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Principles Of Management > Chapter 8 > Flashcards

Chapter 8 Flashcards

FUNDAMENTALS OF ORGANIZING

organization chart

• The reporting structure and division of labor in an organization
• The chart provides a picture of the reporting structure (who reports to whom) and the various activities that are carried out by different individual
• Two fundamental concepts around which organizations structure are differentiation and integration.

Conventional Organization Chart

• The boxes represent different work.
• The titles in the boxes show the work performed by each unit.
• Reporting and authority relationships are indicated by solid lines showing superior-subordinate connections.
• Levels of management are indicated by the number of horizontal layers in the chart. All persons or units that are at the same rank and report to the same person are on one level.

differentiation

• an aspect of the organization’s internal environment created by job specialization and the division of labor
• means that the organization is composed of many units that work on different kinds of tasks, using different skills and work methods.
• for example, differentiation is created through division of labor and job specialization.
• differentiation is high when an organization has many subunits and many kinds of specialists who think differently.
• all the specialized tasks in an organization cannot be performed completely independently.
• because the different units are part of the larger organization, some degree of cooperation must exist among them.
• is achieved through structural mechanisms that enhance collaboration and coordination.
• any job activity that links different work units performs an integrative function

division of labor

• The assignments of different tasks to different people or groups
• Means the work of the organization is subdivided into smaller tasks.
• various individuals throughout the organization perform different tasks

integration

• The degree to which differentiated work units work together and coordinate their efforts
• these differentiated units are put back together so that work is coordinated into an overall product.

specialization

• A process in which different individuals and units perform different tasks

coordination

• the procedures that link the various parts of an organization for the purpose of achieving the organization’s overall mission

THE VERTICAL STRUCTURE

Board of directors major set of duties

1) Selecting, assessing, rewarding, and perhaps replacing the CEO. 2. Determining the firm’s strategic direction and reviewing financial performance. 3. Ensuring ethical, socially responsible, and legal conduct. - in corporations, the owners are the stockholders. But because there are numerous stockholders and the individuals generally lack timely information, few are directly involved in managing the organization. - stockholders elect a board of directors to oversee the organization. - The board, led by the chair, make major decisions affecting the organization, subject to corporate charter and bylaw provisions.

• The legitimate right to make decisions and to tell other people what to do
• traditionally, Authority resides in position rather than in people.
• in private business enterprises, the owners have ultimate authority. In most small, simply structured companies, the owner also acts as a manager. Sometimes the owner hires another person to manage the business and its employees. The owner gives this manager some authority to oversee the operations, but the manager is accountable to – reports and defers to – the owner.

corporate governance

• The role of a corporation’s executive staff and board of directors in ensuring that the firms activities meet the goals of the firms stakeholders
• The authority levels of the organizational pyramid
• The CEO occupies a top position and is the senior member of the top management.
• The top managerial level also include president and vice president; they are the strategic managers in charge of the entire organization.
• The second broad level of the organization is middle-management; at this level, managers are in charge of plants or department
• the lowest level is made up of lower management and workers; it includes office managers, sales managers, supervisors, and other first-line managers as well employees who report directly to them.

span of control

• The number of subordinates who report directly to an executive or supervisor
• holding size constant, narrow spans build a tall organization that has many reporting levels; wide spans create a flat organization with fewer reporting levels; the span of control can also be too narrow or too wide.
• the optimal span of control maximizes effectiveness because it is : 1. Narrow enough to permit managers to maintain control over subordinates. 2. Not so narrow that it leads to overcontrol and an excessive number of managers who oversee a small number of subordinates.
• actually, the optimal span of control depends on a number of factors; the span should be wider when: 1. The work is clearly defined and unambiguous. 2. Subordinates are highly trained and have access to information. 3. The manager is highly capable and supportive. 4. Jobs are similar and performance measures are comparable. 5. Subordinates prefer autonomy to close supervisory control.
• If opposite condition exists, a narrow span of control may be more appropriate.
• subdivisions of an organization
• The assignment of new or additional responsibilities to a subordinate
• it often requires the subordinate to report back to his or her boss about how effectively assignment was carried out.
• delegation is perhaps the most fundamental feature of management because it entails getting work done through others.
• The process can occur between any two individuals in any type of structure with regard to any task.

responsibility

• the assignment of a task that an employee is supposed to carry out
• when delegating work responsibilities, the manager also should delegate to the subordinate enough authority to get the job done
• ironically, it is quite common for people to have more responsibility than authority; they must perform as well as they can through informal influence tactics instead of relying purely on authority.

accountability

• The expectation that employees will perform a job, take corrective action when necessary, and report upward on the status and quality of their performance

centralized organization

• Organization in which high-level executives make most decisions and pass them down to lower levels for implementation
• centralization may be valuable when department have different priorities or conflicting goals, which need to be mediated by top management

decentralized organization

• an organization in which lower-level managers make important decisions

THE HORIZONTAL STRUCTURE

line departments

• units that deal directly with the organization’s primary goods and services
• line managers typically have much authority and power; they have the ultimate responsibility for making major operating decisions and also are accountable for the bottom-line results of their decisions.

staff departments

• units that support line departments
• they include research, legal, accounting, public relations, and human resources departments.
• each of these specialized units often has its own vice President, and some are vested with a great deal of authority, as when an accounting or finance group approves and monitors budgetary activities.
• that manager seems more focused on protecting the company from risks.

departmentalization

• subdividing an organization into smaller subunits

- Basic approaches to departmentalization are functional, divisional, and matrix.

functional organization

• departmentalization around specialized activities such as production, marketing, and human resources
• is common in both large and small organizations. Large companies may organize several functional groupings, including groupings unique to their businesses.
• advantages : 1. Economies of scale can be realized. When people with similar skills are grouped, more efficient equipment can be purchased, and discounts for large purchases can be used. 2. Monitoring of the environment is more effective. Each functional group is more likely attuned to developments in its own field and therefore can adapt more readily. 3. Performance standards are better maintained. People with similar training and interests may develop a shared concern for performance in their jobs. 4. People have greater opportunity for specialized training and in-depth skill development. 5. Technical specialists are relatively free of administrative work. 6. Decision-making and lines of communication are simple and clearly understood.
• disadvantages : 1. People may care more about their own function than about the company as a whole, and their attention to functional tasks may make them lose focus on overall product quality and customer satisfaction. 2. Managers develop functional expertise but do not acquire knowledge of the other areas of the business; they become specialists but not generalists. 3. If the organization becomes fragmented, it may have difficulty developing and bringing new products to market and responding quickly to customer demands and other changes.

divisional organization

• departmentalization that groups units around products, customers, or geographic regions
• Organizations may restructure to group all functions into a single division and duplicate the function across all of the divisions.
• all functions that contribute to a given product are organized under one manager. In the product organization, managers in charge of a function for a particular product report to a product manager.
• advantages : 1. Information needs are managed more easily. Less information is required because people work closely on one product and need not worry about other products. 2. People have a full-time commitment to a particular product line. They develop a greater awareness of how their jobs fit into the broader scheme. 3. Task responsibilities are clear. When things go wrong in a functional organization, functional managers can pass the buck (“That other department is messing up, making it harder for us to do our jobs.”). In a product structure, managers are more independent and accountable because they usually have the resources they need to perform there. Also, the performances of different divisions can be compared by contrasting their profits and other measures. 4. People receive broader training. General managers develop a wide variety of skills, and they learn to be judged by results. Many top executives received crucial early experience in product structure.
• disadvantages : it is difficult to coordinate across product lines and divisions; and although managers learn to become generalists, they may not acquire the depth of functional expertise that develops in the functional structure.
• Customer and Geographic divisions :
• the primary advantage is the ability to focus on customer needs and provide faster, better service. However, duplication of activities across many customer groups and geographic areas is expensive

matrix organization

• an organization composed of dual reporting relationships in which some employees report to two superiors – a functional manager and a divisional manager
• Linkage of employees at all levels and in all functions to the company’s goals and strategy.
• more information shared across functions.
• Communication fostered – especially valuable for complex assignments where different groups depend on each other.
• greater responsiveness to customers from bringing together information about customer needs and organizational capabilities.
• creative ideas from cross functional work.
• loyalty to the organization as a whole rather than to a function or division.
• unclear responsibilities and competing priorities.
• violation of the unity of command principle.
• accountability difficult to define.
• accountability for results under other matrix members’.
• possible conflict and stress for employees who must manage a dual reporting role.
• additional time required for meetings and other communications to coordinate work.
• extensive collaboration needed but not always easy to reward.

unity-of-command principle

• A structure in which each worker reports to one boss, who in turn reports to one boss
• reporting to two superiors can create confusion and a difficult interpersonal situation unless steps are taken to prevent these problems from arising.

network organization

• A collection of independent, mostly single function firms that collaborate on a good or service
• describes not one organization but the web of relationships among many firms.
• network organizations are flexible arrangement among designers, suppliers, producers, distributors, and customers where each firm is able to pursue its own distinctive competence yet work effectively with other members of the network.
• often, members of the network communicate electronically and share information to be able to respond quickly to customer demand.
• in effect, the normal boundaries of the organization becomes blurred or porous as managers within the organization interact closely with network members outside it.
• The network as a whole, then, can display the technical specialization of the functional structure, responsiveness of the product structure, and the balance and flexibility of the matrix.
• very flexible network organization is the dynamic network
• The firm must choose the right specialty. It must be something (good or service) that the market needs and that the firm is better at providing than other firms.
• The firm must choose collaborators that also are excellent at what they do and that provide complementary strengths.
• The firm must make certain that all parties fully understand the strategic goals of the partnership.
• Each party must be able to trust all the others with strategic information and trust that each collaborator will deliver quality products even if the business grows quickly and makes heavy demands.

dynamic network

• temporary arrangements among partners that can be assembled and reassembled to adapt to the environment
• also called the modular or virtual corporation
• The members of the network are held together by contracts that stipulates results expected (market mechanisms) rather than by hierarchy and authority.
• such arrangements are common in the electronics, toy, and apparel industries, each of which creates and sell trendy products at a fast pace.
• dynamic networks also are suited to organizations in which much of the work can be done independently.
• A person who assembles and coordinates participants in a network
• Broker/managers serve several important boundary roles that aid network integration and coordination: 1. Designer role : The broker serves as a network architect who envisions a set of groups or firms whose collective expertise could be focused on a particular good or service. 2. Process engineering role : The broker serves as a network co-operator to take the initiative to lay out the flow of resources and relationships and makes certain that everyone shares the same goals, standards, payments, and the like. 3. Nurturing role : The broker serves as a network developer who nurtures and enhances the network (like team building) to make certain the relationships are healthy and mutually beneficial.

ORGANIZATIONAL INTEGRATION

standardization

• establishing common routines and procedures but apply uniformly to everyone
• constrains actions and integrates various units by regulating what people do.
• people often know how to act – and how to interact – because standard operating procedures spell out what they should do.

formalization

• The presence of rules and regulations governing how people in the organization interact
• simple, often written, policies regarding attendance, dress, and decorum, for example, may help eliminate a good deal of uncertainty at work.
• but an important assumption underlying both standardization and formalization is that the rules and procedures should apply to most (if not all) situations.
• these approaches, therefore, are most appropriate in situations that are relatively stable and unchanging.
• in some cases, when the work environment requires flexibility, coordination by standardization may not be very effective.

coordination by plan

• interdependent units are required to meet deadlines and objectives that contribute to a common goal
• does not require the same high degree of stability and routinization required for coordination by standardization.
• interdependent units are free to modify and adapt their actions as long as they meet the deadlines and target required for working with others.

coordination by mutual adjustment

• units interact with one another to make accommodations to achieve flexible coordination
• involves feedback and discussion to figure out jointly how to approach problems and devise solutions that are agreeable to everyone.
• The popularity of teams today is in part because they allow flexible coordination; teams can operate under the principle of mutual adjustment.
• hashing out every issue takes time and may not be the most expedient approach for organizing work.
• at the same time, it can be very effective when the problems are novel and cannot be programmed in advance with rules, procedures, or plans.
• particularly during crises, in which rules and procedures don’t apply, mutual adjustment is likely to be the most effective approach to coordination

Managing High Information-Processing Demands

• creating slack resources : are simply extra resources in which organizations can rely on in a pinch so that if they get caught offguard, they can still adjust; examples include inventory, employees
• creating self-contained tasks : refers to changing from a functional organization to a product or project organization and giving each unit the resources it needs to perform its task; information processing problems are reduced because each unit has its own full complement of specialties instead of functional specialties that have to share their expertise along a number of different product teams; communications then flow within each team rather than a long a complex array of interdependent groups.
• an organization may take the approach of increasing it’s information processing capability.
• it can invest in information systems, which usually means employing or expanding computer systems; but increasing an organization’s information processing capability also means knowledge management – capitalizing on the intellect and experience of the organization’s human assets to increase collaboration and effectiveness
• One way to do that is by creating horizontal relationships between units to foster coordination; such horizontal relationships are effective because they increase integration.
• as uncertainty increases, the following horizontal processes may be used, ranging from the simplest to the most complex: 1. Direct contact (mutual adjustment) : among managers who share a problem. In a university, for example, a residence hall advisor might call a meeting to resolve differences between two feuding students who live in adjacent rooms. 2. Liaison roles : or specialized jobs to handle communications between the two departments. A fraternity representative is a liaison between the fraternity and the interfraternity council, the University, or the local community. 3. Task forces : or groups of representatives from different departments, brought together temporarily to solve a common problem. For example, students, faculty, and administrators may be a member of a task force charged with bringing distinguished speakers to campus for a current events seminar. 4. Teams, or permanent interdependent decision-making groups. An executive Council made up of department heads might meet regularly to make decisions affecting a college of engineering or liberal arts. 5. Product, program, or project managers : who Direct interdisciplinary groups with a common task to perform. In a college of business administration, a faculty administrator might head an executive education program of professors from several disciplines. 6. Matrix organizations: composed of dual relationships in which some managers report to two superiors. Your instructors, for example, may report to department heads in their respective disciplines and to a director of undergraduate or graduate programs.

Explain how differentiation and integration influence an organization.

• Differentiation means that organizations have many parts.
• Specialization means that various individuals and units throughout the organization perform different tasks.
• The assignment of tasks to different people or groups often is referred to as the division of labor.
• But the specialized tasks in an organization cannot all be performed independently of one another.
• Coordination links to various tasks to achieve the organization’s overall mission.
• An organization with many specialized tasks and work units is highly differentiated; the more differentiated the organization is, the more integration or coordination is required.

Summarize how authority operates.

• Authority is the legitimate right to make decisions and tell other people what to do.
• Authority is exercised throughout the hierarchy because bosses have the authority to give orders to subordinates.
• Through the day-to-day operation of authority, the organization proceeds towards achieving goals.
• Owners or stockholders have ultimate authority.

Define the roles of the Board of Directors and the chief executive officer.

• Boards of directors report to stockholders.
• The board of directors controls or advises management, considers the firm’s legal and other interests, and protects stockholders’ right.
• The chief executive officer reports to the board and is accountable for the organizations performance.

Discuss how span of control affects structure and managerial effectiveness.

• Span of control is the number of people who report directly to a manager.
• Narrow span create tall organizations, and wide span creates flat ones.
• No single span of control is always appropriate; the optimal span is determined by characteristics of the work, the subordinates, the manager, and the organization.

Explain how to delegate effectively.

• Delegation – the assignment of tasks and responsibilities – has many potential advantages for the manager, the subordinate, and the organization.
• But to be effective, the process must be managed carefully.
• The manager should define the goal, select the person, solicit opinions, provide resources, schedule checkpoints, and discuss progress periodically.

Distinguish between centralized and decentralized organizations.

• In centralized organizations, most important decisions are made by top managers.
• In decentralized organizations, many decisions are delegated to lower levels.

Summarize ways organizations can be structured.

• Organization structure on the basis of function, division (product, customers, or geographic), matrix, and network.
• Each form has advantages and disadvantages.

Identify the unique challenges of the matrix organization.

• The matrix is a complex structure with a dual authority organization.
• A well-managed matrix enables organizations to adapt to change.
• But it can also create confusion and interpersonal difficulties.
• People in all positions in the matrix – top executives, product and function managers, and two-boss employees – must acquire unique survival skills.

Describe important integrative mechanisms.

• Managers can coordinate interdependent units through standardization, plans, and mutual adjustment.
• Standardization occurs when routines and standard operating procedures are put in place.
• They typically are accompanied by formalized rules.
• Coordination by plan is more flexible and allows more freedom in how tasks are carried out but keeps interdependent units focused on schedules and joint goals.
• Mutual adjustment involves feedback and discussions among related parties to accommodate each other’s needs.
• It is at once the most flexible and simple to administer, but it is time-consuming.

What components make up an organization’s structure?

What is the difference between a bureaucracy and a matrix organizational structure?

What is a boundaryless organization? What is the purpose of creating one?

What characteristics compose a virtual organization?

What is the difference between organic structural models and mechanistic structural models?

QUIZ The three levels of the organizational hierarchy include: (A) top, strategic, and lower levels (B) top, first-line, and final levels (C) top, operational, and frontline levels (D) top, middle, and operational levels (E) functional, divisional, and matrix levels

(D) top, middle, and operational levels

(B) divisional departments

QUIZ The optimal span of control should be narrow when: (A) The manager is highly capable and supportive. (B) Subordinates prefer autonomy. (C) The work is clearly defined. (D) Jobs are similar. (E) Subordinates are inadequately trained.

(E) Subordinates are inadequately trained.

(D) specialization

(C) Defining the goal

(E) formalization

(C) division of labor

QUIZ Which of the following is an advantage of functional departmentalization? (A) Employees are able to focus exclusively on customer satisfaction. (B) It encourages managers to become generalists. (C) Decision making and lines of communication are simple and clearly understood. (D) It is most useful in a complex environment. (E) It is the most flexible organization form.

(C) Decision making and lines of communication are simple and clearly understood.

QUIZ Coordination refers to : (A) need for specific tasks in the functional fields (B) procedures that link the various parts of the organization (C) Authority levels in the organizational pyramid (D) division of labor within an organization (E) performance of specific tasks by specific people

(B) procedures that link the various parts of the organization

QUIZ Delegation occurs : (A) in any kind of organizational structure (B) only when a functional organization structure exists (C) only when a divisional organizational structure exists (D) only when there is unity of command (E) at top level management alone

(A) in any kind of organizational structure

(E) decentralized authority

QUIZ A matrix organization is an overlap of: (A) line and staff organizational forms (B) functional and divisional organizational forms (C) top and middle level organizational forms (D) customer and geographic organizational forms (E) strategic and tactical organizational forms

(B) functional and divisional organizational forms

QUIZ One of the major tasks paper formed by the board of directors in a corporation is : (A) monitoring and supervising first line employees (B) recruiting front-line employees (C) selecting and recruiting the CEO (D) providing support to line departments (E) acting as a link between the tactical and frontline employees

(C) selecting and recruiting the CEO

(B) standardization

QUIZ Authority is defined as the: (A) narration of a set of future conditions (B) assignment of additional responsibility to a subordinate at a lower level (C) legitimate right to make decisions and to tell people what to do (D) assignment of a task that an employee is supposed to carry out (E) expectation that employees will perform a job, take corrective action, and report upward on the status of their performance

(C) legitimate right to make decisions and to tell people what to do

(B) reduce the need for information

(E) network

QUIZ Which of the following is true of line departments? (A) They provide specialized skills to support staff departments. (B) They focus more on requirements and procedures rather than products and customers. (C) They include research, legal, accounting, and human resource departments. (D) They focus on safeguarding the company from risks. (E) They deal directly with the organization’s primary goods and services.

(E) They deal directly with the organization’s primary goods and services.

QUIZ An organization chart: (A) Evolves from the mission and vision of a company (B) is the long term direction and strategic intent of the company (C) Depicts the products an organization deals with (D) summarizes all information related to organizational planning (E) depicts the positions in a firm

(E) depicts the positions in a firm

(E) vertical dimension

(B) hierarchy

(A) staff departments

(B) centralized

QUIZ Which of the following is an advantage of delegating? (A) It eliminates the manager’s accountability for the task. (B) It is a means for managers to escape from their responsibilities. (C) It allows managers to accomplish more than they could alone. (D) It is a means for a manager to reduce the risks involved performing tasks himself. (E) It helps the employee to take credit for what should have been the manager’s work.

(C) It allows managers to accomplish more than they could alone.

(A) decentralized

(C) governance

(C) differentiation

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The assignment of new or additional responsibilities to a subordinate is called _______.

Correct option is c. delegation.

It is the obligation of a subordinate to properly perform the assigned duty.

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