Centralization Decision Making

In Centralization, all decisions are made by the top management or owner of the organization without consulting lower management. In decentralized organization or rather a company that is operated on delegation of decision-making powers and flexible processes. Executives or business owners assign tasks to management and employees and maintain a very open communication in the organization. Management does not make decisions without approval of top management or executives.

In centralized organization, even those decisions regarding routine operations are generally decided by upper management or business owner and all the policies are put in place to ensure that all the employees follows the directions of top executives.  The reason of this attitude is, organization wants to maintain a chain of command in the organization without errors.

The affect of this attitude may be Positive and inverse/ negative both because some cases immediate decisions are required such as operation sectors a raw material required but production manager does not have a power to take decisions because decisions are made by the top management in such case firm will suffer. An other inverse affect is that employee of the organization do not accepts any change in the organization and they create resistance to change.

Positive affects is in centralization is there is less chance of errors because clear cut instructions are communicated to lower management. Fast executions of decisions, centralization reduce conflict, centralization maintain control and accountability.