Creating a Flexible Organization
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1 Chapter Seven Creating a Flexible Organization Copyright Cengage Learning. All rights reserved. 7 1 Learning Objectives 1. Understand what an organization is and identify its characteristics. 2. Explain why job specialization is important. t 3. Identify the various bases for departmentalization. 4. Explain how decentralization follows from delegation. 5. Understand how the span of management describes the organization. 6. Understand how the chain of command is established by using line and staff management. Copyright Cengage Learning. All rights reserved. 7 2
2 Learning Objectives (cont d) 7. Describe the four basic forms of organizational structure: bureaucratic, matrix, ti cluster, and network kteam. 8. Summarize the use of corporate culture, intrapreneurship, committees, coordination techniques, informal groups, and the grapevine. Copyright Cengage Learning. All rights reserved. 7 3 Chapter 7 Outline What Is an Organization? Developing Organization Charts Five Steps for Organizing g a Business Job Design Job Specialization The Rationale for Specialization Alternatives to Job Specialization Departmentalization By Function By Customer By Product Combination of Bases By Location Delegation, Decentralization, and Centralization Delegation of Authority Decentralization of Authority Copyright Cengage Learning. All rights reserved.
3 Chapter 7 Outline (cont.) The Span of Management Wide and Narrow Spans of Control Organizational Height Chain of Command: Line and Staff Management Line and Staff Positions Compared Line-Staff Conflict Forms of Organizational Structure The Bureaucratic Structure The Cluster Structure The Matrix Structure The Network Structure Additional Factors That Influence an Organization Corporate Culture Coordination Techniques Intrapreneurship The Informal Organization Committees Copyright Cengage Learning. All rights reserved. What Is an Organization? A group of two or more people working together to achieve a common set of goals Developing organization charts Organization chart Chain of command Staff (advisory) positions Copyright Cengage Learning. All rights reserved. 7 6
4 Five Steps to Organizing a Business 1. Job design 2. Departmentalization t ti 3. Delegation 4. Span of management 5. Chain of command Copyright Cengage Learning. All rights reserved. 7 7 Job specialization Job Design Rationale for specialization Alternatives to job specialization Job rotation Job enlargement Job enrichment Copyright Cengage Learning. All rights reserved. 7 8
5 Departmentalization Grouping jobs into manageable units Common bases for departmentalization By function By product By location By customer Combinations Copyright Cengage Learning. All rights reserved. 7 9 Delegation, Decentralization, and Centralization Delegation Assigning part of a s work and power to other workers Responsibility Authority Accountability Copyright Cengage Learning. All rights reserved. 7 10
6 Steps in the Delegation Process The assigns responsibility The subordinate is empowered to do the task Ultimate accountability remains with the Copyright Cengage Learning. All rights reserved Decentralization of Authority Decentralized organization Centralized organization Factors favoring decentralization ti Copyright Cengage Learning. All rights reserved. 7 12
7 The Span of Management (cont d) Organizational height Flat organizations Tall organizations Copyright Cengage Learning. All rights reserved Chain of Command: Line and Staff Management Line management position Line authority Staff management position Advisory authority Functional authority Copyright Cengage Learning. All rights reserved. 7 14
8 Reasons for conflict Line-Staff Conflict Minimizing conflict Copyright Cengage Learning. All rights reserved Forms of Organizational Structure Bureaucratic structure Characteristics i Advantages Disadvantages Matrix structure Copyright Cengage Learning. All rights reserved. 7 16
9 The Matrix Structure (cont d) Advantages Disadvantages Copyright Cengage Learning. All rights reserved Forms of Organizational Structure (cont d) Cluster structure Strengths Weaknesses Network structure (virtual organization) Strengths Weaknesses Copyright Cengage Learning. All rights reserved. 7 18
10 Additional Factors That Influence an Organization Corporate culture Indicators of corporate culture Cultural change is needed when Copyright Cengage Learning. All rights reserved Types of Corporate Cultures Networked culture Mercenary culture Fragmented culture Communal culture Copyright Cengage Learning. All rights reserved. 7 20
11 Additional Factors That Influence an Organization (cont d) Intrapreneurship Intrapreneur Committees Types Positive aspects Negative aspects Copyright Cengage Learning. All rights reserved Additional Factors That Influence an Organization (cont d) Coordination techniques Informal organization Informal groups The grapevine Copyright Cengage Learning. All rights reserved. 7 22
12 Figure 7.1(a) A Typical Corporate Organization Chart (Part 1) 84 A Typical Corporate Organization Chart (Part 1) KEY: Chain of command Staff Vice president, operations Plant Plant Department Department Department Department Supervisor Supervisor Supervisor Supervisor Supervisor Supervisor Supervisor Supervisor 3768X_07_ch07_p indd 84 3/6/09 6:58:28 PM
13 Figure 7.1(b) A Typical Corporate Organization Chart (Part 2) 85 A Typical Corporate Organization Chart (Part 2) President Director of legal services Director of public affairs Vice president, marketing Vice president, finance Director of human resources Regional sales Regional sales Accounting department District District District District Supervisor Supervisor 3768X_07_ch07_p indd 85 3/6/09 6:58:29 PM
14 Figure 7.2 Multibase Departmentalization for New-Wave Fashions, Inc. 86 Multibase Departmentalization for New-Wave Fashions, Inc. President Men s clothing division Women s clothing division Children s clothing division Operations Marketing Design Cutting Sewing Western region Midwestern region Eastern region 3768X_07_ch07_p indd 86 3/6/09 6:58:29 PM
15 Figure 7.3 Steps in the Delegation Process Steps in the Delegation Process 87 THE DELEGATION PROCESS Manager 1 Assign responsibility 2 Grant authority 3 Assign accountability Worker 3768X_07_ch07_p indd 87 3/6/09 6:58:29 PM
16 Figure 7.4 The Span of Management 88 The Span of Management WIDE SPAN High level of competence in s and workers Standard operating procedures Few new problems NARROW SPAN Physical dispersion of subordinates Manager has additional tasks High level of interaction required between and workers High frequency of new problems Flat organization Tall organization 3768X_07_ch07_p indd 88 3/6/09 6:58:29 PM
17 Figure 7.5 Line and Staff Management 89 Line and Staff Management LINE President STAFF Director of legal services Director of public affairs Vice president, marketing Vice president, finance Regional sales Regional sales Accounting department 3768X_07_ch07_p indd 89 3/6/09 6:58:30 PM
18 Figure 7.6 A Matrix Structure 90 Project A Project B Project C A Matrix Structure CEO Vice president, engineering Vice president, production Vice president, finance Employees Vice president, marketing Source: Ricky W. Griffin, Management, 9th ed. Copyright 2008 by Houghton Mifflin Company. Adapted with permission. 3768X_07_ch07_p indd 90 3/6/09 6:58:30 PM
19 Figure 7.7 Types of Corporate Culture 91 Sociability High Types of Corporate Culture Networked Culture Extrovert energized by relationships Tolerant of ambiguities and have low needs for structure Can spot politics and act to stop negative politics Consider yourself easygoing, affable, and loyal to others Communal Culture You consider yourself passionate Strong need to identify with something bigger than yourself You enjoy being in teams Prepared to make sacrifices for the greater good Fragmented Culture Are a reflective and self-contained introvert Have a high autonomy drive and strong desire to work independently Have a strong sense of self Mercenary Culture Goal-oriented and have an obsessive desire to complete tasks Thrive on competitive energy Keep relationships out of work develop them Source: Types of Corporate Culture, in Rob Goffee and Gareth Jones, The Character of a Corporation (New York: HarperCollins, 1998). Copyright 1998 by Rob Goffee and Gareth Jones. Permission granted by Rob Goffee and Gareth Jones by arrangement with The Helen Rees Literary Agency. 3768X_07_ch07_p indd 91 3/6/09 6:58:30 PM
20 Figure 7.A Chapter Outline 92 Chapter 7 Outline Creating a Flexible Organization What Is an Organization? Developing Organization Charts Five Steps for Organizing a Business Job Design Job Specialization The Rationale for Specialization Alternatives to Job Specialization Departmentalization By Function By Customer By Product Combination of Bases By Location Delegation, Decentralization, and Centralization Delegation of Authority Decentralization of Authority The Span of Management Wide and Narrow Spans of Control Organizational Height Chain of Command: Line and Staff Management Line and Staff Positions Compared Line-Staff Conflict Forms of Organizational Structure The Bureaucratic Structure The Cluster Structure The Matrix Structure The Network Structure Additional Factors That Influence an Organization Corporate Culture Coordination Techniques Intrapreneurship The Informal Organization Committees 3768X_07_ch07_p indd 92 3/6/09 6:58:30 PM
21 Figure 7.B Class Exercise Class Exercise 93 Job specialization is the separation of all organizational activities into distinct tasks and the assignment of different tasks to different people. 1. What are the advantages of job specialization? 2. What are the disadvantages of job specialization? 3. What types of jobs lend themselves to specialization? 4. What types of jobs do not lend themselves to specialization? 3768X_07_ch07_p indd 93 3/6/09 6:58:30 PM
22 Figure 7.C Debate Issue 94 Debate Issue Downsizing is a term used to describe a situation where the total number of workers is reduced because they are no longer needed. Should firms use downsizing when employees are no longer needed? YES Downsizing can lead to quicker decision making, precise accountability, and harder-working employees. Downsizing can significantly reduce a firm s salary expense when unneeded employees are terminated. NO Employees are needed to perform their jobs or they wouldn t have been hired in the first place. Downsizing is expensive because most companies must make severance payments and fund retirement plans. 3768X_07_ch07_p indd 94 3/6/09 6:58:30 PM
23 Figure 7.D Chapter Quiz 95 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. 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 s 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. 3768X_07_ch07_p indd 95 3/6/09 6:58:30 PM
24 Figure 7.E(a) Evolution of a Clothing Store Organization (Part 1) 96 Evolution of a Clothing Store Organization (Part 1) 3768X_07_ch07_p indd 96 3/6/09 6:58:31 PM
25 Figure 7.E(b) Evolution of a Clothing Store Organization (Part 2) 97 Evolution of a Clothing Store Organization (Part 2) 3768X_07_ch07_p indd 97 3/6/09 6:58:36 PM
26 Figure 7.F Tall versus Flat Organizations Tall versus Flat Organizations X_07_ch07_p indd 98 3/6/09 6:58:40 PM
27 Figure 7.G Definition of Organization ORGANIZATION 99 A group of two or more people working together to achieve a common set of goals 3768X_07_ch07_p indd 99 3/6/09 6:58:46 PM
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