 The decision-making authority in an organization is important. As we learn about evaluating the performance of an operating unit and the management team, it is critical to understand where the decision-making power lies. Generally, there are two main approaches to decision-making from an organizational perspective, centralized decision-making, and decentralized decision-making. Since the inception of business, most organizations have held the power to make decisions in the hands of relatively few. We call this centralized decision-making. Generally, an owner makes all the decisions for a business. As the business grows, more and more levels of management are added, and it creates a tall organizational chart. There are some advantages to this approach, including coordinating activities towards common goals and being able to enact change fairly quickly. In the past 20 or 30 years, though, we've seen a shift away from centralized decision-making towards decentralized decision-making. Often, organizations that decentralized decision-making have flat organizational charts, whereas several mid-level management functions have been eliminated. Some advantages to this approach include faster decision-making. It frees up top management for more strategic decision-making, and it empowers employees to meet the needs of customers in changing and diverse markets.