Essay on the Difference between Centralization Vs. Decentralization in Organizations

Much administrative authority may be vested by law or by constitution in the local governing bodies of a governmental system, e.g. in the provinces within a country or in the local bodies within a province. In this case the administrative system is a decentralized one because the powers have been removed from the centre.

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Conversely much administrative power may be vested in the hands of the officials of the Central Government with a consequent culmination of the authority and discretion of officials at lower governmental levels. The system is then called centralized because in this case the powers have been centred in the hands of the central body.

The issue of centralization vs. decentralization arises between the superior and subordinate officers within an organization, between the head office and the component parts of organization, between the officials and non-official elements, between the headquarters and the field offices, and between the chief executive and the functional departments or agencies.

Broadly speaking, an organization is said to be centralized if most of the power of decision is vested in the top level so that the lower ones have subordinates for decision.

One of the major problems of modern administration is to reconcile the compulsions of national integration, unified planning and the need for a strong and effective defense that pull in the direction of centralization, with the growing demand for regional autonomy and political commitment to take democracy to the grass roots, which pull in the opposite direction.

Other factors which strengthen the case for centralization are vastness of the geographical area of many states, huge population and the increasing scope of state activity, which often necessitates a great degree of centralization and concentration of powers in the hands of the Central Government.

Centralization stands for concentration of authority at or, near the top of the administrative hierarchy, decentralization, on the other hand, means devolution of powers from above, implying dispersal of power among a number of subordinate officials or administrative units. Decentralization may have different implications to different sets of people.

According to P. Sharan, “To an economist, it means dispersal of industries, to advocates of local authority it implies initiative, responsibility and discretion to local bodies and to an administrator it means delegation of authority to regional and local officers”.

One of the important problems of organization is to reconcile the administrator’s natural desire for complete control, uniformity and certainty with the people’s demand that governmental administration accommodate itself to, local public sentiment.

Similar distortion marks the posture and actions of our government. To centralize or to decentralize seems to be the dilemma facing the government today. On the one hand, the compulsions of a planned economy, the need for effective and strong defence and the urge for national integration pull in the direction of centralization.

On the other hand, the political commitment to take democracy of grass-roots and the growing demand for regional autonomy full in the opposite direction of decentralization. The Planning Commission symbolizes the trend towards centralization, while Panchayati Raj epitomizes the trend towards decentralization.

In the words of White, “The progress of transfer of administrative authority from a lower to a higher level of government is called ‘centralization’, the converse, ‘decentralization’. The essential element in decentralization is the delegation of decision-making functions”.

In the words of Charlesworth, “The significant question in any large administrative undertaking is whether or not any definite actions are taken by the centre-head which can be taken in the periphery”.

The difference between the two concepts is well brought out by Fesler, whether a given field service toward centralization or toward decentralization may be deserved from observation of the importance of matters on which field officials have decision-making authority.

Compared to matters wholly retained for head quarters decision; the extent of central consultation with field officials on matters that arise and are formally decided at headquarters and the height such field opinion carries; the frequency with which field officials must refer matters to headquarters for decision even though they arise at and are partially ‘processed’ in the field, the number and specificity of central regulations and orders governing decision-making in the field; the provision for citizen appeals to headquarters for overruling of field decisions; the degree to which all the agency’s field activities within each geographic area are directed by a single field official; and the calibre of field service, nor its carrying of a heavy work-load, nor its employment of nine-tenths of the agency’s personnel constitutes evidence of decentralization.

Decentralization should be distinguished from delegation. Decentralization means the transfer of administrative authority from the centre to the local agencies, who function autonomously in the field.

Delegation, on the contrary, implies devolution of authority by a person to his agent or subordinate, subject to the right of supervision and control. In brief, delegation is distribution of power functions and not authority and responsibility, which is delegated only in decentralization.