Decentralization is more important than centralization

Decentralization and centralization are two different things that often people question about. When it comes to organization, the first thing that people would consider is, ‘Which one is better and more suitable for the company?’ Decentralization simply means the organization of a company is a free-making decision while centralization is more to focusing on one point, where all of the orders and instruction came from there. Decentralization brings huge benefits for it focuses more on the individual needs of people. It cares about the other choices that are suitable in an organization and because of this, it brings diversity. However, that does not mean that centralization is not as essential as decentralization. Centralization is where all things are in sync. This is where the quality shows off. When a manager gives orders to their employee, they certainly can decide what is better for them.
Decentralization comes with many interpretations. When a part of the work is entrusted to others, it is known as delegation. Decentralization extends to the lowest level of the organisation. “Decentralization is simply a matter of dividing up the managerial work and assigning specific duties to the various executive skills.” (Newman, Summer and Wairen) This is why decentralization is concerned with the decentralization of decision-making authority to the lower levels in managerial hierarchy.
Yes, decentralization is better than a centralization because decentralization focuses on the individual needs of people. A system can’t work properly individually. It needs monitoring from different sources. Power should not be in a single hand but instead, it should be dispersed so that people are not dependent on one party alone.
Decentralization offers several advantages, though relinquishing control may be difficult for a business owner accustomed to making all the decisions. One of the advantages of decentralization is reducing the burden on top executives. Decentralization relieves the top executives the burden of performing various functions. In contrast to this, centralization of authority puts the whole responsibility on the shoulders of an executive and his or her group. This automatically reduces the time at the disposal of top executives who would concentrate on other important managerial functions. So, the only way to lift the burden off their shoulder is to decentralize the decision-making power to the subordinates.
Besides that, decentralization facilitates diversification. Decentralization allows the diversification of products, activities and markets to be facilitated while a centralized enterprise with the concentration of authority at the top will find it difficult and complex to vary its activity and start the additional lines of manufacture or distribution.
In addition to this, quoted from Louis A. Allen, “Decentralization stimulates the formation of small cohesive groups. Since local managers are given a large degree of authority and local autonomy, they tend to weld their people into closely knit integrated groups.” Under decentralization, it promotes motivation because it boosts the morale of the employees as they get involved in the decision-making process. Furthermore, it strives to satisfy the varying requirements of participation, independence, and status. Decentralization helps to promote a spirit of group cohesiveness and spirit.
Even though there are a lot of benefits for a decentralized organization it also has its own disadvantage. A decentralized organisation's biggest disadvantage is that the owner could lose control of the company's day-to-day operations. This is because when an owner trusts their manager's instincts, skills and talents, they tend to believe them and let them do whatever the manager said. However, that can backfire, if the managers aren’t up to the task, which can cause conflict between managers and staff, and between the owner and managers. This could lead to the result in loss of control from the hands of top management. For example, different units of the organization may start working as autonomous units working in their own interest in contrast to the overall interest of the organization.
However, centralization is also important as it benefits a company for better quality product and also employees. Centralization refers to the organizational system where the decision-making authority is limited to the top management, and the subordinates must obey their seniors' orders. Authority centralization is essential for small organizations that lack resources and finance. The question is what is the need to centralize an organisation's authority?
First of all, centralization helps an organization limit their cost efficiently. This is because the management need not spend much on the office and administrative expenses in a centralized organization. Due to centralized decision-making, the expense of recruiting experts and highly qualified staff at each level is also saved. Next, the management will have better command over the subordinates as well as the subordinates know precisely who to obey. There is adequate oversight over the subordinate behavior and the management is well aware of the subordinates' strengths and weaknesses. Last but not least, the subordinates are directly accountable to the top management and thus strive constantly to improve the quality of the work. It also helps in process standardization, and eliminates waste.
In conclusion, both decentralization and centralization have their own strengths and weaknesses that everybody should look after. Both are good in many ways, however, the size of the organization influenced them. If there is a big company that is spread widely, they might need to decentralize their organization because different places require different options. It would be hard if they centralize their company as it could bring conflict and problems from their surroundings. While centralization is better made in small organizations. This is because it is easier to monitor and give orders while they are still making profits. As there are lots of big organizations in this world such franchised restaurants and many more, it is better to decentralize as it makes it easier to manage their company.