Centralization and decentralization

The centralization and decentralization are two concepts that relate to two models of administration and control authority , which are opposites. Both can apply to an organization, a department, or a political system.

CentralizationDecentralization
DefinitionPower administration method in which decision-making rests or is centralized in a single authorityAdministration method in which autonomy of action and independence in procedures are provided to the different units of an organization.
Advantage-Those who have the power over decision-making have a broad vision of the company.
-It allows decision-making to be uniform at a general level and this facilitates the application of different work methods and policies.
-Allows avoiding the need to do the same job more than once due to problems or lack of communication.
-Allows greater training of lower hierarchies.
-The heads of the different units make decisions directly, and this produces a better use of time.
-More staff training.
Disadvantages-Delay in communication due to the distance that may exist between authorities and subordinates.
-The authorities overloaded with work
-Reduces the motivation of employees.
-The decisions of the departments may not go hand in hand with the general terms that govern them.
-The knowledge of the different specialists is not considered.
-It may happen that the units do not have the appropriate equipment to be able to carry out the tasks.

What is centralization?

The centralization is a method of managing power in which decision making rests or is centralized in a single authority , which may be a person, a group or an institution. It is an action of concentrating authority in order to optmize the work system of an organization or the administration of a company.

In this method of administration, power is exercised and managed vertically, since the rest of the people who are part of the organization, or the departments or institutions are subordinate to the central authority.

We can say that centralization is the tendency to centralize, it is said to create nuclei of power , responsibility or prosecution, which have many inputs but few or only one output. This method can be given in human settings and even in biological settings.

An example to define centralization are those governments that prefer a single and hegemonic center of power from which the rest of the country is governed, instead of a tendency to dispersion and autonomy as is the case of federal governments.

Characteristics of centralization

Within centralization we can define three particular characteristics :

-It has a great concentration of power in a few people, sometimes even just one, who takes care of decision-making and in the vast majority of cases executes them.

-If the central power is not in charge of executing the decisions, then it is in charge of ordering their execution to the people or entities subordinate to it.

-If decisions are made in lower instances, they must go through the approval of the central power, since they do not have autonomy.

Advantages of centralization

Among the advantages of this method of power management we can find:

-Those who have the power and authority over decision-making have a broad vision of the company or the government.

-It allows decision-making to be uniform at a general level and this facilitates the application of different work methods and policies.

-Allows avoiding the need to do the same job more than once due to problems or lack of communication.

-People who have greater authority must have a specific preparation that corresponds to their obligations, this implies greater training and knowledge.

Disadvantages of centralization

As disadvantages we can name:

-In centralization, delays in communication may occur due to the distance that may exist between authorities and subordinates.

-The authorities or bosses are usually overloaded with work given the number of tasks they have to attend to.

-Generates a limit in the development of subdivisions and this reduces the motivation of employees.

-It usually happens on several occasions that the authorities are unaware of the problems of the other problems that it addresses.

Types of centralization

Within the administrative field, different types of administration can be given, which are:

-Centralization of performance: this type of method is used for geographic and operational centralizations within an organization, as may be the case of a company that centralizes in a single of its headquarters all the personnel of a certain process or that channels in a branch all the requests of a certain region.

-Department centralization : this centralization is generated when an organization or company builds specialized departments. Those that will go to systems will take care of all the computer and technological requirements and needs of the rest of the organization.

Managerial centralization : It refers mainly to decision-making, which is concentrated in a high-level management or directive leadership, which also manages communications with the team leaders or of each department, thus achieving full control and centralized company.

What is decentralization?

The decentralization is the tendency to provide freedom of action and independence in procedures to the various units of an organization. It is the opposite of centralization. This regime implies that the units that make up a company or organization are able to face their obligations and make the respective decisions.

This method is essential in those federal governments, in which they involve the union of equals of the states or departments that make up the country. Decentralization can also be defined as a political ideology that is based on transferring responsibilities and autonomy from the central government to the rest of the authorities.

The objective of this method is to seek to hand over the responsibilities of production, assignment and different tasks to the local units that are more comfortable with the environment in which they must work.

Characteristics of decentralization

Among the main characteristics of decentralization we can find:

-The central authority of the organization or company transfers the responsibilities to the bodies subordinate to it.

-These instances have independent procedures, which do not need the approval of the main authority.

-In this method the decisions have a participatory character. Although the power to center analyzes the decisions, they do not depend on it.

-It can have many levels of management.

Advantages of decentralization

-Allows greater training of lower hierarchies.

-The heads of the different units or departments make decisions directly, and this produces a better use and use of time.

-More staff training.

Disadvantages of decentralization

-It may happen that the decisions of the departments do not go hand in hand with the general terms that govern them.

-The knowledge of the different specialists is not considered, since they belong to the central department of the organization.

It may happen that the units do not have the appropriate equipment to be able to carry out the tasks.

Types of decentralization

There are different types of decentralization, which are:

– Vertical decentralization : here the central power delegates powers to lower levels.

– Horizontal decentralization : the distribution of power is carried out in instances with the same hierarchy.

– Territorial decentralization: in this type of decentralization, decision-making is left to an institution or department which has powers in a territory.

-Fiscal decentralization: here each of the entities administers its own budget, is in charge of the provision of services and takes care of its own tax management.

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