1. Creating a Flexible Organization
PRIDE HUGHES KAPOOR
INTRODUCTION TO
BUSINESS
ELEVENTH EDITION
Chapter Nine
Creating a Flexible Organization
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2. Learning Objectives
Understand what an organization is and identify its characteristics.
Explain why job specialization is important.
Identify the various bases for departmentalization.
Explain how decentralization follows from delegation.
Understand how the span of management describes an organization.
Describe the four basic forms of organizational structure.
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3. Learning Objectives (cont’d)
Describe the effects of corporate culture.
Understand how committees and task forces are used.
Explain the functions of the informal organization and the grapevine in a business.
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4. 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
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
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5. A Typical Corporate Organization Chart
Figure 9.1
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6. Major Considerations for Organizing a Business
Job design
Departmentalization
Delegation
Span of management
Chain of command
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7. Rationale for specialization
Job Design
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
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8. Alternatives to job specialization
Job Design (cont’d)
Alternatives to job specialization
Job rotation systematically shifts employees from one job to another
Job enlargement
Job enrichment
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9. Grouping jobs into manageable units
Departmentalization
Grouping jobs into manageable units
Common bases for departmentalization
By function
By product
By location
By customer
Combinations
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10. 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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11. Delegation, Decentralization, and Centralization
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
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12. Steps in the Delegation Process
The manager assigns responsibility
The subordinate is empowered to do the task
Ultimate accountability remains with the manager
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13. Decentralization of Authority
Decentralized organization
Management consciously attempts to spread authority widely in the lower levels of the organization
Centralized organization
Authority is concentrated at the upper levels of the organization
Factors favoring decentralization
A complex and unpredictable business environment
Decisions that carry low risk or that are unimportant
Highly capable lower-level managers with strong decision-making skills
Past practices of the firm in decentralizing its structure and decision-making processes
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14. The number of workers who report directly to one manager
The Span of Management
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
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15. The Span of Management (cont’d)
Wide and narrow spans of management
Figure 9.4
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16. The Span of Management (cont’d)
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
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17. Forms of Organizational Structure
Line Structure
The chain of command goes directly from person to person throughout the organization
Simplicity allows for quick decision making and direct accountability
Most suitable for small organizations with lower volume of activities than medium or large organizations
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18. Forms of Organizational Structure (cont’d)
Line-and-Staff Structure
Utilizes the chain of command from a line structure in combination with the assistance of staff managers
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19. Line and Staff Managers
Figure 9.5
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20. Forms of Organizational Structure (cont’d)
Line-and-Staff Structure (cont’d)
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
Functional authority—staff managers’ authority to make decisions and issues directives within their area of expertise
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21. Forms of Organizational Structure (cont’d)
Line-and-Staff Structure (cont’d)
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
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22. Forms of Organizational Structure (cont’d)
Matrix structure
A structure that combines vertical and horizontal lines of authority, usually by superimposing product departmentalization on functional departmentalization
Authority flows both down and across
Employees on cross-functional teams report to both the project manager in charge of the team and to their superiors in their home-base functional department
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23. A Matrix Structure
Figure 9.6
Source: Ricky W. Griffin, Management, 10th ed. Copyright © 2011 by South-Western/Cengage Learning. Adapted with permission.
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24. Forms of Organizational Structure (cont’d)
Matrix Structure (cont’d)
Advantages
Disadvantages
Added flexibility
Increased productivity
Higher morale
Increases in creativity and innovation
Personal development of team members
Chain of command conflicts
May take longer to resolve problems and reach solutions
Personality clashes
Poor communications
Undefined individual roles
Unclear responsibilities
Difficulty in determining how to reward individual and team performance
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25. Forms of Organizational Structure (cont’d)
Network structure (virtual organization)
Administration is the primary function, and most other functions are contracted out to other firms
Strength
Flexibility allows the organization to adjust quickly to changes
Weaknesses
Difficulty controlling the quality of work by other organizations
Low morale and high turnover of hourly workers
Vulnerability of relying on outside contractors
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26. The inner rites, rituals, heroes, and values of a firm
Corporate Culture
The inner rites, rituals, heroes, and values of a firm
Indicators of corporate culture
The physical setting (e.g., building and office layout)
Corporate statements about itself
How the company greets its guests
How employees spend their time at work (alone or in groups)
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27. Corporate Culture (cont’d)
Source: Accenture survey of 1,000 full-time female workers 22 to 35 years old. USA Today, Monday March 1, 2010, B1
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28. Corporate Culture (cont’d) Types of Corporate Cultures
Networked culture
Trust and friendship among employees
Strong commitment to the organization
Informal environment
Mercenary culture
Passion, energy, sense of purpose, excitement for work
Intense, focused, determined to win
Fragmented culture
Employees not friends; work “at” (not “for”) organization
Employees have autonomy, flexibility, equality
Communal culture
Friendship, commitment, focus on performance, high energy
Lives revolve around the product; success is celebrated by all
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29. Corporate Culture (cont’d)
Figure 9.7
Source: “Types of Corporate 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.
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30. Corporate Culture (cont’d)
Cultural change is needed when
A company’s environment changes
The industry becomes more competitive
Company performance is mediocre
The company is growing or becomes a large firm
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31. Committees and Task Forces
Types
Ad hoc—created for a specific short-term purpose
Standing—relatively permanent; charged with performing some recurring task
Task force—established to investigate a major problem or pending decision
Differences with individual action
Advantages
members bring more information and knowledge; more accurate decisions; results communicated more effectively
Disadvantages
Decision making takes longer; may reach unnecessary compromises; one person may dominate
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32. 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
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