Difference Between Centralisation and Decentralisation

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Differences Between Centralisation and Decentralisation

Centralisation / Decentralisation
Centralisation / Decentralisation

Meaning of Centralization and Decentralization

The principles of centralization and decentralization are more or less two sides of the same coin. While centralization holds that it is possible to improve administrative effectiveness by concentrating decision-making in one coordinating body, decentralization, on the other hand, states that decision-making can only be enhanced by delegating decision-making to lower level governments of subordinate units.

Centralisation vs Decentralisation – What are the Differences?

Centralization Decentralization
Definition Form of management in which power is subject to a single authority or entity. Form of management in which power is distributed among several authorities or entities.
  • A lot of power in a few hands.
  • Unilateral decisions.
  • Vertical hierarchy.
  • Authorization from the central power is required to execute actions.
  • Power is shared between several instances.
  • The procedures of each instance are independent.
  • Each department can make its own decisions.
  • There may be different levels of decentralization.
  • Administrative.
  • Organizational.
  • Vertical
  • Horizontal
  • Territorial
  • Fiscal
  • Centralized communications.
  • High staff training.
  • Tasks are not duplicated.
  • Strong leadership.
  • More efficient processes.
  • Higher levels of professional specialization.
  • Less bureaucracy.
  • Administration of own resources.
  • Greater sense of commitment from the authorities involved.
  • Distance between the central power and subordinates.
  • The lack of participation of other instances can generate frustration.
  • Bureaucracy.
  • If the central power fails, the rest of the administrative structure fails.
  • Risk of duplication of tasks.
  • Each instance tends to work on its own, hindering common achievements.
  • If there is no training, the model may fail.

In simple terms, centralization seeks to strengthen the centre while decentralization suggests that the centre must be weakened and stripped of some of its functions in order to increase governmental effectiveness. But they both have the same objective, which is to increase the effectiveness of government.

As such, a good balance has to be found between centralization and decentralization.

There is large differences that shows the degree of centralization and decentralization of government, to some extent, in modern states. The closer a government is to the Unitarianism or Federalism of the pyramid, the greater the degree of centralization.

On the other hand, the farther a government is from the unitary form of government and closer to Confederal Government of the pyramid, the greater the degree of decentralization.

A unitary state therefore has the most centralized form of government. This should not be a surprise since a unitary state has only one source of authority which is the central government.

In a federation, there is some degree of power sharing. There is division of power between the central government and state or regional governments which, at least in theory, are equal and independent of each other.

A confederation is a more decentralized form of government. Here, the general (central) government is dependent on the state governments.

But the separate independent states which have no unifying central government are the most decentralized form of government. This was the system of government that existed in the United States of America before the American War of Independence.

International institutions such as the United Nations, European Union and African Union also fall into this category.

Advantages of Centralization and Decentralization

Both centralization and decentralization have a number of advantages in terms of the management of authority and its effectiveness.

Advantages of Centralisation

  • Those with the power and authority to make decisions have a broad vision of the business or government.
  • It enables decision-making to be uniform at a general level, which facilitates the application of work methods and policies.
  • Avoid doing the same job more than once due to problems or lack of communication.
  • Those with greater authority must have specialized training that corresponds to their obligations. In other words, it implies more training and knowledge.

Advantages of Decentralisation

  • The training of lower hierarchies is increased.
  • The department heads are the ones who make the decisions directly, so that better use and use of time is made.
  • You can have greater control in certain labor or government issues.
  • The training of subordinate personnel is increased.

Disadvantages of Centralization and Decentralization

Also, both centralization and decentralization have various disadvantages that can make people doubt which of these is more convenient. However, one or the other option will be less recommended depending on the situation to which it refers.

Disadvantages of Centralisation

  • There are usually delays in communication or guidance due to the distance between the authorities and other subordinates.
  • The bosses or authorities are usually overloaded with work due to the large number of tasks they must attend to.
  • Limits the development of subdivisions and reduces employee motivation.
  • Many times the authorities are unaware of the problems of the other departments he directs.

Disadvantages of Decentralisation

  • Sometimes the decisions of departments or organizations are not aligned according to the general terms that govern them.
  • There may be loss of time and money if two or more people unknowingly work on the same task that can be solved by only one.
  • The knowledge of the specialists is not taken into account because they belong to the central department of the company or organization.
  • It may happen that the departments do not have the appropriate equipment for the development of their tasks due to lack of training.
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