Centralized Organizational Model

A “centralized organizational model” is a way of governing most decisions from the center of the company (e.g., headquarters, corporate groups, etc.). This means decisions are usually made from the top of the hierarchy. 

A “decentralized model” is the opposite, where most decisions are made from lower levels of the company, in local units or at the frontline. 

A “hybrid model” refers to a combination of both, where some decisions (e.g., those concerning a specific budget amount) are taken at the top and others are localized.

There are benefits to each model. Centralization generally yields better control and greater efficiency, but as decisions are made at the top, the risk is that top leaders/ senior executives lack the operational day-to-day insights of the impact of these decisions.