Contents
Departmentalization – the basis on which individuals are grouped into departments and departments into total organizations.
There are 5 approaches to structural design that reflect different uses of the chain of command in departmentalization.
1. Functional approach
People are grouped together in departments by common skills and work activities such as in an engineering departments an accounting department, human resources department, manufacturing department.
Advantages:
- Efficient use of resources. Economies of scale;
- In-depth skill specialization and development;
- Career progress with functional departments;
- Top manager direction and control;
- Excellent coordination of functions;
- High-quality technical problem solving.
Disadvantages:
- Poor communication across functional departments;
- Slow response to external changes, lagging innovation;
- Decisions concentrated at top of hierarchy, creating delay;
- Responsibility for problems is difficult to pinpoint;
- Limited view of organizational goals by-employee;
- Limited general management training for employees.
2. Divisional approach
Departments are grouped together into separate self-contained divisions based on a common product, program or geographical region. Diverse skills rather than similar skills are the basic of departmentalization. (= product structure, program structure or self-contained units).
Advantages:
- Fast response, flexibility in an unstable environment;
- Fosters concern for customers needs;
- Excellent coordination across functional departments;
- Easy pinpointing of responsibility for product problems;
- Emphasis on overall product and division goals;
- Development of general management skills.
Disadvantages:
- Duplication of recourses across divisions;
- Less technical depth and specialization in divisions;
- Poor coordination across divisions;
- Less top management control;
- Competition for corporate resources.
3. Matrix Approach
Functional and divisional chains of command are implemented simultaneously. They overlay one another in the same departments. Two chains of command exist and some employees report to two bosses.
Advantages:
- More effective use of resources than single hierarchy;
- Flexibility, adaptability to changing environment;
- Development of both general and specific management skills;
- Interdisciplinary cooperation, expertise available to all divisions;
- Enlarged tasks for employees.
Disadvantages:
- Frustration and confusion from dual chain of command;
- High conflict between two sides of matrix;
- Many meetings, more discussion than action;
- Human relations training needed;
- Power dominance by one side of matrix.
4. Team approach
The organization creates a series of teams to accomplish specific tasks and to coordinate major departments. Team can exist from the office of the president all the way down to the shop floor.
Advantages:
- Some advantages of functional structure;
- Reduced barriers among departments, increased compromise;
- Less response time, quicker decisions;
- Better morals, enthusiasm from employee involvement;
- Reduced administrative overhead.
Disadvantages:
- Dual loyalties and conflict;
- Time and resources spent on meetings;
- Unplanned decentralization.
5. Variants
Cross-functional team – a group of employees assigned to a functional departments that meets as a team to resolve mutual problems;
Permanent team – a group of participant from several functions which are permanently assigned to solve ongoing problems of common interest;
Reengeneering – the radical redesign of business processes to achieve dramatic improvement in cost, quality, service and speed.
Network approach means that the organization disaggregates major functions into separate companies. A small headquarters organization services are provided by separate organizations working.
Advantages:
- Global competitiveness;
- Workforce flexibility or challenge;
- Reduced administrative overhead.
Disadvantages:
- Can loose organizational part;
- Employee loyalty weekend.
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