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Centralised or de-centralised management?


S:\TripleA\DP_topic_packs\business management\student_packs\media_human_resources\images\pyramid_people_achieve.jpgA more centralised structure means that the authority and responsibility for the decision-making process of the organisation rests with those at the top of the internal hierarchy of the business. The central or head office is where all key decisions are made. A more de-centralised structure delegates responsibility to those lower down the chain of command e.g. a branch or department.

So, why adopt a centralised structure? Well, it does give the senior management more control over the decision-making process. This normally aids consistency and predictability. It also concentrates power in the hands of a few and so reduces the need for large numbers of managerial grade employees who will normally command high financial packages.

The de-centralised form should encourage greater empowerment and subsequent motivation amongst those lower down the chain and personal development should be more visible to such employees. It should also increase the speed at which decisions are made and allow decisions to take into account local features of the market or business environment. Local managers may need to adapt policies to meet local demands. However, those at the top, who have access to more facts and figures than those lower down the hierarchy, may better appreciate the wider implications of decisions.