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Centralization of authority is the location of most authority at the upper levels of the organization. In
a centralized organization, managers make most decisions, even relatively small ones.
Decentralization is the location of a significant amount of authority in the lower levels of the
Practice Being a Manager
WORK DYNAMICS
Exercise Overview and Objective
This is a role-play exercise that provides an experiential base for discussion of job design and
organizational design. Students are assigned to teams, and then each team member is assigned to a role as
Preparation
No student preparation is required for this exercise. You may want to decide in advance on work team
and role assignments. Students will need plenty of available copy material for the editing work. Each
team should have an identical, or quite similar, stack of annual reports, business magazines, or similar
In-Class Use
Once teams are organized and roles assigned, you should begin the first work session (Step 3). You
should announce, “start” at the opening of a work period, and “stop” at the conclusion. Ask each Project
Manager to total the results for their team, and submit them to you. If you used Observers, you might
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• What factors seemed to play a role in the efficiency and effectiveness of work groups?
If you elected to use the option of two work periods, then you should also explore the differences between
the two sessions. What adjustments did teams make, and why? Did these changes improve performance?
Under either the one-period or two-period forms, students are likely to quickly point up the lack of
The discussion following this exercise may turn toward motivation and goal setting. For example,
students may point out the absence of compensation or other rewards as a factor dampening performance.
Depending on your objectives for this session, you may want to direct the discussion away from this topic
Develop Your Career Potential
“WORK” IN SOMEONE ELSE’S SHOES
Purpose
One of the least discussed aspects of organizational design and job design is how strongly they can
influence individual behavior, attitudes, and perspectives. The purpose of this assignment is to have
Setting It Up
Since this is an individual exercise, you can set it up as an assignment by simply previewing it at the close
of class. Enforce the point that even students who don’t have jobs can find ways to “work” in someone
Questions
1. Describe the job-related differences or tensions where you work. Who is involved? What jobs do they
do? Explain why the job-related differences or tensions exist.
As usual, discussion of this question can be processed via class discussion or in small groups in which
the group members discuss their answers and then choose a spokesperson to summarize and share
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2. Since the best way to see things from someone else’s perspective is to “work” in his or her shoes, see
if you can spend a day, a morning, or even two hours performing one of these jobs. If that’s not
possible, spend some time carefully observing the jobs and then interview several people who
perform them. Describe your boss’s reaction to this request. Was he or she supportive? Why or why
not?
A quick way to gauge bosses’ reactions to this assignment is to write “supportive” and
“nonsupportive” on the board and then ask for a show of hands. Follow the tallying of results with a
3. Answer the following questions after you have worked the job or conducted your interviews. What
most surprised you about this job? What was easiest? What was hardest? Explain. Now that you’ve
had the chance to see things as others see them, what do you think would happen, good or bad, from
letting other people in your organization work in someone else’s shoes? Explain.
At this point, for variety, if you’ve run a general class discussion, you might want to switch to 3-5
minutes of group discussion, after which group spokespersons report their findings (typically 3- 5
Reel to Real – Biz Flix
Because they are so short, the Biz Flix videos are best used to supplement your lesson plans. They are
designed to illustrate the content rather than convey all of the chapter concepts.
Video: Rendition
Segment Summary:
What if someone you love…just disappeared? This is the question posed by the 2007 dramatic thriller
Rendition. Anwar El-Ibrahimi (Omar Metwally) boards a flight in South Africa but never arrives home to
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Discussion Questions from Text:
1. How would you describe the workplace atmosphere in this scene? Would you say it demonstrates
behavioral informality or formality?
Behavioral formality is characterized by routine and regimen, with specific rules about how to
behave, and impersonal detachment. In contrast, behavioral informality is characterized by
2. Do you think the scene shows line authority or staff authority between these two men?
Line authority is the right to command immediate subordinates in the chain of command, while staff
3. What kind of feedback is Alan Smith getting from Senator Hawkins? Is it primarily positive or
negative?
Alan Smith is getting feedback from Senator Hawkins that is primarily negative. Although Alan
Additional Discussion Questions:
1. If you were in Senator Hawkins’ shoes, would you have responded differently? If so, how?
Most students will agree that Senator Hawkins’ feedback was very negative and should be toned
2. If you were the senator, how would you apply delegation of authority or employee empowerment
to resolve this situation?
Delegation of authority is the assignment of direct authority and responsibility to a subordinate to
Reel to Real – Management Workplace
Management Workplace videos can support several in-class uses. In most cases you can build an entire
50-minute class around them. Alternatively, they can provide a springboard into a group lesson plan. The
Management Workplace video for Chapter 9 would be a nice companion to your introduction to the
course on the first day of teaching this chapter.
Video: Modern Shed
Designing Adaptive Organizations
Summary:
Modern Shed, based in Seattle, builds paneled dwellings for use as studio spaces, home offices, pool
houses, project sheds, guesthouses, and more. Like the sheds, the company is built to be adaptive,
Discussion Questions from Text:
1. Describe how Modern Shed functions as a modular organization.
As defined in the text, modular organizations focus on one or two core activities while
outsourcing all remaining business activities to outside companies, contractors, suppliers,
2. What are the advantages and disadvantages of Modern Shed’s organizational structure?
The advantages of operating as a virtual network include fast response to market needs; access to
Workplace Video Quiz
Video Segment 1
Video segment title
Organization Design and Structure
Start time (in sec)
0:00
Stop time (in sec)
2:33
Quiz Question 1
According to owner Ryan Smith, which of the following variables has had
a major influence on the type of organization structure used at Modern
Shed?
Option a
Limited number of resources and employees
Option b
Consumer segments
Option c
Location
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Option d
Technology
Correct option
a: Limited number of resources and employees
Feedback for option a
Correct. The design of Modern Shed’s organization is directly linked to the
amount of resources it has access to.
Quiz Question 2
When Ryan Smith explains that a typical business organization will often
have a group for answering phones, another group for accounting, and
another group for manufacturing, he is describing:
Option a
Span of management
Option b
Functional departmentalization
Option c
Delegation of authority
Option d
Line versus staff authority
Correct option
b: Functional departmentalization
Quiz Question 3
If all 12 to 14 full-time employees at Modern Shed report directly to owner
Ryan Grey Smith, this results in:
Option a
A bureaucracy
Option b
A tall structure
Option c
Unity of command
Option d
Line function
Correct option
c: Unity of command
Feedback for option a
Incorrect. Unity of command means that workers report to just one boss.
Feedback for option b
Incorrect. Unity of command means that workers report to just one boss.
Feedback for option c
Correct. Unity of command means that workers report to just one boss.
Feedback for option d
Incorrect. Unity of command means that workers report to just one boss.
Video Segment 2
Video segment title
Organization Design and Structure
Start time (in sec)
2:33
Stop time (in sec)
5:09
Quiz Question 1
To build individual sheds for customers, Modern Shed sets up temporary
partnerships with independent third-party businesses, which provide
building materials, interior components, and marketing and sales services.
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As a result, Modern Shed’s organization design is best characterized as:
Option a
Functional structure
Feedback for option a
Incorrect. Virtual organizations are companies that are part of a network in
which many companies share skills, costs, capabilities, markets, and
customers to collectively solve problems or provide specific products or
services.
Feedback for option b
Incorrect. Virtual organizations are companies that are part of a network in
customers to collectively solve problems or provide specific products or
Feedback for option d
Incorrect. Virtual organizations are companies that are part of a network in
which many companies share skills, costs, capabilities, markets, and
customers to collectively solve problems or provide specific products or
services.
Quiz Question 2
Eric Johnson, the independent paneling specialist mentioned in the clip, is
an outside contractor and member of Modern Shed’s dealer network. This
means Eric Johnson is:
Option a
Not an employee of Modern Shed
Option b
Not included in Modern Shed’s formal span of management
Option c
Not part of Modern Shed’s chain of command
Option d
All of these
Correct option
d: All of these
Feedback for option a
Incorrect. An outside contractor works with a company but is not formally
Feedback for option b
Incorrect. An outside contractor works with a company but is not formally
Feedback for option c
Incorrect. An outside contractor works with a company but is not formally
Quiz Question 3
Modern Shed’s organizational structure provides all the following benefits
except:
Option a
Allows a small company with limited resources to manufacture a
sophisticated product
Option b
Allows company to have low overhead costs
Option c
Limits managerial control of key partners and work processes
Option d
Enables flexibility to adapt quickly to new market opportunities
Correct option
c: Limits managerial control of key partners and work processes
Option c
Virtual organization
Option d
Matrix
Correct option
c: Virtual organization
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Feedback for option c
Correct. A virtual organization establishes a network of companies that
allows for great flexibility and adaptability.
Feedback for option d
Incorrect. A virtual organization establishes a network of companies that
allows for great flexibility and adaptability.
Video Segment 3
Video segment title
Organization Design and Structure
Start time (in sec)
5:10
Stop time (in sec)
7:20
Quiz Question 1
Modern Shed’s ability to quickly develop a new product in response to a
request by a national home-and-garden company highlights the following
characteristic of the firm’s organization structure:
Feedback for option a
Incorrect. A virtual organization establishes a network of companies that
allows for great flexibility and adaptability.
Feedback for option b
Correct. A virtual organization establishes a network of companies that
allows for great flexibility and adaptability.
Feedback for option c
Incorrect. A virtual organization establishes a network of companies that
allows for great flexibility and adaptability.
Feedback for option d
Incorrect. A virtual organization establishes a network of companies that
allows for great flexibility and adaptability.
Quiz Question 2
Modern Shed founder and CEO Ryan Smith would appear in the following
position on a traditional organization chart:
Option a
Top of the chart
Option b
Underneath the director of marketing
Option c
Side by side with company vice presidents
Option d
None of these
Correct option
a: Top of the chart
Feedback for option a
Correct. An organizational chart shows line of authority within a company.
Feedback for option c
Incorrect. An organizational chart shows line of authority within a
Feedback for option d
Incorrect. An organizational chart shows line of authority within a
company.
Quiz Question 3
A key advantage of Modern Shed’s business structure is:
Option a
Lack of control over independent contractors
Option b
High product expertise with low employee payroll costs
Option c
Ability for mass production
Option d
Limited financial resources
b: High product expertise with low employee payroll costs
Option a
High efficiency in stable, predictable environment
Option b
High flexibility and innovation in a dynamic, uncertain environment
Option c
Cost leadership in a stable, predictable environment
Option d
Maximum control over supply chain
Correct option
b: High flexibility and innovation in a dynamic, uncertain environment
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Feedback for option a
Incorrect. Virtual organizations are companies that are part of a network in
which many companies share skills, costs, capabilities, markets, and
customers to collectively solve problems or provide specific products or
services.
Feedback for option b
Correct. Virtual organizations are companies that are part of a network in
Review Questions
1. Compare an organizational structure and an organizational process.
Organizational structure is the vertical and horizontal configuration of departments, authority, and
jobs within a company. For example, Exhibit 9.1 shows Sony’s organizational chart. From this chart,
2. What five methods have traditionally been used to departmentalize work and workers? Give one
advantage and one disadvantage of each.
Departmentalization is subdividing work and workers into separate organizational units responsible
for completing particular tasks. Traditionally, these five methods of departmentalization have proved
to be the most common:
• Functional departmentalization is the structure in which workers are organized into separate
units responsible for particular business functions or areas of expertise. Advantages include
• Customer departmentalization organizes workers into separate units responsible for particular
kinds of customers. The primary advantage is that it focuses the organization on customer
• Geographic departmentalization organizes workers are organized into separate units
• Matrix departmentalization creates a hybrid organizational structure in which two or more
forms of departmentalization, most often product and functional, are used together. Matrices
3. How do managers generally describe organizational authority?
Organizational authority is determined by the chain of command, line versus staff authority,
delegation, and the degree of centralization in a company. Line authority is the right to command
4. When delegating work, what is the relationship between responsibility, authority, and accountability?
Managers can exercise their authority directly by completing the tasks themselves, or they can choose
to pass on some of their authority to subordinates. Delegation of authority is the assignment of direct
5. Why do companies use job specialization? How can specialized jobs be modified to eliminate the
boredom and low job satisfaction associated with them?
Companies use job specialization to maximize efficiency by creating employee specialists who
become experts in their jobs. Employees can also perform specialized jobs better because that’s all
6. What is the main concern of the job characteristics model?
The primary goal of the job characteristics model (JCM) is to create jobs that result in positive
personal and work outcomes such as internal work motivation, satisfaction with one’s job, and work
7. What differentiates a mechanistic organization from an organic organization?
A mechanistic organization is characterized by specialized jobs and responsibilities, precisely
defined, unchanging roles, and a rigid chain of command based on centralized authority and vertical
8. How do companies use reengineering to redesign organizational processes?
Reengineering is fundamental rethinking and radical redesign of business processes to achieve
dramatic improvements in critical measures of performance, such as cost, quality, service, and speed.
9. How do formal workplaces differ from informal workplaces?
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Behavioral formality is a workplace atmosphere characterized by routine and regimen, specific rules
about how to behave, and impersonal detachment. Behavioral informality is a workplace atmosphere
10. What are the differences between modular and virtual organizations? What are their advantages and
disadvantages?
Because modular organizations outsource all non-core activities to other businesses, they are less
expensive to run than traditional companies. However, modular organizations require extremely close
Additional Activities and Assignments
Out-of-Class Project: “College Organizational Structure” Divide the class into small groups. Each
group should thoroughly research your college’s organizational structure, including the types of
departmentalization used and the chain of command between you (the instructor) and the highest level of
management. Each group should present their findings and the organizational chart to the class; the most
accurate work should be rewarded.
In–Class Activity: “Job Design.” Divide the class into small groups (3-4 students). Ask each group to
come up with some ideas on how to use job rotation, job enlargement, and job enrichment for the
following characteristics: 1) skill variety; 2) task identify; and 3) task significance. (Feedback would be
difficult for an outsider to rate.) Then add the scores. Which job was the best? Is this the type of job you
would prefer? Why or why not?
kind of departmentalization is used? What are the various departments (just underneath the top
management)?
Reengineering. Go to at least three Web sites of companies that sell consulting services to firms that need
reengineering. What do these consulting services offer? What special areas do they handle?