CH 2 B Flashcards
3 elements to organize effectively
1 Creating organizational chart
2 Defining employee relationships
3 Establishing position descriptions
Basic forms of organizational structure
Line
Functional
Line + Staff
3 pros and 3 cons to Line Organization
-Simple, quick, clear
-Management has to have full knowledge, Power it all at the top, and it limits growth
1 pro and 3 cons to functional organization
-Provides expert advise
-Conflicting instructions, slow decisions, and too many managers
2 pros and 3 cons line + staff organization
- Areas of authority are defined, Better communication
- Conflicts can arise, line managers resent to seek advise, costly to have staff who don’t generate revenue
4 items that may be covered in a job description
title
purpose
primary responsibilities
scope of position
Legal forms
Sole Proprietorship
Partnership
Corporation
Operating Affiliations
Loosely Knit
General Purpose Group
Cluster
Common Identity Group
Factors to evaluate when considering an operating affiliation
1 Services + support
2 Exclusivity
3 Fees
4 Contractual agreement
5 Financial strength
Agency
Used when 1 entity acts on behalf of another. Fiduciary relationship - based on trust
Law of agency
Rights and responsibilities that arise when 1 entity represents another
Authority of Insurance Broker
Expressed
Implied
Apparent (Perceived)
Ratification
Retroactive approval. Insurance company becomes aware and agrees on coverage effective the date it was implemented, despite it being outside the authority of the broker.
