Organizing decisions
When organizing, managers must make decisions about the division of labor and work specialization, departmentalization, chain of command, span of management, centralization, and formalization. Collectively, these decisions are often called organizational design.
Division of labor or specializaion
More than two centuries ago Adam Smith concluded that division of labor contributes to increased productivity and efficiency by allowing workers to specialize and become proficient at a specific task. This principle, coupled with technological advances, made possible the tremendous productivity of industrial companies during most of the twentieth century. By the 1940s most manufacturing jobs in developed nations were highly specialized, with workers performing specific, standardized, and repetitive tasks. This resulted in reduced staffing, training, and compensation costs, since highly skilled workers were often not necessary. In addition, since employees were doing the same task repetitively, they tended to become very good at it.
Despite the improvements in productivity made possible by the division of labor, managers must be aware of the negative aspects of specialization: fatigue, stress, boredom, low quality products, absenteeism, and turnover. Such problems have led to programs geared toward job enlargement and job enrichment.