Centralization and Decentralization

Centralization

A pivot location or group of managerial personnel for the planning and decision-making or taking activities of the organization is known as Centralization.
In this type of organization, all the important rights and powers are in the hands of the top level management.
Therefore, the junior staff is only to follow the commands of the top managers and function accordingly; they are not allowed to take an active part in the decision-making purposes.

The assignment of authorities and responsibilities by the top level management to the middle or low-level management is known as Decentralization.
Although, decentralization lacks leadership and coordination, which leads to inefficient control over the organization.
For an effective decentralization process, open and free communication in the organization must be there.

Differences between Centralization and Decentralization

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

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.
Centralization is the systematic and consistent concentration of authority at central points.
Unlike, decentralization is the systematic delegation of authority in an organization.
Formal communication exists in the centralized organization.
Decentralization shares the burden of the top level managers.
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.

Conclusion

The difference between centralization and decentralization is one of the hot topics these days.
Some people think that centralization is better while others are in favor of decentralization.
In ancient times, people used to run their organization in a centralized manner, but now the scenario has been changed completely due to rise in the competition where quick decision making is required and therefore many organizations opted for decentralization.
At present, most of the organization is equipped with both the features, as absolute centralization or decentralization is not possible.
Complete centralization in an organization not practicable because it represents that each and every single decision of the organization is taken by the top echelon.
On the other hand, full fledge decentralization is an indicator of no control over the activities of subordinates.
So, a balance between these two should be maintained.