What is centralization and decentralization in management?
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Answer:
Centralization and Decentralization
A simple way to understand if an organization is working in a centralized or decentralized manner is by looking at two important aspects:
1. The place of the decision-making authority in the hierarchy of the management i.e. Centralized.
2. The degree of decision-making power at the lower echelons in the organization i.e. Decentralized.
An organization has a greater degree of decentralization if the number of decisions made and functions affected at the lower level are higher.
Further, while decentralization and delegation of authority might seem similar, you must not confuse one with another. A decentralized way of working is more about the philosophy of the organization.
Unlike delegation, it is not just about handing over a part of the authority to a subordinate but a way of approaching the decision-making process in the organization.