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Chapter 14

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Department
Commerce
Course
COMMERCE 1BA3
Professor
Emad Mohammad
Semester
Fall

Description
CHAPTER FOURTEEN: ORGANIZATIONAL STRUCTURE What Is Organizational Structure?  Organizational structure: the manner in which an organization divides its labour into specific tasks and achieves coordination among these tasks  Structure affects how effectively and efficiently group effort is coordinated The Division and Coordination of Labour Vertical Division of Labour  Concerned with who gets to tell whom what to do  Autonomy and Control: o Domain of decision making and authority is reduced as number of levels in hierarchy increases o Flatter hierarchy pushes authority lower and involves people further down hierarchy in more decisions  Communication: o Timely communication and coordination can be harder to achieve when labour is divided vertically o Filtering is more likely to occur as number of levels in hierarchy increases Horizontal Division of Labour  Horizontal division of labour groups basic tasks into jobs, then departments so organization can achieve goals  Horizontal division is likely as organization grows  Different groups of employees assigned to different tasks Job Design:  Horizontal division of labour strongly affects job design  Has implications for degree of coordination necessary  Form an ABC Department in which all workers do ABC work: o Enriched jobs in which each worker can coordinate own work o Reduces need for supervision o Requires highly trained workers o May not be possible  Form an ABC Department in which workers specialize in A work, B work or C Work: o Increased horizontal division of labour o Coordination of A work, B work, and C work becomes more critical  Form a separate A Department, B Department, and C Department: o Greates horizontal division of labour o Great control an accountability for separate tasks Differentiation  Differentiation: tendency for managers in separate units, functions or departments to differ in terms of goals, time spans and interpersonal styles  Managers develop different psychological orientation to ward organization and its products/services  Various organizational units tend to operate more autonomously  Departments need to be able to work together Departmentation Functional Departmentation:  Functional departmentation: employees with closely related skills and responsibilities are assigned to same department  Ex. those with skills in sales and advertising are assigned to marketing department  Employees grouped according to kind of resources they contribute to overall goals of organization  Advantages: o Efficiency o Enhances communication within departments o Enhances career ladders since everyone shares same view of career progression o Performance is easier to measure  Disadvantages: o High degree of differentiation between functional departments leading to poor coordination, conflict, etc. o Customers and clients can be ignored Product Departmentation:  Product departmentation: departments are formed on basis of a particular product, product line or service  Ex. a shampoo division and a cosmetics division each with own staff of production people, marketers and R&D personnel  Advantages: o Better coordination among people working on one product line o Flexibility since do not have to involve other parts of organization o Can serve customers better  Disadvantages: o Professional development suffers o Inefficiency if departments are not coordinated Matrix Departmentation:  Matrix departmentation: employees remain members of a functional department while also reporting to a product or product manager  Advantages: o Provides a degree of balance between demands of product and people who do the work, o Very flexible o Better communication because everyone is focused on one product/project  Disadvantages: o No guarantee that product managers will see eye-to-eye o Employees report to two managers (functional manager and product manager) o Causes role conflict, stress Other Forms of Departmentation  Geographic departmentation: o Relatively self-contained units deliver an organization’s products/services in a specific geographic territory o Shortens communication channels o Allows organizations to cater to regional tastes  Customer departmentation: o Relatively self-contained units deliver an organization’s products/services to specific customer groups o Goal is to provide better service to each customer group  Hybrid departmentation: o Some mixture of functional, product, geographic or customer departmentation Basic Methods of Coordinating Divided Labour  Coordination: process of facilitating timing, communication, and feedback among work tasks  Direct Supervision: o Traditional form of coordination o Chain of command o Supervisors/managers coordinate work of subordinates  Standardization of Work Processes: o Technology can provide means of coordination o Direct supervision not necessary o Ex. automobile assembly line o If workers do not have to interact, need minimal supervision  Standardization of Outputs: o Coordination can be achieved through standardization of work outputs o Concern shifts from how work is done to ensuring that work meets physical/economic standards o Ex. top management assigns each division a profit target  Standardization of Skills: o Coordination can be achieved through standardization of skills o Ex. technicians and professionals o Need minimal verbal communication because of high degree of training about what to expect from coworkers  Mutual Adjustment: o Informal communication coordinates tasks o Useful for coordinating most simple and most complicated decisions of labour o Necessary when standardization is not possible  Least Worker Discretion to Most Worker Discretion: Direct Supervision  Standardization of Work Processes  Standardization of Outputs  Standardization of Skills  Mutual Adjustment Other Methods of Coordination  Integration: process of attaining coordination across differentiated departments  Liaison Roles: o Liaison role: person who is assigned to help achieve coordination between his/her department and another department o Second department might nominate its own liaison partner as well  Task Forces and Teams: o Task forces: temporary groups set up to solve coordination problems across several departments o Liaison roles not effective for coordination problems that involve several departments o Task force disbands when integration is achieved  Integrators: o Integrators: organizational members permanently assigned to facilitate coordination between departments o Useful for dealing with conflict between departments that: (1)Are highly interdependent (2)Have diverse goals/orientations (3)Operate in very ambiguous environment o Has great responsibility but no direct authority in either department Traditional Structural Characteristics Span of Control  Span of control: number of subordinates supervised by a manager  Larger the span, the less potential there is for coordination by direct supervis
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