need for less centralisation or a greater degree of decentralisation. C.13.1 Advantages of Centralisation (i) Power and prestige are provided to the top executives. ii) Uniformity of policies, practices, and decision is fostered. iii) Duplication of functions that are similar is minimized. iv) Elaborate and extensive controlling procedures and practices are not required. v) A strong coordinated top management team is developed. C.13.2 Disadvantages of Centralisation (i) There is inflexibility and delays in decision-making. Because of this, centralized organisations are slow in responding to changes in the external environment, such as, competition, technology and consumer demand. ii) Centralisation stifles creativity and initiative of lower level managers. iii) Lower level managers may feel constrained and demotivated because they are not involved in making important decisions. iv) Productivity maybe low because workers are less likely to accept responsibility and are less enthusiastic to implement decisions handed down to them. v) Centralisation requires close supervision and rigid controls for decisions to be implemented effectively. vi) Centralisation does not provide room for the training of subordinates in decision-making. |