Bureaucracy: Centralization & Decentralization

ByGROUP-8Debojit Roy – H66Sritanu Das Mahapatra – H57Abhisek Sahu – H3Krishnakant Pandey – H25Biswajit Ghosh – H12

ORGANISATION STRUCTURE

• A social unit deliberately constructed to seek specific goals

• Characterised by: planned divisions of responsibility power centres to control its efforts an explicit hierarchy and a well defined structure a communication network

• All organisations are ‘goals led open systems’

Six key elements to be addressed when designing structure:

• Work Specialisation• Departmentalisation• Chain of Command (Scalar Chain)• Span of Control (Number of subordinates reporting

directly to a manager or supervisor.)• Centralisation and Decentralisation• Formalisation

ORGANISATIONAL STRUCTURE - KEY TERMS

• Formalisation - The degree to which jobs within the organization are standardized.

• Specialisation - degree to which tasks are divided into separate jobs

• Centralisation - describes the locus of decision making in the organisation; centralised organisations are characterised by a concentration of decision making at the top of the management hierarchy

• Departmentalization - The basis by which jobs are grouped together.

ORGANISATIONAL STRUCTURE - KEY TERMS

• Chain of Command - The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom.

• Decentralization - The degree to which decision making is spread throughout the organization.

Bureaucracy

• A structure of highly operating routine tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command.

Hierarchy Tall and flat forms Span of control Time span of discretion

Bureaucratic structure

CLASSICAL APPROACH• Emphasis on purpose, formal structure, hierarchy of

management, technical requirements and common principles of organisation.

• This perspective was concerned with structuring organisations effectively.

• Two major sub-groupings of this approach are:– Bureaucracy– Scientific Management (sometimes categorised as an

approach in its own right)

CLASSICAL APPROACH

Major Contributors:

Henri Fayol

Linda Urwick

Max Weber – most

prominent of the three.

• Weber proposed a bureaucratic form of structure that he believed would work for all organisations.

Max Weber 1864-1920

• German sociologist

• Taught law, political economy and economics

• Professor of sociology Vienna 1918

• conservative liberal - known for "Die Protestants Ethic und der Geist des Kapitalismus 1930" - debate with (the spirit of) Marx about idealism vs. structural materialism.

• Classical underpinning for organisational studies: Gouldner, Etzioni, Burns & Stalker, Mintzberg, Kanter .......

CLASSICAL APPROACH

Weber’s Ideal Bureaucracy

• Job Specialisation• Authority Hierarchy• Formal Selection• Formal Rules and

Regulations• Impersonality• Career Orientation

Criticisms of Bureaucracy

• Lack of attention to the informal organisation.

• Restriction of psychological growth

• Bureaucratic dysfunction

TALL STRUCTURES: Thought by classical theorists to be

inefficient because of:• Increased overheads• Communication problems• Ill defined management roles• Duplication of effort• Planning and co-ordination problems• However, a contemporary view is that tall

structures may facilitate team working, with all its attendant benefits

FLAT STRUCTURES:

• Result in delegation (motivational)

• Facilitate communication

• Clarify management hierarchies

• Result in meaningful progression for employees (less frequent promotions, but greater increases in authority between levels)

Flat Tall

In order to work, a flatstructure requires thorough training

for staff at each level

Tall or Flat Bureaucracy?

Tall bureaucracy If tasks are high in

ambiguity If the time span of

discretion of the top job is very long (20 yrs 7 levels)

Flat bureaucracy-make as flat as possible, especially if

jobs are very standardized

decisions are decentralized

If the time span of discretion of the top job is short (1 yr 3 levels)

Note: time span of discretion = how long it takes to see the outcomes of your decisions

SPAN OF CONTROL• Basic building block of organisational

structure

• Simply - number of subordinates who report to each manager

• 1 - 10: narrow span

• 11+: wide span

• Determines whether the organisation has a TALL or a FLAT structure

SPAN DETERMINED BY:

• Manager’s ability• Subordinates’ abilities• Similarity of subordinates’ work• Nature of potential problems• Amount of ‘self help’ available to subordinates• Nature of controls required• Availability of managerial support

1

4

16

64

256

1,024

4,096

(highest) 1

8

64

512

4,096

1

2

3

4

5

6

7

orga

nis

atio

nal

leve

lMembers at each level

ASSUMING SPAN OF 4 ASSUMING SPAN OF 8

Operatives: 4,096 Operatives: 4,096 Managers (levels1-6): 1,396 Managers (levels1-4): 585 Ratio of 1:4 Ratio of 1:8

Levels and span of control

Centralisation and Decentralised

Centralisation and Decentralised

• Centralisation - refers to the concentration of authority and responsibility for decision making in the hands of managers at the top of an organisation.

• Decentralisation - refers to authority and responsibility for decision making being dispersed more widely downwards and given the to operating units, branches and lower-level managers.

CENTRALISATION

• Senior mgt can exercise greater control• Procedures can be centralised for

organisation as a whole• Decisions can be taken from a global

perspective• Easier to maintain ‘balance’ between

departments and functions• Senior mgt more experienced decision

makers• Centralised management better in times of

crisis

DECENTRALISATION• Reduced stress and burden on senior

management.• Greater job satisfaction for subordinates• Subordinates may have better ‘local’

knowledge• Delegation increases flexibility and

responsiveness to change• Decentralisation can be used to train

managers• Decentralisation may lead to improved control

DifferenceDifference

• Centralised– greater uniformity in

decisions;– more control;– fewer skilled

managers required;– Less extensive plan

and reporting procedures;

– Faster decision process.

• Decentralised– Lower-level decisions

are easier;– Lower-level

management problems can be dealt on the spot;

– Greater motivation and better opportunities for lower-level managers;

– Top-level managers have more time for strategic planning.

Examples

• Centralized Structure:

Tata Telesrvice Ltd.

• Decentralized Structure:

Infosys.