Centralization is the degree to which decision making takes place at upper levels of the organization. If top managers make key decisions with little input from below, then the organization is more centralized. On the other hand, the more that lower-level employees provide input or actually make decisions, the more decentralization there is.
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Keep in mind that centralization-decentralization is relative, not absolute-that is, an organization is never completely centralized or decentralized . Some of the factors that affect an organization’s use of centralization or decentralization. More centralization More Decentralization Environment is stable Environment is complex, uncertain Lower-level managers are not as capable or experienced at making decisions as upper-level managers Lower-level managers are capable and experienced at making decisions. Lower-level managers do not want a say in decisions Lower-level managers want a voice in decisions Decisions are relatively minor Decisions are significant Organization is facing a crisis or the risk of company failure Corporate culture is open to allowing managers a say in what happens Company is large Company is geographically dispersed Effective implementation of company strategies depends on managers retaining say over what happens. Effective implementation of company strategies depends on mangers having involvement and flexibility to make decisions gfhvhgghghg Centraliztion and decentralization In some organizations, top managets make all the decisions. Lower- level managers merely carry out top management’s directives. At the other extreme, there are organizations where decision making is pushed down to those managers who are clocest to the action.The former organizations are highly centralized; the latter are decentralized. The term centralization refers to the degree to which decision making in concentrated at a single point in the organization. The concept includes only formal authority, that is, the rights inherent in one’s position, Typically, it’s said that if top management makes the organization’s key decisions with little or no input from lower-level personnel, then the organization is centralixed. In contrast, the more that lower- level personnel provide input or are actually given the discretion to make decisions, the more decentralization there is. An organization characterized by centralization is an inherent different structural animal from one that is decentralized. In a decentralized organization, action can be taken more quickly to solve problems, more people provide input inti decisions, and employees are less likely to feel alienated from those who make the decisions that affect their work lives. Consistent with recent management efforts to make organizations more flexible and responsive, there has been a marked trend toward decentralizing decsicion making. In large companies, lower-level managers are closer to “the action” and typically have more detailed knowledge about problems than do top managers. Big retailers like Sears and JC Penney have given their store managers …………………. Chain of command Twenty years ago chain-of command concept was a basic concerstone in the design of organizations.As you’ll see,
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