Difference Between Centralization and Decentralization

Organizations following centralized structure give importance to authority and power to take decisions to a single team with executive powers. In decentralized organizations, multiple teams having a single structure will be handling the operations. It is essential to understand the major difference between these structures for making the business successfully handle the various internal and external operations.

Structure of Management
In centralized management system every manager will be assigned a set of duties to handle a group of employees. One of the disadvantage of such system will be that the managers will not be having time for interacting with individuals. In decentralized kind of organizations several managers will have same duties and dividing duties between the managers is possible. It is also possible in decentralized organizations to take small decisions by managers concerning only a particular team.

Flow of Information
In organizations having centralized management system the decision is taken by the managers at the top level and the information is passed through various levels to reach the employees. It is also possible for the middle-level management but the decisions are taken and the information passed to are for the lower level employees only. In the case of organizations having decentralized management system, all managers have the power to make decisions and the information may be passed on to the employees without getting approval from the top management team.