Distinguish between the decentralization and centralization processes of organizational structure. Discuss which factors determine an organizations position on the decentralization-centralization continuum.
Solved: Distinguish between the decentralization and centralization processes of organizational structure.
Expert Answer
Centralized processes are the processes where the decision is taken up at the top level with decision making control lying with the few people in the function. Under the centralized processes, decision taken up by the one centralized function is followed by all other functions in the organizational structure. In contrast to it, in decentralized processes, decisions are take up with independence at each level of the organization. It brings autonomy in the decision making and speeds up the decision making process.
For example, purchase decisions and budgeting decisions are often used as centralized process when each function raises their request for purchase. Though, functional decisions such as deployment of workers, scheduling of processes are decentralized processes. Thus, an organizational structure can have the combination of both these processes.
There are many factors that affect the decentralized or centralized processes within the organizational structure.
The first factor is the level of control. A high level of control makes centralized process and vice versa. The second factor is the need for speed in decision making process. A need of quick decision requirement at a particular position, leads to the decentralized system. The third factor is the structure of the organization. Flat structure brings decentralization and vertical structure will bring centralized system.
