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DifferenceBetweenCentralizationandDecentralization(withComparisonChart)KeyDifferences

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Dierence Between Centralization and

Decentralization
May26,2015BySurbhiS 5Comments

Nowadays,twotypesoforganizationalstructurecanbeseen,whicharecentralized
anddecentralized.Centralizationofauthoritymeansthepowerofplanningand
decisionmakingareexclusivelyinthehandsoftopmanagementwhileincaseof
Decentralization,thepowersforthesamehasbeendisseminatedbythetop
managementtomiddleorlowlevelmanagement.Thereisaneverendingdebate
betweenthesetwotermstoprovewhichoneisbetter.Inthisarticlemajor
differencesbetweenCentralizationandDecentralizationisexplained.

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Content: Centralization Vs Decentralization

1.ComparisonChart
2.Definition
3.KeyDifferences
4.Conclusion

Comparison Chart
BASISFOR
COMPARISON

CENTRALIZATION

DECENTRALIZATION

Meaning

Theretentionofpowersand
authoritywithrespectto
planninganddecisions,with
thetopmanagement,is
knownasCentralization.

Thedisseminationof
authority,responsibilityand
accountabilitytothevarious
managementlevels,isknown
asDecentralization.

Communication
Flow

Vertical

OpenandFree

DecisionMaking

Slow

Comparativelyfaster

Advantage

Propercoordinationand
Leadership

Sharingofburdenand
responsibility

Powerof
decisionmaking

Lieswiththetop
management.

Multiplepersonshavethe
powerofdecisionmaking.

Reasons

Inadequatecontroloverthe

Considerablecontroloverthe

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De nition of Centralization
Apivotlocationorgroupofmanagerialpersonnelfortheplanninganddecision
makingortakingactivitiesoftheorganizationisknownasCentralization.Inthis
typeoforganization,alltheimportantrightsandpowersareinthehandsofthetop
levelmanagement.
Inearliertimes,centralizationpolicywasthemostcommonlypracticedinevery
organizationtoretainallthepowersinthecentrallocation.Theyhavefullcontrol
overtheactivitiesofthemiddleorlowlevelmanagement.Apartfromthatpersonal
leadershipandcoordinationcanalsobeseenaswellasworkcanalsobe
distributedeasilyamongworkers.
However,duetoconcentrationofauthorityandresponsibility,thesubordinate
employeesroleintheorganizationisdiminishedbecausealltherightvestswiththe
headoffice.Therefore,thejuniorstaffisonlytofollowthecommandsofthetop
managersandfunctionaccordingly,theyarenotallowedtotakeactivepartinthe
decisionmakingpurposes.Sometimeshotchpotchiscreatedduetoexcesswork
load,whichresultsinhastydecisions.BureaucracyandRedtapismarealsooneof
thedisadvantagesofcentralization.

De nition of Decentralization
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Theassignmentofauthoritiesandresponsibilitiesbythetoplevelmanagementto
themiddleorlowlevelmanagementisknownasDecentralization.Itistheperfect
oppositeofcentralization,inwhichthedecisionmakingpowersaredelegatedto
thedepartmental,divisional,unitorcenterlevelmanagers,organizationwide.
DecentralizationcanalsobesaidasanadditionoverDelegationofauthority.
Atpresent,duetotheincreaseincompetition,managerstakedecisionregarding
forthedelegationofauthoritytothesubordinates.Duetowhichthefunctional
levelmanagersgetachancetoperformbetteraswellasfreedomofworkisalso
there.Moreover,theysharetheresponsibilityofthehighlevelmanagerswhich
resultsinquickdecisionmakingandsavingoftime.Itisveryhelpfulprocessfor
theexpansionofthebusinessorganization,likeformergersandacquisitions.
Although,decentralizationlacksleadershipandcoordination,whichleadsto
inefficientcontrolovertheorganization.Foraneffectivedecentralizationprocess,
openandfreecommunicationintheorganizationmustbethere.

Key Dierences Between Centralization and

Decentralization
Thefollowingarethemajordifferencesbetweencentralizationand
decentralization:
1.Theunificationofpowersandauthorities,inthehandsofhighlevel
managementisknownasCentralization.Decentralizationmeans
dispersalofpowersandauthoritiesbythetopleveltothefunctional
levelmanagement.
2.Centralizationisbestforasmallsizedorganization,butlargesized
organizationshouldpracticedecentralization.
3.Incentralizationformalcommunicationflowisthere.Conversely,in
decentralization,communicationstretchesinalldirections.
4.Incentralizationduetoconcentrationofpowersinthehandsofa
singleperson,thedecisiontakestime.Ontheotherhand,
decentralizationprovesbetterintermsofdecisionmakingasthe
decisionsaretakenmuchclosertotheactions.
5.ThereisfullleadershipandcoordinationinCentralization.
Decentralization,sharestheburdenofthetoplevelmanagers.
6.Thereasonforcentralizationisinadequatecontroloverthe
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organization,butthereasonfordecentralizationisgoodandeffective
controloverthesame.

Conclusion
Thedifferencebetweencentralizationanddecentralizationisoneofthehottopics
thesedays.Somepeoplethinkthatcentralizationisbetterwhileothersareinfavor
ofdecentralization.Inancienttimes,peopleusedtoruntheirorganizationina
centralizedmanner,butnowthescenariohasbeenchangedcompletelyduetorise
inextremecompetitionwherequickdecisionmakingisrequiredandtherefore
manyorganizationsoptedfordecentralization.
However,centralizationstillexistsinsomeoftheorganizations.Comingtothe
point,noorganizationiscompletelycentralizedordecentralized,theyare
centralizedordecentralizedonlyuptotheextentofthedelegationofauthority.

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FiledUnder:Business

Comments

Debarshisays
October5,2015at6:34pm
Thanksforthispost,pleasepostdifferencebetweenformalandinformal
organisation..:
thanksinadvance
Reply

SurbhiSsays
October6,2015at4:20am
Thanksforyourappreciation,wewillsurelyconsideryouradvice
Reply

Mittaphabsays
November30,2015at2:57pm
Thankyouverymuchforaveryusefulinformation.
Reply
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ojasviipratapsinghsays
December1,2015at5:01am
thanks!!
Reply

SalimM.Msuyasays
March31,2016at9:31am
Thanksalotforyourclearinformationconcerningaboutdecentralization
andcentralization.
Reply

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