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Centralization, decentralization & formalization

Basic Management Topics and stuff....

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Centralization, decentralization & formalization

  1. 1. Prepared by,Malay m. patel
  2. 2.  Centralization is the degree to which decisionmaking takes place at upper levels of theorganization. If top managers make key decision with littleinput from below, then the organization ismore centralized. Keep in mind that centralization is relative,not absolute- that is, an organization is nevercompletely centralized.
  3. 3. •More Centralization Environment is stable. Lower-level managers are not as capable or experienced atmaking decisions as upper-level managers. Lower-level managers do not want to have a say indecisions. Decisions are relatively minor. Organization is facing a crisis or the risk of companyfailure. Company is large. Effective implementation of company strategies depends onmanagers retaining say over what happens.
  4. 4.  A decentralized organization is one in whichdecision making is not confined to a few top executivesbut rather is throughout the organization, withmanagers at various levels making key operatingdecisions relating to their sphere of responsibility.
  5. 5. •More Decentralization Environment is complex, uncertain. Lower-level managers are capable and experienced atmaking decisions. Lower-level managers want a voice in decisions. Decisions are significant. Corporate culture is open to allowing managers to have asay in what happens. Company is geographically dispersed. Effective implementation of company strategies dependson managers having involvement and flexibility to makedecisions.
  6. 6. Today’s View :-As organization have become more flexible andresponsive to environmental trades, there’s been adistinct shift towards decentralization decisionmaking. This is also known as employeeempowerment, which is giving employees moreauthority to make a decision.
  7. 7. Content What is Formalization ? Advantages & Disadvantages Today’s view about it
  8. 8. Elements ofOrganizationalStructureWhat is Formalization ?• Formalization is the extent to which rules and procedures arefollowed in an organization.•The degree to which organizations standardize behavior throughrules, procedures, formal training, and related mechanisms.Span of ControlCentralizationDepartmentalizationFormalization
  9. 9. Advantages :-• Formalization makes the process of succession routine.• Increase the rationality of organization.• Make explicit and visible the structure of relationshipsamong organizational participants.
  10. 10. Disadvantages :-• Employees are not allowed to exercise their ownjudgment.• Discrimination of work load between employees.• Formal structures are the norms and behaviours thatexist regardless of individuals involvement.
  11. 11. Today’s view about Formalization :-Although some formalization is necessary for consistencyand control, many organizations today rely less on strictrules and standardization to guide and regulate employeebehavior.