Types and Causes of Organizational Differentiation
Organizational structure determines the size and scale of operational and commercial activities. This scale and scope of company´s operations, in turn, explain the need and of organization for labor division and distribution of the tasks among individuals, groups, divisions and even country sectors. Differentiation by itself is the process that allows an organization to allocate human and material resources across tasks to be able to achieve its strategic, operational and tactical objectives. It is possible to observe that the bigger the organization is the higher this allocation and division of labor becomes (Gual and Ricart, 2001). The reality reflects the need of not only horizontal distribution of labor, but vertical allocation of authority and delegation of responsibility. Human resources can be horizontally divided into functions or vertically into divisions with given authority level. With that in mind, differentiation can be horizontal and vertical and coexist in the same organization (Jones, 2012).
Horizontal differentiation is the division of labor based on skills and capabilities into subunits with the unique purpose of distinguishing the tasks on the same level of authority. Functional differentiation distinguishes several functional groups that among others include maintenance, production and support (Banner and Gagne, 1995, pp.134-135).
Vertical differentiation has another purpose. The core function of this differentiation type is to bring organizational structure to the levels of authority and responsibility. Often this authority division is based on divisions that may include several functional groups. The result of vertical differentiation is the reporting and relationships within an organization that allow delegation of responsibilities and create communication channels and cross-function interaction (Jones, 2012).
One of the basic examples of horizontal differentiation is an organization is the basic store operation that distinguishes the function of cashier, merchandizer and assistance clerk. This functional division does not demonstrate any differentiation on authority level and thus, purely horizontal. An example of the vertical differentiation in the same organization is a store supervisor or manager that has hierarchical authority and responsibility of task delegations across the functions.
References
Jones, G. (2010). ‘Organizational theory, design, and change (6th ed.)’ Upper Saddle River, NJ: Prentice Hall. Print.
Banner, D., and Gagne. E. (1995). ‘Designing Effective Organizations: Traditional and Transformational Views.’ New York: Sage Publishing. Print.
Gual J., and Ricart, J. (2001). ‘Strategy, Organization and the Changing Nature of Work.’ Chaltenham: Edward Edgar Publishing Limited. Print.
