Page 36 - Managing Change in Organizations

CarnCh02v3.qxd 3/30/07 4:09 PM Page 19

The dilemmas of organization
any particular case. We have already examined these in the various management
structures considered earlier in this chapter, each discussed in the context of the
growth of organizations. And I said there that currently, in many organizations,
managers are creating structures which both centralize and decentralize; namely,
to centralize key issues such as finance, business development, acquisition, cor-
porate strategy and management development, but to decentralize opera-
tional/profit accountability to the unit, whether a business unit or some other
unit (a school, hospital, police force, etc.).
As will be clear already, there are arguments for and against centralization and
these depend on the circumstances. These issues are addressed at length by
Brooke (1984) and are summarized by Child (1984) as follows.

For centralization

1 Coordination is more straightforward if decisions are made at clearly recog-
nized points within the organizational structure.
2 Senior management have a broader perspective on developments within the
organization and maintain conformity with established policies. They are more
likely to keep up to date with recent developments throughout the industrial
sector.
3 Centralization of control and procedures provides a way of assisting the vari-
ous functional areas in the organization – research and development, production,
personnel, finance and administration – to maintain an appropriate balance.
This occurs by centralizing decisions on resource allocation, functional policies,
targets and human resource matters.
4 Centralization can allow rationalization of managerial overheads by avoiding
duplication of activities or resources where similar activities are being carried
out independently in divisions or subunits.
5 Top managers are seen to have proved themselves by the time they reach a sen-
ior position. Although a point in favour of centralization, there is a danger that
management can adopt the attitude that purely because they are at the top,
they are right.
6 Crises often require strong leadership to cope with external and internal pres-
sures. Centralization of power and control of procedures focus on a key person
or group. Thus arises the opportunity for speedy decision making and control
over communication and coordination.

For decentralization

1 Delegation can reduce the amount of stress and overload experienced by sen-
ior management, especially when operating in large-scale, complex organiza-
tions. When senior management become overloaded, the exercise of control
is diminished. Delegation can remove some of the burden from senior man-
agement allowing them to spend more time on policy issues and long-term
planning.

19