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.
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.
|BASIS FOR COMPARISON||CENTRALIZATION||DECENTRALIZATION|
|Meaning||The retention of powers and authority with respect to planning and decisions, with the top management, is known as Centralization.||The dissemination of authority, responsibility, and accountability to the various management levels is known as Decentralization.|
|Involves||Systematic and consistent reservation of authority.||Systematic dispersal of authority.|
|Communication Flow||Vertical||Open and Free|
|Decision Making||Slow||Comparatively faster|
|Advantage||Proper coordination and Leadership||Sharing of burden and responsibility|
|The power of decision making||Lies with the top management.||Multiple persons have the power of decision-making.|
|Reasons||Inadequate control over the organization||Considerable control over the organization|
|Best suited for||Small sized organization||Large sized organization|