MGHB02H3 Chapter Notes - Chapter 14: Flat Organization, Organizational Chart, Job Design
ProfessorJulie Mc Carthy
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Questions and Exercises prepared by Alan Saks.
I. What Is Organizational Structure?
Organizational structure is the manner in which an organization divides its labour into specific tasks
and achieves coordination among these tasks. It broadly refers to how the organization’s individuals and
groups are put together or organized to accomplish work. Organizational structure intervenes between
goals and organizational accomplishments and thus influences organizational effectiveness. Structure
affects how effectively and efficiently group effort is coordinated. To achieve its goals, an organization
has to divide labour among its members and then coordinate what has been divided.
II. The Division and Coordination of Labour
Labour has to be divided because individuals have physical and intellectual limitations. There are two
asic 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.
A. Vertical Division of Labour
The vertical division of labour is concerned primarily with apportioning authority for planning and
decision making. A couple of key themes or issues underlie the vertical division of labour.
Autonomy and Control. The domain of decision making and authority is reduced as the number of levels
in the hierarchy increases. A flatter hierarchy pushes authority lower and involves people further down
the hierarchy in more decisions.
Communication. As labour is progressively divided vertically, timely communication and coordination
can become harder to achieve. As the number of levels in the hierarchy increases, filtering is more likely
B. Horizontal Division of Labour
The horizontal division of labour involves grouping the basic tasks that must be performed into jobs and
then into departments so that the organization can achieve its goals. Just as organizations differ in the
extent to which they divide labour vertically, they also differ in the extent of horizontal division of
labour. A couple of key themes or issues underlie the horizontal division of labour.
Job Design. Job design is an important component in the horizontal division of labour. The horizontal
division of labour strongly affects job design and it has profound implications for the degree of
coordination necessary. It also has implications for the vertical division of labour and where control over
work processes should logically reside.
Differentiation. Differentiation is the tendency for managers in separate functions or departments to
differ in terms of goals, time spans, and interpersonal styles. As organizations engage in increased
horizontal division of labour, they usually become more and more differentiated.
One way of grouping jobs is to assign them to departments. The assignment of jobs to departments is
called departmentation. It represents one of the core aspects of horizontal division of labour. There are
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several methods of departmentation.
Functional departmentation. Under functional departmentation, employees with closely related skills
and responsibilities (functions) are located in the same department. The main advantage of functional
departmentation is efficiency. It works best in small to medium-sized firms that offer relatively few
roduct lines or services.
Product departmentation. Under product departmentation, departments are formed on the basis of a
articular product, product line, or service. Each of these departments can operate fairly autonomously.
A key advantage is better coordination and fewer barriers to communication among the functional
specialists who work on a particular product line. They also have more potential for responding to
customers in a timely way. A disadvantage is that product-oriented departments might actually work at
Matrix departmentation. Matrix departmentation is an attempt to capitalize simultaneously on the
strengths of both functional and product departmentation. Employees remain members of a functional
department while also reporting to a product or project manager. As a result, it is very flexible. Problems
could arise when product or project managers do not see eye-to-eye with various functional managers
and because employees assigned to a product or project team in essence report to a functional manager
as well as a product or project manager.
Other Forms of Departmentation. Several other forms of departmentation also exist. Under geographic
departmentation, relatively self-contained units deliver the organization's products or services in
specific geographic territories. Under customer departmentation, relatively self-contained units deliver
the organization's products or services to specific customer groups. The obvious goal is to provide better
service to each customer group through specialization. Finally, it is not unusual to see hybrid
departmentation, which involves some combination of these structures. In other words, a structure
ased on some mixture of functional, product, geographic, or customer departmentation. They attempt to
capitalize on the strengths of various structures, while avoiding the weaknesses of others.
D. Basic Methods of Coordinating Divided Labour
The tasks that help organizations achieve its goals must be coordinated so that goal accomplishment is
realized. Coordination is the process of facilitating timing, communication, and feedback among work
tasks. There are five basic methods of coordination.
Direct Supervision. This is a very traditional form of coordination. Working through the chain of
command, designated supervisors or managers coordinate the work of their subordinates.
Standardization of Work Processes. Some jobs are so routine that the technology itself provides a means
of coordination and little direct supervision is necessary for them to be coordinated. Work processes can
also be standardized by rules and regulations.
Standardization of Outputs. Coordination can also be achieved through the standardization of work
outputs. The concern shifts to ensuring that the work meets certain physical and economic standards.
Standardization of Skills. Coordination can be achieved through the standardization of skills. This is the
case when technicians and professionals know what to expect of each other because of their standard
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