Chapter 14

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University of Toronto Scarborough
Management (MGH)
Joanna Heathcote

Chapter 14-ORGANIZATIONAL STRUCTURE WHAT IS ORGANIZATIONAL STRUCTURE? Broadly refers to how an organizations individuals and groups are put together or organized to accomplish work Organizational structure intervenes between goals and organizational accomplishments and thus influences organizational effectiveness Affects how effectively and efficiently group effort is coordinated To achieve its goals, orgs have to do two very basic things: divide labour among its members and the coordinate what has been divided Organizational Structure The manner in which an organization divides its labour into specific tasks and achieves coordination among these tasks THE DIVISION AND COORDINATION OF LABOUR VERTICAL DIVISION OF LABOUR Concerned primarily with the apportioning authority for planning and decision making Autonomy and Control holding all other factors constant, the domain of decision making and authority is reduced as the number of levels in the hierarchy increases Communication The more the org is divided vertically, timely communication and coordination can become more difficult HORIZONTAL DIVISION OF LABOUR Up to a point, the increase specialization that comes with dividing horizontally would promote efficiency Job Design Form an ABC department in which all workers do ABC work Provides for enriched jobs in which each worker can coordinate their own work Reduces the need for supervision and slows for self-managed teams Form an ABC department in which workers specialize in A work, B work and C work Increased horizontal division of labour in which employees specialize in tasks in which the coordination of A work, B work and C work are actually performed in separate departments jobs All this can be handled if the head of the departments job is properly designed Form a separate A dept, B dept and C dept Provides for great control and accountability for the separate tasks, but it also suggests that someone above the department heads will have to get involved in coordination Differentiation The tendency for managers in separate units, functions, or departments to differ in terms of goals, time spans, and interpersonal styles Basically the many different subunits that are created think that they are autonomous of the other departments when in reality they have to work together to get the task done DEPARTMENTATION Functional Departmentation Employees with closely related skills and responsibilities are assigned to the same department Advantages: efficiency, resources can be allocated more efficiently with less duplication Communication within departments should be enhanced 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 can occur Can lead to poor coordination and slow response to organizational problems At worst it can lead to open conflict between departments in which the needs of the clients and customers are ignored Works best in small to medium sized firms that offer relatively few products lines or services Product Departmentation Departmens are formed on the basis of a particular product, product line, or service Advantages Better coordination among the functional specialists who work on a particular product line Fewer barriers to communication should develop Flexibility, since product lines can be added or deleted without great implications for the rest of the organization Product focused departments can be evaluated as profit centres since they have independent control over costs and revenues Disadvantages Professional development might suffer without having a large number of professionals in one place Economies of Scale might be threatened and inefficiency might occur if relatively autonomous product-oriented departments are not coordinated Matrix Departmentation Employees remain members of a functional department while also reporting to a product or project manager Advantages There is a balance between the abstract demands of the product or project and the people who actually do the work Very flexible Good communication between the functional areas on the one project DisadvantagesProblems There can be role conflict since a person can have more than one boss There can be conflict developing between two people Other Forms of Departmentation Geographic Relatively self-contained units deliver an organizations products or services in a specific geographic territory Shortens communication channels, allows org to cater to regional tastes Appearance of local control Customer Relatively self-contained units deliver an orgs products or services to specific customer groups Goal is to provide better service to each customer group through specialization Hybrid A sutrcutre based on some mixture of functional, product, geographic or customer departmentation BASIC METHODS OF COORDINATING DIVIDED LABOUR Coordination A process of facilitating timing, communication, and feedback among work tasks Direct Supervision Designated supervisors or managers coordinate the work of their subordinates Standardization of Work Processes some jobs are so routine that the technology provides for a mean of coordination Standardization of Outputs Concern shifts from how the work is done to ensuring that the work meets certain physical or economic standards Standardization of skills the coordination comes from the skills learned by each individual in a group
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