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.
