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

Bundling tasks… learning objectives Identify and apply the trade-offs in bundling tasks into jobs and subunits Managerial Economics and Organizational Architecture, Chapter 13

Managerial Economics and Organizational Architecture, Chapter 13 Task assignment Specialized perform limited number of functions e.g. traditional assembly line Broad perform multiple functions e.g. professors Managerial Economics and Organizational Architecture, Chapter 13

Specialized task assignment Benefits comparative advantage lower cross-training expense Costs foregone complementarities across tasks coordination costs functional myopia reduced flexibility Managerial Economics and Organizational Architecture, Chapter 13

Managerial Economics and Organizational Architecture, Chapter 13 Tasks at Finware Managerial Economics and Organizational Architecture, Chapter 13

Methods of grouping jobs U-form of organization (unitary) by functional specialty each primary function in one major subunit Managerial Economics and Organizational Architecture, Chapter 13

Finware as functional organization Managerial Economics and Organizational Architecture, Chapter 13

Functional subunits advantages and disadvantages 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 Managerial Economics and Organizational Architecture, Chapter 13

Methods of grouping jobs U-form of organization (unitary) M-form of organization (multidivisional) collection of business units product geographic area each unit has multiple functions Managerial Economics and Organizational Architecture, Chapter 13

Finware as product and geographic organization Managerial Economics and Organizational Architecture, Chapter 13

Product/geographic subunits advantages and disadvantages 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 Managerial Economics and Organizational Architecture, Chapter 13

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 Managerial Economics and Organizational Architecture, Chapter 13

Managerial Economics and Organizational Architecture, Chapter 13 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 Managerial Economics and Organizational Architecture, Chapter 13

Finware as matrix organization Managerial Economics and Organizational Architecture, Chapter 13

Reorganization of IBM Credit Managerial Economics and Organizational Architecture, Chapter 13

Managerial Economics and Organizational Architecture, Chapter 13 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 Managerial Economics and Organizational Architecture, Chapter 13

IBM Credit with functional organization Managerial Economics and Organizational Architecture, Chapter 13

A “reengineered” IBM Credit New technology and information systems supported task reassignment and job redesign As reorganized, empowered caseworkers handle process in 4 hours Managerial Economics and Organizational Architecture, Chapter 13

IBM Credit’s revised organization Managerial Economics and Organizational Architecture, Chapter 13

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 Managerial Economics and Organizational Architecture, Chapter 13

Battle of the functional managers game matrix Managerial Economics and Organizational Architecture, Chapter 13