ISE EBook for Managerial Economics and Organizational Architecture by Brickley James; Smith Clifford; Zimmerman Jerold

Author:Brickley, James; Smith, Clifford; Zimmerman, Jerold
Language: eng
Format: epub
Publisher: McGraw-Hill US Higher Ed ISE

*Incentive issues can favor either specialized or broad task assignment, depending on the nature of the production technology and information flows.

Productive Bundling of Tasks

The choice between specialized and broad task assignments depends on the technological, informational, and incentive issues discussed earlier. One variable that is likely to be of particular importance in making this decision is the relative degree of complementarity among tasks within, versus across, functional areas. At FinWare, the magnitude of the benefits of specialized task assignment depends largely on how related the selling efforts are between the two customer groups. If there are only minor differences between selling to individuals and businesses, training employees to do one makes them well prepared to do the other. In contrast, if the selling tasks are quite different between individuals and businesses, little is gained by training one employee to perform the two selling tasks compared to training separate employees. As a consequence, any economies of scale that result from specializing in sales are likely to be small. Similarly, the costs of specialized task assignment at FinWare depend on the importance of complementarities across functional areas. When these complementarities are low (e.g., little valuable information is gained about service through the selling effort), little is lost by having employees concentrate on a single function. It also is relatively easy to coordinate the individual specialists through the use of routine procedures. Ultimately, the degree of complementarity among tasks depends on how specialized knowledge is created and the costs of transferring knowledge. It also depends on the technology used in the production process.

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Our FinWare example is quite simplified, and in most settings, more complicated task divisions are feasible. For instance, the selling function might have two phases—initial contact and closing the deal. The initial contact requires less specialized product and service knowledge than closing the deal but is potentially more time-consuming. Here, it might be better for a salesperson to handle the initial contact and have a joint call by both the salesperson and service person to close the deal. As another example, at some locations, more complete specialization might be feasible. For instance, an employee at an office with a larger sales volume could concentrate solely on selling to individuals or to businesses. While our basic FinWare example abstracts from these more complicated considerations, it nonetheless isolates some of the key considerations in deciding on how to divide tasks into jobs.

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