Chapter 14 Organizational Behaviour

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