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Relationship of Centralization to Other Structural

In: Business and Management

Submitted By Natesh
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Pages 9
Relationship of Centralization to Other Structural
Properties
Paper citation: Jerald Hage and Michael Aiken, “Administrative Science
Quarterly”
Vol. 12, No. 1 (Jun., 1967), pp. 72-92

Group AC2:
Ankit Kumar Baranwal (14F506)
Ashish Girdhar Gyanchandani (14F513)
Charu Pandey (14F516)
Natesh Bhardwaj H S (14F535)
Surya Bakshi (14F550)

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Overview
In the article titled “Relationship of Centralization to Other Structural Properties”, Jerald Hage and Michael Aiken talk about two different ways of measuring distribution of power. They collect data by conducting survey in 16 hospitals and welfare organizations of which 10 are private and 6 are public. The purpose of this article is to explore the relationship between centralization of power and two critical aspect of organizational social structure, namely; the degree of formalization and the degree of complexity. Here, Hage and Aiken measure the degree of complexity using three factors, namely; the number of occupational specialties, the amount of professional training and professional activity while on the other hand the degree of formalization is being measured in terms of degree of job codification and the amount of rule observation. The author Jerald Hage is a Professor Emeritus and Co-Director of Center for Innovation,
University of Maryland. He completed his Bachelor of Business Administration (B.B.A.), marketing from University of Wisconsin and Doctor of Philosophy (PhD) in sociology from
Columbia University in the City of New York.
The author Michael Aiken, His career, spanning more than forty years has taken him from research fellow in the University of Michigan to be Chancellor of the University of Illinois at
Urbana-Champaign. Prior to that, he had been Chair of the Sociology Department at the
University of Wisconsin.1
Target Audience
The scope of this paper is not limited to only welfare, health and educational organization.
Though, the research is based on 16 selected social welfare and health agencies’ representing both private and public players, the finding from this research holds true to most of the contemporary organizations. Since the paper explicitly discuss about centralization and its relationship between formalization and complexity, it can therefore lead to better understanding of the type of structure prevailing in a particular organization and the strategy made to achieve its

1

http://www.egosnet.org/egos/about_egos/honorary_members/2004_michael_aiken

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goal. The type of organization can be varied in nature, ranging from teams, business entities
(both profit and not for profit), governments to markets and multinational companies.
Assumptions and Evidences
Effect of Centralization on Other Structural Properties
The authors of the research paper have associated the degree of centralization to degree of participation in decision making2 and degree of reliance on the hierarchy of authority3. Here, it is assumed that the degree of centralization is based on only these two measures. The two measures are based on secondary sources as mentioned in the footnotes.
Some of the other measures which affect the degree of centralization are not considered. If we have a look on Henri Fayol’s Centralization & Decentralization Principles4, he has considered various other determinants like size of the business, the nature of the business, the experience of supervisors, the dependability of workers, and the ability of the workers that also affects the degree of centralization.
Relationship between Participation in Decision Making and other Structural Properties:
The authors based on all the 5 structural properties – job codification5, rule observation, number of occupational specialties 6 , degree of professional activity of job occupants and degree of decision making and with level of education through another set of secondary sources which included research works and theories of various renowned authors.
According to Litwak’s theory, organization having more of non-uniform tasks is more likely to be decentralized. Based on this theory the author assumes that since the sample under study are related to non-uniform tasks they essentially are more likely to be decentralized. Later they try to validate the same through their study and find the data of high variance ranging from 1.68 to
3.69 (Range - 0 to 5). This shows that the author assumptions need a larger sample size before generalizing the hypotheses.
2

A study of American Universities by American Association of University Professors & in the studies by Morse
&Reimu, KoverTannenbaum and Cillie
3
Hall, Blau& Scott and others concerned with the concept of span of control
4
http://education-portal.com/academy/lesson/centralization-fayols-principle-lesson-quiz.html#lesson
5
Weber Concept of Office
6
Goldener – Desire for functional autonomy , Strauss – Study of Purchasing Agent

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The job codification is well supported by the least variation in the score, 2.22 to 2.70 (Range – 1 to 4) and can be considered evidence for the relationship determined as backed by the primary source. Also we can see many industries of the recent times have most of their jobs codified so as to leverage the routine tasks and their decision making. If we see manufacturing sectors, eg,
Toyota, it has all its productions line codified to run in the Just in Time model. The workers need not seek authority’s approval for a process.
Rule of observation on the other hand is not backed by any researcher’s work instead has been assumed by the authors with a statement that the more policies an organization has the more is the requirement of rule observation to ensure its conformity. The primary data validates it moderately with a regression of -0.26 statin greater the rule lower is the participation of the employees in the decision making.
In the section, degree of professional activity of job occupants7 the author assumes that a person of high competence is consulted by the men with more power to help them in decision making.
The score form the primary source highly vary significantly from 0.9 to 2.5 (Range – 0 to 3) which doesn’t support the argument stated completely. Also if we look into the organizations of recent times, it is quite difficult to consult all the competent people to reach a final decision. The strategic decisions are mostly made by the board members based on the different analysis done by each department to reach a consensus.
In the level of education8 section the author derives through primary and secondary source that high level of education or training indicates high performance and quality which in turn benefits in decision making. We can relate to the contemporary organizations like Facebook, Flipkart, the recruitment policies are so stringent that they hire only highly skilled people into their organization and make them the decision makers for their domain to let them use their expertise to the fullest.
This evidences from primary sources show that with better professional training the professional activity of the organization increases. Also, the more the professionally active staff, more is the scope for occupational specialties. The results of partial correlation show that except professional

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Blau& Scott research paper; William Kornhauser’s Scientists in Industry
Buley, Lazarfeld&Thielens, Kahn, Tannenbaun& Weiss

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activity and rule observation, other variables do not vary with change in participation in decision making hence implying that Professional training, job codification and Number of occupational specialties is not of much importance when it comes to participation in decision making.
Hierarchy of authority and other structural properties
Here, the author analyses the relation between Hierarchy of authority and other structural properties. According to the author, hierarchy of authority measures the degree of freedom in an organization. The author believes that Hierarchy of authority has a strong relation with other structural properties compared to participation in decision making.
Authors here mention Robert Blauner from Alienation and Freedom; The Factory Worker and
His Industry. Where Robert Blauner states that, “workers are more concerned about control over immediate work process than they are concerned with control over managerial policies”. Here the author relates concern with work to measure of hierarchy of authority and concern with policies to measure of participation in decision making.
To substantiate the above statement an example of a professional staff member in an organization is given where a professional expects greater autonomy over his own work, rather than an opportunity to participate in shaping organizational policies. On the other hand it is also reasonable and rather common that elites of organization employing professional staffs would provide considerable autonomy for making their own work decisions, but might not allow them a voice in allocation of organizational resources.
For example in an IT industry a software engineer would be more concerned in choosing tools and equipment’s required for his project, He would not be very interested in say, shaping the HR policies of the organization. The engineer here is more concerned about making decisions in matters relating to his own work or his own project rather than a general matter relating to the organization. The authors further tries to analyze the relation between hierarchy of authority and other structural properties by compiling the below table based on their survey.

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Correlation between hierarchy of authority and other structural properties
Structural properties
Participation

in

decision

Zero order correlation

Partial correlation

-0.55

-0.52

Job codification

0.14

0.02

Rule observation

0.43

0.53

Number

0.03

0.40

Professional trainings

0.29

0.46

Professional activity

-0.42

-0.31

making

of

occupational

specialities

Inferences drawn from the table


There is no relation between hierarchy of authority and Number of occupational specialties 

Moderate association between hierarchy of authority and Job codification and professional training



Strong association between hierarchy of authority, Rule observation and Professional activity When partial correlation is considered either the relationship disappears or further strengthens.
The only relation which becomes stronger on taking partial correlation into account is relation between hierarchy of authority and Rule observation.
Referencing to the tables 1 and 3, the authors recapitulate that at least for the properties of organizational structure measured; control over organizational resources is a better predictor of organizational structural properties than control over work decisions.
Inferring that an organization which have wide participation in decision will also have less job codification, less rule observation, more occupational specialties, more professional training and professional activity.

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Google.Inc is an example for a company which encourages employees to participate in decision making. Google tries to create a work environment which encourages the employees to participate in decision making.

They regularly collect feedback from the employees to

understand them and also steadily maintain communications and actions throughout the year to continually involve employees in driving positive change. It can be observed that Google also have less amount of job codification.
A part of Google own description of their culture goes like this, “We strive to maintain the open culture often associated with start-ups, in which everyone is a hands-on contributor and feels comfortable sharing ideas and opinions”9. In can be seen that how Google promotes a culture often associated with start-ups which is generally less codified, so as to encourage its employees to participate in decision making.
Comments on the Authors’ Writing Style
This paper has been written sequentially starting with the purpose of the paper followed by a description of the study and survey methodology. Here the authors describe the scope of the research, aspects they wished to cover and the areas which are out of the scope. They have also explained the terminologies used explicitly in the research paper along with examples showing the application of the same in the actual scenario so that we can relate it for better understanding.
The authors, then, proceeds to describe their findings by citing the assumptions followed by making an attempt to prove the same by backing it up with primary data which they gathered during their study. Thus, it can be concluded that the study has been scientifically carried out by both the authors.
Overall the authors have maintained consistency of the topic and have given due weightage to each of the mentioned topic so that they could bring in all the seven measures and their effects proportionately and ensure that the research do not miss out on any important point of discussions. s9 http://www.google.co.in/about/company/facts/culture/

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References
1. http://en.wikipedia.org/wiki/Centralisation
2. http://en.wikipedia.org/wiki/Complexity
3. http://smallbusiness.chron.com/meaning-organizational-structure-3803.html
4. www.businessdictionary.com/definition/formalization.html

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