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Chapter 7

Creating a Flexible Organization

Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 2

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 extends from the highest to the lowest levels

of an organization.


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


Tall Organizations

Administrative costs high because of layers of management

Communication among levels distorted

“too many chiefs and not enough indians”


Wide Organizations

“Plenty of indians but not enough chiefs”

A manager may be the boss of many, many people

Because of this the manager will spend more time supervising, hiring and firing, and working with subordinates and less time working with “the big picture.”


Line Management Position

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

of the organization.

Example: the foreman on the assembly line


Staff Management Position

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

within an organization.

Example: a manager in HR (Human Resources)


Line vs. Staff

Line managers have direct authority

Staff managers have advisory authority and functional authority-they can advise a manager in another department on which questions are appropriate for an interview, for example. In addition, in HR for example, they can actually order someone in another department to give them information such as facts and figures that they might need to run an HR report. That would be functional authority-authority they are automatically given because of their function.

This can make for conflicts sometimes!


Figure 7.5: Line and Staff Management


Reasons to Not Maintain Organizational Chart

Difficult to chart positions

Constant change


5 Steps for Organizing 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 Job Specialization Boredom

Job rotation

Job enlargement

Job enrichment


Departmentalization

…process of grouping jobs into manageable units.


Bases for Departmentalization

Function

Product

Location

Customer


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.


Cluster Structure

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

underlying departments.


Apple’s Org Chart

Steve Jobs

Legal

Retail

Human Resources

Product Design

Marketing

Finance


Steve Jobs

Legal

Retail

Human

Resources

Product

Design

Marketing

Finance

Not Static, Always flexible, changing, evolving…


Delegation

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


Reasons to Delegate

To be successful, a manager must learn how to

delegate.

No one can do everything alone.

Must know the meaning of 3 terms:

responsibility, authority, and accountability


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 to accomplish an assigned job or task.


What to Delegate

Delegate tasks that the employee knows how to

do better than a supervisor.

Delegate simple tasks that employees clearly

can handle.

Delegate tasks that you find most boring but

don’t always delegate the same boring tasks to

the same employees-they will resent it.

Do not delegate:

Tasks related to personnel matters-hiring and firing

Activities assigned specifically to you, the supervisor


Why Some Managers Don’t Delegate Well or Don’t Delegate At All

“If you want something done right, you have to do it yourself.”

Fear that their employee will do it so well that it will show them up.

They are poor organizers and do not plan well.


3 Steps in the Delegation Process


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


Organizational Height

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


Bureaucratic Structure

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

precisely.

Usually is a tall organization (narrow span of management)


Matrix Structure

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


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 more than one supervisor = confusion

Longer to resolve problems

Poor communication

Unclear responsibilities


Cross-Functional Team

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

specific project.


Corporate Culture

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


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.


Formal vs Informal Organizations

All of these forms of organizations have been “formal”. But what about the “informal”??

An Informal Organization ─ stems from personal rather than official/professional relationships

• Informal groups-”cliques” at work.

• Grapevine-rumors that get started among the informal groups at work


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) long

b) flat

c) tall

d) short

e) broad



5. The power to accomplish an assigned job is called

a) authority.

b) accountability.

c) responsibility.

d) delegation.

e) obligation.

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