Decentralization in business is when daily operations and decision-making power are delegated by top management to middle-and lower-level managers — and sometimes even team members.

Why would a company decentralize?

Question: Why do organizations decentralize operations? Answer: Organizations often decentralize out of necessity as they expand. The responsibility of one manager, or group of managers, to run the entire organization can become overwhelming as the number of products offered increases.

When should centralized decision making be used?

When Standards and Uniformity Matter

One overall authority in areas such as payroll, procurement, legal, quality assurance, and safety can often improve economies of scale with centralized decision making.