William G. Ouchi, Bruce S. Cooper, Lydia G. Segal, Tim DeRoche, Carolyn Brown, and Elizabeth Galvin
The Anderson School of Management, UCLA
Working paper, July 25, 2002 (revised September, 2002)
Long an important topic in business schools, the question of how organizations should be structured has rarely been asked of schools, mainly because they are notoriously difficult to analyze. This interesting new report tries to determine whether school systems are best organized using a centralized or decentralized approach. The authors sort nine systems into three categories. Most centralized are large urban districts (New York, L.A. and Chicago), which follow a hierarchical, bureaucratic structure. Least centralized are three diocesan Catholic systems (again in New York, L.A., and Chicago), which cede almost total control to individual schools. In the middle are those few public school districts (here Houston, Seattle and Edmonton) that allow individual schools to make important decisions (such as hiring teachers and choosing curricula) and centralize only those decisions that bring economies of scale (such as insurance and payroll management). The differences in the extreme are striking. With 1211 public schools, New York City has 8,000 people working in central offices (and another 17,000 who work in schools but are effectively part of the central office structure); the New York archdiocese, by contrast, has 286 schools and just 22 people working in its central office. In the end, the authors find that sizable variations in school performance are associated with such differences. Decentralized systems put more of their resources into the classroom, are better able to monitor performance, and had students that did better on standardized tests. They also had fewer scandals and incidents of corruption, despite maintaining smaller compliance staffs. Such results are consistent with the business literature, which has long accepted the wisdom of empowering those closest to the information with authority to make important decisions. Hopefully education, too, will come to recognize that "organizations that are highly centralized and bureaucratic are less likely to innovate and perform effectively" and that efforts to decentralize decision-making (e.g. empowering principals and supporting charter schools) may have great benefits. The authors acknowledge that their sample of districts is small, but these results should prod others to examine this topic in greater depth. Without understanding how organizations work, how can we expect to improve anything as complicated as a school system? To view this working paper, visit http://www.rppi.org/asq.doc; the authors will soon release a book based on their study.
