Organisational Structure

by The Times 100 on Monday 13th June, 2011

The way that the NHS works in England is due to change under government plans. Currently managers in Primary Care Trusts (PCTs) control a lot of the spending in the NHS. They buy in patient services such as clinics and hospital care. Under the planned changes, GPs will be given greater responsibility for spending the health budget rather than the PCTs. Some decisions will still be made at a national level, such as dentistry and neurosurgery, however greater responsibility for making spending decisions will be passed down to clinically-led consortia at local level throughout the country. The consortia are likely to be made up by GPs, hospital doctors and nurses, who will sit on a commissioning body to make decisions on behalf of all of the doctors in their local area. Originally the new system was thought to go ahead in 2013 although this may be delayed until those involved are fully prepared. (BBC News 10th June 2011)

These proposed changes to the NHS are an example of decentralisation. This means that decisions are made away from the organisational centre. Where decision making continues to be made at a national level, such as with dentistry, centralisation will still exist. Many organisations use a combination of centralisation and decentralisation for decision making. The Forestry Commission, the organisation that cares for much of Britain's woods and forests, benefits from both decision making models. Some policies are made at the top of the hierarchy to ensure there is consistency throughout the whole of the Forestry Commission. For example, policy making that ensures Britain adheres to international rules for sustainable forest management. This is centralisation. It also allows for the organisation to benefit from economies of scale. However, decentralisation occurs when decisions are made at a regional level. Each county within Britain, for example, manages its own forest activities such as planting, recreation and education. This is beneficial because regional differences must be dealt with in different ways.

Questions
1.Define decentralisation.
2.Explain why some centralisation is beneficial for organisations.
3.Research task – In your school or college, research the kinds of decisions that are made by the Senior Leadership Team and what decisions are made at Faculty level. Why do you think this is?

Answers to questions
1.Define decentralisation – Decentralisation occurs when decision making power is moved away from the organisational centre towards the operating units, such as local branches.
2.Explain why some centralisation is beneficial for organisations.Centralisation can be beneficial because:

  • firms can benefit from economies of scale, perhaps by centralising purchasing decisions
  • decisions are made in keeping with overall corporate objectives, rather than being based on more personal agenda, thereby creating greater consistency across an organisations
  • senior managers may be more experienced in decision making, and decisions may be made faster.

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