Management, 12e (Robbins/Coulter) Chapter 11 Basic Organizational Design 1) Organizational structure is defined as the formal arrangement of jobs within an organization. Answer: TRUE 2) Customer departmentalization works well because it emphasizes monitoring and responding to changes in customers' need. Answer: TRUE
Answer: FALSE 4) Given other things unchanged, managers with well-trained and experienced employees can function well with a wider span of control than those with a less talented workforce. Answer: TRUE 5) The more the decision-making power of lower-level employees, the more decentralized the organization is. Answer: TRUE 6) Employee empowerment gives employees more authority to make decisions. Answer: TRUE 7) In highly formalized organizations, employees have more discretion in how they do their work. Answer: FALSE 8) Innovators need the efficiency, stability, and tight controls of the mechanistic structure. Answer: FALSE 9) A simple structure is characterized by low spans of controls and high formalization. Answer: FALSE 10) In divisional structures, the parent corporation typically acts as an external overseer to coordinate and control the various divisions of the organization. Answer: TRUE 11) Organizational design is a process that involves decisions about ________. A) work specialization and cost-leadership B) chain of command and span of control C) centralization and differentiation D) departmentalization and diversification Answer: B 12) Which of the following statements accurately defines work specialization? A) It is the basis of grouping jobs together. B) Individual employees specialize in doing part of an activity rather than the entire activity. C) It is the line of authority extending from upper organizational levels to the lower levels. D) It clarifies who reports to whom. Answer: B 13) In case of functional departmentalization, jobs are grouped according to ________. A) tasks B) territories C) product lines D) customer flow Answer: A 14) What kind of departmentalization would be in place in a government organization where different public service responsibilities are divided into activities for employees, children, and the disabled? A) product departmentalization B) geographic departmentalization C) process departmentalization D) customer departmentalization Answer: D 15) Work teams composed of individuals from various functional specialties are known as ________ teams. A) cross-control B) cross-training C) cross-functional D) cross-command Answer: C 16) The line of authority that extends from upper organizational levels to lower levels, clarifying who reports to whom, is known as the ________. A) employee power distance B) unity of command C) span of control D) chain of command Answer: D 17) ________ refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it. A) Responsibility B) Liability C) Bureaucracy D) Authority Answer: D 18) Which one of Fayol's 14 principles of management states that a person should report to only one manager? A) unity of direction B) unity of command C) division of work D) division of authority Answer: B 19) All other things being equal, the wider or larger the span, the more ________ an organization is. A) ambitious B) rigid C) mechanistic D) efficient Answer: D 20) If top managers make key decisions with little input from below, then the organization is ________. A) not mechanistic B) more decentralized C) not formalized D) more centralized Answer: D 21) ________ refers to how standardized an organization's jobs are and the extent to which employee behavior is guided by rules and procedures. A) Specialization B) Centralization C) Decentralization D) Formalization Answer: D 22) Which of the following is a characteristic of a mechanistic organization? A) cross functional teams B) free flow of information C) wide spans of control D) clear chain of command Answer: D l 23) GlaxoSmithKline would become more ________ if it starts allowing its lab scientists to set the priorities and allocate the resources. A) bureaucratic B) mechanistic C) diversified D) organic Answer: D 24) A company with low departmentalization, wide spans of control, centralized authority, and little formalization possesses a ________ structure. A) simple B) functional C) divisional D) matrix Answer: A 25) In which of the following traditional organizational designs, duplication of activities and resources leads to increase in costs and reduced efficiency? A) divisional structure B) team structure C) matrix structure D) project structure Answer: A 26) A ________ is an organizational design that groups similar or related occupational specialties together. A) matrix structure B) functional structure C) divisional structure D) simple structure Answer: B Eric Redd (Scenario) Eric Redd graduated from college and was hired by a company that manufactured parts for the automotive industry. Eventually, the top management noticed that the employees on the assembly line seemed bored, and their motivation was low. Eric's employer decided to try to reorganize in order to increase productivity. Eric's responsibilities are about to change from that of an engineer to a more complex one. 27) In an attempt to reorganize, the assembly-line activity was divided into separate job tasks. Individual employees were trained to become specialists in specific tasks rather than the entire activity. The company seems to have adopted ________. A) work specialization B) departmentalization C) cross-functional teams D) centralization Answer: A 28) Eric majored in engineering and really enjoyed his work. After the reorganization, Eric was required to work with a team that included production workers as well as marketing specialists to design the latest products the company was planning to offer. This implies ________. A) the company is becoming more centralized B) that Eric's job responsibilities have been reduced C) the company is becoming more mechanistic D) that Eric is a part of a cross-functional team Answer: D 29) Eric is offered a chance to help direct the efforts of some employees assigned to his work group. This is a chance for Eric to experience ________. A) self actualization B) groupthink C) referent power D) authority Answer: D 30) When Eric is offered a chance to help direct the efforts of some employees assigned to his work group, he sees this new assignment as a(n) ________. A) decrease in authority B) increase in departmentalization C) increase in his responsibility D) decrease in work specialization Answer: C 31) Write a short essay on work specialization. Answer: Work specialization is the process of dividing work activities into separate job tasks. Individual employees "specialize" in doing part of an activity rather than the entire activity in order to increase work output. It is also known as division of labor. It makes efficient use of the diversity of skills that workers have. Early proponents of work specialization believed that it could lead to great increases in productivity. At the beginning of the twentieth century, that generalization was reasonable. Because specialization was not widely practiced, its introduction almost always generated higher productivity. But, at some point, the human diseconomies from division of labor—boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover—exceed the economic advantages. Today, most managers continue to see work specialization as important because it helps employees be more efficient. However, managers should remember that, at some point, work specialization no longer leads to productivity. Thus, they should plan and organize accordingly. 32) What do you mean by departmentalization? In a short essay, list and discuss the five common forms of departmentalization, their advantages and disadvantages. Answer: The basis by which jobs are grouped together is known as departmentalization. The five common forms of departmentalization are: a. Functional departmentalization - Here jobs are grouped by the functions (i.e., marketing, finance, human resources) performed. This leads to an increased efficiency in the organization because people with similar specialties, common skills, knowledge, and orientations are put together. It also leads to an increased coordination within functional areas. On the flip side, it gives a limited view of the organizational goals. b. Product departmentalization - Here jobs are grouped by product line. This allows the managers to specialize in particular products and services. It also helps the managers to become experts in their industry. On the other hand, this leads to duplication of functions. It also gives a limited view of organizational goals. c. Geographical departmentalization - Here jobs are grouped on the basis of a geographic region. This helps in more effective and efficient handling of specific regional issues that arise. It also helps in serving the needs of unique geographic markets. On the flip side, it leads to duplication of functions. d. Process departmentalization - This method groups jobs on the basis of product or customer flow. This approach efficiently manages the flow of work activities. But, the major disadvantage of this approach is that it can only be used with certain types of products. e. Customer departmentalization - Here jobs are grouped on the basis of specific and unique customers who have common needs. It allows specialists to handle customers' needs and problems. But, this also leads to duplication of functions. It causes departments to have a limited view of organizational goals. Most large organizations continue to use combinations of most or all of these types of departmentalization. Now-a-days, a popular departmentalization trend is the increasing use of customer departmentalization. Because getting and keeping customers is essential for success, this approach works well because it emphasizes monitoring and responding to changes in customers' needs. Another popular trend is the use of teams, especially as work tasks have become more complex and diverse skills are needed to accomplish those tasks. One specific type of team that more organizations are using is a cross-functional team, which is a work team composed of individuals from various functional specialties. 33) In a short essay, explain the concept of chain of command. Answer: The chain of command is the line of authority extending from upper organizational levels to lower levels, which clarifies who reports to whom. Managers need to consider it when organizing work because it helps employees with questions such as "Who do I report to?" or "Who do I go to if I have a problem?" Three other concepts that help in a better understanding of the concept of chain of command are authority, responsibility, and unity of command. Authority - Authority was a major concept discussed by the early management writers; they viewed it as the glue that held an organization together. Authority refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it. Managers in the chain of command had authority to do their job of coordinating and overseeing the work of others. Authority could be delegated downward to lower-level managers, giving them certain rights while also prescribing certain limits within which to operate. These writers emphasized that authority was related to one's position within an organization and had nothing to do with the personal characteristics of an individual manager. Chester Barnard, an early management writer proposed the acceptance theory of authority. According to this theory, authority comes from the willingness of subordinates to accept it. If an employee did not accept a manager's order, there was no authority. The early management writers also distinguished between two forms of authority: line authority and staff authority. Line authority entitles a manager to direct the work of an employee. It is the employer––employee authority relationship that extends from the top of the organization to the lowest echelon, according to the chain of command. As a link in the chain of command, a manager with line authority has the right to direct the work of employees and to make certain decisions without consulting anyone. In the chain of command, every manager is also subject to the authority or direction of his or her superior. As organizations get larger and more complex, line managers find that they do not have the time, expertise, or resources to get their jobs done effectively. In response, they create staff authority functions to support, assist, advise, and generally reduce some of their informational burdens. Responsibility - When managers use their authority to assign work to employees, those employees take on an obligation to perform those assigned duties. This obligation or expectation to perform is known as responsibility. Assigning work authority without responsibility and accountability can create opportunities for abuse. Likewise, no one should be held responsible or accountable for work tasks over which he or she has no authority to complete those tasks. Unity of command - The unity of command principle which is one of Fayol's 14 management principles states that a person should report to only one manager. Without unity of command, conflicting demands from multiple bosses may create problems. 34) Explain the concept of span of control. Answer: How many employees can a manager efficiently and effectively manage? That is what span of control is all about. The traditional view was that managers could not—and should not— directly supervise more than five or six subordinates. Determining the span of control is important because to a large degree, it determines the number of levels and managers in an organization—an important consideration in how efficient an organization will be. All other things being equal, the wider or larger the span, the more efficient an organization is. The contemporary view of span of control recognizes that there is no magic number. Many factors influence the number of employees that a manager can efficiently and effectively manage. These factors include the skills and abilities of the manager and the employees, and the characteristics of the work being done. For instance, managers with well-trained and experienced employees can function well with a wider span. Other contingency variables that determine the appropriate span include similarity and complexity of employee tasks, the physical proximity of subordinates, the degree to which standardized procedures are in place, the sophistication of the organization's information system, the strength of the organization's culture, and the preferred style of the manager. The trend in recent years has been toward larger spans of control, which is consistent with managers' efforts to speed up decision making, increase flexibility, get closer to customers, empower employees, and reduce costs. Managers are beginning to recognize that they can handle a wider span when employees know their jobs well and when those employees understand organizational processes. 35) Explain centralization, decentralization, and employee empowerment. Answer: Centralization is the degree to which decision making takes place at upper levels of the organization. If top managers make key decisions with little input from below, then the organization is more centralized. On the other hand, the more that lower-level employees provide input or actually make decisions, the more decentralization there is. Centralization-decentralization is not an either-or concept. The decision is relative, not absolute——that is, an organization is never completely centralized or decentralized. Early management writers proposed that the degree of centralization in an organization depended on the situation. Their goal was the optimum and efficient use of employees. Traditional organizations were structured in a pyramid, with power and authority concentrated near the top of the organization. Given this structure, historically centralized decisions were the most prominent, but organizations today have become more complex and responsive to dynamic changes in their environments. As such, many managers believe that decisions need to be made by those individuals closest to the problems, regardless of their organizational level. In fact, the trend over the past several decades—at least in U.S. and Canadian organizations—has been a movement toward more decentralization in organizations. Today, managers often choose the amount of centralization or decentralization that will allow them to best implement their decisions and achieve organizational goals. What works in one organization, however, won't necessarily work in another, so managers must determine the appropriate amount of decentralization for each organization and work units within it. As organizations have become more flexible and responsive to environmental trends, there has been a distinct shift toward decentralized decision making. This trend, also known as employee empowerment, gives employees more authority (power) to make decisions. In large companies especially, lower-level managers are "closer to the action" and typically have more detailed knowledge about problems and how best to solve them than do top managers. 36) Explain the concepts of mechanistic and organic structures. Answer: The mechanistic organization (or bureaucracy) was the natural result of combining the six elements of structure: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization. Adhering to the chain-of-command principle ensured the existence of a formal hierarchy of authority, with each person controlled and supervised by one superior. Keeping the span of control small at increasingly higher levels in the organization created tall, impersonal structures. As the distance between the top and the bottom of the organization expanded, top management would increasingly impose rules and regulations. Because top managers could not control lower-level activities through direct observation and ensure the use of standard practices, they substituted rules and regulations. The early management writers' belief in a high degree of work specialization created jobs that were simple, routine, and standardized. Further specialization through the use of departmentalization increased impersonality and the need for multiple layers of management to coordinate the specialized departments. Thus, a mechanistic organization has the following characteristics: a. high specialization b. rigid departmentalization c. clear chain of command d. narrow spans of control e. centralization f. high formalization The organic organization is a highly adaptive form that is as loose and flexible as the mechanistic organization is rigid and stable. Rather than having standardized jobs and regulations, the organic organization's loose structure allows it to change rapidly as required. It has division of labor, but the jobs people do are not standardized. Employees tend to be professionals who are technically proficient and trained to handle diverse problems. They need few formal rules and little direct supervision because their training has instilled in them standards of professional conduct. Thus, an organic organization has the following characteristics: a. cross-functional teams b. cross-hierarchical teams c. free flow of information d. wide spans of control e. decentralization f. low formalization 37) List and discuss the four contingency variables that should be considered while designing an appropriate organizational structure. Answer: a. Strategy and structure - An organization's structure should facilitate the achievement of goals. Since goals are influenced by the organization's strategies, it is logical that strategy and structure should be closely linked. The flexibility and free-flowing information of the organic structure works well when an organization is pursuing meaningful and unique innovations. The mechanistic organization with its efficiency, stability, and tight controls works best for companies wanting to tightly control costs. b. Size and structure - There is considerable evidence that an organization's size significantly affects its structure. Large organizationstypically considered to be those with 2,000 employeestend to have more specialization, departmentalization, centralization, and rules and regulations than do small organizations. However, once an organization grows past a certain size, size has less influence on structure. c. Technology and structure - Every organization uses some form of technology to convert its inputs into outputs. The processes or methods that transform an organization's inputs into outputs differ by their degree of routineness. In general, organizations adapt their structures to their technology depending on how routine their technology is for transforming inputs into outputs. In general, the more routine the technology, the more mechanistic the structure can be, and organizations with more nonroutine technology are more likely to have organic structures. d. Environmental uncertainty and structure - Some organizations face stable and simple environments with little uncertainty; others face dynamic and complex environments with a lot of uncertainty. Managers try to minimize environmental uncertainty by adjusting the organization's structure. In stable and simple environments, mechanistic designs can be more effective. On the other hand, the greater the uncertainty, the more an organization needs the flexibility of an organic design. 38) Discuss the three traditional organizational designs and highlight their strengths and weaknesses. Answer: The three traditional organizational designs are: the simple structure, functional structure, and divisional structure. These structures tend to be more mechanistic in nature. a. Simple structure - It is an organizational design with low departmentalization, wide spans of control, authority centralized in a single person, and little formalization. As employees are added, however, most do not remain as simple structures. The structure tends to become more specialized and formalized. Rules and regulations are introduced, work becomes specialized, departments are created, levels of management are added, and the organization becomes increasingly bureaucratic. At this point, managers might choose a functional structure or a divisional structure. These structures are fast, flexible, and inexpensive to maintain. On the negative side, these structures are not appropriate when the organization starts growing. Moreover, the reliance on one person is also very risky. b. Functional structure - A functional structure is an organizational design that groups similar or related occupational specialties together. This structure enjoys cost-saving advantages from specialization (economies of scale, minimal duplication of people and equipment). It also groups employees who have similar tasks with each other. On the negative side, the constant pursuit of functional goals can cause managers to lose sight of what is best for the overall organization. Moreover, the functional specialists become insulated and have little understanding of what other units are doing. c. Divisional structure - It is an organizational structure made up of separate business units or divisions. In this structure, each division has limited autonomy, with a division manager who has authority over his or her unit and is responsible for performance. In divisional structures, however, the parent corporation typically acts as an external overseer to coordinate and control the various divisions, and often provides support services such as financial and legal. The major strength of this structure is that it focuses on results by holding division managers responsible for what happens to their products and services. But, the duplication of activities and resources encountered in such structures increases the cost and reduces the efficiency of the organization. |
The process of grouping jobs together is known as ________.
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