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ECON 308: Employment Decisions. Chapters 13 Week 12: April 12, 2010. Structure of Decision Rights (Ch 13). BUNDLING TASKS INTO JOBS Specialized versus Broad Task Assignment Productive Bundling of Tasks BUNDLING OF JOBS INTO SUBUNITS Grouping Jobs by Function

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econ 308 employment decisions
ECON 308: Employment Decisions

Chapters 13

Week 12: April 12, 2010

structure of decision rights ch 13
Structure of Decision Rights (Ch 13)
  • BUNDLING TASKS INTO JOBS
    • Specialized versus Broad Task Assignment
    • Productive Bundling of Tasks
  • BUNDLING OF JOBS INTO SUBUNITS
    • Grouping Jobs by Function
    • Grouping Jobs by Product or Geography
    • Trade-offs between Functional and Product or Geographic Subunits
  • Environment, Strategy, Architecture Matrix Organizations
    • Mixed Designs
    • Network Organization
    • Organizing within Subunits
bundling tasks into job subunits
Bundling Tasks into Job Subunits
  • Example: FinWare Financial Software Distributor

Function

Service

Sales

Task 1

Task 2

Individuals

Customer

Type

Task 4

Firms

Task 3

methods of grouping jobs
Methods of grouping jobs
  • U-form of organization(unitary)(Smokestack)
    • by functional specialty
      • Sales
      • Finance
      • Engineering
      • Marketing
      • Manufacturing
    • each primary function in one major sub-unit
specialized task assignment assign by function
Specialized task assignment: Assign by function
  • Benefits
    • Comparative Advantage (Different Skill sets)
      • Sales
      • Technicians
    • Lower Cross-Training Costs
  • Costs
    • Foregone complementarities(Car door & Latch)
    • Coordination Costs: ( Insurance sales , underwritting)
    • Functional Myopia
    • Reduced Flexibility
incentive issues
Incentive Issues
  • Cost of monitoring
  • Broad Bundling and compensation (Faculty)
    • Teaching
    • Research
  • Incentive effects
    • Sales: Commission
    • Technicians: Customer Satisfaction
bundling of jobs into sub units
Bundling of Jobs into Sub-units
  • Group by Function
    • Benefits
      • Coordination within the functional area
      • Promotes functional expertise
      • Hiring and reward structure easier to define
    • Problems
      • Management must coordinate
      • Information flows poorly across departments
      • Difficult to compensate profitability
      • Wasted time: (Airport Security 4 per flight)
bundling of jobs into sub units9
Bundling of Jobs into Sub-units
  • Group by Geography
    • Benefits
      • Decentralized decision making authority
      • Managers compensated on performance of division
    • Problems
      • May ignore interdependencies
where functional subunits work well
Where Functional Subunits Work Well
  • Small firms
  • Homogeneous products
  • Stable underlying technology
methods of grouping jobs11
Methods of grouping jobs
  • 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 multidemensional
Matrix Organizations: Multidemensional

Sales Division

Service Division

Business Products Team

Business Sales

Department

Business Service

Department

Consumer Products Team

Consumer Sales

Department

Consumer Service

Department

chrysler
Chrysler
  • Original: Functional
  • Revised: Product teams
    • Engineers
    • Finance
    • Marketing
    • Assembly line production
  • Ex. Moon-roof control on cheaper model
case study ibm credit
Case Study: IBM Credit
  • Valued at $10 billion in 1993
  • Reduced the time needed to process credit applications from 6 days to 4 hours
    • Old task assignment system: Functionally organized
      • Credit Checkers
      • Contract preparers
      • Loan Pricing
      • Document preparation
    • Reorganized task assignment:
      • Case workers
ibm credit s old functional organization
IBM Credit’s Old Functional Organization

General Manager

CreditDepartment

ContractsDepartment

PricingDepartment

DocumentsDepartment

ibm credit s revised organization
IBM Credit’s Revised Organization

General Manager

Case Worker

Case Worker

Case Worker

Case Worker