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Chapter 7
Organization, Teamwork, and Communication
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Learning Objectives
7-1 Explain the importance of organizational culture.
7-2 Describe how organizational structures develop.
7-3 Describe how specialization and departmentalization help an organization achieve its goals.
7-4 Determine how organizations assign responsibility for tasks and delegate authority.
7-5 Compare and contrast some common forms of organizational structure.
7-6 Distinguish between groups and teams.
7-7 Identify the types of groups that exist in organizations.
7-8 Describe how communication occurs in organizations.
7-9 Analyze a business’s use of teams.
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Organizational Culture
Organizational culture—A firm’s shared values, beliefs, traditions, principles, rules, and role models for behavior.
Formal culture.
Mission statement.
Codes of ethics.
Memos, manuals, and ceremonies.
Informal culture.
Dress codes and work habits.
Extracurricular activities and stories.
Discussions with co-workers.
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Also called corporate culture, an organizational culture exists in every organization, regardless of size, organizational type, product, or profit objective.
When values are shared by all members of an organization, they will be expressed in its relationships with customers.
Organizational culture helps ensure that all members of a company share values and suggests rules for how to behave and deal with problems within the organization.
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Organizational Culture at Zappos
The Zappos tagline “Powered by Service” emphasizes the company’s focus on its customers.
Jonathan Weiss/Alamy Stock Photo
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POLLING QUESTION 1
Which of the following statements is TRUE?
A. A code of ethics is a formal expression of culture.
B. When values are shared by all members of an organization, they cannot be expressed in its relationships with customers.
C. Organizational culture is a visual display of the organizational structure.
D. Discussions with coworkers are a formal expression of culture.
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Answer: A. A code of ethics is a formal expression of culture.
A firm’s culture may be expressed formally through its mission statement, goals, codes of ethics, memos, manuals, and ceremonies, but it is more commonly expressed informally.
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Developing Organizational Structure
Structure—The arrangement of positions within an organization.
Structure is developed when:
Managers assign work tasks to specific individuals or groups.
Coordinate activities to reach the firm’s objectives.
Organizational chart—Visual display of the organization’s structure.
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Rarely is an organization, or any group of individuals working together, able to achieve common objectives without some form of structure, whether that structure is explicitly defined or only implied.
Growth requires organizing—the structuring of human, physical, and financial resources to achieve objectives in an effective and efficient manner. Growth necessitates hiring people who have specialized skills. With more people and greater specialization, the organization needs to develop a formal structure to function efficiently.
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Figure 7.1 The Evolution of a Clothing Store, Phases 1, 2, and 3
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The best way to begin to understand how organizational structure develops is to consider the evolution of a new business such as a clothing store. At first, the business is a sole proprietorship in which the owner does everything—buys, prices, and displays the merchandise; does the accounting and tax records; and assists customers. As the business grows, the owner hires a salesperson and perhaps a merchandise buyer to help run the store. As the business continues to grow, the owner hires more salespeople. The growth and success of the business now require the owner to be away from the store frequently, meeting with suppliers, engaging in public relations, and attending trade shows. Thus, the owner must designate someone to manage the salespeople and maintain the accounting, payroll, and tax functions. If the owner decides to expand by opening more stores, still more managers will be needed.
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Assigning Tasks 1
Specialization—the division of labor into small, specific tasks and the assignment of employees to do a single task.
Reasons to specialize:
Efficiency.
Workers do not waste time shifting from one job to another.
Training is easier.
Overspecialization can have negative effects.
Boredom.
Dissatisfaction.
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For a business to operate, its managers must first determine what activities are required to achieve its goals and objectives. After identifying all activities that must be accomplished, managers then break these activities down into specific tasks that can be handled by individual employees.
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Assigning Tasks 2
Departmentalization—The grouping of jobs into working units usually called departments, units, or divisions.
Common ways to departmentalize:
By function.
By product.
By geographic region.
By customer.
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After assigning specialized tasks to individuals, managers and teams doing similar jobs are organized into groups.
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Functional Departmentalization
The grouping of jobs that perform similar functional activities, such as finance, manufacturing, marketing, and human resources.
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Each of these functions is managed by an expert in the work done by the department.
A weakness of functional departmentalization is that because it tends to emphasize departmental units rather than the organization as a whole, decision making that involves more than one department may be slow, and it requires greater coordination. Departments need to be synchronized to achieve goals. Thus, as businesses grow, they tend to adopt other approaches to organizing jobs.
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Product Departmentalization
The organization of jobs in relation to the products of the firm.
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Each division develops and implements its own product plans, monitors the results, and takes corrective action as necessary. Functional activities—production, finance, marketing, and others— are located within each product division. Consequently, organizing by products duplicates functions and resources and emphasizes the product rather than achievement of the organization’s overall objectives. However, it simplifies decision making and helps coordinate all activities related to a product or product group.
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Geographic Departmentalization
The grouping of jobs according to geographic location, such as state, region, country, or continent.
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Organizing by region requires a large administrative staff and control system to coordinate operations, and tasks are duplicated among the different regions.
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Departmentalization at Coca-Cola
The Coca-Cola Company has four operating regions: Asia Pacific; Europe, Middle East & Africa; Latin America; and North America.
Testing/Shutterstock
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Customer Departmentalization
The grouping of jobs around the needs of various types of customers.
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This allows companies to address the unique requirements of each group.
Customer departmentalization, like geographical departmentalization, does not focus on the organization as a whole and therefore requires a large administrative staff to coordinate the operations of the various market segments.
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Assigning Responsibility 1
Delegation of authority—Not only giving tasks to employees, but empowering them to do whatever is necessary to carry out those tasks.
As a business grows, so do the number and complexity of decisions that must be made.
No one manager can handle them all.
Responsibility.
Accountability.
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Delegation also gives a responsibility, or obligation, to employees to carry out assigned tasks satisfactorily and holds them accountable for the proper execution of their assigned work.
The principle of accountability means that employees who accept an assignment and the authority to carry it out are responsible to a superior for the outcome. While there can be delegation of authority with employee responsibility, the manager delegating still is accountable for oversight of the final result.
The process of delegating authority establishes a pattern of relationships and accountability between a superior and subordinates.
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Assigning Responsibility 2
Degree of centralization—Extent to which authority is delegated throughout an organization.
Centralized organizations.
Authority is concentrated at the top; little decision-making delegated to lower levels.
Decentralized organizations.
Decision-making authority delegated as far down the chain of command as possible.
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Businesses tend to be more centralized when the decisions to be made are risky and when low-level managers are not highly skilled in decision making.
Overcentralization can cause serious problems for a company, in part because it may take longer for the organization as a whole to implement decisions and to respond to changes and problems on a regional or national scale.
Decentralization is characteristic of organizations that operate in complex, unpredictable environments. Businesses that face intense competition often decentralize to improve responsiveness and enhance creativity.
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Centralized Organizations
The United States Postal Service is a centralized organization which limits routine business decisions post offices can make.
Jonathan Weiss/Shutterstock
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Assigning Responsibility 3
Span of management—The number of subordinates who report to a particular manager.
Wide span of management.
Exists when a manager directly supervises a very large number of employees.
Narrow span of management.
Exists when a manager directly supervises only a few subordinates.
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How many subordinates should a manager manage? There is no simple answer.
Narrow spans of management are typical in centralized organizations, while wide spans of management are more common in decentralized firms.
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Assigning Responsibility 4
Organizational structure—The levels of management in an organization.
A company with many levels is considered tall.
Span of management is narrow.
A company with few levels is considered flat.
Span of management is wide.
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Because there are more managers in tall organizations than in flat organizations, administrative costs are usually higher. Communication is slower because information must pass through many levels.
Many of the companies that have decentralized also flattened their structures and widened their spans of management, often by eliminating levels of middle management.
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Figure 7.3 Span of Management: Wide Span and Narrow Span
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A company with many levels of managers is considered tall or hierarchical; in a tall organization, the span of management is narrow (Figure 7.3).
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POLLING QUESTION 2
Sweta has 150 employees who report to her. These 150 employees would be classified as her _____.
A. Span of management.
B. Span of employees.
C. Governing body.
D. Governing employees.
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Answer: A. Span of management
Sweta is responsible for all 150 employaees. They are a part of her span of management.
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Forms of Organizational Structure 1
Line structure.
Simplest organizational structure.
Direct lines of authority extend from top management to employees at the lowest levels.
Most common in small businesses.
Line-and-staff structure.
Traditional line relationship between superiors and subordinates.
Specialized managers assist line managers.
May experience problems with overstaffing, ambiguous lines of communication.
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Along with assigning tasks and the responsibility for carrying them out, managers must consider how to structure their authority relationships—that is, what structure the organization itself will have and how iat will appear on the organizational chart.
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Figure 7.4 Line Structure
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Figure 7.5 Line-and-Staff Structure
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Forms of Organizational Structure 2
Multidivisional structure.
Organizes departments into larger groups called divisions.
Permits delegation of decision-making authority.
Inevitably creates work duplication.
Restructure.
Matrix structure.
Sets up teams from different departments; creates two or more intersecting lines of authority.
Provides flexibility, enhanced cooperation, creativity.
Generally expensive and complex.
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As companies grow and diversify, they may need to restructure, or change the basic structure of an organization. Growing firms tend to restructure into the divisionalized form.
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Figure 7.6 Matrix Structure
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The Role of Groups and Teams in Organizations 1
All teams are groups, but not all groups are teams.
Group.
Two or more individuals who communicate with one another, share a common identity, and have a common goal.
Team.
Small group whose members have complementary skills; have a common purpose, goals and approach; and hold themselves accountable.
Virtual teams.
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Regardless of how they are organized, most of the essential work of business occurs in individual work groups and teams, so we’ll take a closer look at them now. There has been a gradual shift toward an emphasis on teams and managing them to enhance individual and organizational success. Some experts now believe that highest productivity results only when groups become teams.
Think of a team like a sports team. Members of a basketball team have different skill sets and work together to score and win the game.
The purpose of teams should be toward collaboration versus collectivism.
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Table 7.1 Differences between Groups and Teams
| Working Group | Team |
| Has strong, clearly focused leader | Has shared leadership roles |
| Has individual accountability | Has individual and group accountability |
| Has the same purpose as the broader organizational mission | Has a specific purpose that the team itself delivers |
| Creates individual work products | Creates collective work products |
| Runs efficient meetings | Encourages open-ended discussion and active problem-solving meetings |
| Measures its effectiveness indirectly by its effects on others (for example, financial performance of the business) | Measures performance directly by assessing collective work products |
| Discusses, decides, and delegates | Discusses, decides, and does real work together |
Source: Robert Gatewood, Robert Taylor, and O. C. Ferrell, Management: Comprehension Analysis and Application (New York: McGraw-Hill Education, 19 95), p. 427.
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The Role of Groups and Teams in Organizations 2
Committees.
Permanent, formal group that performs a specific task.
Task forces.
Temporary group of employees responsible for bringing about a particular change.
Membership based on expertise rather than position.
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The Role of Groups and Teams in Organizations 3
Teams.
Project teams.
Product-development teams.
Quality-assurance teams (quality circles).
Self-directed teams (S D T).
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Teams are becoming far more common in the U.S. workplace as businesses strive to enhance productivity and global competitiveness. In general, teams have the benefit of being able to pool members’ knowledge and skills and make greater use of them than can individuals working alone.
Project teams are similar to task forces, but normally they run their operation and have total control of a specific work project.
Product-development teams are a special type of project team formed to devise, design, and implement a new product.
Quality-assurance teams, sometimes called quality circles, are fairly small groups of workers brought together from throughout the organization to solve specific quality, productivity, or service problems.
A self-directed team (SDT) is a group of employees responsible for an entire work process or segment that delivers a product to an internal or external customer. SDTs permit the flexibility to change rapidly to meet the competition or respond to customer needs.
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Communicating in Organizations 1
Formal and Informal Communication.
Formal communication channels.
Intentionally defined.
Designed by the organization.
Informal organization.
Consists of friendships and other nonwork social relationships.
The grapevine is the most significant informal type of communication.
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Formal channels of communication are intentionally defined and designed by the organization. They represent the flow of communication within the formal organizational structure, as shown on organizational charts.
Managers can turn the grapevine to their advantage. Using it as a “sounding device” for possible new policies is one example. Managers can obtain valuable information from the grapevine that could improve decision making.
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Figure 7.7 The Flow of Communication in an Organizational Hierarchy
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Communication within an organization can flow in a variety of directions and from a number of sources, each using both oral and written forms of communication. The success of communication systems within the organization has a tremendous effect on the overall success of the firm. Communication mistakes can lower productivity and morale.
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Table 7.2 Types of Formal Communication
| Type | Definition | Examples |
| Upward | Flows from lower to higher levels of the organization | Progress reports, suggestions for improvement, inquiries, grievances |
| Downward | Traditional flow of communication from upper organizational levels to lower organizational levels | Directions, assignments of tasks and responsibilities, performance feedback, details about strategies and goals, speeches, employee handbooks, job descriptions |
| Horizontal | Exchange of information among colleagues and peers on the same organizational level, such as across or within departments, who inform, support, and early on coordinate activities both within the department and between other departments | Task forces, project teams, communication from the finance department to the marketing department concerning budget requirements |
| Diagonal | When individuals from different levels and different departments communicate | A manager from the finance department communicates with a lower-level manager from the marketing department |
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Communicating in Organizations 2
Monitoring Communications.
Technological advances and increased use of electronic communication have made monitoring communications in the workplace necessary.
Failure to monitor employees’ use of technology can be costly.
Artificial intelligence (A I) is significantly impacting workplace monitoring, benchmarking, and understanding how employees feel about their jobs.
More than 40 percent of employers globally have implemented A I processes.
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Many companies require that employees sign and follow a policy on appropriate internet use. These agreements often require that employees will use corporate computers only for work-related activities. Theft of time is a major ethical issue that can hurt employee productivity.
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POLLING QUESTION 3
Managers at Alpha Beta Corporation have noticed a significant drop in productivity at its call center. They attribute this to employees using social media on their smartphones while on the clock. In your opinion, what is the best option to handle this?
A. Implement a zero smartphone use policy.
B. Allow smartphone usage for employees who consistently reach daily goals.
C. Only allow smartphone usage during breaks or lunch.
D. Establish a specific area where smartphone usage is allowed.
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Student answers will vary. Students should discuss the pros and cons for each one. Millennials and Gen Zs often consider smartphone usage a right – not a privilege. Eliminating or severely constraining their instant access to social media often causes disgruntlement. From a manager’s perspective, it increases productivity. Students should consider the following points.
Benefits:
Fewer distractions = increased productivity
Managers focus on work instead of berating employees
Written guidelines create a structured environment
Drawbacks:
Employee disgruntlement
Potentially lower company morale with additional policies and procedures
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Communicating in Organizations 3
Improving Communication Effectiveness.
Encourage employees to provide feedback, even if it is negative.
Encourage mangers to listen.
Avoid interruptions.
Develop strong and effective communication channels and communicate policies throughout the organization.
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Without effective communication, the activities and overall productivity of projects, groups, teams, and individuals will be diminished.
Business professionals should consider the best way to integrate communication technology into workflows.
Communication is necessary in helping every organizational member understand what is expected. Many business problems can be avoided if clear communication exists within the company.
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Solve the Dilemma Quest Star in Transition 1
Quest Star (Q S), which manufactures voice assistance devices, wants to improve its ability to compete against Japanese Arms.
Q S Intracommunication Leadership Initiative (I L I) flattened the levels of management.
Uses teams and peer pressure to accomplish the plant’s goals instead of multiple management levels.
Employees make all decisions within the boundaries of their responsibilities.
Elect team representatives to coordinate with other teams.
Teams are assigned tasks ranging from establishing policies to evaluating on-the-job safety.
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This Solve the Dilemma is taken from Chapter 7, Learning Objective 7-8.
Quest Star (QS), which manufactures voice assistant devices, wants to improve its ability to compete against Japanese Arms. Accordingly, the company has launched a comprehensive quality-improvement program for its Iowa plant. The QS Intracommunication Leadership Initiative (ILI) has flattened the levels of management. The program uses teams and peer pressure to accomplish the plant’s goals instead of multiple management levels with their limited opportunities for communication. Under the initiative, employees make all decisions within the boundaries of their responsibilities, and they elect team representatives to coordinate with other teams. Teams are also assigned tasks ranging from establishing policies to evaluating on-the-job safety.
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Solve the Dilemma Quest Star in Transition 2
Things to consider.
Employees who are not self-motivated team players are having difficulty getting used to their peers’ authority within the system.
Upper-level managers face stress and frustration because they must train workers to supervise themselves.
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However, employees who are not self-motivated team players are having difficulty getting used to their peers’ authority within this system. Upper-level managers face stress and frustration because they must train workers to supervise themselves.
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Solve the Dilemma Quest Star in Transition 3
Critical Thinking Questions.
What techniques or skills should an employee have to assume a leadership role within a work group?
If each work group has a team representative, what problems will be faced in supervising these representatives ?
What are the pros and cons of the system developed by Q S?
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Answers:
To assume a leadership role within a work group, an employee should have very good technical knowledge of the tasks conducted by the team. This individual should also have some conceptual skills in order to relate to the various activities performed within the group. Finally, human relations skills are necessary for the leader to provide information to the rest of the group and for the members of the group to give feedback to their leader.
Each team representative is likely to defend the interests of their own group and to neglect the actions that may favor the performance of the other groups. In other words, the degree of team collaboration is likely to be low.
The program introduced by QS is likely to lead to greater employee involvement, innovation, improved collaboration among employees of each team, and employees’ enhanced sense of accomplishment. Overall, it is likely to increase the firm’s productivity and competitiveness. The cons, however, are that employees have to learn how to supervise themselves, something they were not used to doing under the old system. As a result, they are having difficulty getting used to their peers’ authority under the new system. Training programs are necessary to teach employees how to supervise themselves and work together in teams.
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