Centralisation and

Decentralisation
 Centralisation
Centralisation is the systematic and consistent reservation
of authority at central points within the organisation.
• In centralisation, little delegation of authority is the
rule.
• Power and discretion are concentrated at the top levels.
• Control and decision making reside at the top levels of
the management.
• Absolute centralisation is untenable because it mean
that subordinates have no duties, power, or authority.
• Most organisation start with centralisation of authority
initially.
 Centralisation
There are certain special circumstances forcing
managers to reserve authority and centralise
decision making power.
• To facilitate personal leadership.
• To provide for integration.
• To handle emergencies
 Centralisation
Advantages : There is uniformed decision making
• Duplication of effort is eliminated·
• Highly skilled personnel are available to the whole
organisation and not just the one unit;
• Greater control;
• Economies in staffing;
• Economies of Scale e.g. negotiation of better rates
for office supplies etc.,
• Easier communication.
 Centralisation
Disadvantages
• The organisation is bureaucratic;
• Power is concentrated within the upper
management levels with key decisions taken
by a few top managers;
• Rigidity;
• Delays in decision making;
• Interrupt personal development
 Decentralisation
• Decentralisation is where the authority and
power of decision making is given to the lower
levels of the organisation except that which can
be exercised at central points.
• Absolute decentralisation if fictitious in practice,
degree of decentralisation vary organisation to
organisation.
Types of Decentralisation
• Profit centres/ Responsibility centre:
• Cost/Expense Centres
• Investment Centres
 Decentralisation
• Decentralisation: Advantages
• Lower levels of management will have the power to
make decisions;
• The decisions are made by people who know and
understand situation;
• There is recognition of local conditions;
• The increased power gives improved morale;
• There is personal development due to he increased
responsibility;
• The organisation is more responsive to the environment
 Decentralisation
• Decentralisation: Disadvantages
• There is a lack of uniformity of decision making.
• People have different views and so individuality may
affect those decisions made.
• Inter-unit conflict may arise.
• Managers may not be willing to accept responsibility.
• There is a loss of control at the top of the organisation
structure.
• Loss of some economies of scale.
• Development of a narrow departmental view.
Motivation
 Motivation
• According to Scott “Motivation is a process of stimulating
people to action to accomplish desired goals”. In other
words it is the set of forces that cause people to behave
in certain ways.
Motivation Process ( Generalised Model)

Need Behaviour
Goal
•Work hard
(deficiency) •Find another job Get a pay
•Become union member raise
and pressure
management

Tension Reduction
 Importance of Motivation
• Productive use of resources
• Increased efficiency and output
• Achievement of goals
• Development of friendly relationships
• Stability in workforce

Determinants of Motivation
• The Individual
• The organisation
• The environment
 The Need Hierarchy Approach
(Maslow)
Essential components of the theory
• Adult motives are complex: No single motive determines
behaviour, rather a number of motives operate at the same time.
• Needs form a hierarchy: lower level needs must at least
partly be satisfied before higher level needs emerge
• A satisfied need is not a motivator:
• There is a distinction between needs: higher level needs
can be satisfied in many more ways than the lower level needs.
• People seek growth: They want to move up the hierarchy
 The Need Hierarchy Approach
(Maslow)
• People must, in a hierarchical order, satisfy five needs:
– Physiological needs for basic survival and biological function.
– Security needs for a safe physical and emotional environment.
– Belongingness needs for love and affection.
– Esteem needs for positive self-image/self-respect and recognition and
respect from others.
– Self-actualization needs for realizing one’s potential for personal
growth and development.
Maslow’s Hierarchy of Needs
 The Need Hierarchy Approach
• Weaknesses of Maslow’s theory
– Five levels of need are not always present.
– Ordering or importance of needs is not always the
same.
– Cultural differences in categories and hierarchies.
The Two-Factor Theory (Herzberg)
• People’s satisfaction and dissatisfaction are
influenced by two independent sets of factors—
motivation factors and hygiene factors.
• Theory assumes that job satisfaction and job
dissatisfaction are on two distinct continuums:
– Motivational factors (work content) are on a
continuum that ranges from satisfaction to no
satisfaction.
– Hygiene factors (work environment) are on a
separate continuum that ranges from
dissatisfaction to no dissatisfaction.
The Two Factor Theory of Motivation
The Two-Factor Theory (Herzberg)
• Motivation is a two-stage process:
– Ensuring that the hygiene factors are not deficient
and not blocking motivation.
– Providing employees the opportunity to
experience increase motivational factors through
the use of job enrichment and the redesign of
jobs.
• Criticisms of the Two-Factor Theory
– Interview findings are subject to different
explanations.
– Sample population was not representative.
– Subsequent research has not upheld theory.
 Alderfer’s ERG Theory
Need Level Description

Growth Needs Needs for self-development

(Esteem, self- actualisation and productive work
needs)

Relatedness Needs Needs to have good

(Social needs) interpersonal relations

Existence Needs Basic needs for human

( physiological safety) survival
 ERG Theory
• In this theory Alderfer simplify the Maslow’s
need priority theory but it also remove the
restriction about the activation of needs in any
hierarchical order.
• He suggested that more than one need may be
operative or activated at the same point of time.
• ERG theory provides a specific mechanism for
downward movement in the hierarchy.
Douglas McGregor Theory X & Y
1906-1964
Theory X Assumptions
• Dislike work –will avoid it
• Must be coerced, controlled,
directed, or threatened with
punishment
• Prefer direction, avoid
responsibility, little ambition,
want security
Theory Y Assumptions
• Do not dislike work
• Self direction and self control
• Seek responsibility
• Imagination, creativity widely
distributed
• Intellectual potential only
partially utilized
Douglas McGregor Theory X & Y

• Few companies today still use

Theory X

• Many are trying Theory Y

techniques
 McGregor’s Approach
Theory X Theory Y
1)Production centered 1) Employee centered
2) Autocratic 2) Democratic
3)External control 3) Internal control
4)Closer supervision 4) General supervision
5)Initiating structure 5) Consideration
6)Directive 6) Supportive