Henri Fayol was a pioneer in establishing principles of management. His fourteen principles of management constitute the foundation of business management even today. One of his key principles of management is the principle number eight where Fayol talks about centralization.
Let us define what Centralization is. Centralization means that all the important decisions and actions are directed by a central authority. In such a system this action helps in bringing all the activities taking place in a system; and it also helps in bringing all the activities taking place in a single virtual location. Let us consider an examples of Facebook of Google. Though the facilities of the organizations are available throughout the world, through the algorithms, the actions and procedures are all conceived and put into practice from the central location.
This means that there is a strict hierarchy with one decision maker who could be sitting in the main office of the organization. This could be one of person or it could be a collective decision of some CEOs and others. This type of management has the benefit that there is proper understanding by the employees of the critical role played by the boss. There remains no room for misunderstanding and misjudgment of the instruction to be followed.
As opposed to centralization; decentralization, which is also practiced today, is defined as the measure that helps the manage activities from several separate entities. The benefit of such a situation is that through power sharing the burden of employees and the department is substantially reduced. Power is regularly dispersed among all employees and delegation is made possible. While there are benefits of both the systems, the fact Fayol’s principle of Centralization remains the nucleus and foundation of all thought in the respect of his aspect of management.
Blog is written blog is Vikram Kakri.