Centralization Definition and Meaning

Centralization is the action and effect of centralizing. This verb, on the other hand, refers to bringing various things together in a common center or making different things depend on a central power.

To understand the concept of centralization, therefore, we must pay attention to the notions of center and center. Center, from the Latin centrum, can refer to the interior point that is equidistant from the limits of a figure, to the place where coordinated actions converge, to the region that concentrates the busiest points of a population, to the area where there is more bureaucratic or commercial activity and to the place where people meet with a common purpose.

Central is that relative or belonging to the center. The central can be something that is in the physical center, the place that is between two extremes or that which is the basic or essential of something.

Returning to the idea of ​​centralization, it can be said that it is the action or initiative to bring together different things in a common center. A company can decide to centralize the telephone calls it receives and have them enter the same device so that later a person in charge of the reception can answer it and refer it accordingly. From this point of convergence, the calls are redirected to their respective recipients; If these are not available, this type of organization allows you to leave a message to record the attempted contact.

The centralization of power, on the other hand, is linked to the national or federal government, which assumes the powers attributed to local bodies. This means that all decisions come from the same center (the national government), so the authorities of the provinces, cities, localities, etc. they lose power and autonomy.

Two key figures in the development of the classical approach to management were Henry Fayol and Frederick Winslow Taylor. The first was originally from Istanbul and strongly defended the linear organization, which is characterized by the centralization of authority; Taylor, for his part, from the United States and with a background based on mechanical engineering and economics, is called the father of Scientific Administration, and leaned towards functional organization, with decentralized authority.

Let’s see below the advantages and disadvantages of both concepts:

Advantages of centralization

* The power of decision is given to a series of administrators, who enjoy a global vision of the company;
* greater responsibility, greater training and level of knowledge;
* avoids situations in which the same job is done twice (due to lack of communication) and reduces the operating costs of decentralization;
* promotes greater specialization in certain functions and better use of skills.

Disadvantages of centralization

* Often, decision-makers are not familiar with the issues they are trying to solve;
* Given the distance between the parties, there are often unnecessary delays and operating expenses;
* The more people are involved in a process, the chances of errors due to distortion of messages increase.

Advantages of decentralization

* opens the possibility of decision making from the lowest echelons of the hierarchy, which can translate into greater efficiency;
* better use of time, given the greater proximity between the parties;
* bosses have to make fewer decisions and can focus on other tasks;
* Coordination costs are usually lower than in a centralized organization.

Disadvantages of decentralization

* decisions do not follow the same line, as they are made by different groups;
* It may be that two or more people embark on the same task without the others knowing, with the consequent waste of time and money.


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