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Chapter 14

Chapter 14

by OC91

Department
Management (MGH)
Course Code
MGHD27H3
Professor
Joanna Heathcote
Chapter
14

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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
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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
Disadvantages/Problems
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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Mutual Adjustment relies on informal communication to coordinate tasks
It is most useful for coordinating the most simple and the most complex tasks in the workplace
On a scale with least worker discretion on one side and most worker discretion (enriched) on the other the
extremes are direct supervision and mutual adjustment, respectively
The method of coordination also affects the job design
The task can dictate the coordination method used
OTHER METHODS OF COORDINATION
Integration The process of attaining coordination across differentiated departments
Good Integration achieves coordination without reducing the differences that enable each
department to do its own job well
Liaison Roles A person who is assigned to help achieve coordination between his or her
department and another department
Task Forces and Teams Temporary groups set up to solve coordination problems across several
departments
Integrators Organizational members permanently assigned to facilitate coordination between
departments
Good for dealing with conflicts that are:
Highly interdependent
Have very diverse goals and orientations
Operate in a very ambiguous environment
Integrator mus be unbiased, rely on expert power, must be able to identify strongly with the
overall organizations and its goals
TRADITIONAL STRUCTURAL CHARACTERISTICS
Span of Control The number of subordinates supervised by a manager
The larger the span the less potential there is for coordination by direct supervision
Usually the more complex the task the smaller the span of control
Flat Versus Tall A flat organization has relatively few levels in its hierarchy of authority, while a tall
organization has many levels
Flatter structures tend to push decision-making powers downward in the organization because a
goiven number of decisions are apportioned among fewer levels
Also, flatter structures generally enhance vertical communication and coordination
Formalization The extent to which work roles are highly defined by an organization
Tolerates very little variability in the way members perform their tasks
Formalization stems from either the nature of the job itself or the rules and procedures the org decides
to implement
Centralization The extent to which decision-making power is localized in a particular part of an
organization
The power for all key decisions would rest in a single individual
Usually proper levels of centralization would require the areas that have the most customer contact to
be decentralized and internal functions to be centralized
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