Nonverbal Feedback and Virtual Organizations

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Organizational Behavior Second Edition

Donald Baack Pittsburg State University

Editor in Chief, AVP: Steve Wainwright

Sponsoring Editor: Greer Lleuad

Senior Development Editor: Rebecca Paynter

Development Editors: Sophia Hart, Catharine Thomson, Taylor Holmes

Editorial Assistant: Taylor Holmes

Research Assistant: David Baack

Production Editor: Julie Mashburn

Media Editor: Jaime LeClair

Media Content Writer: Bill Davis

Copyeditors: Douglas Geary, Hannah Wertheimer

Illustrator: Steve Zmina

Photo Researcher: Taylor Holmes

Cover Design: Tara Mayberry

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Cover Image: Ikon Images/ Ikon Images/ SuperStock

ISBN-13: 978-1-62178-363-3

Copyright © 2017 Bridgepoint Education, Inc.

All rights reserved.

GRANT OF PERMISSION TO PRINT: The copyright owner of this material hereby grants the holder of this publication the right to print these materials for personal use. The holder of this material may print the materials herein for personal use only. Any print, reprint, reproduction or distribution of these materials for commercial use without the express written consent of the copyright owner constitutes a violation of the U.S. Copyright Act, 17 U.S.C. §§ 101-810, as amended.

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About the Author

Donald Baack

Dr. Donald Baack is a professor of management at Pittsburg State University, Pittsburg, Kansas. He has an undergraduate degree from Dana College, an MBA from Southwest Missouri State University, and a PhD from the University of Nebraska.

Dr. Baack teaches undergraduate level organizational theory and behavior, advanced organizational behavior, and graduate level behavior management. He has received awards for both teaching and research. He is af�iliated with the Southwest Academy of Management and the Nebraska Economics and Business Association.

Dr. Baack is the author or coauthor of 17 books, including college textbooks in the areas of management, healthcare management, management communication, international marketing, and integrated marketing communications. He has written a high school textbook for students studying international business and three books that are for the general public. Dr. Baack has written over 100 professional journal articles and conference papers. He previously served as consulting editor for Pittsburg State's Journal of Managerial Issues.

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Acknowledgments A big thank you to Taylor Holmes for her guidance and contributions, as well as the efforts of the talented editorial team at Bridgepoint Education who directed the preparation of this edition. Also, thanks to Anna Lustig for providing this opportunity. I was fortunate to have an excellent group of reviewers who provided vital insights and important suggestions. They are:

Brian Divita, Aquinas College

Charlene Anderson, Ashford University

James Moore, Ashford University

John Bathke, Ashford University

Kurt Stuke, Ashford University

Linda Turner, Morrisville State College

Maja Zelihic, Ashford University

Michael Toney, Ashford University

Pamela Gordon, Ashford University

Stephanie Kern, Ashford University

Terrill L. Frantz, Carnegie Mellon University

I am deeply indebted to John Szylagyi, who introduced me to the team at Bridgepoint. Our casual conversation in 2011 led to several wonderful new opportunities. I would also like to express appreciation to Steve Wainwright for having the con�idence in me to work on this book as well as other projects.

Finally, my gratitude goes to my wife, Pamela, for her patience on the many days when I said it was necessary to work instead of tending to other household chores. Pam is my constant source of inspiration and love.

This book is dedicated to Joseph Baack (Joey) and Thomas Baack (Tommy), my two red-headed grandsons who give me such great joy.

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Preface Organizational Behavior, Second Edition, guides students toward a deeper understanding of organizational topics such as team dynamics, organizational structure, motivations, leadership, power, and change management. Using research from the �ield, the text reinforces familiar concepts, discusses contemporary theories, and encourages students to apply these ideas with case studies and analytical exercises. Students will learn to think critically about organizational behavior theories and will learn how to apply them in an increasingly technological and globalized world.

Textbook Features

Organizational Behavior, Second Edition, includes various features to help students understand core concepts:

OB in Action feature boxes include stories and examples that highlight organizational behavior in the lives of business professionals, in companies, and with relation to current events.

Comprehension exercise interactives appear at the end of each section, and include two to three review questions to boost students' critical understanding of chapter content.

Case study feature boxes present students with organizational scenarios that they must evaluate using the case questions included at the end of each study.

Review questions provide an opportunity for students to review and think critically about the topics covered in the chapters.

Analytical exercises at the end of each chapter give students the opportunity to critically assess and apply topics covered in the text.

Key terms list and de�ine concepts discussed in each chapter.

Videos highlight and elaborate on various concepts presented in the text.

Interactive media scenarios guide students through organizational scenarios and ask them to make critical assessments and decisions.

Accessible Anywhere. Anytime.

With Constellation, faculty and students have full access to eTextbooks at their �ingertips. The eTextbooks are instantly accessible on web, mobile, and tablet.

iPhone To download the Constellation iPhone or iPad app, go to the App Store on your device, search for "Constellation for Ashford University," and download the free application. You may log in to the application with the same username and password used to access Constellation on the web.

NOTE: You will need iOS version 7.0 or higher.

Android Tablet and Phone To download the Constellation Android app, go to the Google Play Store on your Android Device, search for "Constellation for Ashford University," and download the free application. You may log in to the Android application with the same username and password used to access Constellation on the web.

NOTE: You will need a tablet or phone running Android version 2.3 (Gingerbread) or higher.

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10Organizational Design and Change

Skarie20/iStock/Thinkstock

Learning Objectives

After reading this chapter and studying the materials, you should be able to:

Identify the basic elements of the organizing process. Recognize and implement the primary elements of organizational structure. Structure an organization in the manner that best suits ef�icient and effective operations. Discuss how to respond to organization changes and redesign.

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For many companies, it is necessary to continuously assess the ef�iciency of operations with environmental changes —both global and domestic—in mind.

Swyz/iStock/Thinkstock

10.1 The Nature of Organizational Structure A great deal of the subject matter associated with organizational behavior concentrates on individuals and groups. For a company to succeed, however, company leaders must also address larger issues. A company should be structured in a manner that facilitates the type of operations involved. This chapter �irst examines the basics of the organizing managerial function and organizational design and then explores newer design options.

The second section of this chapter offers various explanations regarding the reasons companies are structured in different ways and notes the causes of organizational structure. An example of this type of change is provided in the OB in Action box regarding ITC Holdings Corp. The chapter continues with an analysis of the impact of organizational structure on individual workers and the roles they play. Finally, the chapter concludes with a discussion about the nature of organizational change and redesign.

OB in Action: ITC Holdings Corporation

Based in Novi, Michigan, ITC Holdings Corporation (NYSE: ITC) is the nation's largest independent electric transmission company. The company's primary business includes investments in electric transmission grids. Key organizational goals are to "improve reliability, expand access to markets, lower the overall cost of delivered energy and allow new generating resources to interconnect to its transmission systems" (ITC Holdings Corporation, 2017).

Four major parts of the ITC operations are ITC Transmission, Michigan Electric Transmission Company, ITC Midwest, and ITC Great Plains. These subsidiaries allow ITC to own and operate high-voltage transmission facilities in seven states in the Midwest and upper Midwest.

Recently, the company's top management team directed the reorganization of its structure to adapt to an evolving environment. Joseph L. Welch, chairman, president and CEO of ITC, announced, "In recognition of the robust transmission development landscape, this reorganization offers additional �lexibility to ensure we have dedicated resources available to take advantage of development opportunities without detracting focus from our core operating entities" (ITC Holdings Corporation, 2017).

The primary areas involved in the reorganization were in the business centers associated with (1) ITC's four regulated companies, or its original core, (2) U.S. Regulated Grid Development, (3) International and Merchant Development, and (4) Information Technology.

The U.S. Regulated Grid Development sector was enhanced to help ITC grow and expand through new investments in regulated electric transmission infrastructure across the United States. This includes efforts to expand in areas where signi�icant transmission system improvements are needed.

The International and Merchant Development center was designed to focus on driving the company's growth and expansion internationally and domestically through merchant and other commercial development opportunities. The �inal area, Information Technology, was emphasized in the reorganization due to heightened concerns regarding cyber security.

In today's more sophisticated technological environment, many organizations have identi�ied the need to create or redesign structures which assist in managing new innovations and changes in the environment. In this case, Joseph L. Welch concluded, "[The reorganization] also leverages the bench strength of the company's leadership team as we continue to chart a course for continued operational excellence, growth, and sustainability."

Re�lection and Application Questions

1. Do you think creating "silos" of separate operating divisions would work in every type of company? Why or why not? 2. What types of challenges might ITC face using the redesigned structure when entering countries with different power systems, such as France,

which uses direct rather than alternating current in its grid? 3. Should this company be directed by a strong, centralized form of authority with all decisions made at the top, or should decisions be delegated to

managers at lower ranks throughout the organization?

Organizations, Organizing, and Organizational Structure

Before considering the methods by which companies can be constructed, a distinction should be made between the terms "organization," "organizational structure," and "organizing." An organization, according to Barnard (1938/1968), is a system of consciously coordinated activities or forces of two or more persons. Table 10.1 summarizes the de�ining characteristics of an organization.

Note that Table 10.1 does not specify "making pro�it" as an organizational characteristic. Many organizations do not set pro�it goals. There are three types of organizations: pro�it seeking, nonpro�it, and governmental. All three receive or generate revenues, but only the �irst group attempts to make pro�its from those revenues.

Organizational structure is the manner in which organizational tasks are formally divided, grouped, and coordinated. Organizing is a managerial process which involves the deployment of organizational resources designed to achieve strategic objectives. Organizing includes the division of labor, the creation of departments, and the establishment of formal lines of authority (Gomez-Mejia, Balkin, & Cardy, 2005).

The standard elements involved in organizing include job design, departmentalization, and the creation of lines of authority and responsibility, as described in the upcoming sections. In essence, organizing is the process of designing organizational structure along with other components of organizational operations.

Table 10.1: De�ining characteristics of organizations Characteristic Description

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Two or more people Organizations consist of a minimum of two persons but may have thousands

Social setting Regular interactions take place

Division of labor Jobs or tasks are divided among employees

Hierarchy of authority Managers supervise employees

Coordination of activities Standard management functions take place

Common purpose or goal A shared outcome is de�ined

Job Design

Managers and members of the human resource department typically complete the process of job design. As Chapter 5 noted, the steps involved in job design include job analysis, job description, and job speci�ication. Table 10.2 outlines the basics of job design (Mathis & Jackson, 2011). The table describes methods that can be used for each aspect of job design. A job analysis, for example, can be conducted through the processes of experimentation, comparison, and re�lective planning. Experimentation is assigning tasks to jobs in various ways on a trial basis to see which are most ef�icient and effective. A job speci�ication identi�ies the primary selection criteria that will be used in the hiring process.

Table 10.2: Elements of job design Job analysis methods Example(s)

Experimentation Trying different methods of doing a job to �ind the manner that is most ef�icient (a time and motion study)

Comparison Consulting the Dictionary of Occupational Titles (DOT) Making contacts with other companies

Re�lective planning Considering job components and specifying tasks

Job Description Providing a company manual or handbook Including a description on the company web site

Job speci�ication education experience special skills needed personality characteristics legal requirements

High school diploma or college degree Number of years, speci�ic type of experience Physical strength, math, computer software, public speaking Outgoing, self-starter, motivated Equal Employment Opportunity statement

One of the primary topics associated with job design, work specialization or division of labor, describes the degree to which activities in an organization are subdivided into separate jobs (Vitez, 2011). In manufacturing and other industries, workers often perform highly specialized, routine, repeated tasks. The bene�its of such an approach include greater ease of training and replacing workers, as well as higher productivity levels (Rosen, 1983; Smith, 1776). Henry Ford was among the �irst to take advantage of specialization of labor in the early 1900s. His assembly line revolutionized the production process for automobiles.

Several problems are associated with repetitive tasks, including the symptoms of employee dissatisfaction (Clegg, 1983). Companies using division of labor are more likely to experience a workforce characterized by higher levels of absenteeism, tardiness, turnover, accidents, grievances, vandalism, and self-destructive acts (alcohol and substance abuse). Consequently, organizational leaders employ high levels of specialization of labor only in carefully chosen circumstances and/or use programs such as job rotation, job enlargement, and job enrichment to help maintain worker morale.

Departmentalization

Departmentalization is placing jobs into logical groups (departments). Departmentalization involves constructing departments or divisions in which similar jobs are located together, such as accounting, marketing, or production. Departments can exhibit simple functional designs or more complex arrangements. Table 10.3 summarizes the various types of departmentalization and where each is most likely to be found (Daft, 2008).

Table 10.3: Types of departmentalization Departmentalization by Found in

Function Small, single product/service �irms

Product Growing, few-product companies

Process Firms with complex operating processes

Customer Firms selling the same product to diverse customers

Geographic region Branch banking, retail chains, franchise operations

Strategic business unit Conglomerates

Matrix High-tech �irms, multinational companies

Departmentalization by Function Departmentalization by function best suits small companies that offer one main good or service. For example, a small local newspaper's functional departments would include sales (circulation, advertising), production (the content and the physical newspaper), accounting, and human resources. Figure 10.1 presents a simpli�ied organization chart for a local newspaper using the functional approach. The top-level manager in the company maintains control and works with individual department managers who are responsible for speci�ic occupations or tasks (Mintzberg, 1979).

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Figure 10.1: Departmentalization by function in a local newspaper

In many small companies, departments perform speci�ic functions and activities.

Departmentalization by Product Multiproduct �irms often take advantage of departmentalization by product. Figure 10.2 provides an example. Johnson & Johnson divides its operations along product lines, including Acuvue®, Band-Aid®, Tylenol®, and Neutrogena®. In the 1900s, managers at General Motors and DuPont discovered that growth and expansion of product lines required a structural form designed to facilitate the special needs of individual products (Allen, 1958). Departmentalization by product meets these needs and demands (Ronson, Hinings, & Greenwood, 1980).

Figure 10.2: Departmentalization by product

A company that offers many products may assign employees to departments based on those products.

Departmentalization by Process Complex operations can be well served by the process form of departmentalization (Jackson & Morgan, 1982). As an example, Alcoa Inc. operates a tubing plant in one of its aluminum manufacturing operations. The �ive major departments at the plant are casting, press, tubing, �inishing, and product inspection (including packing and shipping goods). Each step in the process requires unique job skills, yet these activities need to be coordinated seamlessly as the work �lows from one department or process to the next. Figure 10.3 displays a process form of departmentalization for Alcoa.

Figure 10.3: Departmentalization by process

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Complex organizations may departmentalize according to the processes individual units perform.

Departmentalization by Customer When companies offer the same product to divergent customers, departmentalization by customer allows for specialization based on customer differences (Koonz & O'Donnell, 1976). Microsoft has established departments for individual customers, small businesses, large corporations, and software developers. Dell Computers has three distinct groups of customers: other businesses (industrial sales), the government, and individual consumers. As Figure 10.4 shows, the operation can be designed to accommodate those customers. This form of structure optimizes service to each group of customers. In the case of Dell, individual customers purchase online or at the retail store. Businesses make purchases at trade shows or through a purchasing department. Governments create speci�ic purchasing procedures that must be followed. The three groups also have different service needs, such as repair contracts.

10.4: Departmentalization by customer

Departmentalization based on customers is common in companies that offer the same product to divergent market channels or clients.

Departmentalization by Geographic Area Geographic area departmentalization is also known as parallel departmentalization (see Figure 10.5). The company is divided by territories or regions, and departments are known by terms such as "district," "zone," or "area." In these organizations, the levels in the organizational hierarchy contain managers doing the same things in different places, such as bank branches or fast-food locations. This type of structure makes it possible to tailor managerial efforts to territorial differences. For example, a Kmart retail store in Texas sells some items during the winter months that are different from those sold in Michigan; however, the departmental names remain the same. A food chain such as Hardee's may offer region-speci�ic menu items based on area tastes, but the same basic plans and tactics are used in all stores.

Figure 10.5: Departmentalization by geographic area

In departmentalization by geographic area, the company may be divided into districts or zones, and a team performs the same functions in each district.

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Departmentalization by Strategic Business Units Large, multiproduct conglomerate corporations may create strategic business units. Large departments consist of clusters of activities that are typically held together by a common thread, such as a product type or type of customer served. A strategic business unit will be analyzed as a "company within the company" (London South East, 2011). Many major corporations align strategic business units by products, customers, geographic region, manufacturing methods, or other common elements identi�ied by top level managers.

Figure 10.6: Departmentalization by strategic business units

Strategic business units are found most often in large conglomerate corporations. Each unit is united by a common thread or goal.

Strategic business units permit the top management team to allow unit managers discretion in establishing goals and conducting operations. Ef�iciencies result from limiting duplication of activities, such as human resources, accounting, and other staff functions. One department can serve the entire organization across all strategic business units.

Departmentalization by Matrix Matrix organizations are sometimes known as two-boss systems, because each employee answers to a functional area supervisor as well as a product manager (see Figure 10.7). Matrix organizations create circumstances in which maximum �lexibility and adaptability in operations are possible. The structure was often used by �irms selling products to governmental agencies, most notably NASA, during the past century. A functional manager can assign specialists to products demanding the greatest amount of attention at any given time. Consequently, some workers are asked to adjust to change and accept some role ambiguity as part of the daily routine. The tasks they work on tend to vary (Davis & Lawrence, 1978).

Figure 10.7: Departmentalization by matrix

In departmentalization by matrix, each employee reports to both a product manager (shown here in the left column) and a functional area manager (shown on the top row).

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A matrix organization can create unnecessary competition between product managers, because each manager will request the best functional specialists. Conversely, it can also facilitate better communication throughout the organization, due to regular interactions between functional and product managers (Burns & Wholey, 1993).

One way to adapt the matrix organization is to design the company by product and by country. Products must often be adapted when moved into new areas, due to differences in electrical systems (AC versus DC) and in measurements such as ounces versus grams. Product managers are asked to identify national differences and help adapt production systems, marketing programs, and other activities to the new circumstances, as displayed in Figure 10.8.

Figure 10.8: International departmentalization by matrix

International departmentalization by matrix is similar to typical matrix organizations, except that instead of a manager for each functional area, there is a manager for each country.

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In summary, organizations are structured in various ways. If jobs are designed based on the product and technologies involved, then departments can be constructed in ways that best match the organization's operations. Lines of authority and responsibility can then be drawn to best facilitate organizational operations.

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SUBMITSUBMITSUBMIT

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Balanced roles require an equilibrium between responsibilities and authority.

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10.2 Dimensions of Organizational Structure The third and �inal step of organizing, following job design and departmentalization, involves completion of the company's structure by establishing lines of authority and responsibility. The vertical lines on an organization chart depict authority/responsibility relationships. A supervisor holds authority, which is the right to direct with permission to act over lower-level employees. The "right to direct" implies the right to manage company activities or, in more common terms, tell people what to do. "Permission to act" re�lects the decision-making aspect of authority, or the right to decide what to do.

Three types of authority found in today's business organizations are line authority, staff authority, and functional authority. Line authority is direct, formal authority. It may be viewed by following the lines presented in an organization chart. Organization charts are created to depict and summarize authority/responsibility relationships.

Staff authority consists of the right to advise, or give advice. Advisory authority rests in positions such as accounting, legal, and human resources, where employees routinely counsel other members of the organization about technical matters. An accountant may possess line authority by serving as a department manager and also carry staff authority in the right to advise others about tax laws, costs of operations, and other topics.

Functional authority is the right to direct but not to discipline. Functional authority emerges when an individual has been assigned a leadership role in a task force, project team, or committee. The leader directs activities and relies on the professionalism of others in the group to complete various assignments. Functional authority continues to grow in use, as many of today's tasks and projects require sets of individuals to complete them.

Employee responsibility, or accountability, suggests the obligation to carry out tasks as assigned by the supervisor. Each individual in a company is responsible to the manager at the next level up in the organization's hierarchy. The concept of parity of authority and responsibility proposes that there should be equal levels of authority and responsibility in each position (Fayol, 1916). Anyone who has authority, such as a department, middle, or top level manager, should be held accountable for how that authority is used. Anyone held responsible for work outcomes should have suf�icient authority to get the job done.

Beyond designating authority and responsibility relationships, other elements of organization structure also deserve attention. When an organizational design has been completed, key elements are in place:

chain of command/hierarchy of authority vertical and horizontal dimensions line and staff span of control standardization and formalization centralization and decentralization mechanistic and organic dimensions

Chain of Command/Hierarchy of Authority

An unbroken line of authority that connects top management to the lowest-ranking levels of an organization is the chain of command, or hierarchy of authority. It indicates a direct, formal command structure. The command structure includes giving, receiving, and following orders as well as identifying communication channels (Miller & O'Leary, 1989).

The concepts of chain of command and hierarchy of authority incorporate authority/responsibility relationships with the principle of unity of command. As originally described by Henri Fayol in 1916 (Trewatha, Newport, & Johnson, 1993), unity of command dictates that each employee should be responsible to a single manager: that person's immediate supervisor. Unity of command is not complete until all supervisors share and work toward the same organizational objectives. Of note, the matrix form of departmentalization directly violates the principle of unity of command, as each functional specialist answers to both a function and a product manager.

Vertical and Horizontal Dimensions

Relationships between employees as depicted on an organization chart exhibit vertical and horizontal dimensions. The vertical dimension indicates upward and downward channels of communication, decision-making, and direction of activities. The vertical dimension re�lects the chain of command. Fayol's scalar principle suggests that this dimension should not be violated as an organization conducts activities. The idea that managers should "go through proper channels" by following the vertical chain of command resonates strongly in many organizations, including military units and police forces, where authority/responsibility relationships must be carefully maintained.

The horizontal dimension of organizational structure provides the basis of dividing work into speci�ic jobs and tasks. The jobs are then placed into units. The horizontal dimension denotes the type of departmentalization employed by the organization.

Line and Staff

In the organizational management literature, the terms "line" and "staff " are employed to describe types of authority as well as differences in job types. A line occupation or department has a direct connection to the production process. Line positions include materials purchasing and handling, production, inventory control, and shipping. Line managers give direct orders related to production operations. Staff positions provide support to organizational operations. They are not directly part of the production system. Staff jobs include accounting, quality control, information technology, administrative assistant, and janitorial positions. At times, the word "staff " may be used in different ways within a company, such as when a manager refers to "my staff," which might include individuals who are actually line employees.

The concepts of line and staff tie into the form of departmentalization that is in place. The two types of occupations are part of the horizontal dimension of an organization's structure. The terms leave room for some ambiguity. It is possible to argue that inspection and quality control should be considered as line occupations—part of production—rather than as staff occupations charged with measuring and ensuring production quality. When a cross-functional team consisting of production workers, accountants, quality control employees, and a human resource employee is formed, the line-staff distinction loses meaning.

Span of Control

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The number of employees reporting directly to a supervisor indicates the supervisor's span of control, or span of management. As shown in Figure 10.9, supervisor A has a span of control of four employees. Supervisor B's span of management consists of six employees. As originally proposed (Fayol, 1916), the concept of span of control was described as trying to identify the ideal number for each supervisor. Obviously, no one exact number can be speci�ied.

Figure 10.9: Span of control

A smaller span of control allows for closer interpersonal relationships between manager and employees, while a larger span of control may mean that employees on that team will have more autonomy.

The literature regarding teams and groups suggests the ideal size to be between �ive and nine employees. A small span allows for closer interpersonal relationships between supervisors and their employees, since supervisors can give them more individual attention. At the same time, smaller spans or a higher supervisor-to-worker ratio generates greater numbers of supervisors, and therefore increased payroll costs. More recent trends toward employee empowerment indicate the usefulness of higher spans of control, or fewer supervisors and more workers holding higher levels of authority and discretion.

Standardization and Formalization

Standardization and formalization offer methods to control operations using organizational design (Child, 1972). Standardization refers to the creation of a signi�icant number of jobs that are exactly the same. For example, a large, multistate bank company might utilize standardization through job titles such as teller, auto loan of�icer, mortgage of�icer, customer service representative (business-to-business), and credit card manager. Each individual branch would employ the same job titles.

Formalization outlines the rules and procedures employees follow. To help bank managers in the home of�ice maintain control over operations, all tellers conduct business in exactly the same way; loan rules for automobiles and mortgages are consistent throughout the operation, and each bank maintains the same levels of reserves as required by law.

Standardization and formalization may be found in a wide variety of organizations that conduct similar operations in several locations. This includes branch banking, retail chains, and franchising situations. The "pools" of activities that are largely the same lead to effective channels of communication and greater degrees of control (Thompson, 1967).

Centralization and Decentralization

The chain of command will be strongly in�luenced by the degree of centralization and decentralization present within the organization. A highly-centralized �irm's top managers maintain strong control over decision-making and hold substantial amounts of power as a result. Centralization relies heavily on the chain of command to direct organizational activities. Centralized organizations are more tightly controlled than decentralized �irms (Huber, Miller, & Glick, 1990).

In more recent times, employee empowerment has led to many organizations shifting to decentralized operations. In such companies, supervisors at lower ranks hold greater degrees of authority through processes of delegation. With decentralization, managers at lower ranks make more important decisions on behalf of the organization (Baack, 1991; Baack & Cullen, 1994). As an example, Sears and J.C. Penney retail stores allow store managers to order inventory, the idea being that these managers are most aware of local conditions and the actions of nearby competitors. In a decentralized company, the chain of command remains intact; however, lower-level managers become more than order followers, instead sharing in the direction of the company.

Mechanistic and Organic Dimensions

Another key element of organizational design dictates company �lexibility and adaptability. Mechanistic organizations are characterized by high use of rules and procedures, a greater number of levels in the organization, formal relationships between workers, and, as a result, a less �lexible method of operation. Organization charts in mechanistic organizations tend to be tall and thin, with many ranks and relatively few people at each rank. Job descriptions for individual positions tend to be carefully spelled out, re�lecting high levels of formalization.

Organic structures employ few rules and procedures, have a small number of organizational levels and ranks, allow for informal relationships among workers and supervisors, and are much more �lexible and adaptable as a result. Organic structures are short and squat, with few ranks and many people in each rank. Job descriptions and actual duties performed tend to be less precisely speci�ied, as employees work on several tasks and utilize a greater number of skills (Morand, 1995).

Mechanistic structure tends to be found in companies with more standardized products and production methods. The structure matches external environments that are more stable and exhibit greater certainty. An organic structure will be present in a company that requires �lexibility and adaptability, such as an advertising agency or other �irm that relies on creativity and innovation. Often the environment surrounding the organization is less stable and more uncertain (Burns & Stalker, 1961). Mechanistic/organic should not be viewed as an either/or choice. Many organizations exhibit elements of both. An argument can be

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There are pros and cons to structuring an organization virtually. A pro may include low to no cost for facilities, while a con may be the inability to work with a group in one common space.

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made, for example, that the U.S. military has become more organic over the past three decades due to shifts in the nature of threats to the country as well as other environmental changes, but it still retains certain mechanistic elements.

New Design Options

The turbulent world of business opportunities presented by emerging technologies has led to two new types of organizational design: virtual organizations and boundaryless organizations. Both take advantage of the Internet and other digital technologies to conduct business operations using adapted forms of organizational structure.

The Virtual Organization Ahuja and Carley (1998) de�ine a virtual organization as a geographically distributed organization whose members are bound by a long-term common interest or goal, and who communicate and coordinate their work through information technology. Virtual organizations work across space, time, and organizational boundaries with links strengthened by webs of communication (Lipnack & Stamps, 1997). Often, virtual organizations employ small numbers of workers and outsource most business functions, commonly including manufacturing, distribution, and marketing, which are facilitated by the Internet (Cascio, 2000). The characteristics of a virtual organization include the following (Burn, Marshall, & Barnett, 2002):

Adaptable, �lexible, and responsive to the external environment Effective utilization of resources Formation of business alliances with varying degrees of permanence Dispersion of component parts Opportunistic behaviors; embracing change and uncertainty Low levels of bureaucracy High infusion of information technology to support business practices and knowledge work

Virtual organizations tend to be centralized with little or no departmentalization. Central control allows use of both formal and informal communication to coordinate company activities. Examples of partially or more completely virtual organizational designs can be found at Amazon.com, Nike, Cisco Systems, the Newman's Own company, and many major motion picture studios, including MGM, Warner Brothers, and 20th Century Fox (Bates, 1998; Gertner, 2003).

The Boundaryless Organization The boundaryless organization form seeks to eliminate the vertical and horizontal boundaries between a company and its customers and suppliers. Further, a boundaryless organization may try to eliminate the chain of command and replace departments with self-managed teams, which means a traditional organizational chart is no longer useful. Spans of control in this format become limitless (Lucas, 1996). General Electric was among the �irst to move toward a boundaryless form of structure under the direction of Jack Welch (Industry Week, 1994).

Internally, boundaryless organizations rely on employee empowerment and often use cross-functional project teams rather than departments. The concepts of reducing internal communication barriers and changing specialists into generalists serve the purpose of making the organization more adaptable to new challenges. Employees derive satisfaction from working on various projects while enjoying interactions with coworkers and supervisors.

External boundaries are reduced through alliances with suppliers, customers, and regulators. Often, collaborations between members of different organizations take place when a project serves the needs of both organizations. Information technology assists in making these connections possible (Fulk & DeSanctis, 1995). Private computer-linked networks permit companies to share information, such as when Procter & Gamble and Levi Strauss link with Walmart to monitor inventory levels so that stores can be ef�iciently resupplied as needed.

In summary, organizational design becomes complete when lines of authority and responsibility have been drawn. Then, the various elements of structure can be speci�ied. Recent trends have incorporated the in�luence of information technology on organizational arrangements.

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10.3 Determinants of Organizational Design Organizations around the world exhibit various versions of organizational design. Company leaders deploy the structural elements featured in the previous section in a variety of ways. In this section, we focus attention on the various forces that in�luence organizational design choices. Table 10.4 summarizes the primary research efforts and theories present in this analysis.

Table 10.4: Determinants of organizational structure Cause or factor Author/researcher

Rationality Max Weber

Company strategies Alfred Chandler

Organizational size Peter Blau; Aston Group

Company technology James D. Thompson; Joan Woodward

External environment Emery & Trist; Burns & Stalker

Max Weber: Rationality

Max Weber (1958) described organizations in terms of three primary sources of power: traditional, charismatic, and legal/rational. In a traditional organization, power originates from inherited sources; an example is kings and serfs in feudal societies. Any person in a position of authority can be traced through his or her lineage. In a charismatic organization, such as a religious organization, volunteer organization, or political party, the leader's personality provides power and becomes the basis of his or her authority.

The legal/rational source of power is an employment contract. A worker agrees to submit to the authority of his or her supervisor in exchange for wages and bene�its. Using the legal/rational framework, Weber describes an ideal organization as resembling a manufacturing business operating in the time of the Industrial Revolution. According to Weber, bureaucracy represents the ideal type of rational organization. The characteristics of a bureaucracy include:

Impersonal and formal conduct Employment and promotion based on technical competence and performance Systematic specialization of labor and speci�ication of responsibilities Well-ordered system of rules and procedures that regulate the conduct of work Hierarchy of position such that each position is controlled by a higher one (hierarchy of authority) Complete separation of property and affairs of the organization from the personal property and affairs of the incumbents

In essence, a bureaucratic organization exhibits mechanistic and centralized dimensions of structure. The bureaucracy model has been criticized for being in�lexible and ignoring changes in the environment. Others view this form of structure as not suited to modern workers because it promotes conformity, interferes with communication, and sti�les innovation (Bennis, 1966).

Alfred Chandler: Strategy and Structure

In 1962, Alfred Chandler proposed a relationship in which an organization's structure follows company strategies. Chandler's analysis is grounded in historical research. His work suggests that organizational structure may be a matter of managerial design, which evolves over time and as internal and external organizational conditions change. An in-depth review of the case histories of 50 major U.S. companies, including General Motors, Standard Oil of New Jersey (now Exxon), and DuPont, revealed four stages of structural development or evolution that were consistently present (see Table 10.5).

Table 10.5: Strategy and structure Stage 1 Most �irms begin with a single product and a centralized, functional form of structure.

Stage 2 Successful �irms tend to grow by adding products and services, the strategy known as product diversi�ication.

Stage 3 The demands of the new products and services become so great that the company becomes inef�icient, and eventually a crisis develops.

Stage 4 To resolve the crisis, company leaders adopt new forms of structure that are product-based and decentralized.

The functional form of structure works well with a single product. The strategy of product diversi�ication occurs only after companies have grown to great size by producing a single product for worldwide distribution. As companies diversify, however, problems of coordination arise between the products. The fourth stage indicates a change in structure as a response in which leaders organize a company in ways that best suit the company's new reality.

The structural changes that result from a product diversi�ication strategy include greater use of standardization and formalization, increases in the number of managerial levels (more ranks in the organization), and a lower administrative intensity level, which means that a smaller number of managers oversee a larger number of employees. Richard Rumelt (1974) further re�ined this approach by noting the connection between strategy, structure, and subsequent economic performance. These �indings remain applicable to today's organizations. For instance, when Amazon.com moved from being an order ful�illment company into the production and sale of a product (the Kindle), its structure was recon�igured to meet the challenges associated with a new form of business activity. Companies that pursue expansion into other countries also tend to reorganize to meet the changing circumstances.

Size and Decentralization

Several major studies of the nature of organizational design took place in the same time frame: the late 1950s and early 1960s. Among their �indings was a connection between the size of an organization and its corresponding structure. Peter Blau and a British set of researchers labeled the Aston Group were the �irst to make this discovery.

Peter Blau's Views of Size and Structure

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Blau's research con�irms that smaller organizations are more easily centralized, due to management's ability to keep track of operations.

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Peter Blau's research revealed a relationship between the size of an organization and the degree of decentralization. In a study of employment security agencies in the United States, the organization's internal condition (size) appeared to exert a far greater impact on its structure than the external environment (Blau & Schoenherr, 1971). Smaller organizations are likely to remain centralized, because managers are aware of all activities and know each employee, which permits the manager to make most decisions.

As it grows, the company begins to add specialists and new departments. The sheer volume of decisions to be made rises. The top manager becomes less able to direct everything, which means delegation begins to take place. At the same time, the top manager wants to retain a degree of control, which leads to standardization, formalization, and mechanization/computerization, or a reliance on computers and technology to maintain operations (Blau & Schoenherr, 1971).

As an example, consider the differences between managing a small family restaurant and a Target superstore. In the restaurant, the manager knows all the employees and every aspect of the business, so he or she can make every decision. At the Target superstore, the manager may not even know the names of all employees. Further, Target employs specialists in many areas, including sporting goods, electronics, jewelry, men's and women's clothing, and others. The Target store manager should allow specialists to make decisions through delegation or decentralization. At the same time, Target employs individuals with titles such as "stocker" and "cashier" (standardization) and the rules for rotating inventory on the shelves and

customer check out procedures are the same for every stocker and cashier (formalization). Target uses computers to track sales, inventory, and other statistics (mechanization), whereas the small family restaurant may keep track of inventory manually. The driving force in these two circumstances would be organizational size.

The Aston Group Studies A group of researchers from England conducted studies regarding what they determined to be the primary or key variables in an organization's structure. Seven variables were studied:

1. origin and history 2. ownership and control 3. organizational size 4. charter 5. technology 6. location 7. dependence

Of these, the most powerfully predictive of subsequent structure was organizational size, which had a strong association with specialization, standardization, formalization, and centralization (Pugh et al., 1969; Hickson, Pugh, & Pheysey, 1969).

The Aston studies utilized a research format that was different from Blau's work, including interviews and a diverse sample, as opposed to quantitatively based counts of items and a homogenous sample. The results add credibility to the conclusion that size does have an impact on organization design in many instances.

Technology and Structure

Within the same time frame as the Blau and Aston group studies, two perspectives suggested a relationship between technology and organizational structure. One was a theoretical analysis proposed by James D. Thompson. The second involved research led by Joan Woodward.

James D. Thompson's Theoretical Approach James D. Thompson (1967) developed a view of organizational structure that begins with the understanding that organizations are open systems that interact with the larger environment. This interaction fosters greater uncertainty. Within that context, a company structures operations around its core technology (or mediating technology), which is the organization's primary producing activity.

In an organizational system, such as the one displayed in Figure 10.10, inputs are regulated by the buffers (departments) that lead them into the technical core. Outputs are moved into the external environment through various departmental activities. Management develops departments (the buffers or departments shown in Figure 10.10) to protect and facilitate the core technology while moving the �low of goods through the organization and into the external environment.

Figure 10.10: Thompson's model of technology and structure

When a new threat emerges, a company may respond by creating a new buffer (or new department) to address the threat.

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When a threat emerges in the external environment, such as a dramatic rise in prices for raw materials, a natural disaster, a terrorist action, negative publicity, or a new competing technology, company leaders tend to respond by creating a new buffer or department to defend against the threat. For instance, when swine �lu threatened the U.S. pork industry through irrational worries that one might catch the �lu by eating pork, one response was to create a special task force to allay the fears. Many information technology departments have specially assigned units to defend against virus attacks, bombs, and other malware.

Joan Woodward's Research Joan Woodward (1965) and her associates engaged in a major research project in the United Kingdom in the 1950s. The purpose was to seek out causes of structure in effective organizations. These efforts identi�ied a consistent pattern in which the technology of a �irm could be matched to its structure, as displayed in Table 10.6.

Table 10.6: Matching technology with structure Type of technology Type of structure

Unit, small-batch production Small number of hierarchical levels; small span of control

Large-batch, mass production Medium number of hierarchical levels; highest span of control

Continuous process production Highest number of hierarchical levels; smallest span of control

Unit, or small batch, technology occurs when units are made one by one (repairing a car; tailoring a suit; special print orders; specialty glass products) or in small lots or batches, such as the amount of marinara sauce prepared for daily use in an Italian restaurant. As the organization moves from unit or small-batch production to mass production, the number of specialties increases, leading to higher numbers of managerial levels and increasing spans of control.

In large-batch or mass production, assembly-line operations create standardized products. Carefully following rules and procedures increases ef�iciency. Many production facilities are mechanistic in structural design, utilizing greater spans of control and the highest number of hierarchical (horizontal) levels.

Continuous process production includes particular business types that produce without interruption, such as chemical producers, some utilities, pharmaceuticals, and distilleries. In these organizations, technical complexities require specialist employees and managers to supervise them, creating the highest number of levels in the hierarchy but the lowest spans of control.

The most important �inding of Woodward's studies was that effective organizations tended to best match the pattern found in each category of technology. In other words, successful �irms matched organizational structures with speci�ic technological circumstances.

Small-Batch Processing: Coffee Production in Costa Rica

Francisco Mena discusses the beginnings of Costa Rica's micro-mill revolution—a move from mass production to small-scale production.

Critical Thinking Questions

1. Why do you think the quality of the coffee increased when the coffee mill switched to small-batch production?

2. What might some of the drawbacks of small-batch production be?

Small Batch Processing: Coffee Production From Title: A Small Section of the World

(https://fod.infobase.com/PortalPlaylists.aspx?wID=100753&xtid=65002)

  0:00 / 2:34 1x © Infobase All Rights Reserved Length: 02:33

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The External Environment

Another theoretical perspective regarding the primary cause of organizational design considers the organization's environment as the driving factor. F. E. Emery and E. L. Trist (1965) analyzed the overall external environment in terms of its level of dynamism, leading them to posit that there are four types of environments: static, routine, dynamic, and turbulent. Environments vary in terms of the amount of change and the complexity of knowledge necessary to operate successfully in that context. The resultant typology of environments is displayed in Table 10.7.

Table 10.7: Typology of environments Type of environment Description

Placid, randomized Little change; simple knowledge environment

Placid, clustered Little change; complex knowledge environment

Disturbed, reactive Greater change; simple knowledge environment

Turbulent �ield High change; complex knowledge environment

T. Burns and G. M. Stalker (1961) had previously identi�ied what they believed to be the ideal form of organizational structure for each environment. Placid and randomized environments (unchanging, simple-knowledge environments) such as the soft-drink industry and container manufacturers, with little change and relatively little new knowledge needed, �it with a bureaucratic and mechanistic structure.

Placid and clustered environments (unchanging, complex knowledge environments), such as computer operating system designers and web search programs (Microsoft; Google), are best served by a mechanistic but decentralized structure designed to deal with a series of variables that might change.

Disturbed and reactive environments (changing, simple-knowledge environments), such as fast-food chains and entrepreneurial �irms, may �ind an organic but centralized structure the most ideal.

Turbulent �ields (highly changing, complex knowledge environments), including today's high-tech, digital organizations, best respond to organic, decentralized structures, possibly including the boundaryless design.

Additional responses to the external environment were described by James D. Thompson. Buffering takes the form of stockpiling materials and inventories, so they can be released as demand rises and falls. Smoothing involves trying to alter demand by in�luencing it through price (off-season discounts) or by offering a second product that will sell when the �irst product goes through a slack period. Forecasting is the attempt to protect the organization's technical core by predicting changes and alterations, giving managers time to adapt to them. Rationing means allocating resources based on priorities.

At the managerial level, reacting to environmental circumstances involves understanding and adapting to the political, social, economic, technological, and competitive opportunities and threats that emerge. When company leaders expect fewer environmental challenges, centralization and more mechanistic structures seem most advisable. The more turbulent the environment becomes, the more likely it will be that a �irm will move toward an organic, decentralized type of structure.

In summary, company structures exhibit all the forms of departmentalization and varying degrees of standardization, formalization, centralization, and decentralization. Some are mechanistic while others are organic, which will in�luence spans of control along with the vertical and horizontal dimensions of each company or organization. These theories help explain why various companies and organizations adapt the types of structures that they do.

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All companies undergo changes. While many changes are planned and scaled, others can be spontaneous and unpredictable.

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10.4 Organizational Change and Redesign For many years, the world of business has experienced an increasing rate of change. Alvin Tof�ler (1970) predicted the trend several decades ago. Tof�ler also noted that people exhibit a natural tendency to resist change. In this section, the impact of change on employees and managers, particularly as it relates to organizational design, will be discussed.

Change in Organizations

A variety of forces can cause organizational leaders to make changes. These can be viewed in two ways. The �irst involves examination of planned versus unplanned change. The second refers to actual factors that drive changes.

Planned versus Unplanned Change When a company alters its course in an intentional and goal-oriented fashion, it institutes planned change. There have been many examples of planned changes in the business world over the past few decades, including retail stores that have moved from brick-and-mortar only to adding e-commerce websites; strategic decisions of all types, including acquisitions, divestments, and co-marketing programs in which two �irms join to create and sell a speci�ic product (e.g., American Express and Starwood Preferred Guest hotel credit cards), as well as re-organizing decisions. For example, not long ago AT&T® reorganized into three global companies, eliminated 40,000 plus jobs, and moved into new markets using digital technologies.

Planned change can be divided into two types. A �irst-order change may be characterized as a lower-magnitude shift in direction. Typically, this type of change involves no major changes in the organization, but rather alterations designed to help the company operate more smoothly. For example, in recent years many �irms have discovered that creating apps for mobile technologies helped create value beyond what was generated by developing and maintaining a website.

In contrast, a second order change consists of multidimensional, radical, discontinuous new activities and strategies. Some current terminology refers to such an approach as reengineering the entire organization. Often doing so involves moving away from previous assumptions about what works best. The U.S. automotive industry has witnessed such dramatic changes in methods of operation, especially following the 2008 recession. Entire methods of conducting business were changed during those years.

Unplanned change takes place in a more spontaneous fashion. The primary force driving unplanned change occurs when an organization must react to an unforeseen event, which can be externally or internally generated. Externally, a variety of forces such as those noted in the next section create the need to respond, including, for instance, a recession or natural event (e.g., a tornado destroys a manufacturing operation). Internally, the sudden death or departure of a CEO can lead to a major turn of events within the company.

Factors That Lead to Change Numerous forces and factors lead to change. One approach is to divide them into those which are primarily external, those that are internal in nature, and those that can be either or both internal and external. Table 10.8 summarizes these elements.

Table 10.8: Factors leading to change External factors Example

Political trends Election results; new legislation

Economic shifts Dramatic growth; recession

Social trends Shifting national mores and cultural factors

Competitive actions Entry of new competition; exit of existing competitor; new forms of competition (new products)

Internal factors Example

Company growth and success New locations; new markets; new products that are widely accepted

Company crisis Death or departure of CEO; natural disaster

Perceived opportunity New employees with new ideas; opportunities found in market analysis (SWOT)

Potentially either internal or external Example

Technology New technology developed or acquired by organization, or imposed by competitive actions

As the table indicates, managers are constantly on the lookout for trends and changes that might affect their organizations. Any of these forces can lead to a planned or an unplanned change of �irst or second order.

Resistance to Change

One well-known dynamic of organizations is that people tend to resist change. A variety of explanations can be given for the unwillingness to accept new ideas and processes. At times, the resistance may be based on well-thought-out rationale; in others, it results from less logical but still understandable instincts (Kotter & Schlesinger, 1979). People resist change at work for the following reasons:

Self-interest Disagreement with the diagnosis

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Misunderstanding of management's intentions/distrust Personality characteristics and reasoning processes

Self-interest takes several forms. An employee can reasonably assume that a proposed change might devalue his or her skills. This might, in turn, actually lead to termination or a new and less desirable job assignment. Further, a manager might view a change as leading to a loss of personal power and in�luence. And �inally, another may see a change as breaking a well-established habit and causing unnecessary work.

As an example of self-interest, consider what might happen when a new technology becomes available that will make the production process or some other work-related activity more ef�icient, such as centralized ordering phone banks and online ordering of food for pizza chains, rather than having each operator �ield inbound calls separately. Despite the improvement on ef�iciency, employees may believe that implementing it will cost them their jobs or limit opportunities to receive pay raises and bene�its. The same technology may threaten the status of the supervisor who oversees that group of workers. Work habits could change, and those in the organization may believe they will be forced to work overtime to implement the new technology and work out the bugs in the system.

Further, the concept of sunk costs suggests that a person's investment in a company escalates over time, as pension funds accumulate and the person's allowed vacation time rises, along with their chances of being promoted or enjoying the bene�its of seniority. These investments, or sunk costs that cannot be taken into any other company or employment situation may, in turn, drive resistance to change as the employee seeks to maintain the status quo (Patti, 1974).

Disagreement with the diagnosis occurs when workers believe management has made an error in deciding a change is necessary or needed. In the medical world, some doctors have been criticized for over-prescribing tests before completing a diagnosis of a patient. In the effort to streamline the process, top management might implement protocols for when such tests (e.g., MRIs, CAT scans, angiograms, etc.) should be used and when they should not. In response, the physicians may argue that it is "better to be safe than sorry."

Misunderstanding or distrust of management's intentions can be a rational or an irrational response to a proposed or enacted change. The sentiment of "What are they really up to?" may rally employees to resist some changes. As has been noted previously in this text, employees at Wells Fargo, who were subjected to unreasonable goals for signing up new accounts with current customers, may distrust any new managerial effort or program for years to come.

Personality characteristics and reasoning processes take several forms. At times, people consider some information pertinent to a change while ignoring other facts, a process known as "selective perception." People tend to dismiss counter-evidence when they have already made up their minds. Further, simple fear of the unknown can play a role in resistance to change, as well as a lower tolerance to change. In simple terms, some employees will have a harder time adapting to changes than others.

Overcoming Resistance to Change

What becomes clear to analysts is the simple fact that change is inevitable. Managers can expect to be involved in making changes at some point in their careers. To achieve the best possible results, several approaches may be taken. Each emphasizes different factors. The manager should choose the method that best matches the situation at hand.

Lewin's Three-Step Change Model Successful change in organizations takes place, according to Kurt Lewin (1951), when three steps occur. The �irst, unfreezing, requires a change agent to address individual resistance, as well as pressures for group conformity. A change agent is the individual who leads an organizational change. The tactics displayed in Table 10.9 can aid in the unfreezing process.

Table 10.9: Overcoming resistance to change Strategy Example

Education and communication Explain the necessity for change and answer questions.

Participation and involvement Engage workers in making the change.

Facilitation and support Carefully plan the change and carry out the plan.

Negotiation and agreement Adopt a bargaining approach.

Manipulation and cooptation Adopt a political approach.

Explicit and implicit coercion Use managerial power. Source: Adapted from John P. Kotter & Leonard A. Schlesinger (1979, March–April). Choosing strategies for change. Harvard Business Review, 111.

Note that managers choose from these strategies based on the nature of the change. The more substantial the degree of change the larger the number of tactics that should be employed.

Movement, the second step, considers the status quo and where the company must go. Driving forces within this stage help direct behavior toward the new end. Restraining forces seek to maintain the status quo. Managers try to increase driving forces while reducing restraining forces. Persuasion tactics are valuable allies in this stage.

The third step is called refreezing, and it seeks to make the change permanent. Reinforcements or rewards can serve as refreezing agents. Managers that role model the new method of operation also provide impetus to accept the new reality.

Kotter's Eight-Step Plan A second approach, developed by John Kotter, builds on Lewin's three-step model and adds detail (Kotter, 1996). According to Kotter, change involves

1. Establishing a sense of urgency and a compelling reason to make the change 2. Forming a power coalition to lead the change 3. Creating a new vision with supporting strategies 4. Communicating the vision to all employees 5. Empowering others to act on the vision, including encouraging risk taking and creativity 6. Planning for and rewarding short-term "wins" that move toward the new vision 7. Consolidating improvements, reassessing changes, and making adjustments 8. Reinforcing the changes by showing the relationship to organization success

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No matter which approach is used, managers should remember that change is often an unsettling process. Individual employees will likely be uncomfortable for a time. Consider the circumstances present in the television industry, as described in the OB in Action box regarding the impact of the internet on traditionally strong companies.

OB in Action: How The Internet has Changed Television

Today's traditional-age students may not recall the impact new technologies have had on the television industry. In the not so distant past, major predictions were made regarding the implementation of a new system of programming delivery—cable television. Previously, network television operated as a near oligopoly, with the major players (NBC, ABC, and CBS) dominating the market. The in�lux of new channels and programs created unprecedented threats to what had previously been a stable industry.

As time passed, the industry evolved again, as the �irst VCR and Beta methods became available. For the �irst time, viewers could record programs and then fast-forward through commercials. Not surprisingly, advertisers, the companies that delivered revenues to individual stations and networks, worried that their messages were simply being ignored.

The digital age compounded the challenges traditional networks faced. First, programming methods shifted from traditional analog to the high de�inition (HD) format, leading to changes in how shows were �ilmed or recorded, as well as the devices people used to watch the programs.

Now, the internet and digital age are once again changing the nature of the industry. Standard interactions between networks and content producers have been altered by the entry of streaming technologies. For the �irst time, new players have made it possible for viewers to watch previously-shown programs in innovative new ways. Hulu was among the leaders in this approach. More recently, providers including Hulu but also Net�lix, HBO, and others entice viewers with radically different programs less encumbered by censorship and traditional network standards, with programming delivered by streaming technologies.

Further, consumers of all types now demand programming to remote devices as well as standard television sets. These possibilities have opened new revenue streams (charging for programming previously delivered free of charge) but also altered advertiser views about how to spend funding to reach potential customers. In addition, the entry of new competitors further dilutes and segments markets, making it more dif�icult to reach large audiences.

In the face of this new world of entertainment, the traditional television industry continues to struggle to �ind ways to adapt and respond. Time will tell whether their efforts will succeed, or whether what were the standard-bearers of programming will continue to exist in any manner resembling their current forms.

Re�lection and Application Questions

1. Identify the sources of change in this environment. 2. As a television executive, what types of resistance to change might you expect as you try to adapt to this new world of programming delivery?

How would you respond? 3. Can you apply these same factors to the motion picture industry? If so, how would companies in that realm need to respond?

As a manager, the eight-step Kotter approach might seem particularly applicable to network television and even to leaders of cable channels (such as ESPN, CNN, or Comedy Central). The quickly moving world of digital content delivery should make it evident that a sense of urgency is needed. Power coalitions might evolve among those who best understand the new technologies and how to apply them. Any new vision would have to reconceptualize television programming into some broader form of "entertainment delivery." That vision would need to permeate the company and entice risk-taking and creativity as a response. Short term "wins" would need to be identi�ied, including any evidence that the organization managed to "hold its ground" against this new wave of competition. Over time, new methods of content preparation and delivery would become more strongly established and would be reinforced by any statistics indicting success.

Action Research The action research approach to overcoming resistance to change involves a company systematically collecting data and information to formulate a planned change (Shani & Pasmore, 1985). Using this methodology, a key individual, the change agent, seeks to identify the type of problem encountered by the organization to prescribe the best type of change to implement. The approach concentrates on the correct identi�ication of the problems, rather than simply implementing past solutions favored by top management. The method also attempts to involve a wide group of employees in the entire process, thereby reducing resistance to change through participation. The standard action research program consists of the following steps:

Diagnosis—usually to be started by an outside person (change agent) who gathers information about organizational problems and concerns through methods such as interviews, reviews of records, and group meetings to discuss issues. Analysis—the outside person distills what has been collected and synthesizes it into a coherent problem statement along with recommendations for actions. Feedback—the problems to be solved are widely shared with organizational employees to prepare and �inalize the action plan. Action—the program commences led by employees and the outside person or change agent. Evaluation—the outside person or change agent reviews results in light of the original data and information collected to determine whether the action plan achieved its intended results.

The action research method has been widely accepted in academic communities and in fact has resulted in a journal with the method's name.

The Role of Change Agent Jack Welch, famous CEO of General Electric, once commented that people should "change before [they] have to." Welch and many others have been driving forces that allowed organizations to adapt, grow, evolve, and change to cope with internal issues as well as external threats and challenges.

A change agent can be an insider or someone from outside the organization who has been employed to do so. Change agents are notorious for evoking negative emotions from employees who seek to resist change and maintain the status quo. When an organization seeks to undergo a change, several questions help guide the selection of a change agent:

How dramatic is this change? Do we have suf�icient information to make the change, or is more investigation required?

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A company can adopt a positive change attitude that will mobilize changes based on the organization's mission, before abrupt and unexpected circumstances force a reorientation.

LoveTheWind/iStock/Thinkstock

How important is employee acceptance of this change? Does this change affect the entire organization or a smaller part of it? What are the long-term implications of this change?

These types of questions will lead to a choice between an internal or external change agent. Less dramatic alterations will often be delegated to an internal manager. When the landscape of the entire company is at issue, many times the person chosen to drive the change will come from the outside. These are not iron-clad rules. Often, the selection boils down to observations of potential change agents, including their personalities. At times a more dynamic and inspiring force may be the prime requisite. At others, a person who can "calm the waters" and ease employees into the transition may be of greater value.

Positive Change and Appreciative Inquiry It may seem as though any approach to change begins with some type of negative statement along the lines of "We have a problem" or "We are doing something wrong." Instead, the positive approach takes a different perspective, commencing with a restatement of what the organization does well or does right. The appreciative inquiry method insists on identifying what is positive within the organization and building on that in ways that emphasize the ongoing vision and mission (Cooperrider, Whitney, & Stavros, J. 2005).

To replace negative evaluations, criticisms, and ongoing attempts at diagnosis, the organization, through its leaders and change agent, engages in activities labeled with terms such as discover, dream, design and destiny. The process is based on the organization's positive change core, or the driving idea that change should proceed from a positive rather than negative approach, and links the energy of that core directly to any new change agenda. The goal becomes to incite changes never thought possible that will be suddenly and democratically put into action (Thomas, 2016).

Impact of Change on Managers

With the exception of the Weberian bureaucracy, nearly every theory or �inding described in the earlier section regarding factors that in�luence organizational design also explains changes in organizational structure. Chandler's model notes that change from a single-product company to multiple products will be accompanied by a change in structure. Blau's work notes that growing �irms tend to move from centralization to decentralization, along with increasing use of standardization, formalization, and mechanization. The Aston group revealed a similar pattern. James D. Thompson's theoretical model accounts for changes in structure due to environmental threats. Woodward notes the growth from small-batch to large-batch production, assisted by changes in the managerial hierarchy and spans of control. Environmental models suggest the necessity for change when environmental conditions shift.

What, then, is the impact of change on the manager's role? Changes or modi�ication to an organization's structure can create a series of outcomes. Among them are the following:

the number and types of decisions made at all ranks the amount of authority held at all levels the number of tasks performed by entry-level employees the formality of relationships role clarity and role ambiguity perceived chances for advancement

Decision Making Organizational design features, including standardization, formalization, centralization/decentralization, and mechanistic/organic dimensions, exhibit a major impact on the ways in which organizational designs emerge in companies. In a highly-centralized organization, decisions made at the top of the hierarchy will be implemented at lower levels, turning lower-ranking supervisors into order followers. As an organization changes and becomes more decentralized, lower-level managers make more decisions, and the decisions are less routine and more specialized.

Authority The mechanistic/organic and centralized/decentralized aspects of design exert the greatest impact on the distribution of authority. Lower-ranking managers hold reduced levels of authority in centralized organizations. Delegation increases authority held at lower ranks in decentralized, organic �irms. An organization that moves from mechanistic to organic or vice versa will experience shifts in the nature and delegation of authority.

Tasks Division of labor directly affects the number of tasks performed at lower and entry levels. In mechanistic and bureaucratic organizations, division of labor directs managers to create routine, repeated tasks for �irst-line employees. As a company moves to a more organic form of structure, individual employees will �ind jobs to be less routine and contain more tasks. Managers will need to adapt to directing activities in these new circumstances.

Formality of Relationships Standardization, formalization, centralization, and mechanistic dimensions rely more on formal relationships between employees, especially those of differing rank. A change to greater decentralization and a more organic structure will lead to increased interactions between ranks and a likely decline in formality between employees and with supervisors.

Role Clarity/Ambiguity Role clarity occurs when an employee has a clear understanding of his or her job and responsibilities. Increased role clarity can be associated with reduced levels of stress and greater satisfaction with the job, because the employee has an unambiguous sense of direction. Standardization, formalization, centralization,

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bureaucracy, and a mechanistic design contribute to increased role clarity. Role ambiguity rises in other circumstances and designs, such as in companies with more organic and decentralized forms of organizational structure.

Perceived Chances for Advancement Organizational hierarchies with greater numbers of levels (vertical) and lower spans of control (horizontal) offer the best possibility of receiving a promotion. More openings are likely to occur, and less competition from members of the same department will be present. In essence, a mechanistic organizational hierarchy creates increased perceptions that a person may obtain a promotion.

In summary, changes in structure affect both managers and rank-and-�ile employees. Jobs are altered as are the relationships between managers and subordinates. A dynamic organization should anticipate changes in plans, operations, organizational structure, jobs, and managerial activities.

SUBMITSUBMITSUBMIT

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Summary and Resources

Chapter Summary

An organization is a system of consciously coordinated activities or forces. Organizations consist of two or more people in a social setting, with division of labor, a hierarchy of authority, coordination of activities, and a common purpose or goal. Organizations can be pro�it-seeking, nonpro�it, or governmental.

Organizing involves the deployment of organizational resources designed to achieve strategic objectives and includes the division of labor, the creation of departments, the establishment of formal lines of authority, and the use of mechanisms of coordination. The three steps of organization include job design, departmentalization, and completion of the company's structure by drawing lines of authority and responsibility.

Departmentalization takes place by constructing departments or divisions in which similar jobs are located together. Forms of departmentalization include departmentalization by function, product, process, customers, geographic areas, strategic business units, and the matrix form.

Organizing involves completion of the company's structure by establishing lines of authority and responsibility. Three types of authority are line authority, staff authority, and functional authority. Responsibility or accountability is the obligation to carry out tasks as assigned by the supervisor. The concept of parity of authority and responsibility proposes that there should be equal levels of authority and responsibility in each position. When an organizational design has been completed, several key elements are in place, including the chain of command/hierarchy of authority as well as vertical and horizontal dimensions of structure.

The chain of command will be strongly in�luenced by the degree of centralization and decentralization present within the organization. Organizational design also dictates company �lexibility and adaptability through the use of mechanistic or organic structural forms.

Emerging technologies have led to two new types of organizational design. Virtual organizations are geographically distributed, with members bound by a long- term common interest or goal, communicating and coordinating their work through information technology. The boundaryless organization seeks to eliminate internal barriers and hierarchy along with the vertical and horizontal boundaries between a company and its customers and suppliers.

The world of business has experienced an increasing rate of change. Still, individual employees resist change for numerous reasons, including self-interest, lack of understanding, lack of trust, disagreement about the need for a change, and a low tolerance for change.

Managers can respond to resistance through tactics including education, communication, participation, involvement, facilitation, support, manipulation, cooptation, and coercion. Lewin's three-step model involves unfreezing, moving, and refreezing employee opinion and behavior. Kotter's eight-step approach elaborates on the same process. The action research approach involves a company systematically collecting data and information to formulate a planned change. The positive approach or appreciative inquiry builds on things the organization does well rather than being a negative, problem-oriented method.

Organizational structure and changes in organizational structure in�luence a series of outcomes. These impact the nature of a manager's job. Among outcomes in�luenced by organizational design are the number and types of decisions made at all ranks; the amount of authority held at all levels; the number of tasks performed by entry-level employees; formality of relationships; role clarity and role ambiguity; and perceived chances for advancement.

CASE STUDY: Battling the Giants

Home State Bank serves a relatively small number of customers in the Midwest. The bank has four locations spread throughout one larger town (the county seat) and three smaller nearby communities. Home State provides the same basic banking services as the giants, such as Bank of America, including home and auto loans, business loans, some insurance and travel services, and customary banking activities—checking (including online banking), savings, and safe deposit boxes.

Home State Bank faces three primary competitors. The �irst, known by management as the "Big Boys," includes the major national banking corporations that enjoy the advantages of scale. At the same time, Home State has countered with personalized service and an emphasis on keeping local money in town in its advertising and promotions. Home State's managers believe they also hold the advantage of knowing how to work with local businesses without the rigid rules the Big Boys had to follow. The second competitor enjoys cost advantages. Credit unions offer fewer services than Home State Bank but do pay higher interest on accounts and charge lower interest on loans. The credit unions are not as convenient for customers in terms of locations and automatic teller machines. Finally, online banking represents the newest form of competition. With more individuals conducting nearly all transactions with cards and Internet access, especially with new mobile technologies, Home State Bank's leadership perceives a potential strong new threat to its retail customer base.

The organizational structure for Home State Bank has remained the same for several decades. The company has been divided into three major divisions: retail, business customers, and special services. Retail includes the lending activities and routine bank accounts. Business customers are served with checking accounts, loans, and facilitation of transaction practices such as letters of credit. Special services, such as insurance and travel, are managed separately and are offered to both individuals and businesses.

The bank's CEO recently hired a new vice president of operations who was given the charge to "shake things up" and "keep us competitive." The individual had experience in one of the Big Boys but wished to move back to his original hometown. His challenge would be to balance the needs for innovative new technologies with hometown pride and traditional service.

Case Questions

1. What form of departmentalization does Home State Bank utilize? 2. Do you believe Home State Bank would be better served by a centralized or a decentralized form of structure? Defend your choice. 3. Should Home State Bank employ a mechanistic or organic type of structure? 4. How would the organizational structure of Home State Bank likely be different from that of the Big Boys? 5. Describe the impact of a change in structure on Home State Bank's employees, should the company reorganize in some new way.

Review Questions

Click on each question to see the answer.

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De�ine the terms "organization," "organizational structure," and "organizing." (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

An organization is a system of consciously coordinated activities or forces of two or more persons. Organizational structure is the manner in which organizational tasks are formally divided, grouped, and coordinated. Organizing is a managerial process which involves the deployment of organizational resources designed to achieve strategic objectives.

What are the three steps of the organizing process? (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

The standard elements involved in organizing include job design, departmentalization, and the creation of lines of authority and responsibility.

Name the primary forms of departmentalization. (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

Departmentalization takes place by constructing departments or divisions in which similar jobs are located together. Forms of departmentalization include departmentalization by function, product, process, customers, geographic areas, strategic business units, and the matrix form.

De�ine authority and responsibility and then name the three types of authority. (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

Authority is the right to direct with permission to act over lower level employees. The "right to direct" implies the right to manage company activities, or in more common terms, tell people what to do. "Permission to act" re�lects the decision-making aspect of authority, or the right to decide what to do. Employee responsibility, or accountability, suggests the obligation to carry out tasks as assigned by the supervisor. The three types of authority found in today's business organizations are line authority, staff authority, and functional authority.

What are the key elements of organizational design? (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

When an organizational design has been completed, the key elements in place are the chain of command/hierarchy of authority, vertical and horizontal dimensions, line and staff dimensions, span of control, standardization and formalization, centralization and decentralization, and mechanistic and organic dimensions.

Describe a virtual organization and a boundaryless organization. (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

A virtual organization is a geographically distributed organization whose members are bound by a long-term common interest or goal, and who communicate and coordinate their work through information technology. The boundaryless organization form seeks to eliminate the vertical and horizontal boundaries between a company and its customers and suppliers. Further, a boundaryless organization should try to eliminate the chain of command and replace departments with self-managed teams.

What are the �ive main causes or determinants of organizational structure? (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

The �ive determinants are rationality, organizational size, strategies, technology, and the organization's environment.

What factors cause individual employees to resist change? (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

Employees resist change for a variety of more or less logical reasons. Among the more common rationales are employee self-interest, lack of understanding, lack of trust in management, differing assessments of the need for change, and a low tolerance for change.

Explain the three-step model of organizational change. (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

Successful change in organizations takes place when three steps occur. The �irst, unfreezing, requires a change agent to deal with resistance by addressing individual resistance, as well as pressures for group conformity. Movement, the second step, considers the status quo and where the company must go. Refreezing seeks to make the change permanent.

What managerial factors are affected by a change in an organization's structure? (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633

Organizational structure and changes in organizational structure create a series of outcomes. Among them are the number and types of decisions made at all ranks, the amount of authority held at all levels, the number of tasks performed by entry-level employees, the formality of relationships, role clarity and role ambiguity, and perceived chances for advancement.

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Analytical Exercises

1. Two forms of matrix organizations include those divided by products and functions and those divided by products and countries. Would a matrix organization divided in other ways be feasible? Discuss the following possibilities:

product and process product and customer product and geographic region customer and geographic region

2. In the opening case, ITC Holdings was restructured in dramatic ways to accommodate more effective management of operations. Which form of authority structure would best �it the redesigned structure?

3. Identify what you believe would be the most ideal form of chain of command/hierarchy of authority, vertical and horizontal dimensions, line and staff, span of control, standardization and formalization, centralization or decentralization, and mechanistic or organic structure for the following situations:

major league baseball team that owns three minor league teams Winn-Dixie grocery stores Geico Insurance local newspaper in a town of 250,000 citizens Amazon.com

4. Of the �ive main determinants of organizational structure—rationality, company strategies, organizational size, company technology, and the external environment—which would have the greatest impact on the following organizations?

video game company (manufactures gaming hardware and creates games) local restaurant chain with three locations local independent insurance agency selling policies for multiple national companies golf equipment manufacturer

5. Changes in organizational structure and organizational design affect the number and types of decisions made at all ranks, the amount of authority held at all levels, the number of tasks performed by entry-level employees, formality of relationships, role clarity and role ambiguity, and perceived chances for advancement. Describe these factors in the following situations:

impact on an entry-level employee with high needs for achievement combined with high needs for autonomy impact on an entry-level employee with an external locus of control and high needs for af�iliation impact on a company experiencing declining sales and layoffs impact on a growing company adding employees

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Key Terms

Click on each key term to see the de�inition.

authority (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

The right to direct with permission to act over lower-level employees.

bureaucracy (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

A mechanistic and centralized form of organizational structure (Weber's rational ideal type).

centralization (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

The degree of organization-wide delegation of authority that relies heavily on the chain of command to direct organizational activities.

change agent (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

The individual who leads an organizational change.

decentralization (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

Organization-wide delegation of authority that allows managers at lower ranks to make more important decisions on behalf of the organization.

departmentalization (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

Placing jobs into logical groups (departments).

�irst-order change (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

A lower-magnitude shift in direction in an organization.

formalization (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

A set of rules and procedures that employees follow.

matrix organizations (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

Also called two-boss systems; organizations in which each employee answers to a functional area supervisor as well as a product manager.

mechanistic (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

An organizational structure characterized by high use of rules and procedures, a greater number of levels in the organization, formal relationships between workers, and a less �lexible method of operation.

organic (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

An organizational structure characterized by low use of rules and procedures, a small number of organizational levels and ranks, informal relationships among workers, and a more �lexible and adaptable method of operation.

organization (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

A system of consciously coordinated activities or forces of two or more persons.

organizational structure (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

The manner in which organizational tasks are formally divided, grouped, and coordinated.

organizing (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

A managerial process which involves the deployment of organizational resources designed to achieve strategic objectives; includes the division of labor, the creation of departments, and the establishment of formal lines of authority.

planned change (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

A change that occurs when a company alters its course in an intentional and goal-oriented fashion.

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responsibility (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

Also known as accountability; the obligation to carry out tasks as assigned by the supervisor.

second order change (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

A change that includes a set of multidimensional, radical, discontinuous new activities and strategies.

span of control (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

Also known as span of management; the number of employees reporting directly to a supervisor.

standardization (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

The creation of a signi�icant number of jobs that are exactly the same.

unplanned change (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

Change that takes place in a spontaneous fashion.

unity of command (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

The idea that each employee should be responsible to a single manager (that person's immediate supervisor) and all supervisors share and work toward the same organizational objectives.

work specialization (http://content.thuzelearning.com/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/cover/books/Baack.3633.17.1/sections/co

Division of labor, or the degree to which activities in an organization are subdivided into separate jobs.

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