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
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Organizational Structure and
Design
Chapter 16
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DIVISION OF LABOUR: A SUMMARY
Division of Labour
High
Dimension
Low
Degree of specialization
General tasks
Highly specialized tasks
Typical organizational size
Small
Large
Economic efficiency
Inefficient
Highly efficient
Elements of Organizational Structure
Departmentalization
Span of
Control
Organizational
Structure
Elements
Formalization
Centralization
4
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
5
Tall versus Flat Organizations: Comparison
Flat hierarchy
Tall hierarchy
Chief
Executive
Chief
Executive
Relatively wide
span of control
Relatively narrow
span of control
Forces for (De)centralization
Centralization
• Organizational crises
• Management desire for control
• Increase consistency, reduce costs
• Complexity — size, diversity
• Desire for empowerment
Decentralization
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DECENTRALIZATION: BENEFITS
WHEN LOW AND WHEN HIGH
Low Decentralization
(High centralization)
High decentralization
(low centralization)
Eliminates the additional responsibility not desired by people
performing routine jobs
Can eliminate levels of management,
making a leaner organization
Permits crucial decisions to be
made by individuals who have
the “big picture”
Promotes greater opportunities for
decisions to be made by people closest
to problems
Formalization
• 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 Structures
Mechanistic
Organic
• High formalization
• Low formalization
• Narrow span of control
• Wide span of control
• High centralization
• Low centralization
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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
few top people
Decentralized, diffused
throughout the
organization
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…
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Simple
• Few employees reporting directly to one
person (owner)
Owner
Employee
Employee
Employee
13
Functional Organizational Structure
•Organizes employees around skills or
other resources (marketing, production)
•Create subordinate goals
President
Finance
Production
Marketing
14
Divisionalized Structure
Organizes employees around outputs,
clients, or geographic areas
President
Enterprise
Systems
Laserjet
Solutions
Consumer
Products
15
Project-Based Matrix Structure
Employees are temporarily assigned to a specific
project team and have a permanent functional unit
President
Engineering
Manager
Marketing
Manager
Software
Manager
Project A
Manager
Project B
Manager
Project C
Manager
16
HYBRID structures
• Parts are combined to maintain balance
of power and effectiveness across
functional, product, geographic and
client focused units
17
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
18
Network/Virtual Organizational
Structure
Product
Development
Firm
(France)
Marketing
Firm
(U.K.)
Core
Firm
(Canada)
Customer
Service
Firm
(U.S.A.)
Production
Firm
(China)
Accounting
Firm
(Canada)
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Contingencies
• Organizational size
• Technology
• External environment
• Organizational strategy
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Types of Organizational Technology
High
Analyzability
Low
Analyzability
Assembly
Line
Engineering
Projects
Skilled
Trades
Scientific
Research
Low
Variety
High
Variety
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Org. Environment & Structure
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
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Org. Environment & Structure (con’t)
Diverse
• Variety of products,
clients, locations
• Divisional form aligned
with the diversity
Hostile
• Competition and resource
scarcity
• Use organic structure for
responsiveness
Integrated
• Single product, client,
location
• Don’t need divisional form
Munificant
• Plenty of resources and
product demand
• Less need for organic
structure
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