Difference Between Centralization and Decentralization (with Comparison Chart)

centralization vs decentralization Centralization and Decentralization are the two types of structures, that can be found in the constitution, government, management and even in purchasing. Centralization of authority means the world power of plan and decision make are entirely in the hands of clear management. It alludes to the concentration of all the powers at the apex level .
On the other hand, Decentralization refers to the dispersion of powers by the top management to the middle or low-level management. It is the deputation of assurance, at all the levels of management .
To determine whether an organization is centralized or decentralized greatly depends on the location of decision-making authority and the degree of decision-making power at lower levels. There is a never ending consider between these two terms to prove which one is better. In this article, significant differences between Centralization and Decentralization, in an constitution is explained.

Content: Centralization Vs Decentralization

Comparison Chart

Basis for ComparisonCentralizationDecentralization

MeaningThe retention of powers and authority with respect to planning and decisions, with the top management, is known as Centralization.The dissemination of authority, responsibility and accountability to the various management levels, is known as Decentralization.

InvolvesSystematic and consistent reservation of authority.Systematic dispersal of authority.

Communication FlowVerticalOpen and Free

Decision MakingSlowComparatively faster

AdvantageProper coordination and LeadershipSharing of burden and responsibility

Power of decision makingLies with the top management.Multiple persons have the power of decision making.

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Implemented whenInadequate control over the organizationConsiderable control over the organization

Best suited forSmall sized organizationLarge sized organization

Definition of Centralization

A pivot localization or group of managerial personnel for the planning and decision-making or taking activities of the organization is known as Centralization. In this character of constitution, all the important rights and powers are in the hands of the top floor management .
In earlier times, centralization policy was the most normally practiced in every organization to retain all the powers in the central location. They have wide control condition over the activities of the center or low-level management. apart from that personal leadership and coordination can besides be seen equally good as work can besides be distributed easily among workers .
however, due to the concentration of authority and responsibility, the subordinate employee ’ s function in the arrangement is diminished because of all the right vests with the heading office. therefore, the junior staff is only to follow the commands of the top managers and officiate consequently ; they are not allowed to take an active character in the decision-making purposes. sometimes hotchpotch is created due to surfeit workload, which results in hasty decisions. bureaucracy and Red-tapism are besides one of the disadvantages of centralization.

Definition of Decentralization

The assignment of authorities and responsibilities by the top level management to the center or subordinate management is known as decentralization. It is the perfect opposite of centralization, in which the decision-making powers are delegated to the departmental, divisional, unit or center flat managers, organization-wide. decentralization can besides be said as an addition to Delegation of authority .
At salute, due to the increase in competition, managers take the decision regarding for the delegating of authority to the subordinates. Due to which the running level managers get a gamble to perform well, ampere well as freedom of knead, is besides there. furthermore, they share the duty of the high-level managers which results in quick decision make and preservation of clock. It is a very effective march for the expansion of the commercial enterprise arrangement, like for mergers and acquisitions .
Although, decentralization lacks leadership and coordination, which leads to inefficient control over the organization. For an effective decentralization serve, open and detached communication in the constitution must be there .

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Key Differences Between Centralization and Decentralization

The points given below are noteworthy, so far as the difference between centralization and decentralization is concerned :

  1. The unification of powers and authorities, in the hands of high-level management, is known as Centralization. Decentralization means dispersal of powers and authorities by the top level to the functional level management.
  2. Centralization is the systematic and consistent concentration of authority at central points. Unlike, decentralization is the systematic delegation of authority in an organization.
  3. Centralization is best for a small sized organization, but the large sized organization should practice decentralization.
  4. Formal communication exists in the centralized organization. Conversely, in decentralization, communication stretches in all directions.
  5. In centralization due to the concentration of powers in the hands of a single person, the decision takes time. On the contrary, decentralization proves better regarding decision making as the decisions are taken much closer to the actions.
  6. There are full leadership and coordination in Centralization. Decentralization shares the burden of the top level managers.
  7. When the organization has inadequate control over the management, then centralization is implemented, whereas when the organization has full control over its management, decentralization is implemented.
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The remainder between centralization and decentralization is one of the hot topics these days. Some people think that centralization is better while others are in prefer of decentralization. In ancient times, people used to run their organization in a centralized manner, but now the scenario has been changed wholly due to rise in the rival where quick decision gain is required and consequently many organizations opted for decentralization .
At show, most of the organization are equipped wth both the features, as absolute centralization or decentralization is not possible. complete centralization in an organization not feasible because it represents that each and every single decision of the arrangement is taken by the top echelon. On the other hand, full moon fledge decentralization is an indicator of no control over the activities of subordinates. so, a balance between these two should be maintained .

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