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
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.