Unit 7.4 & 7.5 – Departmentalization & The Span of Management

Departmentalization
the process of grouping jobs into manageable units
Departmentalization by function
grouping jobs that relate to the same organizational activity.
disadvantages of Departmentalization by function
it can lead to slow decision making and it tends to emphasize the department over the organization as a whole
Departmentalization by product
grouping activities related to a particular good or service
Departmentalization by location
grouping activities according to the defined geographic area in which they are performed.
Departmentalization by customer
grouping activities according to the needs of various customer populations.
advantage of Departmentalization by customer
allows the firm to deal efficiently with unique customers or customer groups
disadvantage of Departmentalization by customer
a larger-than-usual administrative staff is needed
Delegation
assigning part of a manager’s work and power to other workers.
three steps of the delegation process
assign responsibility,

grant authority, &

create accountability

Responsibility
the duty to do a job or perform a task
Authority
the power, within an organization, to accomplish an assigned job or task.
Accountability
the obligation of a worker to accomplish an assigned job or task.
Barriers to Delegation
manager does not trust the employee to complete the task

manager fears the employee will perform exceptionally and attract the notice of higher level managers.

managers do not delegate because they are disorganized and they are not able to plan and assign work effectively

decentralized organization
an organization in which management intentionally attempts to spread authority widely in the lower levels of the organization.
centralized organization
an organization that systematically works to concentrate authority at the upper levels of the organization.
Factors that influence the extent to which a firm is decentralized
external environment in which the firm operates

the nature of the decision itself

the abilities of lower-level managers. If managers do not have strong decision-making skills, top managers will be reluctant to decentralize

a firm that has practiced centralization or decentralization is likely to maintain that same posture in the future

span of management/control
the number of workers who report directly to one manager.
wide span of control
manager has a larger number of subordinates
narrow span of control
manager has only a few subordinates
span of management may be wide when:
(1) the manager and the subordinates are very competent

(2) the organization has a well-established set of standard operating procedures

(3) few new problems are expected to arise.

span of management should be narrow when:
(1) workers are physically located far from one another

(2) the manager has much work to do in addition to supervising workers

(3) a great deal of interaction is required between supervisor and workers

(4) new problems arise frequently

Organizational height
the number of layers, or levels, of management in a firm.
If the span of management is wide:
fewer levels are needed, and the organization is flat
If the span of management is narrow:
more levels are needed, and the resulting organization is tall