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

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

3. 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

4. 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

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

6. 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

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

8. 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

9. 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

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

11. 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

12. 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

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

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

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

16. 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

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

18. 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

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

20. 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

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