Question

What are the benefits of having all product information visible to all the fields of a company in an organized, central location? What are the risks?

Answer 1

Centralization is an approach to management and organizational structure in business in which important decisions are made by a small number of company leaders, often in a centralized headquarters. This is opposed to decentralization where decisions are made more locally by leaders throughout the organization. Quick implementation of decisions. In a centralized organization, decisions are made by a small group of people and then communicated to the lower-level managers. The involvement of only a few people makes the decision-making process more efficient since they can discuss the details of each decision in one meeting.

ADVANTAGES

1. A clear chain of command

A centralized organization benefits from a clear chain of command because every person within the organization knows who to report to. Junior employees also know who to approach whenever they have concerns about the organization.

2. Focused vision

When an organization follows a centralized management structure, it can focus on the fulfillment of its vision with ease

3. Reduced costs

A centralized organization adheres to standard procedures and methods that guide the organization, which help reduce office and administrative costs.

What are the risks of centralization / dis advantages of centralization

1. Bureaucratic leadership

Centralized management resembles a dictatorial form of leadership where employees are only expected to deliver results according to what the top executives assigned them.

2. Remote control

The organization’s executives are under tremendous pressure to formulate decisions for the organization, and they lack control over the implementation process.

3. Delays in work

Centralization results in delays in work as records are sent to and from the head office. Employees rely on the information communicated to them from the top, and there will be a loss in man-hours if there are delays in relaying the records. It means that the employees will be less productive if they need to wait long periods to get guidance on their next projects.

4. Lack of employee loyalty

Employees become loyal to an organization when they are allowed personal initiatives in the work they do. They can introduce their creativity and suggest ways of performing certain tasks. However, in centralization, there is no initiative in work because employees perform tasks conceptualized by top executives. It limits their creativity and loyalty to the organization due to the rigidity of the work.