In decentralisation the controlling is done by the head of departments. In this article, significant differences between Centralization and Decentralization, in an organization is explained. Decentralisation helps to increase employees morale because it involves delegation. Delegation of Authority : Concept of Authority : Since authority is the crux in distribution of authority. Although, decentralization lacks leadership and coordination, which leads to inefficient control over the organization. The administration of a union contract is facilitated through a uniform policy with respect to wages, promotions, vacations, dismissals, and similar matters.
It is the end result of delegation. Maintenance of Secrecy — Decentralisation enables to maintain secrecy without much cost and unnecessary trouble. Freedom of Action Very little freedom to the subordinates Considerable freedom Decentralization can be called as extension of delegation. In some cases, decentralization may not be possible at all. Normally it is not a complete reversal of decentralization.
During a crisis decentralisation creates its own problems. Disadvantages of Decentralization Not withstanding the merits of decentralization, there are certain difficulties in its application to all cases and in all circumstances The serious limitations of decentralization are as follows: 1. While both approaches have a number of advantages and disadvantages as mentioned above, effective results can be achieved when clear guidelines are given to employees as to what their level of responsibilities and authorities are. In practice the term delegation is in use for different activities. On the other hand, people with rational managerial temperament believe and want to rely upon participative approach of doing the work and are anxious to take maximum opportunity of individual initiative in the organization, opt for decentralization.
To make delegation effective, the spirit and willingness of both the parties are crucial. Large organisations have geographically dispersed units with large number of levels in each unit. Key Difference — Delegation vs Decentralization Delegation and decentralization are commonly used management concepts by organizations in order to effectively manage the business operations. That is, in delegation the superior keeps complete control. Of course, the practice is not based on the assumption that people at the higher level in the managerial hierarchy do not make mistakes. Likewise, if pricing of any product is subject to regulation, hardly any authority could be given to sales manager to exercise and assert.
Also important to note is that on the delegation continuum centralisation and decentralisations are the two ends. Unlike, decentralization is the systematic delegation of authority in an organization. Uniform policy also has certain internal advantages. Every unit formulates its own policies. Effective Control and Supervision Decentralization leads to effective control and.
The sheer volume of management responsibilities necessitates delegation. Nature It is a routine function It is an important decision of an enterprise. Generally speaking, owner-managed enterprises tend to be more centralised than the professionally managed ones. Setting measures of control to ensure that actual performance conforms to planned performance is centralised with the top management. Decentralisation is just opposite to centralisation but centralisation and decentralisation are mutually dependent in a large organisation.
Degree of Decentralisation Decentralisation is not an unmixed blessing. It is complete when authority is delegated to the maximum possible extent. The less checking required on the decision. If they do not have enough skill or competence to take appropriate decisions, the enterprise has to incur heavy losses due to their faulty decisions. Higher Efficiency A superior being able to concentrate on non-routine jobs delegated to subordinates multipolices his efficiency 2.
Better Distribution of work in the Group since every employee gets adequate authority to act, it also leads to prompt decision making 5. Therefore, it is not used by all organisations. They emerge only if decentralisation is not effectively planned and followed. The necessity of decentralisation of office services occurs when official activities are performed at functional departmental level. Communication Flow Vertical Open and Free Decision Making Slow Comparatively faster Advantage Proper coordination and Leadership Sharing of burden and responsibility Power of decision making Lies with the top management. The lower level managers have enough decision making authority and support to introduce innovativeness in their work.