Meaning of Centralisation When the Authority to make all decisions is vested in a single person in the organisation it is centralisation. Koontz & Odonnell : To the extent that authority is not delegated, it is centralisation.
Factors affecting centralisation Leadership Need for integration Uniformity of action Emergencies Scarcity of managerial manpower Expensive and important decisions External factors
Meaning of Decentralisation Decentralisation is delegating authority to the employees at different levels in the organisation in the context of duties assigned to them. Decentralisation is dispersal of the centers of decision making throughout the organisation. Joseph Massie : Decentralisation is an organisational concept which takes decision – making to the lower levels of organisation
Factors affecting decentralisation Burden on top executives Need for diversification Need to preserving grip on the market Need for development of managers Need to improve motivation
Common Definition Henry Fayol : Everything that goes to increase the importance of of the subordinates role is decentralisation, everything which goes to reduce it is centralisation.