Difference Between Centralization and Decentralization (With Comparison Chart) - Key Differences

4/24/2018 Difference Between Centralization and Decentralization (with Comparison Chart) - Key Differences
BUSINESS FINANCE BANKING EDUCATION GENERAL LAW SCIENCE
IT
Di erence Between Centralization and

Decentralization
May 26, 2015 By Surbhi S — 15 Comments
Centralization and Decentralization are the two types of structures, that can be
found in the organization, government, management and even in purchasing.
Centralization of authority means the power of planning and decision making
are exclusively in the hands of top management. It alludes to the concentration of
all the powers at the apex level.
On the other hand, Decentralization refers to the dissemination of powers by the

top management to the middle or low-level management. It is the delegation of
authority, 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-
https://keydifferences.com/difference-between-centralization-and-decentralization.html 1/13
making power at lower levels. There is a never ending debate between these two
terms to prove which one is better. In this article, significant differences between
Centralization and Decentralization, in an organization is explained.
Content: Centralization Vs Decentralization

1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion
Comparison Chart
BASIS FOR
CENTRALIZATION DECENTRALIZATION
COMPARISON
Meaning The retention of powers and The dissemination of

authority with respect to authority, responsibility and
planning and decisions, with accountability to the various
the top management, is management levels, is known
known as Centralization. as Decentralization.
Involves Systematic and consistent Systematic dispersal of

reservation of authority. authority.
Communication Vertical Open and Free

Flow
Decision Making Slow Comparatively faster
Advantage Proper coordination and Sharing of burden and

Leadership responsibility
Power of Lies with the top Multiple persons have the

decision making management. power of decision making.
Reasons Inadequate control over the Considerable control over the

organization organization
BASIS FOR
CENTRALIZATION DECENTRALIZATION
COMPARISON
Best suited for Small sized organization Large sized organization
De nition of 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.
In earlier times, centralization policy was the most commonly practiced in every
organization to retain all the powers in the central location. They have full control
over the activities of the middle or low-level management. Apart from that personal
leadership and coordination can also be seen as well as work can also be
distributed easily among workers.
However, due to the concentration of authority and responsibility, the subordinate

employee’s role in the organization is diminished because of all the right vests with
the head office. 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. Sometimes hotchpotch is created due to excess
workload, which results in hasty decisions. Bureaucracy and Red-tapism are also
one of the disadvantages of centralization.
De nition of Decentralization
The assignment of authorities and responsibilities by the top level management to
the middle or low-level 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 level managers, organization-wide.
Decentralization can also be said as an addition to Delegation of authority.
At present, due to the increase in competition, managers take the decision

regarding for the delegation of authority to the subordinates. Due to which
the functional level managers get a chance to perform better, as well as freedom of
work, is also there. Moreover, they share the responsibility of the high-level
managers which results in quick decision making and saving of time. It is a very
effective process for the expansion of the business organization, like for mergers
and acquisitions.
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.
Key Di erences 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,

Key Differences
then centralization is implemented, whereas when the organization
6,381 likes
has full control over its management, decentralization is implemented.
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Conclusion
The difference between centralization and decentralization is one of Key the hot topics
Differences
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these days. Some people think that centralization is better while others are in favor
of decentralization. In ancient times, people used to run their
Its organization
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At present, most of the organisation are equipped wth both the features, as
absolute centralization or decentralization is not possible. Complete centralization
in an organisation not practicable because it represents that each and every single
decision of the organisation 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.
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Filed Under: Business
Comments
Debarshi says
October 5, 2015 at 6:34 pm
Thanks for this post, please post difference between formal and informal
organisation.. :
thanks in advance
Reply
Surbhi S says
October 6, 2015 at 4:20 am
Thanks for your appreciation, we will surely consider your advice
Reply
Mittaphab says
November 30, 2015 at 2:57 pm
Thank you very much for a very useful information.
Reply
ojasvii pratap singh says

December 1, 2015 at 5:01 am
thanks!!
Reply
Salim M. Msuya says

March 31, 2016 at 9:31 am
Thanks a lot for your clear information concerning about decentralization

and centralization.
Reply
Gerald L. Charles says

November 6, 2016 at 5:36 pm
Am much thank you for your contribution which led me to be sufficient in

the present of elite people. Gerald L. Charles. The student In Mount Meru
University (DED)
Reply
payal sidana says

January 9, 2017 at 3:15 am
Thanks a lot for this useful topic…
Reply
Mohamed says
January 14, 2017 at 4:16 am
Thank you for your contribution.
Reply
Praveen says
January 23, 2017 at 8:09 pm
Thans a lot
Reply
Chau says
February 23, 2017 at 10:45 pm
Thank you very much!
Reply
sonu bba says

March 12, 2017 at 10:53 pm
Very important.
Reply
Eli Bariki says

May 12, 2017 at 8:26 pm
The information was so useful to me. May you please speak about
communication, leadership, responsibility, accountability, delegation and
Administration.
Again, I appreciate your contribution to knowledge.
Reply
Surbhi S says
May 13, 2017 at 9:42 am
All the topics you mentioned are covered in the website, use search
box to get the topic of your interest.
Reply
Jephanne Mabong says

July 3, 2017 at 8:22 am
Thank you very much for this article. It helps me a lot in understanding
my school report.
Keep up the good job
Reply
MALLESHA M says
September 29, 2017 at 11:06 am
Thanks for giving lot of information about centralization and

decentralization
Reply
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BUSINESS FINANCE BANKING EDUCATION GENERAL LAW SCIENCE

Di erence Between Centralization and

On the other hand, Decentralization refers to the dissemination of powers by the

To determine whether an organization is centralized or decentralized greatly

Content: Centralization Vs Decentralization

Meaning The retention of powers and The dissemination of

Involves Systematic and consistent Systematic dispersal of

Communication Vertical Open and Free

Decision Making Slow Comparatively faster

Advantage Proper coordination and Sharing of burden and

Power of Lies with the top Multiple persons have the

Reasons Inadequate control over the Considerable control over the

Best suited for Small sized organization Large sized organization

However, due to the concentration of authority and responsibility, the subordinate

At present, due to the increase in competition, managers take the decision

Although, decentralization lacks leadership and coordination, which leads to

Key Di erences Between Centralization and

1. The unification of powers and authorities, in the hands of high-level

2. Centralization is the systematic and consistent concentration of

4. Formal communication exists in the centralized organization.

5. In centralization due to the concentration of powers in the hands of a

6. There are full leadership and coordination in Centralization.

7. When the organization has inadequate control over the management,

has full control over its management, decentralization is implemented.

Like Page Share

Be the first of your friends to like this

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Difference Between Difference Between Difference Between

Difference Between Difference Between Difference Between

Filed Under: Business

Thanks for your appreciation, we will surely consider your advice

Thank you very much for a very useful information.

ojasvii pratap singh says

Salim M. Msuya says

Thanks a lot for your clear information concerning about decentralization

Gerald L. Charles says

Am much thank you for your contribution which led me to be sufficient in

payal sidana says

Thanks a lot for this useful topic…

Thank you for your contribution.

February 23, 2017 at 10:45 pm

Thank you very much!

sonu bba says

Eli Bariki says

Jephanne Mabong says

Thanks for giving lot of information about centralization and

I'm not a robot

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Difference Between Micro and Macro

Difference Between Developed

Difference Between Management and

Difference Between Qualitative and

Difference Between Delegation and

Difference Between Formal and

Difference Between Strategic Planning

Difference Between Policies and

Difference Between Coordination and

Difference Between Unit Banking and

Difference Between Product and

Difference Between Regional Party and

Difference Between Fire Insurance and

Difference Between Unicameral and

Difference Between Direct Democracy

Difference Between Lokayukta and

Difference Between Overlapping and

Difference Between Political Science