Centralization vs Decentralization

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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.
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Channel: Communication Coach Alex Lyon
Views: 68,754
Rating: 4.8731279 out of 5
Keywords: communication training, communication skills, presentation skills, communication coach, Alex Lyon, centralization, centralization vs decentralization, organizational structure, hierarchy, centralization vs decentralization in management, centralized vs decentralized structures, management, what is centralization and decentralization, what is decentralization, leadership, centalization vs decentralization in authority, centralization and decentralization, mean that
Id: jviFsd4hhfE
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Length: 6min 14sec (374 seconds)
Published: Mon Feb 05 2018
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