Meaning of Centralization
Centralization means concentration of authority few hands. Centralization thus refers to reservation of authority of decision making. No one at any level, except on the top, is authorized to take decisions. The subordinate’s job is to carry out the decisions taken.
Henri Fayol was of the view that everything that goes to reduce the role of a subordinate is centralization. And really a subordinate in centralized system is more or less reduced to zero so far as the authority is concerned. He has duties to perform, responsibilities to fulfill and adjectives to achieve. Against these obligations he has no right to say what is wrong or what is right. Whatever is given to him he has to chew and digest.
Centralization refers to an anathematic reservation of authority at a central point within the framework of the organization. Decisions under centralized system of organizational structure are taken at a central point by the managers. Every manager reserves his authority to plan, to organize, to command, to motivate and to control. Only authority relating to routine matters is delegated to the subordinates.
The term ‘centralization’ should logically mean the opposite of ‘decentralization’ that is all responsibility and authority is retained at a central points.
Definition of Centralization
E.F.L Breech. defined it “Centralization must be used specifically, because in everyday meaning it implies the absence of any ‘organization structure’ at all i.e. that responsibility for this or that is retained at the centre. It may be found, in particular, to refer to a pattern in which the responsibility for all specialist lies at the central unit, the managers within the structure carrying decentralized responsibility for executive management of operations but depending on the central unit tor deciding on all specialist activities. Once an enterprise attains any really sizable growth, considerable belays and difficulties originate from this practice.
In fact in his long narration E.F.L Breech has focused his attention more on the disadvantages of centralization than the plus points in its favors. However, he has brought the meaning more clearly when he says that it (centralization) is the opposite of decentralization which he regards “as the fusion of management structure with management action in other words, the process seen operating within is due framework,” while centralization is the concentration of management structure at a central point where all decisions concerning the policies and programmes of the enterprise taken.