creating a flexible organization

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 1

Creating a Flexible Organization

Chapter

7

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 2

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

What Is an Organization?

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 3

A Typical Corporate Organization Chart

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Job design-• Specialization• Alternatives to specialization

Departmentalization Delegation Span of management Chain of command

Major Considerations for Organizing a Business

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 5

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.

Job Design

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 6

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

Job Design (cont.)

Needs photo credit

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 7

Grouping jobs into manageable units Common bases for departmentalization

• By function• By product• By location• By customer• Combinations

Departmentalization (Ways of Organizing)

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Evolution of an Organization Chart

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Departmentalization by Function

CEO

Finance Marketing Operations

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Departmentalization by Product

CEO

Computers Printers Software

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 11

Departmentalization by Location

CEO

U.S. Region

European Region

Asian Region

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 12

Departmentalization by Customer

CEO

Home Users

Business Users

Educational Users

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 13

Multibase Departmentalization forNew-Wave Fashions, Inc.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 14

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

Delegation, Decentralization, and Centralization

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 15

The manager assigns responsibility.

The subordinate is empowered to do the task.

Ultimate accountability remains with the manager.

Steps in the Delegation Process

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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 17

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

The Span of Management

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 18

The Span of Management (cont.)

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 19

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 20

Line and Staff Managers

© 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.)• 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 22

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 23

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

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 24

Chapter Quiz

1. Solid vertical lines on an organization chart indicate

A. staff positions.B. employees.C. delegated positions.D. the chain of command.E. line and staff positions.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 25

Chapter Quiz

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

A. specialization.B. rotation.C. sharing.D. enlargement.E. enrichment.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 26

Chapter Quiz

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.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 27

Chapter Quiz

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

A. longB. flatC. tallD. shortE. broad

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 4 | Slide 28

Chapter Quiz

5. The power to accomplish an assigned job is called

A. authority.B. accountability.C. responsibility.D. delegation.E. obligation.