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Textbook notes-Chapter 14-Organizational Structure

Management (MGH)
Course Code
Andrew Davidson

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- how an }Pv]}v[ individuals or groups are put together organized to accomplish work
- to achieve its goals, an organization has to do 2 basic things
1) divide labour among its members
2) coordinate what has been divide
organizational structure: the manner in which an organization divides its labour into specific tasks and
achieve coordination among these tasks
1) Vertical Division of Labour [chart pg 482]
- concerned primarily with apportioning authority for planning and decision making
- separate departments, units, or functions within an organization will vary in the extent to which they
vertically divide labour
autonomy and control
- domain of decision making and authority is reduced as the number of levels in the hierarchy
- more divided vertically, timely communication and coordination become harder
2) Horizontal of labour
- groups the basic tasks that must be performed into jobs and then into departments so that the
organizations can achieve its goals
- required workflow is the main basis for this division
- as organization grows, horizontal division of labour is likely, with diff groups of employees assigned to
perform each of the tasks
- suggest some specialization of the part of the workforce
- up to a pnt this increased specialization can promote efficacy
key themes or issues
i) job design
-each design has implications for the job involves and how these jobs are coordinated
- horizontal division of labour strongly affects jo design
- has profound implications for the degree of coordination necessary
- has implications for the vertical divisions of labour and where control over work processes should
logically reside
ii) differentiation: the tendency for managers in separate units, functions, or departments to differ in
terms of goals, time spans, and interpersonal styles
- in tending to their own domains and problems, managers often develop distinctly diff psychological
orientations toward the organization and its products or services
- differentiation is a natural and necessary consequence of the horizontal divison of labour, but it again
points to the need for coordination

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3) Departmentation
i) functional departmentation: employees with closely related skills and responsibilities are assigned to
the same department [chart pg 285]
- efficiency
- communication with departments should be enhanced since everyone speaks the same language
- career ladders and training opportunities within the function are enhanced cuz all parties will share the
same view of career progression
- it should be easier to measure and evaluate the performance of functional specialists when they are
all located in the same department
- specialization within departments lead to poor coordination and slow response to organizational
- open conflicts b/w departments, in which the needs of clients and customers are ignored
- departmental empires might be build at the expense of pursuing organizational goals
- functional departmentation works best in small to medium size firms that offer relatively few products
lines or services
- can also be an effective means of organizing the smaller divisions of large corporation
- when scale gets bigger and output of organization gets more complex, most firms use product
departmentation or its variation
ii) production departmentation: departments are formed on the basis of a particular product, product
line or service [chart pg 486]
- better coordination among the functional specialists who work on a particular product line
- flexibility
- can be evaluated as profit centres
- services the customer or client better
- suffer without a critical mass of professionals working in the same place at the same time
- economies of scale might be threatened and inefficiency might occur if relatively autonomous product
oriented departments are not coordinated
iii) matrix departmentation: employees remain members of a functional department while also
reporting to a product or project manager [pg 487]
- matrix could be based on short term projects
- provides a degree of balance b/w the abstract demands of the product or project and the ppl who
actually do the work, resulting in a better outcome
2 interrelated problems threatened the matrix structure
1)there no guarantee tht product or project managers will see eye to eye with various functional

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2) the violation of a classical management principle(should only be one boss) can result in role conflict
and stress, especially at performance review time
Other forms of departmentation
1) geographic departmentation: relatively self constrained units deliver an organizations products or
series in a specific geographic territory [chart pg 488]
- shortens communication channels, allows the organization to cater to regional tastes, and gives some
appearance of local control to clients and customers
ex. national retailers, insurance companies, oil companies
2) customer departmentation: relatively self constrained units deliver an organizations products or
services to specific customer groups [chart pg 489]
- adv and disadv are the same as product departmentation
3) hybrid departmentation: a structure based on some mixture of functional product, geographic, or
customer departmentation
- attempt to capitalize on the strengths of various structures, while avoiding the weakness of others
coordination: a process of facilitating timing, communication, and feedback among work tasks
1) direct supervision
- working through the chain of command, designated supervisors or mangers coordinate thw work of
their subordinates
2) standardization of work process
- some jobs are so routine that the tech itself provides a means of coordination
- lil direct supervision is necessary for these jobs to be coordinated
3) standardization of outputs
- concern shifts from how the work is done to ensuring that the work meets certain physical or
economic standards
- the physical specification of the valves will dictate how this work is to be coordinated
- standardization of outputs is often used to coordinate the work of separate product or geographic
- usually, top management assigns each division a profit target
- these standards ensure that reach division pulls its weight in contributing to the overall profit goals
4) standardization of skills
- common in technicians and professionals
5) mutual adjustment
- relies on informal communication to coordinate tasks
-useful for coordinating the most simple and the most complicated division of labour
- the methods can be ordered in terms of the degree of discretion they permit in terms of task
- direct supervision permits lil discretion
- diff in coordination stem from the way labour has been divided
- when tasks are more routine, we see coordination via direct supervision or standardization of work
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