The transmittal of information from site to headquarters can considerably lengthen the procurement procedure and cycle even when telephone, fax and computer links are used. Second Disadvantage of Decentralization Lower-level managers may have objectives and goals that differ from those of the organization. Decentralization means dispersal of powers and authorities by the top level to the functional level management. And: how should the organization structure be adapted? Centralization of authority means the power of planning and decision making are exclusively in the hands of top management. Since the initiative is not there, charm is not there.
Disadvantage of Decentralization Disadvantages of decentralized arrangement are as follows: 1. The weakest form of decentralization. There is always the chance of authority abuse and mismanagement on the part of these lower level managers, especially if the company does not have an effective control and performance evaluation system. Since it is an open system it is always ready to communicate with other systems. Centralisation and decentralisation are both complimentary to each other. Seeing the big picture is really necessary to achieve goal clarity, as well as consistency and congruence of actions with desired goals.
Staff attached to the department develops a sense of loyalty to it, and also develops personal interest in the work. They get the opportunity to develop their talents and managerial skills, preparing them for senior management positions when the time comes. Uniformity in action — Uniformity in action is established throughout the organisation because of central administrative control. A company that is divided into sub-units can easily work around different markets, product lines, and segments. There will be duplication of efforts, equipment's and machines etc. They are: 1 tender centralisation, most of the decisions are taken not at a point where work is being done but at a point higher in the organisation.
Thus there remains no charm in either the work or the organization as he knows fully well that no upper ladder is there for him as he is not allowed to take any initiative. Autocracy is not necessarily an intention and could be incidental. Subordinates are asked only to function as a machine whereas the top management functions as operators. The supplying authority may give directions from the office that is located in a place where large quantity of raw material supply is taking place. Because of these disadvantages, absolute centralisation is not considered, particulars in a fast growing economic scenario. Facilitates Personal Leadership: In a small company, centralisation is desirable since the leader has to take quick decisions. Decentralization involves spreading the decision-making throughout an organization instead of a few making all of the decisions.
Centralisation is a concept that denotes the concentration of authority in a particular position. The work may be done in different departments in different way and with different equipments. Uniformity of Action: As the major management decisions are taken by a central authority, a uniform policy in the whole of the concern can be adopted. Decentralisation of Procurement gives a site manager this authority. As a boss, you can count on a framework where your word is the final word. Employee Management Closer and better employee management and community relations are possible in small administrative units for business as a whole, where decentralization may mean a more widespread distribution of roles and purchases, which may reduce proportionately the unfavorable impact of sales decline. In case of any emergency arising the uniformity of activities help in adjusting the activities, procedure and decisions taken.
Better control and supervision: Decentralisation ensures better control and supervision as the subordinates at the lowest levels will have the authority to make independent decisions. For example, recruitment for the whole organization may be carried out by a single department. Cenratisatioh of authority in pure sense of the term is not found. The uniformity of activities and specialization of work lead to economic operation and best utilization of the staff services. Fourth, it facilitates the development of junior management.
It results in the economy of wages and salaries. On the other hand, Decentralization refers to the dissemination of powers by the top management to the middle or low-level management. A co-ordination of the activities of the functional department is also affected by the General Office. Diversification of activities Decentralization reduces the burden of the chief executives with making routine decisions. Direct control and supervision are facilitated which results in less likelihood of conflict of authority and duplication of work.
Grooming future leaders is also much easier in such an atmosphere. Since a worker is working, in a functional department, work can be performed promptly. However, routine and compartmentalized work can be a disadvantage for employees interested in new challenges and ongoing learning. Even in a decentralized system, there needs to be a way for different arms of a business to come together and consider the bigger picture. Furthermore, centralization often refers to departmental activities. A decision is usually a democratic and participative outcome and if there's a goof up in progress, chances are great that someone will spot it. Centralisation of authority increases the burden on the top executives and little time is left for attending to important functions of administration like planning, organisation, motivation, etc.
Similarly decisions about the matters referred, measure the degree of decentralisation depending upon the power to take decisions vested in an officer without the need of getting consent of somebody else. Thus extra labor and extra cost involved in duplication is avoided and economy is ensured. These decisions are important but not as crucial as developing a criteria for the hiring and dismissal of employees. Better co-ordination — Centrlisation facilitate better coordination among various operations. They feel as though the success of their sector falls directly on them, and in many ways it does. Willingness of the subordinates to accept responsibility :- there should be interest from the subordinates to take responsibility and assume authority to enable delegation of duties to take place.
Disadvantages of Decentralization Decentralization also has some drawbacks to be aware of… One of these is loss of control. Limitations of Centralisation : 1. Thus, we see that in centralisation decisions regarding the work are made not by those doing the work, but at a point higher in the organisation. Centralized Organizations: They are firms in which all the major decisions are m … ade at the top of the organization hierarchy. Involves Systematic and consistent reservation of authority.