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Division of Labour & CoordinationDivision of Labour & CoordinationDivision of Labour & CoordinationDivision of Labour & Coordination

J. Player, New York Times

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

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Writing topicsWriting topicsWriting topicsWriting 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.

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Organizational Structure and Organizational Structure and DesignDesignOrganizational Structure and Organizational Structure and DesignDesign

Chapter 16

Division of LabourDimension Low High

Degree of specialization General tasks Highly specialized tasks

Typical organizational size Small Large

Economic efficiency Inefficient Highly efficient

DIVISION OF LABOUR: A SUMMARYDIVISION OF LABOUR: A SUMMARY

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OrganizationalOrganizationalStructureStructureElementsElements

Span ofSpan ofControlControl

CentralizationCentralization

Department-Department-alizationalization

FormalizationFormalization

Elements of Organizational StructureElements of Organizational StructureElements of Organizational StructureElements of Organizational Structure

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Span of ControlSpan of ControlSpan of ControlSpan 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

Tall versus Flat Organizations: ComparisonTall versus Flat Organizations: ComparisonChief

Executive

ChiefExecutive

Tal

l hie

rarc

hy

Fla

t h

iera

rch

y

Relatively narrowspan of control

Relatively widespan of control

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• Organizational crisesOrganizational crises• Management desire for controlManagement desire for control• Increase consistency, reduce costsIncrease consistency, reduce costs

CentralizationCentralization

• Complexity — size, diversityComplexity — size, diversity• Desire for empowermentDesire for empowerment

DecentralizationDecentralization

Forces for (De)centralizationForces for (De)centralizationForces for (De)centralizationForces for (De)centralization

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 organizationperforming routine jobs

Permits crucial decisions to be Promotes greater opportunities formade by individuals who have decisions to be made by people closestthe “big picture” to problems

DECENTRALIZATION: BENEFITSDECENTRALIZATION: BENEFITSWHEN LOW AND WHEN HIGHWHEN LOW AND WHEN HIGH

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FormalizationFormalizationFormalizationFormalization

• The degree to which organizations standardize behaviour through rules, procedures, formal training and related mechanisms.

• Strengths and limits?

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Mechanistic vs. Organic StructuresMechanistic vs. Organic StructuresMechanistic vs. Organic StructuresMechanistic vs. Organic Structures

Mechanistic

• High formalizationHigh formalization

• Narrow span of controlNarrow span of control

• High centralizationHigh centralization

Organic

• Low formalizationLow formalization

• Wide span of controlWide span of control

• Low centralizationLow centralization

StructureDimension 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

MECHANISTIC VERSUS ORGANIC DESIGNS:MECHANISTIC VERSUS ORGANIC DESIGNS:A bird’s eye viewA bird’s eye view

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Effects of DepartmentalizationEffects of DepartmentalizationEffects of DepartmentalizationEffects 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…

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Simple Simple Simple Simple

• Few employees reporting directly to one person (owner)

OwnerOwner

EmployeeEmployee EmployeeEmployee EmployeeEmployee

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•Organizes employees around skills orother resources (marketing, production)•Create subordinate goals

Functional Organizational StructureFunctional Organizational StructureFunctional Organizational StructureFunctional Organizational Structure

PresidentPresident

FinanceFinance ProductionProduction MarketingMarketing

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Organizes employees around outputs,clients, or geographic areas

Divisionalized StructureDivisionalized StructureDivisionalized StructureDivisionalized Structure

PresidentPresident

EnterpriseEnterpriseSystemsSystems

LaserjetLaserjetSolutionsSolutions

ConsumerConsumerProductsProducts

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Project CProject CManagerManager

Project BProject BManagerManager

Project AProject AManagerManager

EngineeringEngineeringManagerManager

MarketingMarketingManagerManager

SoftwareSoftwareManagerManager

Employees are temporarily assigned to a specificproject team and have a permanent functional unit

Project-Based Matrix StructureProject-Based Matrix StructureProject-Based Matrix StructureProject-Based Matrix Structure

PresidentPresident

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HYBRID structuresHYBRID structuresHYBRID structuresHYBRID structures

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

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Features of Team-Based StructuresFeatures of Team-Based StructuresFeatures of Team-Based StructuresFeatures 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

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CoreCoreFirmFirm

(Canada)(Canada)

ProductProductDevelopmentDevelopment

FirmFirm(France)(France)

MarketingMarketingFirmFirm

(U.K.)(U.K.)

CustomerCustomerServiceService

FirmFirm(U.S.A.)(U.S.A.)

ProductionProductionFirmFirm

(China)(China)

AccountingAccountingFirmFirm

(Canada)(Canada)

Network/Virtual Organizational Network/Virtual Organizational StructureStructureNetwork/Virtual Organizational Network/Virtual Organizational StructureStructure

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ContingenciesContingenciesContingenciesContingencies

• Organizational size

• Technology

• External environment

• Organizational strategy

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HighAnalyzability

LowAnalyzability

High Variety

Low Variety

ScientificResearch

AssemblyLine

SkilledTrades

EngineeringProjects

Types of Organizational TechnologyTypes of Organizational TechnologyTypes of Organizational TechnologyTypes of Organizational Technology

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Org. Environment & StructureOrg. Environment & StructureOrg. Environment & StructureOrg. Environment & Structure

DynamicDynamic

• High rate of change• Use team-based, network,

or other organic structure

StableStable

• Steady conditions, predictable change

• Use mechanistic structure

ComplexComplex

• Many elements (such as stakeholders)

• Decentralize

SimpleSimple

• Few environmental elements

• Less need to decentralize

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Org. Environment & Structure (con’t)Org. Environment & Structure (con’t)Org. Environment & Structure (con’t)Org. Environment & Structure (con’t)

DiverseDiverse

• Variety of products, clients, locations

• Divisional form aligned with the diversity

HostileHostile

• Competition and resource scarcity

• Use organic structure for responsiveness

IntegratedIntegrated

• Single product, client, location

• Don’t need divisional form

MunificantMunificant

• Plenty of resources and product demand

• Less need for organic structure