Managerial Economics and Organizational Architecture, Chapter 13 Decision Rights Bundling Tasks into Jobs and Subunits

Managerial Economics and Organizational Architecture, Chapter 13

Decision Rights

Bundling Tasks into Jobs and Subunits


Bundling tasks…learning objectives

• Identify and apply the trade-offs in bundling tasks into jobs and subunits


Task assignment

• Specialized– perform limited number of functions

• e.g. traditional assembly line

• Broad– perform multiple functions

• e.g. professors


Specialized task assignment

• Benefits– comparative advantage– lower cross-training expense

• Costs– foregone complementarities across tasks– coordination costs– functional myopia– reduced flexibility


Tasks at Finware


Methods of grouping jobs

• U-form of organization (unitary)– by functional specialty– each primary function in one major subunit


Finware as functional organization


Functional subunitsadvantages and disadvantages

• Advantages– promotes effective coordination– promotes functional expertise– well-defined promotion path

• Disadvantages– opportunity cost of senior management time– coordination problems across departments– employee focus on functions, not customers



• U-form of organization (unitary)

• M-form of organization (multidivisional)– collection of business units

• product

• geographic area

– each unit has multiple functions


Finware as product and geographic organization


Product/geographic subunitsadvantages and disadvantages

• Advantages– decision rights tied to specific knowledge– senior management able to focus on strategy– promotes coordination pertinent to product/area

• Disadvantages– unit interdependencies may be ignored– economies may be foregone



• U-form of organization (unitary)

• M-form of organization (multidivisional)

• Matrix organization– intersecting lines of authority– functional departments address performance

reviews and professional development– product/geographic subunits address

customer/client needs


Matrix organizations

• Employees are assigned to two subunits– functional department– other pertinent subunit

• Intersecting lines of authority– functional managers handle performance

reviews– product or other managers provide input


Finware as matrix organization


Reorganization of IBM Credit


IBM Credit originally

• Originally organized around functions– employees assigned specialized set of tasks

within functional area– employees had limited decision authority

• Credit application processing took 6 days


IBM Credit with functional organization


A “reengineered” IBM Credit

• New technology and information systems supported task reassignment and job redesign

• As reorganized, empowered caseworkers handle process in 4 hours


IBM Credit’s revised organization


Battle of the functional managers

• Quick Motorcycle Company– functionally organized

• design department

• marketing department

• New product design options– speed

– safety

• Marketing options– magazine advertising older consumers

– television advertising younger consumers


Battle of the functional managersgame matrix

Documents

Managerial Economics and Organizational Architecture, Chapter 13 Decision Rights Bundling Tasks into Jobs and Subunits