Page 152 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Principles and Practices of Management

Notes Centralisation and decentralisation, being the two extremes of operations of authority,
are relative terms.
We, today, cannot think of an organisation which is completely centralised or decentralised
as in between the operations of the two there is always a continuum of authority.
Their applications in a democratic setup would depend upon the objectives of the
organisation, its life and size, nature of service, etc.
In centralisation, power and discretion remain concentrated at the top levels.

Centralisation works well in the early stages of organisational growth and keeps all parts
of the organisation moving harmoniously towards a common goal.
It also helps in handling resources and information very well, in times of emergency.
However, when the organisation grows beyond a limit, centralisation comes in the way
of proper coordination, communication and control.
In decentralisation, a great deal of authority is delegated and more decisions are made at
lower levels.
Decentralisation allows subordinates to grow and reduces the burden of the top executives
and allows them to focus attention on key issues.

For a multiproduct enterprise, decentralisation is the only way to offer a balanced emphasis
on its profitable product- mix.
On the negative side, decentralisation may be a costly exercise as more independent
centers crop up.
Conflicts may erupt between competing divisions.
Remote control from headquarters may prove to be ineffective at times.
The appropriate mix of centralisation and decentralisation is something to be decided by
the organisation taking various factors into account.

8.6 Keywords

Centralisation: The process by which the activities of an organisation, particularly those
regarding decision-making, become concentrated within a particular location and/or group.
Conflicts: Actual or perceived opposition of needs, values and interests.
Delegation: Assignment of authority and responsibility to another person (normally from a
manager to a subordinate) to carry out specific activities.
Discretion: Ability to make responsible decisions.
Span of management: The number of employees who report to a superior.
Supervision: management by overseeing the performance or operation of a person or group

8.7 Self Assessment

Fill in the blanks:

1. Span of management is sometimes also referred to as span of………………..or……………..
2. ………………..gave mathematical formulae for finding out relationship within span of
management.

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