Centralization is a term that some people may not understand. This term often appears in discussions about government systems. This centralization is related to the government system which is related to the relationship between the central government and regional governments.
Apart from that, this term is often also known as centralization, this term centralization is also related to its opposite, namely decentralization. So, to find out a clearer explanation of centralization, see the article below, Grameds, regarding centralization.
Understanding Centralization
Centralization comes from the English word ‘ centre’ which means middle or center. According to KBBI, centralization is the unification of everything to a place that is considered the center. In a government system, centralization will relate to the authority of the central government.
So, centralization can be said to be concentrating all authority to a small number of managers or those at the top of an organizational structure.
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Apart from that, it can also be interpreted that the centralized system means that all decisions (decisions or policies) are issued by the center and the regions just have to wait for instructions issued by the center to implement these policies.
Characteristics of Centralization
After understanding it, the discussion this time will be the characteristics of centralization. There are also characteristics of centralization as follows:
- General policies can also be made more easily implemented in all regions.
- The decision making process is easier and faster because it can be determined by the center.
- There was a centralization of all authority to the central government
- Everything related to politics and administration can be handled by the central government.
- There is uniformity in management, starting from planning, implementation, management and evaluation.
- The chain of command held by the central government can make coordination easier
- Planning, implementation, management and evaluation are integrated because of the uniformity of management
Types of Centralization
There are several types of centralization that companies can apply in their management, such as:
1. Centralization of departments
This type of centralization is based on different departments within an organization. Each department will have a central office or leader who makes decisions for that department.
2. Centralization of management
This type of centralization is the most common type where centralization is when one person or one department makes all decisions for the entire organization.
3. Geographic centralization
This type of centralization is usually seen in large companies that have locales in various regions. Each location has its own leader or group of leaders who make decisions for that location.
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Centralization Goals
Of course this system has a purpose. The objectives of centralization are as follows:
- To be able to prevent each region from becoming independent, which has the potential for conflicts of interest or even secession.
- To facilitate the implementation of general policies and their implementation in each region.
- To be able to facilitate and speed up the decision-making process which indirectly shows strong leadership.
Advantages of Centralization
Theoretically, centralization also has advantages. The advantages of centralization are as follows:
1. Organizations become more efficient and leaner
Because all organizational effectiveness becomes centralized, decision making will also be easier.
2. Organizational planning and development is more integrated
There is no need for too far a level of coordination between the decision-making unit and those who will implement or be affected by the decision-making.
3. Increased resource sharing and synergy
Resources can be managed more efficiently because it is done more centrally.
4. Reduction of redundancies in assets and other facilities
One asset can be used together without having to provide the same asset for different jobs.
5. Improved coordination
Coordination will become easier because of unity of command.
6. Concentration of expertise
The expertise of organizational members can be utilized optimally because leaders can give authority.
Lack of centralization
Apart from having advantages, something definitely also has disadvantages. Following are the disadvantages of centralization.
1. Decreased decision making speed and decision quality
Decision making with a centralized approach often does not consider factors that could influence decision making.
2. Demotivation and disincentives for the development of organizational units
Organization members will find it difficult to develop their potential because there is no vehicle and the dominance of leaders is too high.
3. Decrease in speed to respond to environmental changes
Organizations are very dependent on the responsiveness of only a few groups of people.
4. Increased management complexity
Organizational management will become more complicated because of the many problems at the lower organizational unit levels.
5. Broad perspective but not deep enough
Organizational leaders will make decisions based on the perspective of the organization as a whole but do not or rarely consider what the implementation will be like.
Positive and Negative Impacts of Centralization in Several Fields
1. Economic Aspect
If viewed from an economic perspective, the positive impact provided by this centralized system is that the economy will be more focused and orderly because in this system only the center will regulate the economy.
However, the negative impact is that it seems as if regions will only be used as tools and not allowed to regulate their respective economic policies, resulting in financial concentration in the Central Government.
2. Socio-Cultural Aspects
If we look at it from a social and cultural perspective, for our own country, Indonesia, with this centralized system, the cultural differences of each region can be united. That way, each region can highlight its own culture and prioritize the motto Bhinneka Tunggal Ika.
However, the negative impact of this system is that the central government will be more dominant in driving all state activities. Domination by the central government will eliminate the existence of regions as local governments which have their own unique socio-cultural dynamics.
If left for longer, it will result in dependence on the central government which will kill local creativity and initiative to develop their locality.
3. Security and Political Aspects
If seen from a security perspective, the positive impact of this system is that security is more guaranteed and conflicts rarely occur. If it is in the political sector, local governments do not need to bother with problems that arise due to differences in decision making because all decisions have been coordinated by the central government. That way, the local government just accepts it.
The negative impact in terms of security is that military organizations will be more prominent so that military organizations will have more things compared to other organizations.
If it is in the political field, the negative impact of this system is that there will be infertility in regions because they only continue to depend on decisions given by the central government. The time required for decisions and policies will also be longer and the realization of those decisions will be hampered.
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Example of a Centralized System
There are several examples of centralized systems in our country such as:
- The State Security Institution, namely the TNI (Indonesian National Army) which protects Indonesia at three points, namely land, sea and air.
- Bank Indonesia (BI) is the center for regulating all monetary and fiscal policies.
- In Indonesia’s old government system in the New Order era, all power was placed in the central government.
However, currently the new Indonesian government can only implement centralization in certain areas such as international relations, justice, defense and security, finance and general government.
Understanding Decentralization
Apart from centralization, there are also terms that often coexist with centralization. namely decentralization. The following is an explanation of decentralization.
Understanding Decentralization
Based on Law No. 32 of 2004 article 1 concerning regional government, decentralization is the transfer of government authority from the central government to autonomous regional governments to regulate and manage all government affairs in the country.
Meanwhile, according to Law No. 5 of 1974, the transfer of authority aims to achieve efficient government and then produce autonomy (the freedom of the people in the area to organize and manage their own interests).
Decentralization Goals
There are several goals of a decentralized system, including:
- To prevent financial concentration in the central government.
- As an effort to democratize regional government to involve the people in responsibility for administering government.
- To develop programs for socio-economic improvement at the local level.
Types of Decentralization
After understanding the meaning and objectives of decentralization, the following are the types of decentralization.
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Political decentralization
Political decentralization aims to give citizens or some elected representatives more power in public decision-making. The aim is to introduce a more participatory form of government by giving citizens or their representatives greater influence in the formulation and implementation of policies and plans.
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Decentralization of administration
This decentralization involves the redistribution of authority, responsibility and financial resources for providing public services from the central government to local units of government agencies, regional governments or semi-autonomous public bodies or companies
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Fiscal decentralization
Financial responsibility is a core component of this decentralization. Local governments and private organizations must have sufficient levels of revenue either generated locally or transferred through the center to carry out these functions effectively. Apart from that, decentralization will also provide authority to make decisions about spending.
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Market decentralization
Market decentralization involves shifting responsibility for markets from the public to the private sector including businesses and non-governmental organizations. Market decentralization will involve constitutional legal reform as well as the passing of new laws.
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Environmental decentralization
With environmental decentralization, the government can better control its forests, water, minerals, wildlife and other resources. Delegating control to regional or local governments has proven to be an effective way to deal with problems such as illegal land use, zoning, environmental damage and exploitation.
Positive and Negative Impacts of Decentralization
1. Economic Aspect
The positive impact of decentralization from an economic perspective is that local governments can manage their natural resources easily, this can increase regional income and community income.
The negative impact is that it can result in Corruption, Collusion and Nepotism (KKN) if local officials work incorrectly.
2. Socio-Cultural Aspects
From a socio-cultural perspective, decentralization has a positive impact in the form of strengthening regional socio-cultural ties and developing the culture of a region.
The negative impact of this decentralization is that each region may compete to highlight its culture. So, indirectly it can undermine the sense of unity and oneness.
3. Security and Political Aspects
The positive impact of decentralization in the political field is that regions will be more active in managing their regions because decisions and policies are decided by the regional government.
Meanwhile, the negative impact is excessive euphoria if the authority is misused for the interests of a certain group, group or personal interests.
Example of a Decentralized System
An example of a decentralized system is the current government system in Indonesia. The regional autonomy system implemented gives authority and policy to regional governments. That way, a region can achieve equitable development and increase regional potential.
Deconcentration
Apart from centralization and decentralization, there is also deconcentration which carries out both. The following is an explanation of deconcentration.
Understanding Deconcentration
Deconcentration is the transfer of power and authority from the central government to regions or other bodies, but only for administrative matters, while everything else remains the responsibility of the central government. This principle can be said to be a combination of the principle of centralization and the principle of decentralization.
Deconcentration Goals
There is also a purpose for implementing this deconcentration principle
- Improving the efficiency and effectiveness of government administration, development management and services in the public interest
- Maintaining social and socio-cultural communication in the state administration system
- The realization of harmonious relations between government structures and between governments in the regions
- Maintaining harmony in the implementation of national development
- Maintaining the integrity of the Unitary State of the Republic of Indonesia
Advantages of Deconcentration
- Politically, it can reduce regional complaints about policies implemented by the central government
- Economically, it can help the government. It can help the government facilitate access to information
- Allows direct interaction between the government and the people
- Securing government policies in all fields
- An effective medium for establishing national unity and unity
Disadvantages of Deconcentration
- The costs required will be large
- The decisions taken will take a relatively long time
- Coordination is difficult due to the increasing complexity of government structures
- The balance of regional interests will easily be disturbed
- Possible to give rise to regional fanaticism
Positive and Negative Impacts of Deconcentration
Positive impact
- Politically, the existence of deconcentration will be able to reduce complaints in the regions against central government policies.
- Economically, deconcentration officials can assist the government in formulating planning and implementation through an intensive flow of information conveyed from the regions to the center.
- Allows direct contact between the government and the people.
- The presence of deconcentration tools in the regions can secure the implementation of central government policies or national policies in the political, economic and administrative fields.
- It can be an effective tool to ensure national unity and integrity.
Negative impact
- Coordination becomes increasingly difficult as government structures become more complex.
- The balance and harmony between various regional interests is more easily disturbed.
- Encouraging the emergence of regional fanaticism.
- The decision taken took relatively long time.
- The costs required are large.
Example of Deconcentration
- Tax Services at the Tax Office
- The President delegates the authority to implement the ASEAN GAMES which will be held in the regions to the local Governor
From all the discussion above, it can be said that centralization is a place that is considered the center. Well, Grameds is an explanation of centralization which is complemented by an explanation of decentralization and deconcentration. Hopefully all the discussion above is useful and can broaden your insight.