Griffin Mgmt12e IM Ch08

CHAPTER 10
Basic Elements of Organizing

The second basic management function, as introduced in Chapter 1, is THE ORGANIZING PROCESS.
Part Four of the text is devoted to in-depth coverage of the various issues and concepts most relevant to
organizing.
Part Four contains four chapters. Chapter 10 introduces the basic elements of organizing. Chapter 11
discusses organization design. Organization change and innovation are covered in Chapter 12. Finally,
Chapter 13 deals with human resource management.
CHAPTER SUMMARY
This chapter introduces the basic elements of organizing. Key topics covered in the chapter are designing
jobs, grouping jobs via departmentalization, establishing reporting relationships, distributing authority,
coordinating activities, and differentiating between positions.
LEARNING OBJECTIVES
After covering this chapter, students should be able to:
1. Identify the basic elements of organizations.
2. Describe the basic alternative approaches to designing jobs.
3. Discuss the rationale and the most common bases for grouping jobs into departments.
4. Describe the basic elements involved in establishing reporting relationships.
5. Discuss how authority is distributed in organizations.
6. Discuss the basic coordinating activities undertaken by organizations.
7. Describe basic ways in which positions within an organization can be differentiated.
MANAGEMENT IN ACTION
Who’s the Boss?
The opening case looks at Treehouse Island Inc., a company that produces courses in web development
and programming and business education to teach students a range of technology-related skills. When
Ryan Carson and Alan Johnson, the two founders, realized the unhappiness of first-line employees, they
decided to cut back on management. They soon decided to cut all management. One of a manager’s
most important jobs is communicating so the company set up a new internal information tool called
Canopy. The new system requires much more time to get any task accomplished, a major drawback.
Carson and Johnson are also unsure how the system will work when the number of employees increases.
Management Update: In April 2015, Tony Hsieh, CEO of Zappos, announced the
company was moving toward a boss-free environment, no titles. Zappos is a successful
business so experts will closely watch their stab at holacracy.
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Management 12e by Ricky W. Griffin
LECTURE OUTLINE
I. THE ELEMENTS OF ORGANIZING
Organizing is deciding how best to group organizational activities and resources.

Organization structure is the set of elements that can be used to configure an organization.
There are six basic building blocks managers use when constructing an organization: designing
jobs, grouping jobs, establishing reporting relationships between jobs, distributing authority among
jobs, coordinating activities among jobs, and differentiating among positions.
Teaching Tip: The building block analogy used in the text is a good way to introduce
this material. Building blocks come in all manner of shapes and can be combined in
innumerable ways to create things. Likewise, the elements of organizing can be
configured in many different ways as well.
Group Exercise: You might ask student groups to sketch real or hypothetical
organization charts. You can then use the boxes (jobs) and reporting relationships (lines)
they generate to illustrate some of the elements of organizing introduced in this chapter.
II. DESIGNING JOBS
The first basic element of organization structure is job design.

Job design is the determination of an individual’s work-related responsibilities.
The natural starting point for designing jobs is determining the level of desired specialization.
A. Job Specialization
Job specialization is the degree to which the overall task of the organization is broken down
and divided into smaller component parts. It evolved from the concept of division of labor.
Mass-production capabilities stemming from job specialization techniques have had a
profound impact throughout the world.
B. Benefits and Limitations of Specialization
1. There are four benefits of specialization.
a) Workers will become proficient at their task because it is small and simple.
b) Transfer time between tasks decreases.
c) The more narrowly defined the job, the easier it is to develop specialized equipment
to assist with the job.
d) Training costs should be relatively low.
2. Drawbacks to job specialization.

a) The main problem with specialization is that the worker can become bored and
dissatisfied. This can lead to higher absenteeism and lower quality of work.
b) The anticipated benefits of specialization do not always occur.
c) Managers should avoid extreme specialization.
Extra Example: Another good example to illustrate how job specialization evolves is
Sam Walton. When Walton opened the first Wal-Mart store, he planned the store himself,
ordered all the merchandise, developed the newspaper ads, and even operated one of the
cash registers. Of course, as his business grew these jobs were later assigned to others.
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 121
Chapter 10: Basic Elements of Organizing
Discussion Starter: Ask students if they have experienced highly specialized jobs.
Discussion Starter: Ask students to speculate on how managers and organizations

should optimize job specialization in order to balance efficiency and worker satisfaction.
C. Alternatives to Specialization
Because of the drawbacks noted, many firms have sought alternative approaches to job design.
1. Job rotation involves systematically moving employees from one job to another.
This alternative has not been very successful because the jobs that lend themselves to
rotation tend to be relatively standard and routine. Worker satisfaction quickly wanes.
Job rotation can increase flexibility and lower costs.
Management Update: Many companies are using job rotation today for training. For
example, Southwest Airlines uses job rotation quite effectively, shifting employees
across jobs in different departments and different functions.
Global Connection: At General Electric’s plant in Puerto Rico, workers rotate to new
jobs every six months. They also get pay raises for each new job they master.
2. Job enlargement increases the total number of tasks workers perform.
There are some positive consequences but training costs usually increase, unions argue
that pay should increase as tasks increase, and in many cases the work remains boring
and routine even after job enlargement.
3. Job enrichment involves increasing both the number of tasks a worker does and the
control the worker has over the job.
Increasing an employee’s sense of responsibility requires managers remove some
controls from the job, delegate more authority, and structure the work in complete units.
Before implementing, work systems need analyzed, which seldom happens. In addition,
managers rarely ask for employee preferences when enriching jobs.
Cross-Reference: Job enrichment is based on the two-factor theory of motivation
developed by Frederick Herzberg. We discuss the two-factor theory in Chapter 15.
4. The job characteristics approach suggests that jobs should be diagnosed and improved
along five core dimensions, taking into account both the work system and employee
preferences.
a) Skill variety, the number of things a person does in a job.
b) Task identity, the extent to which the worker does a complete or identifiable portion
of the total job.
c) Task significance, the perceived importance of the task.
d) Autonomy, the degree of control the worker has over how the work is performed.
e) Feedback, the extent to which the worker knows how well the job is being
performed.
Extra Example: A useful way to illustrate variations on the core job dimensions is by
contrasting the jobs of airline pilot and airline ticket agent. The agent does one basic
thing (process tickets), while the pilot does several (preflight checks, taking off, flying,
landing, etc.). Similar distinctions can be drawn for each of the other dimensions.
High ratings on these dimensions presumably lead to high motivation, high-quality

performance, high satisfaction, and low absenteeism and turnover.
A concept called growth-need strength presumably affects how the model works for
different people. People indicative of high growth-need have a strong desire to grow,
develop, and expand their capabilities and expected to respond strongly to this
alternative. People with low growth-need are expected not to respond as strongly.
Group Exercise: Have small groups of students select a job they observe regularly (i.e.,
retail clerk, fast-food worker). Ask them to describe how each of the five core job
dimensions exist now and how the job might be changed to improve the core dimensions.
5. Work teams are another alternative to specialization that allows an entire group to
design the work system it will use to perform an interrelated set of tasks.
Cross-Reference: Work teams are discussed more fully in Chapter 18.
III. GROUPING JOBS: DEPARTMENTALIZATION
The second building block of organization structure is the grouping of jobs according to some
logical arrangement.
Departmentalization is the grouping of jobs according to some logical arrangement.
A. Rationale for Departmentalization
The rationale for departmentalization is linked to size. As the organization grows, it is no
longer possible for one owner-manager to oversee all of the workers. New managerial
positions oversee workers grouped according to some plan.
B. Common Bases for Departmentalization
Teaching Tip: Using Figure 10.2, stress for students that most organizations use multiple
bases of departmentalization in different areas and/or at different levels.
1. Functional departmentalization groups jobs involving the same or similar activities.
Most common in smaller organization, has three primary advantages.
a) Each department can be staffed by experts in that functional area.
b) Supervision is facilitated because an individual manager needs to be familiar
with only a relatively narrow set of skills.
c) Coordinating activities inside each department is easier.
As an organization grows, several disadvantages emerge.
a) Decision making tends to become slower and more bureaucratic.
b) Employees may concentrate too narrowly on their own unit, losing sight of the
total organizational system.
c) Accountability and performance become increasingly difficult to monitor.
Interesting Quote: “One of the beauties of the vertical, functional organization is that
who you report to and who’s the boss is very, very clear.” (Douglas Lennick, American
Express executive, Fortune, April 3, 1995, 92.).
2. Product departmentalization is grouping activities around products or product groups.
Advantages
a) Integrated and coordinated activities across products and product lines.
b) Enhances speed and effectiveness of decision making.
c) Product performance is easily and objectively measures, thereby improving

accountability of departments.
Disadvantages
a) Managers may focus on their own product or product group, ignoring the rest of
the organization.
b) Each department needs its own functional specialists, increasing administrative
costs.
Teaching Tip: Identify local organizations that use product departmentalization. (Many
retail outlets use this approach and serve as good examples.)
Global Connection: Few Japanese companies ever use functional departmentalization.

Instead, most Japanese companies use product- or customer-based departmentalization.
3. Customer departmentalization structures the organization’s activities so as to respond
to and interact with specific customers and customer groups.
The basic advantage is the ability to use skilled specialists to deal with unique customers
or customer groups. However, a fairly large administrative staff is required to integrate
the activities of the various departments.
4. Location departmentalization groups jobs on the basis of defined geographic sites or
areas.
The primary advantage is it enables the organization to respond easily to unique customer
and environmental characteristics in the various regions. On the negative side, a larger
administrative staff may be required to keep track of units in scattered locations.
Teaching Tip: If possible, identify for your students examples of local organizations that
use customer and location bases of departmentalization.
5. Other forms of departmentalization, such as time, can be used to group activities.
Airlines use this type of structuring. Sequence also can be used to structure an
organization. For example, insurance claim divisions frequently are organized by policy
number sequence.
Group Exercise: Have groups of students search for examples of different forms of
departmentalization in your college or university.
6. Other considerations include two final points about job grouping.
a) Common synonyms for departments: divisions, units, sections, or bureaus.
b) Almost any organization is likely to employ multiple bases of
departmentalization, depending on level.
c) The role of social media in departmentalization is beginning to impact
departmentalization.
IV. ESTABLISHING REPORTING RELATIONSHIPS
The third basic element of organizing is the establishment of reporting relationships among
positions.
A. Chain of Command
1. The chain of command is a clear and distinct line of authority among positions in the
organization. Comprised of two components: unity of command and the scalar principle.
Teaching Tip: Trace for students the chain of command in your college or university.
Discussion Starter: Discuss advantages and disadvantages of a clear chain of command.

2. Unity of command suggests that each person within an organization should have a clear
reporting relationship to one and only one boss.
3. The scalar principle suggests there must be a clear and unbroken line of authority
extending from the lowest to the highest position in the organization.
B. Narrow Versus Wide Spans

Span of management or span of control is the number of people who report to a particular
manager.
Managers and researchers seek to determine the optimal span of management.
One early writer, A. V. Graicunas, quantified span of management issues. He noted that a
manager must deal with three kinds of interactions with and among subordinates:
1. Direct – manager’s one-to-one relationship with each subordinate.
2. Cross – relationship among the subordinates themselves.
3. Group – relationships between groups of subordinates.
The number of possible interactions can be determined by the following formula:
I=N(2N/2 + N – 1)
I is the total number of interactions and N is the number of subordinates.
The important point is each additional subordinate adds more complexity than the previous
one. Going from nine to ten subordinates is very different from going from three to four.
Another early writer, Ralph C. Davis, described two kinds of spans: an operative span (could
approach 30 subordinates) for lower-level managers and an executive span for middle and top
managers (should be limited to between three and nine).
Lyndall F. Urwick and General Ian Hamilton both concluded the executive span should never
exceed six subordinates.
Group Exercise: Have students research the different spans of management for different
administrators in your college or university.
Teaching Tip: Have students use the formula shown in the text to calculate the effects of
different spans of management, say for spans of four, eight, and ten subordinates.
C. Tall Versus Flat Organizations
Tall organizations have more layers of management than do flat organizations.
Many businesses today have adopted a flatter organization by widening spans of management.
This may lead to improved employee morale and productivity as well as increased managerial
responsibility. Some companies are adapting the flat structure to improve communication and
flexibility.
Teaching Tip: Use Figure 10.3 to illustrate tall versus flat organizations.
Extra Example: An example of a firm that has always used a flat structure is Toyota.
Have students compare the number of layers in Toyota and its rival, General Motors.
Interesting Quote: “In a big organization each layer slows down the process. By
delayering you are giving people the power to change.” (Serge Huot, GE Executive,
Fortune, April 3, 1995, 96.)
D. Determining the Appropriate Span
There are at least eight factors that influence the determination of the appropriate span.
Teaching Tip: Table 10.1 summarizes the eight factors influencing span of management.
1. Competence of supervisor and subordinates (greater equals wider)
2. Physical dispersion of subordinates (greater equals narrower)
3. Extent of nonsupervisory work in manager’s job (more equals narrower)
4. Degree of required interaction (more equals narrower)
5. Extent of standardized procedures (more equals wider)
6. Similarity of tasks being supervised (more similar equals wider)
7. Frequency of new problems (higher equals narrower)
8. Preferences of supervisor and subordinate
Interesting Quote: “Remember the theory that a manager should have no more than six
or seven direct reports? I say the right number is closer to ten or fifteen. …With ten or
fifteen reports, a leader can focus only on the big important issues, not on minutiae.”
(Jack Welch, CEO of General Electric, Harvard Business Review, September–October
1989, 114.)
Global Connection: Many Chinese managers today are still concerned with trying to
identify the “ideal” span of management. U.S. consultants report that when they visit
Chinese businesses, this is one of the most frequently asked questions.
V. DISTRIBUTING AUTHORITY
Another important building block in structuring organizations is the distribution of authority among
positions.
Authority is power that has been legitimized by the organization.
A. The Delegation Process
Delegation is the process by which managers assign work to subordinates.
1. The primary reason for delegation is to allow the manager to get more work done. Also,
the employee may have more expertise than the manager, or the manager may want to
challenge and develop the employee’s skills.
2. The delegation process involves three steps: (1) the manager assigns responsibility or
tasks, (2) gives authority needed to do the job, and (3) establishes accountability.
3. Delegation may be problematic if managers are unwilling to delegate, are too
unorganized to delegate or do not trust their employees enough to delegate. Also,
subordinates may be reluctant to accept delegation.
Teaching Tip: Relate delegation back to job specialization. As managers find it useful to
create new specialized jobs to perform various functions, they similarly may find it useful
and necessary to delegate authority to people performing those jobs.
Discussion Starter: Ask students if they have ever worked for a boss who did not
delegate properly. Explore whether the problem was too little or too much delegation.
B. Decentralization and Centralization

1. Decentralization is the process of systematically delegating power and authority
throughout the organization to middle and lower-level managers. Decentralization is one
end of a continuum, anchored at the other end by centralization.
2. Centralization is the process of systematically retaining power and authority in the
hands of higher-level managers.
What factors determine an organization’s position on the decentralization-centralization
continuum?
One common determinant is the organization’s external environment. Complexity and
uncertainty leads the organization to decentralize. Another factor is the history of the
organization. Firms tend to do what they have done in the past. A third factor is the
costlier and riskier the decision, the more pressure to centralize. Organizations consider
the abilities of lower-level managers. If lower-level managers do not have the ability to
make high-quality decisions, they may centralize decisions.
Teaching Tip: Point out the relationship between decentralization and flat organizations.
Specifically, as organizations become flatter, they must also become more decentralized.
VI. COORDINATING ACTIVITIES
A fifth major element of organizing is coordination. Job specialization and departmentalization

break jobs down into small units and combine them into departments. Coordination keeps the
departmental activities focused on the organizational goals.
Coordination is the process of linking the activities of the various departments in the organization.
Global Connection: Brazilian firms are traditionally managed in a highly centralized
manner. Guards often patrol factory floors, employee trips to the bathrooms are timed,
and employees are frequently searched when they leave work.
A. The Need for Coordination
The primary reason for coordination is that departments and work groups need information
and resources from each other to do their jobs. This interdependence comes in three forms:
pooled, sequential, and reciprocal.
1. Pooled interdependence occurs when units operate with little interaction; their output is
simply pooled. This is the lowest level of interdependence.
2. In sequential interdependence, the output of one unit becomes the input for another in a
sequential fashion. This creates a moderate level of interdependence, usually one way.
3. Reciprocal interdependence exists when activities flow both ways between units.
Extra Example: Note that different courses have different levels of interdependence. A
biology course and a philosophy course may be unrelated other than contributing to
overall student education (pooled interdependence), whereas Statistics I may feed directly
into Statistics II (sequential interdependence).
B. Structural Coordination Techniques
1. Organizations that use the managerial hierarchy to achieve coordination place one
manager in charge of interdependent departments or units.
Teaching Tip: Note that the hierarchy is most effective as a coordination technique when
the organization is relatively tall and centralized.
2. Rules and procedures coordinate routine activities. Not useful for complex problems.
3. Managers in liaison roles coordinate interdependent units by acting as a common point of

contact in order to facilitate the flow of information between units.
4. Task forces work well when interdependence is complex, involving several units.
Individuals from each unit who has special information form a task force to solve a
specific problem and then go back to their original units.
5. Integrating departments are a more permanent version of a task force. There are
permanent members as well as temporary members.
In general, the greater the degree of interdependence, the more attention the organization
must devote to coordination.
Teaching Tip: Liaison roles, task forces, and integrating departments are more likely to
be used for coordination in organizations that are relatively flat and decentralized.
C. Electronic Coordination
Technology, especially the Internet, email, handheld devices, and networked computers make
coordination easier.
Discussion Starter: Ask students who have jobs how their organization coordinates the
work of different employees.
VII. DIFFERENTIATING BETWEEN POSITIONS
A. Differences Between Line and Staff.

The last building block of organization structure is differentiating between line and staff
positions.
A line position is in the direct chain of command that is responsible for the achievement of an
organization’s goals.
A staff position provides expertise, advice, and support for line positions.
Differences between Line and Staff
1. Purpose differs. Line managers work toward organizational goals whereas staff managers
advise and assist.
2. Authority differs. Line authority is formal or legitimate authority whereas staff authority
is less concrete and may take many forms. Advise authority means the line manager can
choose whether to seek or avoid input from staff. Compulsory advice means the line
manager must consider the advice but can choose to heed it or ignore it. Functional
authority is the most important form. This is formal or legitimate authority over
activities related to the staff member’s specialty.
Teaching Tip: Provide some local examples of line and staff organizational positions.
B. Administrative Intensity
Administrative intensity is the degree to which managerial positions are concentrated in staff
positions.
High administrative intensity is an organization with many staff positions relative to the
number of line positions. Low administrative intensity reflects more line positions.
Discussion Starter: The text notes that many organizations have reduced the number of
staff members they employ. Ask students if they believe that this trend can go too far.
Specifically, is it imaginable that an organization can function with no staff employees?
END OF CHAPTER QUESTIONS
Questions for Review

1. Describe the five alternatives to job specialization. What is the advantage of each, as
compared to specialization?
Job rotation occurs when employees move systematically from one job to the next. This offers
workers some variety in their tasks. Job enlargement involves increasing the total number of tasks,
again giving workers some additional variety in the jobs. Job enrichment increases both the number
of tasks and the worker’s control over their own work. This tends to increase variety and the
worker’s need for achievement and growth. The job characteristics approach improves several
aspects of job design in an effort to increase meaningfulness, responsibility, and control. Work
teams provide an alternative to job specialization, and they allow the group to design and assign
tasks. Work teams increase job variety and autonomy.
2. What is meant by unity of command? By the scalar principle? Can an organization have one
without the other? Explain.
Unity of command is an organization design principle that states that every worker should report to
exactly one superior. The scalar principle states that there must be a clear and unbroken chain of
authority from every worker to the top manager in the firm. It is possible to have one without the
other. For example, a firm may use a matrix design in which the scalar principle holds but the unity
of command principle is violated because each worker reports to two superiors.
3. Describe the organizational structure that results from each of the different bases of
departmentalization. What implications does each of these structures have with regard to the
distribution of authority within the organization?
Functional departmentalization results in an organization in which workers who perform similar
tasks are grouped together. In this type of organization, authority is given to leaders who are experts
in each of the necessary functions. Product departmentalization results in groupings of employees
who all work on the same products. Product experts become leaders. Customer departmentalization
results in groupings of employees who all work with the same customer groups. Customer experts
become leaders. Under location departmentalization, employees are grouped based on their
geographic site. Authority resides in a leader who supervises all the work done at one site.
4. Explain the differences between line and staff positions. What are the advantages and
disadvantages of high versus low administrative intensity?
Line positions are filled by workers and managers who are in the direct chain of command related to
the achievement of the organization’s goals. Staff workers and managers provide support and advice
to those in line positions. If an organization has many staff positions relative to the number of line
positions, the administrative intensity is high. When administrative intensity is high, costs tend to be
high and production is inefficient. Most firms prefer low administrative intensity whenever possible
to reduce costs.
Questions for Analysis

5. Some people have claimed that the increasing technological sophistication required by many
of today’s corporations has led to a return to job specialization. In your opinion, what would
be the consequences of a sharp increase in job specialization? Consider both positive and
negative outcomes in your answer.
Many jobs devoted to information technology require specialization of skills and knowledge—for
example, computer programmers, systems engineers, and web site designers. Positive outcomes of
specialization include efficiency, the development of specialized expertise, and ease in training and
replacing workers. Disadvantages include worker boredom, lack of creativity, and difficulty in
coordinating the work of many diverse specialists.
6. Try to develop a different way to departmentalize your college or university, a local fast food
restaurant, a manufacturing firm, or some other organization. What might be the advantages
of your form of organization?
Responses will vary. One example follows: “Our business department has two units—the
accounting unit and a unit for other subjects. This can be improved by merging accounting with
finance to offer a single accounting and finance degree. The other unit can offer a degree that
combines marketing and management. Finance students already take accounting courses, while
accountants should learn about finance. Likewise, marketing can learn from management and vice
versa.”
7. Consider the list of jobs below. In your opinion, what is the appropriate span of management
for each? Describe the factors you considered in reaching your conclusion.
 A physician practices medicine in a privately owned clinic, while also supervising a
number of professional nurses and office staff.
 An owner-manager of an auto body shop deals with customers, directs several
experienced mechanics and trains and oversees the work of some unskilled laborers.
 A manager in an international advertising agency directs a team of professionals who are
located in offices around the world.
Students’ will give various answers, but here is an example of the factors they should consider. “For
the physician, the span can be relatively wide because workers and managers are experts, they work
in the one physical location, many procedures can be standardized, the tasks are similar, and the
problems are not usually new. On the other hand, the physician must perform a lot of
nonsupervisory work and must interact with workers constantly. In addition, the clerical workers
may require more oversight than the nurses due to professional training and expertise.”
Questions for Application

8. Consider a job you have held. (Or, if you have not held a job, interview a worker.) Using the
job characteristics approach, assess that job’s core dimensions. Then describe how the core
dimensions led to critical psychological states and, ultimately, to personal and work outcomes.
Clearly, students’ answers will vary. The students should correctly identify the core dimensions, and
then they should accurately describe the process by which dimensions lead to psychological states
and then to outcomes.
9. Use the Internet to locate organization charts for five different organizations. (Or use data
from the Internet to draw the organization charts yourself.) Look for similarities and
differences among them and try to account for what you find.
Many organizations do not publish their organization charts, but often, a look at the senior
management team can give significant clues to the organization structure. For example, if the top
mangers hold titles like Vice President of North American Operations then one can assume that the
firm is using location departmentalization. Students will note similarities in the makeup of the
structures such as a member of the top management team to represent each of the departments.
Differences will primarily be related to the bases of departmentalization and to different spans of
control.
10. Contact two very different local organizations (retailing firm, manufacturing firm, church,
civic club, and so on) and interview top managers to develop organization charts for each
organization. How do you account for the similarities and differences between them?
Interesting similarities should become evident among the civic organizations and the retail store.
Service orientation will differentiate these organizations from manufacturing firms. The main
different in the latter case may be in the production function. If one of the students chooses a
restaurant, which may be considered a service, discuss the production function. Likewise, if there is
an assembly plant that does not actually manufacture component parts, discuss how it differs from a
restaurant. There will be many avenues to explore in the different types of organizations.
END OF CHAPTER EXERCISES
Building Effective Conceptual Skills

I. Purpose
This exercise develops students’ conceptual skills through an investigation of span of control.
II. Format
The exercise must be done outside of class and can be effectively completed by an individual or by
a small group of students. Answers to the follow-up questions should be written outside of class.
The time required will vary, depending on how long each interview lasts. If you want to shorten the
exercise, reduce the number of workers to be surveyed.
III. Follow-Up
A. First, survey ten workers and managers about the span of management in their respective
workplaces.
B. Now, choose one of these individuals for further investigation. Interview this person to get a
better idea about the type of work that he or she does, the amount of required interaction with
supervisors, the skill levels expected of workers, and other factors that may enter into the
determination of optimal span of management. (See Table 10.1 for guidance.)
C. Given the information that you gathered in performing task 2, does the span of management in
the workplace make sense? Why or why not?
Students will have varying answers, depending on what they learn in their interviews. In order
to answer Question 3, students should refer to the section of text entitled “Determining the
Appropriate Span.”
D. If the span of management seems to be appropriate, what are some of the likely outcomes that
the organization can expect? What are some likely outcomes if it seems inappropriate?
Appropriate spans of management will help to ensure adequate but not overbearing
supervision, which should increase worker satisfaction and job performance, while keeping
costs to a minimum. Firms that have too narrow of a span will tend to have dissatisfied
workers, lower job performance, and overly high costs. Firms that have too broad of a span
will have lower job performance, including a lot of worker errors.
Building Effective Diagnostic Skills

I. Purpose
This exercise is designed to help students develop their diagnostic skills through the analysis of a
very real problem that should also be relevant and interesting to them.
II. Format
This diagnostic skills exercise can be done by individual students or students working together in
groups. The estimated time for completion of the exercise is about 20 minutes.
III. Follow-Up
A. For Scenario A, list the major barriers to decentralization that you foresee.
B. For Scenario B, list the major barriers to centralization that you foresee.
There will be some variation in answers to Questions 1 and 2, but students should mention
items such as resistance to change, changing perceptions of risk, communication barriers, and
power conflicts.
C. In your opinion, which scenario would be easier to implement in reality? In other words, is it
probably easier to move from centralization to decentralization or vice versa? Whatever your
opinion in the matter, be ready to explain it.
Students will probably recognize that the move from centralization to decentralization reduces
power for the fewest people, the top managers. At the same time, the move empowers many
people within the organization who have not had decision-making authority in the past. This
will be a popular move for most employees. In contrast, the change from decentralization to
centralization will reduce power for most employees and therefore is likely to meet more
resistance.
D. Given a choice of starting your career in a firm that’s either highly centralized or high
decentralized, which would you prefer? Why?
Students’ answers will vary, depending somewhat on their self-confidence and risk-taking
propensity. Some students will prefer the relative safety of a centralized organization, which
will shield new, young employees from the risks inherent in decision making. Others will
prefer the decentralized organization, which will give new employees more decision-making
power.
MANAGEMENT AT WORK
From Pyramid Schemes to Mutual Fun

This case outlines the organizational structure found at Rite-Solutions who builds advanced software for
the military as well as consumer-gaming platforms for casinos. The owners wanted to scrap the pyramid
and rethink the company as a community. The company has a stock-market type game called “Mutual
Fun” with the aim of making people feel relevant to the success of the business. So far the game has
generated more than 50 innovative product and process ideas.
Management Update: Rite-Solutions was a 2015 finalist for the 10th annual Bersin by
Deloitte WhatWorks Award program recognizing innovation and excellence in critical
areas of human resources.
1. Case Question 1: Obviously, Jim Lavoie and Joe Marino have little confidence in the chain of
command principle as a means of fostering success in today’s business world. Explain why,
referring to shortcomings in the concepts of unity of command and the scalar principle. How would
Lavoie and Marino respond to the criticism that, under their system, “the buck doesn’t stop
anywhere in particular”?
Lavoie says in the text that he believes the chain of command is a ‘relic’ designed to control
information flow. Lavoie understands the importance of innovation to organizational survival,
especially now as the pace of innovation increases. Lavoie and Marino think reporting to one boss
(unity of command) and the scalar principle (a clear chain of command) hinder innovation, as there
are more possibilities of someone dismissing an idea along the way. Lavoie and Marino likely feel
the ‘buck’ stops at the company itself, the community of workers comprising Rite-Solutions.
2. Case Question 2: Says Jim Lavoie: “Being acknowledged as part of an organization’s future is all
it takes for an employee to grow deeper roots in it.” First of all, explain what Lavoie means. Then
consider the following questions: Do you basically agree or disagree with Lavoie? Do you think
that it’s important to “grow roots” in an organization that you work for? What might it take for you
to feel that you’re “part of an organization’s future” – that it’s worth it to sink “deeper roots”? What
other factors might be important to you in feeling that you’re something more than a mere cog in
some organizational machine?
Possibly Lavoie means that if the employee has a personal interest in the company, they are likely to
stay and give the company their best efforts. Students may agree or disagree with Lavoie and will
have different opinions on “growing roots”.
3. Case Question 3: According to Lavoie, Mutual Fun is Rite-Solutions’ “Innovation Engine” (IE).
Its function, he says, is twofold: (1) It generates the good ideas that “fuel a Web 2.0 environment,”
and (2) it “engages the Y Generation to strive for the betterment of the organization.” What is a
Web 2.0 environment? What is the Y Generation? Do you work, or are you likely to be working, in
a Web 2.0 environment? What do you think you need to learn in order to succeed in such an
environment? Are you a member of the Y Generation? What values do you have that reflect Y
Generation values?
Student responses will vary but there should be some sense of the rapid expanse and use of
technology in today’s work environment. The Y Generation is comprised of individuals born
between the 1980’s and the year 2000. Most students will work in a Web 2.0 environment as this
work environment is common today. Student’s thoughts on the skills they will need varies. Most
students will be part of the Y Generation and they may mention values such as believing there is
more business success than profit. They want on-the-spot recognition and want to feel personally
responsible for making the world a better place and they tend to only stay at an organization for two
years.
4. According to one researcher on the role of gamification in business,* the difference between a
product created in a factory and one that is crowdsourced is that in the former case, coordination is
supplied by managers. In the latter case, it is provided by a structure that emerges spontaneously
through the actions of the crowd. What about you? Are you more comfortable working with other
people when the requirements of the work are handed down by someone in “authority” or more
comfortable when they “emerge spontaneously” from the interactions of a group? Under which
circumstances are you more “creative”? Has your experience with social media influenced your
attitude toward game playing as a way of connecting or even collaborating with other people?
Student answers will vary widely for all of these questions.
*Neil B. Niman, The Gamification of Higher Education: Developing a Game-Based Business Strategy in
a Disrupted Marketplace (Palgrave Macmillan, 2014), pp. 58-59.

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CHAPTER 10

Basic Elements of Organizing

I. THE ELEMENTS OF ORGANIZING

Organizing is deciding how best to group organizational activities and resources.

II. DESIGNING JOBS

The first basic element of organization structure is job design.

2. Drawbacks to job specialization.

Discussion Starter: Ask students to speculate on how managers and organizations

High ratings on these dimensions presumably lead to high motivation, high-quality

III. GROUPING JOBS: DEPARTMENTALIZATION

c) Product performance is easily and objectively measures, thereby improving

Global Connection: Few Japanese companies ever use functional departmentalization.

IV. ESTABLISHING REPORTING RELATIONSHIPS

Discussion Starter: Discuss advantages and disadvantages of a clear chain of command.

B. Narrow Versus Wide Spans

B. Decentralization and Centralization

VI. COORDINATING ACTIVITIES

A fifth major element of organizing is coordination. Job specialization and departmentalization

3. Managers in liaison roles coordinate interdependent units by acting as a common point of

VII. DIFFERENTIATING BETWEEN POSITIONS

A. Differences Between Line and Staff.

END OF CHAPTER QUESTIONS

Questions for Review

Questions for Analysis

Questions for Application

END OF CHAPTER EXERCISES

Building Effective Conceptual Skills

Building Effective Diagnostic Skills

From Pyramid Schemes to Mutual Fun

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