Chapter 7 Creating a Flexible Organization Learning Objectives

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

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

Organization Chart …a diagram that represents the positions and relationships within an organization. Copyright

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. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 5

Chain of Command …the line of authority that extends from the highest to the

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.

Job Specialization …the separation of all organizational activities into distinct tasks and the assignment of different tasks to different people. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 9

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 Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 10

Combating Job Specialization Boredom ü Job rotation ü Job enlargement ü Job enrichment Copyright

Departmentalization …process of grouping jobs into manageable units. Copyright © Cengage Learning. All rights

Bases for Departmentalization § § Function Product Location Customer Copyright © Cengage Learning. All

Function …grouping jobs that relate to the same organizational activity. Copyright © Cengage Learning.

Product …grouping activities related to a particular product or service. Copyright © Cengage Learning.

Location …grouping activities according to the defined geographic area in which they are performed.

Customer …grouping activities according to the needs of various customer populations. Copyright © Cengage

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. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 18

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

Figure 7. 3: Steps in the Delegation Process To be successful, a manager must learn how to delegate. No one can do everything alone. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 20

Responsibility …the duty to do a job or perform a task. Copyright © Cengage

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

Accountability …the obligation of a worker to accomplish an assigned job or task. Copyright

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 Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 24

Decentralized Organization …an organization in which management consciously attempts to spread authority widely in the lower levels. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 25

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 Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 27

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

Figure 7. 4: The Span of Management Copyright © Cengage Learning. All rights reserved.

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

Tall Organizations § Administrative costs high because of layers of management § Communication among

Wide Organizations § Managers perform more administrative duties § Managers spend more time supervising and working with subordinates Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 32

Line Management Position …a position that is part of the chain of command that includes direct responsibility for achieving the goals of the organization. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 33

Staff Management Position …a position created to provide support, advice, and expertise within an

Line vs. Staff § Line managers = line/direct authority § Staff managers • Advisory authority • Functional authority § Conflicts • To line from staff o More formal education o Younger • To staff from line ─ ignored Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 35

Figure 7. 5: Line and Staff Management Copyright © Cengage Learning. All rights reserved.

Table 7. 1: Five Characteristics of Organizational Structure Copyright © Cengage Learning. All rights

Bureaucratic Structure …a management system based on a formal framework of authority that is outlined carefully and followed precisely. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 38

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 Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 39

Matrix Structure …an organizational structure that combines vertical and horizontal lines of authority, usually by superimposing product departmentalization on a functionally departmentalized organization. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 40

Cross-Functional Team …a group of employees from different departments who work together on a

Figure 7. 6: A Matrix Structure Copyright © Cengage Learning. All rights reserved. Chapter

Advantages of Matrix Structure ü Flexibility ü Increased productivity ü Raises morale ü Nurtures creativity and innovation ü Employees experience personal development Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 43

Disadvantages of Matrix Structure ü Reporting to 1+ supervisor = confusion ü Longer to resolve problems ü Personality clashes ü Poor communication ü Undefined individual roles ü Unclear responsibilities ü Ways to reward individual/team performance ü Expense to maintain Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 44

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

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 Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 46

Cluster Structure Strengths ü Flexibility ü Try new techniques ü Explore new ideas Copyright © Cengage Learning. All rights reserved. Weaknesses ü Lack of job security ü Increased stress ü Rapid changes Chapter 7 | Slide 47

Network Structure …an organization in which administration is the primary function, and most other functions are contracted out to other firms. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 48

Network Structure § No manufacturing of product it sells § Few permanent employees • Top management • Hourly clerical § Leased facilities/equipment § Temporary workers § Limited formal structure Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 49

Strengths/Challenges of Network Structure § Strength = flexibility § Challenges • Quality control • Low morale/high turnover • Vulnerability to outside contractors Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 50

Corporate Culture …the inner rites, rituals, heroes, and values of a firm. Copyright ©

Corporate Culture Indicators § Physical setting § What company says about culture § How guests greeted § How employees spend their time Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 52

Figure 7. 7: Types of Corporate Cultures Copyright © Cengage Learning. All rights reserved.

Organizations of the Future § Small, task-oriented work groups § Control over own activities § Computer coordinated § Strong corporate culture § Supports trust and risk taking Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 54

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 Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 56

Coordination Techniques § Managerial Hierarchy ─ provides increased authority at higher levels of management § Informal Organization ─ stems from personal rather than official relationships • Informal group • Grapevine Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 57

Chapter Quiz 1. Solid vertical lines on an organization chart indicate relationships among a) b) c) d) e) staff positions. employees. delegated positions. the chain of command. line and staff positions. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 58

Chapter Quiz (cont. ) 2. The systematic shifting of employees from one job to another is called job a) b) c) d) e) specialization. rotation. sharing. enlargement. enrichment. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 59

Chapter Quiz (cont. ) 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. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 60

Chapter Quiz (cont. ) 4. In a _____ organization, administrative costs are higher because more managers are needed. a) b) c) d) e) long flat tall short broad Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 61

Chapter Quiz (cont. ) 5. The power to accomplish an assigned job is called a) b) c) d) e) authority. accountability. responsibility. delegation. obligation. Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 62