Chapter 7

Report
Creating a Flexible Organization
Chapter
7
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 1
What Is an Organization?

A group of two or more people working together
to achieve a common set of goals

Developing organization charts
• Organization chart
– 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
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 2
A Typical Corporate Organization Chart
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Chapter 4 | Slide 3
Major Considerations for
Organizing a Business

Job design• Specialization
• Alternatives to specialization

Departmentalization

Delegation

Span of management

Chain of command
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 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.
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 5
Job Design (cont.)

Alternatives to job specialization
• Job rotation systematically shifts employees from
one job to another
• Job enlargement-adding more responsibilities
• Job enrichment-more variety and
more responsibility
Needs photo credit
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 6
Departmentalization (Ways of Organizing)

Grouping jobs into manageable units

Common bases for departmentalization
• By function
• By product
• By location
• By customer
• Combinations
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 7
Evolution of an Organization Chart
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Chapter 4 | Slide 8
Departmentalization by Function
CEO
Finance
Marketing
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Operations
Chapter 4 | Slide 9
Departmentalization by Product
CEO
Computers
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Printers
Software
Chapter 4 | Slide 10
Departmentalization by Location
CEO
U.S.
Region
European
Region
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Asian
Region
Chapter 4 | Slide 11
Departmentalization by Customer
CEO
Home
Users
Business
Users
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Educational
Users
Chapter 4 | Slide 12
Multibase Departmentalization for
New-Wave Fashions, Inc.
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Chapter 4 | Slide 13
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
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 14
Steps in the Delegation Process

The manager assigns
responsibility.

The subordinate is
empowered to do
the task.

Ultimate accountability
remains with the
manager.
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 15
Decentralization of Authority

Decentralized organization
• Spreads the authority widely into the lower levels

Centralized organization
• Authority is concentrated at the upper levels
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 16
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
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 17
The Span of Management (cont.)
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 18
The Span of Management (cont.)

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
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 19
Line and Staff Managers
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 20
Forms of Organizational Structure (cont.)

Line-and-staff structure (cont.)
• 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
–
–
Example: A manager has concerns that one of his employees
may be sexually harassing another so he consults with HR first
before taking action.
Functional authority—staff managers’ authority to make
decisions and issue directives within their area of expertise
–
Example: A staff manager in the Finance Dept tells a Line
Manager in the Production Dept to bring her payroll figures so
that Finance can create a month-end report.
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 21
Forms of Organizational Structure (cont.)

Line-and-staff structure (cont.)
• 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.
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 22
The Informal Organization

Pattern of behavior and interaction that stems
from personal rather than official relationships
• Informal groups
–
Formed by the members themselves to accomplish goals
that may or may not be relevant to the organization
–
Can be powerful forces in organizations, exerting positive
as well as negative influences
• The grapevine
–
Informal communication network within an organization
that is completely separate from—and sometimes faster
than—the organization’s formal communication channels
–
May be accurate or distorted; managers should be aware
and use appropriately
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Chapter 4 | Slide 23
Chapter Quiz
1. Solid vertical lines on an organization chart
indicate
A.
B.
C.
D.
E.
staff positions.
employees.
delegated positions.
the chain of command.
line and staff positions.
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 24
Chapter Quiz
2. The systematic shifting of employees from
one job to another is called job
A.
B.
C.
D.
E.
specialization.
rotation.
sharing.
enlargement.
enrichment.
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 25
Chapter Quiz
3. Grouping all activities according to the
geographic area in which they are located is
departmentalization by
A.
B.
C.
D.
E.
function.
employee.
product.
customer.
location.
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 26
Chapter Quiz
4. In a ______ organization, administrative
costs are higher because more managers are
needed.
A.
B.
C.
D.
E.
long
flat
tall
short
broad
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 27
Chapter Quiz
5. The power to accomplish an assigned job is
called
A.
B.
C.
D.
E.
authority.
accountability.
responsibility.
delegation.
obligation.
© 2013 South-Western, a part of Cengage Learning. All rights reserved.
Chapter 4 | Slide 28

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