Page 231 - Encyclopedia of Business and Finance

eobf_D 7/5/06 2:59 PM Page 208

Division of Labor

Given these concerns, a significant change is under
way in management of work in organizations. According
to Richard Walton (1991), the work force can be managed
in two ways, one based on control and the other based on
commitment. Key factors that differ between the control
and commitment approaches are job design principles,
performance expectations, management organization
(structure, systems, and style), compensation policies,
employment assurances, employee input in policies, and
labor-management relations (Walton, 1995).
The control-oriented approach is based on the classic
bureaucratic principles of specialization and division of
labor. In the control-oriented environment, worker com-
mitment does not flourish. Division of labor can ulti-
mately reduce productivity and increase costs to produce
units. Several reasons are identified as causes for reduction
in productivity. For example, productivity can suffer when
workers become bored with the monstrous repetition of a
task. Additionally, productivity can be affected when
workers lose pride in their work because they are not pro-
ducing an entire product they can identify as their own
work. A breakdown in the mass production line can bring
an entire production line to a standstill. Also, with highly
specialized jobs, worker training can be so narrowly
focused that workers cannot move among alternate jobs
easily. Consequently, productivity can suffer when one
key worker is absent. Finally, discontent with control is
Max Weber (1864–1920). German sociologist Max Weber
defined the beaucratic model in the early 1900s. increasing in today’s work force, further hindering the
long-term success of the classic bureaucratic application of
specialization and division of labor.

by workers within a particular firm. Second is the division In contrast to the control-oriented approach, the
of labor between firms, which concerns the range of prod- commitment-oriented approach proposes that employee
commitment will lead to enhanced performance. Jobs are
ucts or services the firm produces.
more broadly designed and job operations are upgraded to
include more responsibility. Control and coordination
CURRENT APPLICATION OF depend on shared goals and expertise rather than on for-
DIVISION OF LABOR mal position. The control and commitment-oriented
Fred Luthans (2005) describes the bureaucratic model approaches are only one way to view the concepts of divi-
proposed by Max Weber as an “historical starting point” sion of labor and specialization. These concepts influ-
for organizational analysis. Citing “complex, highly con- enced organizations in the late 1990s by a complex array
flicting relationships, advanced information technology, of organizational dynamics.
and empowered employees,” Luthans (p. 519) discusses In response to such complex organizational dynamics
the functional and dysfunctional consequences of special- as intense competitive pressures, organizations were being
ization uncovered in several research studies. For example, restructured. Hierarchies were becoming flatter, meaning
although specialization has enhanced productivity and that fewer levels of management existed between the low-
efficiency, it has also led to conflict between specialized est level of worker and top management. In some organi-
units, hindering achievement of the overall goals of the zations, web-like and network organizational structures
organization. Further, specialization can impede commu- were replacing traditional hierarchical organizations
nication among units, as highly specialized units tend to (Kerka, 1994). In these redesigned organizations, the shift
“withdraw into themselves and not fully communicate was away from departments that focused on traditional
with other units above, below, or horizontal to it” (p. organizational functions such as production, administra-
519). In addition, highly specialized jobs can lead to tion, finance, design, and marketing (Lindbeck and
employee boredom and burnout. Snower, 1997).

208 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION