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SPEX 209

Dimensions of Organisational Structure: Centralisation and Formalisation

Specialisation Overview

• Specialisation: A critical concept in organisational design that pertains to the division of tasks and roles within an organisation to enhance efficiency.

• Importance: Specialisation is essential for delivering services that cater specifically to diverse needs, which may include variations in clientele, technical objectives, timeframes, and organizational goals.

• Fragmentation Issue: While specialisation aims to improve efficiency, it can lead to major challenges in coordination, which may manifest as:

  • Overly Narrow Focus: Departments may become so specialised that they lose sight of the overall mission of the organisation.

  • Delivery Gaps: Insufficient communication and collaboration can result in missed opportunities and services falling through the cracks.

  • Interference Among Differing Goals: Conflicting objectives across specialised units can impede the organisation's ability to function cohesively.

• Role of Hierarchies: Specialisation is often embedded within hierarchies, which can evolve into complex networks and markets, influencing organisational dynamics and effectiveness.

Lecture Purpose

• This lecture aims to outline the significance of structural elements in organisational design, particularly focusing on:

  • Centralisation: The degree to which decision-making authority resides at the upper levels of an organisation versus being distributed among lower levels.

  • Formalisation: The extent to which rules, regulations, and procedures shape the organisational landscape.

• Emphasis will be placed on the complexities and trade-offs inherent in both dimensions, enabling a better understanding of their impact on governance and management processes.

Centralisation Explained (Pollitt 2005)

• Centralisation is presented as a necessary response to fragmentation issues arising from specialisation and the division of labour.

• Definition: Refers to the concentration or dispersion of authority and decision-making within an organisation, directly impacting operational effectiveness.

• Context in Sport: Specifically relates to decision-making powers such as the strategic placement of training centres and the configuration of leadership structures, which play a significant role in shaping sporting success.

Centralising Healthcare in New Zealand

• A recent announcement by Health Minister Andrew Little: Plans to dismantle 20 District Health Boards (DHBs) to create a single, streamlined mega-agency alongside a dedicated Māori health agency.

• Significance: This shift is described as the most substantial transformation in the New Zealand health system over the past 20 years, reflecting a top-down leadership approach to managing healthcare delivery effectively, as explained by observer Keith Lynch.

Movement from Decentralised to Centralised Authority

• A diagram layout will demonstrate the historical and strategic transition:

  • Moving from distinctive geographical regional governance (e.g., North Island, South Island authority structures) towards a cohesive centralised authority framework within Basketball New Zealand and other sporting entities.

High Performance Programme Reviews

• Triathlon New Zealand conducted an independent review from December 2011 to May 2012, focusing on measures to enhance performance through centralisation strategies.

• Key Recommendations:

  • The establishment of a High Performance Director (HPD) to oversee initiatives.

  • Implementation of centralised decision-making practices with defined accountability to streamline operations.

  • Development of optimisation strategies for coaching through the formation of training hubs to maximise athlete potential.

  • A commitment to talent identification and innovation within the high-performance programme to ensure sustained success.

Study on Centralising Elite Swimming Program

• Performance Assessment: A comprehensive analysis conducted on performance improvements among New Zealand swimmers between 2002 and 2013 as a direct result of centralisation initiatives.

• Methodology: Utilised performance metrics from over 8500 swimmers, applying mixed methods to closely evaluate the longitudinal performance changes and impacts of centralised governance.

• Findings: Notable significant performance enhancements were documented, though these were only apparent after several years of consistent centralisation efforts, illustrating the time required to realise benefits.

Benefits of Centralisation in Sports

• Coverage of New Zealand cycling's achievements during the 2014 UCI Track Championships highlighted the positive outcomes arising from centralised training methodologies.

• The approach has generated two-thirds of New Zealand's medal totals in recent sporting years, underscoring its effectiveness in achieving peak performance outcomes.

Characteristics of Centralised vs Decentralised Structures

• Centralisation:

  • Decision-making occurs predominantly at higher organisational levels, reflecting a top-down governance style.

  • Involves fewer personnel in planning and decision-making, which can lead to faster execution but may stifle inclusivity.

• Decentralisation:

  • Encourages the generation of plans from grassroots levels, contributing to a bottom-up approach in management.

  • Promotes participative management styles, enhancing stakeholder engagement and inclusiveness, thereby fostering innovation.

Challenges at Bike New Zealand

• Reports highlight governance issues and dissatisfaction within the cycling community, raising concerns about Bike NZ’s effectiveness across various organisational levels.

• Specific interventions in selection processes have been noted to cause friction and disputes within the organisation, posing risks to organisational harmony and performance.

Distortions Due to Centralisation

• Analysis of reviews points towards significant challenges in management practices within sports, often identified as 'wicked problems'—where increasing player influence must co-exist with a focus on athlete welfare.

• Commentary by Sports Minister Grant Robertson underscores views that New Zealand's sports structure may be inadequate, highlighting areas needing reform.

Canoe Racing Centralisation Case Study

• This section examines the investments made in a centralised training centre for canoe racing, drawing inspiration from the successes in rowing, and discusses challenges encountered by elite athletes.

Arguments for Decentralisation

• An evaluation on the effectiveness of smaller organisations compared to larger counterparts forms a critical basis for discussing decentralisation benefits.

• Emphasises the concept that local experts may manage local issues more effectively, enhancing the capacity for fostering innovation within their contexts.

• Engages with the ongoing debate regarding shifts in authority in decentralisation versus centralisation discussions in organisational management.

Elite Athlete Experiences with Decentralisation

• Evidence indicates a transition within New Zealand sports, such as swimming, from a predominantly centralised performance model to decentralised approaches that prioritise athlete independence and comprehensive skills development.

Advantages of Centralized Structures

• One of the main benefits identified with centralised structures includes a significant reduction in complexity, enhanced coordination across functions, and improved economic efficiency.

• Centralised systems allow for the amalgamation of resources and knowledge, which fosters a broader perspective and helps in avoiding narrow or parochial views in decision-making.

Background on Futures Project

• The release of reports by Sport New Zealand proposed a more decentralised decision-making framework, explicitly focusing on local community needs while mitigating the complexities associated with resource allocation.

Summary of Centralisation and Decentralisation

• Both centralisation and decentralisation are recognised principles concerning organisational structure, existing simultaneously as organisations strive for improved effectiveness, despite neither demonstrating absolute superiority.

• Ongoing trade-offs inherent in both principles contribute to their sustained relevance in contemporary governance discussions.

Organisational Governance Methods (Thompson 1991; Rhodes 2003; Bevir 2012)

• The three identified governance methods include:

  • Hierarchies: Reflect command-based structures exercising authority and control.

  • Markets: Based on transaction dynamics involving buyers and sellers.

  • Networks: Functioning through trust-based relationships that facilitate cooperative interactions among entities.

Formalisation Explained

• Formalisation: Defined as the extent to which formal rules and regulations govern organisational behaviours, structures, and processes, inclusive of laws, policies, guidelines, procedures, and specified roles of personnel.

Case Study: Formalisation in Secondary School Sports

• Contextual analysis reveals initiatives aimed at enhancing the quality of programmes and increasing student participation, set against a backdrop of dwindling teacher involvement and limitations in external funding sources.

Responses to Formalisation Issues

• Recommendations for enhancing formalisation practices include the establishment of formalised reporting mechanisms for managing statistics, documented job descriptions to increase accountability, and formal plans for resource allocation to ensure optimal usage.

Advantages and Trade-offs of Formalisation

• Pros: Enhanced ease of monitoring processes, consistency across functions, fairness in treatment, and continuity of services.

• Cons: Potential to stifle innovation, and risks of leading to goal displacement where procedural adherence overshadows intuitive and adaptive responses to changing circumstances.

Goal Displacement Defined

• Goal displacement occurs when secondary objectives inadvertently overshadow primary organisational goals, prompting an overemphasis on fulfilling specific metrics rather than driving towards the core mission and overall vision.

Organisational Development Tool (ODT) Snapshot

• The ODT serves to assess organisational capability and performance, with a goal of pinpointing strengths as well as areas necessitating enhancements.

• The recommendations presented are aimed at refining both strategic and operational frameworks within the organisation.

More on Goal Displacement and Counting Problems

• Elaborates on the dangers of an excessive focus on quantifiable objectives potentially distorting core values and detrimentally affecting performance outcomes.