Question

Give any four differences between centralisation and decentralisation.

Hint:

Centralisation concentrates authority at the top, whereas decentralisation distributes authority to lower levels.

Answer 1

Centralisation and decentralisation differ mainly in the distribution of authority and decision-making power within an organisation. The four major differences are explained below:
(i) Concentration of Authority:
In centralisation, decision-making authority is concentrated at the top level of management. Lower-level managers have very limited powers. In decentralisation, authority is delegated to middle and lower levels of management, allowing them to take decisions related to their work.
(ii) Role of Top Management:
Under centralisation, top management takes most of the important decisions and closely controls operations. In decentralisation, top management focuses more on policy formulation and strategic planning, while routine decisions are handled by lower-level managers.
(iii) Managerial Development:
Centralisation limits the development of managerial skills at lower levels because employees get fewer opportunities to make decisions. Decentralisation helps in developing managerial talent by giving employees experience in decision-making and problem-solving.
(iv) Flexibility and Speed of Decisions:
Centralisation often leads to delays in decision-making due to dependency on top management. Decentralisation allows faster and more flexible decisions as authority is delegated closer to the point of action.
Thus, while centralisation ensures uniformity and control, decentralisation promotes efficiency, initiative, and managerial growth.