Centralized Authority: Definition & Explanation

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  • 0:03 What Is Centralized Authority?
  • 0:49 Advantages
  • 1:20 Disadvantages
  • 1:57 Example
  • 2:49 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
In this lesson you'll learn about centralized authority. We'll discuss the key concepts of centralized authority as well as look closer at an example.

What Is Centralized Authority?

Centralized authority exists in an organization when all or most decisions and orders come from a centralized source, usually the members from the top levels of the organizational structure. Centralized authority comes from the top of the organization, flows down, and radiates out. Information flows up to the top from all parties of the organization, where it is analyzed and synthesized so decisions can be made. Once a decision has been made, orders flow down from the top of the organization through the process of delegation, where superiors confer authority on subordinates to accomplish certain tasks. The top level remains in control and coordinates, monitors, and assesses all activities necessary for compliance with the order.

Advantages

Centralized authority has some advantages. It can be an efficient means of management because of its strong ability to coordinate different groups and members in the organization and prevent unnecessary duplication of effort. It is also a fairly stable, consistent, and predictable means of managing the organization because of the clear lines of authority. Centralized authority also provides a high degree of accountability because responsibility is clearly set forth in the organization's chain of command. In other words, it's easy to find out who gave the order and who was to follow the order.

Disadvantages

Centralized authority is not without disadvantages. It can hinder creativity and innovation because decision-making is in the hands of a few at the top rather than spread out across the organization. Since subordinates don't contribute to decision-making, they are often not invited to contribute to the problem-solving, even if they have unique skills and perspectives that can make important decisions. This also means organizations with centralized authority often have a difficult time adapting to changes in their environments. Finally, given the constraining nature of the organization from the standpoint of subordinate employees, job satisfaction and commitment to the organization may be low.

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