Creating a Flexible Organization: Understanding Characteristics, Specialization, Departmentalization, and Decentralizati

1. 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 extendsfrom the highest to the lowest levelsof an organization.

7. Reasons toNotMaintain Organizational Chart • Difficult to chart positions • Constant change

8. 5 Steps forOrganizing 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 JobSpecialization Boredom • Job rotation • Job enlargement • Job enrichment

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

13. Bases for Departmentalization • Function • Product • Location • Customer

14. Function …grouping jobs that relate to thesame organizational activity.

15. Product …grouping activities related toa particular product or service.

16. Location …grouping activities accordingto the defined geographic area inwhich they are performed.

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

18. Figure 7.2: MultibaseDepartmentalization for New-Wave Fashions, Inc. Most firms use more than one basis for departmentalization to improve efficiency and to avoid overlapping positions.

19. Delegation …assigning part of a manager’s workand 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. 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. Accountability …the obligation of a worker toaccomplish 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. 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 chainof command and that includes direct responsibility for achieving the goalsof the organization.

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

35. 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 ofOrganizational Structure

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

39. Characteristicsof 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. Advantagesof Matrix Structure • Flexibility • Increased productivity • Raises morale • Nurtures creativity and innovation • Employees experience personal development

44. Disadvantagesof 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 orCollaborative 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 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. 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