Current centralization
Current centralization
Centralization (of control) is a means of coordinating corporate activities. It is measured by the degree of top management involvement in the gathering of information and the execution of decisions.
Centralization is related to who makes certain types of decisions. This includes establishing the budget, exercising control over evaluations and rewards, and being involved in hiring and firing. Empowerment of individuals usually means greater decentralization, i.e., decision making at lower levels in the organization. If only one person is responsible for decision-making, the degree of centralization is high.
Centralization is categorized by degrees ranging from highly centralized to highly decentralized. Measures of centralization are:
- Management's involvement in information gatehering
- Management participation in the interpretation of information
- Management control with the execution of decisions
- Discretion over budgets
- Discretion over evaluations
- Middle management discretion over hiring and firing
- Discretion over personnel rewards
- Discretion over purchasing
- Middle management discretion over projects
- Management discretion over work exceptions
By way of comparison, formalization is a means of coordinating corporate activities using rules. It is measured by the degree of use of rules and the manner in which exceptions are handled. No number of rules can include all possible contingencies.
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