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Part 3 Chapter 7

Managing for Quality and Competitiveness

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We continue part 3 of your textbook, Managing for Quality and Competitiveness, with chapter 7, Organization, Teamwork, and Communication.

CHAPTER 6

The Nature of Management

CHAPTER 7

Organization, Teamwork, and Communication

CHAPTER 8

Managing Service and Manufacturing Operations

In chapter 7, we take a look at organization, teamwork, and communication as it relates to business management. An organization’s structure determines how well it makes decisions and responds to problems, and it influences employees’ attitudes toward their work. Because a business’s structure can so profoundly affect its success, this chapter will examine organizational structure in detail. First, we discuss how an organization’s culture affects its operations. Then we consider the development of structure, including how tasks and responsibilities are organized through specialization and departmentalization. Next, we explore some of the forms organizational structure may take. Finally, we consider communications within business.

Learning Objectives

LO 7-1 Define organizational structure and relate how organizational structures develop.

LO 7-2 Describe how specialization and departmentalization help an organization achieve its goals.

LO 7-3 Determine how organizations assign responsibility for tasks and delegate authority.

LO 7-4 Compare and contrast some common forms of organizational structure.

LO 7-5 Distinguish between groups and teams and identify the types of groups that exist in organizations.

LO 7-6 Describe how communication occurs in organizations.

LO 7-7 Analyze a business’s use of teams.

After reading this chapter, you will be able to:

Define organizational structure, and relate how organizational structures develop.

Describe how specialization and departmentalization help an organization achieve its goals.

Determine how organizations assign responsibility for tasks and delegate authority.

Compare and contrast some common forms of organizational structure.

Distinguish between groups and teams, and identify the types of groups that exist in organizations.

Describe how communication occurs in organizations.

Analyze a business’s use of teams.

Organizational Culture

A firm’s shared values, beliefs, traditions, philosophies, rules, and role models for behavior

Formally

Mission statement

Code of ethics

Methods & Manuals

Ceremonies

Informally

Dress code & work habits

Discussions with co-workers

Extracurricular activities and stories

One of the most important aspects of organizing a business is determining its organizational culture, a firm’s shared values, beliefs, traditions, philosophies, rules, and role models for behavior. Also called corporate culture, an organizational culture exists in every organization, regardless of size, organizational type, product, or profit objective.

A firm’s culture may be expressed formally through its mission statement, codes of ethics, memos, manuals, and ceremonies, but it is more commonly expressed informally. Examples of informal expressions of culture include dress codes (or the lack thereof), work habits, extracurricular activities, and stories. Employees often learn the accepted standards through discussions with co-workers.

Attitudes and Behaviors Associated with Corporate Culture (1 of 2)

Ensures that organizational members:

Share values

Observe common rules

Share problem-solving approaches

Organizational culture helps ensure that all members of a company share values and suggests rules for how to behave and deal with problems within the organization.

Attitudes and Behaviors Associated with Corporate Culture (2 of 2)

	Employees who view their culture negatively	Employees who view their culture positively
Committed toward organization	17%	86%
Satisfied with organization	13%	87%
Likely to recommend their organization to others	13%	88%
Intend to leave the organization	63%	10%
Alignment with leadership	8%	59%

The table confirms that executives in this study believe that corporate culture has a significant impact on organizational performance and the ability to retain good employees. The key to success in any organization is satisfying stakeholders, especially customers. Establishing a positive organizational culture sets the tone for all other decisions, including building an efficient organizational structure.

Source: Survey conducted by Critical Metrics LLC CR Magazine 3, June 2012, www.thecro.com/content/quantifying-corporate-culture

TOMS Shoes

TOMS Shoes’ organizational culture is determined by the founder’s desire to provide as many shoes as possible to children in developing countries

The for-profit component of the company manages overall operations

Its nonprofit component, Friends of TOMS, is responsible for volunteer activities and shoe donations

TOMS Shoes’ organizational culture is determined by the founder’s desire to provide as many shoes as possible to children in developing countries (where shoeless children walk for miles to get water, food, and medical care). Blake Mycoskie gives hundreds of thousands of shoes to children around the world each year, creating a strong organizational culture of giving back and corporate social responsibility. His company operates with a program that for every shoe purchased, a shoe will be donated to children in need. His company operates with a program that for every shoe purchased, a shoe will be donated to children in need. The organizational structure at TOMS Shoes consists of two parts. The for-profit component of the company manages overall operations. Its nonprofit component, Friends of TOMS, is responsible for volunteer activities and shoe donations.

Organizational Structure

The arrangement or relationship of positions within an organization

Getting people to work together efficiently and coordinating the skills of diverse individuals require careful planning

An organization’s structure develops when:

Managers assign work tasks to specific individuals or work groups

Coordinate the diverse activities required to reach the firm’s objectives

Structure is the arrangement or relationship of positions within an organization. Rarely is an organization, or any group of individuals working together, able to achieve common objectives without some form of structure, whether that structure is explicitly defined or only implied. Getting people to work together efficiently and coordinating the skills of diverse individuals require careful planning. Developing appropriate organizational structures is therefore a major challenge for managers in both large and small organizations.

An organization’s structure develops when managers assign work tasks and activities to specific individuals or work groups and coordinate the diverse activities required to reach the firm’s objectives

Organizational Chart

A visual display of the organizational structure, lines of authority (chain of command), staff relationships, permanent committee arrangements, and lines of communication

The figure on the next slide (figure 7.1 in text), shows these stages of growth with three organizational charts (visual displays of organizational structure, chain of command, and other relationships).

The Evolution of a Clothing Store Phases 1, 2, and 3

The best way to begin to understand how organizational structure develops is to consider the evolution of a new business such as a clothing store. At first, the business is a sole proprietorship in which the owner does everything—buys, prices, and displays the merchandise; does the accounting and tax records; and assists customers. As the business grows, the owner hires a salesperson and perhaps a merchandise buyer to help run the store. As the business continues to grow, the owner hires more salespeople. The growth and success of the business now require the owner to be away from the store frequently, meeting with suppliers, engaging in public relations, and attending trade shows. Thus, the owner must designate someone to manage the salespeople and maintain the accounting, payroll, and tax functions. If the owner decides to expand by opening more stores, still more managers will be needed. The figure above (figure 7.1 in text), shows these stages of growth with three organizational charts (visual displays of organizational structure, chain of command, and other relationships).

Specialization

The division of labor into small, specific tasks and the assignment of employees to do a single task

Reasons to specialize

Efficiency

Workers do not waste time shifting from one job to another

Ease of training

Activities too numerous for one person

After identifying all activities that must be accomplished, managers then break these activities down into specific tasks that can be handled by individual employees. This division of labor into small, specific tasks and the assignment of employees to do a single task is called specialization. The rationale for specialization is efficiency. People can perform more efficiently if they master just one task rather than all tasks. Specialization means workers do not waste time shifting from one job to another, and training is easier. Specialization also occurs when the activities that must be performed within an organization are too numerous for one person to handle.

Over-Specialization

Negative consequences

Employees become bored

Job dissatisfaction

Poor quality work

Increased injuries

Increased employee turnover

Overspecialization can have negative consequences. Employees may become bored and dissatisfied with their jobs, and the result of their unhappiness is likely to be poor quality work, more injuries, and high employee turnover. In extreme cases, employees in crowded specialized electronic plants are unable to form working relationships with one another.

Job Specialization

Common in automobile manufacturing

Divide work into smaller specialized tasks

Employees can perform their work more quickly and efficiently

Job specialization is common in automobile manufacturing. By dividing work into smaller specialized tasks, employees can perform their work more quickly and efficiently.

Departmentalization

The grouping of jobs into working units usually called departments, units, groups, or divisions

Most companies use more than one departmentalization plan to enhance productivity

Functional departmentalization

Product departmentalization

Geographical departmentalization

Customer departmentalization

After assigning specialized tasks to individuals, managers next organize workers doing similar jobs into groups to make them easier to manage. Departmentalization is the grouping of jobs into working units usually called departments, units, groups, or divisions. As we shall see, departments are commonly organized by function, product, geographic region, or customer. Most companies use more than one departmentalization plan to enhance productivity. For instance, many consumer goods manufacturers have departments for specific product lines (beverages, frozen dinners, canned goods, and so on) as well as departments dealing with legal, purchasing, finance, human resources, and other business functions.

Functional Departmentalization

The grouping of jobs that perform similar functional activities, such as finance, manufacturing, marketing, and human resources

Functional departmentalization groups jobs that perform similar functional activities, such as finance, manufacturing, marketing, and human resources. This approach is common in small organizations. A weakness of functional departmentalization is that, because it tends to emphasize departmental units rather than the organization as a whole, decision making that involves more than one department may be slow, and it requires greater coordination.

Product Departmentalization

The organization of jobs in relation to the products of the firm

Product departmentalization , as you might guess, organizes jobs around the products of the firm. Functional activities—production, finance, marketing, and others—are located within each product division. Consequently, organizing by products duplicates functions and resources and emphasizes the product rather than achievement of the organization’s overall objectives. However, it simplifies decision making and helps coordinate all activities related to a product or product group.

Geographical Departmentalization

The grouping of jobs according to geographic location, such as state, region, country, or continent

Geographical departmentalization groups jobs according to geographic location, such as a state, region, country, or continent. Multinational corporations often use a geographical approach because of vast differences between different regions. However, organizing by region requires a large administrative staff and control system to coordinate operations, and tasks are duplicated among the different regions.

Customer Departmentalization

The arrangement of jobs around the needs of various types of customers

Customer departmentalization arranges jobs around the needs of various types of customers. Customer departmentalization, like geographical departmentalization, does not focus on the organization as a whole and therefore requires a large administrative staff to coordinate the operations of the various groups.

PepsiCo Inc. is organized into business units

PepsiCo Americas Foods: which includes brands such as Frito-Lay North America, Quaker Foods North America, and all of its Latin American food and snack businesses

PepsiCo Americas Beverages: which includes the Mountain Dew, Lipton, and Tropicana brands

PepsiCo Europe: which includes regional brands like Wimm-Bill-Dann and Marbo as well as all beverage, food, and snack businesses in Europe and South Africa

PepsiCo Asia, Middle East and Africa: which includes all beverage, food, and snack businesses in these regions

What type(s) of departmentalization does PepsiCo use for organizing its corporations?

PepsiCo Inc. is organized into business units:

PepsiCo Americas Foods, which includes brands such as Frito-Lay North America, Quaker Foods North America, and all of its Latin American food and snack businesses;

PepsiCo Americas Beverages, which includes the Mountain Dew, Lipton, and Tropicana brands;

PepsiCo Europe, which includes regional brands like Wimm-Bill-Dann and Marbo as well as all beverage, food, and snack businesses in Europe and South Africa; and

PepsiCo Asia, Middle East and Africa, which includes all beverage, food, and snack businesses in these regions.

What type(s) of departmentalization does PepsiCo use for organizing its corporations?

PepsiCo has actually adopted a combination of two types of departmentalization. While it clearly separates foods from beverages in the Americas, the company chooses to divide its segments into geographic regions—a type of geographic departmentalization.

Delegation of Authority

Giving employees not only tasks, but also the power to make commitments, use resources, and take whatever actions are necessary to carry out those tasks

As a business grows, so do the number and complexity of decisions that must be made

No one manager can handle them all

Delegation of authority frees a manager to concentrate on larger issues such as planning or dealing with problems and opportunities

Delegation of authority means not only giving tasks to employees but also empowering them to make commitments, use resources, and take whatever actions are necessary to carry out those tasks. As a business grows, so do the number and complexity of decisions that must be made; no one manager can handle them all. Delegation of authority frees a manager to concentrate on larger issues, such as planning or dealing with problems and opportunities.

Responsibility and Accountability

Responsibility

The obligation, placed on employees through delegation, to perform assigned tasks satisfactorily and be held accountable for the proper execution of work

Accountability

The principle that employees who accept an assignment and the authority to carry it out are answerable to a superior for the outcome

Delegation also gives a responsibility, or obligation, to employees to carry out assigned tasks satisfactorily and holds them accountable for the proper execution of their assigned work. The principle of accountability means that employees who accept an assignment and the authority to carry it out are answerable to a superior for the outcome. The act of delegating authority to a subordinate does not relieve the superior of accountability for the delegated

job.

Degree of Centralization (1 of 2)

Centralized organizations

A structure in which authority is concentrated at the top, and very little decision-making authority is delegated to lower levels

Overcentralization can cause serious problems for a company

May take longer for the organization as a whole to implement decisions and to respond to changes and problems on a regional scale

The extent to which authority is delegated throughout an organization determines its degree of centralization.

In a centralized organization, authority is concentrated at the top, and very little decision-making authority is delegated to lower levels. Although decision-making authority in centralized organizations rests with top levels of management, a vast amount of responsibility for carrying out daily and routine procedures is delegated to even the lowest levels of the organization. Overcentralization can cause serious problems for a company, in part because it may take longer for the organization as a whole to implement decisions and to respond to changes and problems on a regional scale.

Degree of Centralization (2 of 2)

Decentralized organizations

An organization in which decision-making authority is delegated as far down the chain of command as possible

Delegating authority to lower levels of managers may increase the organization’s productivity

A decentralized organization is one in which decision-making authority is delegated as far down the chain of command as possible. Decentralization is characteristic of organizations that operate in complex, unpredictable environments. Delegating authority to lower levels of managers may increase the organization’s productivity. Decentralization requires that lower-level managers have strong decision- making skills.

Span of Management

The number of subordinates who report to a particular manager

A wide span of management exists when a manager directly supervises a very large number of employees

A narrow span of management exists when a manager directly supervises only a few subordinates

How many subordinates should a manager manage? There is no simple answer. Span of management refers to the number of subordinates who report to a particular manager. A wide span of management exists when a manager directly supervises a very large number of employees. A narrow span of management exists when a manager directly supervises only a few subordinates. The figure on this slide demonstrates the differences between a wide span and narrow span of management.

Organizational Layers

The levels of management in an organization

Complements the concept of span of management

A company with many layers of managers is considered tall; in a tall organization, the span of management is narrow

Organizations with few layers are flat and have wide spans of management

Many of the firms that have decentralized also flattened their structures and widened their spans of management

Complementing the concept of span of management is organizational layers, the levels of management in an organization. A company with many layers of managers is considered tall; in a tall organization, the span of management is narrow. Because each manager supervises only a few subordinates, many layers of management are necessary to carry out the operations of the business.

Learning Organization

Opens communication between departments in order to increase the level of learning among employees

Manager invests in employees through extensive training and minimal restrictions so creativity is emphasized

Employees are encouraged to experiment with the ideas that have the most value for customers

Managers encourage a healthy level of risk taking and learning from mistakes

Failure is valued as a learning experience

Success seen as a fleeting experience

A learning organization is one that opens communication between departments in order to increase the level of learning among employees within the organization. The manager creating and sustaining this kind of organization invests in employees through extensive training and minimal restrictions so that creativity is emphasized. Through the knowledge that is created and captured, employees are encouraged to experiment with the ideas that have the most value for customers. Managers encourage a healthy level of risk taking and learning from mistakes. Failure is valued as a learning experience and success, while celebrated, is seen as a fleeting experience that should not be the focus of the future because there is not much to learn from success.

Forms of Organizational Structures

Line structure

Line-and-staff structure

Multidivisional structure

Matrix structure

Managers must consider how to structure their authority relationships

What structure the organization will have

How it will appear on the organizational chart

Along with assigning tasks and the responsibility for carrying them out, managers must consider how to structure their authority relationships—that is, what structure the organization itself will have and how it will appear on the organizational chart. Common forms of organization include line structure, line-and-staff structure, multidivisional structure, and matrix structure.

Line Structure

The simplest organizational structure in which direct lines of authority extend from the top manager to the lowest level of the organization

Has a clear chain of command, which enables managers to make decisions quickly

Structure requires that managers possess a wide range of knowledge and skills

Most common in small businesses

The simplest organizational structure, line structure, has direct lines of authority that extend from the top manager to employees at the lowest level of the organization. This structure has a clear chain of command, which enables managers to make decisions quickly. A mid-level manager facing a decision must consult only one person, his or her immediate supervisor. However, this structure requires that managers possess a wide range of knowledge and skills. They are responsible for a variety of activities and must be knowledgeable about them all. Line structures are most common in small businesses.

Line-and-Staff Structure (1 of 2)

A structure having a traditional line relationship between superiors and subordinates and also specialized managers – called staff managers – who are available to assist line managers

Focus on their area of expertise in the operation of the business

Staff managers provide advice and support to line departments on specialized matters

May experience problems with overstaffing and ambiguous lines of communication

Employees may become frustrated with lack of authority

The line-and-staff structure has a traditional line relationship between superiors and subordinates, and specialized managers—called staff managers—are available to assist line managers. Line managers can focus on their area of expertise in the operation of the business, while staff managers provide advice and support to line departments on specialized matters such as finance, engineering, human resources, and the law.

However, line-and-staff organizations may experience problems with overstaffing and ambiguous lines of communication. Additionally, employees may become frustrated because they lack the authority to carry out certain decisions.

7-30

Line-and-Staff Structure (2 of 2)

The figure on this slide demonstrates the line-and-staff structure

Multidivisional Structure

A structure that organizes departments into larger groups called divisions

Occurs as organizations grow larger and more diversified

Divisions can be formed on the same bases as departments (customer, product, and/or geography)

Delegation of authority and divisionalized work

Inevitably creates work duplication

As companies grow and diversify, traditional line structures become difficult to coordinate, making communication difficult and decision making slow. When the weaknesses of the structure—the “turf wars,” miscommunication, and working at cross-purposes—exceed the benefits, growing firms tend to restructure, often into the divisionalized form. A multidivisional structure organizes departments into larger groups called divisions. Just as departments might be formed on the basis of geography, customer, product, or a combination of these, so too divisions can be formed based on any of these methods of organizing. Multidivisional structures permit delegation of decision-making authority, allowing divisional and department managers to specialize.

However, the divisional structure inevitably creates work duplication, which makes it more difficult to realize the economies of scale that result from grouping functions together.

Matrix Structure (1 of 2)

A structure that sets up teams from different departments, thereby creating two or more intersecting lines of authority; also called a project-management structure

Flexibility

Enhanced cooperation

Creativity

Respond quickly to changes in the environment

Generally expensive and quite complex

Employees may be confused as to whose authority has priority (project manager’s or immediate supervisor’s)

Another structure that attempts to address issues that arise with growth, diversification, productivity, and competitiveness, is the matrix. A matrix structure, also called a project management structure, sets up teams from different departments, thereby creating two or more intersecting lines of authority.

7-33

Matrix Structure (2 of 2)

This figure displays a matrix structure.

Groups and Teams

All teams are groups but not all groups are teams

A GROUP is two or more individuals who communicate with one another, share a common identity, and have a common goal

A TEAM is a small group whose members have complementary skills; have a common purpose, goals, and approach; and hold themselves mutually accountable

Virtual teams are employees in different locations who rely on technological tools to accomplish their goals

Regardless of how they are organized, most of the essential work of business occurs in individual work groups and teams, so we’ll take a closer look at them now. Although some experts do not make a distinction between groups and teams, in recent years there has been a gradual shift toward an emphasis on teams and managing them to enhance individual and organizational success. Traditionally, a group has been defined as two or more individuals who communicate with one another, share a common identity, and have a common goal. A team is a small group whose members have complementary skills; have a common purpose, goals, and approach; and hold themselves mutually accountable. All teams are groups, but not all groups are teams.

The type of groups an organization establishes depends on the tasks it needs to accomplish and the situation it faces. Some specific kinds of groups and teams include committees, task forces, project teams, product-development teams, quality-assurance teams, and self-directed work teams. All of these can be virtual teams—employees in different locations who rely on e-mail, audio conferencing, fax, Internet, videoconferencing, or other technological tools to accomplish their goals. Virtual teams are becoming a part of everyday business, with the number of employees working remotely from their employer increasing more than 80 percent in the last several years.

Differences Between Groups and Teams

WORKING GROUP	TEAM
Has strong, clearly focused leader	Has shared leadership roles
Has individual accountability	Has individual and group accountability
Has the same purpose as the broader organizational mission	Has a specific purpose that the team itself delivers
Creates individual work products	Creates collective work products
Runs efficient meetings	Encourages open-ended discussion and active problem-solving meetings
Measures effectiveness indirectly by its effects on others (e.g., financial performance of the business)	Measures performance directly by assessing collective work products
Discusses, decides, and delegates	Discusses, decides, and does real work together

The table above (table 7.2 in text) points out some important differences between them.

Working Group Team

1. Has strong, clearly focused leader 1. Has shared leadership roles

2. Has individual accountability 2. Has individual and group accountability

3. Has the same purpose as the broader organizational mission 3. Has a specific purpose that the team itself delivers

4. Creates individual work products 4. Creates collective work products

5. Runs efficient meetings 5. Encourages open-ended discussion and active problem-solving meetings

6. Measures its effectiveness indirectly by its effects on others 6. Measures performance directly by assessing collective work products

(e.g., financial performance of the business)

7. Discusses, decides, and delegates 7. Discusses, decides, and does real work together

Committees and Task Forces

Committees

A permanent, formal group that performs a specific task

Task Forces

A temporary group of employees responsible for bringing about a particular change

Come from all departments and levels of organization

Membership based on expertise rather than position

Occasionally, may be formed from individuals outside a company

Organizations make use of specialized groups two of which are presented on this slide: committees and the task force. A committee is usually a permanent, formal group that does some specific task. For example, many firms have a compensation or finance committee to examine the effectiveness of these areas of operation as well as the need for possible changes.

A task force is a temporary group of employees responsible for bringing about a particular change. They typically come from across all departments and levels of an organization. Task force membership is usually based on expertise rather than organizational position. Occasionally, a task force may be formed from individuals outside a company.

Teams (1 of 2)

Project Teams

Groups similar to task forces which normally run their operation and have total control of a specific work project

Product-Development Teams

A specific type of project team formed to devise, design, and implement a new product

In the United States, the use of teams in organizations has become fairly widespread. Teams are typically formed because they have been found to increase productivity, quality, and competitiveness. Teams are beneficial because they pool members’ knowledge and skills and make greater use of them than individuals working alone. It is important to point out that effective teams are usually small in number, no more than five members. Organizations employ different types of teams depending upon what they wish to accomplish. The more common types of teams are listed on this slide and the following slide: project teams, product development teams, quality assurance teams that are often called quality circles, and the highest form of team functioning called the self-directed work teams referred to as SDWT.

Project teams are groups similar to task forces which normally run their operation and have total control of a specific work project.

Product-development teams are a specific type of project team formed to devise, design, and implement a new product.

Teams (2 of 2)

Quality-Assurance Teams (or Quality Circles)

Small groups of workers brought together from throughout the organization to solve specific quality, productivity, or service problems

Self-Directed Work Teams (SDWT)

A group of employees responsible for an entire work process or segment that delivers a product to an internal or external customer

Quality-assurance teams (or quality circles) are small groups of workers brought together from throughout the organization to solve specific quality, productivity, or service problems.

Self-directed work teams (SDWT) are a group of employees responsible for an entire work process or segment that delivers a product to an internal or external customer.

Meetings and Teams

DID YOU KNOW?

A survey of managers and executives found that they feel 28 percent of meetings are a waste of time and that information could be communicated more effectively using other methods

At Google, small teams work on research and engineering projects that often last 6-12 months

Did you know? :A survey of managers and executives found that they feel 28 percent of meetings are a waste of time and that information could be communicated more effectively using other methods.

At Google, small teams work on research and engineering projects that often last 6-12 months

The Flow of Communication in an Organizational Hierarchy

The figure on this slide displays the flow of communication in an organizational hierarchy. Communication within an organization can flow in a variety of directions and from a number of sources, each using both oral and written forms of communication. The success of communication systems within the organization has a tremendous effect on the overall success of the firm. Alternatives to face-to-face communications—such as meetings—are growing, thanks to technology such as voice-mail, e-mail, social media, and online newsletters. Many companies use internal networks called intranets to share information with employees. Intranets increase communication across different departments and levels of management and help with the flow of everyday business activities.

Yammer and the Intranet

Many companies use internal networks called intranets to share information with

Intranets increase communication across different departments and levels of management and help with the flow of everyday business activities

Yammer is a social network that companies can use to connect employees with one another

Many companies use internal networks called intranets to share information with employees. Intranets increase communication across different departments and levels of management and help with the flow of everyday business activities. Companies can even integrate aspects of social media into their intranets, allowing employees to post comments and pictures, participate in polls, and create group calendars.

Yammer is a social network that companies can use to connect employees with one another.

Upward Communication

Flows from lower to higher levels of the organization

Includes information such as progress reports, suggestions for improvement, inquiries, and grievances

Formal channels of communication are intentionally defined and designed by the organization. They represent the flow of communication within the formal organizational structure, as shown on organizational charts. Traditionally, formal communication patterns were classified as vertical and horizontal, but with the increased use of teams and matrix structures, formal communication may occur in a number of patterns.

Upward communication flows from lower to higher levels of the organization and includes information such as progress reports, suggestions for improvement, inquiries, and grievances.

Downward Communication

Refers to the traditional flow of information from upper organizational levels to lower levels

Typically involves directions, assignment of tasks and responsibilities, performance feedback, and certain details about the organization’s strategies and goals

Downward communication refers to the traditional flow of information from upper organizational levels to lower levels. This type of communication typically involves directions, the assignment of tasks and responsibilities, performance feedback, and certain details about the organization’s strategies and goals.

Horizontal Communication

Involves the exchange of information among colleagues and peers on the same organizational level, such as across or within departments

Information informs, supports, and coordinates activities both within the department and with other departments

Horizontal communication involves the exchange of information among colleagues and peers on the same organizational level, such as across or within departments. Horizontal information informs, supports, and coordinates activities both within the department and with other departments. At times, the business will formally require horizontal communication among particular organizational members, as is the case with task forces or project teams.

Diagonal Communication

When individuals from different units and organizational levels communicate

With firms downsizing and increasing the use of work teams, workers are being required to communicate with others in different departments and on different levels to solve problems and coordinate work

With more and more companies downsizing and increasing the use of self-man aged work teams, many workers are being required to communicate with others in different departments and on different levels to solve problems and coordinate work. When these individuals from different units and organizational levels communicate, it is diagonal communication.

Informal Communication Channels

Grapevine

An informal channel of communication, separate from management’s formal, official communication channels

Friendships and nonwork social relationships comprise the informal organization of a firm

Managers can utilize informal communications as a sounding device

Information from grapevine could improve decision making

Use grapevine to their advantage by floating ideas, soliciting feedback, and reacting accordingly

While formal communications are important for organizational efficiency, informal communication has a profound impact on the effectiveness of the organization. Communication occurs between friends who may be in different departments and on different levels in the organization. The most significant information communication occurs through the grapevine that is separate form management's formal, official communication channels. Information passed along the grapevine may relate to the job or it may be gossip and rumor. The accuracy of grapevine information can be of great concern to managers.

Non-Verbal Communication

Non-verbal communication is embedded in most forms of communication; send messages out through hand movements, head nodding, tone of voice or written word

These indirect forms of communication can be more informative than the direct message being transmitted

It is important to be aware of one’s own non-verbal communication style in order to ensure sending the intended message

Non-verbal communication is embedded in most forms of communication and send messages out through hand movements, head nodding, and tone of voice or written word. These indirect forms of communication can be more informative than the direct message being transmitted. It is important to be aware of one’s own non-verbal communication style in order to ensure sending the intended message.

Improving Communication Effectiveness

Encourage employees to provide feedback

Managers should always encourage feedback, including concerns and challenges about issues

Helps identify strengths and weaknesses

Strong feedback mechanisms help empower employees

Avoid interruptions

Develop strong and effective communication channels through training

Important for companies to communicate e-mail policies throughout the organization

Without effective communication, the activities and overall productivity of projects, groups, teams, and individuals will be diminished. Communication is an important area for a firm to address at all levels of management.

One of the major issues of effective communication is in obtaining feedback. If feedback is not provided, then communication will be ineffective and can drag down overall performance. Managers should always encourage feedback, including concerns and challenges about issues. This will allow the organization to identify strengths and weaknesses and make adjustments when needed. Strong feedback mechanisms help to empower employees as they feel that their voices are being heard.

Interruptions can be a serious threat to effective communication. Various activities can interrupt the message. For example, interjecting a remark can create discontinuance in the communication process or disrupt the uniformity of the message.

Strong and effective communication channels are a requirement for companies to distribute information to different levels of the company. Businesses have several channels for communication, including face-to-face, e-mail, phone, and written communication (for example, memos). Each channel has advantages and disadvantages, and some are more appropriate to use than others. It is important that employees use e-mail correctly. It is quite easy to send the wrong email to the wrong person, and messages sent over e-mail can be misinterpreted. It is therefore important for companies to communicate their e-mail policies throughout the organization.

Solve the Dilemma (1 of 3) Quest Star in Transition

Quest Star (QS), manufactures quality stereo loudspeakers, wants to improve ability to compete against Japanese firms

QS Intracommunication Leadership Initiative (ILI) has flattened the layers of management

Uses teams and peer pressure to accomplish the plant’s goals instead of multiple management layers

Employees make all decisions within the boundaries of their responsibilities

Elect team representatives to coordinate with other teams

Teams are assigned tasks ranging from establishing policies to evaluating on-the-job safety

This Solve the Dilemma is taken from Chapter 7, page 228:

Quest Star (QS), which manufactures quality stereo loudspeakers, wants to improve its ability to compete against Japanese fi rms. Accordingly, the company has launched a comprehensive quality-improvement program for its Iowa plant. The QS Intracommunication Leadership Initiative (ILI) has flattened the layers of management. The program uses teams and peer pressure to accomplish the plant’s goals instead of multiple management layers with their limited opportunities for communication. Under the initiative, employees make all decisions within the boundaries of their responsibilities, and they elect team representatives to coordinate with other teams. Teams are also assigned tasks ranging from establishing policies to evaluating on-the-job safety.

Solve the Dilemma (2 of 3) Quest Star in Transition

Things to consider

Employees who are not self-motivated team players are having difficulty getting used to their peers’ authority within the system

Upper-level managers face stress and frustration because they must train workers to supervise themselves

However, employees who are not self-motivated team players are having difficulty getting used to their peers’ authority within this system. Upper-level managers face stress and frustration because they must train workers to supervise themselves.

Solve the Dilemma (3 of 3) Quest Star in Transition

Discussion Questions

What techniques or skills should an employee have to assume a leadership role within a work group?

If each work group has a team representative, what problems will be faced in supervising these representatives?

Evaluate the pros and cons of the system developed by QS.

Discussion Questions

1. What techniques or skills should an employee have to assume a leadership role within a work group?

2. If each work group has a team representative, what problems will be faced in supervising these representatives?

3. Evaluate the pros and cons of the system developed by QS.

Discussion

Identify four types of departmentalization and give an example of each type.

Discuss the different forms of organizational structure. What are the primary advantages and disadvantages of each form?

Distinguish between centralization and decentralization. Under what circumstances is each appropriate?

Define span of management. Why do some organizations have narrow spans and others wide spans?

Identify four types of departmentalization and give an example of each type.

Departmentalization is grouping jobs into working units usually called departments, units, groups, or divisions. Functional departmentalization is the grouping of jobs that perform similar functional activities, such as finance, manufacturing, marketing, and human resources. Product departmentalization is grouping jobs around the products of a firm. Geographical departmentalization is grouping jobs by geographic location, such as country, region, or an even smaller area. Customer departmentalization is grouping jobs around the needs of various types of customers, which allows an organization to respond to the needs of each group of customers. (Examples of these departmentalization types will vary according to the examples given by students).

Discuss the different forms of organizational structure. What are the primary advantages and disadvantages of each form?

The process of delegation establishes a pattern of authority and accountability, often called bureaucracy, within the organization. Various forms of bureaucracy include line structure, line-and-staff structure, and matrix structure, as well as committees.

A line structure is based on direct lines of authority that extend from the top executive to employees at the lowest level of an organization. This structure provides a clear chain of command, but it also requires managers to possess a wide range of knowledge.

In the line-and-staff structure there is a line relationship between superiors and subordinates, and line departments are directly involved in the operation of the organization. Specialized managers, called staff managers, are available to assist line managers.

The matrix structure involves setting up teams from different departments and creating two or more intersecting lines of authority. The matrix structure improves cross-pollination of ideas but is generally temporary.

Distinguish between centralization and decentralization. Under what circumstances is each appropriate?

A centralized organization is one in which top‑level managers delegate very little authority to lower-level employees. A decentralized organization is one in which authority is delegated as far down the chain of command as possible. A centralized organization is appropriate when the decisions to be made are risky and when low-level managers are not highly skilled in decision making. Decentralization is appropriate when the organization operates in complex and unpredictable environments.

Define span of management. Why do some organizations have narrow spans and others wide spans?

Span of management is the number of subordinates who report to a particular manager. A wide span of management exists when a manager directly supervises a large number of employees. A narrow span of management exists when a manager directly supervises only a few subordinates. The nature of spans of management in a company depends on the physical distance between managers and subordinates, on the managers’ responsibilities other than supervision, and on the degree of interaction required between managers and subordinates. Other factors include the frequency of problems, the competence of subordinates, and the existence of specific operating procedures.