chapter 7 creating a flexible organization. copyright © cengage learning. all rights reserved....
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Chapter 7
Creating a Flexible Organization
Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 2
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.
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Organization
…a group of two or more people working together to achieve a
common set of goals.
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Organization Chart
…a diagram that represents the positions and relationships within
an organization.
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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.
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Chain of Command
…the line of authority that extendsfrom the highest to the lowest levels
of an organization.
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Reasons to NotMaintain Organizational Chart
Difficult to chart positions Constant change
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5 Steps forOrganizing a Business
1. Job Design
2. Departmentalization
3. Delegation
4. Span of Management
5. Chain of Command
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Job Specialization
…the separation of all organizational activities into distinct tasks and the
assignment of different tasks to different people.
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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
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Combating JobSpecialization Boredom
Job rotation
Job enlargement
Job enrichment
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Departmentalization
…process of grouping jobs into manageable units.
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Bases for Departmentalization
Function Product Location Customer
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Function
…grouping jobs that relate to thesame organizational activity.
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Product
…grouping activities related toa particular product or service.
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Location
…grouping activities accordingto the defined geographic area in
which they are performed.
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Customer
…grouping activities according to theneeds of various customer populations.
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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.
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Delegation
…assigning part of a manager’s workand power to other workers.
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Figure 7.3: Steps in the Delegation Process
To be successful, a manager must learn how to delegate.
No one can do everything alone.
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Responsibility
…the duty to do a job or perform a task.
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Authority
…the power, within an organization, to accomplish an assigned job or task.
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Accountability
…the obligation of a worker toaccomplish an assigned job or task.
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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
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Decentralized Organization
…an organization in which management consciously attempts to spread authority widely in the lower
levels.
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Centralized Organization
…an organization that systematically works to concentrate authority at the
upper levels.
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Factors Influencing Decentralization
Complexity/predictability of external environment
Risk/importance of decision
Abilities of lower-level managers
Past practice
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Span of Management
…the number of workers who report directly to one manager.
Wide vs. Narrow Flat vs. Tall
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Figure 7.4: The Span of Management
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Organizational Height
…the number of layers, or levels, of management in a firm.
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Tall Organizations
Administrative costs high because of layers of management
Communication among levels distorted
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Wide Organizations
Managers perform more administrative duties Managers spend more time supervising and
working with subordinates
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Line Management Position
…a position that is part of the chainof command and that includes direct responsibility for achieving the goals
of the organization.
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Staff Management Position
…a position created to provide support, advice, and expertise
within an organization.
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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
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Figure 7.5: Line and Staff Management
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Table 7.1: Five Characteristics ofOrganizational Structure
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Bureaucratic Structure
…a management system based on a formal framework of authority that is outlined
carefully and followed precisely.
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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 40
Matrix Structure
…an organizational structure that combines vertical and horizontal lines of authority,
usually by superimposing product departmentalization on a functionally
departmentalized organization.
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Cross-Functional Team
…a group of employees from different departments who work together on a
specific project.
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Figure 7.6: A Matrix Structure
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Advantages of Matrix Structure
Flexibility Increased productivity Raises morale Nurtures creativity
and innovation Employees experience
personal development
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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
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Cluster Structure
…an organization that consists primarily of teams with no or very few
underlying departments.
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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
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Cluster Structure
Strengths
FlexibilityTry new techniquesExplore new ideas
Weaknesses
Lack of job security Increased stressRapid changes
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Network Structure
…an organization in which administration is the primary function, and most other
functions are contracted out to other firms.
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Network Structure
No manufacturing of product it sells Few permanent employees
• Top management• Hourly clerical
Leased facilities/equipment Temporary workers Limited formal structure
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Strengths/Challenges of Network Structure
Strength = flexibility
Challenges
• Quality control• Low morale/high turnover• Vulnerability to outside contractors
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Corporate Culture
…the inner rites, rituals, heroes,and values of a firm.
Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 52
Corporate Culture Indicators
Physical setting
What company says about culture
How guests greeted
How employees spend their time
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Figure 7.7: Types ofCorporate Cultures
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Organizations of the Future
Small, task-oriented work groups
Control over own activities
Computer coordinated Strong corporate culture Supports trust and risk
taking
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Intrapreneur
…an employee who pushes an innovative idea, product, or process
through an organization.
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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 57
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 58
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.
Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 59
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.
Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 60
Chapter Quiz (cont.)
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.
Copyright © Cengage Learning. All rights reserved. Chapter 7 | Slide 61
Chapter Quiz (cont.)
4. In a __________ organization, administrative costs are higher because more managers are needed.
a) longb) flatc) tall d) shorte) broad
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Chapter Quiz (cont.)
5. The power to accomplish an assigned job is called
a) authority.b) accountability.c) responsibility.d) delegation.e) obligation.