Marketing91

  • Home
  • Categories
    • Marketing
      • Advertising
      • Branding
      • Sales
      • Retailing
      • Consumer Behavior
      • Distribution
      • Market Research
      • Pricing
      • Product Management
      • Strategy
      • Segmentation
      • Targeting
      • Positioning
      • Services Marketing
      • Articles
    • Digital Marketing
      • Blogging
      • SEO
      • E-commerce
      • Email marketing
      • Social Media Marketing
      • Facebook Marketing
    • Brands Analysis
      • Marketing Mix
      • SWOT of Brands
      • Strategies
      • Competitors
      • Lists
      • Expensive
    • Management
      • Customer Management
      • Communication
      • Leadership
      • Decision Making
      • Delegation
      • Organizational Management
      • Motivation
      • Personal Development
      • Project Management
      • Risk Management
      • Team Management
      • Time Management
    • Careers
      • Interviews
    • Business
      • Business Models
      • Logistics
      • Supply Chain
    • Human Resources
    • Skills
  • News
  • About Us
    • Contact Us
  • Academy

Differences Between Centralized And Decentralized Organization

May 4, 2018 By Hitesh Bhasin Filed Under: Organizational Management

Organizations vary in their structure and the structure is decided by the type of business an organization is involved in, leadership style of the founder, owner etc.

In this article we will look at what the differences between centralised organization and decentralised organization are.

What is A centralized organization?

A centralised organization is one where core important decisions are taken by those at a higher level of authority. All important decisions are routed through this channel and are taken by those who are in a position to look at things from a broader perspective and have gained a lot of knowledge and experience over the years. After the decision is taken, it is communicated to the lower level employees who are expected to follow the orders.

This kind of a structure depends heavily on certain key people to conceptualise and implement certain key decisions. This needn’t mean that there is just one person making all the decisions in the organization. People at different levels are authorised but, unlike decentralised organizations, there is less team based decision making and more of individual decision making.

To read more on centralized organizations, please click here.

What is a Decentralized Organization?

A decentralised organization, as the name suggests, is one where the decision making authority is not solely in the hands of a particular group or figure but with multiple people at multiple levels of the hierarchy.

In this type of an organization, most of the decisions are made by middle level or lower level employees rather than being made by the top management, as is the case with centralised organizations.

To read more on Decentralized organization, click here.

The designations and hierarchy in both centralised and decentralised organizations might be the same but the levels at which decisions are taken differ greatly.

Differences Between Centralized And Decentralized Organization

A major point of difference between centralized organization and decentralized organization is the direction in which the flow of information happens.

  • In a centralised organization, there is a presence of vertical flow of information. The orders come from the senior management and follows a top to bottom approach and the junior and middle management report to the seniors thereby creating a down to up flow of information.
  • In a decentralised organization, there is vertical and horizontal flow of information. Senior management, middle management and the junior management are all connected to each other. There is also free flow of information between employees in a particular level of management
  • Centralised organizations are best fit for companies of a smaller size. The central figure of authority is then able to make better and more well informed decisions. This is also fit for boutique consulting firms etc.
  • A decentralised model is best suited for huge multinationals that operate in many countries and have diversified employees to manage and varied rules and regulations to adhere to.
  • The environment of a company and is sustenance is mostly stable in centralised organisations since the decisions are taken by a central authority which are consistent with each other.
  • A decentralised organization is more prone to instability and uncertainty. Decisions taken in a decentralised organization are not always in sync because they are taken by different centres of power that do not always think and act alike. There is also a lot of scope for personal bias to creep in, in decentralised organizations since employees can put their personal interest before that of an organization.
  • Middle & lower management in a centralised company are not used to decision making and would rather be decision followers rather than decision makers.
  • Middle and lower management are more skilled and equipped at decision making in a decentralised organization because they have the experience of decision making. They are also more innovative and can think out of the box. The scenario is not the same in a centralised organization.
  • The main outcome or objective of a centralised organization is that the whole burden falls on the shoulders of a particular body.
  • The objective of a decentralised system is that the burden is shared.
Also Read  What is a Centralized organization and how does it work?

The above are the major differences between centralized and decentralized organizations. No single method is perfect. Depending on the type and scale of the company, the type of organization and its structure can be decided.

Liked this post? Check out these detailed articles on Topic of Organizational Management

Alternatively, check out the Marketing91 Academy, which provides you access to 10+ marketing courses and 100s of Case studies.

Marketing91 Academy

About Hitesh Bhasin

Hi, I am an MBA and the CEO of Marketing91. I am a Digital Marketer and an Entrepreneur with 12 Years of experience in Business and Marketing. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. You will generally find me online at the Marketing91 Academy.

Related posts:

  1. What is a Centralized organization and how does it work?
  2. What is Decentralized organization and advantages of how does it work?
  3. What is a Mechanistic Organization? Organization Structure Explained With Best Example
  4. Functional Organization: Definition, Examples, Features, and Advantages
  5. Matrix Organization: Structure, Types, Examples, and Advantages
  6. What is a Bureaucratic Organization?
  7. What is a Coercive Organization?
  8. Perceptual Organization – Definition, Meaning And Principles
  9. Project Organization – Definition, Types and Chart
  10. What is Political Organization? Types and Benefits Explained

Join the Marketing91 Academy

Marketing Masterclass

Management Masterclass

Management Masterclass

Communication Course

Communication Masterclass

View All Courses
Economics Masterclass

Economics Masterclass

Sales Masterclass

Sales
Masterclass

Advertising Masterclass

Advertising Masterclass

View All Courses
Leadership Masterclass

Leadership Masterclass

Branding Masterclass

Branding
Masterclass

Strategy Masterclass

Strategy
Masterclass

View All Courses
Not found what you are looking for? Search this website.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Advertisement
Recent Posts
  • 11 Marketing lessons from Facebook
  • Informational Power: Definition, Sources and Importance
  • Reward Power in Leadership: Definition and Examples
  • Expert Power: Definition, Examples and Development
  • Legitimate Power: Definition, Examples, Advantages and Disadvantages
Advertisement

Marketing91

MORE INFO

  • About Marketing91
  • Marketing91 Team
  • Privacy Policy
  • Cookie Policy
  • Disclaimer
  • Terms of Use
  • Editorial Policy
  • Advertise
  • Contact us
  • Sitemap

WE WRITE ON

  • Marketing
  • Business
  • Management
  • Brands
  • Digital Marketing
Search
[email protected]

Copyright © 2023 Marketing91 All Rights Reserved