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Chapter 14

Chapter 14 Notes

Management (MGH)
Course Code
Julie Mc Carthy

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Chapter 14 Organizational Structure Notes
What is Organizational Structure?
to achieve its goals, a firm has to do 2 things: divide labour among its members and then coordinate what has been divided
organizational structure manner in which a firm divides its labour into specific tasks and achieves coordination among tasks
The Division and Coordination of Labour
Vertical Division of Labour
vertical division of labour is concerned primarily with apportioning authority for planning and decision making
separate departments, units, or functions within an organization will vary in the extent to which they vertically divide labour
holding other factors constant, domain of decision making and authority is reduced as number of levels in hierarchy increases
as labour is progressively divided vertically, timely communication and coordination can become harder to achieve
these two themes illustrate that labour must be divided vertically enough to ensure proper control but not so much as to make
vertical communication and coordination impossible, which varies across organizations and across their functional units
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—required workflow is the main basis for this division
as the firm grows, horizontal division of labour is likely, with different groups of employees assigned to perform each task
the horizontal division of labour suggests some specialization on the part of the workforce, which can promote efficiency
the horizontal division of labour is closely tied to job design—(1) the horizontal division of labour strongly affects job design;
(2) it has profound implications for the degree of coordination necessary; and (3) it also has implications for the vertical division
of labour and where control over work processes should logically reside
differentiation tendency for managers in separate units, functions, or departments to differ in terms of goals, time spans, and
interpersonal styles; under high, various organizational units tend to operate more autonomously
differentiation is a natural and necessary consequence of horizontal division of labour, but it points to the need for coordination
functional departmentation employees with closely related skills and responsibilities are assigned to the same department
advantages include efficiency, enhanced communication, enhanced career ladders and training opportunities, and performance of
functional specialists should be easier to measure and evaluate
a disadvantage is high degree of differentiation, leading to poor coordination, slow response, open conflict between departments
product departmentation departments are formed on the basis of a particular product, product line, or service
advantages include better coordination among the functional specialists who work on a particular product line, fewer barriers to
communication, flexibility, can be evaluated as profit centres, and serves the customer or client better
disadvantages include loss of professional development, threatened economies of scale, and inefficiency
matrix departmentation employees remain members of a functional department while reporting to product or project manager
this is an attempt to capitalize simultaneously on the strengths of both functional and product departmentation
it provides a degree of balance between abstract demands of product or project and people who actually do work, resulting in a
better outcome; very flexible; leads to better communication among the representatives from the various functional areas
two interrelated problems threaten—(1) there is no guarantee that product or project managers will see eye-to-eye with the
various functional managers; and (2) employees assigned to a product or project team in essence report to two managers, which
can result in role conflict and stress, especially at performance review time
geographic departmentation relatively self-contained units deliver firm’s products or services in specific geographic territory
this shortens communication channels, allows the firm to cater to regional tastes, and gives some appearance of local control
customer departmentation relatively self-contained units deliver a firm’s products or services to specific customer groups
hybrid departmentation a structure based on some mixture of functional, product, geographic, or customer departmentation
Basic Methods of Coordinating Divided Labour
coordination a process of facilitating time, communication, and feedback among work tasks
there are 5 basic methods of coordination: direct supervision, standardization of work processes, standardization of outputs,
standardization of skills, and mutual adjustment
mutual adjustment relies on informal communication to coordinate tasks
Other Methods of Coordination
integration the process of attaining coordination across differentiated departments
three methods of achieving integration include the use of liaison roles, task forces, and full-time integrators
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