Centralization in any business organization is the spotlight of pre-eminence and control which lies in the hands of very few people. Implementation of this abstract notion will bring out both positives and negatives, just like in any concept. So, what are the advantages and disadvantages of centralized organizational structure?

1. Centralization in an Organization: Advantages and Disadvantages
Centralization in any business organization is the spotlight of pre-eminence and control which
lies in the hands of very few people. Implementation of this abstract notion will bring out both
positives and negatives, just like in any concept. Let’s look at the various advantages and
disadvantages of implementing the idea of centralization within an organization.
Advantages of centralization:
• Unbiased allocation of work: Being fair and just in assigning a particular amount of
work, not only between different units but also between responsible individual employees
will increase momentum within the Company.
• Standardization of work: By implementing centralization, one of the outcomes would
result in equality of behavior that guarantees unvarying judgment and standardized
progression.
• Area of specialization: There is an immediate advantage if a leader who handles a
particular area is an expert in the same field. This will ease the work distribution process
within the other levels of the team.
• Replication of work: Centralized training and standardization of work leave no scope for
replication of tasks or actions. This eliminates additional expenditure on excessive labor
for duplication of work.
• Flexibility: In a crisis or an emergency, standardization of work takes just one step to
revise all the activities at once. This guarantees a greater degree of flexibility in an
organization than a Company with no centralized training.
Having stated all the advantages of centralization, it is also important to be acquainted with the
negatives before putting the concept into effect.
• Administrative system: A centralized administrative system gives way to inequity
through the instigation of excessive regulations or strict conformity to official norms which
is redundant or bureaucratic and that hinders decision-making and delays work.
• Dictatorship: An employee is always expected to work according to what has been
dictated to him. No employee at the subordinate level is given the authority to take a
decision on a particular issue, in the absence of the lead. This causes psychological
reluctance and the employee sees no growth or motivation within the corporation and
hence results in him being disloyal towards the Company.
The system of centralization, thus, cannot be easily upheld. There is a thin line between every
norm and its outcome that is adapted in this concept. Centralization requires a clever yet
delicate way of handling in order to help sustain for a longer period of time as the most
important factor, secrecy, cannot be easily maintained in a system that is centralized to all.
Do share your thoughts on the same.
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