Centralization is the name given to the process within an organization where the main authority is executed from a central head office location. Most retailers and other large corporations operate in this way. Just like any form of management there are advantages and disadvantages to running a business in this way.
Merits of centralization:
• Senior managers are given more responsibility as they oversee everything and ensure all the required actions from the head office are executed on a local level.
• There is more structure and more organization within the corporation.
• Important decisions are made at a senior level in head office so the daily operations are not interrupted.
• Important decisions can be made quicker and will be more consistent within the whole organization.
Demerits of centralization:
• Too much responsibility may fall on one or two regional managers.
• The rest of the workforce could feel out of the loop and unimportant as they are not included in the main decision making processes.
• The staff at head office who make the main decisions may not make an effort to forge good relationships with staff on the ground so this could be negative for effective communication within the organization.
• Branch managers may feel unimportant as they cannot make important decisions without first consulting their head office superiors. This may demoralize them.
Merits of centralization:
• Senior managers are given more responsibility as they oversee everything and ensure all the required actions from the head office are executed on a local level.
• There is more structure and more organization within the corporation.
• Important decisions are made at a senior level in head office so the daily operations are not interrupted.
• Important decisions can be made quicker and will be more consistent within the whole organization.
Demerits of centralization:
• Too much responsibility may fall on one or two regional managers.
• The rest of the workforce could feel out of the loop and unimportant as they are not included in the main decision making processes.
• The staff at head office who make the main decisions may not make an effort to forge good relationships with staff on the ground so this could be negative for effective communication within the organization.
• Branch managers may feel unimportant as they cannot make important decisions without first consulting their head office superiors. This may demoralize them.
