Chapter 7 Creating a Flexible Organization. Copyright © Cengage Learning. All rights reserved....

Chapter 7

Creating a Flexible Organization

Learning Objectives

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. Understand how the chain of command is established by using line and staff management.

7. Describe the four basic forms of organizational structure: bureaucratic, matrix, cluster, and network.

8. Summarize the use of corporate culture, intrapreneurship, committees, coordination techniques, informal groups, and the grapevine.

Organization

…a group of two or more people working together to achieve a

common set of goals.

Organization Chart

…a diagram that represents the positions and relationships within

an organization.

Figure 7.1: A Typical Organization Chart

A company’s organization chart represents the positions and relationships within the organization and shows the managerial chains of command.

Chain of Command

…the line of authority that extendsfrom the highest to the lowest levels

of an organization.

Reasons to NotMaintain Organizational Chart

Difficult to chart positions Constant change

5 Steps forOrganizing a Business

1. Job Design

2. Departmentalization

3. Delegation

4. Span of Management

5. Chain of Command

Job Specialization

…the separation of all organizational activities into distinct tasks and the

assignment of different tasks to different people.

Rationale for Specialization

Job too large for one person More efficient No lost time changing between operations More-specialized job makes it easier to design

specialized equipment More specialized the job the easier the job

training

Combating JobSpecialization Boredom

Job rotation

Job enlargement

Job enrichment

Departmentalization

…process of grouping jobs into manageable units.

Bases for Departmentalization

Function Product Location Customer

Function

…grouping jobs that relate to thesame organizational activity.

Product

…grouping activities related toa particular product or service.

Location

…grouping activities accordingto the defined geographic area in

which they are performed.

Customer

…grouping activities according to theneeds of various customer populations.

Figure 7.2: Multibase Departmentalization for New-Wave Fashions, Inc.

Most firms use more than one basis for departmentalization to improve efficiency and to avoid overlapping positions.

Delegation

…assigning part of a manager’s workand power to other workers.

Figure 7.3: Steps in the Delegation Process

To be successful, a manager must learn how to delegate.

No one can do everything alone.

Responsibility

…the duty to do a job or perform a task.

Authority

…the power, within an organization, to accomplish an assigned job or task.

Accountability

…the obligation of a worker toaccomplish an assigned job or task.

Barriers to Delegation

Desire to ensure that the job gets done

Fear that worker will do well and attract notice of higher-level managers

Inability to plan and assign work effectively

Decentralized Organization

…an organization in which management consciously attempts to spread authority widely in the lower

levels.

Centralized Organization

…an organization that systematically works to concentrate authority at the

upper levels.

Factors Influencing Decentralization

Complexity/predictability of external environment

Risk/importance of decision

Abilities of lower-level managers

Past practice

Span of Management

…the number of workers who report directly to one manager.

Wide vs. Narrow Flat vs. Tall

Figure 7.4: The Span of Management

Organizational Height

…the number of layers, or levels, of management in a firm.

Tall Organizations

Administrative costs high because of layers of management

Communication among levels distorted

Wide Organizations

Managers perform more administrative duties Managers spend more time supervising and

working with subordinates

Line Management Position

…a position that is part of the chainof command and that includes direct responsibility for achieving the goals

of the organization.

Staff Management Position

…a position created to provide support, advice, and expertise

within an organization.

Line vs. Staff

Line managers = line/direct authority Staff managers

• Advisory authority• Functional authority

Conflicts• To line from staff

o More formal educationo Younger

• To staff from line ─ ignored

Figure 7.5: Line and Staff Management

Table 7.1: Five Characteristics ofOrganizational Structure

Bureaucratic Structure

…a management system based on a formal framework of authority that is outlined

carefully and followed precisely.

Characteristics of a Bureaucracy

Departmentalization by function

Formal patterns of delegation

High degree of centralization

Narrow span of management = tall organization

Clearly defined line/staff positions with formal relationships between the two

Matrix Structure

…an organizational structure that combines vertical and horizontal lines of authority,

usually by superimposing product departmentalization on a functionally

departmentalized organization.

Cross-Functional Team

…a group of employees from different departments who work together on a

specific project.

Figure 7.6: A Matrix Structure

Advantages of Matrix Structure

Flexibility Increased productivity Raises morale Nurtures creativity

and innovation Employees experience

personal development

Disadvantages of Matrix Structure

Reporting to 1+ supervisor = confusion Longer to resolve problems Personality clashes Poor communication Undefined individual roles Unclear responsibilities Ways to reward individual/team performance Expense to maintain

Cluster Structure

…an organization that consists primarily of teams with no or very few

underlying departments.

Team or Collaborative Organization

Team members work together on a project until finished

Team may remain intact when assigned another project

Or Team members may be reassigned to

different teams

Cluster Structure

Strengths

FlexibilityTry new techniquesExplore new ideas

Weaknesses

Lack of job security Increased stressRapid changes

Network Structure

…an organization in which administration is the primary function, and most other

functions are contracted out to other firms.

Network Structure

No manufacturing of product it sells Few permanent employees

• Top management• Hourly clerical

Leased facilities/equipment Temporary workers Limited formal structure

Strengths/Challenges of Network Structure

Strength = flexibility

Challenges

• Quality control• Low morale/high turnover• Vulnerability to outside contractors

Corporate Culture

…the inner rites, rituals, heroes,and values of a firm.

Corporate Culture Indicators

Physical setting

What company says about culture

How guests greeted

How employees spend their time

Figure 7.7: Types ofCorporate Cultures

Organizations of the Future

Small, task-oriented work groups

Control over own activities

Computer coordinated Strong corporate culture Supports trust and risk

taking

Intrapreneur

…an employee who pushes an innovative idea, product, or process

through an organization.

Committees

Ad Hoc ─ created for a specific short-term purpose

Standing ─ permanent and charged with performing some recurring task

Task Force ─ created to investigate a major problem/pending decision

Coordination Techniques

Managerial Hierarchy ─ provides increased authority at higher levels of management

Informal Organization ─ stems from personal rather than official relationships

• Informal group• Grapevine

Chapter Quiz

1. Solid vertical lines on an organization chart indicate relationships among

a) staff positions.b) employees.c) delegated positions.d) the chain of command.e) line and staff positions.

Chapter Quiz (cont.)

2. The systematic shifting of employees from one job to another is called job

a) specialization.b) rotation.c) sharing.d) enlargement.e) enrichment.

3. Grouping all activities according to the geographic area in which they are located is departmentalization by

a) function.b) employee.c) product.d) customer.e) location.

4. In a __________ organization, administrative costs are higher because more managers are needed.

a) longb) flatc) tall d) shorte) broad

5. The power to accomplish an assigned job is called

a) authority.b) accountability.c) responsibility.d) delegation.e) obligation.

Chapter 7 Creating a Flexible Organization. Copyright © Cengage Learning. All rights reserved....

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