What Functions Does Division of Labour Play in Firms - Research Paper Example

 The purpose of this essay is to provide answers to two essay questions as provided on the written course assignment list. The two questions that will be answered are, “What functions does division of labour play in firms/organizations?” and “Why are organizations structured hierarchically? Are there any alternatives?” Q#1: What functions does division of labour play in firms/organizations? The format that will be utilized for answering this question is to first define what division of labour is, then describe its origins. Next this paper will provide examples of how division of labour can be beneficial and detrimental to an organization. Division of labour in its most basic form represents simply a method of organizing work in which the process is broken up into more specialized separate processes. According to the businessdictionary.com (2009), division of labour is a division of tasks and processes so that workers can become a specialist in one specific job function. Whilst the abstract concept of division of labour may be traced back to Plato it was not until Adam Smith published An Inquiry Into the Nature and Causes of the Wealth of Nations (1776) that through the example of pin making, the true potential of the division of labour and increased specialization that a quantitative increase in production can be recognized. At the time of publication Smith had recognized three substantial benefits to the division of labour as observed in pin manufacturing each of which will be covered in detail The first benefits are improvements to a labourer’s dexterity insofar as the labourer recognizes improvements as a result of dedicated focus to a specific task. There is little question that the more time that a person dedicates to a specific task the better they will become at performing that task. However by performing a function day in and day out for many years on a specific function a person gains a masterful understanding of a function. According to a theory as proposed by Gladwell (2008) after performing a function for 10,000 hours somebody is able to recognize mastery of a task and as such this represents a key to success. Returning to the case of pin manufacturing as highlighted by Smith (1776) the specific actions of pin making are Drawing wire. Straightening the wire. Cutting the wire. Putting a point on the wire. Making the head of the pin. Affixing the head. If a person were to only focus their activities on cutting the wire into an exact length, after enough time it is likely that with enough time the person would be able to substantially increase their hourly output. The next advantage of the division of labour would be the time saved by not having to switch from one task to the next. There is no question that time is wasted in performing a function by simply putting down a tool finding the next too and then performing the action. This is a concept that was revolutionized in the manufacturing of automobiles in an assembly line method. For example it was the case that a single person would be responsible for building an engine block on the first generation automobiles. By subdividing each individual function of the manufacture of an engine block into dozens of smaller sub functions, manufacturers could spend less time switching from one function to another and focus just on performing one task. Returning to our example of pin manufacturing rather than spending time drawing the wire and then getting the tools necessary to straighten a wire, a pin make can simply focus on just one function. The last major advantage of utilizing a system hat employs a divison of labour is that a great deal of the machines, tools and other technology have evolved alongside with the system of specialized labour. The best example of this that comes to mind are pneumatic tools such as an ‘air ratchet’. These are tools that used highly compressed gas as a power source for their primary function. If for example a person were to be removing or affixing a tire to a vehicle the function can be performed sluggishly with a normal ratchet wrench, or with a pneumatic air wrench someone can affix or remove dozens of tires an hour. However the startup and use of these tools requires a precise calibration and specific startup time that makes them impractical for infrequent use. Returning to the case of pin manufacturing it is the case that pin making is no longer the delicate time consuming process that it once was but assuming that one were to try and recreate the old process again, instead of using a sharpening stone for putting a point on the wire one could use a specialized tool such as a pneumatic grinder. Not everybody has been a proponent for the application of division of labour. According to the Stanford Encyclopedia of Philosophy (2008 revision) Karl Marx described industrial division of labour as representing a form of alienation in which a person becomes reduced to the condition of a machine. Take the example of Lidl and Aldi grocery retailers in Europe. These companies are frequently the subject of criticism because of the low wages paid to the checkout clerks and the near impossibility of skills upgrading to perform more complex and higher paying job functions within the organization. If it is the case that the job function is of very low monetary function to an organization than it would be the case and there is no need for the person to upgrade their skills then socially speaking the employees are stuck in a live with very little vertical organizational mobility. Building on this argument it is the case that with the increased specialization in an organization it is the case that many companies recognize decreased knowledge by their employees. Anybody who has been so a sole proprietorship music store would typically encounter an employee or owner who has a vast knowledge of music however in many mega chain music stores it is the case that many employees dedicate their work functions tasks that do not build an encyclopedic knowledge of music but are dedicated to to inventory management, stocking shelves, reconciling cash inventories, point of sale, customer service for example. What this amounts to is customers often feel alienated in the buying process because in many cases the floor staff would not be able to help them in their music queries. To counter this method of a division of labour there are still a number of successful business models are in essence the exact opposite of a division of labour model. Some examples of this would be a custom automobile company, candle makers, micro brewers, etc. However it should be noted that in many cases these businesses charge a premium for this service. Q#2: Why are organizations structured hierarchically? Are there any alternatives? There are a number of different potential solutions to the question why are organizations structured hierarchically? To answer this question this paper will first define what an organizational hierarchy is then address what kind of organizations utilize hierarchies. After this point an in depth analysis as to why different organizations employ hierarchies will be given. Next this paper will look at what kind of hierarchies are utilized by different organizations and how these hierarchical formats best meet the specific needs of the organization. Lastly this paper will provide some alternative models that can and have been used by a variety of different organizations to meet their leadership needs. In its most simple form a hierarchy is a structure where every participant except for the entity at the very top is subordinate to at least one other participant. In the case of an organization or firm a hierarchy is simply the structure within the organization. According to BNET.com this structure represents the vertical or horizontal layers of personnel within an organization wherein each layer would be subordinate to the layer that is above it. This structure can typically be codified on a type of organizational chart so that boundaries and roles within an organization can be more clearly defined in terms of employee empowerment and autonomy. Examples of hierarchies in general are found all over the globe in many different forms. It is the case that loosely defined any hierarchy is simply an arrangement of anything in which something is above or below a relative entity. In this respect hierarchies are found in animal species such as primates, right through to complex social structures such as the Catholic Church, Armed Forces, the U.S. Government, or a simple factory. Now that this term is loosely defined one can question why it is the case that organizations use hierarchies. There are a number of different reasons as to why an organization would employ a hierarchy. According to Mintzberg (1979) as espoused in Segal-Horn (1998) it is the case that most organizations operate a hierarchical model as a means of organizational leader’s efficient allocation of resources towards achieving strategic objectives. What this may translate to is three distinct functions that a hierarchy presents. Firstly there is the case that many organizations need leadership in order to achieve goals. Secondly it is the case that there is a perceived notion that in order for an organization to achieve a strategic objective it will almost certainly be the case that tasks must be efficiently allocated to different participants through functional specialization in order to most efficiently achieve this goal. Lastly this model presents the concept of efficiency in the decision making process by employing a hierarchical model. Leadership, perceived or otherwise is a powerful force within an organization as it is the case that without effective leadership the effective allocation of tasks would be very difficult. In organizations there are typically many different tasks that must be performed in order to achieve organizational objectives. If for example there were to be a system in which every participant had to submit input before job tasks could be allocated almost certainly nobody would suggest that they themselves should perform an undesirable task. As such in a traditional top down organizational hierarchy superiors can make subordinates perform tasks that they would not want to do in exchange for the promise of promotion, more money, job retention etc. Inherent in the concept of organizational hierarchy is the concept of functional specialization. Keeping the Henry Ford assembly line model in mind it was the case that up until the application of an assembly line model all cars were built by specialists that partook in the manufacturing process from beginning to end. According to Georgano (1985) it was through the efficient allocation of resources and job tasks on an assembly line that the production of vehicles in a Ford plant was able to increase productivity to the point where specialist manufacturers could no longer compete. In this sense an organizational hierarchy is a much more efficient model of manufacturing an end product. Organizational hierarchy has long been cited as being efficient in cutting down decision making time. With the emergence of a post-bureaucratic style of organizational structure as espoused by Heckscher and Donnellon (1994) the concept of group dialogue for decision making was highlighted. In a command structure as utilized by a traditional hierarchy, decisions are often made by an individual (or small group of people) and the implementation of the decision is immediate. With a group decision making process all active participants submit their input before a committee makes a formalized decision. Whilst this may yield an effective strategy for making a decision the shortcoming of the strategy is that a tremendous amount of time would be wasted before a final decision would be made. Imagine for example a modern army in a combat situation where before an attack strategy can be formalized all soldiers must be rounded up to discuss the best method of attack, even though a suitable strategy may be devised the time wasted may provide ample time for an opposing force to either retreat or even attack. Now that we have established why organizations employ organizational hierarchies we can question what kind of organizations utilizes hierarchies. It has been argued by Osborne and Gaebler (1993) that the concept of the modern formalized organizational hierarchy made the transfer from the industrial sites and into the development of a bureaucratic style of governance. By applying a hierarchical authority and functional specialization modern states were then given the opportunity to efficiently undertake larger and more complicated tasks. As such we find organizational hierarchies in all forms of governments from the smallest municipalities to the highest levels of government. Since the dawn organized combat, armed forces have used some structure of organizational hierarchy in which typically decision making responsibilities are broken up into different smaller sub components all beneath a higher ranking official. As mentioned earlier, most business units also employ an organizational hierarchy in order to most efficiently achieve their organizational goals. With all of these different types of organizations and all of the different types of organizational goals, it is no wonder that there is not one universal model of organizational hierarchy, rather a collection of modified versions to achieve different goals. Moreover, typically an organizational hierarchy is structured in a top down style in which two traditional models can be employed which are tall organizational and flat organizational hierarchy (See appendix #1). It should be noted that even in a flat organizational hierarchy it is still the case that there are still entities that are subordinate to higher management. There is no question that criticisms of the traditional hierarchical model exist, such as implied subjugation of people by authorities. As such one alternative model to the hierarchical model is the development of group decision making model. One example of this model is a business cooperative such as Isthmus Engineering and Manufacturing in Wisconsin which according to the company website (2009) is run on a democratic model in which the company is owned and run by the employees and the larger decisions that need to be made are done by every employee. An additional alternative to a traditional hierarchical model is what has been dubbed the ‘Responsible Autonomy’ model, which could be described as a form of anarchy in which there would be no formalized authority of one group over another. Whilst this may not be a popular form of unit organization it theoretically exists in sole proprietorship organizations in which the sole participant is free to do whatever he or she would like. Another final alternative to the traditional hierarchical model is a heterarchy, in which could be described as not mutually exclusive of a hierarchy. Heterarchy for example has an overlapping or mixed system, where it may be the case that a business unit is run as a group decision making model this sub unit still falls within the confines of a traditional model. An example of this model would be the development of Wikipedia in which several individuals are free to contribute as they please however whatever contributions made are still subject to the conditions of the organizations administrators. Appendices Appendix #1 Source: Reference For Business: Encyclopedia of Business 2nd Edition [online] Available at http://www.referenceforbusiness.com/management/images/eom_0005_0001_0_img0112.jpg Accessed on December 24th 2009. References BNET.com (2009) Business Definition for Organizational Hierarchy. [Online] Available at http://dictionary.bnet.com/definition/organization+hierarchy.html Accessed on December 24th, 2009 BusinessDictonary.com (2009) Definition of Division of Labour [online] Available at http://www.businessdictionary.com/definition/division-of-labor.html Accessed on December 24th 2009. Georgano, G. N. (1985), Cars: Early and Vintage, 1886-1930, London: Grange-Universal . Gladwell, M. (2008) Outliers: The Story of Success. Little, Brown and Company; 1st edition. Heckscher C. (Editor), Donnellon A. (Editor), 1994, The Post-Bureaucratic Organization: New Perspectives on Organizational Change, Sage Publications. Isthmus Engineering and Manufacturing Company Website (2009). About Us. [online] Available at http://www.isthmuseng.com/aboutus/workerownedcoop/workerownedcoop.aspx Accessed on December 24th 2009. Osborne, D.and Gaebler, T. (1993)Reinventing Government : How the Entrepreneurial Spirit is Transforming the Public Sector. Plume. Smith, A. (1904) An Inquiry into the Nature and Causes of the Wealth of Nations, London: Methuen and Co., Ltd., ed. Edwin Cannan. Fifth edition. Originally Published in 1776. Stanford Encyclopedia of Philosophy (2008) Karl Marx [online] Available at http://plato.stanford.edu/entries/marx/ Accessed on December 24th 2009. Mintzberg, H (1979) The Structuring of Organizations. In Segal-Horn, S.(1998) The Strategy Reader. Blackwell Publishing in Association with the Open University. Read More