Concept, Advantages, Disadvantages and Examples

We explain to you what centralization is, how it is classified and what its advantages and disadvantages are.Besides, examples and what is decentralization.

Centralization creates nuclei of power, responsibility or processing.

What is centralization?

We talk about centralization when the powers of decision or process within any organization tend to converge in the same instance, or more simply, when all power or all obligations tend to fall into the same organizational instance , either as part of a government, a company or any administrative model.

Centralization will then be the tendency to centralize, that is, to create nuclei of power, responsibility or processing , which have many inputs and a few (or only one) exit, thus creating a convergence.This can occur in many human and even biological fields, since a management Centralized resources can be, on certain occasions, much more efficient than a dispersed one.

For example, the centralist governments are those who prefer a unique and hegemonic center of power from the which govern the rest of the country, in place r of a tendency towards dispersion and autonomy such as that proposed by the decentralization of federal or federative governments.In the business sphere, similarly, there is talk of centralization when the lower instances in the business hierarchy transfer their administrative authority to a higher instance , that is, they converge on the same headquarters or supervision.

See also: Administrative Audit.

Types of centralization

Management centralization manages communications to team leaders.

In the administrative field, we can talk about different types of administration, such as:

• Performance centralization. Applies to geographic and operational centralizations within an organization, as would be the case of a company that locates all the personnel of a process in one of its headquarters determined, or to channel through a branch all the requests of a given region.


• Department centralization. It occurs when an organization builds specialized departments or coordinations, which will go to systems will take care of all the information and technology requirements of the rest of the company.


• Management centralization. Strictly bind decision-making, focused on high-level management or some type of management board, which also manages communications to team or department leaders, thus having full and centralized control of the company.

Advantages of centralization

All centralization pursues an increase in control.Centralist models facilitate monitoring, unique decision making, resource control and the specificity of the organization, given that they create decision-making or processing nuclei of the different tasks, preventing the work from being duplicated, repeated or dispersed.All centralization generates hierarchies and establishes leadership dynamics, so it is an ideal system for strong leadership.

For example, centralist governments were very important during the time of the formation of Latin American nations, because by focusing all political and economic power on the figure of a president, the nation was more easily constituted and left much less room for anarchy and eventual dismemberment of the country.

Disadvantages of centralization

Centralization can generate authorities on which all the work falls.

Centralization also has its disadvantages, especially as regards the dependence between the nucleus and the periphery on decision-making and the process of information.It is usual in centralized models that appear “bottlenecks”, that is, funnel dynamics in which the input of a department is far superior to its processing or decision-making capacity, but since everything is centralized, nobody else can vent the workload pending.This causes delays and sabotages productivity time .

Another risk of centralization has to do with despotism or the excess of rigidity in the hierarchy , thus generating authorities on which everything falls.This reduces the junior staff to the mere follow-up of orders or instructions, forcing them to wait for a response from management that usually takes, and that is often required quickly, for immediate decision making.Bureaucracy is usually the result of excessive centralization.

Example of centralization in a company

A clear example of centralization in the management of a company is the creation of a Strategic Management or Operations Management, in charge of supervising absolutely all the sections of the organizational management.This authority will enjoy full powers in the company and will therefore be able to make appropriate decisions to promptly resolve the difficulties, may request information freely and may intervene in any process as it deems necessary.This will reinforce the company's work criteria, prevent It takes risky decisions and will point to the creation of a common administrative criterion, reducing anarchy to a minimum.

In return, however, there will be a noticeable increase in business bureaucracy, since all communication and all documents must also be sent to the new management , which in turn will issue new documentation for transmit their decisions.In addition, there is a risk that the decisions of this management will be delayed (suppose, due to the momentary absence of key personnel) and subject the rest of the company to a waiting time, delaying the entire production line.

Decentralization

A decentralized regime consists of a number of independent units.

Decentralization is, logically, the opposite process to centralization, that is, the tendency to give autonomy of action and independence in its procedures to the various units of an organization , such as coordinations or departments.A decentralized regime consists of a number of independent units, each capable of facing similar obligations.

Political decentralization is key for federal or federal governments , which consist of the union of equals between the different states or departments that make up the country.