Article written by Adam

26 responses to “Centralization vs. Decentralization”

  1. emmanuel

    is there always decentralizing tendency in any organization?if so why?

  2. Adam H

    Adam,
    Very interesting article. Much of the management science is looking more and more at bottom up decision-making as opposed to top-down for the reasons you mention.
    It works in economics too, as far as decentralization of information and decisions.
    Have you read Hayek’s essay: The Use of Knowledge in Society?
    http://www.econlib.org/library/Essays/hykKnw1.html
    I think you would like it. It’s an all time classic. He was on to something way back then…
    Adam

  3. Enrico Talao

    If the company is in centralized structure now and its getting bigger so that centralization is no longer appropriate at some point, what are the warning signs that decentralization is best?

    When is the best time to alert top management that decentralization could be a solution for the above?

  4. Anne

    Hi Adam,

    Your articles and responses are very insightful. Thank you.

    Our manufacturing company (1200 employees – and a subsidiary of a major global organization) is considering centralization of certain divisions. In your postings, you mainly focus on centralization vs. decentralization. Can you provide some additional insights into what divisions or functions, (for example, IT, purchasing, administration, engineering, strategy, maintenance, etc.), are best suited for centralization? In addition, if you have any guidance as to what materials, papers, etc. are available on the internet to assist me in this evaluation, I would much appreciate it.

    Thanks.

  5. Vivian Guarin

    is it possible to centralize an adademic library with four different branches of different location? because of this scarcity of librarians and limited number of resources and materials

  6. cindi

    hi there,
    very nice article. what’s the name of this textbook please?
    i’m really interested.
    thanks

  7. Adam Pieniazek

    Cindi, the textbook is Management by Stephen Robbins and Mary Coulter.

    Note, that is an affiliate link so if you do order the textbook via Amazon I receive a small piece of the pie from Amazon to help pay for the upkeep of this site.
    :-)

    Thanks for stopping by!

  8. khurram

    Centralization:-
    A function of how much decision-making authority is pushed down to lower levels in an organization; the more centralized an organization, the higher the level at which decisions are made.

    Decentralization:-
    The pushing down of decision-making authority to the lowest levels of an organization.

    In your opinion, which of the above (Centralization vs. Decentralization) is a more successful method of management and why?

    What you think about it,

  9. Adam Pieniazek

    Honestly khurram it depends on the specific organization being looked at. In reality, we probably need a little bit of both, as a completely decentralized organization will not have a top level direction, while a completely centralized organization will stagnate and drive away creative employees.

    If I had to choose one I would go with decentralized structure as it empowers employees and frees up the boss/owner to focus on the big picture.

  10. JAIRUE CAFE

    what are the benefits gain in decentralization and centralization company? especially in organic structure(decentralization), organic structure (centalized). what company’s usually use this kind of structure.

    thanks.

  11. bob

    why is centeralization the best techniques that busness could use?

  12. mark yong and jolly

    thanks for all the coments.
    it really helps us answer our case analysis in our management class her in the Philippines

  13. Paolo

    Dear Adam,

    thanks a lot for all the articles and the extensive replies. It is a great services you offer to however is interested in this subject.

    i really admire people like you that share their experience freely.

    Regards,

    Paolo

  14. nadea andrea

    hi Adam and member of the floor..
    thnx so much by exchange the idea about decentralization and centralization…it really help me a lot in order to complete my assignmnet. althought i study about government and rest of you talk in business, but the concept still same and i still able to apply and adopt in my task.

    thnx again.

  15. Ken

    Hi Adam,

    Very nice article about the relationship between centralization and decentralization!!

    Both centralization and decentralization are important. The severe economic recession may be caused by the decentralization because the government does not have a centralized control of the companies. In my opinion, it is also important to introduce the predict mechanism because the situation may be drastically worse when the managers realize the real situation.

    Generally, it is hard to solve all problems because it is up to human beings who act and decide.

  16. Adam Pieniazek

    Thanks Ken.

    The recession might be caused by decentralization, but likewise some of it is due to the government exuding too much control, for instance forcing companies to give mortgages to unqualified buyers in an attempt to boost home ownership.

    Yes, managers it seems take a particularly optimistic view. Part of the job description almost requires it, because if your boss is gloomy about business prospects you’ll likely begin looking for other work ahead of time and thus your performance and your company’s performance will suffer. I don’t blame CEOs for being cheerleaders for their companies and saying everything will be OK, however the media, government, and investors should have realized this and not blindly accepted a CEO’s words as truth.

    Thanks for the thoughtful comment Ken.

  17. Adam

    I don’t appreciate the disrespect to Al Davis.

  18. eslam

    whats mean by centralization i mean its real meaning or how we use it in organizations

  19. fahim khan

    salam
    sir i hav one qustion that in decentralized organiztion is it possble that the low managment or workers can directly contect with top management with out interferance of middle level management?
    plese reaply me

    1. Adam Pieniazek

      Sure it’s possible fahim. A decentralized organization aims to keep interference low and open up communication channels so members of the organization can talk to each other directly when necessary. Whether it’s feasible for huge organization to open up the communication channel to their top management to all members within the organization is another matter (imagine a CEO getting e-mails from the 20,000+ workers at his/her company). It’s possible and ideal to have open communication, and with our technology today is feasible, as long as everyone uses discretion (e.g. doesn’t copy the CEO on every single e-mail, etc.).

  20. Gade

    Your artical is useful to me very much because i have an exam tomorrow and i can’t figure it out about the different between centralized and decentralized.

    Thank you again

  21. Jonathan

    I think most companies should operate under a decentralized organization. Employees and low level supervisors should have the oppurtunity to voice his or her opinions. The opinions should be reviewed by upper management, and the low end employees should have a good explanation behind his or her opinion. Too many businesses are hurting now because the upper management did not attend college or only have a bachelor’s degree. Not to disrespect them, but there are employees that have the experience and knowledge to have changed some things.

    Employees would be happier and more motivated to carry out the vision and mission of the company if he or she feels that they are really a part of the company in that way. You can’t tell someone that they are an excellent employee or the team lead but will not give them the opportunity to control that. In order to properly control a low end position there needs to be assistance from the chain of command. Some companies do need centralized structures due to risky markets and uneducated employees on a global level.

    It is up to the top management to decide this, but even if centralized is chosen managers should not forget to what goes down doesn’t come up always. What goes up must come down, and the organization would be more intact as a whole and aware of unsensitive inforamtion and innovation.