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                Chapter 1                    Centralization  

                                                                               

 

1.1What is Centralization? Centralization is an extant to which decision making is retained by upper level management in an organization. It means all the key decisions of organization are made by top management without or with a little participation from lower level managers.

                                      

                             In the centralized decision making authority is retained by top managers and middle and lower level managers have a little authority. All strategic decisions are taken by the managers higher in hierarchy and below from them just serve as a link to carry out the implementation of those decision; they can’t alter the decisions without the prior permission of their superiors, no matter how much necessary it is.

 

                             Centralized decision making was much more popular in the past. But now a days trends are changing quickly; organizations are traveling from centralization towards decentralization (we will discuss decentralization later). Centralization is however; still popular in some countries-not in case of multinational organizations doing business in these countries. Specially, Asian countries, like Pakistan, India, and China, are still successfully using centralization decision making in their organizations. Centralization is also very popular in South American countries, like Brazil and Argentine.

 

                             1.2 Researchers think of Centralization in term of: decision making and control. But despite of apparent simplicity of concept, it can be complex. The complexity of concepts derives from three sources: First, people at the same level can have decision making authority. Second, not all decisions are of equal importance in organization-some are strategic and some are operational, strategic decisions making authority is retained by top level of management that is called centralization. Third, individuals may not perceive that they really                             

Have authority even though their job descriptions include it. Thus objectively they have authority, but subjectively they don’t.

                             The relationship between centralization and four design decisions are generally as follows:

 

1.     The higher the specialization of labor, the greater the centralization. This relationship holds because highly specialized jobs do not require the discretion which authority provides.

2.     The greater the use of functional departments, the greater the centralization. The use of Functional departments requires that the activities of the several interrelated departments be coordinated.

Consequently, authority to coordinate them will be retained in top management.

3.     The wider the span of control, the greater the centralization. Wide spans of control are associated with relatively specialized jobs which as we seen have little need for authority.

4.     The less the authority is delegated, the greater the centralization. By definition of terms, centralization involves retaining authority in the top management jobs, rather than delegating it to lower levels in the organization.

 

We can say that high centralization is the result of: high     specialization, functional departments, wide span of control, centralized authority.

 

 1.3 Important advantages of Centralization:

 

1.    Power and prestige are provided the chief executive.

 

2.    Uniformity of policies, practices, and decisions are fostered.

 

3.    Full utilization of the main office specialties is promoted, due in larger part to their proximity to the top management level.

 

4.    High qualified specialists can be utilized because the scope and volume of their work are sufficient to support and to support and to challenge topnotch managers.

 

5.    Duplication of functions is maintained at minimum.

 

6.    The danger of action drifting and getting off course is minimized.

 

7.    Elaborate and extensive controlling procedures and practices are not required.

 

8.    A strong coordinated top-management team is developed.

 

1.4 Disadvantages of Centralization: As in centralization all authority is retained by top management, and lower levels have a very little authority, this situation sometimes turns into chaos for the operation of organizations. Following are some disadvantages of centralization:

 

1.    Sometimes some decisions are to be taken immediately at the spot, but due to centralization, none of the decisions can be made without permission of top level managers and it results in financial loss of organization.

 

2.    Participation from lower levels can be used as motivating tools, in centralization there is a little participation from lower levels, those who are at lower levels, when feel that they are not directly responsible for the operation they might not take their work seriously and show a poor performance.

 

3.    In centralized environment middle level managers just serve as a link to carry out decisions of top level managers from lower level managers. Middle level managers might not work efficiently due to less authority.

 

4.    In centralized environment the credit of work of junior employees sometimes is taken by Officers and gain promotion and rewards, that demoralizes the employees and next time they will not give their best to their work.               

 

  1.5 Factors that influence the amount of centralization:

           

I.                  Environment is stable.

II.               Lower level managers are not as capable or experienced at making decisions as upper level managers.

III.            Lower level managers don’t want to have a say in decisions.

IV.             Decisions are significant.

V.                Organization is facing a crisis or the risk of company failure.

VI.             Company is Large.

VII.          Effective implementation of company strategies depends on managers’ retaining say over what happens.

                               

 

Fig 1.1 A formal organizational Chart of an organization

Organization Chart

 

 

This chart shows the hierarchy of a Formal (centralized) organization. This hierarchy in fact shows the chain of command –an unbroken line of authority that extends from the upper level of the organization to the lowest level and clarifies who report to whom.

 

 

 

 

Chapter 2                 Decentralization

 

 

 


2.1 What is Decentralization? Decentralization is a process of handing down the decision making authority to lower level of the organization. The concept of centralization-decentralization is a relative one but not an absolute one. What we mean is that an organization can never centralized or decentralized completely. Few organizations could function effectively if all major decisions were made by only a selected group of top managers; nor could they function effectively if all decisions were delegated to lower employee levels.

                                                    Decentralization is the delegation of authority for making managerial decisions to subordinates at lower level in organization. The degree of decentralization in an organization is not measured by the quantity of decisions that are passed down the managerial hierarchy, but rather by the importance and scope of the decisions and their impact on entire organization.

 

2.2 Decentralization and Physical Dispersion: The position is sometimes taken that a firm is decentralized when its management is physically dispersed. Physical dispersion or physical decentralization occurs when central managers are geographically separated from division or branch managers. This viewpoint is not entirely correct, as authority to making managerial decisions is may be delegated by a manager to subordinate sitting at an adjacent desk. Likewise, centralized management occurs when a central manager is heavily involved in the decisions that are made in distant divisions, although decentralization management usually goes hand in hand with physical dispersions.

 

                                         In decentralized decision making the authority of decision making is delegated-delegation is a process of assigning responsibility along with necessary authority- to the lower level employees in the organization. It means employees in lower levels can take decision on their own responsibility. Some decisions are to be taken immediately at the spot, as any delay in decision making can result in a great financial loss. There are some limitations in decentralized decision making, only operational or short term decisions can be taken by employees at lower levels and top level management is authorized for all strategic and long term decision making. It means lower level employees can take decisions in case of day to day problems during operation of an organization.

2.3 Degree of Decentralization

The degree of decentralization in an organization is not measured by the quantity of decisions that are passed down the managerial hierarchy, but rather by the importance and scope of the decisions and their Impact on the entire organization. As one management write has explained, the degree of decentralization is greater:

 

1.     The greater the number of decision made lower down the management hierarchy.

2.     The more important the decisions made lower down the management hierarchy. For example, the greater the sum of capital expenditure that can be approved by the plant manager without consulting anyone else, the greater the degree of decentralization in this field.

3.     The more function affected by decisions made at lower levels. Thus companies which permit only operational decisions to be made at separate branch plants are less decentralized than those which also permit financial and personnel decisions at branch plants.

4.     The less checking required on decision. Decentralization is greater when no check at all must be made; less when superiors have to be informed of the decision after it has been made; still less if superiors have to be consulted before the decision is made. The fewer people to be consulted, and the lower they are the management hierarchy, the greater the degree of decentralization.

 

2.4 Factors in Decentralization

There are no simple formulas to indicate the extent to which authority should be decentralized. The following factors are often considered when making this decision:

 

1.     Are the persons at lower levels capable of making sound decisions?

 

2.     Which person down the line has the necessary facts to make a given type of decision?

 

3.     Will changing conditions in the field require that speedy, flexible decision be made at the local level?

 

4.     How important is the decision in term of dollars, its impact on other decisions in the organization, and the morale of the manager down the line?   

 

In decentralization, as decision making authority is delegated to lower level managers it means that that lower level managers can take decision at their own risk. The decentralization in organization boosts the morale of employees. Feeling their importance in organization they try to work hard and give their full efforts to the organization. Decentralization is emerging as the most popular trend. Recently many organizations change their style- from centralized authority to decentralized authority-. Decentralization gain popularity with the increasing globalization, now days many organizations turn into multinational or global. Organizations are doing business in more then one country in this case, as we have discussed the concept of physical dispersion, decentralization is the best solution.

 

           Consistent with the recent management efforts to make organizations more flexible and responsive, there’s been a distinct trend towards decentralized decision making. In large companies especially, lower level managers are “closer to action“ and typically more detailed knowledge about problems and how best to solve them than do top managers.

 

              2.5 As decentralization is delegation of authority there are some PRINCIPLES OF DELIGATION. These principles are guides to delegation of authority; delegation may be ineffective, organization may fail and the managerial process may be seriously impeded. Following are some delegation principles:

 

1.    Principle of delegation by result expected. Since authority is intended to furnish managers with a tool for so managing as to gain contribution to enterprise objectives, authority delegated to an individual manager should be adequate to assure the ability to accomplish results expected.

 

2.    Principle of functional definition. The more a position or department a clear definition of results expected, activities to be under taken, organizational authority delegated, and authority and informational relationships with other positions understood, the more adequately the individuals responsible can contribute toward accomplishment of organizational objectives.

 

 

3.    Scalar Principle. The scalar principle refers to the chain of direct authority relationships from superior to subordinate throughout the organization.

 

4.    Authority level Principle. Functional definition plus the scalar principle gives rise to the authority-level principle. According to which maintenance of intended delegation requires that decisions within the authority competence of individuals be made by them and not be referred upward in the organization structure.

 

5.    Principle of unity of command. Principle of unity of command is that one subordinate should have only one superior to whom he is directly responsible.

 

6.    Principle of absoluteness of responsibly. The responsibility of subordinate to their superiors for performance is absolute, once they have accepted an assignment and the right to carry it out; superior can’t escape responsibility for the organization activity of their subordinates.

 

7.    Principle of parity of authority and responsibility. Principle that the responsibility for actions cannot be greater than that implied authority delegated, nor it

     Should be less.

2.6 The Art of Delegation. Most failures in effective delegation or decentralization occur not because of lack of understanding of nature of principle of delegation but because of inability or unwillingness to apply them in practice. Delegation is, in a way, an elementary act of management. In most of cases reasons of failure of delegation lies in personal attitude toward delegation following are some personnel attitudes helpful in the process of delegation.

 

1.    Receptiveness

2.    Willingness to let go

3.    Willingness to let other make mistakes

4.    Willingness to trust subordinates

5.    Willingness to establish and use broad controls

 

2.7 Factors that Influence Decentralization

 

I.                  Environment is complex and uncertain.

II.               Lower level managers are capable and experienced at decision making.

III.            Lower level managers want a voice in decisions.

IV.             Decisions are relatively minor.

V.                Corporate culture is open to allowing managers to have a say in what happens.

VI.             Company is geographically dispersed.

VII.          Effective implementation of company strategies depends on managers’ having involvement and flexibility to make decisions.   

 

2.8 Advantages of Decentralization:

 

1.     Some experts believe that decentralization encourages the development of professional managers. As decision making authority is pushed down in the organization, manager must adapt and prove themselves if they are to advance.

2.     In decentralized pattern, managers can exercise more autonomy and satisfy their desires to participate in problem solving. This freedom can lead to managerial creativity and ingenuity, which contribute to the flexibility and profitability of the organization.

3.     In decentralization mangers or employees from lower level participate in decision making, that participation increases their loyalty and dedication for their organization. In other words this can be use as the motivation tool for organizational success.

4.     As in decentralization employees at lower level can take decisions without prior permission  of their seniors, therefore  some decisions that have to be taken immediately can be taken by employees at the spot and that may results in increase of organization monitory profit and reputation.

 

 

 

2.9 Disadvantages of Decentralization:

 

Decentralization has disadvantages that must weighed against the advantages. The advantages are not without drawbacks, and most advocates of decentralization recognize that if an organization shifts from centralized to decentralized authority, certain costs may be incurred. These are some of the costs:

 

1.     Managers must be trained to handle decision making, and this may require expensive formal training program.

2.     Since many managers have worked in centralized organizations, it is uncomfortable for them to delegate authority in a decentralized management. Their attitudes are difficult to alter, and attempts often lead to resistance.

3.     Accounting and performance appraisal system must be made compatible with the decentralized management, and this can be costly. Administrative costs are incurred because new or altered accounting and performance appraisal systems must be tested, implemented, and evaluated.

4.     Another problem that comes with the decentralization is complexity of organization structure. In centralization organization structure is simple, whereas in decentralization this structure is rather complex.

 

These are only some disadvantages of decentralization and for the perception that only decentralization is better for an organization has not got any definite and clear-cut answer. But one prerequisite for successful decentralization is through consideration of each organization factors (e.g., work force, size, and control mechanism.

 

Under A more decentralized arrangement, the organization structure of the enterprise would appear like as shown in fig 2.1         

            Each plant is now set up operate more as a self-contained unit. For example, the manager of plat 1 has his own purchasing, engineering, cost, and standards departments reporting to him as well as his departmental operating units. But note that the unit’s decentralization is not the same for each plant manager. This decision will depend in part upon the plant managers themselves and also how efficiently it is believed these activities can be performed at end for the particular plant. Plant 1 has a standards organizational unit, whereas plant 2 does not such a unit, but plat 2 has a research unit which 1 (or plant 1) does not have plant 3 has both standards and research units.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fig.2.1Hierarchy of a Decentralized organization.

 

 

Organization Chart

 

 

 

 

 

Chapter 3                 Counter-balancing Centralization and Decentralization in various aspects of management

 

 


As we already have discussed the centralization and decentralization, it is now relatively easier for us to understand the concept of Centralization versus Decentralization in management. In any organization there is always a need for decision making, why? because management is responsible for defining the goals and establishing the plans to accomplish these goals. From the definition of goal to the accomplishment of the goal, for all the process included, it is necessary to make decisions. Right decisions turn in company’s favor whereas wrong decision turn against.

3.1 Centralized .vs. Decentralized decision making:

 

If we compare centralization and decentralization from the decision making point of view, we can easily find out that both have different affect on decision making. In Centralized environment only the top level managers are authorized for decision making and middle level managers may have a little authority while the lower level managers are liable to act in the way or work in the direction that is being specified by their seniors. Decision required for any sort of action will be taken at the top level; no matter it is about lower level, middle level, or higher level. As in centralized decision making all authority is retained by high level and up to some extent middle level managers and there is no participation from lower level employees.

                                      The new concept of decentralized decision making has gained much popularity in few days. In this type of decision making the employees at lower level also participate actively in decision making as well as middle and higher level managers. The new concept about the lower level employees is that they are “men in action” or “very close to-operations” therefore they have got much knowledge about the operations and can decide and implement the best solution. These employees work in the field and have got a good knowledge about the problem encountered and can decide the best solution. Unlike centralization employees can take decisions on the spot as they are authorized to do so and that is a time saving factor.

Management is a process undertaken by one person to coordinate the activities of other persons to achieve results not attainable by any one person working alone. The person who integrates and coordinates the work activities of other is called manager. Managers manage their tasks with the powers or authority given to them by their position. Mangers may also use some of their personal powers like expert power and referent power powers given by the position are legitimate, reward and coercive power. The concept of centralization and decentralization go side by side with the assignment of authority. Major authority of a manager is decision making, decide what to do, how to do, what plan are required to complete the task, and when  the task should be completed. That decision making authority has a great impact on all management functions. Centralization or decentralization is method of distribution of authority, who is authorized to do what?

                             All management functions are affected with distribution of authority. Basic management functions are:

 

1.     Planning

2.     Organizing

3.     Leading

4.     controlling

 

We will discuss centralization and decentralization for each of the function separately.

 

3.2 Centralization .vs. Decentralization in Planning

 

The planning function is capstone activity of management planning is process that involves defining of goals or objectives establishing an overall strategy for achieving these goals, and developing a comprehensive hierarchy of plans to integrate and coordinate the work activities. Planning is the phase in which game plane of organization is defined the objectives, for the accomplishment of which the organization is came into being, are defined. It is really very important that before starting efforts to achieve something you must know what you really want to achieve, what is your primary objective and what is your secondary. You can set your priorities, and these priorities will direct your efforts in the achievement of goal. After the definition of goals there comes the development of sub plans or a complete hierarchy of plans in order to find out that what tasks are necessary to complete a task.

 

3.2.1How Distribution of authority affects Planning?

 

Distribution of authority has a great affect on planning, as in centralized authority only the top level management is authorized for planning (defining goals and establish sub-plans to achieve goals). Lower level employees just serve as tools to implement these plans. In decentralized authority lower level employees as well as upper level are authorized for planning. In case of decentralization the situation could be complex as many people are participating in the goal defining, different people have different prospects therefore each person come with a new idea and it’s become really hard to decide the goal and this situation leads toward conflicts; whereas in centralization top level managers have to decide the goal and all lower level employees have to agree with him.

             None of the organizations can’t centralized or decentralized completely sometimes the balance of centralization is heavier and sometimes that of decentralization. In planning phase although participation of lower level employees is important but for decision making and establishing sub plans to achieve goals it is really important that only a very limited no. of persons take a part because that reduces the chances of confusion and ambiguity

 

In this phase lower level employee should participate and give their suggestions and top level managers should consider their suggestions seriously, if these suggestions are reasonable and practicable then should be selected that means that the upper levels must have the tolerance for the negotiations- before making any decision or choosing any solution top level manager communicate with lower levels and take them in confidence, and tell them that they are the part of decision.

                   As we have discuss that the large extent of decentralization could result in complexity because every one in the organization wants his solution or decisions to be implemented and that is not possible and that situation can be more serious if different groups, rather then individuals are participating in planning. If you choose and implement the plans of one group then other group might take it as rejection or insulting and that situation may prove be the starting point of a cold war within the organization.

 

3.2.2 Which one is more effective-centralization or Decentralization?

 As we already have discussed that if variety of people is participating in this phase, they all come with a variety of ideas and this situation creates trouble. From this point of view we can say that in this phase authority should be centralized i.e. only a limited no. of people should be allowed to make or alter the plans. For successful implementation it is necessary that selected group of people should be from top level of management. This phase can be decentralized in a manner that the people from top should communicate and negotiate with lower level employee. As a matter of fact no organization can be completely centralized or decentralized.

 

3.3 Centralization .vs. Decentralization in Organizing

 

Organizing is an important function of management, organizing is process of creating organization’s structure. Centralization and decentralization has no impact on organizing. Infect in organizing phase managers decide the structure of organization- the structure of organization is the formal frame work in which job tasks are divided, grouped and coordinated. In organizing phase a manger has to decide the organizational structure that whether it is centralized, decentralized and also define the extent of formalization- formalization is the degree to which jobs within the organization are standardized and the extent to which employees’ behavior is guided by rules and procedures. In this phase requirements of organization are analyzed and then decision is taken that what structure organization have? And from centralization and decentralization which one is dominant and which one is dominated?

                                                           Size and structure has a great effect on the structure of organization. An organization structure is a mean to help the managers achieve their objectives. The initial research on the strategy-structure relationship was a study by Alfred Chandler of several large U.S. companies. He traced the development of organizations such as Dupont, General Motors, and Standard oil of New Jersey, and sears over a period of 50 years and concluded that changes in corporate strategy led to the changes in an organization’s structure. Specifically, chandler found out that organizations usually began with a single product or line. The simplicity of this strategy required only a simple or loose form of structure. Decisions were centralized and in the hand of a single senior manager, and specialization, departmentalization, and formalization were low. As organization grew, their strategies became more ambitious and elaborate, and the structure changed to support the chosen strategy.

                                          In order to have a clear view of centralization and decentralization regarding organizing point of view we will discuss two forms of organizations:

 

1.     Mechanistic organization.    

2.     Organic organization.

 

Mechanistic Organization

                                      An organization structure that is characterized by high specialization, extensive departmentalization, narrow span of control, high formalization, a limited information network , and a little participation in decision making by lower level employees.

 

Organic organization

                                An organization structure that’s highly adaptive and flexible with little work specialization, minimal formalization, and a little direct supervision of employees.

 

In mechanistic organization there is high specialization, rigid departmentalization, clear chain of command, narrow span of control, centralization and high formalization. Whereas organic organization includes cross functional team, cross hierarchical teams, free flow of information, wide span of control, decentralization, and low formalization.

 

3.4 Centralization .vs. Decentralization in Leading.

 

Leaders are the persons who are able to influence others and who possess managerial authority. Leadership is the ability to influence a group toward the goal achievement of goals. Leading is not all management but it is an important part of management. What is the difference between leaders and managers? Managerial position in an organization gives authority and managers use this authority. In order to clarify this concept we should first out the types of power that differs mangers from leaders. Same amount of power is given to both manager and leader but leader has some other powers along with this power that a manager doesn’t have. There are two types of power:

 

1. Positional power. The power that comes from managerial position is called positional power. There are three types of positional powers:

                             I. Legitimate power.

                            II. Reward power.

                           III. Coercive power.

 

3.     Personal power. This is the power a leader got due to his personal characteristics and an ordinary manager can’t have this type of power. There are two types personal power:

                                              I. Expert power

                          II. Referent power

These powers distinguish an ordinary manager from a leader manager. Ordinary managers tend to use positional power to get their job done whereas leaders relay on their personal power.

 

3.4.1 How centralization and decentralization affect Leading?

 

We can measure centralization or decentralization in planning phase by checking the flexibility of leadership. Flexible planning is the planning featuring participation from the lower levels of the organization and in inflexible planning there is no participation or very little participation from lower level employees, we can say that flexible planning features decentralization whereas inflexible planning features centralization.

                                  All the studies made on behavioral approach of leadership have concluded that there are two behavioral types of leader: Employee-centered and job-centered. Employee centered leaders are those who focused the employees as well as goal achievement of organization.

Job centered leaders are those who much focused on achievement rather than employees. Employee centered leaders used decentralized approach of leader ship and job centered leader tend to use centralized approach. Regarding to centralization and decentralization there are two styles of leadership: Autocratic style-describes a leader who typically tends to centralize authority, dictate work methods, make unilateral decisions, and limit subordinate participation.

Democratic style-describes a leader who tends involve subordinates in decision making, delegates authority, encourage participation in deciding work methods, and use feed backs as opportunity for coaching.

 

3.4.2 Which one is more effective in this phase centralization or decentralization?

 

In order to measure the effectiveness the contemporary theories of leadership could serve as best tool. We discuss the first contingency model developed by Fred Fiedler called Fiedler contingency model. This is the theory that effective groups depend upon a proper match between a leader style of interacting with subordinates and the degree to which the situation gives control and influence to the leader.

                                                                             For this model we can easily derive the result that decentralization        is relatively more effective in this phase. When subordinates participate in organization activities and take a part in deciding work methods then feel themselves motivated and they dedicate all of their efforts for the achievement of organization goals and they also obey the manager more when they consider him as their leader who respects their ideas.

 

3.5 Centralization .vs. Decentralization in controlling

 

Controlling is the process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviation. Controlling is the most important activity that a manager performs. Management starts with the process of planning and attains its peak on controlling. Although managers perform some other activities other than planning, organizing, leading, and controlling like motivating etc, but the control phase is of utmost   importance in process of management.

                                                                   Controlling is not just the activity of correcting any problem, but it is the process to prevent the problems-problem is a state discrepancy between the real and desired outcome. A manager has to lookout many problems, internal and external. For controlling the most important thing is authority, what extent of authority? If manager has got high authority or low, it means that manager can control by using power or not. Centralized authority gives more power to a manger, more than, the decentralized authority.

 

3.5.1Which one is more effective Centralization or Decentralization? 

 

In controlling phase a manager with more power and authority is suitable because in this phase all activities that are performed by the organization members are monitored

And for the coercion of any flaw it is necessary that manager is more powerful then other employees, means that the distribution of authority is centralized, if one person is responsible to control, he can control more effectively and if there is more than one person the conflict may occur.

 

3.6 Centralization and Decentralization which one is more effective in general?

 

An organization can’t centralized or decentralized completely, in some phases centralization is more effective but there are some conditions in which decentralization is more useful. We can say that organizations use both centralization and decentralization in their operations.

As we have discussed that both centralization and decentralization have some advantages and disadvantages.

The latest trend in managements is the decentralization of authority and various studies have made on this issue and after monitoring the activities of both centralized and decentralized organizations it is found out that organization featuring decentralization to a certain extent are performing very well, their employees are self-confident and creative.

Whereas in centralized organization employees usually seek to avoid hard work and as they are not getting the proper credit of their work they don’t dedicate their maximum efforts for achievement of organization’s goal. We can conclude that a organization should use both centralization and decentralization but the degree of decentralization should be greater than that of centralization.

 

 

 

 

 

 

 

Centralized .vs. Decentralized Management of Public Information Systems: A Core-Periphery Solution

By:  Richard Heeks

 

 

Focusing points:

 

CENTRALISED AND DECENTRALISED APPROACHES: Review of Experience

1. The Centralized Approach to Public Sector IS Responsibilities

Constraints to centralized approaches

Disadvantages of centralized approaches

2. The Decentralized Approach to Public Sector IS Responsibilities

Constraints to decentralized approaches

Disadvantages of decentralized approaches

Centralized and Decentralized Approaches: Review of Experience

 

This section of the paper will now review the first two approaches described above: the centralized and the decentralized.

 

The Centralized Approach to Public Sector IS Responsibilities

 

Many public sector organizations began their ‘computing careers’ by adopting a centralized approach, and there are continuing drives to maintain centralization. These drives include particularly the desire of senior public managers to control the costs, pervasive impacts, and potential failures associated with information systems. Managers are also driven by the desire to achieve the potential benefits of centralized approach, including those listed below.

 

Sharing resources

A well-planned centralized system holds data used across the organization in one place, allowing all staff to access it. This makes it both faster and easier to undertake organization-wide activities. Central

Planning and operation also allows compatible technology and Skills to be introduced. Exchange of hardware, software and staff between organizational systems and units therefore becomes much easier.

 

Avoidance of duplication

One main intention of centralized approaches is to have a single version of any particular information system for the whole organization, and to store any item of data once and only once. As a result, there is no wasted effort, no wasted storage capacity, and no inconsistency of data.

 

Learning and control

A centralized approach to information systems provides an organizational focus for learning and for control. This is likely to produce higher quality information systems and can also reduce costs by:

 

·        avoiding the decentralization problems of non-functioning or malfunctioning systems,

·        avoiding the decentralization problems of inadequate security, maintenance and documentation, and by

·        Allowing technology purchases and system developments that are not organizational priorities to be blocked.

 

 

Constraints to centralized approaches

However, centralized approaches are beset by problems, some of which are outlined in this and the following section. First, there are constraints: most public sector organizations encounter considerable barriers if they attempt to develop a centralized approach to information systems, as described below.

 

Technical constraints

Where decentralized information systems, manual or computerized, are already in place, technical barriers to centralization may be immense. Indeed, computerization may create ‘electronic concrete’ that increases these barriers (Belay & Taylor 1994). The barriers include differences between existing decentralized IS in everything from data definitions to software to computing and network systems. Technical barriers also include the need to create some form of interconnection – typically a computer network – between the different organizational units whose systems are to be centrally controlled.

 

Resource constraints

Centralized approaches require the commitment of four key resources: money, time, people, and skills. For many public organizations, a centralized approach may not be possible because of financial constraints; because staff are too busy on other things; or because no one has the confidence or capabilities to undertake the necessary planning and co-ordination tasks.

 

Cultural constraints

Barriers and antagonisms between decentralized units can undermine any hope of drawing them together for a centralized approach to information systems. At times, these barriers seem to derive from a ‘them and us’ attitude that is akin to modern-day tribalism. These cultural barriers are seen in the different mindsets that create quite different views of the world between groups; in the different jargon they use in communication; and in the different issues and people they value (de Kadt 1994). This makes it hard to centralize.

                Lack of trust deriving from such barriers is seen to prevent the type of co-operation required for centralized approaches to information systems. It is, indeed, the IT business, which has helped to spread NIH: the not invented here mentality that rejects information systems for the simple reasons that someone else developed them.

 

 

Structural constraints

Structural barriers to centralized approaches in the public sector are found both within and between public sector organizations. One can perceive a three-way gap, as described by Knight& Silk (1990).

 

Disadvantages of centralized approaches

Even if the listed constraints were to be overcome, centralized approaches can produce some disadvantageous outcomes. One obvious disadvantage of a centralized approach – as already noted above – is the high level of overt resource costs. Other disadvantages are described below.

 

Heavy time consumption

Centralized decisions and actions are more time-consuming than a decentralized approach because of: the additional time it takes for information to flow up the organization as an input to centralized decisions; the additional time it takes to collate information from a variety of different decentralized locations as an input to centralized decisions; and the additional time it takes for implementation information to flow down the organization. The result can be inordinate delays in the process of information systems development (Wolfe 1999).

 

Limited ability to meet user needs

Centralized approaches necessarily mean that priority goes to those systems, which are seen, as important by some select and centralized staff group. The priorities of the periphery – both individuals and individual work units – may not be addressed (Hayward 1994). Consequences of this failure to meet user requirements may include:

·        a backlog of user applications awaiting development,

·        limited use or even total failure of centrally-planned information systems, and

·        Poor quality of data within these systems, since users will not be motivated to maintain data quality.

 

 

The Decentralized Approach to Public Sector IS Responsibilities

It would seem that centralized approaches to public information systems are highly problematic. What, then, of decentralized approaches? As technology has become smaller, cheaper, easier-to-use, more reliable, and more powerful, so decentralized approaches seem to be an increasing possibility.

 Decentralization may also be driven by a desire to remove control from central IT units, or by its perceived advantages, which include those listed below.

Greater fit between systems and local needs

The closer the proximity of user and developer, the less the communication gap and the more likely it is that the developed system meets the users’ real needs.

 

Higher usage of computerized systems

This flexibility to fit local needs helps to explain the dramatic growth in computer use associated with decentralized approaches, such as end-user computing. Users are better motivated by such approaches and are far keener to take up computing when it directly supports their own interests and work.

 

Faster system development

The less the organizational distance between system user and system developer, the faster development of that system is likely to be. Again taking the extreme of end-user development, there will be no delay for the development of mutual understanding and no clash with higher priority information systems developments. This can help to the less the organizational distance between system user and system developer, the faster development of that system is likely to be. Again taking the extreme of end-user development, there will be no delay for the development of mutual understanding and no clash with higher priority information systems developments. This can help to overcome the staffing constraints and systems development backlog that often afflicts centralized IS units. Other aspects of system use such as implementation, operation, troubleshooting and maintenance are also likely to occur more quickly under a decentralized regime.

 

Constraints to decentralized approaches

 

However, just like their centralized counterparts, decentralized approaches are also beset by problems, some of which are outlined below and in the following section.

As already noted, many of the constraints to centralized approaches described above are, in fact, constraints to change in general. They are therefore also constraints to a decentralized approach and will not be reiterated in detail. Examples include (Warner 1992, Braa 1996, Computing 1996):

 

·        Technical constraints, such as heavy existing investments in a centralized system.

·        Resource constraints, such as a lack of skills to support decentralized decision making and action on information systems.

·        Political constraints, such as the unwillingness of those at the center to change information flows, resource flow and associated organizational power.

 

Disadvantages of decentralized approaches

Even if the listed constraints are overcome, decentralized approaches can produce some disadvantageous outcomes.

 

Duplication of effort

Apart from constraining what public organizations can do, decentralized approaches also tend to be very costly because units will often duplicate what others are doing (Computing 1996, Computing 1998a). Duplication may cover:

·        analysis, design and implementation of information systems,

·        gathering and administration of data, and

·        System operation, support and maintenance.

In addition, computer input, output, storage and processing capacity would all have to be duplicated.

The unnecessary duplication of data (known as data redundancy) tends to be particularly problematic, yet it is quite common. For example, public organizations often store basic details of their employees many times over:

·        on paper and on computer, and

·        For personnel, for payroll, for training, and for other records.

 

Lack of learning and control

In addition to the extra direct costs that duplication imposes, there is an indirect cost of lost learning opportunities and limited cross-fertilization of ideas. Decentralized approaches also necessarily mean limited central ability to plan and control, leading to a tendency for some decentralized systems to be developed and used without due care (Wolfe 1999). The result may be a system that never works or does not work properly, with compromised data quality or system security.

      NOTES

 


1.  “Business Its Nature and Environment-An Introduction”

       Eighth Edition by:

                           RAYMOND E. GLOS

                           RICHARD D. STEADE

                           JAMES R. LOWERY

       Pages: 103,109, 110, 122, 126, 130, 470 

 

 


2.  “Management-Principles and Functions”

 Fourth Edition by:

                    John M. Ivancevich

                       James H. Donnelly, Jr.

                       James L. Gibson

Pages: 32-33, 168-72, 199, 211-13,217-18, 304-6

 


3.  “Management”

       Sixth Edition by:

                          Stephen P. Robbins

                           Mary Coulter

        Pages: 13-15, 23-25, 56-57, 300, 305-8,520

 

 


4.  “Management-A System And Contingency Analysis of

  Managerial Functions”

  By:

      Harold Koontz

      Cyril O’ Donnell

Pages: 374-85

 


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