1. Foundations of Business 3e
Pride, Hughes, & Kapoor

2. Creating a Flexible Organization
Chapter 7

3. 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.
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.

4. So, 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

5. Example: A Typical Corporate Organization Chart

6. Objective: Organize your Shop
Class Excercise
The Gift Wrapping Store
You have an idea to open up a gift wrapping store in a high-end mall in Omaha. You anticipate a non-stop work flow.
Your employees (4) are…your brother (who is strong) your sister (who is “gifted” at gift decoration) your 16 yr old niece (who is good at wrapping) your 15 yr old nephew (who is a hard worker)
Jobs at the shop:
Box the gift
Wrap the gift perfectly
Decorate the gift creatively
Order supplies
Answer the phones
Work the cash register
Answer phones
Handle customer service issues (complaints)
Objective: Organize your Shop
Who will do what jobs?
Who will be in charge, second, third…?

7. Gift Wrap Store Organizational Chart
You
Phones /customer service / finances
Lead Manager
Brother
Boxing/supplies
Sister
Wrapping/shop displays
Decorations
Dept
Boxing Dept
Nephew
Niece
Assistant Boxer
Assistant Gift Decorator

8. Major Management Considerations for Organizing a Business
Job design
Departmentalization
Delegation
Span of management
Chain of command

9. Organizing Consideration #1 - 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.

10. Class Exercise Can become very efficient at a task
Job specialization is the separation of all organizational activities into distinct tasks and the assignment of different tasks to different people.
What are the advantages of job specialization?
What are the disadvantages of job specialization?
What types of jobs lend themselves to specialization?
What types of jobs do not lend themselves to specialization?
Can become very efficient at a task
The task can become boring…less production.
Highly specialized tasks using special equipment
Low skilled, nonmotivating work

11. Alternatives to job specialization
Job Design (cont.)
Alternatives to job specialization
Job Rotation - systematically shifts employees from one job to another
Job Enlargement - Expanding
a workers job to include additional
but similar tasks
Job Enrichment – motivation
technique that provides employees
more variety and
responsibility in their jobs
Needs photo credit

12. Types of Firms Using Job Rotation by Industry

13. Organization Consideration #2 - Departmentalization
Grouping jobs into manageable units
Common bases for departmentalization
By function
By product
By location
By customer
Combinations

14. An Evolving Organization Chart

15. Departmentalization by Function
CEO
Finance
Marketing
Operations

16. Departmentalization by Product
CEO
Computers
Printers
Software
Hewlett Packard?

17. Departmentalization by Location
CEO
U.S. Region
European Region
Asian Region
Coca Cola?

18. Departmentalization by Customer
CEO
Home Users
Business Users
Educational Users
Dell Computers?

19. Multibase Departmentalization for New-Wave Fashions, Inc.

20. Using the Internet
Accenture is a consulting company that firms turn to for advice about reorganization of current structures and processes.

21. Organization Consideration #3 - 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

22. Steps in the Delegation Process
The manager assigns responsibility.
The subordinate is empowered to do the task.
Ultimate accountability remains with the manager.

23. Authority: Should it be Centralized or Decentralized?
Decentralized organization
Management consciously attempts to spread authority widely in the lower levels of the organization
Nordstrom Department Store
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

24. Organization Consideration #4 – 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

25. The Span of Management – Narrow or Wide?

26. The Span of Management – Some definitions
Organizational height—number of layers, or levels, of management in a firm
Flat organizations – Verizon Store
Have wider spans of management and fewer levels
Require managers to perform more administrative tasks and to spend more time supervising subordinates
Tall organizations - UNL
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

27. Organization Consideration #5 –The Chain of Command
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

28. Forms of Organizational Structure (cont.)
Line-and-staff structure
Utilizes the chain of command from a line structure in combination with the assistance of staff managers

29. Line and Staff Managers

30. 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
Functional authority—staff managers’ authority to make decisions and issue directives within their area of expertise

31. 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.

32. Forms of Organizational Structure (cont.)
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

33. A Matrix Structure

34. Finally, Corporate Culture, Comittees and Task Forces
What is 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)

35. Corporate Culture (cont.)
Source: Accenture survey of 1,000 full-time female workers 22 to 35 years old. USA Today, Monday March 1, 2010, B1

36. 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

37. Corporate Culture (cont.)
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

38. Use of 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
Committees vs. 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

39. 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
York College “Green Team”
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

40. II.-Do you Know What Your Strengths Are?
Videos
“Trombone Player Wanted” - Parts 1 & 2
I.-What’s Stopping You?
Are you in the 2 out of 10?
As you grow, your personality changes?
Will you grow most in your area of weakness?
Do your daily energies lie with strengths or weaknesses?
What really makes a great team member?
II.-Do you Know What Your Strengths Are?
Strengths are not just what you are good at.
Who is the best judge of my strengths?
Are your strengths at the center of your week?

41. 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.

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

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

44. Chapter Quiz
In a ______ organization, administrative costs are higher because more managers are needed.
long
flat
tall
short
broad

45. Chapter Quiz The power to accomplish an assigned job is called
authority.
accountability.
responsibility.
delegation.
obligation.