MHR 505 Lecture Notes - Lecture 11: Quality Management, Railways Act 1921, Departmentalization
10 Dec 2015
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Chapter 13 – Designing Organizational Structures
Organizational structure: the division of labour as well as the patterns of
coordination, communication, workow, and formal power that direct
organizational activities
Learning Outcome 1
All organizational structures include two fundamental requirements: the
division of labour into distinct tasks and the coordination of that labour so
that employees are able to accomplish common goals
Division of Labour
Division of labour
refers to the subdivision of work into separate jobs
assigned to di!erent people
Subdivided work leads to job specialization, because each job now includes a
narrow subset of the tasks necessary to complete the product or service
Job specialization increases work e$ciency
Training costs are reduced because employees require fewer physical and
mental skills to accomplish the assigned work
Job specialization makes it easier to match people with speci&c aptitudes or
skills to the jobs for which they are best suited
Coordinating Work Activities
An organization should divide work among many people only to the extent
that those people can coordinate with each other
Coordination through Informal Communication: includes sharing
information on mutual tasks as well as forming common mental models so
that employees synchronize work activities using the same mental road map
Concurrent engineering: the organization of employees from
several departments into a temporary team for the purpose of
developing a product or service
Concurrent engineering typically consists of a cross-functional project
team of people from various functional departments, such as design
engineering, manufacturing, marketing, and purchasing
Coordination through Formal Hierarchy: hierarchy assigns legitimate
power to individuals, who then use this power to direct work processes and
allocate resources
Work is coordinated through direct supervision – the chain of command
Managers are able to closely supervise only a limited number of
employees
Coordination through Standardization: involves creating routine
patterns of behaviour or output, three distinct forms
Standardized processes:
this coordinating mechanism is feasible
when the work is routine or simple
Standardized outputs:
this form of standardization involves ensuring
that individuals and work units have clearly de&ned goals and
output measures
Standardized skills:
when work activities are too complex to
standardize through processes or goals, companies often coordinate
work e!ort by extensively training employees or hiring people who
have learned precise role behaviours from educational programs
Learning Outcome 2
Organizational structure has four elements that apply to every organization
Span of Control
Span of control (span of management): the number of people directly
reporting to the next level in the hierarchy
A narrow span of control exists when very few people report directly to a
manager
A wide span of control exists when a manager has many direct reports
Henri Fayol (French engineer and management scholar) strongly
recommended a relatively narrow span of control – typically no more than 20
employees
A second factor inuencing the best span of control is whether employees
perform routine tasks
A wider span of control is possible when employees perform routine jobs,
because there is less frequent need for direction or advice from supervisors
A narrow span of control is necessary when employees perform novel or
complex tasks, because these employees tend to require more supervisory
decisions and coaching
A third inuence on span of control is the degree of interdependence among
employees within the department or team
A narrow span of control is necessary where employees perform highly
interdependent work with others
More supervision is required for highly interdependent jobs because
employees tend to experience more conict with each other, which requires
more of a manager’s time to resolve
Employees are less clear on their personal work performance in highly
interdependent tasks, so supervisors spend more time providing coaching
and feedback
Tall versus Flat Structures: span of control is interconnected with
organizational size (number of employees) and the number of layers in the
organizational hierarchy
If Company A has a wider span of control (more direct reports per
manager) than Company B, then Company A must have fewer layers
of management (i.e., a atter structure) than does Company B
The reason for this relationship is that a company with a wider span of
control necessarily has more employees per supervisor, more
supervisors for each middle manager, and so on
As companies employ more people, they must widen the span of
control, build a taller hierarchy, or both
Most companies end up building taller structures because they rely on
direct supervision to some extent as a coordinator mechanism and
there are limits to how many people each manager can coordinate
Tall structures have higher overhead cost because most layers of
hierarchy consist of managers rather than employees who actually
make the product or supply the service
Senior managers in tall structures often receive lower-quality and less
timely information from the external environment because information
from front-line employees is transmitted slowly or not at all up the
hierarchy
Undermines managerial functions:
critics of delayering point out that
all companies need managers to translate corporate strategy into
coherent daily operations
Increases workload and stress:
delayering increases the number of
direct reports per manager and thus signi&cantly increases
management workload and corresponding levels of stress
Restricts managerial career development:
delayering results in fewer
managerial jobs, so companies have less manoeuvrability to develop
managerial skills
Centralization and Decentralization
Centralization: the degree to which formal decision making authority is
held by a small group of people, typically those at the top of the
organizational hierarchy
Document Summary
Organizational structure: the division of labour as well as the patterns of coordination, communication, workflow, and formal power that direct organizational activities. All organizational structures include two fundamental requirements: the division of labour into distinct tasks and the coordination of that labour so that employees are able to accomplish common goals. Division of labour refers to the subdivision of work into separate jobs assigned to different people. Subdivided work leads to job specialization, because each job now includes a narrow subset of the tasks necessary to complete the product or service. Training costs are reduced because employees require fewer physical and mental skills to accomplish the assigned work. Job specialization makes it easier to match people with specific aptitudes or skills to the jobs for which they are best suited. An organization should divide work among many people only to the extent that those people can coordinate with each other.
