Ch.7 Creating a Flexible Organization ① Understand what an organization is and identify its characteristics. ② Explain why job specialization is important. ③ Identify the various bases for departmentalization. ④ Explain how decentralization follows from delegation. ⑤ Understand how the span of management describes an organization. ⑥ Describe the four basic forms of organizational structure. ⑦ Describe the effects of corporate culture. ⑧ Understand how committees and task forces are used. ⑨ Explain the functions of the informal organization and the grapevine in a business. 1
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Ch.7 Creating a Flexible Organization
① Understand what an organization is and identify its characteristics.
② Explain why job specialization is important.
③ Identify the various bases for departmentalization.
④ Explain how decentralization follows from delegation.
⑤ Understand how the span of management describes an organization.
⑥ Describe the four basic forms of organizational structure.
⑦ Describe the effects of corporate culture.
⑧ Understand how committees and task forces are used.
⑨ Explain the functions of the informal organization and the grapevine in a business.
1
What Is an Organization?
• A group of two or more people working together to achieve a common set of goals
• A diagram that represents the positions and relationships within an organization
• Chain of command• The line of authority that extends from the highest to the lowest levels of the organization
• Staff (advisory) positions• Jobs that are not part of the direct chain of command in the organization
2
A Typical Corporate Organization Chart
3
Major Considerations for Organizing a Business
• Job design
• Departmentalization
• Delegation
• Span of management
• Chain of command
4
Job Design
• Job specialization• The separation of activities into distinct tasks and the
assignment of different tasks to different people
• Rationale for specialization
• The “job” of the organization is too large for one person to accomplish
• A worker learning only a specific, highly specialized task should be able to learn to do it efficiently
• Workers do not lose time switching from one operation to another
• Specialization makes it easier to design machinery to assist those who do the job
• Specialization makes it easier to train new workers
5
Job Design (cont’d)
• Alternatives to job specialization
• Job rotation systematically shifts employees from one job to another
• Job enlargement
• Job enrichment
6
Departmentalization
• Grouping jobs into manageable units
• Common bases for departmentalization• By function
• By product
• By location
• By customer
• Combinations
7
Multibase Departmentalization forNew-Wave Fashions, Inc.
• MultibaseDepartmentalization for New-Wave Fashions, Inc.• Most firms use more
than one basis for departmentalization to improve efficiency and to avoid overlapping positions.
8
Delegation, Decentralization, and Centralization
• Delegation—assigning part of a manager’s work and power to other workers
• Steps in Delegation• Responsibility—the duty to do a job or perform a task
• Authority—the power, within an organization, to accomplish an assigned task
• Accountability—the obligation to accomplish an assigned job or task
• Barriers to Delegation• Fear the work will not get done
• Fear the work will be done too well
• Inability to plan and assign work effectively
9
Steps in the Delegation Process
• The manager assigns responsibility
• The subordinate is empowered to do the task
• Ultimate accountability remains with the manager
10
Decentralization of Authority
• Decentralized organization• Management consciously attempts to spread authority widely in
the lower levels of the organization
• Centralized organization• Authority is concentrated at the upper levels of the organization
• Factors favoring decentralization• A complex and unpredictable business environment
• Decisions that carry low risk or that are unimportant
• Highly capable lower-level managers with strong decision-making skills
• Past practices of the firm in decentralizing its structure and decision-making processes
11
The Span of Management
• The number of workers who report directly to one manager
• Wide span• Large number of subordinates to one manager
• Narrow span• Only a few subordinates to one manager
12
The Span of Management (cont’d)
• Wide and narrow spans of management
13
FIGURE 7-4
The Span of Management (cont’d)
• Organizational height—number of layers, or levels, of management in a firm• Flat organizations
• Have wider spans of management and fewer levels
• Require managers to perform more administrative tasks and to spend more time supervising subordinates
• Tall organizations• Have narrow spans of management and many levels
• Have higher administrative costs (more managers)
• May distort internal communications during passage of the communications through the multiple levels of organization
14
Forms of Organizational Structure
• Line Structure• The chain of command goes directly from person to person throughout the
organization
• Simplicity allows for quick decision making and direct accountability
• Most suitable for small organizations with lower volume of activities than medium or large organizations
15
Forms of Organizational Structure (cont’d)
• Line-and-Staff Structure• Utilizes the chain of command from a line structure in combination
with the assistance of staff managers
16
FIGURE 7-5
Line and Staff Managers
17
Forms of Organizational Structure (cont’d)
• Line-and-Staff Structure (cont’d)
• Line managers make decisions and give orders to subordinates• Line authority—line managers can make decisions and issue
directives related to organizational goals
• Staff managers provide support, advice, and expertise• Advisory authority—the expectation that line managers will
consult with staff managers before making decisions
• Functional authority—staff managers’ authority to make decisions and issues directives within their area of expertise
18
Forms of Organizational Structure (cont’d)
• Line-and-Staff Structure (cont’d)
• Reasons for conflict between line and staff managers• Staff managers often have more formal education
• Staff managers are sometimes younger and more ambitious
• Line managers may perceive staff managers as a threat
• Staff managers may become angry if their recommendations are not adopted
• Minimizing conflict between line and staff managers• Integrate line and staff managers into one team
• Ensure that responsibilities are clearly defined
• Hold both line and staff managers accountable for results
19
Forms of Organizational Structure (cont’d)
• Matrix structure• A structure that combines vertical and horizontal lines of authority, usually by
superimposing product departmentalization on functional departmentalization
• Authority flows both down and across
• Employees on cross-functional teams report to both the project manager in charge of the team and to their superiors in their home-base functional department