What are the basics that an Organization needs to know about Degree of centralization while devising its Organizational Structure ?

1. Degree of Centralization
By
“The Organization Consultants”

2. Introduction
“Architecture does not create extraordinary organizations by
collecting extraordinary people. It does so by enabling very
ordinary people to perform in extraordinary ways”
John Kay
Author:- “Foundations Of Corporate Success: How Business Strategies Add Value”
(Oxford University Press - ISBN: 9780198289883)

3. Introduction
 Organizational Structure: Framework that organizes all formal
relationships within an organization, establishing lines of
accountability and authority, and elaborating how the jobs or
tasks within an organization are grouped together and
arranged.
 Factors to tweak and arrange in order to build an
organizational structure are:
Chain of Command
Span of Control
Centralization
Specialization
Formalization
Departmentation

4. Aim
To acquaint you with the importance of Degree of
Centralization with regards to devising an organizational
structure.
Sequence
Degree of Centralization
Advantages of Centralized Structure
Advantages of Decentralized Structure
Factors Affecting Degree of Centralization
Conclusion

5. Degree of Centralization
“Centralization” is the systematic and consistent
reservation of authority at central points in the
organization
“Decentralization” is the systematic delegation
of authority at all levels of management
throughout the organization

6. Degree of Centralization
Operations carried out at lower
level as per directions of the
top level
Decision-making power is
concentrated at a single point
Operations can be coordinated
at divisional level
Decision-making power is
spread out

7. Degree of Centralization
Advantages of Centralized Organizational Structure
Reduced cost Uniformity in
Action
Personal
Leadership
Flexibility Improved Quality
of Work
Better
Coordination

8. Degree of Centralization
Advantages of Decentralized Organizational Structure
Distributed
burden of Top
Executive
Increased
Motivation &
Morale
Greater Efficiency
& Output
Quick Decisions Effective Control

9. Degree of Centralization
Factors Affecting Degree of Centralization
Size and dispersal
of Operation
Nature of Business Quality of
Executives
Effective Control
System
Importance of
Decisions

10. Degree of Centralization
Factors Affecting Degree of Centralization
Requirement of
Uniformity
History & Culture
of Organization
Management
Philosophy
Availability of
Efficient Managers

11. On a lighter note

12. Conclusion
Many businesses have organizational structures that simply
evolved during the business’s lifetime
Organizational structures often need to evolve with passage
of time as per the variations in basic factors
Devising an Organization’s structure requires deliberate
planning & consideration of relevant factors

13. Conclusion

14. Thank You