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Centralization of decision making authority.
Date Posted:
8/8/2018 6:39:04 AM
Posted By: Faimus Membership Level: Gold Total Points: 1012
as representatives of the organization then work in, identify opportunities available to the organizations, allocate the necessary resources to exploit the selected opportunities and deal with any threats that may occur in the course of exploiting the opportunities.
A centralized system also promotes uniformity of policies and decisions. This is because in a centralized system decisions are made by a individual or a board which has to agree on the best method of implementing a given strategy. This system is most effective especially in organizations where uniformity is key. Examples of such organizations are institutions of higher learning such as university, colleges and technical training institutions. In the case of a university, a given university may have various campuses located in different parts of a country or region. The courses offered in all the campuses are usually the same. This is the case because decision making authority is centralized. If for instance, the administration of one of the campuses identifies a course which would favorable to offer in the region where it is located, then it has to consult with the top administrators in the main campus who then decide whether or not to introduce the course in the given campus. This therefore ensures uniformity in all the given branches of the institution.
In addition, a centralized system enables integration. This is because the decision made by the top managers are implemented at all levels in the organization. The subordinate therefore know and understand their job objective, how their job objective fits in the group effort to aid in the achievement of the goals of the organization. Any changes to the decisions from any of the lower levels of the organization are usually proposed to the top managers before implementation. This is because a change at any level will cause a change in the whole organization. Integration further enables close control and supervision of activities by the top managers. The managers are therefore able to detect any deviations from the proposed plans or set standards and formulate and undertake the necessary corrective actions to enable the achievement of the goals of the organization.
Centralization of authority also reduces the risks of errors by subordinates. In a system where a centralized system is not practiced then a decentralized one is in place. A decentralized system entails the delegation of certain tasks and duties to subordinates. Subordinates in most cases lack the vast knowledge and experience that the top managers have accumulated over the years in practice. The subordinates can therefore make errors that have great implications on the organization when decision making authority is delegated to them. This is dangerous especially in a case where the decisions to be made involve high risks and costs. In addition, accountability cannot be delegated hence the top managers still remain accountable for any mistakes committed by the subordinates to whom they had delegated decision making authority. A centralized system therefore eliminates the possibility of such errors by resting the discretion to make decisions on the top managers who have proficiency in their field of expertise and also ensures the accountability of the top managers.
In a centralized system, there are fewer positions in the structure of the levels of positions in the organization compared to a case where a decentralized or both a centralized and a decentralized system is employed. Fewer position implies that the organization thus has fewer personnel and require fewer equipment for its operation thus low operation costs for the organization. This is because the organization has lesser costs to incur fewer salaries to pay and equipment to purchase. Low operations costs ensure high profit margins and hence growth and expansion of the organization.
Although the centralized system is advantageous, most organizations utilize both the centralized and decentralized systems to curb the disadvantages associated with employing just one of the systems.
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