1. Creating a Flexible Organization
Chapter 7
Creating a Flexible Organization

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.
Understand how the chain of command is established by using line and staff management.
Describe the four basic forms of organizational structure: bureaucratic, matrix, cluster, and network.
Summarize the use of corporate culture, intrapreneurship, committees, coordination techniques, informal groups, and the grapevine.

3. Organization
…a group of two or more people working together to achieve a common set of goals.

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

5. 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.

6. Chain of Command
…the line of authority that extends from the highest to the lowest levels of an organization.

7. Reasons to Not Maintain Organizational Chart
Difficult to chart positions
Constant change

8. 5 Steps for Organizing a Business
Job Design
Departmentalization
Delegation
Span of Management
Chain of Command

9. Job Specialization
…the separation of all organizational activities into distinct tasks and the assignment of different tasks to different people.

10. 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

11. Combating Job Specialization Boredom
Job rotation
Job enlargement
Job enrichment

12. …process of grouping jobs into manageable units.
Departmentalization
…process of grouping jobs into manageable units.

13. Bases for Departmentalization
Function
Product
Location
Customer

14. …grouping jobs that relate to the same organizational activity.
Function
…grouping jobs that relate to the same organizational activity.

15. …grouping activities related to a particular product or service.

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

17. Customer
…grouping activities according to the needs of various customer populations.

18. 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.

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

20. Figure 7.3: Steps in the Delegation Process
To be successful, a manager must learn how to delegate.
No one can do everything alone.

21. …the duty to do a job or perform a task.
Responsibility
…the duty to do a job or perform a task.

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

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

24. 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

25. Decentralized Organization
…an organization in which management consciously attempts to spread authority widely in the lower levels.

26. Centralized Organization
…an organization that systematically works to concentrate authority at the upper levels.

27. Factors Influencing Decentralization
Complexity/predictability of external environment
Risk/importance of decision
Abilities of lower-level managers
Past practice

28. …the number of workers who report directly to one manager.
Span of Management
…the number of workers who report directly to one manager.
Wide vs. Narrow
Flat vs. Tall

29. Figure 7.4: The Span of Management

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

31. Tall Organizations
Administrative costs high because of layers of management
Communication among levels distorted

32. Wide Organizations
Managers perform more administrative duties
Managers spend more time supervising and working with subordinates

33. Line Management Position
…a position that is part of the chain of command and that includes direct responsibility for achieving the goals of the organization.

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

35. Line managers = line/direct authority Staff managers
Line vs. Staff
Line managers = line/direct authority
Staff managers
Advisory authority
Functional authority
Conflicts
To line from staff
More formal education
Younger
To staff from line ─ ignored

36. Figure 7.5: Line and Staff Management

37. Table 7.1: Five Characteristics of Organizational Structure

38. Bureaucratic Structure
…a management system based on a formal framework of authority that is outlined carefully and followed precisely.

39. 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

40. Matrix Structure
…an organizational structure that combines vertical and horizontal lines of authority, usually by superimposing product departmentalization on a functionally departmentalized organization.

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

42. Figure 7.6: A Matrix Structure

43. Advantages of Matrix Structure
Flexibility
Increased productivity
Raises morale
Nurtures creativity and innovation
Employees experience personal development

44. 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

45. Cluster Structure
…an organization that consists primarily of teams with no or very few underlying departments.

46. 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

47. Cluster Structure Flexibility Try new techniques Explore new ideas
Strengths
Flexibility
Try new techniques
Explore new ideas
Weaknesses
Lack of job security
Increased stress
Rapid changes

48. Network Structure
…an organization in which administration is the primary function, and most other functions are contracted out to other firms.

49. No manufacturing of product it sells Few permanent employees
Network Structure
No manufacturing of product it sells
Few permanent employees
Top management
Hourly clerical
Leased facilities/equipment
Temporary workers
Limited formal structure

50. Strengths/Challenges of Network Structure
Strength = flexibility
Challenges
Quality control
Low morale/high turnover
Vulnerability to outside contractors

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

52. Corporate Culture Indicators
Physical setting
What company says about culture
How guests greeted
How employees spend their time

53. Figure 7.7: Types of Corporate Cultures

54. Organizations of the Future
Small, task-oriented work groups
Control over own activities
Computer coordinated
Strong corporate culture
Supports trust and risk taking

55. Intrapreneur
…an employee who pushes an innovative idea, product, or process through an organization.

56. 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

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

58. Chapter Quiz
Solid vertical lines on an organization chart indicate relationships among
staff positions.
employees.
delegated positions.
the chain of command.
line and staff positions.

59. Chapter Quiz (cont.)
The systematic shifting of employees from one job to another is called job
specialization.
rotation.
sharing.
enlargement.
enrichment.

60. Chapter Quiz (cont.)
Grouping all activities according to the geographic area in which they are located is departmentalization by
function.
employee.
product.
customer.
location.

61. Chapter Quiz (cont.)
In a __________ organization, administrative costs are higher because more managers are needed.
long
flat
tall
short
broad

62. Chapter Quiz (cont.) The power to accomplish an assigned job is called
authority.
accountability.
responsibility.
delegation.
obligation.