The organization structure, which an organization selects, is dependent on the nature of the organization, size, ownership, and business environment. Jan a nurse management is seeking an organization with a decentralized organization structure that will offer her the opportunity to empower her subordinates. She attends an interview at a teaching hospital and in the process, she make a few observations on the organizational structure. This paper provides an in-depth discussion into centralized and decentralized organization structures. In addition, it offers the advantages of working in decentralized and centralized business environment and finally gives the differences in authority, accountability and responsibility in the two structures.
In centralized organizations, knowledge, information, and ideas are concentrated at the top level of management (Gitman & McDaniels, 2008). The organization where Jan had her interview is centralized because the nurses have to consult with the charge nurse before making any decisions. The charge nurse then consults with the director of nursing before the decision arrived at and relayed back to the nurses. The nurses at organization describe their organization structure as traditional with a comfortable environment. Centralized organization structures have many hierarchies and are very bureaucratic. On Jan researching on the organization structure of the teaching hospital she had her interview she found that the structure had many hierarchies.
The strengths and weaknesses of centralized and decentralized organization structures lie in the inherent factors in the structures, which influence the ability of the organization to achieve its goals, and objectives effectively. In spite of their differences, both centralized and decentralized business organizations have their weaknesses and strengths. The centralized organization structure increases uniformity in decision making because all decisions are made at a central point. (Gitman & McDaniels, 2008). The centralized organizational structure also enables the organization to make fast decisions because the decisions are made at the top without consultation with subordinates. The decentralized organization structure allows employees input in the decision-making process, which motivates employees because they feel their opinion in the organization is valued. Decentralized organizational structures are more flexible and thus facilitate change.
Centralized organization structures reduce the chance of conflict amongst employees as all decisions are made at the top and their role is just implementing the instructions given. In addition, when working in centralized organizational structure the employee is not accountable for any wrong decisions made because management makes them. Decentralized organization gives employee the opportunity to be innovative in their work and freedom to select working method as long as they adhere to the required standards.
Centralized and decentralized structures differ in position of where responsibility, authority and accountability lie. In centralized organization structures the authority and accountability is at the top hierarchy of the organization structure (Gitman & McDaniels, 2008). However, even if management is accountable for employee’s performance, the employees are responsible for executing instructions from top managements by following prescribed policies and procedures. In decentralized organizations, authority is devolved to all levels of the organization structure. This means that managers at the different levels of the organization hierarchy have the authority and are accountable for the performance of their departments.
Gitman, L. J. & McDaniels, C. (2008).The Future of Business: The Essentials. USA: Cengage Learning