Specialization next to centralization, formalization and hierarchy, is one of the dimensions of the organizational structure. Specialization determines the division of labor between the units and the posts in the organizational structure and the nature and strength of the ties in the work breakdown. Structural specialization is to sort out positions and organizational structure in units according to some criterion, and the connection of homogeneous positions in larger organizational units, such as departments, divisions, strategic business units. Connecting aims to ensure coordination of the different work by submission of joint actions, to common management. It requires creation of specialized procedures and rules of operation but the tasks entrusted to the individual worker should be restricted to perform one function.
Types of specialization
Depending on how activities are grouped within the organization, there are the following types of specialization:
- functional Specialization (breakdown by function) - consists of grouping activities according to their functions, for example: the manager might organize company by assigning professionals: technical, accounting, human resources and supply to separate departments.
- Product Specialization (breakdown by product) - grouping activities according to types of manufactured products, such as: employees who deal with each of the major types of products shall carry out their tasks under the leadership of manager, specializing in all things related to its product range.
- Market Specialization (breakdown by customers) - grouping activities according to common customers, e.g. company can be divided into three sections, serving retail, wholesale customers and institutions. This type of specialization is based on the premise that each customers group has common types of problems and needs, which can best be addressed by specialists.
- Regional specialization (breakdown by territory) - grouping activities according to geographic regions, e.g.: the West, South West and the East. Each region has assigned own regional sales manager.
- Specialization on the basis of the process - grouping activities according to the stage in work process or flow of customers. It is used for example in offices, in which to receive a specific service you need to go through several departments.
Organizations currently applies most of above described types of specialization. Today's competitive environment resulted in the focus of management on customers. To better track their needs and be able to respond to changes, a lot of emphasis is put to the specialization based on customers.
Advantages of specialization
- decrease in number of management decisions needed,
- high skill of workers in performing daily tasks,
- minimizing mental effort,
- reduce of the time needed to move from one position to another,
- lower costs of training,
- ability to use specialized equipment.
Disadvantages of specialization
Specialization promotes productivity, however, excessive specialization leads to the creation of the following barriers to growth:
- technology (waste of time formed by frequent transmission of semi-finished products),
- psychological (an increase in the number of errors associated with the monotony of work),
- organizational (increase in the cost of coordination).
- Mayhew, B. W., & Wilkins, M. S. (2003). Audit firm industry specialization as a differentiation strategy: Evidence from fees charged to firms going public. Auditing: A Journal of Practice & Theory, 22(2), 33-52.
- Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman, H. J. (1978). Organizational strategy, structure, and process. Academy of management review, 3(3), 546-562.
- Norton, E., & Tenenbaum, B. H. (1993). Specialization versus diversification as a venture capital investment strategy. Journal of Business Venturing, 8(5), 431-442.