Centralization of decision making authority.


Date Posted: 8/8/2018 6:39:04 AM

Posted By: Faimus  Membership Level: Silver  Total Points: 962

Centralization of authority is a situation whereby decision making authority is retained by the top level managers. Decision making authority is the discretion to make decision that affect and influence the behavior of others without having to obtain permission from any other person in an organization. This authority is vested in the position and it is through it that the incumbent is able to get all activities under their jurisdiction done so as to achieve the organizational goals. Top level managers are the policy makers and take care of the organization. They are in charge of the organization and responsible for it’s overall performance. They formulate strategies, provide leadership, evaluate the methods of organization and provide a sense of direction in the organization. They bear titles such as Chief executive officers, managing directors, chairpersons or presidents. Centralization of authority is advantageous in the followings ways.

It enables the utilization of the skills of central experts. Top managers are individuals who posses preferred leadership characteristics such ability to judge, communicate, inspire and listen, employ the appropriate leadership styles as demanded by the situation at hand and focus on achieving the organizational goals. The managers also have a wide range of knowledge and years of experience in their areas of specialization. They also well trained in the managerial roles and functions. Some managers start as employees and rise through the ranks to the position of top managers and therefore are well conversant with how the organization works. Top level managers are thus able to solve organizational issues in ways that benefit the organization, create a working environment that is free from victimization and fear and see the wider perspective of the situations that the organization may have to go through. They are also able collect and disseminate information vital to the organization, act

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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