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OB chapter 14.doc

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Carolyn Capretta

Chapter 14 – Organizational Structure What is Organizational Structure? Organization structure – the manner in which an organizational divides its labour into specific tasks and achieves coordination among these tasks. The Division and Coordination of Labour Vertical Division of Labour • The vertical division of labour is concerned primarily with apportioning authority for planning and, decision-making - who gets to tell whom what to do? • Example: In a manufacturing firm, the vertical division of labour is usually signified by titles such as president, manager, and supervisor. • Autonomy and control – the domain of decision making and authority is reduced as the numbers of levels in the hierarchy increases. On the other hand, a flatter hierarchy pushes authority and involves people further down the hierarchy in more decisions. • Communication – a second theme underlying the vertical division of labour is communication or coordination between levels. As labour is progressively divided vertically, timely communication and coordination can become harder to achieve. Horizontal Division of Labour • The horizontal division of labour groups the basic tasks that must be performed into jobs and then into departments so that the organization can achieve its goals • Horizontal division f labour suggests some specialization on the part of the workforce • Job Design – the horizontal division of labour is closely tied to our earlier consideration of job design. Suppose that an organization offers a product or service that consists of A work, B work and C work • Differentiation – as organizations engage in increased horizontal division of labour, they usually become more and more differentiated. Differentiation is the tendency for managers in separate units, functions, or departments to differ in terms of goals, time spans, and interpersonal styles. Departmentation • The assignment of jobs to departments is called Departmentation, and it represents one of the core aspects of the horizontal division of labour. • Functional Departmentation – employees with closely related skills and responsibilities are assigned to the same department. • Advantages: communication within departments should be enhanced, since everyone “speaks the same language”, career ladders and training opportunities within the function are enhanced because all parties will share the same view of career progression, the performance of functional specialists should be easier to measure and evaluate when they are all located in the same department. • Disadvantages: high degree of differentiation between functional departments • Production Departmentation – departments are formed on the basis of a particular product, product line, or service. Each of these departments can operate fairly autonomously because it has its own set of functional specialists dedicated to the output of that department. • Advantage: better coordination among the functional specialists who work on a particular product line, flexibility, and product-focused departments can be evaluated as profit centres, since they have independent control over costs and revenues. • Disadvantage: professional development might suffer without a critical mass of professionals working in the same place at the same time. • Matrix departments – employees remain members of a functional department while also reporting to a product or project manager. • Advantages: provides a degree of balance between the abstract demands of the product or project and the people who actually do the work, resulting in a better outcome. Also it is very flexible. • Other Forms of Departmentation: 1) Geographic departmentation: relatively self-contained units deliver an organization’s products or services in a specific geographic territory. {National retailers, insurance companies, oil companies} 2) Customer departmentation: relatively self-contained units deliver an organization’s products or services to specific customer groups. {Universities have a separate graduate and undergraduate division} 3) Hybrid departmentation: a structure based on some mixture of functional, product, geographic, or customer departmentation. {Wal-Mart & McDonald’s} Basic Methods of Coordinating Divided Labour Coordination – a process of facilitating timing, communication, and feedback among work tasks Fived basic methods of coordination: 1) Direct supervision – a very traditional form of coordination, working through the chain of command, designated supervisors or managers coordinate the work of their subordinates. 2) Standardization of work processes – some jobs are so routine that the technology itself provides a means of coordination. The automobile assembly line provides a good example. 3) Standardization of Outputs – even when directed supervision is minimal and work processes are not standardized, coordination can be achieved through the standardization of work outputs. 4) Standardization of Skills – even when work processes and output cannot be standardized and direct supervision is unfeasible, coordination can be achieved through standardization of skills. 5) Mutual Adjustment – mutual adjustment relies on informal communication to coordinate tasks. It is useful for coordinating the most simple and the most complicated divisions of labour. Other Methods of Coordination Integration – the process of attaining coordination across differentiated departments Liaisons Roles - A person who is assigned to help achieve coordination between his or her department and another department. - One person serves as a part-time link between two departments Task Forces and Teams - Temporary groups set up to solve coordination problems across several departments - Representatives from each department are included on full-
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