Question

Distinguish between Centralisation and Decentralisation.

Hint:

Centralisation and decentralisation represent two extremes in decision-making. The choice between the two depends on factors like the size of the organization, its goals, and the external environment.

Answer 1

Centralisation and decentralisation are two opposite approaches to decision-making in an organization. Below are the key differences between them: Step 1: Definition of Centralisation.
Centralisation refers to the concentration of decision-making authority at the top levels of management. In a centralized organization, decisions are made by a few top executives, and lower-level managers and employees have little autonomy in decision-making.
Step 2: Definition of Decentralisation.
Decentralisation is the delegation of decision-making authority to lower levels of management. In a decentralized organization, decision-making is spread across various levels, giving more power and autonomy to managers and employees at the operational level.
Step 3: Authority and Control.
- In centralisation, authority is retained by top management, leading to tight control and uniformity across the organization.
- In decentralisation, authority is distributed, leading to greater flexibility and autonomy for local managers to make decisions.
Step 4: Speed of Decision-Making.
- In centralisation, decision-making is slower because it requires approval from top management, which can delay actions.
- In decentralisation, decision-making is faster as local managers can take decisions without waiting for approval from higher-ups.
Step 5: Flexibility.
- Centralisation offers less flexibility since decisions are made at the top, and lower levels have to follow strict guidelines.
- Decentralisation provides more flexibility, as decisions can be adapted to local conditions, allowing for quick responses to changes.
Step 6: Accountability.
- In centralisation, accountability lies with top management.
- In decentralisation, accountability is shared across various levels, making local managers responsible for their actions.