Centralization is the extent to which decision-making power is concentrated at h

Question

Centralization is the extent to which decision-making power is concentrated at higher levels in an organization. In centralized companies, many important decisions are made at higher levels of the chain of command, whereas in decentralized companies, decisions are made and problems are solved at lower levels by employees who are closer to the problem in question.

The employees churning the work day in and out are the biggest asset any company has. Their performance and approach results in the success or failure of the business. So, in my opinion the decentralized structure is most effective because as a lower-level employee I would feel more comfortable and be more productive. The authority provided would result in a sense of empowerment which would help in making decisions more quickly. Decentralized companies provide greater levels of bureaucratic equality to employees. Applicants for a job are more likely to be attracted to decentralized organizations because centralized organizations assign decision-making responsibility to higher-level managers. This places greater demands on the judgment capabilities of the high-level managers. The centralization of operations leads to inefficiencies in decision making. If the decision-making responsibilities are delegated by top management to middle and lower-level employees within the organization than it allows the top management to focus more on major decisions. A decentralized structure provides a better chance that the organization will maintain self-sufficiency because low-level managers and employees are habituated to working autonomously. If growth results in opening a new business unit in a different geographic area, decentralization allow the new unit to operate as an independent entity, meaning it can react more easily to the specific needs of the area, such as deciding to sell products that appeal to the local market.

Explanation / Answer

Many organizations have highly centralized structures whereby upper level management personnel make the lion's share of important decisions. Many other organizations have decentralized organizational structures in which lower-level personnel and employee teams make most of the important decisions. In your opinion, which type of structure is most effective? Why?

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