Division of Labour & Coordination

1. Division of Labour & Coordination Division of labour • Subdivision of work into separate jobs assigned to different people Coordination of work • Informal communication • Formal hierarchy • Standardization • Formalization • Goals/outputs • Training/skills J. Player, New York Times

2. Writing topics • How is your organization structured? • Who reports to whom? Why do you think it is structured in this way? What works? What doesn’t work? What would help the organization function better given the contingencies of org structure.

3. Organizational Structure and Design Chapter 16

4. DIVISION OF LABOUR: A SUMMARY Division of Labour Dimension Low High Degree of specialization General tasks Highly specialized tasks Typical organizational size Small Large Economic efficiency Inefficient Highly efficient

5. Elements of Organizational Structure Department- alization Span of Control Organizational Structure Elements Formalization Centralization

6. Span of Control • Number of people directly reporting to the next level • Assumes coordination through direct supervision • Wider span of control possible when: • with other coordinating methods • employees perform similar tasks • tasks are routine

7. Chief Executive Chief Executive Tall versus Flat Organizations: Comparison Tall hierarchy Relatively narrow span of control Flat hierarchy Relatively wide span of control

8. Organizational crises • Management desire for control • Increase consistency, reduce costs • Complexity — size, diversity • Desire for empowerment Centralization Decentralization Forces for (De)centralization

9. DECENTRALIZATION: BENEFITS WHEN LOW AND WHEN HIGH Low Decentralization High decentralization (High centralization) (low centralization) Eliminates the additional respon- Can eliminate levels of management, sibility not desired by people making a leaner organization performing routine jobs Permits crucial decisions to be Promotes greater opportunities for made by individuals who have decisions to be made by people closest the “big picture” to problems

10. Formalization • The degree to which organizations standardize behaviour through rules, procedures, formal training and related mechanisms. • Strengths and limits?

11. Mechanistic Organic • High formalization • Narrow span of control • High centralization • Low formalization • Wide span of control • Low centralization Mechanistic vs. Organic Structures

12. MECHANISTIC VERSUS ORGANIC DESIGNS: A bird’s eye view Structure Dimension Mechanistic Organic Stability Change unlikely Change likely Specialization Many specialists Many generalists Formal rules Rigid rules Considerable flexibility Authority Centralized in Decentralized, diffused few top people throughout the organization

13. Effects of Departmentalization • How are employees and their activities grouped together? • Areas of common supervision • Establishes work teams and supervision structure • Creates common resources, measures of performance, etc • Encourages informal communication among people and subunits 5 pure types of departmentalization…

14. Simple • Few employees reporting directly to one person (owner) Owner Employee Employee Employee

15. Functional Organizational Structure • Organizes employees around skills orother resources (marketing, production) • Create subordinate goals President Marketing Finance Production

16. Divisionalized Structure Organizes employees around outputs,clients, or geographic areas President Consumer Products Enterprise Systems Laserjet Solutions

17. Engineering Manager Marketing Manager Software Manager Project-Based Matrix Structure Employees are temporarily assigned to a specificproject team and have a permanent functional unit President Project A Manager Project B Manager Project C Manager

18. HYBRID structures • Parts are combined to maintain balance of power and effectiveness across functional, product, geographic and client focused units

19. Features of Team-Based Structures • Structure is built around Self-directed work teams rather than individuals • Teams organized around work processes • Very flat span of control • Very little formalization • Most supervisory activities are delegated to the team • Usually found within divisionalized structure • Very responsive and flexible; empowerment is high; reduced need for managers; time consuming; ambiquity

20. Network/Virtual Organizational Structure MarketingFirm(U.K.) ProductDevelopmentFirm(France) CoreFirm(Canada) CustomerServiceFirm(U.S.A.) ProductionFirm(China) AccountingFirm(Canada)

21. Contingencies • Organizational size • Technology • External environment • Organizational strategy

22. Types of Organizational Technology Assembly Line Engineering Projects High Analyzability Skilled Trades Scientific Research Low Analyzability Low Variety High Variety

23. Dynamic Stable • High rate of change • Use team-based, network, or other organic structure • Steady conditions, predictable change • Use mechanistic structure Complex Simple • Many elements (such as stakeholders) • Decentralize • Few environmental elements • Less need to decentralize Org. Environment & Structure

24. Diverse Integrated • Variety of products, clients, locations • Divisional form aligned with the diversity • Single product, client, location • Don’t need divisional form Hostile Munificant • Competition and resource scarcity • Use organic structure for responsiveness • Plenty of resources and product demand • Less need for organic structure Org. Environment & Structure (con’t)