Decentralized Organizational Structure

Decentralization is a type of organizational structure in which daily operations and decision-making

responsibilities are delegated by top management to middle and lower-level mangers within the organization,
allowing top management to focus more on major decisions.
Decentralizing takes some of the burden of daily operations off the owner. When the owner allows others to
perform such tasks as hiring new employees or ordering supplies, this frees up some time to spend more on big-
picture items, such as planning for expansion or meeting with important clients. Though it can be hard for some
owners to allow this type of flexibility, the rewards can be substantial for both employees and business owners.
According to the study of Michael R.M. Abrigo, Zhandra C. Tam, and Danica Aisa P. Ortiz, establishing
the impact of decentralization on health is far from straightforward. In the case of the Philippines, decentralization
was simultaneously adopted across the whole country, making direct comparison between states of centralization
and decentralization among local governments not possible. In addition, local governments that have more
effectively embraced decentralization are likely to be systematically different along important dimensions
compared to those that still largely rely on the national government. Thus, simple comparison of outcomes across
local governments may actually reflect these differences in characteristics rather than the impact of
decentralization. This allows a better appreciation of the potential benefits from decentralization that is distinct
from its implementation issues.

The Advantages of Centralized Organizational Structure

1. Increasing local control over resources and increasing accountability.
2. Increasing role and participation of local communities in governance, based on principles of
participation, transparency and accountability.
3. Reducing central authority by fragmenting central control and introducing checks and balances.
4. Strengthening local levels of governance with greater capability to provide public services.
5. New paradigm of local economic development.
6. Promoting innovation and experimentation and adaptation of different schemes to reflect local
realities.

The Disadvantages of Centralized Organizational Structure

However According to the journal entitled “Decentralization and Health in the Philippines: A Systematic
Review of Empirical Evidences”, they find weak evidence of impact of decentralization on health expenditures.
Many countries who have introduced decentralization have also decentralized some or all of public health
care functions from central to lower levels of governments. In many cases, the national government provides
monetary and fiscal support to local governments and these local governments then assume the direct responsibility
for providing health care goods and services, and operate health care facilities in their jurisdiction.
In conclusion, the driving reason for decentralization is to improve the well-being of people by empowering
local voters to change the quality and quantity of the public health services that they receive from their local
authorities. As explained earlier, the health decentralization is a very recent phenomenon, and thus there is no
established ‘best practices guide’ or a perfect universal framework which can be executed anywhere. The process
has been plagued by many problems in developing economies. In many developing nations, the traditional health
system is highly centralized, and this was evident in the manner in which Health for All programs were executed in
various countries. It was mostly a top down center designed program which was difficult to manage by highly
ineffective health ministries. This program was prime focus for World Health Organization also for many years.
Even now most of the approaches focusing on health challenges, including Millennium Development Goals of
United Nations and World Bank sponsored Poverty Reduction Strategy Papers in developing countries assume a
strong central role for ministries of health. The debate around the issue of decentralization in health sector has
developed around the appropriate design of the decentralization model. Supporters believe that decentralization
combined with systematic citizen involvement in setting goals, execution and functioning, financing, monitoring
and other functions can lead to positive outcomes. It will also require people to obtain the skills, material support
and authority needed to offer high-quality services. Decentralization will further enable people to secure
information, financing, bargaining power and also give health ministries a chance to change their objectives and
redefine their roles. They will have a chance to become more realistic in their targets and offer expertise that suits
them the best (Shivraj. nd.)

Comparison Between a Centralized and Decentralized Organizational Structure

In centralized organization, all of the decisions regarding everyday operation and processes are generally
decided upon by upper level executives including the office of the director, board of trustees, president, etc. The
rules and policies are put in place to ensure the rest of the institution follows the direction of the upper level. It is
basically something that lacks you and you have to pass that. Just like in some institutions including SLUHSH and
BGHMC, they are both centralized organization. It is both a hierarchy decision-making structure. All the decisions
and processes are handled strictly at the top or upper level executives. Managers and staffs lower in the chain of
command are limited in the decision-making process and can rarely implement new processes without the approval
of the upper levels in the chain of command. On the other side, decentralized organization is operated on
delegation of decision-making powers and flexible processes. Meaning, executives or the upper levels assign tasks
to managements and staffs and they maintain a very open communication. They can go straight to the top, discuss
and decide, implement and evaluate on their own. They were given the power of freedom to run their department
as they see fit. So, basically, in decentralized organization the decision-making is lesser. Decentralized
organization is not common in such institutions but there are some that operate this kind of organization like in
East Avenue, Diliman, Quezon City. Their communication flow is open and free. They share the responsibility of
the the high-level managers which results in quick decision-making and saving of time. This institution may lack
leadership and coordination but with their flow of communication they will be able to control over the
organization.