There are different implications of the terms centralization and decentralization. In context of management, these terms refer to the presence of the decision-making authority in a particular organization. In order to find out if a particular organization is centralized or decentralized, it is necessary to find the decision-making power. If the power to make the decisions lies with the person at the top of the organization, the organization can be described as a case of centralization. But if the power to take the decisions has been divided among different persons in the organization, it will be a case of decentralization. The role played by the subordinates is also connected with the level of delegation of authority. Hence, if the subordinates have to implement whatever orders have been given to them, it can be described as the centralization of authority. In such a case, all the decisions are taken by the top level management and no authority is available to the subordinates to change or amend these decisions. As compared to this situation, in case of decentralization, the subordinates were more power, and they also have a significant role in the process of decision-making.

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Some of the advantages of decentralization can be described as follows:-

1. Quick decisions: In case of a decentralized system, the decision-making powers are delegated at the level of actual execution. Therefore, when the need arises to take a decision, the particular executive can decide immediately. Such executive is not required to make a reference to the top-level management for most of the decisions. Therefore it returns the process of taking decisions.

2. Reduces the burden of top management: In a centralized system of authority, the top-level executives are overburdened. Therefore they do not have any time to involve in activities like planning etc. On the other hand in case of decentralized decision-making, the power is delegated to the lower level of management, which relieves the top executives from some of the burden. In case of decentralized system, the top executives only deal with the work that needs their personal attention and every other word is assigned to the persons at the appropriate level. This significantly reduces the burden of the top-level executives and they can effectively deal with their other responsibilities like planning etc.

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The advantages of centralization can be described as follows: –

1. Facilitates Evaluation: In cases where the same policies are used for all the parts of the organization, it becomes easy to evaluate their performance. Such a situation also helps in comparing the results of various departments of the organization. This situation also helps in achieving his sense of competition between different departments. The ultimate result is in the form of an improvement in overall performance.

2. Centralization of procedures and systems: Centralization also allows the centralization of procedures and systems. It facilitates smooth working of various departments. Similarly, a consistency can be achieved in the day-to-day workings of the organization. Consumer services also experience and improvement when standard policies are implemented.

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The failure of the process of delegation can be the result of halfhearted approach adopted in this regard by the superiors or the subordinate managers. Therefore, when the delegation is partial, unclear or, it is inconsistent with the expected results, the process of delegation is bound to fail. In this regard, the following steps need to be taken in order to make the process of delegation effective.

1. Defining assignments: It is very important that the work assigned to each person has been defined properly. Similarly, the results that are expected from each person should also be described clearly. These persons should be providing sufficient authority so that they can achieve the desired results.

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The delegation of authority is required in case of almost every organization. The question that has to be decided in this regard is how much authority needs to be delegated to the subordinate managers. The pattern that should be followed for delegation needs to be decided on the basis of its requirements. At the same time, it will also be useful to regularly check the already present a delegation of authority for the purpose of ensuring that such delegation is appropriate and adequate. As mentioned above, there are a number of factors that have an impact on the decision regarding delegation. Some of these factors have been discussed below:-

1. The history of the organization: The history of the organization has an impact on the level of delegation of authority. Therefore, an organization that has grown over a period of time, has the tendency to centralize power. In case of a small organization, most of the decision-making powers are held by the owner of the organization. Even as the business of the organization grows, the tendency remains to centralize the powers. But in case of an organization that is the result of a merger, combination or an amalgamation, there can be a greater amount of decentralization of powers. If the organization is working on decentralized pattern, the organization will be run in the same way even after its acquisition. Therefore the growth history of the organization had an impact on the level of delegation of authority in the organization.

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