Decentralized Organization

Planning, organizing, leading, and controlling are the important as well as basic parameters that keep an organization functioning (David & David, 2014). But more importantly, how these parameters are applied in an organization defines the actual method of functioning i.e. running an organization centralized or decentralized. As per Fayol, everything that increases the participation of employees in an organization is decentralization and everything that does not, is centralization (Schimmoeller, 2012). Autocracy has no place in management, and rightfully, never had. During the late 19th and early 20th century, Fayol noticed a vast amount of centralization consisting of unsatisfactory working environments followed by the dictatorship of the owners and many psychological factors affecting the industrial output (Rodrigues, 2001). Because of this, Fayol proposed a psychological approach towards management that differentiated centralized against a decentralized approach. Although, centralization is better for businesses during their initial phase, after a while, a business must pursue decentralized approach towards the management to ensure sustainability, wiser decision making, and a satisfactory working environment in the organization.

Generally, …show more content…
In addition, more an organization is decentralized, more central is the functioning of the controls are; as the knowledge of general conditions of the organization such as annual income, expenditures, budget and the policies recommendation on such conditions are transparent and are accessible to everyone in the organization (Rust, 1919). However, in a centralized environment, the organization tends to remain inert over general issues such as profit, dividends, strategies and current conditions of an