Decentralization of management is carried out with the help of. Centralized and decentralized forms of government. What are the disadvantages of decentralization of power

The quality of activity in the distribution of powers and responsibilities is determined by the ratio of centralization and decentralization established in the organization. The specific content of the desired ratio in each organization depends on the level of decision-making established in it.

Centralization called the concentration (concentration) of the decision-making process (authority) at the top level of the management hierarchy. Decentralization, on the contrary, involves the transfer of decision-making authority on certain problems to the lower floors of the management structure. In the latter case, the corresponding powers are dispersed over many subjects (divisions and services) of the organization, each of which has its own hierarchy. Centralization and decentralization are designed to ensure the distribution of decision-making powers between the levels of the management hierarchy.

Establishing a reasonable ratio of centralization and decentralization in terms of the formation of organizational management structures involves:

• - centralization of the functions of setting goals and setting tasks, as well as monitoring execution in the organization with the simultaneous transfer of authority to make operational decisions to the lower levels of the management hierarchy;
• - integration of all types of activities necessary to achieve a common goal, and ensuring its priority over private functional goals;
• - giving management structures flexibility and mobility so that they are able to respond quickly enough to changes in the external and internal conditions of the organization's activities;
• – Reasonably fast and timely decision-making on the merits of changing situations;
• - creation of conditions for self-identification of leaders of all levels of management hierarchies and the best motivation for their activities under given conditions.

Finding the optimal combination of centralization and decentralization is important for any management system.

The degree of centralization (decentralization) of managerial powers is determined by the following characteristics of the organization:

• 1) the need to allocate scarce resources and conduct a single policy in relation to all departments, which is difficult with significant decentralization;
• 2) the costs associated with the adoption of corporate decisions. The more expensive they are, the higher level these issues should be considered;
• 3) the size of the organization. Due to the complexity of coordinating internal processes, large organizations need to be divided into a number of independent structures, the leadership of which should be as close as possible to the decision-making level, and horizontal links should be developed between them;
• 4) the specifics of the activity. Some activities may technically limit the possibilities of centralization (decentralization) of powers. Others demand strategic decisions that are impossible without centralization, or, conversely, tactical actions that involve decentralization;
• 5) historical traditions and views of top management;
• 6) readiness of personnel for independent activity.

The level of centralization and decentralization is usually determined using variables: the number of decisions made in the management hierarchy; the significance of these decisions for the organization; effectiveness of decision execution technologies. If necessary, you can use other indicators - both quantitative and qualitative.

The degree of centralization of powers is characterized by the share of decisions made at the highest levels of the hierarchy; the level of making important decisions; the share of employees performing managerial functions at the organization level; the percentage of decisions that are not consistent with management; the frequency of involving subordinates to participate in management, etc.

Both centralization and decentralization have their advantages and disadvantages, which are found in the specific conditions of the activities of organizations.

To virtues centralization include:

• - it becomes easier to concentrate efforts on key areas of activity in accordance with the interests of the organization;
• - eliminates unnecessary duplication managerial functions, which leads to cost savings (for example, instead of accounting in each division, a single accounting department with a smaller staff is created);
• - the decision-making process is concentrated in the hands of those people who know the general situation better, have great knowledge and experience;
• - simplifies the control and coordination of activities across the organization, maintaining discipline and order, stabilizes the working condition, deviations from which are considered harmful (therefore, centralization is preferable during a recession);
• – improved use of experience and knowledge of management personnel.

However, centralization has the following limitations:

• - due to the significant time spent on the transfer of information, during which a large part of it is lost or distorted, the organizational response slows down;
• - the most important decisions are made by top managers who have a poor idea of ​​the specific situation and local specifics, as a result of which they turn out to be of insufficient quality. At the same time, performers who are in the thick of things cannot take the initiative. Since solutions are imposed, due to lack of interest, they are inefficiently implemented.

In general, centralization is effective in a stable environment. Fully centralized management of highly complex objects requires control system almost impossible requirements for information processing and communication. Therefore, it is necessary for them to provide the maximum possible independence.

The growth in the number of entities included in the organization, their legal independence, territorial dispersion, the complication of production and information relations, rapid change conjuncture, etc. contributed to the decentralization of powers.

In modern decentralized organizations, decisions are made at the highest level about the mission, goals, approval of long-term plans, distribution of resources among departments, evaluation of their activities, and improvement of the management system. External relations are also carried out here, general control over units, the promotion of cooperation and the creation of a favorable climate, principles are developed personnel policy, horizontal contacts are maintained, etc. All strategic decisions are previously coordinated with grassroots leaders, who receive freedom of tactical actions.

To virtues decentralization includes the following:

• - bringing the sources of decisions closer to the "performers", their better justification and greater speed of adoption, which allows you to respond flexibly and in a timely manner to external influences;
• - strengthening the responsibility of performers at the lower levels of the organization while strengthening trust between them;
• - favoring the development of informal relations in the organization and reducing the potential of bureaucratic procedures;
• – creation of prerequisites for revealing the creative potential of employees and identifying their abilities for leadership activities.

Flaws decentralization:

• - there is a risk of loss of control;
• - poses a threat of violating the principle systems approach to the development of solutions, in particular due to the lack of proper consideration external influences;
• - the processes of integration of related units (groups) required to ensure unity of action are weakened;
• - the possibility of excessive concentration of attention and time on operational (current) activities to the detriment of strategic ones.

Decentralization of management is expedient if the activity of the unit is autonomous within reasonable limits, and other units do not significantly affect it, in the context of the obvious expediency of increasing the efficiency of decisions, etc. Often senior management, moving certain management functions and responsibility for their proper execution to low levels of the hierarchy (in the order of decentralization), they "forget" to simultaneously transfer the corresponding powers to the same levels along with the resources required for their execution.

Be that as it may, any developing organization is constantly in a state of choice between centralization and decentralization, in the process of overcoming contradictions in their relationships. Moreover, these relationships are invariably conflicting, and equilibrium relations between the parties, by definition, are a temporary phenomenon. The conjuncture forces organizations to constantly modify their structures, moving from centralization to decentralization according to circumstances, and, conversely, strive to ensure their unity/balance.

The necessary redistribution of powers and responsibilities within the management system is often associated with the adjustment of its organizational structure. Therefore, the adjustment may be due not only to the clarification of powers and responsibilities structural divisions, but also the centralization of some management functions or the expansion of the independence of individual divisions of the organization.

In many areas of life there are such concepts as centralization and decentralization.

These concepts entered written English at the beginning of the 19th century, when a French politician first described in his article the existing centralization of bureaucratic power and the efforts of citizens towards the decentralization of state functions. During the 19th and 20th centuries the ideas of freedom and decentralization reached their apogee thanks to the political movements of the anarchists.

At the beginning of the XX century. in response to the centralization of economic power and political power, a decentralist movement emerged. His main idea was to accuse industrial production in the destruction of middle-class shopkeepers and small industries(manufactories) and promoted the ideas of increasing the possibilities of owning property and returning to life on a small, local scale.

Within the framework of the system approach, decentralization should be understood as such a reorganization of ongoing intrasystem processes, in which a significant part of them is transferred to a lower level of the hierarchy. In other words, this is the transfer of decision-making powers and responsibilities from the center to other, less significant organizations, while constricting the rights and powers of the corresponding center.

Description of decentralization in simple words

In simple terms, decentralization is the redistribution of power. All the power that only the center possessed begins to diverge from the regions to the places.

In the context of decentralization, there is an expansion and strengthening of the rights, powers, opportunities of places, departments, regions, autonomies, republics. That is, if all decisions were made in one place by the leader, head, boss, director or manager, then with decentralization, subordinates are also vested with some power, freeing their leadership from some functions.

And even simpler - the power that belonged to one person, in the conditions of decentralization, begins to belong to many people.

Decentralization - information from Wikipedia

Decentralization in production

At the enterprise, decentralization is characterized by the degree of power that the head of the organization has. Strong centralization in the enterprise is a pronounced unity of command. In such organizations, as a rule, the main success factor is high discipline, and decision-making occurs all the time in the same way, according to the standard scenario.

However, modern market relations require flexibility and efficiency in decision-making related to the sale of products, customer service, and the development of company tactics. The current business environment shows that organizations with a greater degree of decentralization are the most viable and competitive. In the conditions of such a power distribution structure, employees involved in the sale of goods and services are empowered to make the necessary management decisions on their own.

Usually, a manager at a decentralized enterprise, without the consent of the top management, promptly resolves emerging issues, thereby ensuring an increase in speed. production processes and implementation of responses to external factors. This has a beneficial effect on final result production.

In decentralized enterprises, collective decisions play a significant role. It often happens that in order to solve the current situation, the opinions of specialists from different professional areas and with an integrated approach to the problem, a reasonable way out of the current situation is found. An effective tool in the fight against the problems that have arisen, it is precisely a balanced collective decision that can become.

Enterprises with the described management structure have the following characteristics:

• decisions made by lower hierarchical structures are more significant;
• the performance of organizational functions occurs in accordance with the decisions made by the departments;
• control out central control behind the actions of the lower hierarchical structures is quite low.

A large degree of decentralization in the enterprise contributes to:

• increasing the managerial skills of managers;
• increasing skills for competitiveness in modern market conditions that contribute to economic recovery and improve labor productivity;
• independence of management, starting from the middle management level, in solving emerging problems, which leads to awareness and evaluation of their own contribution to obtaining the result and is a significant additional motivation for their work.

Decentralization in the economy

The market economy must be partially decentralized, since it is characterized by a free regime of economic activity of citizens and their associations that does not depend on orders and instructions from above.

A decentralized economy in market conditions should not be burdened by a state plan established by the center, which is unconditionally subject to implementation. Instead of a mandatory one, there is a recommendatory forecast plan, which the ministry proposes to the regions. There is not only a restriction of the rights of the central state or other governing apparatus, but also the delegation of planning and management powers to economic units, the provision of independence in decision-making, as well as in the tactics and strategy of their actions.

However, in order to avoid chaos and utter discord, the market economy must be controlled and directed, so the complete decentralization of the economy is impossible and undesirable. The country's economy must have a system of rules of economic behavior that is common to all participants in the economic process.

Decentralization in government

The process of dispersal of power from the center to the regions and the establishment of local self-government by obtaining part of the powers from the central government is decentralization.

This mechanism is beneficial if there is a harmonious relationship between the center and the regions. Decentralization in government is the transfer of responsibility for planning, management and use of resources from the central government to lower levels.

Decentralization is closely related to the distribution of functions (or tasks) among the lowest levels of the social order that are able to perform them.

The principle of subsidiarity one of the main principles of distribution social assistance as needed between departments. It is this principle that underlies the European Charter local government. It is also important that not all management functions should be transferred to the field.

Based on the principle of subsidiarity, it is worth decentralizing if it is extremely important to achieve the goals set and there are guarantees for their effective implementation and improved management quality.

Differences between decentralization and federation

Decentralized state, where the powers of the central apparatus of power are largely transferred to its constituent parts occupies an intermediate position between unitary and federal states. To some extent, it has similarities with the federal structure of the state, which consists in vesting the right of an administrative-territorial unit to legislate, to be financially independent, and also the possible presence of autonomy in its composition.

But there are significant differences between the two control systems.

Federalism It is a system of government in which both national and regional governments have power. Here there is a constitutional recognition of the autonomy of the regions with protection from encroachments on their sovereignty by the central government.

It can be part of the policy of both a unitary and a federal state. Decentralization provides for the autonomy of the regions in accordance with the adopted laws, the supreme power can decide when and what powers to transfer to the regions, or can take them back at any time. In this case, most of the taxes collected in the administrative-territorial units are transferred to the central administration, the powers of the regions are small, and everything must be begged from the main leadership.

Pros and cons of decentralization

Advantages

• Strengthening local democracy. Unit managers have a significant amount of information about local conditions for decision making. There are no costs for its transfer from the central administration, everything happens at the local level.
• Improvement of socio-economic development, social and territorial interests are taken into account, policy is more accurately adjusted taking into account emerging conditions.
• Local managers make more timely decisions, which is most attractive for customers. The activities of managers are most effective due to the fact that they can take the initiative, acquire valuable experience through trial and error, and develop managerial talent. Soil is emerging for the cultivation of new administrators and talented civil servants. Management costs are reduced.
• Ensuring freedom and human rights through the opposition of the parties.
• Focusing the knowledge and skills of top management on issues strategic planning by transferring the burden of day-to-day problem solving to local managers.
• Allows you to install more flexible system regulation without the bureaucracy characteristic of centralized management.

Flaws

• Making incompetent decisions by managers of departments due to lack of information, lack of coordination of goals between departments, etc.
• Duplication of executable functions.
• Decreased loyalty to other units of the common whole.
• Isolation of parts, which leads to conflicts, weakening of control.
• The presence of a tendency to draw the controlled process into anarchy and disorder.

Consequently, decentralization clearly reflects the nature of relations between leaders of various levels in the management system, whether it be any area of ​​economic activity, an enterprise, an economy or a state. This is a new quality of management that allows you to get as close as possible to a positive result.

The value of decentralization lies in the impossibility of solving all the issues that arise in the departments from a single center. To do this, the powers are distributed among structural units that have sufficient capabilities to solve their own problems.

Reasonable delegation of authority is one of the important principles of successful management. It also operates in the situation of managing large firms and corporations. This confirms the study Irina Levina conducted among firms operating in Europe and Russia.

In the course of the study, results were obtained that describe the factors that affect the possibility of centralization or decentralization of company management. There are many such factors - the size of the company, the quality human capital, socio-demographic characteristics CEO, the presence of kinship or family ties between general manager and company owners.

The work was carried out in two stages. The first included an empirical analysis of data from the 2010 European Firms in the Global Economy survey conducted in seven European countries: Germany, England, France, Austria, Spain, Italy, and Hungary. At the second stage, the results of the survey " Russian firms in the global economy”, held in 2014 in Russia.

Strong family ties hinder decentralization

According to the results of the study, firms with a decentralized management system are more often involved in international trade, innovation and research activities, are more likely to train their employees. Meanwhile, as Irina Levina noted, decentralization is not an easy process for a company, since it involves many costs and depends on a number of factors.

So, for example, if property is concentrated in the hands of individuals or families, then the likelihood of centralization increases significantly. This, according to Levina, may be due to the unwillingness to share power and control over the management of the company with outsiders.

Also, the chances of centralization increase if the CEO belongs to the family that controls the firm. However, there are country specifics. So the presence of family ties among the owners and managers of the company increases the likelihood of centralization in Russia, England and France by 5%, in Hungary - by 7%, in Italy - by 12%, in Spain and Germany - by 28-31%, in Austria - by 41%. According to the author of the study, such differences between countries may be due to cultural characteristics. For example, in Spain, Austria and Germany, the level of prestige of owning and managing a family (or own) business is high. And it is in these countries that the effect of kinship on the likelihood of decentralization is most pronounced.

The personal characteristics of the CEO also partly influence the nature of management. Male leaders tend to be more centralized than female leaders. In some countries, there is a relationship between the age of the head of the company and the choice of management style (centralized or decentralized).

Centralization Champions - Russia, Hungary, Italy

The study revealed that there is a big difference in the degree of prevalence of decentralized management style between countries. Thus, the highest share of companies with decentralized management was found in Spain (39% of all companies surveyed), the UK (38%) and Austria (35%). In Germany, the share of decentralized firms is 29%, in France 22%. Minimal decentralization of business management is typical for Russia, Hungary and Italy (15-17%). “In countries with weak institutions and a low level of legality, the risks of decentralization are higher, since managers to whom the leaders or owners of the company delegate authority can use the received power not in the interests of the company, but in their personal interests, and at the same time it will be difficult for the owners / managers of the company to punish,” commented Levina.

These studies contain statistics separately for firms operating in high-tech and specialized fields and for medium and large companies. Interestingly, even among large companies, the share of firms with decentralized management is not so high, in 5 of the 8 countries studied it is less than 50%. Between what bigger company, the more difficult it is to carry out centralized control. In high-tech and specialized industries, the share of decentralized firms is somewhat higher than in the rest.

Table 1. Share of decentralized firms by country

Country	Total share	Firms operating in high-tech and special. areas	Medium and large firms: 100 employees or more	Large firms: 250 employees or more
Great Britain
Germany

Decide which element hierarchical structure the most important decisions must be made - the business of the top management of the organization. This determines the form of the organizational structure and the effectiveness of management decisions.

As already mentioned above, if the controllability becomes too high, then additional levels of control must be introduced to prevent loss of coordination.

Organizations in which senior management retains most of the authority needed to make critical decisions are called CENTRALIZED.

DECENTRALIZED ORGANIZATIONS- these are organizations in which powers are distributed among lower levels of management. Here, middle managers have very large powers in specific areas of activity.

Any organization can be called centralized or decentralized only in comparison with other organizations or in comparison with itself, but in other periods.

The idea of ​​decentralized structures is based on the idea that people are inherently capable of successfully coping with tasks.

Here, it is usually up to the top management to resolve issues of long-term planning, resource allocation, coordination and evaluation of the activities of departments. Lower-level managers are delegated the right to make decisions in areas directly related to the products and services for which they are responsible.

To understand how this organization is centralized compared to others, you can determine the following characteristics:

1. The number of decisions made at lower levels of management.

The greater the number of those decisions that are made by lower-level managers, the greater the degree of decentralization.

2. The importance of decisions taken at lower levels.

In a decentralized organization, middle and lower managers can make decisions related to the cost of significant material and labor resources or the direction of the organization's activities in a new direction.

3. Consequences of decisions taken at lower levels.

If lower and middle managers can make decisions that consume more than one business function, then the organization tends to be decentralized.

4. The amount of control over the work of subordinates.

In a highly decentralized organization, senior management rarely reviews the day-to-day decisions of their subordinates. The assessment of their actions is done on the basis of the total results achieved, which should be achieved by this unit.

Centralization and decentralization have their disadvantages and advantages, the ratio of which is determined by external and internal variables.

Benefits of centralization:

1. Improves control and coordination of specialized independent functions, reduces the number and extent of erroneous decisions made by less experienced managers;

2. Avoids a situation where some departments grow and develop at the expense of others or the organization as a whole;

3. Allows more economical and easy use of the experience and knowledge of the staff of the central administrative apparatus.

Benefits of decentralization:

1. Allows you to solve the control problem large organizations where there is a huge amount of information and the complexity of the process and decisions;

2. Gives the right to make decisions to the leader who is closest to the problem that has arisen and, therefore, knows it better;

3. Encourages initiative and allows the individual to identify with the organization

4. Helps prepare a young leader for higher positions by giving him the opportunity to make important decisions at the very beginning of his career. This provides an influx of talented leaders in the organization.

The factors that determine the ratio of centralization and decentralization include the following:

The need for radical changes and the high level of uncertainty in the external environment favors decentralization;

The ratio of centralization and decentralization should be adequate to the strategy;

In times of crisis or the emergence of immediate threats, power, as a rule, is concentrated in the hands of the top management of the organization.

Centralized and decentralized organizations

The most important issue of departmentalization is how to divide labor horizontally, that is, the definition of the tasks of each structural unit. Second important point creating an organizational structure - a vertical division of labor. Top management must decide where in the hierarchy of the organization, the main decisions will be made, and this decision determines the form of the organizational structure and the effectiveness of managerial decisions.

The bottom line is that different positions in the structure receive a relative amount of authority. As we learned from the discussion of power relationships, the manager must delegate to the subordinate at least as much authority as the latter needs to accomplish the tasks assigned to him. In addition, if the rule of manageability becomes excessively large, then in order not to disturb coordination, it is necessary to delegate linear powers and introduce additional levels of management. This, however, is only General requirements; there are many specific ways of delegation of authority.

Organizations where management top level reserves most of the powers related to the most important decisions are called centralized. Decentralized organizations are organizations in which powers are distributed according to different levels management. In such organizations, middle and lower managers have very broad powers in specific areas of activity.

Degree of centralization

In practice, absolutely centralized or decentralized organizations do not exist. These are only the extreme points of the continuum, between which there are all real structures. The difference is only in the relative degree of delegation of rights and powers, so any organization can be called centralized or decentralized only in comparison with others or with itself in other periods of time.

You can understand how centralized an organization is compared to others by the following characteristics.

1. The number of decisions made at the middle and grassroots levels. How more solutions accepted by lower managers, the higher the degree of decentralization.

2. The Importance of Decisions Made at the Middle and Grassroots Levels. In a decentralized organization, middle and lower level managers have the right to make decisions regarding the allocation of significant material and labor resources or changes in the direction of activity.

3. The influence of decisions made at the middle and grassroots levels. If lower-level and middle-level managers have the power to make decisions that affect more than one function, then the organization is likely to be decentralized.

4. Degree of control over subordinates. A highly decentralized organization top management rarely checks the daily decisions of his subordinates, initially believing them to be correct. The assessment is based on overall results, in particular in the areas of profitability and growth.

Some departments of an organization may be more centralized than others. For example, in a typical hospital, administrative functions, as a rule, are highly centralized, and medical personnel, primarily medical practitioners, are practically autonomous and independent in their actions. In large universities, the extent to which a teacher can change the content of their course also often varies greatly by faculty.

When we talk about the degree of centralization or decentralization of an organization, we actually determine the degree to which top management delegates to lower levels their authority to make critical decisions in such areas as pricing, new product development, marketing, and unit efficiency issues. But even in very decentralized organizations, top management reserves the right to decide such issues as the formulation of the overall goals and objectives of the organization, strategic planning, and the development of the company's policy in various areas, collective agreements with trade unions, creation of the financial and accounting system of the firm. Obviously, the management of any one department should not be allowed to decide how the organization as a whole should work. So, one of the reasons that Bank of America in 1986, lost almost $ 1 billion, there was an excessive decentralization of decisions on the provision of loans. According to research, currently Bank of America drastically reduces the number of branches eligible to provide loans, and obliges the top management of the central branch of the bank to constantly monitor these activities.

But, although in highly decentralized organizations many decision-making powers are indeed transferred to middle managers, the most important decisions still fall within the competence of employees at high levels of the organizational hierarchy, not lower than the level of the head of the unit. This form of decentralization of large firms is called federal decentralization.

Factors affecting the degree of decentralization

Shortly after World War I, firms such as du Pont, General Motors, Standard Oil of New Jersey and Sears, have recognized the potential problems of the functional departmentalization and centralization they use. This structure has been quite effective in the past, but as the product range expands, the business diversifies and enters international markets these firms have realized that the number and complexity of decisions they have to make are beyond their capacity. It was decided that in order to ensure the further growth and development of the organization and improve the effectiveness of decisions on critical issues it is necessary to transfer some important powers to the lower levels of management. And these organizations began to move towards a decentralized structure, in which top management left the issues of long-term planning, distribution of company resources among departments, coordination and evaluation of the activities of departments. Divisional managers were empowered to make decisions directly related to the products they were responsible for.

This tendency to reorganize the company in accordance with its expansion strategy is another manifestation of the thesis already cited by us “Strategy determines the structure”, repeatedly confirmed by research. At about the same time, and for similar reasons, other large firms began to move towards a decentralized divisional structure: Union Carbide, Westinghouse Electric, U.S. Rubber, Goodrich and A&P. But, as might be expected, this trend has not become universal, and not all firms that have implemented decentralized structures have continued to move in this direction. So, for example, in 1976 one of the pioneers of decentralization, Sears, faced with declining levels of profitability, began a return to centralization. Most of the important purchasing and advertising decisions in the firm at that time were made at the level of store directors, and under the new structure, they were transferred to the level of head office management. According to the company, this allowed them to better control costs and use the advantages of size and purchasing power in negotiations with suppliers. Sears.

According to a comprehensive study, the highest degree of decentralization is characteristic of such industries as the transport, chemical, electrical and rubber industries. Compared to the most centralized industries - food, metallurgy, engineering and paper - they are distinguished by a high degree of diversification and activity in international markets.

Partly because they are based on the idea that people are inherently capable of successfully completing tasks, and partly because of the amount of evidence for their effectiveness, decentralized structures today have many supporters. One of the most striking and compelling pieces of evidence comes from Peter Drucker, who was one of the first to study perhaps the most significant decentralization experience in world history: decentralization General Motors by A.P. Sloan in the 1920s. Building on the apparent success of decentralization in Du Pont, General Motors, General Electric, Standard Oil and Sears, Drucker concluded that “the basic rule for any organization is to create least the number of levels of management and the shortest chain of command instances.

Many managers agree with this conclusion. Most large American corporations have a decentralized structure. Their general structure is based on the principle of federal decentralization, in which the heads of the most important departments can act almost autonomously in everything related to the products they produce. But even the most vocal supporters of decentralization admit that it is not suitable in all situations. Both centralization and decentralization have their advantages and disadvantages, the ratio of which is determined by external and internal variables. Their main advantages are briefly described in Table. 12.3, and the disadvantage of centralization is that it does not allow you to enjoy the benefits of decentralization, and vice versa.

Table 12.3. Advantages of centralization and decentralization.

Benefits of centralization.

1. Centralization increases the effectiveness of control and coordination of specialized independent functions, reduces the number and extent of erroneous decisions made by inexperienced managers.

2. Strong centralized management avoids a situation where some units grow and develop at the expense of others or the organization as a whole.

3. Centralized management makes it possible to use the experience and knowledge of centralized administrative staff more economically and efficiently.

Benefits of decentralization.

1. It is impossible to centrally manage especially large organizations, since this requires a certain amount of information, and, consequently, the decision-making process is greatly complicated.

2. With decentralization, the decision-making power passes to the manager who is most familiar with the problem.

3. Decentralization encourages initiative and allows workers to identify with the organization. In a decentralized approach, the largest unit of the organization is small enough to understand how it works and to control it. Consequently, the manager, working in such a structure, experiences the same enthusiasm and responsibility as an independent entrepreneur.

4. Decentralization helps prepare young manager to higher positions, giving him the opportunity to make important decisions at the very beginning of his career. This provides the organization with the necessary number of talented managers. Since decentralization reduces the distance between the top and bottom organizational levels, this structure encourages aspiring young managers to stay with the firm and grow with it.

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DECENTRALIZED ORGANIZATIONS Some organizations, especially diversified corporations, decentralize most of their activities and retain only a managerial framework that considers financial control, strategic planning,

by Jeston John

Organizational Strategy Why Organizational Strategy Is Important to Business Processes Sometimes an organization's strategy is not taken into account in business processes. The reasons for this state of affairs are given below and the conclusions that we have reached from our own results are discussed.

From the book Business Process Management. A Practical Guide to Successful Project Implementation by Jeston John

Organization strategy This is about the development of an organization strategy by level 1 leaders. As indicated at the stage of developing the strategy of the general scheme, we do not give recipes or methods, but, in our opinion, it is worth understanding what is a strategy, what is its use

From the book Fundamentals of Management author Mescon Michael

Organizations All the above examples have one general characteristics owned by Brownie Troop 107, King's Ranch in Texas, Mount Sinai Hospital, Sony, Harper & Row Publishers, North Korea, General Motors, the US Navy, and your college. All of these are organizations. Organization is the basis of the world of managers and the reason