In the earlier blog, we learnt about
the importance of centralization and decentralization in the context
of an organization. In today's blog, we would discuss the relation between
the three dimensions of organization structure - centralization, complexity
and formalization.
Centralization and Complexity: When
decisions are decentralized, there would be a lot of overhead in terms
of coordination to ensure that the organization is in the intended direction
towards achieving the goal. This also has an implication in terms of
the professional training that needs to be imparted to the employees
- this is visible highly in a small shop where the owner of the shop
would make most of the decisions while the support staff would have
very little decisions to make!
Centralization and Formalization:
To begin with it would definitely help to understand that if we simply
look only at the relation between these 2 terms it would be really hard
to find a relation between centralization and formalization. It would
become clear if we look at the kind of employees the organization has.
When the employee is rather unskilled
it would be mandatory to have lot of procedures, rules and regulation
if in such a scenario, if there is a centralized decision making or
decentralized decision making it would only depend on the scenario in
question.
If the employee is a professional,
it would mandate that the decision making being delegated to the employee
would act as a motivator. It also means that the employee would
need to enjoy a lower formalization to really act on his work!
Read in Kannada:
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