Centralisation is the process by which the activities of an organization, particularly those regarding decision-making, become concentrated within a particular location and/or group. Decentralisation is where the decision making responsibility is given to more operational managers, lower down the organisation.
Cenralisation: Advantages
There is uniformed decision making;
Duplication of effort is eliminated·
Highly skilled personnel are available to the whole organisation and not just the one unit;
Greater control;
Economies in staffing;
Economies of Scale e.g. negotiation of better rates for office supplies etc.,
Easier communication.
Centralisation: Disadvantages
The organisation is bureaucratic;
Power is concentrated within the upper management levels with key decisions taken by a few top managers;
Rigidity;
Delays in decision making;
Stifles personal development.
Decentralisation: Advantages
Lower levels of management will have the power to make decisions;
The decisions are made by people who know and understand he situation;
There is recognition of local conditions;
The increased power gives improved morale;
There is personal development due to he increased responsibility;
The organisation is more responsive to the environment.
Decentralisation: Disadvantages
There is a lack of uniformity of decision making;
People have different views and so individuality may affect those decisions made;
Inter-unit conflict may arise;
Managers may not be willing to accept responsibility;
There is a loss of control at the top of the organisation structure;
Loss of some economies of scale;
Development of a narrow departmental view.
One example of a function becoming centralised could be filing with the organisation creating a central filing department. Procedures become standardised for filing those documents, there will be greater security of those records than if spread out over several regional offices; maintenance of these files...