Divisional Structure and Organizational Design
Divisional Structure: Advantages and Disadvantages
Advantages of Divisional Structure:
- Focus on a specific product, service, or market.
- Clearly defines responsibilities and accountability.
- Provides autonomy to managers.
- Provides supporting services from the center to divisions.
Disadvantages of Divisional Structure:
- May develop a conflict of interests between divisions.
- Possibility of a drift in meeting corporate objectives.
- May produce neglect of long-term priorities.
- Central control may stifle local innovation.
Coordination in Organizations
Coordination is the integration of the activities of individuals and units into a concerted effort that works towards a common objective. This requires a well-understood chain of command and span of management.
Span of Management
Factors influencing the width of control:
- Complexity of work activities.
- Variety of work activities.
- Quality of manager.
- Quality of subordinates.
Relationship to the span of management:
- The more complex the work, the narrower the span.
- The greater the variety of work, the narrower the span.
- The more talented the manager, the wider the span.
- The more responsible and able the subordinates, the wider the span.
Organizational Design in Practice
It is important that:
- As an organization grows in size, the design is increasingly decentralized, and managers delegate decision-making to those parts of the organization best placed to make these particular decisions.
- As an organization changes its strategy, the organizational design remains consistent with this change.
- As the priorities, products, and services of an organization change over time, organizational design reflects these changes.
- As technology changes, organizational design changes because of alterations to information requirements and decision-making.
Division of Work
Division of work is the breaking down of tasks into component parts so that individuals are responsible for an activity or a limited set of activities instead of the whole task. For example, McDonald’s restaurants have broken down the process of producing food into small steps.
Advantages of Work Division:
- Less skilled workers can be used because the task has been simplified.
- Training can be quick and relatively easy.
- Proficiency is gained very rapidly due to task repetition.
- Efficiency increases because workers do not waste time moving between tasks, increasing operational speed.
- Workers can be assigned to operations that best suit their aptitudes and preferences.
Disadvantages of Work Division:
- Workers become skilled in only one operation, requiring retraining when that skill is no longer needed.
- Mechanization has reduced demand for workers with limited skills.
- Retaining workers to higher skill levels is difficult without high basic levels of education and training.
- Constant repetition of a single operation can be boring and demotivating.
- Workers rely on a constant supply of products, potentially causing production bottlenecks.
- Workers may lack motivation due to performing a small part of the overall process.