Chapter 7 (Creating a Flexible Organization)

Question 1

What are the reasons for organizing?

Answer 1

(1) lower operating costs
(2) focused consumer targeting
(3) specialization

Question 2

What are the 5 characteristics of organizing?

Answer 2

(1) Job Specialization
(2) Grouping jobs into manageable units
(3) Delegation of Power
(4) Span of Management
(5) Chain of Command

Question 3

In a tree diagram, what’s the difference between a straight line and a dotted line?

Answer 3

Straight Line: chain of command (power to hire and fire)

Dotted Line: staff (only advises)

Question 4

What kind of companies have a greater need for organization charts? Why?

Answer 4

LARGER companies have a greater need for organization charts, because of:

(1) higher frequency for change, requiring constant organizating to remain updated
(2) higher need to clarify growth, change of positions and reporting

Question 5

Why do some companies avoid organization charts?

Answer 5

Companies avoid organization charts due to fear of potential chaos through clarification of who works for who.

Question 6

Define specialization.

Answer 6

Specialization: the assignment of distinct, specific tasks to different workers

Question 7

What’s the rationale for specialization?

Answer 7

(1) Unspecialized or undivided work can become too overwhelming for an individual worker
(2) Increases worker skill level and efficiency by focusing tasks
(3) Simplifies training

Question 8

What are the risks for specialization?

Answer 8

(1) Boredom if the specialized work is too concentrated and/or repetitive
(2) Higher rate of worker absences due to lack of stimulation and interest
(3) Discourages worker’s enthusiasm and effort, therefore work efficiency
(4) Increases risk for sabotage due to workers’ need for change

Question 9

What are the alternative solutions for the risks of specialization?

Answer 9

(1) Job Rotation: maintains workers’ interest AND workers’ obtain a wider skill range (making workers more versatile and replaceable)
(2) Job Enlargement: increasing the amount of tasks for an individual worker
(4) Job enrichment: increasing the difficulty or demands for the particular task

Question 10

Define Departmentalization.

Answer 10

Departmentalization: the process of grouping jobs into manageable units

Question 11

What are the four bases of departmentalization?

Answer 11

(1) By function (for smaller & new companies)
(2) By product (for larger & older companies)
(3) By location (for specific regional needs)
(4) By customer (for service-based and market specific)

Question 12

What are the pros/cons of “by function” departmentalization? What is the possible, although temporary, solution?

Answer 12

“By function” Departmentalization ~
Pros: Easy supervision and coordination
Cons: Conflicting roles and lack of communication; slows decision making, encourages department over company
Solutions: Can be solved with a facilator to act as a go-between; however, this is only a temporary solution, a band-aid.

Question 13

What are the pros/cons of “by product” departmentalization?

Answer 13

Pros: Easier decision-making and allows integration of similar tasks for that product
Cons: Duplication of roles (due to division by product) that may end up being repetitive and unnecessary

Question 14

What are the pros/cons of “by location” departmentalization?

Answer 14

Pros: Ability to target and respond to unique, location-based demands such as weather and culture differences
Cons: Demands a larger administrative staff and control system

Question 15

What are the pros/cons of “by customer” departmentalization?

Answer 15

Pros: Ability to deal efficiently with unique, customer-based needs
Cons: Demands larger-than-usual administrative staff

Question 16

Define the 3 evolutions of organizing.

Answer 16

(1) One-person operation: no hierarchy or specialization; 1-man-show of investor, producer, marketer and bookkeeper
(2) Two-person operation: vertical hierarchy only; consists of owner/operator (investor, producer, marketer and bookkeeper) and a general assistant
(3) A mature organization: consists of vertical and horizontal hierarchy; consists of the corporate president, directors (production, marketing, accounting) and the specialized workers for each department

Question 17

Define Multibase Departmentalization.

Answer 17

Multibase Departmentalization: the use of more than one basis for departmentalization

Question 18

Define Delegation.

Answer 18

Delegation: Assigning a manager’s work and power to several workers

Question 19

What are the rationale and barriers of delegation?

Answer 19

Rationale for Delegation:
(1) No manager can do everything by themselves
(2) Develops the skills of subordinates
(3) Leadership Grooming
Barriers to Delegation:
(1) Risk of Incomplete or Disatisfactory Work: due to workers’ incompetence (prevented by delegating power and responsibilities little-by-little, and firing upon workers’ failure to satisfactorily complete tasks assigned)
(2) Risk of Work Being Done TOO well: puts manager in risk of getting replaced by subordinate due to subordinates’ superior ability and performance
(3) Disorganization: failure to clarify and communicate, leading to unsatisfactory work or unnecessary duplication of the same work by different workers

Question 20

What is the delegation process?

Answer 20

(1) Assign responsibility: choose the specific task and assign worker to perform task
(2) Grant authority: communicate the transfer of power to enable worker to execute assigned task
(3) Assign accountability: hold responsibility to the worker assigned with task

Question 21

Is accountability created or delegated?

Answer 21

Accountability is a LIABILITY that is CREATED for the use of power

Question 22

Define centralized and decentralized organization.

Answer 22

Centralized organization: Authority is systematically concentrated at the highest levels (tip:think more vertical hierarchy and decreased role of subordinates)
Decentralized organization: Authority is consciously spread widely across levels (tip: think more horizontal hierarchy and increased role of subordinates)

Question 23

What are the reasons for centralization vs decentralization?

Answer 23

Centralize
(1) Risky Decision: centralize to concentrate the decision-making power to the higher levels, to allow focus on the bigger picture
(2) To give lower managers the necessary formal power to increase compliance and efficiency
Decentralized
(1) If company environment has become too complicated and unpredictable; decentralized to produce more simplicity, efficiency and involvement of the lower-level workers

Question 24

What’s the difference between delegation vs decentralization?

Answer 24

(1) Delegation typically occurs only between one person to another, while decentralization is wider in scope and transfers power to more subordinates. (2) Delegation typically puts responsibility on the managers, while decentralization increases the role of responsibility to the subordinates

Question 25

Define Span of Management.

Answer 25

Span of Management: the number of workers who report directly to one manager

Question 26

What are the defining characteristics of a wide span vs. narrow span of management?

Answer 26

Wide Span: large number of subordinates under one manager
~ A.K.A. “flat” managements: more horizontal hierarchy, focuses on empowering employees, increases workers’ self-direction and collaborative problem-solving
(1) requires high level of competence from managers and workers
(2) Managers mainly focus on administrative and supervising tasks
(2) for standard operating procedures
(3) for operations that are consistent and rarely pose new problems

Narrow Span: few number of subordinates under one manager
~ A.K.A. “Tall” Managements: more vertical hierarchy, focuses on creating control, increasing chain of command
(1) Physical dispersion of subordinates
(2) Manager has additional tasks
(3) For operations with a high frequency of new problems
(4) Internal communication may become distorted

Question 27

Define the 4 forms/structures of formal organization.

Answer 27

(1) Matrix Structure: both horizontal and vertical lines of authority; team members report to both the project manager and the functional manager. Pros: innovation Cons: confusion, chain of command conflicts
(2) Line Structure: the simplest and oldest form; direct chain of command (quick decision-making and direct accountability), consists of line and staff (dotted line) managers
(3) Virtual Organization: only consists of a few permanent employees (management and clerical roles); all other functions are taken by contractors and vendors Pros: choose who you want, when yiu wan! Cons: vulnerability of relying on outside workers to operate and function
(4) Corporate Culture: clearly defines inner rites, rituals, history and values of the company; exerts powerful influence on employee thoughts and behavior; indicators are physical settings, corporate statements, customer treatment and employee behavior

Question 28

What are the 4 divisions of corporate culture?

Answer 28

High Socialbility 
(1) Networked Culture
(2) Communal Culture
Low Socialbility
(3) Fragmented Culture
(4) Mercenary Culture

Question 29

Define informal organization.

Answer 29

Informal Organization: Formed by members of a company to accomplish goals; based more on personal rather than official relationships

Question 30

Define Grapevine.

Answer 30

Grapevine: the informal, interpersonal channel of communication that is not officially sanctioned by the company; risk of possible spreading of misinformation