Centralization refers to reserving authority at central points in an organization, such as reserving decision-making power and operating authority at top levels of management. Decentralization is the systematic delegation of authority to all levels of management. While centralization allows for focused vision and fast execution, it places a heavy burden on top executives. Decentralization empowers employees, relieves this burden, enables more efficient localized decision-making, and makes expansion easier, though coordination can be more difficult to maintain across divisions. Organizations must consider the tradeoffs between these approaches to structuring authority.

1. Centralization & Decentralization
Of Authority

2. • “Centralization” is the systematic and
consistent reservation of authority at central
points in the organization.
• The implication of centralization can be :-
 Reservation of decision making power at
top level.
 Reservation of operating authority with the
middle level managers.
 Reservation of operation at lower level at
the directions of the top level.

3. Different Kinds of Centralization
• Centralization of performance
• Departmental centralization
• Centralization of management

4. • Decentralization is a systematic delegation of
authority at all levels of management and in
all of the organization.
• “Everything that increasing the role of
subordinates is decentralization and that
decreases the role is centralization”
• Authority in retained by the top management
for taking major decisions.
• Decentralization pattern is wider is scope.

5. Implication of Decentralization
• Less burden on the Chief Executive as in the
case of centralization.
• Subordinates get a chance to decide and act
independently.
• Operations can be coordinated at divisional
level.
• Co-ordination to some extent is difficult to
maintain.

6. Advantage of Centralized
Organizational Structure
• Focused Vision
• Fast Execution
• Reduced Conflict
• Control and Accountability

7. Advantage of Decentralized
Organizational Structure
• Empowering Employees
• Relieving the Burden
• Preparing for Emergencies
• More Efficient Decision-Making
• Ease of Expansion