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Last week, we studied the advantages of the management principle of centralization; this week, we will consider the disadvantages of centralization.

 There may be delay in work since in centralization, all decisions, major and minor, significant and insignificant, have to be taken by the top authority. Even though the low level manager or employee is quite aware of the decision that must be taken in an ordinary situation with an insignificant issue, he is not supposed to take the decision; he has to wait and by the time the top authority gets time to come down to his problem and give decision, much precious and productive time has been wasted; it actually means the decision has cost the company more than it should. Therefore, both cost and time are unnecessarily consumed with no benefit to any one, either for the decision-maker or for the decision-receiver.

 Administration and cautious, consistent monitoring of the work of the employees always go together; they are integral to one another. In other words, monitoring includes controlling also. Control is an administrative tool to check and minimize the wasteful expenditure of money and manpower; yet, it is not directly productive in the sense the top authority will be unduly burdened with this task of control giving less and less time for innovative business measures that will take the business enterprise to the next level of growth. Indeed, the physical distance has been conquered and the MD with the provision of the CCTV can watch all from his room itself across the workplace.  All the same, time if spent in excess is ill-directed therefore misspent.

 In a centralized environment, an employee will feel that he has not been given opportunity to learn more and grow more. Decision-making is a definite skill that sharpens the intellectual grasp of the things. One gets an inward sense of growing into knowledge of his chosen field and this sense is essential in making the job less mechanical and repetitive, leading one to boredom. Boredom corrodes away one’s skill and capabilities. There is least possibility of an employee feeling immensely grateful to the management in such centralized atmosphere.

 Indeed, the degree of centralization and decentralization depends on the nature of organizations. One man business enterprise necessarily ends up in centralization; but, a multi-national company or a company with various products to its credit cannot go in for total centralization.  A good businessman knows how far to centralize and how far to decentralize and it also knows when to change the pattern of distribution of centralization and decentralization; it would not stick on to empty vanity that puts the business enterprise on the path of loss therefore on the path of cessation.

 Mismanagement and successful business are mutually exclusive of one another. 

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