Factors Influencing Centralisation
To integrate organizational efforts, and achieve the desired level of coordination and control needed to meet certain objectives, an organization or manager needs to have some reserve authority.
When a corporation is small, centralization makes it easier for individuals to take on personal leadership roles, provide for action integration and uniformity, and manage emergencies.
Factors Influencing Decentralisation
Decentralization becomes imperative when an organization grows bigger. The main purpose of decentralization is to ease the burden of top executives. The warning signals that point to a need for decentralization can be had from the problems in planning and control of operations, neglect of proactive strategies in preference to routine fire-fighting operations, the proliferation of personal staff around top executives, and mushrooming of committees. Decentralization is a crucial component, if not a need, for diversification and divisionalization.
Decentralisation also encourages and motivates managers to perform better because it allows them to make more important decisions and gives them flexibility and autonomy in their functioning.