2. 8-2
Learning Objectives
LO 1 Explain how differentiation and integration influence an
organization’s structure.
LO 2 Summarize how authority operates.
LO 3 Define the roles of the board of directors and the chief
executive officer.
LO 4 Discuss how span of control affects structure and
managerial effectiveness.
LO 5 Explain how to delegate effectively.
LO 6 Distinguish between centralized and decentralized
organizations.
LO 7 Summarize the ways organizations can be structured.
LO 8 Identify the unique challenges of the matrix organization.
LO 9 Describe important integrative mechanisms.
5. 8-5
Fundamentals of Organizing
Differentiation
the organization is
composed of many
different units that
work on different
kinds of tasks, using
different skills and
work methods.
Integration
degree to which
differentiated work
units work together
and coordinate their
efforts
6. 8-6
Differentiation
Division of labor
The assignment of
different tasks to
different people or
groups
Specialization
A process in which
different individuals
and units perform
different tasks
9. 8-9
Hierarchical Levels
Hierarchy
The authority levels of the organizational
pyramid
Corporate governance
The role of a corporation’s executive staff and
board of directors in ensuring that the firm’s
activities meet the goals of the firm’s
stakeholders
10. 8-10
Span of Control
Span of control
The number of subordinates who report directly
to an executive or supervisor
Tall, flat
12. 8-12
Delegation
Responsibility
The assignment of a task that an employee is
supposed to carry out
Accountability
The expectation that employees will perform a
job, take corrective action when necessary, and
report upward on the status and quality of their
performance
13. 8-13
Advantages of Delegation
Leverages managers’ energy and talent
Allows managers to accomplish more than they
could on their own
Helps develop effective subordinates.
Promotes a sense of being an important,
contributing member of the organization, so
employees tend to feel a stronger commitment,
perform their tasks better, and engage in more
innovation
15. 8-15
Decentralization
Centralized
organization
An organization in
which high-level
executives make
most decisions and
pass them down to
lower levels for
implementation
Decentralized
organization
An organization in
which lower-level
managers make
important decisions
16. 8-16
The Horizontal Structure
Line departments
Units that deal
directly with the
organization’s
primary goods and
services
Staff departments
Units that support
line departments
18. 8-18
Advantages of Functional
Organizations
1. Economies of scale can be realized
2. Monitoring of the environment is more effective
3. Performance standards better maintained
4. Greater opportunity for specialized training and skill
development
5. People have greater opportunity for specialized
training and in-depth skill Development
6. Decision making and lines of communication are
simple and clearly understood
20. 8-20
Advantages of the
Product Approach
1. Information needs are managed more easily
2. People have a full-time commitment to a
particular product line
3. Task responsibilities are clear
4. People receive broader training
22. 8-22
The Matrix Organization
Matrix organization
An organization composed of dual reporting
relationships in which some managers report to
two superiors—a functional manager and a
divisional manager
27. 8-27
The Network Organization
Dynamic network
Temporary
arrangements among
partners that can be
assembled and
reassembled to
adapt to the
environment
Broker
A person who
assembles and
coordinates
participants in a
network
28. 8-28
Coordination by Standardization
Standardization
Establishing common
routines and
procedures that
apply uniformly to
everyone.
Formalization
The presence of rules
and regulations
governing how
people in the
organization interact.
30. 8-30
Coordination by Mutual Adjustment
Coordination by
mutual adjustment
Units interact with
one another to make
accommodations to
achieve flexible
coordination
31. 8-31
Reducing the Need for Information
Slack resources
extra resources on
which organizations
can rely in a pinch so
that if they get
caught off guard,
they can still adjust
Creating self-
contained tasks
changing from a
functional
organization to a
product or project
organization and
giving each unit the
resources it needs to
perform its task
32. 8-32
Increasing Information-Processing
Capability
1. Direct contact among managers who share a problem
2. Liaison roles to handle communication between two
departments
3. Task forces brought together temporarily to solve a
common problem
4. Teams, or permanent interdepartmental decision-
making groups
5. Product, program, or project managers
6. Matrix organizations