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Chapter 14

BUS 2090 Chapter Notes - Chapter 14: Business Process, Human Relations Movement, Ambidexterity

Course Code
BUS 2090
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
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
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
As labour is progressively divided vertically, timely communication & coordination can become harder to
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

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Certain departments like R&D and Marketing need eachother but function differently
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
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
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
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
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
Professional development might suffer without critical mass of pros working in same place at same
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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