Centralization vs Decentralization

Centralization vs Decentralization

In this video, we’re going to talk about
the difference between centralization
and decentralization in organizations. So
let’s unpack the details.
Hello again friends. Alex Lyon here. If you’ve never
tuned in to this channel before,
Communication Coach, we put out weekly
videos on professional communication and
leadership skills. And today we’re going
to talk about Centralization versus
Decentralization in organizational
settings. I think once you see each of
these in their side-by-side comparisons
you’ll be able to see your own personal
experience a little bit more clearly and
understand how organizations work. and
as we talk about each of these, I would
like to invite you to make a comment
below, in that section below the video,
about where you see the strengths and the
disadvantages under each of these models.
So let’s start with the centralized
style of organizational structure. This
is where you see all of the power
concentrated in a single individual or a
small group of individuals. In fact, the
tell-tale sign you’re dealing with a
centralized type of organization is
where the top boss is the president CEO
and chairman of the board. that’s highly
centralized authority under one person.
And as a result all of the power
authority and the decision-making power
is held in that person’s hands. So a lot
of times what you’ll see is quite a bit
of top-down communication where the
person in the top position makes a
decision and hands that communication
down, hands a decision down, and the
communication flows down the chain of
command all the way eventually down to
the people at their front line of the
organization. So in that way you have
what we call the classic hierarchy. You
have all of these levels represented
like in a military style where you have
the top general, so to speak, the top
officers and then all the middle people
and then finally the frontline
supervisors and frontline employees. So
it’s a pyramid if you will. And as part
of every pyramid you also frequently see
division of labor where each of these
jobs is broken up into small little
pieces. So you might do one little thing
and then hand it off to the next person.
It’s a little bit like an assembly line
where everybody just has one little
tiny piece of the job to complete the
job overall in the end. Now even if
you’re in an office setting, by the way,
you can still feel this assembly line
philosophy woven into this hierarchy and
this division of labor style that you
often see in a centralized style of
organization. So what we end up with is
something that is tightly coupled, a
system that has tight coupling. so
everything in the organization is
directly connected and if one thing
happens in this department the other
departments feel the jolt. so anytime
something happens in an assembly line,
let’s say you’re going from A to Z to
finish your product. If something happens
at Step C the whole assembly line
has to stop. And that becomes a really
big problem for the organization because
all the work grinds to complete halt. so
that’s a tightly coupled. Now the upside
of a centralized style of organization
is control and stability. In fact the
whole thing is designed for control. So
if you consider that an advantage than
it is. the downside is that they’re not
very flexible. So if change happens
they’re pretty bad at adapting to that
change especially in the marketplace. And
also they’re really bad at upward
communication, that bottom-up
communication. So if there’s good feedback from employees or from customers, it
doesn’t really make it to the top level
decision-makers through all those levels
of hierarchy. And if they do hear about
something, it’s usually distorted or
tainted a little bit. So that’s the
centralized style. Now let’s contrast
that with the decentralized style of
organizations. This is where the
control is spread out. So you don’t have
one person who is the Chairman the CEO and
the president. You have people in
different positions like this so that
decision-making power is somewhat spread
out. Authority is somewhat spread out.
Just like in the states of the United
States. We have 50 states we have a
central government, but let’s just pretend
for a minute that our country was more
emphasized on the state-level control.
that would be a little bit more
decentralized and it’s the same way an
organizations. When power is distributed
between and among the teams or the units or the department heads, that’s a little
bit more decentralized so it doesn’t all
have to go through the people at the
very very top of the hierarchy. And so as
a result you often have decision-making
power as well as communication
spread out throughout the groups and the
team. So lots more communication between and among team members on a team and
between it among the teams themselves.
So, not a hierarchy and division of labour
but this team-based work. So you have a
lot of cross-training. People know how to
do multiple jobs and know how to learn
over time through cross-training. how to
work with others outside of their
immediate department. You end up with
something called a loosely coupled
system. So instead of an assembly line
where it’s tightly coupled and
everything is directly affecting the
other, a loosely coupled system is where
the pieces are still connected but the
connection is more of an interdependent
connection. So if one team has a problem
it’s not likely to directly affect the
other teams. they might feel some
influence eventually but the other teams
can keep working. The assembly line
doesn’t grind to a halt because it’s not
organized that way. so the advantages of
a decentralized organization obviously
it’s flexible and adaptable to changes
in the marketplace. And usually teams
produce very high-quality products and
services. the downside is that
coordination is not automatic and teams
have to learn over time to get better at
communicating between and among the team
so that they’re not just working in a
completely isolated fashion. they have to
work all together as well at times. so
those are contrasting look and a
comparison at centralized versus
decentralized organizations. As I put
these side-by-side here, I would like to
ask you which one do you most relates
you. Where do you see yourself in each of
these in your professional experience?
Again, as I mentioned, I would love to
hear you comment in that section below
the video. I look forward to reading
those comments. If you have never
subscribed to this channel, I invite you
to do so. As I mentioned we put out
weekly content on professional
communication and leadership skills. So
until next time, God bless and I will see
you in the next video.


  1. Coach, thanks. Still fighting trials that come with blessings. Soon. Secret. Hit the like button puts your channel on my algorithm making it easier to find your channel for ref. Created 5 categories of like for better management. Days/hours away from showing how to create individual/personal algorithms to use the power of YouTube to feed the skills, a combination of tasks, necessary to get more from life, even get out of bed after 8 years following a car accident. You are on this journey with me. You are my clear, concise communication coach. Soon.

  2. I prefer decentralized system which seems more flexible. My company is kind of fit the decentralized model, different teams, can participate in the decision making more or less. But the communication within this system in my company's case doesn’t go well, too much noise in there, making the whole communication become spotty and inefficient.

  3. Those two types of org have each advantage and disadvantage, it must apply by different type of company, centralization is suitable for manufactury or facility, but decentraliazation is suitable for inovation or creation company, such as IT industrial.

  4. Thank you so very much i really didn't know how to differentiate centralisation from decentralisation and here you nailed it for me.

  5. I think decentralized sounds like a healthier work place where people like they are contributing more and what they implement matters, but I am more accustomed to the Centralized way, which is not always a bad thing.

  6. Thanks for the lessons!
    i have these questions.
    If the CEO despite having a good supporting team, is finding it difficulty keeping up with the many decisions of importance in the company and the company decides to reorganize into segments which will be headed by managing directors. 1. What decision areas might reasonably be retained at the company head office? 2. and what decision areas should be transferred to the new managing directors if such a reorganization is to achieve its objectives?

    anyone with idea please!!!!!

  7. Thank you for explaining the assembly line method between centralized and decentralized model versions. Tightly coupled and loosely coupled system made me think of a train.

  8. centralization is good for those types of organizations where there is very less creativity and which does not involve general people, like oil and mineral extraction, internet and electric connections..on the other hand decentralization is good for organization requiring innovation and creativity and which directly affects the general masses, like health, technology, media

  9. I've ever tried to avoid having a close encounter with the communism, but it didn't make any sense, because you know the country is under the communism, or the government claims the country is socialism with national characters. I've worked in an area where the communism is, and I know what the centralized means.

  10. I wouldn't want a decentralised military. Top-down communication is built into it. But then I wouldn't want a centralised government. Too much power in the hands of one person.

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