Kapitel 3 PDF

Kapitel 3 1 Specialization Definition: The extent to which labor is split into specific jobs with specified activities (division of labor). -> If specialization is intense each employee performs a narrow range of tasks Division of labour can be done by: - Professional knowledge (Tax, accoun...

Kapitel 3 1 Specialization Definition: The extent to which labor is split into specific jobs with specified activities (division of labor). -> If specialization is intense each employee performs a narrow range of tasks Division of labour can be done by: - Professional knowledge (Tax, accounting, software programming) - Horizontal specialization (natural and logic sequence of jobs the organization does (assembly line) - Vertical specialization (according to line of hierarchy of authority, e.g. Finance – Accounting – Storage of Documents) A Job has a lower degree of vertical specialization the higher the degree of decision-making and control is (increasing complexity) Jobs Line Jobs - Executive position: has the authority to make decisions and give tasks to employees in lower positions. Supporting Jobs - Staff Position, assistance position - Consult and support executive positions - Often highly specialized - In general no right to decide or direct others Dilemma of Specialization The more specialized an organization, the more complex and difficult is its coordination Economic Advantage Disadvantage High efficiency Vulnerability in case of interruptions (depend.) Low logistical efforts Human diseconomies possible Sufficiency of certain skill High degree of coordination necessary At first there is a decrease of marginal costs and high productivity by focus but then people are demotivated, there is overcrowding, overdependence due to overspecialization Basic Concepts of Departmentalization Departmentalization = Processes in which organization is structurally divided by combining jobs in departments according to common or shared characteristics Functional Grouping: Places together employees who perform similar functions Divisonal Grouping: Activities are grouped alternatively according to: Regions, Outcomes, Customers 2 Span of Control Definition: The number of employees that a manager or supervisor can effectively oversee and manage directly. Factors determining the span: - Required/needed contacts - Degree of specialization - Ability to communicate Increasing Complexity as Span of Control Increases - As span increases there is a disproportionate increase of need of coordination relationships - Critical in determining the span is frequency and intensity of relationships NOT THE NUMBER OF SUBORDINATES! What happens if the middle management is eliminated? - Span of control increases, meaning fewer managers will need to oversee more employees This can result in: - Increased workload for remaining managers - Potential breakdown in communication: Can lead to slower decision-making and breakdown in comm. as fewer managers are available to bridge the gap between top level and execution level - Risk of reduced oversight and control: Harder for managers to effectively monitor and guide their subordinates, leading to inefficiencies and lower overall performance Suggestions: Redistribute responsibilities: Clearly define and delegate tasks to remaining managers or create self-managed teams that require less supervision Training for Managers: Equip remaining managers with the necessary skills and tool to handle a larger span of control effectively Factors influencing span of control Horizontal Specialization: More specialized tasks need closer supervision, narrowing the span. Decentralization: More autonomy at lower levels widens the span since less oversight is needed. Standardization: Well-defined, routine tasks allow managers to oversee more employees, widening the span. Informal Ties: Strong relationships improve communication, enabling a wider span of control. Vertical Differentiation: More management levels usually result in a narrower span. Advantages of a narrow span of control Advantages of a broad span of control - Allows the manager to communicate - Message receive the more employees more quickly with employee and faster, as less layers of management control them more easy pass the message through organization - Feedback of employees more effective - Less manager = less costs - Less management skill required Spans of Control by Functions Why is the design of spans different? Function-Specific Needs: Different functions (e.g., sales, engineering) have different requirements for supervision. Tightness of Control: Functions that need tight control or close supervision (e.g., R&D) may have a narrower span of control. Standardization: Highly standardized tasks (e.g., manufacturing) can operate with a wider span of control and fewer hierarchy levels. Hierarchy Levels: The number of levels in the hierarchy depends on how complex and specialized the tasks are within each function. 3) Centralization and Decentralization Centralization Definition: When important processes or decisions are handled by a central unit rather than by individual departments. - Makes the most sense for activities which are either don’t add much value to core business or are extremely important and should be managed centrally, like HR Strategic Reasons for Centralization Commonality: - Centralized activities leverage scale and reduce costs (e.g., manufacturing, IT systems). - Common initiatives like HR, compliance, and central warehousing. - New product introductions follow centralized processes for efficiency. Financial implications: - High-value decisions require expertise (e.g., equipment purchases). - Capitalize on size benefits (e.g., supplier negotiations, government lobbying). Outsourcing preparation: - Centralized processes support successful outsourcing and smooth handover. - Common culture post-merger: Standard processes aid integration and foster desired behavior. Talent mobility: - Standard practices help managers adapt to new positions quickly. Advantages Disadvantages Can ensure thorough debate taking in account Slower response to local variations and all issues conditions Concentration of expertise makes it easier to Less likely to take account of local knowledge develop new services and promote best practice methods Retains control over major/costly decisions May lack relevant knowledge for good decisions Decentralization Definition: Decentralization means that decisions or processes happen inside each individual unit or department, instead of being handled centrally. It works best when the tasks are either very important for the unit’s core activities or not very important for the whole group. For example, each division like "Cars" or "Buses" has its own HR department. Reasons for Decentralization: 1. Faster decision-making: Decentralized units can make decisions without waiting for approval from higher levels, which speeds up the process. 2. Better adaptability: Each unit can respond quickly to local needs or changes in the environment. 3. Empowerment of local managers: Managers at lower levels feel more responsible and are empowered to make important decisions. 4. Reduced workload for top management: Top leaders are not overwhelmed by day-to- day decisions, allowing them to focus on strategic goals. Advantages Disadvantages Faster decision-making: Local managers can Different units may make decisions hthat make decisions quickly without waiting for conflict with overall company policies, leading approval to inconsistencies Increased Flexibility May duplicate functions or processes, leading to inefficiencies Gives more responsibility to low level Local managers may not have the broader managers and employes, boosting motivation perspective or information that central management has, leading to decisions that may not be optimal for the entire organization. Strategic Reasons for Decentralization Empowerment and Motivation: Decentralization increases identification and motivation by giving decision-making power. Speed: Faster decision-making without the need to coordinate activities. Talent Development and Innovation: Local decision-making expands knowledge and allows for creative, alternative solutions. 4) Formalization Definition: How much an Organization relies on written rules and guidelines. ➔ The bigger the company the more formalized it tends to be, meaning there are more documents like procedures, job descripitions, regulations and manuals ➔ Important for industries where safety and precision are critical, like aircraft Gutenberg’s Principle ➔ Best organizational success is achieved when similar and repetitive tasks are guided by general rules. - If there are too few rules (under-organization) things are chaotic - If there are too many (over-organization) it becomes rigid and inefficient - Optimum is when there is just right amount of structure Benefits of Formalization - Formalization controls behavior and increases task transparency. - Interdependencies are easier to identify and manage. - Formalization simplifies responsibility changes and improves coordination Formal and Informal Organization - Formal rules can be substituted by informal rules that develop over time and are difficult to abolish through formal directives - Informal rules can relief top-management by improving coordination positions and departments but can also be barrier to change