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REVIEW ON RELATIONSHIP OF CENTRALISATION TO

OTHER STRUCTURAL PROPERTIES

Name

Roll Number

G Abhishek Rao
14S602
Gaurav Rajiv Gupte
14S618
Pooja Jain
14S631
Souvik Sarkar
14S649
Sanyashree
14810
Review of research paper by group AF1 (Section 6)

INTRODUCTION
This research paper is aimed at finding out the relationship between
centralisation and other structural properties present in an organisation. In
this review we took into consideration various aspects like centralisation,
formalisation and complexity. This further made us rely on issues like
occupational specialisation, professional training, job codification and rule
observation. The authors Jerald Hage and Michael Aiken have defined the
degree of formalisation and the degree of complexity as two critical
aspects where the former variable represented the relative emphasis on
the use of rules, the red tape of bureaucracy, while relative emphasis on
professional training and occupational skills was emphasised by the latter.
Target Audience
Jerald Hage is a Professor Emeritus and Co-Director of Centre for
Innovation, University of Maryland. He has developed various theories of
innovation and empathised with the organisational problems. His major
goal is to write a theory of societal change that respects alterative
pathways and distinct historical periods.
Michael Aiken is currently the Director of Communication, Research &
Evaluation in the National Transformation Program at the Office of the
Prime Minister, Jamaica House.
They both are concerned with the societal issues and the problems faced
in the organisation. Thus, they publish research papers for organisations
and so various organisations and students from various B-schools are their
target audience.

REVIEW ON RELATIONSHIP OF CENTRALISATION TO


OTHER STRUCTURAL PROPERTIES

ABSTRACT
Within an organization the centralisation and the related structural
properties such as formalisation and complexity have been subjected to
review by various eminent authors:

AUTHOR
Michael Crozier
Tannenbaum and Massarik and Worthy

PERSPECTIVE/CONTRIBUTION
Distribution of Power
Importance of allocation of power in an
organisation.
Implication of decentralisation
Max Weber
Hierarchy of authority
In this research, the relationships between centralisation and these
structural properties has been examined by the authors:
They are examining two ways in which distribution of power can be
measured in the sixteen health and welfare organizations taken under
consideration

Participation in decision making of the employees.


Hierarchy of authority.

Degree of
Centralisati
on

Hierarchy
of Authority

Exhibit 1

Participatio
n in
Descision
Making

REVIEW ON RELATIONSHIP OF CENTRALISATION TO


OTHER STRUCTURAL PROPERTIES

METHODOLOGY AND STUDY DESIGN


The study was conducted on:

16 social welfare and Health agencies which provided rehabilitation


and psychiatric services were selected.
The full-time staff size of these agencies was from 12 to several
hundreds.
Interviews were conducted on 314 full time staff members from
these 16 organizations.
The selected respondents were as follows: All the department heads
With departments less than 10 members half were selected
randomly
With departments more than 10 members one-third were
selected randomly.
Their sampling procedure divided the organization into levels and
departments.
Job occupants, in upper level
Job occupants in the lower level
All job Occupants in the upper level were included because they
were more involved in decision making.
Data collected from all the 16 organizations was pooled together
and aggregated.
For each position a social value was assigned depending on the
involvement of that particular position in decision making i.e. more
weightage was given to the position which was directly involved in
decision making as compared to other positions.
The number of interviews conducted varied from 7 to 41, based on
size of the agency.

Structural Properties:
This research paper describes three main components of the
organizational structure: Centralization, Formalization and Complexity.
The degree to which decision making is placed on a certain individual,
unit or level is called CENTRALIZATION.

REVIEW ON RELATIONSHIP OF CENTRALISATION TO


OTHER STRUCTURAL PROPERTIES
The degree to which jobs within the organization are standardized is
FORMALIZATION.
The degree of differentiation in the jobs that exist within an
organization is called COMPLEXITY.
centralization and complexity
There is an inverse relationship between Centralization and Complexity.
Greater the centralization of work decisions, the complexity in
providing professional training is less.
Centralization and formalization
High formalization can be found coupled with either a centralized or
decentralized structure. Their relationship is very ambiguous.

REVIEW ON RELATIONSHIP OF CENTRALISATION TO


OTHER STRUCTURAL PROPERTIES

FORMALIZATI
ON

JOB
CODIFICATIO
N

COMPLEXITY

NO. OF
OCCUPATION
AL
SPECIALITIES

PROFESSION
AL ACTIVITY

Exhibit 2

ASSUMPTIONS:-

PROFESSION
AL TRAINING

RULE
OBSERVATION

REVIEW ON RELATIONSHIP OF CENTRALISATION TO


OTHER STRUCTURAL PROPERTIES
Assumptions made in this study are that a system of interrelated variables
is formed by the the structural properties of an organization.
Another assumption was done while doing sampling procedure where the
employees at the higher level of hierarchy were selected as they were
most likely to make key decisions. The employees at the lower level of
hierarchy were selected randomly as they were assumed to be out of
decision making process.
This assumption made is a valid assumption as we can observe in real
time scenario the participation in decision making lies more with those
occupants at the higher level of hierarchy.

OBSERVATION:
After the study effect of centralization on structural properties were analysed
based on two components of centralization i.e. Participation in Decision
Making and Hierarchy of Authority. Other structural properties that were
taken into consideration were Job Codification, Rule Observation, Number of
Occupational Specialties, Professional Training and Professional Activity. Zero-

order correlation and Partial correlation was calculated using Pearson


Correlation coefficient. Following observations were made using this
technique.
Co-relation between participation in decision making and other
structural properties:
Participation in decision making was measured on a scale of 1to 5. If we
observe the zero-order correlation data present in the case study we can
come up with certain conclusions. The correlation between participation in
decision making and rule observation was a negative (R=-0.26). This
indicates that when less people participate in decision making, there is a
less commitment among non-participants towards new policies and as a
result there is more implementation of rules. All the three structural
properties i.e. occupational specialties, professional activity and
professional training have a strong positive correlation with participation
in decision making. This signifies the fact that when there are more
professional expertise among people resulting from training or specialized
activity then people tend to participate in decision making more or in
other words, like to work independently taking their own decision. Also
with more expertise, an employee builds certain dependability on him and
as a result the higher authority tends to include that person more in
decision making.

REVIEW ON RELATIONSHIP OF CENTRALISATION TO


OTHER STRUCTURAL PROPERTIES
On the other hand, the correlation between participation in decision
making and job codification was a weak (R=-0.12) and it was not
conclusive.
If we take into account the partial correlation co-efficient then it was
observed that for each of the variables except professional activity and
rule observation, the association with participation in decision making
remains substantially the same, even with the other five variables used as
controls.
Co-relation between hierarchy of authority and other structural
properties:
When we observe the correlation data between hierarchy of authority and
other structural properties, it is observed that only strong correlation
exists between hierarchy of authority and rule observation (R=0.43) and
also between hierarchy of authority and professional activity (R=-0.42).
From this it can be concluded that professionally active employees may
demand less amount of supervision along with more participation in
decision making. The strong zero-order and partial correlation (R= +0.53)
between hierarchy of authority and rule observation suggests that they
are the two close aspects of general property of closeness of supervision.
Combining all the data observed it can be found that correlation between
participation in decision making and other structural properties are higher
than that between hierarchy of authority and and other structural
properties. This implies that participation in decision making is more
important dimension of the distribution of power than hierarchy of
authority. Also an organization that has wide participation in decision
making is also likely to have less job codification, less rule observation,
more occupational specialties, more professional training, and more
professional activity.
Centralization, Formalization And Complexity:
There are two hypotheses that were brought into consideration. These
are:
(1)Lesser the degree of centralization, lesser is the degree of
formalization.
(2)Lesser the degree of centralization, the greater is the degree of
complexity.
But data observed showed a strong alignment with the 2 nd hypotheses but
the 1st hypotheses was very weakly supported. Indicators of low

REVIEW ON RELATIONSHIP OF CENTRALISATION TO


OTHER STRUCTURAL PROPERTIES
formalization i.e. high job codification and high rule observation were
found to have low to moderate correlation coefficient with indicators of
low centralization i.e. high participation and low hierarchy.
On the other hand, indicators of high complexity i.e. Professional training
and professional activity have strong correlation with indicators of low
centralization. This indicates that decentralized arrangement relies upon
the skills and expertise of its members while the centralized arrangement
relies upon rules.

Contribution Of Research Paper To Organizational Theory


This paper tells us the relationships between centralization, formalization
and complexity giving us a clearer view of how organizations function and
how the relationship between these dimensions affects the overall
organization.
A REAL LIFE example to see the relationships between these
dimensions is very evident in case of Indian Railways. The organizational
structure of Indian railways is a mix of centralization, complexity and
formalization. It has a highly structured organization with centralization.
Its hierarchy of authority has the union railway minister at the top of
hierarchy and two ministers of states below him in hierarchy. The railway
board works with minister of states. The railway board consists of six
members and the chairman. Thus the participation in decision making at
the highest level is shared by the railway board. This makes the structure
of the railways highly centralized.
There are various divisions of railways where various levels of managerial
positions exist increasing the number of occupational specialities. The
various departments under each division like electrical, mechanical, traffic
etc. needs high amount of professional training for the professional
activities of the railways. This makes the functioning of the railways
complex.
The Indian railways has very large number of employees almost 1.4
million. This huge work force has a large number of workers working on
railway tracks and on signalling system which requires a high level of
accuracy in working. Thus to facilitate this high level of accuracy the
railways exercises high level of job codification and rule observation. Thus
formalization in this huge organization is evident

REVIEW ON RELATIONSHIP OF CENTRALISATION TO


OTHER STRUCTURAL PROPERTIES
SCOPE OF THE RESEARCH AND ITS LIMITATIONS
The scope of this research is to establish a relationship between
centralization, formalization and complexity. The study has used some
structural properties as indicators for each of these three basic entities in
an organization so as to determine the relationship. However, the number
of indicators used here are limited and can be further increased
depending on the type of organization.
One of the research finding was that there was a negative relationship
between participation in decision making and job standardization which is
not ideally the case. As organizations which are highly centralized should
have greater standardization. But in the research we got the result
otherwise. Though this relationship can be justified considering the type of
the organization considered under study but further research is required
to determine true relationship between these indicators.
Also some of the other findings such as no relationship between hierarchy
of authority and number of departments which is to be related closely
indicates that there is need for further research into determining the
relationships.
LIMITATIONS
The 16 organizations considered for study here are of the same type i.e.
health and welfare organizations which will not give us a true
representation of the relationship between the three basic dimensions and
its indicators.
Also the organizations considered under study lies in the same
geographical area. There might be subtle variations in the relationships so
obtained if the study was conducted over the organizations belonging to
different areas and that will give a clearer picture of the relationships.
There was not adequate representation from the lower levels of the
organizations. Even though this suits this type of organization but which
may not be necessarily be true to other types of organizations.
Also the method used in the study i.e. interviews of the various employees
may not give a true representation of the relationships so obtained
through the study.
Thus, there is need for further research into finding suitable ways for
finding the relationship. Also there is further need for research into

REVIEW ON RELATIONSHIP OF CENTRALISATION TO


OTHER STRUCTURAL PROPERTIES
determining more indicators which control centralization, complexity and
formalization.

CONCLUSION
In a nutshell, this research paper tells us that in determining the
distribution of power in an organization participation in decision making
plays a dominant role. Also there is an inverse relationship between
degree of centralization and degree of complexity. Furthermore greater
occupational speciality results in decentralization.
Also there is scope for finding better indicators to measure organizational
dimensions more comprehensively.