MGHB02H3 Chapter Notes - Chapter 14: Absenteeism, Diminishing Returns, Dic Entertainment

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Published on 5 May 2011
School
UTSC
Department
Management (MGH)
Course
MGHB02H3
Organizational Structure
To achieve its goals, an organization has to do two very basic things: divide labour amount its mem-
bers and then 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.
Division and Coordination of Labour
There are two dimensions to the division of labour; a vertical dimension and a horizontal dimension.
Once labour is divided it must be coordinated to achieve organizational effectiveness.
Vertical Division of Labour
The domain of decision making and authority is reduced as the number of levels in the hierarchy in-
creases. As labour is progressively divided vertically, timely communication and coordination can be-
come harder to achieve. 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
The horizontal division of labour groups the basic tasks that must be performed into jobs and then
into departments so that the organization can achieve its goals. This division of labour suggests some
specialization on the part of the workforce. The horizontal division of labour strongly affects job de-
sign (recall ABC work). As organizations engage in increased horizontal division of labour, they usu-
ally become more and more differentiated. Differentiated: The tendency for managers in separate
units, functions or departments to differ in terms of goals, time spans and interpersonal styles (recall
R&D manager vs. marketing manager).
Departments
Methods of departmentation (assigning jobs to departments):
Functional Departmentation
May 5, 2011 5:09 PM
W11:Ch.14
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Functional Departmentation: Employees with closely related skills and responsibilities are assigned to
the same department. The most cited advantage is that of efficiency.
Communication within departments is enhanced, since everyone “speaks the same language”
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 located in the same department
High degree of differentiation can lead to poor coordination and slow response to organizational prob-
lems or to open conflict between departments. Thus, this type of division works best in small-sized
firms that offer few products lines or services.
Product Departmentation
Product Departmentation: Departments are formed on the basis of a particular product, product line,
or service. Each of these departments can operate fairly autonomously because it has its own set of
functional specialists dedicated to the output of that department. One key advantage is better coordi-
nation among the functional specialists who work on a particular product line - fewer barriers to
communication should develop. Other advantages include flexibility, can be evaluated as profit cen-
tres, better customer service since the client can see more easily who produced the product. Disadvan-
tages are that professionals development might suffer without a mass of professionals working in the
same place at the same time and if departments are not coordinated, they can be working on similar
products or competing with each other.
Matrix Departmentation
Matrix Departmentation: Employees remain members of a functional department while also reporting
to a product or project manager. It is very flexible - people can be moved around as project flow dic-
tates, and projects, products or new regions can be added without total restructuring. In addition, be-
ing focused on a particular product or project can also lead to better communication among the repre-
sentatives from the various functional areas. The disadvantages are that product or project managers
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Document Summary

To achieve its goals, an organization has to do two very basic things: divide labour amount its mem- bers and then 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. There are two dimensions to the division of labour; a vertical dimension and a horizontal dimension. Once labour is divided it must be coordinated to achieve organizational effectiveness. The domain of decision making and authority is reduced as the number of levels in the hierarchy in- creases. As labour is progressively divided vertically, timely communication and coordination can be- come harder to achieve. Labour must be divided vertically enough to ensure proper control but not so much as to make vertical communication and coordination impossible. The horizontal division of labour groups the basic tasks that must be performed into jobs and then into departments so that the organization can achieve its goals.