Centralization vs Decentralization - YouTube

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.