Chapter 6 Basic Organization

1. Chapter 6 Basic Organization • The elements of structure • Contingency variables affecting structure • Organization design applications • Organization culture

2. The Elements of Structure • Work specialization • Chain of command • Span of control • Authority and responsibility • Centralization versus decentralization • Departmentalization

3. Work Specialization Definition: Work specialization is a component of organization structure that involves having each discrete step of a job done by a different individual rather than having one individual do the whole job.

4. High Impact from human diseconomies Productivity Impact from economies of specialization Low Low High Work Specialization Exhibit 6-1 Economies and Diseconomies of Work Specialization

5. CEO Executive Vice President President Executive Vice President Vice President Vice President Vice President Vice President Vice President Region 1 Region 2 Region 3 Region 4 Region 5 District A District B District C District D District E District F District G Exhibit 6-2 Chain of Command

6. Span of Control • Definition It is the number of subordinates a manager can direct efficiently and effectively.

7. Contingency Variables • The level in the organization • The quality of employees • Similarity of employee tasks • The complexity of tasks • The physical proximity of employees • The degree of standardization of work procedures • The strength of the organization’s value system • The sophistication of the organization’s MIS • The preferred managing style of managers

8. Authority and Responsibility • Definition • Line authority and staff authority • How do authority and power differ? • The types of power

9. Authority: It is the rights inherent in a managerial position to give orders and expect subordinates to be obeyed. • Responsibility: It is an obligation to perform assigned activities. • Power: It is an individual’s capacity to influence decisions.

10. Line Authority and Staff Authority • Line authority entitles a manger to direct the work of an employee. A manager with line authority has the right to direct the work of employees and to make certain decisions without consulting anyone • Staff authority is used to support, assist, and advise the holders of line authority. • Whether a manager’s function is classified as line or staff depends on the organization’s objectives.

11. Executive Director Assistant to the Executive Director Director of Human Resources Director of Operations Director of Purchasing Other directors Unit 1 Manager Unit 2 Manager Other Human resources Operations Purchasing Other Human resources Operations Purchasing Exhibit6-3 Line Versus Staff Authority Line authority Staff authority

12. The Types of Power • Coercive power:power on fear. • Reward power:power based on the ability to distribute something that others value. • Legitimate power:power based on one’s position in the formal hierarchy. • Expert power:power based on one’s expertise, special skills, or knowledge. • Reference power:power based on identification with a person who has desirable resources or personal traits.

13. Centralization Versus Decentralization • Centralizationis a function of how much decision-making authority is pushed down to lower levels in an organization; the more centralized an organization is, the higher is the level at which decisions are made. • Decentralizationrefers to the pushing down of decision-making authority to lowest levels of an organization. • Centralization-decentralization is not an either-or concept. It’s a degree phenomenon.

14. The Five Ways to Departmentalization • Functional departmentalization • Product departmentalization • Customer departmentalization • Geographic departmentalization • Process departmentalization