: 3 ghow best 9 orl aces and ing the basic frameworks that: gvisio® spay ie ne cape, maging force a | ee thei work done — men ne ertical elements of organization serch theta Tee Thi chapter discus Ar of fve devoted to organizing, the second basic ma genio? can control and i ; o we describe managerial planning— deca” | ce fonction identified in Chapter [0 oe coe howto do it. We ft labo) Bethe 6 shat to do, Organizing. toe rien Subsequent sections explore the basic elemeng ye | ne pio pe meaning of organization structure. Subseq ne managers use to create an organization. a th ‘one 0 job 5P The Elements of Orga’ o ’ Imagine asking a chil build a castle with a set of buildi g blocks. She secon ip wr0 blocks and other larger ones. She uses some square ones, some round ones, and some ti. theaters. angular ones. When she finishes, she has her own caste, unlike any other. Another child, aes presered with the sme tsk, constructs diferent castle, He selects diferent blocs, | OOS io taampe, nd combines them in diferent ways. The children’s activities—choosing certain | RNA combinations of block and then ptng them together in unique ways—arein many way | URGE IY analogous to the manager's job of organizing, Zs Organizing is deciding how best to group organizational elements. Just as children select Disney zation structure fener at can be different kinds of building blocks, managers can choose a variety of structural possibilities, paren oo ‘And just.as the children can atsemble the blocks in any number of ways, s0, too, can ma 1s put the organization together in many different ways. Understanding the nature of these ef building blocks and the different ways in which they can be configured can have a power. | B@M¥ ful impact on a firm's competitiveness In this chapter, our focus is on the building blocs | Of Spe themsclves—organization structure, In Chapter 15 we focus on how the blocks can be put together—organization design oe ‘There are six basic building blocks that managers can use in constructing an organiza Ratan tion: designing jobs, grouping jobs, establishing reporting relationships between jobs, dstib- |» YETY PO! uting authority among positions. The logical within the organization jobs, coordinating activities among jobs, and differentiating among starting point is the first building block— designing jobs for peopleee > CHAPTER 14 Basic Elements of Organizing 349 ofdivisin of labor. Adam Smith, an eighteenth-century econ: wet dn seen fac nen et nad Fe tei nee ale eon naman Pe Hef fouth ground the point, and son, Smith claimed that ten men working int ‘were able to produce 48,000 pins in a day, whereas each man weskine alms ved ae working alone could roe bit ‘examples of the impact of specializetion cam zed by Henry Ford and his contemy ation came fom the auiomil sembly H aries, Mass-production capabilites stem- oe Tom job specialization techniques have had a profous Penton : BT Petes orrtcth contry, high levels oflomec po ami he wo feel tongs economies inthe history ofthe wai es specialization in its purest form is simply a normal extension nizatior qt far enanple, when Walt Dancy started hs eompery head cet ee Hf-wete cartoons, drew them, added character voices, and then marketed: them to Asthe business grew, though, he eventually hired others to perform many of same functions. As growth continued, so, too, did specialization. For example, as ipimation atists work on Disney movies today, they may specialize in generating com- images of a single character or doing only background scenery. Others provide Fees, and marketing specialists develop promotional campaigns. And today, the Walt ‘ Disney Company has literally thousands of different specialized jobs. Cleatly, no che enon could perform them al ‘ enefits and Limitations of Specialization Job specialization provides four benefits to organizations.* Fist, workers performing small, simple tasks will become veyyptoficient at each task. Second, transfer time hetween tusks decreases. If employees perform several different + tasks, some time is lost as they stop doing the first task and start doing the next. Third, the more narrowly defined a iobis, the easier it is to develop specialized equipment to ‘mist with that job. Fourth, when an employee who per forms x highly specialized job is absent ot resigns, the se ssl to tein sorncone new tclativly low ough specialization is generally thought of in ems of operating jobs, many organi shave extended “the basic elements of specialization to BREE BESS TR PF rere]rs ¢ the Organizing Process: ch, his approach jalization fou! before enrichme 5 to Specialize’ as ds 7 sicitedatbepecilzation managers have sought other approache, % porte een ‘enriching, ited weepes ‘Ty coumter he probe pect anizatonal demands fr eficieny ang eee ete 70 io jab design that eciee bt ety eee omy, Five alternative approaches are job Bsand wy oe rnenel Pron, jb enlargement, jd entichinenh he jb characterises approach, and work teams? wee loyees from one job to another. characteristics Appr rotation i ; cb rotation involves yterai.ally moving empl op OBA hat docs a Hoots mouse ight unload trucks on Monday, cary income inventory to storage get -f STEN netg improved A106 wentory from storage on Thursday, "Tuesday, verfy invoices on Wednesday, pull outgoing in hd load eee Friday. Thus the jobs do not change; instead, workers move from jab to ‘ job. Unfortunately, fr this very reason, job rotation has not been very successful in enhancing ‘ill 2" he nun employee motivation or satisfaction. Jobs hat are amenable to rotation tend to be relatively : Task identity> the exte Sand routine, Workers who are rotated toa “new” job may be more satisfied at Gist, but Ton otal job Tignificance, the A Tatty, the deere’ 5, Feedback, the extent | Le wanes, Alough many companies (among them American Stet Batichem Stel, Ford, Prodenia nsornce, TRW, and Westen obs)..makes the day GO Fant tied job rotation, itis most often wsed today 252 training device t get bored doing the _toimprove worker skills and flexibility. Job rotation is also being used more to Free Rexbility and lower costs. That is, because workers who can perform cover and over. rate jobs can be moved around to diferent obs when demand shifts, the GURE 14.1 THE J08 vox ms, a ASSEMBLY UNE WORKER? business can often get by with fewer workers |i niall Thejob characteristics app’ five core job dimensions m Job Enlargement On the assumption that doing the same basi task over and over is the sation, performance, and s Pema ene of worker dissatisfaction, jb enlargement was developed to increase the total vember of tasks workers perform. As. result, all workers perform a wide variety of tasks, which presumably reduces the level of job dissatisfaction. Many ‘organizations have used job enlarge- oa} nent, including IBM, Detroit Edison, ATCT, the U.S. Civil Service, and Maytag. At Maytag, for example, the assembly line for producing washing-machine water pumps was systematr cally changed so that work that had originally been performed by six workers, who passed the ‘work sequentially from one person to another, was performed by four workers, each of whom asembled a complete pump.* Unfortunately, although job enlargement does have some positive consequences, these ae often offset by some disadvantages: (1) Training costs usually ‘increase, (2) unions have argued that pay should increase because the worker is doing more tasks, and (3) in many cases the work remains boring and routine even after job enlargement * + Task identity © Task significanc prod = sikCHAPTER 14 @ thas Hlements of Organizing 345 1 sr This approach, however, also has disadvantages, For ayters a poe eee envchment, but this seldom entering on ang Moen enticing jobs. And note tat while Anderen Bank erployne acted oe, mesa gate esponsibility, the firm's goal was toler labor cot, th lpact te Be en enlose monte, proance and turnover havent een sewed Parr mi — j yo coaracteristics Approach The job characteristics approach is an alternative to job stay, esto tat oes ake oto account the work sem and employes preferences As Seed in Figure 14.1, the job characteristics approach suggests that job fobs | Bed improved slong ive core dimensions: moe ee te ee at 1 Sl vrety, the numberof things 2 person docs ina job ie | 2 Tate, the extent to which the worker does a complete or identifiable portion of Mean the total job mem | 3 Taksigniicance, the perceived importance of the task levice | 4 Autonomy, the degree of control the worker has over how the work is performed mete. | 5: Fedbock, the extent to which the worker knows how wel the job is being performed AIGURE 14.1 THE JOB CHARACTERISTICS APPROACHSS ee pant 5 The Organizing Process © aqig BASES FOR OF 1 sions, the more employees wll experienc y 10 oop obs into de “The highe a jb rategon those dimensions, oe nen ably leads to high mote! | eine 9 exe states, in tur, % ie paychologcal states. Experiencing these sttes ins “ oduct, prctloge a igh atfcin, and How absenteeism nd wrnovr Fag | OBE cP igh gui need strength i presumed to affect how the model works for ie a relent i develop, and expand their capabilities (ing people, People wih a sing cs : eon i sar sieeeceL ‘ oth need strength) are expected to respo ern Soa hurry dividuals with low growth-need strength are expected nag ap er: been conducted totes the usefulnes ofthe job chang teristics approach. The Southwestern, Division of Prudential Insurance fr expe thisapprech in ity claigy division. Results included moderate declines in tumover andy small But measurable improvement in work quality, Other research findings have net yp ported this approach as strongly. Thuis, although the job characteristics approach is oneat | the most promising alterhativesto job specialization, itis probably not the final answer, (i Work Teams Another alternative to job specializat‘on is work teams. Under this arange- ‘ment, a group is given responsibility for designing tre work system to be used in performing | an intertelated set of tasks. In the typical assembly-line system, the work flows from one worke | exto the next, and each worker has. specified jobsto perform. In a work team, however, the group itself decides how jobs will be allocated. For example, the work team assigns specie tasks fo members, monitors and controls its own performance, and has autonomy over work scheduling." We discuss work tearns more fully in Chapter 22, ® the basic job design alternatives? 10d of job design best describes a job you have recently held? Do you ‘isagree with the text's assessment of that job design? Functional Departmental Sally among smaller organi . + | gether those jobs involv n ean organizational funct s Serial functions, such as p a ing, finance, an This approach, which First, each dep experts can be hired to because an indi ‘Of skills. And, third, coo 5 On the other hand, as . ei approach may emerg Wueratic. Employees (ame lose sight of the total aoe 7 ome increasingly diffic od : r ‘because of productior = =CHAPTER 14 ® Basic Elements of Organizing 347 1.2. BASES FOR DEPARTMENTALIZATION, . ‘group jobs into departments. Apex, a hypothetical orgénization, uses al four . ‘of the primary bases of departmental Bc carci esi he Apex na outon un nom ee oul penton functional Department 4 common base for departmentalization, espe- aly emong saller organizations, iby function. Functional departmentalisation groups together those jobs-involving the same ot similar activities (The word function is used here to, reer cipntational functions such a finance and production rater than the base Pat: earl faecabon, pachos plang opeontrling) The computes depaiment a Abex Hat rid marketing departments, each an organizational fonction in smaller organizations, has three primary y experts in that functional area. Market- ample. Second vision ispant s The Organizing Process considers departmentaliztion has three major advantages, First all activities yy oe ated gh one prodvet or poduet g700P C2 omer m be easily integrated and coordinated. gat all co enhanced. Third, the performans - eo find de ‘nd effectiveness of decision making are = the speed ups can be assessed more easly and objectively, hen | ge a aioe dr india! products oF ad mrarnents forthe result oftheir activites ~ Pa ee imminently er apo Force, mng,, | eres uc! 2 s cath department may focus an their own product br product group to the exclusion of depending ne y see her or his pri | fon, 4€P rest of the organization. For example, a marketing manager may see her or his primary guy” | wep depart nization. For another, ad than helping the overall organization. ina | Neer Gere arch depaiont rust have ils own fanctional specialises | such as market research and financial analysis. Custoi partmentalization Under customer departmentalization, the organing ears respond to and interact with specific customers 0: custome, groups. The lending activities in most banks ‘or example, ate usually tailored to mee | the needs of different kinds of customers (busin.ss, consumer, mortgage, and agricultural ee loans). Figure 14.2 shows that the marketing brinch of Apex’s computer business has tuo distinct departments industrial sales and consumer sales. The industrial sales depa. ment handles marketing activities aimed at business customers, whereas the consume; > sales department is responsible for wholesaling computers to retail stores catering to ind). H eed pees Establis! ‘The basic advantage of this approach is that the organization is able to use skilled special ‘The third basic ists to deal with unique customers or customer groups. It takes one set of skills to evaluate positions. Suppc balance sheet and lend a business $500,000 for operating capital, and a different set of skill, new employees, {o evaluate an individual's creditworthiness and lend $20,000 for a new car. However, afily manager report large administrative staff is required to integrate the activities of the various departments, In banks, for example, coordination is necessary to make sure that the organization does not over-commit itself in any one area and to handle collections on delinquent accounts from 2 diverse set of customers, ing manager, of basic issues inve ~ and the span of tion to formal d Lecation Departmentalization Location departmentalization groups jobs oi the basis of ve eos defined geographic sites or areas. The defined sites or areas may ange in size from a hemi- eee ecole | sphere to only afew blocks ofa lage ciy. The manufacturing branch of Apexs compute Looks Like a G busines hae two plants—one in Dallas and another in Phoenix. Similarly, the design division keeping track o oft tftvare desig unit has two abs—one in Chicago andthe other in St Lonis Ape Saag. sales group has five sales tensitories corresponding to different regions ofthe Unied ve i ice departments (precinctsCHAPTER 14 @ Basic Elements of Organizing 348 considerations Two findl points about job ‘ grouping remain to nse City ate often called something entirely diferent Gonsen ose® made. Fist, ewe ll gommoneynonyms ‘The higher we look in an oxganiestion the oie Peas ccs nee ier ve gye aio sions. Nevertheless, the underying ogc behing eairiDemcn Bem ses rin mee st tiple bases of departmentaliza- Second, almost any organization is likely to employ mul 'ypothetical firm that we created ie degending on le. though Apex Computer iy tpexplain departmentalization, itis quite similar to many real organizations in variety of bases of departmentalization for different levels and ferent car of eee 3 What are the common bases of departmentalization? \dentify an organization with which you have some familiarity. Based on your knowledge of the firm, describe-how itis departmentalized. Re ‘The third basic element of organizing isthe establishment of reporting relat postions. Suppose, for example, that the owner-manager of a small business has just hired two few employees, one to handle marketing and one to handle production. Will the marketing manager report to the production manager, wll the production manager report to the market- ing manager, or will each report directly to the owner-manager? These questions reflect the basi issues invelved in establishing teporting relationships: clarifying the chain of command and the span of management, We should also note before proceeding, though, that in addi fon to formal departmental arrangements (as described easier) and prescribed reporting rela- tionships (as discussed below), there is also Eanes fora tet ta tks place a le in any organization. The Technica ing box on page 350 entitled “Wha Tma28 People in ay otkars Cradle Played by Mice on Spee” describes one popula too for eeping track of the increasingly complex networks characteristic ‘of modern organizations. to evaluates nt set of sills ied in the early years of the twentieth argued that clear and distinctFa lesion aniaations ls the determination coo seepone will sign 0 on of ributed among positions. Authority is power that has been logue! i Mager responsible bythe orpization Disb authority another normal outgrowth of incresane™ || apapn believes that thi nizational size, For example, when an owner-manager hires a sales representative ye OU jeans that has hit his products, he needs to give the new employee appropriate authority to make deo iphese three step about delivery dates, discounts, and so forth. If every decision requires the approval nate have d owner-manager, he is no better off than he was before he hited the sales repreenanse | implied rather than st power given to the sales representative to make certain kinds of decisions, then, eps’ | _appesceptive subordi theestablishment of a pattern of authority—the sales representative can make some gt’ experience with sions alone and others in consultation with coworkers, and the sales representative a rho to do the jo defer some decisions to the boss, Two specific issues that managers must address whey tributing authority are delegation and decentralization." ‘ problems in Deleg le 2 manage able to plan wo The Delegation Process ; Pe epagens may worry Delegation is the establishment of a pattern of authority between a superior and one or mor | _ment.And. finally, subordinates Specifcelly, delegations the proces by which managers esign a porn y messbondinates are rlu their total workload to others." mand. They ma ity. Or they may sim Reasons for Delegation The primary reason for delegation is to enable the manager toga There are no qui ie work done. Subordinates help ease the manager's burden by doing majot portions | must understand the xe organization's work, In some instances, a subordinate may have more expertise in addres ‘come to recognize th ing a particular problem than the manager does. For example, the subordinate ma have had | __ develop to the point special training in developing information systems or may be more familiar with a particula | same time, manager product line or geographic area. Delegation also helps develop subordinates. By participa | to their own career, t ing in decision making and problem solving, subordinates learn about overall operations and |__aget who trained the improve their managerial skills | Ultimate responsibili Richard Bransor arts of the Delegation Process In theory, as shown in Figure 14.4, the delegation proces |__within the’Virgin Gi involves three steps. First, the manager assigns responsibility or gives the subordinate a ob]. Records first began, to do, The assignment of responsibility might range from telling a subordinate to prepares] the ability and desir ._ Teport to placing the person in charge of a task force. Along with the assignment, the indivi | Company was becor ual is also given the authority to do the job, The manager may give the subordinate the pows!| split the company i td requisition needed information from confidential files orto dtect a group of other worker: | Branson has contims gement potential a FIGURE 14.4 STEPS IN THE DELEGATION PROCESS '& manager successfully delegate responsiblity to subor Decentraliz: norshouldhe or she fear thatthe sudo | Jost as authority ea ancement is threatened. ns of authority of systemati ned lower-level ma of a continuur = One end of What factors d © Sentinuusa? |‘manager establishes the subordinates accountaility—that is the subordinate Feet ee ilgtcn city oot the tsk signed by thy manege’ For aaione tee Cao af Src wll sgn of for the company on financial performance ony when fe iediceal Aupter responsible fr each unit has certified his or her own results a being secure, The maces that this high level of accountability il hep it soid the Land of secontng il that has hit many busineses in recent firm ® 5 hese three steps donot occur mechanically, however, Indeed, when a manager afd a aborinate have developed a good working relationship the major pre ofthe pene, oy be [ipl aber than stated. The manager may simply mention thats pater ok most be dane . repre eeptive subordinate may realize that the manager is actually assigning the job to hes From meee de ifexperence withthe bos, she may alo know; without being ld what he io toe sees Sdresp tive mt authority to do the job and that she is accountable tothe boss for finishing the job as “agreed troblems in Delegation Unfortunately, problems offen arse in the delegation process. For example, a manager may be reluctant to delegate. Some managers are so disorganized that they ze unable to plan workin advance and, 25 rest cannot delegate appropriately. Similar, some managers may worry that subordinates will do too well and pose a threat to their own advance- ment, And, nally, managers may not trust the subordinate to do the job well. Similaly, some soborinaes are reluctant to accept delegation. They may be afraid tat failure wil result in a reprimand. They may also perceive that there are no rewards for accepting additional responsibil- ly, Orthey may simply prefer to avoid rsk and therfore want thei boss to take all responsiblity ‘There are no quick fixes for these problems. The basic issue is communication. Subordinates ‘ust understand their own responsibilty, authority, and accountability, and the manager must come to recognize the value of effective delegation. With the pasage of time, subordinates should develop to the point at which they can make substantial contributions tothe organization. At the ‘ame time, managers should recggnize tata subordinates saisfctry performance isnot a threat tothe: own career, but an accomplishment by bth the subordinate who did the ob and the man- ‘get who tained the subordinate and was astute enough to ents the subordinate with the project. Unimat responsibilty forthe outcome, however, continues to reside withthe manager. Richard Branson, the founder of Virgin Records and now the owner of over 300 companies withn the Virgin Group, eared the importance of delegation early in his career. When Virgin Records int began, employees had the freedom to take charge of any responsibilities they had theabily and deste to do. However, as the employee count reached 100, Branson feared the ¢ompany was becoming too slow. To maintain employee flexibility but prevent slowdown, he nt | ‘pltthe company in-half and pinpointed talented employees fforn Virgin Records to run it, Branson has continued this strategy as his empire has grown, identifying employees with man- ‘gement potential and fostering employee empowerment through systematic delegation, * CHAPTER 14 Basic Elements of Organizinges ll lll . soe | > PARTS GH Me Orpenizing Provess : | ‘Usually, the greater the complesity and uneeitainty of the ew t ; tendency Ne devenil ve. Another crucial factor is the history of ie ave a tendency to do what they have done in the past aie sore 18 ship between what ary organisation cit in its eatly history Hae fing bude terms of centralization or decentralization, The nature oy av the considered. The costlier and riskier the decisions, the more pres waste on Organisations abo consider the abilities of lower-level managets I lower-level mangge owen fot have the ability to make high:-wality decisions, there is likely to be a high level ra” Muaigeamnens tralzation, IFlowerdevel managers are well qualified, top management can take advente™ erin #0 of their talents by decentraliing: i ft, iftop management does not, talented lowerieey | asic foE Ot managers may leave the organization: nl fiyaite at (Avmanager has no clear-cut guidelines for determining whether lo centtlie or dace, AEE tealize, Many successful organizations such as General Electic and:Tohnton &Johoet, Peganpeslant + are quite decentrilized. Equally siccessul firms, such as. McDonalds an Walmart hog | quendepente” remained centralized, [BM has cecently undergone a transformation from sing a high, | nae AMM! #88 : centralized approach tow much mére decentalized arn’, EEmmMBmees! ‘When you have command and control by managing its operations, A great deal of decision-making sue agmuafonte 18 the top 10 people, you can only do one or i ¥a pase fom the hans of select group of top ene ng dpa pendent, Rese! down to six product and marketing groups, ‘The reason fo two things at a time, The future is about. move was speed the companys saa ne ests 10 eed the company’s ability to make decisions, inw | many BU claboraton and teamwork and making Sse,tew est an rapend ites ncn a utch Shell, long operated ii highly decentralized manne . decisions with a proces: nat offers scale, recently pita ie porate ‘ te a ded t he " JOHN CHAMBERS, CISCO CeO" has also initiated a change to become more centralized” Because of the What are the steps in the delegation process? ‘Under what Grcumstances would you prefer to work in a centralized organi na decentralized organization? enters, ats and loadin, ving and nt To is inc n. As we discuss earlier, job specialization and Unis ad then combining hoe and Pro activities of the department via ru ctivities of each departmen! by coordination — the ization." are interdepe”™ perform their respect"® ‘miore coordinatio® y. There are three Units with Units is pooled