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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 219
CHAPTER 7
Creating a Flexible Organization
INSTRUCTOR MANUAL RESOURCES
7.1 A Word from the Authors..................................................................................................... 220
7.2 Transition Guide ................................................................................................................... 220
7.3 Quick Reference Guide......................................................................................................... 221
7.4 Learning Objectives.............................................................................................................. 222
7.5 Brief Chapter Outline............................................................................................................ 222
7.6 Comprehensive Lecture Outline ........................................................................................... 223
7.7 Textbook Answer Keys......................................................................................................... 230
7.7a Concept Checks .................................................................................................. 230
7.7b Discussion Questions.......................................................................................... 233
7.7c Video Case: Zappos Wants to Make Customers (and Employees) Happy......... 235
7.7d Building Skills for Career Success ..................................................................... 236
7.8 Quizzes I and II..................................................................................................................... 238
7.9 Answer Key for Quizzes I and II.......................................................................................... 240
7.10 Classroom Exercises............................................................................................................. 241
7.10a Homework Activities.......................................................................................... 241
7.10b Classroom Activities........................................................................................... 241
7.10c Exercise Handouts .............................................................................................. 241
220 Chapter 7 Creating a Flexible Organization
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7.1 A WORD FROM THE AUTHORS
Having outlined in the preceding chapter the management of a business organization, in this chapter
we examine the organization itself. First, we define organization from a business perspective. Then
we discuss five dimensions of organizational structure: (1) job specialization, (2) departmentalization,
(3) centralization, (4) span of management, and (5) chain of command.
Next, we discuss the various methods of combining these individual elements within a single busi-
ness structure. We introduce four approaches to organizational structure—line, line-and-staff, ma-
trix, and network—and present the advantages and disadvantages of each. We conclude the chapter
with a brief discussion of how corporate culture, committees, informal groups, and the grapevine
affect an organization.
7.2 TRANSITION GUIDE
New in Chapter 7: Creating a Flexible Organization
 A new Inside Business feature describes W.L. Gore’s culture of individual commitment.
 The two Personal Apps in this chapter can help students apply content to their real life. The first
one discusses the connection between line-and-staff groups in a job, and the second one discuss-
es clues to use when searching for a new job.
 An example about Intel offering short-term job assignments has been added to the section “Al-
ternatives to Job Specialization.”
 A new example about how PepsiCo has divided its products and locations has been added to the
section “Combinations of Bases.”
 An Entrepreneurial Success feature examining how to be a successful delegator has been added.
 A new video case examines how Zappos is focused on making customers and employees happy.
 The Building Skills for Career Success section contains a new Social Media Exercise that de-
scribes how Zappos is customer-centered.
Chapter 7 Creating a Flexible Organization 221
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7.3 QUICK REFERENCE GUIDE
Instructor Resource Location
Transition Guide IM, p. 220
Learning Objectives Textbook, p. 183; IM, p. 222
Brief Chapter Outline IM, pp. 222–223
Comprehensive Lecture Outline IM, pp. 223–229
Entrepreneurial Success Successful Leaders Are
Successful Delegators
Textbook, p. 191
Striving for Success Dell Restructures to Jump-Start
Innovation
Textbook, p. 198
Inside Business Autonomy Fosters Innovation and
Success at W.L. Gore
Textbook, p. 184
Marginal Key Terms List Textbook, p. 201
Concept Checks Textbook, pp. 185, 187, 189, 192, 193, 196, 198, and 199
Questions and Suggested Answers, IM, pp. 230–233
Discussion Questions Textbook, p. 202
Questions and Suggested Answers, IM, pp. 233–235
Video Case (Zappos Wants to Make Customers [and
Employees] Happy) and Questions
Textbook, pp. 203–204
Questions and Suggested Answers, IM, pp. 235–236
Building Skills for Career Success Textbook, pp. 204–205
Suggested Answers, IM, pp. 236–237
IM Quiz I & Quiz II IM, pp. 238–240
Answers, IM, p. 240
Classroom Exercises IM, p. 241
222 Chapter 7 Creating a Flexible Organization
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7.4 LEARNING OBJECTIVES
After studying this chapter, students should be able to:
1. Understand what an organization is and identify its characteristics.
2. Explain why job specialization is important.
3. Identify the various bases for departmentalization.
4. Explain how decentralization follows from delegation.
5. Understand how the span of management describes an organization.
6 Describe the four basic forms of organizational structure.
7. Describe the effects of corporate culture.
8. Understand how committees and task forces are used.
9. Explain the functions of the informal organization and the grapevine in a business.
7.5 BRIEF CHAPTER OUTLINE
I. What Is an Organization?
A. Developing Organization Charts
B. Major Considerations for Organizing a Business
II. Job Design
A. Job Specialization
B. The Rationale for Specialization
C. Alternatives to Job Specialization
III. Departmentalization
A. By Function
B. By Product
C. By Location
D. By Customer
E. Combinations of Bases
IV. Delegation, Decentralization, and Centralization
A. Delegation of Authority
1. Steps in Delegation
2. Barriers to Delegation
B. Decentralization of Authority
V. The Span of Management
A. Wide and Narrow Spans of Management
B. Organizational Height
Chapter 7 Creating a Flexible Organization 223
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
VI. Forms of Organizational Structure
A. The Line Structure
B. The Line-and-Staff Structure
C. The Matrix Structure
D. The Network Structure
VII. Corporate Culture
VIII. Committees and Task Forces
IX. The Informal Organization and the Grapevine
7.6 COMPREHENSIVE LECTURE OUTLINE
I. WHAT IS AN ORGANIZATION? An organization is a group of two or more people
working together to achieve a common set of goals. A neighborhood dry cleaner owned and
operated by a husband and wife team is an organization. So are IBM, Rubbermaid, and Home
Depot.
A. Developing Organization Charts. An organization chart is a diagram that represents
the positions and relationships within an organization. (See Figure 7-1.)
1. The chain of command is the line of authority that extends from the highest to the
lowest levels of the organization.
2. The positions represented by broken lines are not part of the direct chain of com-
mand; these are advisory, or staff, positions.
3. Many smaller organizations find organization charts useful. Some large organiza-
tions do not maintain complete, detailed charts because:
a) It is difficult to accurately chart a few dozen positions much less the thou-
sands that characterize larger firms.
b) Larger organizations are almost always changing which quickly makes the or-
ganization chart outdated.
Teaching Tip: Enter “organization chart” in your favorite search engine and bring up some exam-
ples of organization charts. Some good ones include the one for the Justice Department (http://www
.justice.gov/agencies/index-org.html) and the one for the United Nations (http://www.un.org/en/
aboutun/structure/org_chart.shtml). Comparing these and the charts you found, what do you think
constitutes a good organization chart?
B. Major Considerations for Organizing a Business. The factors to consider when de-
ciding how to organize a firm include job design, departmentalization, delegation, span
of management, and chain of command.
224 Chapter 7 Creating a Flexible Organization
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II. JOB DESIGN
A. Job Specialization. Job specialization is the separation of all organizational activities
into distinct tasks and the assignment of different tasks to different people.
B. The Rationale for Specialization. Specialization is necessary for several reasons.
1. The “job” of most organizations is simply too large for one person to handle.
2. When a worker has to learn one specific, highly specialized task, that individual
can learn it quickly and perform it efficiently.
3. The worker who is doing the same job over and over does not lose time changing
operations.
4. The more specialized the job, the easier it may be to design specialized equipment.
5. The more specialized the job, the easier is the job training.
Teaching Tip: As an example of job specialization, ask your students about the specialization in
their family as they were growing up. Chances are that each member of the family had some tasks
for which they were the family “expert.” For example, were they the computer guru in their house?
C. Alternatives to Job Specialization. Specialization can also have some negative conse-
quences, such as employee boredom and dissatisfaction. Managers can minimize these
issues.
1. Job rotation is the systematic shifting of employees from one job to another.
2. Job enlargement and job enrichment along with other methods used to motivate
employees are discussed in Chapter 10.
III. DEPARTMENTALIZATION. Departmentalization is the process of grouping jobs into
manageable units. Common bases of departmentalization are:
A. By Function. Departmentalization by function groups jobs that relate to the same or-
ganizational activity.
1. Many smaller and newer organizations departmentalize on function.
2. The disadvantages of this method are that it can lead to slow decision making and
it tends to emphasize the department rather than the organization.
B. By Product. Departmentalization by product groups all activities related to a particular
good or service.
C. By Location. Departmentalization by location groups all activities according to the de-
fined geographic area in which they are performed.
D. By Customer. Departmentalization by customer groups all activities according to the
needs of various customer populations.
E. Combinations of Bases. Many organizations use a combination of departmentalization
bases. (See Figure 7-2.)
Chapter 7 Creating a Flexible Organization 225
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Teaching Tip: Ask your students if any of them have ever worked for a restaurant or hotel. Ask them
what type of departmentalization they might have encountered. A hotel might have a specific group of
employees who only handle banquets and corporate meetings, which would be an example of customer-
based departmentalization. At a restaurant, things might be arranged by function. As part of the discus-
sion, ask students what improvements they might make.
IV. DELEGATION, DECENTRALIZATION, AND CENTRALIZATION. Delegation as-
signs work and power to other workers.
A. Delegation of Authority
1. Steps in Delegation. Three steps are generally involved in the delegation process.
(See Figure 7-3.)
a) The manager must assign responsibility. Responsibility is the duty to do a job
or perform a task.
b) A manager must grant authority, which is the power, within the organization,
to accomplish an assigned job or task.
Teaching Tip: Ask students if anyone has ever given them the responsibility for accomplishing a
task without giving them the authority to get it done.
c) The manager must create accountability. Accountability is the obligation of a
worker to accomplish an assigned job or task. Accountability is created, but it
cannot be delegated.
2. Barriers to Delegation. For several reasons, managers may be unwilling to dele-
gate work.
a) A manager may not trust the employee to complete the task.
b) A manager may fear that a subordinate will do exceptional work and attract
the attention of top management.
c) Some managers are so disorganized that they simply are not able to plan and
assign work effectively.
Teaching Tip: Consider using “The Delegator” exercise here. It is a five-minute individual quiz that
can be used as the basis for discussion regarding when it is and when it isn’t appropriate to delegate.
B. Decentralization of Authority. The pattern of delegation throughout an organization
determines the extent to which that organization is decentralized or centralized.
1. An organization in which management consciously attempts to spread authority
widely across organization levels is said to be a decentralized organization.
226 Chapter 7 Creating a Flexible Organization
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. An organization that systematically works to concentrate authority at the upper
levels is a centralized organization.
3. A variety of factors can influence the extent to which a firm is decentralized.
a) The external environment in which the firm operates.
b) The nature of the decision to be made. The riskier or more important the deci-
sions that have to be made, the greater is the tendency to centralize decision
making.
c) The decision-making abilities of lower-level managers.
d) A firm that has practiced centralization or decentralization is likely to main-
tain that same practice in the future.
4. In principle, neither decentralization nor centralization is right. What works for one
organization may or may not work for another.
V. THE SPAN OF MANAGEMENT. The fourth major step of organizing a business is estab-
lishing span of management (or span of control), which is the number of workers who report
directly to one manager.
A. Wide and Narrow Spans of Management. A wide span of management exists when a
manager has a large number of subordinates. A narrow span exists when the manager
has only a few subordinates. Several factors determine the span that is best for a particu-
lar manager.
B. Organizational Height. Organizational height is the number of layers, or levels, of
management in a firm.
1. The span of management plays a direct role in determining an organization’s
height. (See Figure 7-4.)
a) If the span of management is wide, fewer levels are needed, and the organiza-
tion is flat.
b) If the span of management is narrow, more levels are needed, and the result-
ing organization is tall.
2. In a tall organization, administrative costs are higher because more managers are
needed. Communication may become distorted.
3. Managers in a flat organization may have to perform more administrative duties
because there are fewer managers.
VI. FORMS OF ORGANIZATIONAL STRUCTURE. The four basic forms of organizational
structure are line, line-and-staff, matrix, and network.
A. The Line Structure. A line structure is when the chain of command goes directly from
person to person throughout the organization.
1. Managers within a line structure, called line managers, make decisions and give
orders to subordinates to achieve the goals of the organization.
Chapter 7 Creating a Flexible Organization 227
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. A line structure allows line managers to make decisions quickly with direct ac-
countability because the decision maker only reports to one supervisor.
3. The downside of a line structure is that line managers are responsible for many ac-
tivities and therefore must have a wide range of knowledge about all of them. Con-
sequently, line structures are more popular in small organizations rather than in
medium and large size organizations where activities are more numerous and com-
plex.
B. The Line-and-Staff Structure. A line-and-staff structure utilizes the chain of com-
mand from a line structure, but also provides line managers with specialists, called staff
managers.
1. Staff managers provide support, advice, and expertise to line managers. They are
not part of the chain of command but they do have authority over their assistants.
2. Both line and staff managers are needed for effective management, but the two po-
sitions differ in important ways. (See Figure 7-5.)
a) Line managers have line authority, which means that they can make decisions
and issue directives relating to the organization’s goals.
b) Staff managers have advisory authority which means they can provide advice
to line managers. Staff managers also have functional authority allowing them
to make decisions and issue directives about their areas of expertise.
3. Conflict between line managers and staff managers can occur if line managers per-
ceive that staff managers are a threat to their authority or if staff managers perceive
that their recommendations are not being adopted by line managers. There are sev-
eral ways to minimize this conflict.
a) Integrate line and staff managers into one team.
b) Ensure that the areas of responsibility of line and staff managers are clearly
defined.
c) Hold line and staff managers accountable for the results of their activities.
C. The Matrix Structure. The matrix structure combines vertical and horizontal lines of
authority.
1. The matrix structure occurs when product departmentalization is superimposed on
a functionally departmentalized organization. (See Figure 7-6.)
2. Authority flows both down and across and employees report to more than one su-
pervisor.
3. In a matrix structure, people from different departments are assigned to a group,
called a cross-functional team, to work on a new project.
a) Frequently, cross-functional teams are charged with developing new products.
b) The project manager is in charge of the team, but employees on the team also
report to their functional department supervisor.
c) Cross-functional teams may be temporary or permanent.
4. The matrix organization has several advantages.
228 Chapter 7 Creating a Flexible Organization
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
a) One advantage is added flexibility.
b) This structure can increase productivity, raise morale, and nurture creativity
and innovation.
c) Employees experience personal development by doing a variety of jobs.
5. The matrix organization also has several disadvantages.
a) Having employees report to more than one supervisor can cause confusion
about who is in charge.
b) Like committees, teams may take longer to resolve problems and issues than
individuals working alone.
c) Because more managers and support staff may be needed, a matrix structure
may be more expensive to maintain.
D. The Network Structure. In a network structure (or virtual organization), administration
is the primary function performed. Other functions are contracted out to other organiza-
tions.
1. This type of organization has only a few permanent employees consisting of top
management and a few hourly clerical workers.
2. Leased equipment and facilities are temporary.
3. There is limited formal structure.
4. Flexibility allows an organization to quickly adjust to changes.
5. Managers may face some of the following challenges:
a) Controlling the quality of work performed by other organizations.
b) Low morale and high turnover among hourly workers.
c) A lack of clear hierarchy.
Teaching Tip: Consider using the 30- to 60-minute “Virtual Network Structure” exercise here. This
exercise will allow students to explore the complexities of building a network.
VII. CORPORATE CULTURE. A corporate culture is generally defined as the inner rites, ritu-
als, heroes, and values of a firm.
A. Corporate culture is generally thought to have a very strong influence on a firm’s per-
formance over time.
B. Goffee and Jones identified four types of corporate cultures. (See Figure 7-7.)
1. Networked culture
2. Mercenary culture
3. Fragmented culture
4. Communal culture
Chapter 7 Creating a Flexible Organization 229
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Teaching Tip: Use the “What’s My Culture?” group exercise here. It takes approximately 15 to 20
minutes.
C. Some experts believe that cultural change is needed when the company’s environment
changes such as when the industry becomes more competitive, the company’s perfor-
mance is mediocre, or the company is growing rapidly.
VIII. COMMITTEES AND TASK FORCES
A. Several types of committees can be used within an organizational structure.
1. An ad hoc committee is created for a specific short-term purpose, such as review-
ing the firm’s employee benefits plan.
2. A standing committee is a relatively permanent committee charged with perform-
ing a recurring task.
3. A task force is a committee established to investigate a major problem or pending
decision.
B. Committees offer some advantages over individual action.
1. Several members are able to bring more information and knowledge to the task at
hand.
2. Committees tend to make more accurate decisions and to transmit their results
through the organization more effectively.
C. Disadvantages to using committees include the following:
1. Committee deliberations take much longer than individual action.
2. Unnecessary compromise may take place within the committee.
IX. THE INFORMAL ORGANIZATION AND THE GRAPEVINE. Informal organization
describes the pattern of behavior and interaction that stems from personal rather than official
relationships.
A. An informal group is created by the group members themselves to accomplish goals that
may or may not be relevant to the organization.
1. Workers may create an informal group to go bowling, form a union, get a particular
manager fired or transferred, or share lunch.
2. Informal groups can be powerful forces in organizations. Managers should be
aware of informal groups.
B. The grapevine is the informal communications network within an organization.
1. The grapevine is completely separate from—and sometimes much faster than—the
organization’s formal channels of communication.
2. Managers would make a mistake if they tried to eliminate the grapevine. A more
rational approach is to recognize the existence of the grapevine as a part (though an
unofficial part) of the organization.
230 Chapter 7 Creating a Flexible Organization
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7.7 TEXTBOOK ANSWER KEYS
7.7a Concept Checks
Concept Check (p. 185)
1. How do large and small organizations use organizational charts differently?
Most smaller organizations find organization charts useful. They clarify positions and report re-
lationships for everyone in the organization, and they help managers track growth and change
in the organizational structure. However, many large organizations, such as ExxonMobil, Kel-
logg’s, and Procter & Gamble, do not maintain complete, detailed charts for two reasons. First,
it is difficult to chart even a few dozen positions accurately, much less the thousands that char-
acterize larger firms. Second, larger organizations are almost always changing parts of their
structure. An organization chart would be outdated before it was completed.
2. Identify the major considerations when organizing a business.
The most important considerations are as follows:
a. Job design. Divide the work that is to be done by the entire organization into separate parts,
and assign those parts to positions within the organization.
b. Departmentalization. Group the various positions into manageable units or departments.
c. Delegation. Distribute responsibility and authority within the organization.
d. Span of management. Determine the number of subordinates who will report to each manager.
e. Chain of command. Establish the organization’s chain of command by designating the posi-
tions with direct authority and those that are support positions.
Concept Check (p. 187)
1. What are the positive and negative effects of specialization?
For a number of reasons, some job specialization is necessary in every organization because the
“job” of most organizations is too large for one person to handle. When a worker has to learn
one specific, highly specialized task, that individual should be able to learn it very efficiently. A
worker repeating the same job does not lose time changing from operations, as the pin workers
did when producing complete pins. The more specialized the job, the easier it is to design spe-
cialized equipment. And finally, the more specialized the job, the easier is the job training.
The most significant drawback is the boredom and dissatisfaction employees may feel when repeat-
ing the same job. Bored employees may be absent from work frequently, may not put much effort
into their work, and may even sabotage the company’s efforts to produce quality products.
2. What are three ways to reduce the negative effects of specialization?
Job rotation, job enlargement, and job enrichment can reduce the negative effects of specialization.
Chapter 7 Creating a Flexible Organization 231
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Concept Check (p. 189)
1. What are the four most common bases for departmentalization?
The four most common bases of departmentalization are by function, by product, by location,
and by type of customers. Departmentalization by function groups jobs that relate to the same
organizational activity. Departmentalization by product groups activities related to a particular
good or service. Departmentalization by location groups activities according to the defined ge-
ographic area in which they are performed. Departmentalization by customer groups activities
according to the needs of various customer populations.
2. Give an example of each.
Departmentalization by function groups jobs that relate to the same organizational activity, such
as marketing. Departmentalization by product groups activities related to a particular good or
service. Departmentalization by location groups activities according to the defined geographic
area in which they are performed. Departmentalization by customer groups activities according
to the needs of various customer populations.
Concept Check (p. 192)
1. Identify and describe the three steps in the delegation process.
The three steps involved in delegation are (1) assigning responsibility, which is the duty to per-
form the job or task; (2) granting authority, which is the power within the organization to ac-
complish the task or job; and (3) creating accountability, which is the obligation of a subordi-
nate to accomplish an assigned task or job.
2. Differentiate decentralized organization and centralized organization.
The pattern of delegation throughout an organization determines the extent to which that organ-
ization is decentralized or centralized. In a decentralized organization, management consciously
attempts to spread authority widely across various organization levels. A centralized organiza-
tion, on the other hand, systematically works to concentrate authority at the upper levels.
Concept Check (p. 193)
1. Describe the two spans of management.
A wide span of management exists when a manager has a larger number of subordinates. A nar-
row span exists when the manager has only a few subordinates.
2. What are problems associated with each one?
In a taller organization, administrative costs are higher because more managers are needed.
Communication among levels may become distorted because information has to pass up and
down through more people. Although flat organizations avoid these problems, their managers
may perform more administrative duties simply because there are fewer managers. Wide spans
of management also may require managers to spend considerably more time supervising and
working with subordinates.
Concept Check (p. 196)
1. Describe the four forms of organizational structure.
The four forms of organizational structure are as follows:
232 Chapter 7 Creating a Flexible Organization
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 A bureaucratic structure is a management system based on a formal framework of au-
thority that is outlined carefully and followed precisely.
 The matrix structure combines vertical and horizontal lines of authority.
 A cluster structure is a type of business that consists primarily of teams with no or very
few underlying departments.
 In a network structure (sometimes called a virtual organization), administration is the
primary function performed, and other functions such as engineering, production, mar-
keting, and finance are contracted out to other organizations.
2. Give an example of each form.
Examples of a bureaucratic structure could be government agencies, colleges, and universities.
An example of companies that use the matrix structure might be Ford Motor Company when it
assembled a special project team to design and manufacture its global cars. Often, engineering
and construction firms, like Bechtel Corporation, use a matrix structure for their projects.
In a cluster organization, the operating unit is the team, and it remains relatively small. If a team be-
comes too large, it can be split into multiple teams, or individuals can be assigned to other existing
teams. For example, Horizon Live (an e-learning company) uses this form of organization.
A network organization does not manufacture the products it sells. This type of organization
has a few permanent employees consisting of top management and hourly clerical workers.
Leased facilities and equipment, as well as temporary workers, are increased or decreased as the
needs of the organization change. Thus, there is rather limited formal structure associated with a
network organization. Often, start-ups are formed as a network structure.
Concept Check (p. 198)
1. What is corporate culture?
Corporate culture is generally defined as the inner rites, rituals, heroes, and values of a firm. It
can have a powerful influence on how its employees think and act, as well as determine how the
public perceives the organization.
2. Explain the four types of corporate cultures.
There are four distinct types of corporate culture:
a. Networked culture is a relaxed and informal environment. There is a strong commitment
and a feeling of loyalty to the organization, characterized by a base of trust and friendship
among employees.
b. In the mercenary culture, employees are very intense, focused, and determined to win. In
addition to employees working to earn money, feelings of passion, energy, sense of purpose,
and excitement for one’s work play a large role in motivating an organization’s employees.
c. Fragmented culture suggests that employees do not necessarily become friends but have a
high degree of autonomy, flexibility, and equality. Employees in this type of culture consid-
er themselves as working “at” the organization, not “for” it.
d. In the communal culture, the positive traits of the networked culture and the mercenary cul-
ture are combined. Traits such as friendship, commitment, high focus on performance, and
high energy contribute to the organization resulting in an environment where success by
anyone is celebrated by all.
Chapter 7 Creating a Flexible Organization 233
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Concept Check (p. 199)
1. What is the difference between a committee and a task force?
An ad hoc committee is created for a specific short-term purpose, such as reviewing the firm’s
employee benefits plan. Once its work is finished, the ad hoc committee disbands. A standing
committee is a relatively permanent committee charged with performing a recurring task. A
firm might establish a budget review committee, for example, to review departmental budget
requests on an ongoing basis. Finally, a task force is a committee established to investigate a
major problem or pending decision.
2. What are the advantages and disadvantages of using committees?
Committees offer some advantages over individual action. Their several members are able to
bring information and knowledge to the task at hand. Furthermore, committees tend to make
more accurate decisions and to transmit their results through the organization more effectively.
However, committee deliberations take longer than individual actions. In addition, unnecessary
compromise may take place within the committee, or the opposite may occur, as one person
dominates (and thus negates) the committee process.
Concept Check (p. 199)
1. In what ways can informal groups affect a business?
Informal groups can be powerful forces in organizations. They can restrict output, or they can
help managers through tight spots. They can cause disagreement and conflict, or they can help
to boost morale and job satisfaction. They can show new people how to contribute to the organ-
ization, or they can help people to get away with substandard performance.
2. How is the grapevine used in a business organization?
The grapevine is the informal communications network within an organization. Information can
be transmitted through the grapevine in any direction—up, down, diagonally, or horizontally
across the organizational structure. Subordinates may pass information to their bosses, an exec-
utive may relay something to a maintenance worker, or there may be an exchange of infor-
mation between people who work in totally unrelated departments. Managers should respond
promptly and aggressively to inaccurate grapevine information to minimize the damage that
such misinformation might do. Moreover, the grapevine can come in handy when managers are
on the receiving end of important communications from the informal organization.
7.7b Discussion Questions
1. In what way do organization charts create a picture of an organization?
Organization charts are diagrams that represent positions in the organization and the relation-
ships among them. They also illustrate the five considerations in the organizing process: spe-
cialization, departmentalization, centralization, span of management, and chain of command.
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Jacob journeyed to Egypt, to see the prosperity of that son from
whom they had been separated for so many years. You know how
tenderly he fulfilled towards them every filial duty, how anxiously he
watched over them, and how carefully he supplied their necessities.
And when he had closed their eyes, and had given directions
concerning their remains, you well remember how he addressed to
you the affecting declaration, “I am now loosened from every earthly
tie, and have no other care but you. Henceforth you, the members
of this church, shall be my brother and my sister, my father and my
mother.”
Having given you this brief detail, we now proceed to consider,
III. The remembrance of his work which it now behoves you to cherish.
Your own minister’s anxiety and endeavour during his life, like that
of the apostle’s, was, that after his decease, you might have these
things always in your remembrance. Still, it is not merely an
intellectual remembrance of these things which it becomes you to
cherish. You may remember every text from which he preached,
and every sermon he has delivered, and yet neither be sanctified nor
saved by their influence. Nor can you be saved by keeping in
memory the things which you have heard, unless you remember
them with faith, and experience, and practice; “for if ye know these
things happy are ye if ye do them.” Permit me, therefore, earnestly
and affectionately to address to you the following exhortations.
In the first place, you should cherish the remembrance of these
things by BELIEVING the gospel which he preached. There are some
of you, my beloved friends, whose minds I fear still need to be
stirred up to the remembrance of the things that belong to your
peace. The endeavours of your departed minister, diligent, and
impressive, and persevering, as they were, have failed to awaken in
your hearts the feelings of penitence and faith. Some of you have,
perhaps, for many years, sat under the sound of that gospel which
during every year has been to you “the savour of death unto death.”
Throughout the whole course of his ministry you are the persons
who occasioned his keenest anxieties and his bitterest
disappointments; for so far as you were concerned he seemed to
labour in vain, and to spend his strength for nought. Yet he warned,
and exhorted, and admonished you to the last; and it should be to
you, day and night, an awful and awakening remembrance, that the
very last text from which he preached, [21]
was the subject of a
sermon emphatically addressed to you; for its language was,
“Notwithstanding I have spoken unto you, rising early and speaking, yet ye
would not hearken unto me.” And these words, the last which he
addressed to you on earth, were, perhaps, the first which he
repeated concerning you at the bar of God. Ah! my brethren, were
it possible for any thought to disturb his peaceful breast in heaven, it
would be the recollection of the state of guilt and impenitence in
which he has left you on earth—it would be the thought that now
perhaps you and he are separated for ever. And shall this be the
case? Can any of you—can you, my dear young friends, bear the
thought that you may have bidden an eternal farewell to your
faithful and paternal minister? Will you, who have procrastinated till
his death, not have these things in your remembrance now, after his
decease? When there is joy in heaven over one sinner that
repenteth, shall he never be told that angels are rejoicing over you?
And will you not from this time, and from the grave of your
deceased instructor cry unto God, “My Father, thou art the guide of
my youth?” My dear brethren, whether you be young or old,
“behold now is the accepted time, behold now is the day of
salvation.” To-morrow may be too late for ever; and if you delay, the
remembrance of these things may be stirred up in your minds by the
worm that dieth not, and by the fire that never shall be quenched.
But if you wish to have these things in your remembrance now, go,
by faith and prayer, to that Redeemer, whose gospel and whose
minister you have hitherto neglected. Go to him with all the guilt
and condemnation which that neglect has contracted. Go, as the
prodigal went, with the feeling of penitence in your heart, and the
confession of penitence on your lip—and whilst you are yet afar off,
he will behold you with compassion, and run, and fall on your neck,
and embrace you, and exclaim, “This my son was dead and is alive
again, he was lost and is found!”
Secondly, You should cherish the remembrance of these things by
ADHERING to the gospel which he preached. For as it respects you
who have, through grace, believed the gospel which he preached,
his endeavour was that, after his decease, you might have these
things ALWAYS in remembrance—and the Lord grant that his joy
concerning you may be fulfilled. There are, I doubt not, many
persons, once blessed with the ministry of our beloved friend on
earth, who are now his companions in the skies; and of whom he
has said already, “Behold here am I, and the children thou hast
given me.” And there are, I trust, many now present who will be
“his hope, and his joy, and his crown of rejoicing in the presence of
our Lord Jesus Christ at his coming.” You, my dear brethren in the
Lord, can no longer enjoy the living instructions of your revered
pastor, but it becomes you, as members of his church, to have the
things which he once taught you always in remembrance. Adhere
steadfastly and perseveringly to the doctrines, and to the spirit, and
to the practice of the gospel of Jesus Christ, “by pureness, by
knowledge, by long-suffering, by kindness, by the Holy Ghost, by
love unfeigned.” Imitate your deceased minister’s excellencies, and
avoid his imperfections. Endeavour to equal him—endeavour to
surpass him in all that is holy, and just, and good. Above all, let the
same mind be in you which was in Christ Jesus; and repose, with
unshaken confidence, on that grace which is sufficient for you, and
on that strength which is made perfect in your weakness. You are
now in circumstances such as require all the sympathy and
consolation that the gospel can supply. Your minister is a corpse—
the house of God in which he has been accustomed to meet you is
become his sepulchre—and all your future meetings will be held
around his grave. May the God of mercy be your comforter. May all
the grace and tenderness which fills and flows from HIS heart who
wept at the grave of Lazarus, flow into your own. And when you
begin to look out for a successor to your deceased pastor, may you
be directed to one who shall appear among you clothed with his
mantle, and blessed with a double portion of his spirit. In all your
future intercourse with each other, and in all your social meetings for
devotion or for the business of the church, I beseech you, by the
mercies of God, to adhere always to the gospel of Christ. Never lose
the praise which you have in other churches of the saints, by
destroying peace among yourselves. Let brotherly love continue. Let
each individual among you determine, for the sake of Christ and of
his people, to cherish it in his own heart and to exhibit it in his own
conduct, and then its fragrance will perfume and bless the church.
“It will be like the precious ointment on the head of Aaron, which
went down to the skirts of his garments; and like the dew which
descended on the mountains of Zion, where the Lord commanded
the blessing, even life for evermore.” “Jehovah bless you and keep
you. Jehovah cause his face to shine upon you, and be gracious
unto you. Jehovah lift upon you the light of his countenance, and
give you peace.”
Finally, You should cherish the remembrance of these things by
CIRCULATING the gospel which he preached. This also, my brethren,
was one of the things which your minister endeavoured that you
should have in your remembrance after his decease—for the ready
and efficient assistance which he gave to many of the religious
institutions in this city—the efforts which he made to extend the
gospel in the county—and the laborious zeal with which he
endeavoured to promote the interests of the Baptist Missionary
Society—all shew how desirous he was to advance the kingdom of
Christ in the world. Go you, my brethren, and do likewise. Never
become weary of labouring in the cause of Christ. And remember,
for your encouragement, that though the priests are not suffered to
continue by reason of death, though ministers of the gospel are as
mortal as their hearers, and though all flesh is grass, there is,
nevertheless, one thing stable and eternal in the midst of this
moving and this dying world—and this one thing is, “the word of the
Lord, that endureth for ever.” The church lives, though the pastor
dies. The church must increase, though he has decreased. One
generation shall pass away and another generation shall succeed,
“till time and nature dies.” But during all this mortality and change,
“Jesus Christ is the same yesterday, to-day, and for ever,” and his
word shall have free course and be glorified, till it cover and crown
the world, and till the kingdoms of this world shall become the
kingdoms of our God and of his Christ, and he shall reign for ever
and ever. “Then cometh the end, when he shall deliver up the
kingdom to God, even the Father; when he shall have put down all
rule, and authority, and power. For he must reign till he has put all
enemies under his feet. The last enemy that shall be destroyed is
death. Thanks be to God who giveth us the victory through our Lord
Jesus Christ! Therefore, my beloved brethren, be ye steadfast, unmoveable,
always abounding in the work of the lord, forasmuch as ye know that your
labour is not in vain in the lord.”
THE END.
Preparing for the Press, by the same Author,
A COURSE OF
SHORT SERMONS FOR FAMILIES,
TO BE PUBLISHED IN
WEEKLY NUMBERS, AT A PENNY EACH.
PRINTED BY WILKIN AND FLETCHER, UPPER HAYMARKET, NORWICH.
October 5th, 1832.
FOOTNOTES.
[9] See “Two Sermons addressed principally to the students of the
two Baptist Academies at Stepney and Bristol,” entitled “Advice and
Encouragement to young Ministers;” and “The substance of a
Sermon preached at Bradford,” entitled, “Practical Cautions to
Students and young Ministers.” All of which are well worthy the
attentive perusal of students and of young ministers of every
denomination.
[21] Jeremiah, xxxv, 14.
*** END OF THE PROJECT GUTENBERG EBOOK A FUNERAL
SERMON FOR THE REV. JOSEPH KINGHORN ***
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  • 5. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 219 CHAPTER 7 Creating a Flexible Organization INSTRUCTOR MANUAL RESOURCES 7.1 A Word from the Authors..................................................................................................... 220 7.2 Transition Guide ................................................................................................................... 220 7.3 Quick Reference Guide......................................................................................................... 221 7.4 Learning Objectives.............................................................................................................. 222 7.5 Brief Chapter Outline............................................................................................................ 222 7.6 Comprehensive Lecture Outline ........................................................................................... 223 7.7 Textbook Answer Keys......................................................................................................... 230 7.7a Concept Checks .................................................................................................. 230 7.7b Discussion Questions.......................................................................................... 233 7.7c Video Case: Zappos Wants to Make Customers (and Employees) Happy......... 235 7.7d Building Skills for Career Success ..................................................................... 236 7.8 Quizzes I and II..................................................................................................................... 238 7.9 Answer Key for Quizzes I and II.......................................................................................... 240 7.10 Classroom Exercises............................................................................................................. 241 7.10a Homework Activities.......................................................................................... 241 7.10b Classroom Activities........................................................................................... 241 7.10c Exercise Handouts .............................................................................................. 241
  • 6. 220 Chapter 7 Creating a Flexible Organization © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7.1 A WORD FROM THE AUTHORS Having outlined in the preceding chapter the management of a business organization, in this chapter we examine the organization itself. First, we define organization from a business perspective. Then we discuss five dimensions of organizational structure: (1) job specialization, (2) departmentalization, (3) centralization, (4) span of management, and (5) chain of command. Next, we discuss the various methods of combining these individual elements within a single busi- ness structure. We introduce four approaches to organizational structure—line, line-and-staff, ma- trix, and network—and present the advantages and disadvantages of each. We conclude the chapter with a brief discussion of how corporate culture, committees, informal groups, and the grapevine affect an organization. 7.2 TRANSITION GUIDE New in Chapter 7: Creating a Flexible Organization  A new Inside Business feature describes W.L. Gore’s culture of individual commitment.  The two Personal Apps in this chapter can help students apply content to their real life. The first one discusses the connection between line-and-staff groups in a job, and the second one discuss- es clues to use when searching for a new job.  An example about Intel offering short-term job assignments has been added to the section “Al- ternatives to Job Specialization.”  A new example about how PepsiCo has divided its products and locations has been added to the section “Combinations of Bases.”  An Entrepreneurial Success feature examining how to be a successful delegator has been added.  A new video case examines how Zappos is focused on making customers and employees happy.  The Building Skills for Career Success section contains a new Social Media Exercise that de- scribes how Zappos is customer-centered.
  • 7. Chapter 7 Creating a Flexible Organization 221 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7.3 QUICK REFERENCE GUIDE Instructor Resource Location Transition Guide IM, p. 220 Learning Objectives Textbook, p. 183; IM, p. 222 Brief Chapter Outline IM, pp. 222–223 Comprehensive Lecture Outline IM, pp. 223–229 Entrepreneurial Success Successful Leaders Are Successful Delegators Textbook, p. 191 Striving for Success Dell Restructures to Jump-Start Innovation Textbook, p. 198 Inside Business Autonomy Fosters Innovation and Success at W.L. Gore Textbook, p. 184 Marginal Key Terms List Textbook, p. 201 Concept Checks Textbook, pp. 185, 187, 189, 192, 193, 196, 198, and 199 Questions and Suggested Answers, IM, pp. 230–233 Discussion Questions Textbook, p. 202 Questions and Suggested Answers, IM, pp. 233–235 Video Case (Zappos Wants to Make Customers [and Employees] Happy) and Questions Textbook, pp. 203–204 Questions and Suggested Answers, IM, pp. 235–236 Building Skills for Career Success Textbook, pp. 204–205 Suggested Answers, IM, pp. 236–237 IM Quiz I & Quiz II IM, pp. 238–240 Answers, IM, p. 240 Classroom Exercises IM, p. 241
  • 8. 222 Chapter 7 Creating a Flexible Organization © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7.4 LEARNING OBJECTIVES After studying this chapter, students should be able to: 1. Understand what an organization is and identify its characteristics. 2. Explain why job specialization is important. 3. Identify the various bases for departmentalization. 4. Explain how decentralization follows from delegation. 5. Understand how the span of management describes an organization. 6 Describe the four basic forms of organizational structure. 7. Describe the effects of corporate culture. 8. Understand how committees and task forces are used. 9. Explain the functions of the informal organization and the grapevine in a business. 7.5 BRIEF CHAPTER OUTLINE I. What Is an Organization? A. Developing Organization Charts B. Major Considerations for Organizing a Business II. Job Design A. Job Specialization B. The Rationale for Specialization C. Alternatives to Job Specialization III. Departmentalization A. By Function B. By Product C. By Location D. By Customer E. Combinations of Bases IV. Delegation, Decentralization, and Centralization A. Delegation of Authority 1. Steps in Delegation 2. Barriers to Delegation B. Decentralization of Authority V. The Span of Management A. Wide and Narrow Spans of Management B. Organizational Height
  • 9. Chapter 7 Creating a Flexible Organization 223 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. VI. Forms of Organizational Structure A. The Line Structure B. The Line-and-Staff Structure C. The Matrix Structure D. The Network Structure VII. Corporate Culture VIII. Committees and Task Forces IX. The Informal Organization and the Grapevine 7.6 COMPREHENSIVE LECTURE OUTLINE I. WHAT IS AN ORGANIZATION? An organization is a group of two or more people working together to achieve a common set of goals. A neighborhood dry cleaner owned and operated by a husband and wife team is an organization. So are IBM, Rubbermaid, and Home Depot. A. Developing Organization Charts. An organization chart is a diagram that represents the positions and relationships within an organization. (See Figure 7-1.) 1. The chain of command is the line of authority that extends from the highest to the lowest levels of the organization. 2. The positions represented by broken lines are not part of the direct chain of com- mand; these are advisory, or staff, positions. 3. Many smaller organizations find organization charts useful. Some large organiza- tions do not maintain complete, detailed charts because: a) It is difficult to accurately chart a few dozen positions much less the thou- sands that characterize larger firms. b) Larger organizations are almost always changing which quickly makes the or- ganization chart outdated. Teaching Tip: Enter “organization chart” in your favorite search engine and bring up some exam- ples of organization charts. Some good ones include the one for the Justice Department (http://www .justice.gov/agencies/index-org.html) and the one for the United Nations (http://www.un.org/en/ aboutun/structure/org_chart.shtml). Comparing these and the charts you found, what do you think constitutes a good organization chart? B. Major Considerations for Organizing a Business. The factors to consider when de- ciding how to organize a firm include job design, departmentalization, delegation, span of management, and chain of command.
  • 10. 224 Chapter 7 Creating a Flexible Organization © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. II. JOB DESIGN A. Job Specialization. Job specialization is the separation of all organizational activities into distinct tasks and the assignment of different tasks to different people. B. The Rationale for Specialization. Specialization is necessary for several reasons. 1. The “job” of most organizations is simply too large for one person to handle. 2. When a worker has to learn one specific, highly specialized task, that individual can learn it quickly and perform it efficiently. 3. The worker who is doing the same job over and over does not lose time changing operations. 4. The more specialized the job, the easier it may be to design specialized equipment. 5. The more specialized the job, the easier is the job training. Teaching Tip: As an example of job specialization, ask your students about the specialization in their family as they were growing up. Chances are that each member of the family had some tasks for which they were the family “expert.” For example, were they the computer guru in their house? C. Alternatives to Job Specialization. Specialization can also have some negative conse- quences, such as employee boredom and dissatisfaction. Managers can minimize these issues. 1. Job rotation is the systematic shifting of employees from one job to another. 2. Job enlargement and job enrichment along with other methods used to motivate employees are discussed in Chapter 10. III. DEPARTMENTALIZATION. Departmentalization is the process of grouping jobs into manageable units. Common bases of departmentalization are: A. By Function. Departmentalization by function groups jobs that relate to the same or- ganizational activity. 1. Many smaller and newer organizations departmentalize on function. 2. The disadvantages of this method are that it can lead to slow decision making and it tends to emphasize the department rather than the organization. B. By Product. Departmentalization by product groups all activities related to a particular good or service. C. By Location. Departmentalization by location groups all activities according to the de- fined geographic area in which they are performed. D. By Customer. Departmentalization by customer groups all activities according to the needs of various customer populations. E. Combinations of Bases. Many organizations use a combination of departmentalization bases. (See Figure 7-2.)
  • 11. Chapter 7 Creating a Flexible Organization 225 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Teaching Tip: Ask your students if any of them have ever worked for a restaurant or hotel. Ask them what type of departmentalization they might have encountered. A hotel might have a specific group of employees who only handle banquets and corporate meetings, which would be an example of customer- based departmentalization. At a restaurant, things might be arranged by function. As part of the discus- sion, ask students what improvements they might make. IV. DELEGATION, DECENTRALIZATION, AND CENTRALIZATION. Delegation as- signs work and power to other workers. A. Delegation of Authority 1. Steps in Delegation. Three steps are generally involved in the delegation process. (See Figure 7-3.) a) The manager must assign responsibility. Responsibility is the duty to do a job or perform a task. b) A manager must grant authority, which is the power, within the organization, to accomplish an assigned job or task. Teaching Tip: Ask students if anyone has ever given them the responsibility for accomplishing a task without giving them the authority to get it done. c) The manager must create accountability. Accountability is the obligation of a worker to accomplish an assigned job or task. Accountability is created, but it cannot be delegated. 2. Barriers to Delegation. For several reasons, managers may be unwilling to dele- gate work. a) A manager may not trust the employee to complete the task. b) A manager may fear that a subordinate will do exceptional work and attract the attention of top management. c) Some managers are so disorganized that they simply are not able to plan and assign work effectively. Teaching Tip: Consider using “The Delegator” exercise here. It is a five-minute individual quiz that can be used as the basis for discussion regarding when it is and when it isn’t appropriate to delegate. B. Decentralization of Authority. The pattern of delegation throughout an organization determines the extent to which that organization is decentralized or centralized. 1. An organization in which management consciously attempts to spread authority widely across organization levels is said to be a decentralized organization.
  • 12. 226 Chapter 7 Creating a Flexible Organization © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2. An organization that systematically works to concentrate authority at the upper levels is a centralized organization. 3. A variety of factors can influence the extent to which a firm is decentralized. a) The external environment in which the firm operates. b) The nature of the decision to be made. The riskier or more important the deci- sions that have to be made, the greater is the tendency to centralize decision making. c) The decision-making abilities of lower-level managers. d) A firm that has practiced centralization or decentralization is likely to main- tain that same practice in the future. 4. In principle, neither decentralization nor centralization is right. What works for one organization may or may not work for another. V. THE SPAN OF MANAGEMENT. The fourth major step of organizing a business is estab- lishing span of management (or span of control), which is the number of workers who report directly to one manager. A. Wide and Narrow Spans of Management. A wide span of management exists when a manager has a large number of subordinates. A narrow span exists when the manager has only a few subordinates. Several factors determine the span that is best for a particu- lar manager. B. Organizational Height. Organizational height is the number of layers, or levels, of management in a firm. 1. The span of management plays a direct role in determining an organization’s height. (See Figure 7-4.) a) If the span of management is wide, fewer levels are needed, and the organiza- tion is flat. b) If the span of management is narrow, more levels are needed, and the result- ing organization is tall. 2. In a tall organization, administrative costs are higher because more managers are needed. Communication may become distorted. 3. Managers in a flat organization may have to perform more administrative duties because there are fewer managers. VI. FORMS OF ORGANIZATIONAL STRUCTURE. The four basic forms of organizational structure are line, line-and-staff, matrix, and network. A. The Line Structure. A line structure is when the chain of command goes directly from person to person throughout the organization. 1. Managers within a line structure, called line managers, make decisions and give orders to subordinates to achieve the goals of the organization.
  • 13. Chapter 7 Creating a Flexible Organization 227 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2. A line structure allows line managers to make decisions quickly with direct ac- countability because the decision maker only reports to one supervisor. 3. The downside of a line structure is that line managers are responsible for many ac- tivities and therefore must have a wide range of knowledge about all of them. Con- sequently, line structures are more popular in small organizations rather than in medium and large size organizations where activities are more numerous and com- plex. B. The Line-and-Staff Structure. A line-and-staff structure utilizes the chain of com- mand from a line structure, but also provides line managers with specialists, called staff managers. 1. Staff managers provide support, advice, and expertise to line managers. They are not part of the chain of command but they do have authority over their assistants. 2. Both line and staff managers are needed for effective management, but the two po- sitions differ in important ways. (See Figure 7-5.) a) Line managers have line authority, which means that they can make decisions and issue directives relating to the organization’s goals. b) Staff managers have advisory authority which means they can provide advice to line managers. Staff managers also have functional authority allowing them to make decisions and issue directives about their areas of expertise. 3. Conflict between line managers and staff managers can occur if line managers per- ceive that staff managers are a threat to their authority or if staff managers perceive that their recommendations are not being adopted by line managers. There are sev- eral ways to minimize this conflict. a) Integrate line and staff managers into one team. b) Ensure that the areas of responsibility of line and staff managers are clearly defined. c) Hold line and staff managers accountable for the results of their activities. C. The Matrix Structure. The matrix structure combines vertical and horizontal lines of authority. 1. The matrix structure occurs when product departmentalization is superimposed on a functionally departmentalized organization. (See Figure 7-6.) 2. Authority flows both down and across and employees report to more than one su- pervisor. 3. In a matrix structure, people from different departments are assigned to a group, called a cross-functional team, to work on a new project. a) Frequently, cross-functional teams are charged with developing new products. b) The project manager is in charge of the team, but employees on the team also report to their functional department supervisor. c) Cross-functional teams may be temporary or permanent. 4. The matrix organization has several advantages.
  • 14. 228 Chapter 7 Creating a Flexible Organization © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. a) One advantage is added flexibility. b) This structure can increase productivity, raise morale, and nurture creativity and innovation. c) Employees experience personal development by doing a variety of jobs. 5. The matrix organization also has several disadvantages. a) Having employees report to more than one supervisor can cause confusion about who is in charge. b) Like committees, teams may take longer to resolve problems and issues than individuals working alone. c) Because more managers and support staff may be needed, a matrix structure may be more expensive to maintain. D. The Network Structure. In a network structure (or virtual organization), administration is the primary function performed. Other functions are contracted out to other organiza- tions. 1. This type of organization has only a few permanent employees consisting of top management and a few hourly clerical workers. 2. Leased equipment and facilities are temporary. 3. There is limited formal structure. 4. Flexibility allows an organization to quickly adjust to changes. 5. Managers may face some of the following challenges: a) Controlling the quality of work performed by other organizations. b) Low morale and high turnover among hourly workers. c) A lack of clear hierarchy. Teaching Tip: Consider using the 30- to 60-minute “Virtual Network Structure” exercise here. This exercise will allow students to explore the complexities of building a network. VII. CORPORATE CULTURE. A corporate culture is generally defined as the inner rites, ritu- als, heroes, and values of a firm. A. Corporate culture is generally thought to have a very strong influence on a firm’s per- formance over time. B. Goffee and Jones identified four types of corporate cultures. (See Figure 7-7.) 1. Networked culture 2. Mercenary culture 3. Fragmented culture 4. Communal culture
  • 15. Chapter 7 Creating a Flexible Organization 229 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Teaching Tip: Use the “What’s My Culture?” group exercise here. It takes approximately 15 to 20 minutes. C. Some experts believe that cultural change is needed when the company’s environment changes such as when the industry becomes more competitive, the company’s perfor- mance is mediocre, or the company is growing rapidly. VIII. COMMITTEES AND TASK FORCES A. Several types of committees can be used within an organizational structure. 1. An ad hoc committee is created for a specific short-term purpose, such as review- ing the firm’s employee benefits plan. 2. A standing committee is a relatively permanent committee charged with perform- ing a recurring task. 3. A task force is a committee established to investigate a major problem or pending decision. B. Committees offer some advantages over individual action. 1. Several members are able to bring more information and knowledge to the task at hand. 2. Committees tend to make more accurate decisions and to transmit their results through the organization more effectively. C. Disadvantages to using committees include the following: 1. Committee deliberations take much longer than individual action. 2. Unnecessary compromise may take place within the committee. IX. THE INFORMAL ORGANIZATION AND THE GRAPEVINE. Informal organization describes the pattern of behavior and interaction that stems from personal rather than official relationships. A. An informal group is created by the group members themselves to accomplish goals that may or may not be relevant to the organization. 1. Workers may create an informal group to go bowling, form a union, get a particular manager fired or transferred, or share lunch. 2. Informal groups can be powerful forces in organizations. Managers should be aware of informal groups. B. The grapevine is the informal communications network within an organization. 1. The grapevine is completely separate from—and sometimes much faster than—the organization’s formal channels of communication. 2. Managers would make a mistake if they tried to eliminate the grapevine. A more rational approach is to recognize the existence of the grapevine as a part (though an unofficial part) of the organization.
  • 16. 230 Chapter 7 Creating a Flexible Organization © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7.7 TEXTBOOK ANSWER KEYS 7.7a Concept Checks Concept Check (p. 185) 1. How do large and small organizations use organizational charts differently? Most smaller organizations find organization charts useful. They clarify positions and report re- lationships for everyone in the organization, and they help managers track growth and change in the organizational structure. However, many large organizations, such as ExxonMobil, Kel- logg’s, and Procter & Gamble, do not maintain complete, detailed charts for two reasons. First, it is difficult to chart even a few dozen positions accurately, much less the thousands that char- acterize larger firms. Second, larger organizations are almost always changing parts of their structure. An organization chart would be outdated before it was completed. 2. Identify the major considerations when organizing a business. The most important considerations are as follows: a. Job design. Divide the work that is to be done by the entire organization into separate parts, and assign those parts to positions within the organization. b. Departmentalization. Group the various positions into manageable units or departments. c. Delegation. Distribute responsibility and authority within the organization. d. Span of management. Determine the number of subordinates who will report to each manager. e. Chain of command. Establish the organization’s chain of command by designating the posi- tions with direct authority and those that are support positions. Concept Check (p. 187) 1. What are the positive and negative effects of specialization? For a number of reasons, some job specialization is necessary in every organization because the “job” of most organizations is too large for one person to handle. When a worker has to learn one specific, highly specialized task, that individual should be able to learn it very efficiently. A worker repeating the same job does not lose time changing from operations, as the pin workers did when producing complete pins. The more specialized the job, the easier it is to design spe- cialized equipment. And finally, the more specialized the job, the easier is the job training. The most significant drawback is the boredom and dissatisfaction employees may feel when repeat- ing the same job. Bored employees may be absent from work frequently, may not put much effort into their work, and may even sabotage the company’s efforts to produce quality products. 2. What are three ways to reduce the negative effects of specialization? Job rotation, job enlargement, and job enrichment can reduce the negative effects of specialization.
  • 17. Chapter 7 Creating a Flexible Organization 231 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Concept Check (p. 189) 1. What are the four most common bases for departmentalization? The four most common bases of departmentalization are by function, by product, by location, and by type of customers. Departmentalization by function groups jobs that relate to the same organizational activity. Departmentalization by product groups activities related to a particular good or service. Departmentalization by location groups activities according to the defined ge- ographic area in which they are performed. Departmentalization by customer groups activities according to the needs of various customer populations. 2. Give an example of each. Departmentalization by function groups jobs that relate to the same organizational activity, such as marketing. Departmentalization by product groups activities related to a particular good or service. Departmentalization by location groups activities according to the defined geographic area in which they are performed. Departmentalization by customer groups activities according to the needs of various customer populations. Concept Check (p. 192) 1. Identify and describe the three steps in the delegation process. The three steps involved in delegation are (1) assigning responsibility, which is the duty to per- form the job or task; (2) granting authority, which is the power within the organization to ac- complish the task or job; and (3) creating accountability, which is the obligation of a subordi- nate to accomplish an assigned task or job. 2. Differentiate decentralized organization and centralized organization. The pattern of delegation throughout an organization determines the extent to which that organ- ization is decentralized or centralized. In a decentralized organization, management consciously attempts to spread authority widely across various organization levels. A centralized organiza- tion, on the other hand, systematically works to concentrate authority at the upper levels. Concept Check (p. 193) 1. Describe the two spans of management. A wide span of management exists when a manager has a larger number of subordinates. A nar- row span exists when the manager has only a few subordinates. 2. What are problems associated with each one? In a taller organization, administrative costs are higher because more managers are needed. Communication among levels may become distorted because information has to pass up and down through more people. Although flat organizations avoid these problems, their managers may perform more administrative duties simply because there are fewer managers. Wide spans of management also may require managers to spend considerably more time supervising and working with subordinates. Concept Check (p. 196) 1. Describe the four forms of organizational structure. The four forms of organizational structure are as follows:
  • 18. 232 Chapter 7 Creating a Flexible Organization © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  A bureaucratic structure is a management system based on a formal framework of au- thority that is outlined carefully and followed precisely.  The matrix structure combines vertical and horizontal lines of authority.  A cluster structure is a type of business that consists primarily of teams with no or very few underlying departments.  In a network structure (sometimes called a virtual organization), administration is the primary function performed, and other functions such as engineering, production, mar- keting, and finance are contracted out to other organizations. 2. Give an example of each form. Examples of a bureaucratic structure could be government agencies, colleges, and universities. An example of companies that use the matrix structure might be Ford Motor Company when it assembled a special project team to design and manufacture its global cars. Often, engineering and construction firms, like Bechtel Corporation, use a matrix structure for their projects. In a cluster organization, the operating unit is the team, and it remains relatively small. If a team be- comes too large, it can be split into multiple teams, or individuals can be assigned to other existing teams. For example, Horizon Live (an e-learning company) uses this form of organization. A network organization does not manufacture the products it sells. This type of organization has a few permanent employees consisting of top management and hourly clerical workers. Leased facilities and equipment, as well as temporary workers, are increased or decreased as the needs of the organization change. Thus, there is rather limited formal structure associated with a network organization. Often, start-ups are formed as a network structure. Concept Check (p. 198) 1. What is corporate culture? Corporate culture is generally defined as the inner rites, rituals, heroes, and values of a firm. It can have a powerful influence on how its employees think and act, as well as determine how the public perceives the organization. 2. Explain the four types of corporate cultures. There are four distinct types of corporate culture: a. Networked culture is a relaxed and informal environment. There is a strong commitment and a feeling of loyalty to the organization, characterized by a base of trust and friendship among employees. b. In the mercenary culture, employees are very intense, focused, and determined to win. In addition to employees working to earn money, feelings of passion, energy, sense of purpose, and excitement for one’s work play a large role in motivating an organization’s employees. c. Fragmented culture suggests that employees do not necessarily become friends but have a high degree of autonomy, flexibility, and equality. Employees in this type of culture consid- er themselves as working “at” the organization, not “for” it. d. In the communal culture, the positive traits of the networked culture and the mercenary cul- ture are combined. Traits such as friendship, commitment, high focus on performance, and high energy contribute to the organization resulting in an environment where success by anyone is celebrated by all.
  • 19. Chapter 7 Creating a Flexible Organization 233 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Concept Check (p. 199) 1. What is the difference between a committee and a task force? An ad hoc committee is created for a specific short-term purpose, such as reviewing the firm’s employee benefits plan. Once its work is finished, the ad hoc committee disbands. A standing committee is a relatively permanent committee charged with performing a recurring task. A firm might establish a budget review committee, for example, to review departmental budget requests on an ongoing basis. Finally, a task force is a committee established to investigate a major problem or pending decision. 2. What are the advantages and disadvantages of using committees? Committees offer some advantages over individual action. Their several members are able to bring information and knowledge to the task at hand. Furthermore, committees tend to make more accurate decisions and to transmit their results through the organization more effectively. However, committee deliberations take longer than individual actions. In addition, unnecessary compromise may take place within the committee, or the opposite may occur, as one person dominates (and thus negates) the committee process. Concept Check (p. 199) 1. In what ways can informal groups affect a business? Informal groups can be powerful forces in organizations. They can restrict output, or they can help managers through tight spots. They can cause disagreement and conflict, or they can help to boost morale and job satisfaction. They can show new people how to contribute to the organ- ization, or they can help people to get away with substandard performance. 2. How is the grapevine used in a business organization? The grapevine is the informal communications network within an organization. Information can be transmitted through the grapevine in any direction—up, down, diagonally, or horizontally across the organizational structure. Subordinates may pass information to their bosses, an exec- utive may relay something to a maintenance worker, or there may be an exchange of infor- mation between people who work in totally unrelated departments. Managers should respond promptly and aggressively to inaccurate grapevine information to minimize the damage that such misinformation might do. Moreover, the grapevine can come in handy when managers are on the receiving end of important communications from the informal organization. 7.7b Discussion Questions 1. In what way do organization charts create a picture of an organization? Organization charts are diagrams that represent positions in the organization and the relation- ships among them. They also illustrate the five considerations in the organizing process: spe- cialization, departmentalization, centralization, span of management, and chain of command.
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  • 21. Jacob journeyed to Egypt, to see the prosperity of that son from whom they had been separated for so many years. You know how tenderly he fulfilled towards them every filial duty, how anxiously he watched over them, and how carefully he supplied their necessities. And when he had closed their eyes, and had given directions concerning their remains, you well remember how he addressed to you the affecting declaration, “I am now loosened from every earthly tie, and have no other care but you. Henceforth you, the members of this church, shall be my brother and my sister, my father and my mother.” Having given you this brief detail, we now proceed to consider, III. The remembrance of his work which it now behoves you to cherish. Your own minister’s anxiety and endeavour during his life, like that of the apostle’s, was, that after his decease, you might have these things always in your remembrance. Still, it is not merely an intellectual remembrance of these things which it becomes you to cherish. You may remember every text from which he preached, and every sermon he has delivered, and yet neither be sanctified nor saved by their influence. Nor can you be saved by keeping in memory the things which you have heard, unless you remember them with faith, and experience, and practice; “for if ye know these things happy are ye if ye do them.” Permit me, therefore, earnestly and affectionately to address to you the following exhortations. In the first place, you should cherish the remembrance of these things by BELIEVING the gospel which he preached. There are some of you, my beloved friends, whose minds I fear still need to be stirred up to the remembrance of the things that belong to your peace. The endeavours of your departed minister, diligent, and impressive, and persevering, as they were, have failed to awaken in your hearts the feelings of penitence and faith. Some of you have, perhaps, for many years, sat under the sound of that gospel which during every year has been to you “the savour of death unto death.” Throughout the whole course of his ministry you are the persons
  • 22. who occasioned his keenest anxieties and his bitterest disappointments; for so far as you were concerned he seemed to labour in vain, and to spend his strength for nought. Yet he warned, and exhorted, and admonished you to the last; and it should be to you, day and night, an awful and awakening remembrance, that the very last text from which he preached, [21] was the subject of a sermon emphatically addressed to you; for its language was, “Notwithstanding I have spoken unto you, rising early and speaking, yet ye would not hearken unto me.” And these words, the last which he addressed to you on earth, were, perhaps, the first which he repeated concerning you at the bar of God. Ah! my brethren, were it possible for any thought to disturb his peaceful breast in heaven, it would be the recollection of the state of guilt and impenitence in which he has left you on earth—it would be the thought that now perhaps you and he are separated for ever. And shall this be the case? Can any of you—can you, my dear young friends, bear the thought that you may have bidden an eternal farewell to your faithful and paternal minister? Will you, who have procrastinated till his death, not have these things in your remembrance now, after his decease? When there is joy in heaven over one sinner that repenteth, shall he never be told that angels are rejoicing over you? And will you not from this time, and from the grave of your deceased instructor cry unto God, “My Father, thou art the guide of my youth?” My dear brethren, whether you be young or old, “behold now is the accepted time, behold now is the day of salvation.” To-morrow may be too late for ever; and if you delay, the remembrance of these things may be stirred up in your minds by the worm that dieth not, and by the fire that never shall be quenched. But if you wish to have these things in your remembrance now, go, by faith and prayer, to that Redeemer, whose gospel and whose minister you have hitherto neglected. Go to him with all the guilt and condemnation which that neglect has contracted. Go, as the prodigal went, with the feeling of penitence in your heart, and the confession of penitence on your lip—and whilst you are yet afar off, he will behold you with compassion, and run, and fall on your neck,
  • 23. and embrace you, and exclaim, “This my son was dead and is alive again, he was lost and is found!” Secondly, You should cherish the remembrance of these things by ADHERING to the gospel which he preached. For as it respects you who have, through grace, believed the gospel which he preached, his endeavour was that, after his decease, you might have these things ALWAYS in remembrance—and the Lord grant that his joy concerning you may be fulfilled. There are, I doubt not, many persons, once blessed with the ministry of our beloved friend on earth, who are now his companions in the skies; and of whom he has said already, “Behold here am I, and the children thou hast given me.” And there are, I trust, many now present who will be “his hope, and his joy, and his crown of rejoicing in the presence of our Lord Jesus Christ at his coming.” You, my dear brethren in the Lord, can no longer enjoy the living instructions of your revered pastor, but it becomes you, as members of his church, to have the things which he once taught you always in remembrance. Adhere steadfastly and perseveringly to the doctrines, and to the spirit, and to the practice of the gospel of Jesus Christ, “by pureness, by knowledge, by long-suffering, by kindness, by the Holy Ghost, by love unfeigned.” Imitate your deceased minister’s excellencies, and avoid his imperfections. Endeavour to equal him—endeavour to surpass him in all that is holy, and just, and good. Above all, let the same mind be in you which was in Christ Jesus; and repose, with unshaken confidence, on that grace which is sufficient for you, and on that strength which is made perfect in your weakness. You are now in circumstances such as require all the sympathy and consolation that the gospel can supply. Your minister is a corpse— the house of God in which he has been accustomed to meet you is become his sepulchre—and all your future meetings will be held around his grave. May the God of mercy be your comforter. May all the grace and tenderness which fills and flows from HIS heart who wept at the grave of Lazarus, flow into your own. And when you begin to look out for a successor to your deceased pastor, may you be directed to one who shall appear among you clothed with his
  • 24. mantle, and blessed with a double portion of his spirit. In all your future intercourse with each other, and in all your social meetings for devotion or for the business of the church, I beseech you, by the mercies of God, to adhere always to the gospel of Christ. Never lose the praise which you have in other churches of the saints, by destroying peace among yourselves. Let brotherly love continue. Let each individual among you determine, for the sake of Christ and of his people, to cherish it in his own heart and to exhibit it in his own conduct, and then its fragrance will perfume and bless the church. “It will be like the precious ointment on the head of Aaron, which went down to the skirts of his garments; and like the dew which descended on the mountains of Zion, where the Lord commanded the blessing, even life for evermore.” “Jehovah bless you and keep you. Jehovah cause his face to shine upon you, and be gracious unto you. Jehovah lift upon you the light of his countenance, and give you peace.” Finally, You should cherish the remembrance of these things by CIRCULATING the gospel which he preached. This also, my brethren, was one of the things which your minister endeavoured that you should have in your remembrance after his decease—for the ready and efficient assistance which he gave to many of the religious institutions in this city—the efforts which he made to extend the gospel in the county—and the laborious zeal with which he endeavoured to promote the interests of the Baptist Missionary Society—all shew how desirous he was to advance the kingdom of Christ in the world. Go you, my brethren, and do likewise. Never become weary of labouring in the cause of Christ. And remember, for your encouragement, that though the priests are not suffered to continue by reason of death, though ministers of the gospel are as mortal as their hearers, and though all flesh is grass, there is, nevertheless, one thing stable and eternal in the midst of this moving and this dying world—and this one thing is, “the word of the Lord, that endureth for ever.” The church lives, though the pastor dies. The church must increase, though he has decreased. One generation shall pass away and another generation shall succeed,
  • 25. “till time and nature dies.” But during all this mortality and change, “Jesus Christ is the same yesterday, to-day, and for ever,” and his word shall have free course and be glorified, till it cover and crown the world, and till the kingdoms of this world shall become the kingdoms of our God and of his Christ, and he shall reign for ever and ever. “Then cometh the end, when he shall deliver up the kingdom to God, even the Father; when he shall have put down all rule, and authority, and power. For he must reign till he has put all enemies under his feet. The last enemy that shall be destroyed is death. Thanks be to God who giveth us the victory through our Lord Jesus Christ! Therefore, my beloved brethren, be ye steadfast, unmoveable, always abounding in the work of the lord, forasmuch as ye know that your labour is not in vain in the lord.” THE END. Preparing for the Press, by the same Author, A COURSE OF SHORT SERMONS FOR FAMILIES, TO BE PUBLISHED IN WEEKLY NUMBERS, AT A PENNY EACH. PRINTED BY WILKIN AND FLETCHER, UPPER HAYMARKET, NORWICH. October 5th, 1832.
  • 26. FOOTNOTES. [9] See “Two Sermons addressed principally to the students of the two Baptist Academies at Stepney and Bristol,” entitled “Advice and Encouragement to young Ministers;” and “The substance of a Sermon preached at Bradford,” entitled, “Practical Cautions to Students and young Ministers.” All of which are well worthy the attentive perusal of students and of young ministers of every denomination. [21] Jeremiah, xxxv, 14.
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