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Division of Labor

In the restructured organizations, highly-specialized division of labor within firms as workers transfer their
jobs disappeared in favor of workers performing a mul- knowledge from task to task more easily. Information and
titude of tasks within relatively small autonomous cus- manufacturing technology can also enable individual
tomer-oriented teams. In these working groups, workers workers or work teams to combine different tasks more
were given a broad task specification by management readily to meet a customer’s needs while enhancing pro-
and within those loose constraints, the teams were ductivity. For example, customer information gained from
allowed to organize, to allocate roles, to schedule tasks, production activities can be used to improve financial
and so forth (Bessant, 1991). With this design, tradi- accounting practices, and employee information gained
tional occupational barriers and clear-cut specialized job from training activities can be used to improve work prac-
descriptions began evaporating as workers were empow-
tices.
ered to define their own job tasks. This movement Eric Alsene (1994) reported that increased integra-
resulted in a decrease of the division of labor and special-
ization within firms. tion of computer databases has the potential to pro-
foundly alter task and functional assignments in
As a consequence of these changes, during the 1990s organizations, consequently affecting division of labor
increased division of labor between firms was often accom-
and specialization. Originally, the purpose of integrating
panied by a reduction in the division of labor within firms.
computers into organizations was to merge the various
In other words, while firms were becoming more special-
ized in the products and services they offered, individual functions of labor. Computer integration was designed to
restructure businesses around their core business
workers within firms were handling an increasing range
and depth of job responsibilities. As mentioned earlier, this processes, outsourcing some activities to specialized
external organizations and strengthening partnerships
work was often completed in autonomous teams.
with suppliers and subcontractors. In the new culture
shaped by computer integration, every worker was to
EFFECTS OF SIZE, COST, AND
have a broader view of the organization. Workers were
PERFORMANCE ON DIVISION OF
expected to work in teams with enhanced communica-
LABOR
tion, participation, teamwork, and an enhanced sense of
In some organizations, division of labor and the degree of
belonging and continuous learning. In this new organiza-
specialization are being reduced, while in other organiza-
tional model enabled by technology, the classic bureau-
tions, division of labor and specialization are increasing. A cratic mass production model in which workers
number of factors can influence this discrepancy among
performed functions separately and sequentially was
organizations.
eliminated.
For example, the degree of specialization and division
The computer integration model was designed to
of labor can be related to the size of the organization; typi-
ultimately lead to the dismantling of vertical and horizon-
cally, small and mid-sized employers are not able to cost jus-
tify specialized division of labor. Lindbeck and Snower tal barriers while supervisory control concentrated
increasingly on work methods rather than on final prod-
(1997) report that, as the costs of communication among
workers declines, the degree of specialization, and conse- ucts (Child, 1987). In other words, the new design
quently, division of labor within organizations, may rise. enabled organizations to focus on how products and serv-
Some literature reports that, as the size of the market ices were delivered rather than on what products or serv-
increases, it supports more division of labor. The degree of ices were delivered. This design facilitated continuous
division of labor within firms can also depend on the degree improvement in the organization. The new technologies
to which performance on particular tasks is measurable, assisted in blurring the boundaries among departments
and the degree to which wages affect task performance. while information flowed freely throughout the organiza-
Implementation of technology can also have a profound tion, thereby disregarding the traditional bureaucratic
influence on the division of labor in organizations. hierarchy. As work groups and task forces were formed,
units no longer worked in isolation.
EFFECTS OF TECHNOLOGY ON The new model enabled by technology calls into
DIVISION OF LABOR question the traditional division of labor in organizations.
Computerization has enabled organizations to increase For example, flexible manufacturing systems eliminate the
the variety of tasks performed by workers, consequently barrier between maintenance and production. This
reducing specialization and division of labor. For example, increased automation supports the movement described
information technology—flexible machine tools and pro- earlier of work becoming more diversified, independent,
grammable multipurpose equipment—can reduce the intellectual, and collective.

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 209