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Chapter 14

Chapter 14 Organizational Behaviour

6 Pages
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Department
Business
Course Code
BUS 2090
Professor
Hassan Wafai

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Chapter 14 Individuals, Groups & Organizations
Organizational Structure
What is Organizational Structure?
Broadly, organizational structure refers to how individuals and groups are put together and organized to
accomplish work
Org structure intervenes between goals and organizational accomplishments and thus influences
organizational effectiveness
Structure affects how effectively and efficiently group effort is coordinated
To achieve goals, an org. must divide labour among its members and then coordinate what has been
divided
Organizational Structure: The manner in which an org. divides its labour into specific tasks and achieves
coordination among these tasks
The Division & Coordination of Labour
Labour must be divided b/c everyone CANT do everything
Vertical Division of Labour
Vertical division of labour is concerned primarily w/ apportioning authority for planning & decision-
making who tells whom what to do?
Usually signified by titles such as president, manager or supervisor
Separate units, departments, or functions within an org. will also often vary in the extent to which they
vertically divide labour
A production unit might have several levels of management, ranging from supervisor to general
manager
Autonomy & Control
Holding other factors constant, the domain of decision making & authority is reduced as the # of levels in
the hierarchy increases
Managers have less authority over fewer matters
A flatter hierarchy pushes authority lower & involves people further down the hierarchy in more decisions
Communication
As labour is progressively divided vertically, timely communication & coordination can become harder to
achieve
As the number of levels in the hierarchy increases, filtering is more likely to occur
Info filtering is a barrier to communication
Labour must be divided vertically enough to ensure proper control but not so much as to make vertical
communication and coordination impossible
Horizontal Division of Labour
Horizontal division of labour groups the basic tasks that must be performed into jobs and then into
departments so that the org. can achieve its goals
Required workflow is the main basis for this division
As an org. grows, horizontal division of labour is likely, with different groups of employees assigned to
perform each of these tasks
The horizontal division of labour suggests some specialization on the part of the workforce
Up to a point, increased specialization can promote efficiency (“jack of all trades”)
Job Design
Differentiation: The tendency for managers in separate units, functions, or departments to differ in terms of
goals, time spans, and interpersonal styles
As orgs engage in increased horizontal division of labour managers in separate units, functions or
departments to differ in terms of goals, time spans and interpersonal styles
In tending to their own domains & problems, managers often develop distinctly different psychological
orientations toward the org and its products/services
Under high differentiation, various org units tend to operate more autonomously
Certain departments like R&D and Marketing need eachother but function differently
Departmentation
The assignment of jobs to departments is called departmentation and it represents one of the core aspects of
the horizontal division of labour
Department” is generic term and can mean unit, group or section
Several methods…
Functional Departmentation
Functional Departmentation: Employees w/ closely related skills and responsibilities are assigned to the same
department
Under this, employees are grouped by what kind of resources they contribute to achieving the overall goals
of the org.
Works best in small o-medium organizations that have relatively few product lines or services
Advantages
Increased efficiency b/c all engineers are in same area not scattered all over for example
All support factors, such as resource books specialized software, lab space etc. can be allocated better
w/ less duplication
Communication within departments is enhanced
Career ladders and training opportunities within the function are enhance b/c 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
located in the same department
Disadvantages
A high degree of differentiation can occur between functional departments and this can lead to poor
coordination and slow response to org. problems
At worst can lead to real conflict b/t departments in which needs of clients & customers is ignored
Product Departmentation
Product Departmentation: Departments are formed on the basis of a particular product, product line, or service
Each of these departments can operate pretty autonomously b/c it has its own set of functional specialists
dedicated to the output of that department
E.g. A personal care company might have a shampoo division and a cosmetics division
Advantages
Better coordination among the functional specialists who work on a certain product line since the
attention is focused on 1 product
Flexibly since product lines can be added or deleted without implications for the rest of the org
Product-focused departments can be evaluated as profit centres since they have independent control
over costs and revenues
Product differentiation often serves the customer or client better since the client can see more easily
who produced the product
Disadvantages
Professional development might suffer without critical mass of pros working in same place at same
time
Economies of scale might be threatened and inefficiency might occur if relatively anonymous product-
oriented departments aren’t coordinated
Matrix Departmentation
Matrix Departmentation: Employees remain members of a functional department while also reporting to a
product or project manager
Most variations of the matrix design boils down to what exactly gets crossed w. functional areas to form
the matrix & the degree of stability of the matrix relationships
Besides products, matrix could also be based on geographical regions or projects for example

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Description
Chapter 14 Individuals, Groups & Organizations Organizational Structure What is Organizational Structure?  Broadly, organizational structure refers to how individuals and groups are put together and organized to accomplish work  Org structure intervenes between goals and organizational accomplishments and thus influences organizational effectiveness  Structure affects how effectively and efficiently group effort is coordinated  To achieve goals, an org. must divide labour among its members and then coordinate what has been divided Organizational Structure: The manner in which an org. divides its labour into specific tasks and achieves coordination among these tasks The Division & Coordination of Labour Labour must be divided b/c everyone CANT do everything Vertical Division of Labour  Vertical division of labour is concerned primarily w/ apportioning authority for planning & decision- making – who tells whom what to do?  Usually signified by titles such as president, manager or supervisor  Separate units, departments, or functions within an org. will also often vary in the extent to which they vertically divide labour  A production unit might have several levels of management, ranging from supervisor to general manager Autonomy & Control  Holding other factors constant, the domain of decision making & authority is reduced as the # of levels in the hierarchy increases  Managers have less authority over fewer matters  A flatter hierarchy pushes authority lower & involves people further down the hierarchy in more decisions Communication  As labour is progressively divided vertically, timely communication & coordination can become harder to achieve  As the number of levels in the hierarchy increases, filtering is more likely to occur  Info filtering is a barrier to communication  Labour must be divided vertically enough to ensure proper control but not so much as to make vertical communication and coordination impossible Horizontal Division of Labour  Horizontal division of labour groups the basic tasks that must be performed into jobs and then into departments so that the org. can achieve its goals  Required workflow is the main basis for this division  As an org. grows, horizontal division of labour is likely, with different groups of employees assigned to perform each of these tasks  The horizontal division of labour suggests some specialization on the part of the workforce  Up to a point, increased specialization can promote efficiency (“jack of all trades”) Job Design Differentiation: The tendency for managers in separate units, functions, or departments to differ in terms of goals, time spans, and interpersonal styles  As orgs engage in increased horizontal division of labour managers in separate units, functions or departments to differ in terms of goals, time spans and interpersonal styles  In tending to their own domains & problems, managers often develop distinctly different psychological orientations toward the org and its products/services  Under high differentiation, various org units tend to operate more autonomously  Certain departments like R&D and Marketing need eachother but function differently Departmentation  The assignment of jobs to departments is called departmentation and it represents one of the core aspects of the horizontal division of labour  “Department” is generic term and can mean unit, group or section Several methods… Functional Departmentation Functional Departmentation: Employees w/ closely related skills and responsibilities are assigned to the same department  Under this, employees are grouped by what kind of resources they contribute to achieving the overall goals of the org.  Works best in small o-medium organizations that have relatively few product lines or services Advantages  Increased efficiency b/c all engineers are in same area not scattered all over for example  All support factors, such as resource books specialized software, lab space etc. can be allocated better w/ less duplication  Communication within departments is enhanced  Career ladders and training opportunities within the function are enhance b/c 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 located in the same department Disadvantages  A high degree of differentiation can occur between functional departments and this can lead to poor coordination and slow response to org. problems  At worst can lead to real conflict b/t departments in which needs of clients & customers is ignored Product Departmentation Product Departmentation: Departments are formed on the basis of a particular product, product line, or service  Each of these departments can operate pretty autonomously b/c it has its own set of functional specialists dedicated to the output of that department  E.g. A personal care company might have a shampoo division and a cosmetics division Advantages  Better coordination among the functional specialists who work on a certain product line since the attention is focused on 1 product  Flexibly since product lines can be added or deleted without implications for the rest of the org  Product-focused departments can be evaluated as profit centres since they have independent control over costs and revenues  Product differentiation often serves the customer or client better since the client can see more easily who produced the product Disadvantages  Professional development might suffer without critical mass of pros working in same place at same time  Economies of scale might be threatened and inefficiency might occur if relatively anonymous product- oriented departments aren’t coordinated Matrix Departmentation Matrix Departmentation: Employees remain members of a functional department while also reporting to a product or project manager  Most variations of the matrix design boils down to what exactly gets crossed w. functional areas to form the matrix & the degree of stability of the matrix relationships  Besides products, matrix could also be based on geographical regions or projects for example  Uses cross-functional teams Advantages  It provides a degree of balance between the abstract demands of the product or project and the people whoa actually do the work, resulting in better outcome  Very flexible b/c people can be moved around as project flow dictates  Can lead to better communication from among the different reps from various functional leads due to working on project Disadvantages  No guarantee the product or product managers will see eye-to-eye resulting in conflict  Employees assigned to a product or project team in essence report to 2 managers, their functional & project manager which can result in role conflict and stress Other forms of Departmentation Geographic Departmentation: Relatively self-contained units deliver an organization’s product or services in a specific geographic territory  Shortens communication channels, allows the org. to cater to regional tastes, and gives some appearance of local control to clients & customers  National retailers, insurance companies, and oil companies often use this Customer Departmentalization: Relatively self-contained units deliver an organization’s products or services to specific customer groups  Obvious goal is to provide better customer service  Banks have different commercial lending divisions, universities have undergrad and grad divisions etc. Hybrid Departmentalization: A stricture based on some mixture of functional, product, geographical or customer departmentalization Basic Methods of Coordinating Divided Labour Coordination: A process of facilitating timing, communication and feedback among work tasks 5 Basic Methods:  The use of various coordination methods tends to vary across different parts of the org. and stem from the way labour has been divided  Advisory subunits staffed by pros such as legal department or a marketing research group, often rely on a combo of skill standardization and mutual adjustment  Methods of coordination may change as tasks demands change 1. Direct Supervision  Working through the chain of command, designated supervisors/managers coordinate the work of subordinates 2. Standardization of Work Processes  Some jobs are so routine that technology itself provides a means of coordination  Little direct supervision is needed for these jobs  Work can also be standardized by rules and regulations 3. Standardization of Outputs  Concerns shifts from how the work is done to ensuring that the work meets certain physical or economic standards  Often used to coordinate the work of s
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