Which management model is better - centralized or decentralized? If someone points to one of them in response, he is poorly versed in management. Because there are no good or bad models in management. It all depends on the context and its competent analysis, which allows you to choose the optimal way to manage the company here and now. Centralized management is a great example of this. Let's figure out when this model works well and when it is unacceptable.
Concepts, powers, tasks
It's all about the division of labor and decisions: how to distribute tasks for each structural unit and at what level key decisions will be made. The distribution of labor and decision-making on a vertical basis will lead to the formation of a centralized management system. The hierarchy of subordination in such a company is strict, and the powers of employees are minimal and carefully defined.
Companies in which the authority to make key decisions belong to the chief executive and his immediate circle are called centralized. Companies with opposite management methods are called decentralized. In them, powers are distributed among departments and employees at different levels; even lower levels can make decisions on a fairly wide range of business issues.
Signs of a centralized management principle
There are few of them:
- There are more administrative departments than needed.
- Their functions are more important than those of production ones.
- Research structures are localized in the central office of the leading company of the holding.
- Control of product production, sales, marketing projects and all other functional units is carried out through the central administrative departments of the head office.
Centralization comes in different forms
In real life, there are no pure centralized control models (as well as decentralized ones). The difference between companies lies only in the degree of independence of decisions at different levels, that is, in the degree of delegation of powers and rights. If you look at it, any organization can be classified as centralized or decentralized when compared with other enterprises.
The criteria by which the degree of “centralization” can be assessed are as follows:
- The relative share of decisions that are made and implemented at the middle and lower levels. If this share constitutes a minority of overall decisions, the organization will gravitate towards a centralized model.
- Now about the quality of decisions at the middle and lower levels: if decisions regarding changes in directions of work or, for example, the distribution of significant resources can only be made by senior management, you have a centralized management model.
- Breadth of mid-level and low-level solutions: if they cover only one function, you have a centralized company.
- In centralized management, top management constantly monitors the day-to-day work and especially the decisions of subordinates. One might, of course, think that no company, in principle, can do without monitoring the work of subordinates. But in decentralized companies, they prefer to evaluate employee performance based on general criteria: profitability, for example.
These criteria are very relative. But you need to evaluate companies with their help only in comparison with others.
Advantages of the model
It is extremely important to free yourself from the unnecessary stereotype that has developed in connection with this concept. Very often it is associated with the “Soviet” style, which includes all administrative and command elements. In fact, the centralized management model has a different nature and serious advantages:
- Minimize duplication of functions or activities.
- The ability to quickly and clearly standardize operations and processes in the company.
- Relative simplicity of effective control over the operation of systems and employees in general and in particular.
- The ability to optimize the use of resources in the form of personnel, space, equipment, etc.
These are great opportunities to quickly mobilize your team. In a strict hierarchical system, the decisions of top management are binding on all units below. Therefore, such companies are able to mobilize all human resources to solve urgent and complex problems, i.e., where coordinated hard work of all structures is needed. The most striking and popular example is the reflection of external aggression. There is a lot of historical evidence of this, because countries with a centralized control system dealt best with external attacks: quickly and together.
Ability to effectively implement new business lines or structural changes to improve operational efficiency. Tough, sometimes unpopular, but necessary decisions are easier to make centrally.
Crisis management also involves quick and comprehensive decisions that need to be carried out not only without question, but also in a short time. Almost any critical situation in business is most effectively resolved by a centralized management method. understand this well.
When centralized management is useful and necessary
The advantages of this model allow it to be used widely. We must not forget that the centralized management principle can be used temporarily - for a certain period of time to perform very specific tasks.
- When organizing and developing a new company in which different divisions grow at different speeds and success. In such a situation, centralized control is needed with direct directives that do not allow one to grow at the expense of others.
- With staffing and management shortages occurring more often than we would like. To cover this shortfall, time will be required for two tasks: hiring suitable managers from outside and training in-house candidates for leadership positions. During this period, it will be useful for the first manager to take everything into his own hands so that the lack of professionals in local management does not affect the work.
The examples can be continued. The main thing is to have a good understanding of the current situation in the company and the tasks that you want to implement.
Can the centralized model be used permanently? Of course you can. Taking into account the size of the company, the qualifications of its personnel, the region of operation of the company, the personal qualities of the first manager, etc.
Steve Jobs and his autocracy
Steve Jobs is a typical example of a true crisis manager. There are many stereotypes associated with him. The classic explanation for his success lies in just one argument: “because he believed passionately.” There is no doubt that faith in success and the correctness of actions is an important factor. But faith alone will not get you far. It is necessary to make sure that subordinates not only believe, but also rush to carry out everything that will be entrusted to them.
Autocrats act like monarchs with full power to achieve their goals. This requires enormous willpower and, of course, faith. All this was fully present in Steve Jobs: “This is my way, this is the best way.” Employees called Jobs "His Majesty." He was not just an autocrat, he was an extreme autocrat.
Hybrid management model at McDonald's
An interesting example is shown by the famous McDonald's. It all depends on the nature and type of solutions. Middle management (some tenants and restaurant managers) have enormous power, even to the point of complete independence in making decisions about human resources, locating new restaurants, or purchasing food. There is a decentralized approach to management.
As for decisions on pricing policy or the release of new products, they are made within the framework of centralized management functions: by top management without any discussions with the departments below. A great example of a smart combination of different management approaches.
Disadvantages: paper mountains and more
Not a single management system is without shortcomings. The disadvantages of the centralized model are as follows:
- Delay in decision making at the top. Don't let this point surprise you. Above, we mentioned the quick execution of management decisions, but not their quick adoption.
- Sometimes there is a low quality of decisions at the top, because one person cannot know everything at once and about everything. This is due to the lack of information and ignorance of the real situation on the ground.
- Mountains of paper, an increase in the number of documents, unjustified bureaucracy in the form of unnecessary cumbersome procedures.
Once you understand the benefits of centralized management structures, you can apply this model in the most effective way. This can be a temporary method, or partial for individual functions. The main thing is to believe in yourself and in your path. Like Steve Jobs.
During the first era of Internet development from 1980 to 2000, all Internet services operated on open protocols, controlled by the Internet community. People knew that they could expand their online presence and were confident that the rules of the game would not change the next day. At this time, the now well-known companies Yahoo, Google, Amazon, Facebook, LinkedIn and YouTube were created. At the same time, the importance of centralized platforms has decreased.
Then came the second internet age in 2000, which continues to this day. Tech companies, notably Google, Apple, Netflix, Facebook, and Amazon (FAANG), created software and services that quickly outpaced the capabilities of open protocols. The widespread use of smartphones has only accelerated this trend: mobile applications have become the main source of access to the Internet. As a result, users have moved from open services to more complex centralized services. Even when users access open protocols like the Internet, they typically do so through software and services created by FAANG companies.
The current situation has its pros and cons. Good news: m millions of people have access to the latest technologies, most of which are freely available. Now comes the bad news: it's become much more difficult for startups to establish and expand their online presence because centralized platforms dictate the rules of the game, taking away audience and profit. This situation led to the suppression of the development of innovative technologies: the Internet became less interesting and less dynamic. Entrenched centralization has also caused a number of other negative consequences: fake news, state-sponsored bots, EU privacy laws, etc. It is safe to say that in such an environment, social tensions will only worsen.
“Web 3” – the third era of the Internet
The only way to somehow stop the rampant centralization is to solve the problem at the government level. It is necessary to develop a regulatory policy towards Internet giants. And this is possible because the Internet, as a software-based network, can be remade through entrepreneurial innovation and market forces.
As we said, the Internet is a software network that has a fairly simple core that connects billions of programmable computers. Software is simply human thought represented in code., which has almost unlimited space for creativity. Using computers connected to the network, their owners can run absolutely any software. With the right set of incentives, anything can be distributed over the Internet. Internet architecture is a platform where technical creativity and incentive systems intersect.
What we see now is still the first evolutionary stage of the Internet. It is likely that we will witness profound changes in the main services of the network, which will become possible thanks to the introduction of cryptoeconomic mechanisms disclosed in the Bitcoin and .
Cryptonetworks combine the best of the first two eras of the Internet: community-driven, decentralized networks with capabilities that will eventually exceed the capabilities of the most modern centralized services.
Why decentralization?
Many people misunderstand this term. For example, many people advocate decentralization because they want to free themselves from government censorship, or they advocate decentralization because of their libertarian political views. However, not only these principles underlie this concept.
Let's take a closer look at the problems of centralized networks. Centralized platforms exist according to a predictable life cycle. During the launch phase, they do everything possible to attract as many users as possible, as well as third-party stakeholders: developers, enterprises, media, etc. This is done in order to increase the value of the service, since platforms are (by definition) systems with multi-sided network effects. As platforms evolve along an S-curve, their power over users and third-party stakeholders steadily increases.
When the curve reaches its peak, the relationship of centralized platforms with network users changes from positive to neutral. The easiest way to continue to grow is by collecting data from users and using it to grow your audience and increase your profits. The most striking examples of the implementation of such a strategy are Microsoft VS Netscape, Google VS Yelp, Facebook VS Zynga and Twitter against their huge number of analogues. The iOS and Android operating systems structure their market strategy somewhat differently, although they still charge a hefty 30% fee, refuse applications for some unknown reason, and exploit the functionality of third-party applications at their own request.
For third parties, this transition from cooperation to competition resembles a deception scheme. Over time, top entrepreneurs, developers and investors have become wary of partnering with centralized platforms, as there is ample evidence of the disastrous consequences of such cooperation. In addition, users are forced to give up privacy and the ability to control their own data, which makes them a good target for scammers. These problems with centralized platforms are likely to become even more pronounced in the near future.
Time for crypto networks
Crypto networks are networks built on the principles of the Internet, which, firstly, use blockchain technology, and secondly, use cryptocurrencies (tokens) as an incentive system tool for network users and miners. Some systems, like Ethereum, are software platforms that can be used as the basis for creating any application. Other networks are created for a specific purpose, such as Bitcoin, a network built to store assets of value, Golem, a network built to perform computation, and Filecoin, a network built to store files in a decentralized manner. More examples of successful decentralized applications at the link.
The first Internet protocols were technical specifications created by working groups or non-profit organizations that hoped to achieve consensus within the Internet community for eventual technology adoption and further development. These mechanics worked well in the early days of the Internet, but very few new protocols have become widespread since the 1990s. Crypto networks solve this problem by providing economic incentives to developers and other network participants in the form of token rewards. They are also more reliable from a technical point of view.
Crypto networks use several mechanisms to maintain neutrality as the network grows, in order to prevent the implementation of deception schemes inherent in centralized platforms. This is achieved through the following mechanisms: firstly, the contract between crypto networks and their users is executed within the framework of open source code, and secondly, they control the mechanisms of “voice” and “exit” (Albert O. Hirschman’s theory “Exit, Voice and Fidelity”) » – analysis of the behavior of a person faced with a deterioration in the quality of the services he consumes). Users are given a “voice” to govern the community both “on chain” (through the protocol) and “off chain” (through social structures around the protocol). In this case, participants can leave the network by selling their tokens.
In short, crypto networks bring users together to collaborate towards a common goal: the simultaneous growth of the network and the value of the token.
This attitude is one of the reasons why the Bitcoin network has defied all naysayers and continues to thrive despite the rise of competitors like Ethereum.
Today, cryptosystems are forced to overcome restrictions, which makes it much more difficult to compete with centralized platforms. The most serious obstacles relate to network performance and scalability. Certainly, the next few years will be dedicated to eliminating these problems and creating networks that form a new infrastructural layer for the entire industry. After which all efforts will be directed to creating new-level applications based on this infrastructure.
Why decentralization will win
Software and web services are created by developers. There are millions of highly skilled developers in the world. Only a small fraction of them work at large technology companies, only a small fraction of which work on creating new products. Many of the most important software projects in history were created by teams of small startups or as independent developer communities.
“It doesn't matter who you really are. Most smart people work for someone else anyway." - Bill Joy
Decentralized networks could become the main flagship of the new era Internet for the same reason as in the first era: winning the hearts and minds of entrepreneurs and developers. A striking example is the competition between the familiar Wikipedia and its centralized rival Encarta (an encyclopedia from Microsoft). By the 2000s, Encarta created a more interesting product with a larger audience. However, Wikipedia grew faster due to the support of a community of volunteers driven by the spirit of decentralization. Bottom line: By 2005, Wikipedia had become the most popular reference site on the Internet, and Encarta closed in 2009.
This case clearly illustrates that when evaluating an Internet platform, it is worth considering not only the final product, but also analyzing the dynamics of the system’s development. Centralized networks often take off at the start, but gradually begin to fade, since their development depends on the bureaucratic system. Decentralized platforms do not immediately show good results, but they develop much more steadily and dynamically due to the constant work of a community of users interested in the growth of the project.
In the case of crypto networks, there are several feedback funnels, including core protocol developers, additional platform developers, third-party application developers, and service providers who operate on the network. These feedback mechanisms are also fueled by incentive reward systems, which, as can be seen in the Bitcoin and Ethereum networks, can accelerate the rate of development of the crypto community. Sometimes this leads to disastrous consequences, for example, to excessive electricity consumption by Bitcoin miners (read our article for more information about energy consumption during mining).
Who will prevail in the new era of Internet development: decentralized or centralized systems? The answer lies in the following: the winner will be the one who creates a quality product, which is only possible if there are highly qualified developers and patient investors. The FAANG alliance (Google, Apple, Facebook, Netflix and Amazon) has many advantages, including cash reserves, large user bases and operational infrastructure. However, crypto networks can make a much more attractive offer for developers and investors. If they can win the hearts of the latter, crypto enthusiasts will be able to mobilize many more resources than the FAANG, which will allow them to outpace the development of these companies' products.
“If you had asked people in 1989 what they needed to improve their lives, the answer would have been “a decentralized network of nodes,” the company Farmer & Farmer
You may have noticed that access to centralized platforms is often provided bundled with some kind of application: Facebook messenger, or pre-installed applications on the iPhone. In contrast to this, decentralized products are released in a sense “unfinished”, without a clear user scenario. As a result, they are tested for product-market fit: whether the platform meets the needs of the developers and investors who will later complete the product and build the ecosystem, and whether the platform meets the needs of users. This two-step product evaluation process causes many people, including developers, to underestimate the potential of decentralized platforms.
New era of the Internet
Of course, decentralized platforms are not a panacea for all problems. However, they offer a better approach than centralized competitors.
To illustrate, let's compare the problem of spam on Twitter and email. Because Twitter
In the scientific literature, two main points of view have emerged regarding the distribution of income and expenses between two levels of government: the federal center and the constituent entities of the federation. Proponents of one of them believe that efficiency in the distribution of resources is best achieved if the right to spend financial resources belongs to the level of government and management that most fully represents those who benefit from these expenditures. According to supporters of this point of view, the federal center should bear the costs of national goals, the achievement of which is in the interests of society as a whole, otherwise, in accordance with the principle of subsidiarity, responsibility for costs should be borne by the subjects of the federation and local authorities.
Proponents of centralization hold a different point of view. They believe that especially in large countries that are characterized by significant regional inequalities in the distribution of expenses and income, the ability of federal subjects to provide certain benefits to their residents will vary greatly, leading to unwanted migration, and also, in some cases, to continuous social and political pressure. Lower standards for the provision of certain goods may adversely affect human capital and the prospects for long-term growth of the economy). And in this sense, the decentralization of income and expenses increases social costs.
Excessive decentralization can create difficulties for the federal government in pursuing macroeconomic stabilization through sound budget policy. In this regard, it is particularly important that decentralization be undertaken carefully and carefully in countries facing acute fiscal or macroeconomic imbalances. In such countries, the strict budget constraint to which the constituent entities of the federation are subject becomes of fundamental importance, although in this case, inter-budgetary relations must be structured in such a way as to ensure a balance between expenses and revenues.
A certain centralization of financial resources and the corresponding powers to dispose of them is also supported by the fact that in any state there is a certain set of exclusive matters of jurisdiction that fall within the competence of only the federal government and the implementation of which requires concentration of income and expenses at the federal level. These are those benefits in the broad sense of the word (country’s defense capability, internal security, environmental protection) that are enjoyed by the entire population of the country, regardless of place of residence.
The need to centralize significant financial resources at the level of the federal center is also explained by the presence of significant financial and economic differences between the regions of the country. The lag of some subjects of the federation from others in terms of living standards leads to an outflow of population and capital from poor regions, narrowing the already limited resource base.
The benefits of centralization cannot be overestimated and the benefits of decentralization cannot be underestimated. 1) in countries that do not face acute fiscal or macroeconomic imbalances, reasonable decentralization of income and expenditure more actively involves the constituent entities of the federation in the management of macroeconomic processes in the country and forces them to share responsibility for achieving national economic goals, while simultaneously relieving the upper echelon of power of the burden, which the subjects of the federation themselves can bear independently. 2) decentralization does not at all exclude the significant regulatory role of the federal center, which can influence the decentralized provision of necessary benefits to the population by determining the fundamentals of policy in this direction, transferring resources to the subjects of the federation to equalize their capabilities in carrying out this policy, and implementing subsequent control over the use of transfers and quality services provided at lower levels of management, as well as the establishment of prohibitions or restrictions on borrowing.
“Revenue sharing and grants serve as a coordinating mechanism that allows decentralized spending to be combined with centralized tax collections and redistribution.” According to representatives of the movement called “market-preserving federalism,” “optimal decentralization of the budget system can serve as an effective mechanism for creating a market economy and stimulating economic growth.”
Ticket 13.
Problems of combining centralization and decentralization.
The problem of centralization or decentralization is global in nature and is essentially relevant for any society and its political system. The trend towards centralization is determined by the need to ensure an internally consistent, holistic and stable management system, unity of fundamental principles and policy directions. Until now, not a single state as a complexly organized system could do without a centralizing, coordinating principle. Neglecting centralism would mean the disintegration of the political and legal whole into many weakly interconnected and generally unrelated parts.
At the same time, the absolutization of centralism is dangerous. It leads to the bureaucratic ossification of the political and administrative system, which becomes insensitive to regional interests and social innovations, and creates scope for bureaucratic arbitrariness and corruption.
Along with centralization, the tendency towards decentralization is equally objective. It is impossible from one center to solve all the practical issues that arise daily on the ground, especially if the country occupies a huge area. Increasing the efficiency of functioning of all management structures requires the distribution of functions and powers, and therefore responsibility, between the center and individual regions in the most appropriate way for the given time and given conditions.
Decentralization is important because it allows us to bring the management system closer to the population, better take into account social and territorial interests, more accurately adjust policies taking into account changing conditions, and unleash the initiative of lower levels of management. Decentralization of power and management makes it possible to establish a more flexible regulatory system with less bureaucracy compared to strictly centralized management. However, excessive emphasis on trends towards decentralization can lead to a situation where the interests of the whole are missed and a real threat of separatism, localism and anarchy appears. In the case of absoluteization of any of these trends, conflicts arise that give rise to dysfunctionality of the entire management system.
Being objectively inevitable, the trends of centralization and decentralization are in contradictory interaction. None of them can be simply eliminated without the risk of destabilization and enormous damage to governance. To resolve the contradiction between these trends means to find the most appropriate forms of their relationship for a particular time.
The most optimal is a combination of centralization and decentralization that ensures unity in the main thing, in resolving key issues of political and managerial strategy, and diversity in specifics, in techniques and approaches to solving management problems.
In the literature on the problems of federalism, a contrast between centralization and decentralization is sometimes allowed.
Centralism is necessary, but within certain limits. Centralization, unchecked by centralization, can cause consequences of two kinds. A greater degree of decentralization can provide effective protection against external aggression, but it can also create an irresistible temptation to carry out such aggression. Federalism cannot be identified with decentralism. Federalism is unthinkable without centralization. The latter has a positive impact on the federal structure of the state, relieving the federal center of many functions that can be performed more effectively by the subjects of the federation. In particular, the analysis of American federalism concludes that the United States needs a transfer of power from an overburdened central system, while at the same time making the federal mechanism more efficient politically and administratively. However, decentralization in a federation by itself is not sufficient to achieve democracy, fairness and greater governance efficiency. Decentralization can help achieve these desired goals, but it does not automatically achieve them. Federalism does not mean centralization alone or decentralization alone. In real life, federalism is impossible without centralization and decentralization at the same time.
The relationship between the two indicated trends is not given once and for all and is not the same for all federal states. Accordingly, the forms and processes by which different federations adapt to the changing balance of centralization and decentralization also vary. If we arrange federal states along the “centralization - decentralization” axis, then at any given moment they can be at different points on this axis. However, the specified location points may change over time.
The experience of foreign federations shows that at different periods of their history, depending on specific circumstances, either centralization or decentralization came to the fore.
Centralization, just like decentralization, is determined by a certain set of factors, and since the set of the latter in different federations and at different stages of development of the same federation is not the same, then each time to understand and explain which trend and why prevails at a given time, it is necessary to refer to the specific historical conditions in which this or that federation is located. Thus, in the long term, economic interests push the constituent parts of the federation towards integration and may require centralization for some time in making the most important economic decisions. At the same time, national-cultural factors require the preservation, if a nation wants to survive, of its characteristics, ethnic identity, self-preservation of national culture, and they thereby act in favor of decentralization.
In Germany, there is also an interaction between trends towards centralization and decentralization. In particular, although formal decentralization of the legislative process in favor of the lands cannot be carried out without constitutional amendments, de facto decentralization can occur through self-restraint of the federal government in the field of legislation. The predominant trend in the development of German federalism is currently considered to be a tendency towards centralization and this is primarily due to the integration of Germany into the EU.
The tendency towards centralization and, accordingly, the threat to the autonomy of the lands manifests itself in two ways. On the one hand, it is the federal government, and not the states, that is involved in the process of developing EU legislation, which is directly applied in Germany. The lands are deprived of such direct inclusion in the legislative process, which inevitably affects their interests. On the other hand, and as a consequence, policy areas that were traditionally the responsibility of the Länder are now increasingly falling under EU jurisdiction. Taking all this into account, the Länder sought to rectify the situation and, in particular, to increase their influence on the decision-making process in EU bodies.
As for the Russian Federation, currently, following a period of sharp decentralization, the pendulum has swung in the opposite direction - towards rather strict centralization. Preconditions for recentralization: decline in economic mobilization in the republics, financial dependence of more than 2/3 of the regions on the redistribution of federal funds, the terrifying effect of the anti-Chechen war, insufficient interregional coordination of interests against the center and support for Putin’s reforms by a qualified majority in the State Duma.
The most optimal solution for the near future would be to ensure an approximate balance between both trends - towards centralization and decentralization. The Russian Federation is now experiencing a time when any bias towards centralization or decentralization is dangerous with the risk of destabilization, dangerous with the risk of destabilization with all the ensuing consequences. In current conditions, federation as a form of government is perhaps the most adequate means of combining centralization and decentralization in different proportions in the political and administrative sphere. The clear and unconditional predominance of one of them would turn the federation itself into a fiction. In the political science literature, the idea was expressed about a different ratio of centralization and decentralization, depending on the principle of building a federal state. It is argued that the division of the federation into component parts formed along ethnic lines necessitated widespread decentralization, which obviously affected the state. structure, relations between the federal center and S, distribution of jurisdiction and powers. Federations, which are divided into component parts identified on a territorial basis, were limited to selective decentralization.
The sphere of management, in which primarily the federal authorities or state authorities of the constituent entities of the federation are involved, still acquires leading importance. In those areas that, in the interests of the federation as a whole, should be attributed to the exclusive competence of federal authorities, centralization, of course, prevails. Management in areas that the subjects of the federation themselves can perfectly understand without unnecessary interference from the federal center should be naturally decentralized.
Taking into account both trends - centralization and decentralization - is a necessary condition for the rational delimitation of jurisdiction and powers between the federation and its subjects.
Pros of centralization
The most important advantages of a system with a centralized structure are the following:
1. High mobilization abilities.
Since in a centralized system a decision made at a high level is binding on all lower-level subsystems, the system can mobilize all its resources to solve complex problems that require a powerful response, for example, to repel aggression or solve in the shortest possible time such tasks that require tension and concerted action. work of a gigantic number of subsystems.
2. Relatively short reaction time to influences (internal or external).
This is mainly determined by the fact that in a centralized structure the “distance” from the lower-level subsystem to the center that makes decisions that are mandatory for all subsystems is relatively small. True, the above is not true for any centralized systems. If the number of levels is large, then, firstly, the path traversed by information towards the center is considerable, and, secondly, at each level the subsystems introduce their own “noise” and the information is distorted, at least in a small part. Therefore, the information that reaches the central management level may not correspond to the actual state of affairs and, accordingly, the center may make decisions that are inadequate to the situation and that can harm the entire system due to the issuance of inappropriate or simply stupid commands. We can say that hierarchical structures with more than five to seven levels are unstable precisely because there is too much distortion of information when transmitting it through the levels. For organizational systems, it is possible to reduce the level of noise introduced by using computer information systems. Then the centralized management structure has the opportunity to grow for some time. The goal of preserving the centralized administrative system in our country was to be served by the attempt, which failed in the 70s, due to the general disorder, to create a unified automated control system covering all levels of management. Those. this attempt was then late and could not be realized precisely because of the already expanded multi-level system of government.
3. In a centralized system, it is quite simple to implement processes of information interaction (coordination of lower-level actions)
In a hierarchical system, a fundamental possibility is created for global optimization of control of the system as a whole.
Indeed, mastery of the entire picture of affairs in the system allows the center to organize without any particular difficulties (who can object to it?) management that is optimal from the point of view of the entire system as a whole. In this case, the center may allow the functioning of any subsystems not in an optimal mode (with subsidies), and in some cases even go to the elimination of subsystems for the sake of the existence of the system as a whole. (All this, however, is good if decisions are made by a competent and informed center.) Unfortunately, a centralized system does not, in general, contribute to getting a competent leader into the center. To do this, you need to create rules for promoting the smartest ones to the top. However, there is still a certain “scheme” - democracy in a developed society.
From the given basic properties, you can form a fairly large number of private advantages of centralized structures, which you can apply in your life and activities:
1.1 For a developing organizational structure with rapid growth of the system, different subsystems grow at different rates, strong and competent centralized management may not allow some subsystems to develop at the expense of others or to the detriment of the goals of the organization as a whole.
1.2. Centralized management in conditions of a shortage of qualified personnel in the field of management makes it possible to more effectively use the knowledge and experience of those professionals who are available, installing them at the top of the management hierarchy.
Disadvantages of centralization
Relative disadvantages of centralized structures:
1. In general, the adaptive capabilities (inflexibility) of the system are insufficiently high.
In order to reorganize the system, subsystems need to “convince” the central link of the system of this need, which often believes that it is they who have complete information and understanding of the problems. Considering that in a “large” centralized system the levels introduce their own information noise, and the center may not receive objective information about the state of the subsystems, such a belief may not be successful. In organizational systems, for example, such as our former socialist state, perestroika became possible only in 1985, when the prerequisites for changing the system of managing the national economy were ripe (and even overripe), and leaders, infected with the relative freedom of the “thaw”, had grown to the age of power. » 60s. Until this year, all attempts to change the management structure were unsuccessful.
2. Relatively low system reliability.
Since the center is ultimately in charge of everything, and it is also the most informed, the destruction of the center, overload or breakdown leads to disorganization and even destruction of the system as a whole. A definite solution to the problem can be considered increased protection of the center from external aggressive influences and an increase in redundancy in the means of communication.
3. Strong dependence of the behavior of the entire system on the behavioral characteristics of the center.
Since the center makes decisions that are binding on all subsystems, the behavior of the system decisively depends on the “literacy” of the central link or the nature of the idea implemented by the central body. One can even say that a centralized system has the character of an object that is at the center of control of the system (in socio-economic systems, remember Lenin, Stalin, Khrushchev, Brezhnev. - So the psychology of a particular political figure significantly changed the character of the state and its behavior in the international arena) .
In natural centralized systems, the core always carries the most important behavioral “genes”, determining the “rules of the game” of other subsystems in the internal environment of the system as a whole. There are many examples.
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