Decentralized Vs. Centralized Organizational Structures

An organization must align its strategy and structure to allow itself to achieve performance improvements over time. The four different structures, simple, functional, multidivisional, and matrix, are all suited to allow companies with different strategies to succeed but the company must decide which of these is correct for itself. A small start-up company will overburden itself with excessive cost if it seeks to implement a functional structure because it clearly will not have the talent on hand to create whole departments of HR employees or accountants. On the other hand, a company that grows to become a large multi-national

I work for a small company that sells auto parts to automotive stores all over the United States. Based on my observation, I can say that our organizational structure is centralized

The structures that subscribe to different organizations play a major role and determine how information flows throughout an organization as well as the reporting structure within the organization. In most organizations, the decisions are made within the upper management realm, but in other organizational groups, the responsibility of making decisions are distributed within their own group. The end factor for the most part amounts to a lateral structural arrangement where a variety of branches work together in accomplishing a universal organizational goal rather than functioning as separate groups or units. Lateral structural arrangements give a way to coordinate and correspondence between broadly diverse viewpoints inside an organization, and all the more regularly changing the way of

According to Gray and Larson (2008), a matrix type of organization is one in which a hybrid organization form of a project management structure is placed directly over the functional order of the normal business operations. Typically, this type of organizational structure has two chains of command and the project participants have to report to two separate chains of command. This type of structure is designed to use resources efficiently. It is also intended to provide an optimal solution while being able to accomplish multiple projects at the same time. According to Gray and Larson (2008), there are several advantages and disadvantages to this type of organizational structure. The advantages of this type of structure are that it allows multiple projects to go on at the same time by sharing resources. It also allows the project managers to focus on coordinating and integrating different units or resources that can be integrated into several functions within the organization. Also,

While organizations once typically held centralized structures, the more recent trend is toward decentralization. Centralization is the extent that and organization’s decision-making is made at a single point or by a single person. In centralized organizations, top managers make all of the decisions, while lower-level managers and employees follow their instructions. In decentralized organizations, decision-making is delegated to work groups or the managers who are closest to the organization’s day-to-day actions. Centralization affects employee/manager relationships by providing a more stable environment and clarity regarding whom to go to for directions, while decentralization allows employees to feel less isolated from decision-makers and have more autonomy. In terms of its impact on organizational strategies, decentralization allows for problems to be solved more quickly by those who have more direct knowledge about the specific customer base, while centralization lets companies avoid bad choices and maintain a stable environment.

Manager’s of an organization has to use structure to help the company run efficiently. “The five types of organizational structures are functional, divisional, matrix, team-based, and virtual network” (Draft, 2013, p.316). Functional structure in an organization that is developed by grouping departments by the skills, level of knowledge, activities done daily, and the resource used. “This structure places specific departments from the bottom to the top” (Draft, 2013, p.318). For example, specific departments such as: human resources, accounting, engineering, and manufacturing are placed at the top, while there are mostly seen at the bottom in other organizations. While common functions such as; people, facilities, and other resources are combined together as a single department instead of being divided into multiple departments.

Over the past few years many changes have been made by organizations, in the way that they do business. One of these changes has been going from rigid and centralized organizations, to now taking advantage of flexible and decentralized structures. An organizational structure outlines the way the job tasks are formally divided, grouped, and coordinated. The effect a decentralized structure has on managers and employees is that, the gap between who can make the decision has been spread. With a decentralized structure the process of decision-making comes down to the manager that is closest to the action. The impact on organizational strategies has been that organizations have to adapt to the new structures to fit in to be able to compete more efficiently and effectively.

engineering, marketing etc) into specific teams to work on special projects on a temporary basis. (CRF Online Classrooms 2010) This in turn creates the possible need for an employee to have more than one superior to whom they would have to report to. (Global Security Glossary 2010) The matrix structure focuses upon a concoction of functional and divisional structures, where the formations of teams of these specialists are based upon the focus of their particular environment (i.e. products serviced/provided, market nature, geographical setting etc.) (Bartol et al. p 323)

Section 4. Organizational Structure 1. List of all chapters in Indiana, Kentucky, Ohio, Iowa, Wisconsin, Missouri and Illinois Collegiate chapters in Indiana, including the current number of members (in order from smallest to largest): Valparaiso University 60 DePauw University 92 Purdue University 109 Butler University 146

There are many types of structures that an organization might have, each of them comes with its own set of advantages and disadvantages. Let us look at the benefits and drawbacks of three (or rather, five) of the more modern structures.

Decentralization belongs to many types, depending on the characteristics, policy implications and condition for success. Political, administrative, fiscal and market decentralization are the fundamental types of decentralization. There are different terms and words for defining the types of decentralization and there may also have various ways to operate them. However, the comprehensive approach is more vital than defining. It can be observed that every country has its own type of functioning decentralization and each local department may have unique combinations.

According to Robbins and Judge (2008), the structure of an organisation determines the way duties and tasks are split as well as coordinated inside the organisation. Any structure utilised by an organisation would depend on the size of that organisation and also the purpose and goals for which the organisation stands for (Brooks, 2003). For example, there is the product or activity based structure, the functional structure and the matrix structure.

Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.

In a centralized organizational structure one individual is responsible for making all the decisions and maintains control of the company by giving direction. While Decentralized organizational structures often rely on several persons with the authority to make final decision for the company’s well being. Some benefits associated with a centralized organization are as follows: Reduction in cost in the work environment, having a focused vision on one common goal and Reduction in conflict. A Few drawbacks of a centralized organization include, No secrecy because all ideas and decisions are conveyed to all, No special attention and Delay in work. Advantages associated with Decentralization are; Huge relief is provided off the top managers, Greater use is made of employees skills and Decision making is left up to educational and well informed people.

To review the factors that affect the shape of the hierarchy: horizontal differentiation, centralization, and standardization. (5.2)