Chapter 10

Means that decision authority is located near top organization levels.

Centralization

A joint effort between people from two or more departments to produce outcomes that meet a common goal or shared purpose.

Collaboration

The managerial task of adjusting and synchronizing the diverse activities among different individuals and departments.

Coordination

The degree to which organizational tasks are subdivided into separate jobs. Also called work specialization.

Division of labor Employees within each department perform only the tasks relevant to their specialized function.

This Span of control has a wide span, is horizontally dispersed, and has fewer hierarchical levels.

Flat Structure

The average span of control used in an organization determines whether the structure is

tall or flat

What is the third characteristic of Authority?

Authority is accepted by subordinates. -Although authority flows from the top down, subordinates comply because they believe managers have a legitimate right to issue orders.

Decision authority is pushed downward to lower organization levels.

Decentralization The trend is toward broader spans of management and greater decentralization.

The deployment of organizational resources to achieve strategic goals.

Organizing

Authority is distinguished by three characteristics, What are they?

1. Authority is vested in organizational positions, not people. 2. Authority flows down the vertical hierarchy. 3. Authority is accepted by subordinates

An unbroken line of authority that links all employees in an organization and shows who reports to whom.

Chain of command

Factors that typically influence centralization versus decentralization: Crisis tends to require centralization

Previously, three executives handled the upstream unit, but BP CEO Robert Dudley believed a strong centralized structure was needed to manage risk.

Departmentalization Approaches: virtual network structure

the organization subcontracts most of its major functions to separate companies and coordinates their activities from a small headquarters organization.

Departmentalization Approaches: Team Approach permanent teams

A group of employees from all functional areas permanently assigned to focus on a specific task or activity.

Departmentalization Approaches: Matrix Approach

A structural approach that uses both functional and divisional chains of command simultaneously, in the same part of the organization. The matrix structure, therefore, supports a formal chain of command for both functional (vertical) and divisional (horizontal) relationships. As a result of this dual structure, some employees report to two supervisors simultaneously.

Manufacturing Technology types of production technology: Small-batch and unit production

A type of manufacturing technology that involves the production of goods in batches of one or a few products designed to customer specification. Examples of items produced through small-batch manufacturing include custom clothing, special-order machine tools, space capsules, satellites, and submarines.

Means that people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command.

Accountability Accountability is the mechanism through which authority and responsibility are brought into alignment. For organizations to function well, everyone needs to know what they are accountable for and accept the responsibility and authority for performing it.

The formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve outcomes desired by the organization.

Authority

What is the second characteristic of Authority?

Authority flows down the vertical hierarchy. -Positions at the top of the hierarchy have more formal authority than are positions at the bottom.

What is the first characteristic of Authority?

Authority is vested in organizational positions, not people. -Managers have authority because of the positions they hold, and other people in the same positions would have the same authority.

furthers horizontal coordination by including members across the organization

Cross-functional Team

When managers transfer authority and responsibility to positions below them in the hierarchy.

Delegation Most organizations today encourage managers to delegate authority to the lowest possible level to provide maximum flexibility to meet customer needs and adapt to shifts in the environment.

The basis for grouping individual positions into departments and departments into the total organization.

Departmentalization Managers make choices about how to use the chain of command to group people together to perform their work.

Departmentalization Approaches: Divisional Approach

Divisional structure An organizational structure that groups employees and departments based on similar organizational outputs (products or services), such that each division has a mix of functional skills and tasks. divisions can be organized with responsibility for individual products, services, product groups, major projects or programs, divisions, businesses, or profit centers. The divisional structure is also sometimes called a product structure, program structure, or self-contained unit structure.

Service technology: Direct contact with customers.

Employees and customers interact directly to provide and purchase the service. Production and consumption are simultaneous.

Departmentalization Approaches: Vertical Functional Approach

Functional Structure An organizational structure in which activities are grouped together by common function from the bottom to the top of the organization. The functional structure groups positions into departments based on similar skills, expertise, work activities, and resource use. In a functional structure, people within a department communicate primarily with others in the same department to coordinate work and accomplish tasks or implement decisions that are passed down the hierarchy.

Factor that typically influence centralization versus decentralization. Greater change and uncertainty in the environment are usually associated with decentralization.

Greater change and uncertainty in the environment are usually associated with decentralization. A good example of how decentralization can help cope with rapid change and uncertainty occurred following Hurricane Katrina in 2005. Mississippi Power restored power in just 12 days, thanks largely to a decentralized management system that empowered people at the electrical substations to make rapid, on-the-spot decisions.

Manufacturing Technology types of production technology: Continuous process production

Involves mechanization of the entire workflow and nonstop production, such as in chemical plants or petroleum refineries. Examples of continuous process technologies are chemical plants, distilleries, petroleum refineries, and nuclear power plants.

Why is organization important?

It follows strategy Strategy defines what to do; organizing defines how to do it. Structure is a powerful tool for reaching strategic goals, and a strategy's success often is determined by its fit with organizational structure.

Structure Fits with Manufacturing Technology

Knowledge, tools, techniques, and activities should match production activities

Means that people in management positions have the formal authority to direct and control immediate subordinates.

Line Department Line Authority Perform primary business tasks Have formal authority to direct and control immediate subordinates

Manufacturing Technology types of production technology: Large-batch and mass production.

Mass production Characterized by long production runs to manufacture a large volume of products with the same specifications. Examples of mass production are automobile assembly lines and the large-batch techniques used to produce tobacco products and textiles.

The framework in which an organization defines how tasks are divided, resources are deployed, and departments are coordinated.

Organization structure 1) the set of formal tasks assigned to individuals and departments - Work Specialization 2)formal reporting relationships, including lines of authority, decision responsibility, number of hierarchical levels, and span of managers' control - Chain of Command 3) the design of systems to ensure effective coordination of employees across departments.

refers to frequent horizontal coordination and communication carried out through ongoing relationships of shared goals, shared knowledge, and mutual respect.

Relational coordination Southwest Airlines achieves the shortest turnaround time in the airline industry because managers foster relational coordination among the varied people and departments involved in the flight departure process.

consulting companies, law firms, brokerage houses, airlines, hotels, advertising companies, amusement parks, and educational organizations

Service Technology Distinct feature is the need to be close to customers Intangible outputs Direct contact with customers

Manufacturing firms can be categorized according to types of production technology:

Small-batch and unit production Large-batch and mass production Continuous process production

The number of employees reporting to a supervisor.

Span of Management This characteristic of structure determines how closely a supervisor can monitor subordinates. Traditional views of organization design recommended a span of management of about 7 to 10 subordinates per manager. However, many lean organizations today have spans of management numbering 30, 40, and even higher.

The right to advise, counsel, and recommend in the manager's area of expertise.

Staff Departments Staff Authority Staff authority is a communication relationship; staff specialists advise managers in technical areas. Support line departments

This span of control Has an overall narrow span and more hierarchical levels.

Tall Structure Having too many hierarchical levels and narrow spans of control is a common structural problem for organizations.

A temporary team or committee designed to solve a problem involving several departments.

Task Force

Factors that typically influence centralization versus decentralization: The amount of centralization or decentralization should fit the firm's strategy.

Whole Foods has thrived for years with a decentralized approach that allowed store managers to go in their own direction and run their stores as they saw fit. Decentralization fit with the strategy of allowing stores to provide the local flavor, specialty items, and customer service that are a cornerstone of the company's success. However, as stiffer competition has eroded profits, Whole Foods has recently centralized some functions to increase efficiency.

Generally, when supervisors must be closely involved with subordinates, the span should be small, and when supervisors need little involvement with subordinates, it can be large. The following list describes the factors that are associated with less supervisor involvement and thus larger spans of control:

Work performed by subordinates is stable and routine. Subordinates perform similar work tasks. Subordinates are concentrated in a single location. Subordinates are highly trained and need little direction in performing tasks. Rules and procedures defining task activities are available. Support systems and personnel are available for the manager. Little time is required in nonsupervisory activities, such as coordination with other departments or planning. Managers' personal preferences and styles favor a large span.

Centralization and decentralization pertain to the hierarchical level at which

decisions are made.

Is the visual representation of an organization's structure.

organization chart The set of formal tasks and formal reporting relationships provides a framework for vertical control of the organization. The characteristics of vertical structure are portrayed in the organization chart

Departmentalization Approaches: Team Approach

team-based structure A structure in which an entire organization is made up of horizontal teams that coordinate their activities and work directly with customers to accomplish organizational goals. Probably the most widespread trend in departmentalization in recent years has been the implementation of team concepts. The team approach gives managers a way to delegate authority, push responsibility to lower levels, and be more flexible and responsive in a complex and competitive global environment. T

Departmentalization Approaches: Team Approach cross-functional teams

A group of employees from various functional departments that meet as a team to resolve mutual problems.

Five approaches to structural design reflect different uses of the chain of command in departmentalization:

Functional Divisional Matrix are traditional approaches that rely on the chain of command to define departmental groupings and reporting relationships along the hierarchy Team-Based Virtual networks are two innovative approaches that have emerged to meet changing organizational needs in a turbulent global environment

The duty to perform the task or activity that one has been assigned.

Responsibility

Three concepts related to authority

Responsibility Accountability Delegation

Service technology: Intangible output

The output of a service firm is intangible. Services are perishable and, unlike physical products, cannot be stored in inventory. The service is either consumed immediately or lost forever.

A chain of command is associated with two underlying principles, what are they?

Unity of command -means that each employee is held accountable to only one supervisor The Scalar principle -refers to a clearly defined line of authority in the organization that includes all employees

A manager who is responsible for a specific work project that involves people from various functions and levels of the organization.

project manager

The difference among the three manufacturing technologies is called technical complexity.

technical complexity The degree to which complex machinery is involved in the production process to the exclusion of people.