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What is Centralization?

In every organization, there are a number of employees working and there are many decisions which are to be taken. It is quite obvious because in the field of business management there come many circumstances in which the decisions are to be taken.

I am talking about these things because centralization is related to the power to take decisions in the organization. If you are looking for information about what is centralization. Then let me tell you that you have been landed on the right website here.

Because in this article of mine, I will tell you the meaning of centralization and also the advantages and disadvantages of the same. Before we proceed to the further part of this article let me tell you that centralization is also one of the principles of management which are written by Henry Fayol.

What is Meaning of Centralization?

What is Centralization?

Centralization refers to the concentration of the decision making power at the high level only. Which means the power to make decisions is the top level management only.

The decisions in the organization will be taken by the people working in the top level management only. It may be a single person or few people.

You should also note that it does not mean that in a centralized organization there is no delegation of authority. Only the important decisions are taken by the top level management.

Advantages of Centralization

When the power of decision making is concentrated in the top level management only. Then the organization will get the below-mentioned advantages.

  • A single person will be responsible for all the decisions.
  • Work is uniformly divided among all the employees.
  • This results in effective decisions as they are taken by a specialized person.

The advantages are explained below.

A single person will be responsible for all the decisions.

As the power to make decisions is with the top level management only, a single person or only a few people will be responsible for all the decisions taken in the organization. This also results in quick decisions.

Work is uniformly divided among all the employees.

In a centralized organization, the work is uniformly divided among all the employees working. The division of work is always maintained.

This results in effective decisions as they are taken by a specialized person.

The people working in the top level management of the organization, are highly qualified with a good experience in work. And that is the reason why this will result in effective decisions.

Disadvantages of Centralization

There are not only the advantages when the decision powers are with the top level management only. We have got some disadvantages as well and they are as mentioned below.

  • The employees are not motivated they are neglected.
  • No freedom to the employees to express their views.
  • More rules and regulations.

The employees are not motivated they are neglected.

During the decision making process, the employees other than top-level management are ignored. And that is the reason why those employees are neglected and not motivated.

No freedom to the employees to express their views.

As the other employees are neglected they are not allowed to express their views. Even if they want to express their views, the top level management is not interested in taking them.

More rules and regulations.

In a centralized organization, it is believed that the rules and regulations are more when compared to the decentralized organization.

Centralization revolves around the decision making power. There are 10 types of decisions which are taken in all the organization. If you want to know more about the types of decisions you can read that by following this link.

Conclusion

This was all about what is centralization along with the advantages and disadvantages. I hope you are clear with all the information mentioned here. If you have any doubts in your mind then you can comment below.

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