Principles of Management
Definition: Organizational design is engaged when managers develop or change an organization`s structure. Organizational Design is a process that involves decisions about the following six key elements:
I.
Work Specialization: describes the degree to which tasks in an organization are divided into separate jobs. The main idea of this organizational design is that an entire job is not done by one individual. It is broken down into steps, and a different person completes each step. Individual employees specialize in doing part of an activity rather than the entire activity
II.
Departmentalization It is the basis by which jobs are grouped together. For instance every organization has its own specific way of classifying and grouping work activities.
There are five common forms of departmentalization:
I.
Functional Departmentalization. As shown it groups jobs by functions performed. It can be used in all kinds of organizations; it depends on the goals each of them wants to achieve.
Example of Functional Departmentalization
Different aspects on this type of departmentalization:
Positive Aspects o o o Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations Coordination within functional area
In-depth specialization
Negative Aspects o o
Poor communication across functional areas
Limited view of organizational goals
2. Product Departmentalization . It groups jobs by product line. Each manager is responsible of an area within the organization depending of his/her specialization Example of Product Departmentalization
Source: Bombardier Annual Report
Different aspects on this type of departmentalization:
Positive Aspects
Allows specialization in particular products and services o Managers can become experts in their industry o Closer to customers o Negative Aspects
Duplication of functions o Limited view of organizational goals o 3.
I.
Work Specialization: describes the degree to which tasks in an organization are divided into separate jobs. The main idea of this organizational design is that an entire job is not done by one individual. It is broken down into steps, and a different person completes each step. Individual employees specialize in doing part of an activity rather than the entire activity
II.
Departmentalization It is the basis by which jobs are grouped together. For instance every organization has its own specific way of classifying and grouping work activities.
There are five common forms of departmentalization:
I.
Functional Departmentalization. As shown it groups jobs by functions performed. It can be used in all kinds of organizations; it depends on the goals each of them wants to achieve.
Example of Functional Departmentalization
Different aspects on this type of departmentalization:
Positive Aspects o o o Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations Coordination within functional area
In-depth specialization
Negative Aspects o o
Poor communication across functional areas
Limited view of organizational goals
2. Product Departmentalization . It groups jobs by product line. Each manager is responsible of an area within the organization depending of his/her specialization Example of Product Departmentalization
Source: Bombardier Annual Report
Different aspects on this type of departmentalization:
Positive Aspects
Allows specialization in particular products and services o Managers can become experts in their industry o Closer to customers o Negative Aspects
Duplication of functions o Limited view of organizational goals o 3.