Creating a Flexible Organization Chapter 7
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
A Typical Corporate Organization Chart
Major Considerations for Organizing a Business Job design- Specialization Alternatives to specialization Departmentalization Delegation Span of management Chain of command
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.
Alternatives to job specialization Job Design (cont.) Alternatives to job specialization Job rotation systematically shifts employees from one job to another Job enlargement-adding more responsibilities Job enrichment-more variety and more responsibility Needs photo credit
Departmentalization (Ways of Organizing) Grouping jobs into manageable units Common bases for departmentalization By function By product By location By customer Combinations
Evolution of an Organization Chart
Departmentalization by Function CEO Finance Marketing Operations
Departmentalization by Product CEO Computers Printers Software
Departmentalization by Location CEO U.S. Region European Region Asian Region
Departmentalization by Customer CEO Home Users Business Users Educational Users
Multibase Departmentalization for New-Wave Fashions, Inc.
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
Steps in the Delegation Process The manager assigns responsibility. The subordinate is empowered to do the task. Ultimate accountability remains with the manager.
Decentralization of Authority Decentralized organization Spreads the authority widely into the lower levels Centralized organization Authority is concentrated at the upper levels
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
The Span of Management (cont.)
The Span of Management (cont.) 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
Line and Staff Managers
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 Example: A manager has concerns that one of his employees may be sexually harassing another so he consults with HR first before taking action. Functional authority—staff managers’ authority to make decisions and issue directives within their area of expertise Example: A staff manager in the Finance Dept tells a Line Manager in the Production Dept to bring her payroll figures so that Finance can create a month-end report.
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.
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
Chapter Quiz Solid vertical lines on an organization chart indicate staff positions. employees. delegated positions. the chain of command. line and staff positions.
Chapter Quiz The systematic shifting of employees from one job to another is called job specialization. rotation. sharing. enlargement. enrichment.
Chapter Quiz Grouping all activities according to the geographic area in which they are located is departmentalization by function. employee. product. customer. location.
Chapter Quiz In a ______ organization, administrative costs are higher because more managers are needed. long flat tall short broad
Chapter Quiz The power to accomplish an assigned job is called authority. accountability. responsibility. delegation. obligation.