Exam # 2

DECISION-MAKING

1. Is decision-making a function of management? No, it a part of all functions of management. Most closely associated with planning

2. Why do we make decisions as managers? To accomplish our goals efficiently

3. What’s the difference between programmed and non-programmed decisions? Programmed a set of decisions that has been developed for routine repetitive problems

o Normally associated with a standing company policyo Rule or standard operating procedure used in making the decision

Non-Programmed specific solution made for a problem that is novel (new), unique (different and hard to understand), complex (if you have to think about it), or unstructured

o Top managers—more important as you go up the management pyramid, conceptual skills very important

4. Do managers make more programmed or non-programmed decisions, in general? Managers make more programmed decisions As you go up the management ladder, top-level makes more non-programmed decisions, these decisions become more

common More autonomy more non-programed

5. What is decision-making under conditions of certainty? Managers know all available alternatives and outcomes associated with each. The outcomes of each alternative are

known with absolute certainty (100% probability)

6. What is decision-making under conditions of risk? Involves a risk of complete certainty regarding the outcomes of various alternatives, but an awareness of the probabilities Alternatives are known but outcomes are in doubt Most common condition Key element in decision making under conditions of risk is accurately determining the probabilities associated with each

alternative

7. What is decision-making under conditions of uncertainty? Don’t know the alternatives, the potential outcomes, or the probabilities of the outcome occurrences Hardest decision to make a good decision

8. Which decision-making condition is most common? Least common? Most difficult? Most common – Risk (probabilities 0-100%) Least common/Easiest – Certainty (100% probabilities) Most difficult – Uncertainty (no probabilities)

9. What is the key to making good decisions under risk? Accurately determining the probabilities associated with each alternative, always a risk (can still have an unfavorable

outcome)

10. How do programmed/non-programmed decisions and the different decision-making conditions relate? Certainty Programmed Uncertainty Non-programmed Risk Both (Programmed & Non-programmed) Most non-programmed decisions are made in craft jobs Most programmed decisions are made in enlarged jobs; every programmed decision was at one point or another a non-

programmed decision

11. What does the traditional economic model assume about decision-makers? (2 assumptions) Decisions are made under conditions of certainty

o Managers are completely rational (total rational) and seek to maximize benefits You always select the best alternative—maximizing Prescriptive model (of decision making) – what we should do but not actually what we do

12. Under what decision-making condition do decisions get made in the traditional economic model? Certainty

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13. What does the behavioral model assume about decision-makers? Assumes bounded rationality, rather than complete… Satisficing (satisfying rather than maximizing) a mental short cut that is a heuristic (not irrational) Managerial decisions are bounded by the limited mental capacity and emotions of the manager, as well as environmental

forces she cannot control How decisions are actually made, go from one to another until you reach one that satisfies Can only lead to a maximizing situation if you are lucky Descriptive model—describes how we do it

14. What is bounded rationality? What three things bound one’s rationality? Limits to your rationality that keep you from knowing everything. Managers are unable to grasp the full complexity of managerial decisions due to

o Emotional stateo Uncertainty of future events (<100%) o Limited mental capacity (7+/- 2)

15. What is satisficing? How does it differ from maximizing? Is it irrational? Satisficing – doesn’t consider all alternatives; managers don’t maximize their benefits. Select the 1st alternative that meets

a minimally acceptable standard, rather than going though and evaluating all the alternatives and selecting the best one Maximizing considers all alternatives.. Satisficing is not traditional, but not irrational because it may be sensible due to the limits of human processing Satisficing is more efficient and less time consuming

16. What is a heuristic? What are the advantages of and disadvantages of heuristics? Heuristic is a labor saving device or a rule of thumb that managers use because of their limited information processing

capabilities (mental shortcut) Simplifies complex environments Advantages saves time and effort (more effective), produces more good decisions than bad Disadvantages implicitly guide our judgment, we use them without realizing, over rely on them, can lead towards errors

due to biases (good thing misapplied)

17. What is the availability heuristic? What factors cause you to overestimate the frequency of an event? Underestimate the frequency of an event? Manager assesses the frequency of an event based on how easy it is to recall the event in memory

o If something is easily remembered it is frequent, if something is hard to remember it is infrequento If something is rare, but emotional you will remember it easier; rare, but recent more easily remembered..

Overestimate if the memory is recent, vivid, emotional, specific, or easily imagined Underestimate if the event is distant, bland, unemotional

18. What is the representativeness heuristic? What’s the problem with this heuristic? Manager assesses the likelihood of an occurrence by matching it with a preexisting category or stereotypes Problem lead to prejudice or discrimination on non-job related factors and missed opportunities and mistakes

19. Under what decision-making conditions do decisions get made in the behavioral (bounded) model? Mostly risk, but also uncertainty

20. What does the irrational/implicit favorite model of decision-making say about decision-making? Decision maker selects a favorite early on in the evaluation of alternatives. Once the favorite is chosen, all other

alternatives are evaluated against ito Can lead the decision maker to distort informationo Manager wants his/her decision making process to appear rational while in reality it’s far from ito Decisions made under uncertainty

21. What types of decisions are made irrationally? Uncertainty, decisions with little information Non-programmed decisions (1st car, 1st wife, 1st job, etc..)

22. What is the basic purpose of a brainstorming session? Generate ideas on how to solve the problem, not to evaluate them

o 7-9 people are presented with a problem and are asked to identify as many potential solutions as possibleo Criticism is strictly prohibited, prevents creativity

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23. What are the four rules in brainstorming? 1) Evaluation/criticism is prohibited 2) Freewheeling is welcome; the more off the wall idea, the better

o Based on the idea of free association of ideas—first thing that pops into your subconscious is more creative 3) Quantity not quality 4) Combination and improvement is sought (Synergy)

24. Can inhibitions be totally eliminated in brainstorming sessions? No, it is very difficult/impossible… non-verbal communication and power differences among members will always be there Disadvantages—costly and time consuming

25. What two creativity techniques does synectics use in helping the group to generate better ideas? Fantasy & Analogy looks at the problem with a different perspective “Wet leaves” – analogy that helped Pringles potato chips

26. What is the superhero technique? Fantasy technique which is a way to stimulate creativity by getting rid of barriers. As a superhero there are no rules

therefore nothing can hold you back from solving the problem, makes you more creative and you start to fantasize Helps individuals overcome internal inhibitions resulting from traditional ways of perceiving and thinking.

27. In synectics, what is the job of the facilitator? Technical expert? Facilitator’s job is to structure the problem and help lead the discussion away from traditional ways of thinking, and

generate ideas (creativity; uses fantasy and analogy) Technical expert helps the group evaluate the feasibility of ideas

28. What’s the problem with synectics? Doesn’t separate the generation of ideas and the evaluation of them, time consuming, & costly As soon as a group member generates an idea, the technical expert evaluates the idea All ideas should be generated before any idea is evaluated!!

29. What research is NGT based on? The Nominal Group Theory is based on research that discovered more and better ideas are discovered by several

persons working separately than by the same persons working in an interactive group NGT is a group “in name only”

30. How is NGT different from brainstorming and synectics? NGT is a structured process and doesn’t rely on free association of ideas (done individually) Purposely restricts verbal interaction

31. What in NGT does one try to eliminate to improve the decision-making process? NGT tries to eliminate the negative aspects (inhibiting effects) of the group process

32. What are the steps in NGT?1. 7-9 members of varying backgrounds and training are brought together as a group and are familiarized with a problem2. Members work silently and alone generating solutions to the problem, prepares a list of ideas in response3. Members share their ideas in a round-robin manner, until all ideas are out4. Structured Interaction—members discuss and evaluate each idea5. Members vote privately on each idea (ranked in order of best to worst) briefly discussing the vote’s outcome, and a final

secret ballot is conducted Steps 2 & 5 are INDIVIDUAL STEPS! No talking during these steps. Trying to eliminate the negative prospects of the group process

33. What are the defining characteristics of the Delphi technique? Same as NGT, BUT no face-to-face, and members remain anonymous. A structured approach to creating problem solving using a group of experts No face-to-face interaction between members Experts are not brought together to discuss their ideas Experts remain anonymous to one another (members never meet—difference from NGT) Questionnaires are used to obtain:

o Alternatives generated by the expertso The evaluation of the alternatives by the expertso The final vote on the alternatives

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34. What is the reasoning behind the Delphi technique? Keep experts initial judgment ideas from being influenced by social pressure or other psychological aspects of group

behavior

35. What are some problems that can be encountered when using the Delphi technique? Design of the questionnaire can limit the results obtained Extremely time consuming Member interest and motivation may decrease if too much time passes between steps

36. What is the stepladder technique? It is a technique used during teleconferences when the group cannot be face to face

37. What is the stepladder technique designed to prevent? Promote? It is designed to promote the decision-making and interaction of group decision making by compensating for the obstacles

of non-visual communication.

38. What are operations research techniques? What are they designed to do? What kind of data do they usually require? Are they an aid or substitute for managerial decision-making? What do managers need to think critically about when they use these techniques? Are they applicable to all decisions that managers make? Operations research helps to evaluate alternatives by making the evaluation more systematic. They require quantitative

data (numerical), which is not applicable for all decisions. It is meant as an aid, not a substitute. They are greatest use when making decisions under risk.

o More detailed answer is provided on page 19 in the course pack, but I think this is all you will probably need to know.

Finer points Alternative Outcomes = Expected values Designed to help in evaluating RISK Most applicable for certainty or risk Least applicable to decisions made under uncertainty (top managers) Only as good as the data they’re based on

39. What is meant by the term “confirmatory bias” in decision-making? Protect our ego We look for information that confirms we made a good decision; we ignore information that disconfirms our decision Stereotypes of groups persist because of this bias

40. What is the gambler’s fallacy? After a series of unfortunate events the next event must be better (or chance corrects itself)

o Ex) If I hire 4 bad employees surely the fifth one will be good

41. In making decisions, do people pay more attention to descriptive, qualitative information or statistical, quantitative information? Descriptive, qualitative—actually contains less information When people make judgments they often ignore statistical/relevant data (logical base-rate reasoning) and make their

judgments using qualitative and descriptive data (i.e. vivid case data or personal experience data)

42. In making decisions, people often violate the law of large numbers. What does that mean? Why does it occur? As sample size increases accuracy and reliability increase. People often try to substitute their own limited number of experiences for established guidance. The example Kerry uses is how he used to think his own opinions were better than his parents, but he realizes his parents

have had more life experiences or a larger sample size

43. How does the framing of a decision affect decision-making? Positive framing? Negative framing? Positive framing (in terms of a gain) when we gain, we take less risk; RISK-AVERSE Negative framing (in terms of a loss) when we are afraid we are going to lose, we take more risk to try and recoup the

loss (a bird in the hand is worth two in the bush)—high pressure sales tactic; RISK-SEEKING Research has shown that positively framed negotiators were more frequent and had more successful contract than

negatively framed.

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(ASSIGNED OUTSIDE READING QUESTIONS #s 44-54)

44. What is group decision making a function of? Group Decision Making = Individual Efforts/Contributions + Assembly Effects – Process Losses

45. What is an assembly effect? Process loss? Assembly effect–positive effects from a group; positive consequences of bringing a group together such as synergy, more

information, diverse viewpoints, checking points Process loss–negative effects from a group; negative consequences of bringing a group together such as interpersonal

conflict, domination by a few, more time and expense, indecisiveness

46. What is the optimal size for a decision making group? 5 or 7 (odd number to break a tie) allows for better group dynamics and more participation Upper limit is 12; once they hit 12 group starts breaking up into clicks

47. What are the advantages of group decision making? More information available to help solve the problem; greater pooled resources = Assembly Effects Superior evaluation because of wide range of viewpoints Individuals get better understanding of the decision made, which makes it easier for them to communicate decision to

subordinates Fulfills the need for personal growth Individuals learn new skills Sets up “fairness image”; perceived as being more fair than decisions made by sole individuals Participation in decision making reduces stress

48. What are the disadvantages of group decision making? = Process Losses Time consuming; costlier Indecisiveness Domination by a few members Leveling effect may occur Free riders are a problem in groups With corporate power and personal pride at stake, disagreement over important matters occurs Escalation of demands—people may want to participate in things that are inappropriate for them to participate in Social motives can prevail over hard-headed task orientation

49. What is the leveling effect? Group decision-making causes compromising which lowers the quality of the decision, but at the same time increases the

acceptant of the decision The leveling effect is BOTH assembly effect AND process loss

50. When does a manager (under what conditions) use individual decision making rather than group decision making? When time is limited, or short When decision maker has all relevant knowledge and expertise to solve problem When subordinate acceptance of decision is not an issue When subordinates of a group do not get along well When subordinates don’t share the organizations goals

51. Rank the following in terms of decision making accuracy: group, average individual in the group, and best member in the group?

1. Best member 2. Group 3. Average member

Group decisions will tend to be more accurate; better than the average individual in the group; seldom better than the performance of the best individual

Group has better implementing, many hands make for light work

52. Which is more efficient: group or individual decision making? (consider both short term and long term efficiency) Depends upon the perspective Group—long run (slow in the beginning, quick in the end) Individual—short run (quick in beginning, slow in the end)

53. Where do you have greater creativity: five individuals generating ideas alone or those same five individuals generating ideas as a group? 5 individuals generating ideas/working ALONE has the most creativity

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54. Which leads to greater acceptance of the decision and better implementation of the decision: individual or group decision making? GROUP DECISION MAKING is better if degree of acceptance by al those involved is the criterion

JOB DESIGN

55. What function of management is concerned with job design and organizational design? Organizing function, it consists of dividing work and coordinating group and individual activity for purpose of goal

attainment

56. What are the three aspects of job design? Content—major duties, responsibilities Work methods/procedures—how you will have to do in performing those tasks Relation to other jobs—how does your job related you other’s jobs; who do you have to work with to get things done

(vertical and horizontal coordination)

57. What is skill variety? Extent to which your job allows you to do a wide variety of tasks, thereby requiring a wide variety of skills (perform many

tasks, SV high) Management positions have high skill variety because they have to have human, conceptual, and technical skills. High SV jobs require more education, more training, and more experience; they provide more challenge, allow for more

creativity and give more prestige than low skill variety jobs. Craftsman—HIGH Specialized/routine—LOW

58. What is task identity? Extent to which your job allows you to complete a whole piece of work from beginning to end and can clearly identify your

efforts Take pride and ownership in your work Craftsman—HIGH Specialized—LOW

59. What is task significance? Extent to which the job and its performance exert a considerable impact on the lives of others All jobs have impact even garbage men (think about how a city smells in the middle of a sanitation strike in July) but some

jobs have more impact, like a surgeon. With high task significance, there is a feeling of accomplishment TS affects the effort you give when doing your job Greatest TS—Top management Least TS—First line Specialized jobs—LOW

60. What is autonomy? Extent to which your job allows you to make important decisions about that job Self governance; self ruled The more autonomy given, more becoming your own boss/self-managed Greatest autonomy—Top managers Least—1st line (has more laborers) Increases in strength as you go up the management period Craftsman, top—HIGH Specialized, 1st line—LOW

61. What is feedback? Extent to which your job gives you information on how you are performing on the job 360 degree feedback feedback that comes from supervisors, co-workers, subordinates, customers, and self; feedback

from every angle Self feedback is seen as the most important!

62. What is job breadth and job depth? Job Breadth—number of tasks that a jobholder performs, horizontal (narrow to wide)

o Jobs with relatively few tasks (low job breadth/range)—specializedo Many tasks (high job breadth/range)o HORIZONTAL Loading—skill variety

Job Depth—amount of discretion a jobholder has over his/her job activities and outcomes (shallow to deep)o Enlarged jobs (wide and shallow)

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o Specialized jobs (narrow and shallow)o Enriched (wide and deep)o VERTICAL Loading—autonomy

63. What task characteristics is job breadth similar to? Skill variety, task identity, & task significance

64. What task characteristic is job depth similar to? Autonomy & feedback

65. What job design is least prevalent today? Most prevalent today? Least prevalent—craft jobs (high quality, low quantity) Most prevalent—specialized jobs (high quantity, low quality)

66. What is specialized job and how does it load on the five task characteristics? Result of the Industrial Revolution and the division labor—activity to smaller and smaller tasks

o Narrow breadth & shallow deptho Efficient o Less skill varietyo Low task identityo Low task significanceo Little autonomyo High degree of feedback

67. What are the advantages of specialized jobs? Greater efficiency

o Higher productivity (quantity)o Lower wages due to low skill levelo Lower training costs, job simple to learn

68. What are the disadvantages of specialized jobs? Only occur when the wrong person is in that job

Low motivation Low job satisfaction Low quality performance High absenteeism High turnover (quitting) Sabotage & strikes—can’t find a way to make people listen to you Alcohol & drug abuse—work life spills into home life

69. What is the purpose of job enlargement? Break job monotony by adding more tasks, this increases breadth but not depth To provide more challenge, arousal so performance will improve Wide breadth but shallow depth Task identity and skill variety increases

70. What two task characteristic does job enlargement increase? Skill variety & task identity

71. The motivational benefits of job enlargement are short-lived or long-lived? Short-lived, once you learn other tasks, you become bored again

72. What is job rotation? Special case of job enlargement Rotating employees through a series of specialized jobs in a planned sequence. This method is a short-lived attempt to

break boredom Short-lived, increasing breadth but not depth

73. What is job enrichment? How is it different from job enlargement? Job enrichment is a move back to craft jobs from the assembly line like specialized jobs. Enrichment tries to make work

more meaningful, interesting, challenging, adds greater control and freedom Increases breadth AND increases depth—(DIFFERENT FROM JOB ENLARGEMENT)

74. What are the advantages of job enrichment? High in motivation and satisfaction High quality job performance

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Low in absenteeism and turnover

75. What are the different aspects of the job characteristics model?(look at the figure on page 29 in the course pack) Job characteristics Critical psychological states Personal/work outcomes

76. What are the three moderators that influence the effectiveness of job enrichment? How do they influence it? Knowledge and skill of employee (Ability)—people with low skills or knowledge do not get any thing out of job

enrichment Growth-need-strength of employee (Motivation)—people with high growth need strength are expressive (better match

for enriched job), low growth need strength are instrumental “Context” satisfaction of employee (Satisfaction)—people who are upset about other context things (pay, company

policies, etc.) they are less responsive to job enrichmenta. Performance = ability “can do” X motivation “will do” X role clarity “know what to do”

77. What are the five steps in redesigning a job so it will be enriched? What happens at each step and what task characteristics are increased? Forming Natural Work Units put employees together in teams (increase in task identity & significance) Combining Tasks job enlargement, giving them multiple things to do (increase in skill variety & task identity) Establishing Client Relationships put them in contact with the people who use their product or service (increases

skill variety, task significance, autonomy, & feedback) Vertical Loading most important step! give the employee direction as to when and how it’s done; increasing freedom

and depth (mostly increases autonomy) Open Feedback Channels info on how well performing (360 degrees)

78. What step in the redesign process is job enrichment? Combining Tasks

79. What step in the redesign process is most important? Vertical Loading

80. What are the disadvantages of job enrichment? High training and salary costs Places greater demands on workers Union resistance to anything that changes work roles Not all workers have the ability Supervisors can lose their jobs

81. How does strategy influence job design? Prospector Strategy enriched or craft jobs

o Develop new and different products, be creative, innovative to exploit new opportunities Defender Strategy specialized job design and maybe enlarged

o Lower costs and be maximally efficient to hold on to current market share

82. What employee factors should be taken into consideration when designing jobs? Ability (can they do it) & motivation (will they do it)

83. What type of motivation is best suited to specialized jobs? Enriched jobs? Specialized Jobs Instrumental- work is a paycheck; work because you have to work Enriched Jobs (craft jobs) Expressive- work is personally satisfying; grow and develop through your work (Ex:

artists/painters)

84. What is instrumental motivation? Expressive motivation? See answer to question #82

85. What is the Yerkes-Dodson law? (arousal and performance are related in what manner?) Some people are hyper-sensitive which means they need little stimulation to get to their activation level. Or stated

differently, a moderate level of arousal leads to high performance Curvilinear relationship—challenge and performance Looks like an inverted U

86. When someone is hyper-sensitive to their environment, what type of job design should they be given? Why? A hyper sensitive person reacts very strongly to their environment, so they need a basic specialized job.

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87. When someone is hypo-sensitive to their environment, what type of job design should they be given? Why? A hypo sensitive person needs a lot of stimulation to get excited, so they need an enriched job which will give them

stimulation and challenge88. How does technology affect job redesign efforts?

The more technology used in a job the harder it is to redesign it, it would be much easier to redesign craft work, than an assembly line job.

Easiest to redesign--Sally craft shop Hardest—Exxon Plastics

89. How do unions feel about any attempt from management to redesign jobs? Unions are very resistant because they are afraid it will bring greater efficiency and the need to employ less people.

90. How do economic factors affect redesigning of jobs? Job redesign is very expensive because all jobs are interconnected. Changing one job, you now have to change them all In bad times there is very little change in job design

ORGANIZATIONAL DESIGN

91. What is the relationship between specialization and coordination according to the specialization-coordination dilemma? The more you try to divide up work between individuals and groups, the harder it is to coordinate between those individuals

and group Specialization advantages: efficiency and expertise Coordination advantages: deals with environmental threats and opportunities Coordination is easier to achieve within departments, harder to achieve between departments If you focus on efficiency it will be harder to change for the environmental threats and opportunities

92. Where is it more difficult to coordinate within departments or between departments? It is more difficult to coordinate between departments, because they have different goals.

93. What is the primitive/agency organizational design? What are its advantages/disadvantages? (Kerry sent the class an e-mail with pictures of these different models or page 43 in the course pack) The primitive/agency model has one boss and everyone reporting to him/her. This model is good because it is very flexible

and employees will do exactly what boss tells them to do, but it is not practical for larger firms because it breaks down with complexity, because one boss just can’t manage that many employees.

This was the predominate during the 1st part of the industrial revolution; most small businesses are primitive/agency design Quite flexible but breaks down under conditions of complexity because of the limited information-processing capacity of the

boss

94. What is the functional organizational design? How are activities grouped? A functionally designed organization groups its activities according to specialty or function One CEO and then VP’s for different functions, Human Resources, Marketing, Production etc. Divided the labor up and creates specialists; focus is SPECIALIZATION Predominant during the 1920s-1940s

95. What are the advantages of a functional design? Allows for people to specialize in their expertise, has greater efficiency. KISS (Keep It Simple Stupid) so we can make the CEO’s job and coordination easier

96. What are the disadvantages of a functional design? Problems with coordination are only done from the top so it’s slower, and people in the different departments don’t identify

with the overall mission of the company. Customers and customer satisfaction goes down

97. When does one use the functional design? Small to medium size organization, stable environment, one or a few products, efficiency and quality are your goals, &

defender strategy If we keep it simple, our coordination problems will start to lessen

98. What is the product design? How are activities grouped? Specialists are grouped together to perform all the activities necessary to produce an individual good or service. Each

major product line is a separate and semi-autonomous division of the company Specialists are brought together to work on ONE product; increases coordination; expertise and efficiency decreases Coordination in product design is coordinated by VPs; multiple people doing the same thing, things will get done quicker Predominant during the 1950s & most Fortune 500 companies are structured this way toady Ex) 3-M has many different product lines, it makes band-aids, post-it notes, and computer disks

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99. What are the advantages of a product design? Well coordinated, each product is a profit centers, managers are held accountable, Each product has its own unique needs

and it allows the company to be more responsive. The division also makes it easy to identify what products make money (profit centers) and which ones loose money, this is handy if you want to spin-off a division or close up an un-profitable one.

Able to make changes quickly and respond to environment and make customers happy

100.What are the disadvantages of a product design? SPECIALIZATION It is hard to coordinate between the different units. It also loses efficiency because there is a lot of duplication, (you have

research and development, HR for each group. 5 HR departments, 5 accounting departments) Less expertise being developed

101.When does one use the product design? Large in size, dynamic environment, multiple product lines, goals are external effectiveness and customer satisfaction, &

prospector strategy (develop new and different products) Coordination is rewarded—MAKE IT COMPLEX

102.What is a profit center and what are its benefits? Profit center is set up in product/matrix designs; to see which products are doing well and which ones are lagging You can see each department separately, which establishes accountability, gives more feedback on each product, and

allows you to use info to make decisions. Every department shows its own expenses and revenues. You can see who is doing better and decide on which to

keep/adjust. When you hold people accountable they work harder to make sure the product is successful

103.What is a matrix design? How are activities grouped? It is often used with aerospace industry where for each project there is a group of technical experts in different fields. So a

Jet engine propulsion engineer might be working on several different projects, each one with a project manager responsible for coordinating that project, and he or she would also have a functional manager manages all of the propulsion engineers on any project. Uses coordination and violates specialization and coordination conflict.

ONLY DO THIS DESIGN BECAUSE YOU HAVE TO DO IT High tech products with short product lives Need specialized and technical experts that can work quickly Need specialization and coordination at the same time Functional and product designs combined; both are equally emphasized

104.What are the advantages of a matrix design? Extremely flexible and responsive, minimizes duplication, high product innovation, establishes responsibility, specialization

and coordination achieved at same time

105.What are the disadvantages of a matrix design? Violates unity of command (multiple bosses), stress and strain on employees, employee loyalty difficult to obtain, top

management loses command of control, power struggles exist between managers

106.When does one use the matrix design? Same condition as product design, difference is low tech vs. high tech Large in size, dynamic environment, multiple and high tech (temporary) products, goals are creativity and innovation

balanced against completion of deadlines, prospector strategy Same conditions as product design except HIGH TECH

107.What is the job of a project manager in the matrix design? Coordinate between the different technical experts to get the job done on time and on budget Try to bribe for the best personal that the functional manager is assigning to the jobs Horizontal authority—violates unity of command

108.What is the job of a functional manager in the matrix design? Make decisions specialized to their function; keep people up-to-date and experts in their areas (HAS POWER) Decide which personal goes to the different project teams Vertical authority—violates unity of command

109.Which type of manager has no formal authority in the matrix design?

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The project manager has no formal authority; they must use their people skills to get project done on time and within budget. Entrepreneur inside of organization; violates parity (status) of authority to responsibility principle; leader stays for 2-3 years and then become CEO or VP; very difficult job!!

110.In which organizational design type, is it most difficult to replace the CEO from within the organization? Why is this the case? It is most difficult in the functional design because no one else has experience coordinating, often times in functional

design, the company has to get a CEO from outside the company; CEO is only generally trained manager CEO from product or matrix can be replaced from within.

111.Which organizational design accommodates growth readily? The product design and matrix both accommodate growth well.

112.What is scalar chain or chain of command? What functions does it serve? What structural mechanism does one use to bypass the strict chain of command in organization? The chain of command is where one individual reports to, or is subordinate to another. The chain of command:

o 1) defines levels of authority o 2) routes information up and down the chain of command. The gangplank is used to bypass the chain of

command if you have to make reactions to environment (most likely to bypass the chain of command in the MATRIX design).

1st line to middle to top = Chain of Command; distorts accuracy of communication Chain of command is really clear in the FUNCTIONAL DESIGN, unclear in the MATRIX DESIGN

113.What is unity of command? Why does one try not to violate this principal of organizing? The idea that subordinates should report to only one boss otherwise they will have conflicting orders; reporting to 2 or more

bosses stresses out employee; this is violated in every organization because your manager’s manager often gives you instructions

114.Where is unity of command violated? In what organizational design type is unity of command violated to the greatest extent? It is violated in almost all organizations (EVERYWHERE) but to the greatest extent in the matrix design Matrix violates it the most

115.What is delegation of authority? Why do managers delegate authority? It is passing authority from one level to another, it is used to extend a managers reach. Power of important tasks and decisions because managers can’t do everything themselves. This makes lower jobs more

important (empowers the workers)

116.What cannot be delegated when a manager delegates authority? Accountability cannot be delegated, the manager is still responsible

117.What violates the parity of authority and responsibility in the matrix? (TEST QUESTION) Project manager

118.Why do managers resist delegating authority? Looks lazy if they delegate tasks Afraid to lose control Easier to do yourself Lacks trained subordinates; feel like others can’t do it better than they can Afraid of costly mistakes

119.What do the terms “centralized” and “decentralized” mean as they pertain to delegation of authority? Centralized Delegation of Authority—authority is concentrated at top levels of management; authority is kept at the top and

not delegated Decentralized Delegation of Authority—authority is delegated to lower levels; giving more power to lower level managers;

never have a totally decentralized organization *1st and functional are most CENTRALIZED; 3rd and matrix are most DECENTRALIZED. Product is in between…the VP

does on the 2nd level

120.What are the signs that one’s organization is becoming decentralized? Decisions made by lower management Important decisions at lower management Flexibility in lower management levels in interpreting policies Autonomy in lower management decision making (Increased breadth and increase depth, you are enriching and empowering the lower management) When we decentralize we enrich the lower level managers job—making more non-programmed decisions

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121.What are the benefits of decentralized organizations? Job enrichment Greater job motivation Skills improve More responsive Allows top managers more time to strategically plan

122.When does an organization need to decentralize? An organization needs to decentralize when it becomes dynamic or larger in size. Product and matrix more decentralized

123.What does span of control mean? How many people report directly to a manager; 1 person reporting gives you a narrow span of control Deciding on which is the “best” span of control depends on a number of things in the business

124.What is the relationship between span of control and organizational height? As span of control is widened, organizational height decreases, decrease management levels Narrow span of control, organizational height increases, increase management levels

125.What is the paradox of managerial control as it relates to span of control? Narrow spans of control allow managers tighter control over their subordinates, however, this loosens overall control from

top to bottom because there are now more management levels. Makes the overall control less—may cause problems Wide span of control allows managers to have loose control over subordinates, but more control from top to bottom

because there are fewer management levels.

126.What are the advantages of the disadvantages of wide spans of control? The advantage is that it can lead to substantial payroll savings and improve communications, but at the same time it can

decrease managerial control from top to bottom.; corporate downsizing

127.What is the optimal span of control? There is none; We used to believe 5+ or -2 from 3-7 but there’s not one. The number of people you should manage

depends on individual situation; take everything into account

128.What are the factors that narrow span of control? Widen span of control? Narrow—

o Low need for powero Untrained/Inexperienced supervisorso Separation among employeeso More problems to solveo R&D Labo Dynamic environment

Wide—o Skilled and knowledgeable employeeso Well trained supervisors, have a lot of experienceo Higher need for powero Similar employeeso Assembly line; similar worko Stable environment

Topics Kerry Emphasized in Class Decision making is not one of the 5 functions of management but a part of all of them especially planning Negative framing leads to buyers remorse, customers regret their decision and are not likely to be a repeat decision The most common decision making scenario is under conditions of risk You can identify the difference between the different decision scenarios by looking at the probabilities, 100% certainty, XX

% risk, unknown% uncertainty Insurance companies make mostly programmed decisions, they have actuaries develop statistics that guide them to

making the right decision Programmed decisions are associated with Certainty and risk, non-programmed with decisions made under uncertainty Satisficing is a rational method but it usually doesn’t maximize the outcome Irrational Model-Implicit-“Kerry’s First Love Model” Kerry told a long story about his first car, and how early on in the

decision making process he ignored all the alternatives and just made his decision downsizing enriches jobs and creates more autonomy hypo-sensitive (need lots of stimulation) tend to be hyper-active The more technical factors of production, the harder it is to redesign jobs

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Matrix design is sometimes called “the meat grinder model” because it is very stressful having multiple bosses and there is high burnout rate and turnover

In an identification problem, you can pick out the functional design by looking for “KISS” (keep it simple stupid) and a stable operating environment

The matrix design bypasses the chain of command communication As the span of control stretches wider, it gets shorter, and as it gets narrower, it gets taller

FROM The Book

1. What is the geographic structure? p. 209 (257)An organizational structure in which each region of a country or area of the world is served by a self contained division. (Divisions broken down by geographic location.) Ex. Macy’s, Neiman Marcus

2. What is the global geographic structure? p. 210 (258)Managers located different divisions in each of the world regions where the organization operates.

3. When does one use the global geographic structure? p. 210 (258)Mostly used with multidomestic strategy because customer needs vary with country or region.

4. What is the global product structure? p. 210 (258)Opposite of geographic structure; each product division not country or regional managers, take responsibility for deciding where to make products and how to market to foreign countries.

5. When does one use the global product structure? p. 210 (258)Mostly used with global strategy where customers abroad will buy the same kind of products with little variation.

6. What is the market (customer) structure and why is it used? p. 212 (260)Divisions grouped based on particular kinds of customers they serve.

7. What is the product team structure? p. 214 (262)Employees are permanently assigned to a cross-functional team and report only to the product team manager or to one of his or her direct subordinates.

8. What are the two ways that the product team structure is different from the matrix structure? p. 214 (262)1. It does away with dual reporting relationships and two-boss managers2. Functional employees are permanently assigned to a cross-functional team that is empowered to bring a new

or redesigned product to the market.

9. What is a cross-functional team? p. 214 (262)A group of managers brought together from different departments to perform organizational tasks.

10. What is a hybrid structure? p. 214-5 (262-3)The structure of a larger organization that has many divisions & simultaneously uses many different organizational structures.

11. What are the disadvantages of decentralization? p. 220 (268)- If divisions, functions, or teams are given too much decision making authority they may begin to pursue their own goals

at the expense of organizational goals.- Lack of communication among functions or divisions may prevent possible synergies between them from ever

materializing and organizational performance suffers.

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REVIEW QUESTIONS FROM CLASS

Which are true concerning heuristics? efficient, simplify, produce, when lead to errors = biases {misapplied}

Which of the following are true concerning heuristics?1. They make us more efficient2. They simplify complex environments3. They produce more good than bad decisions4. When they lead to errors, they are called biases5. All of the above are true.

All of the following could cause one to overestimate the frequency of an event except An event that is hard to imagine

In the gambler’s fallacy, the person believes after a number of unfortunate e vents that the likelihood of good fortune is Nearly a sure thing

Decision framed negatively, the decision maker… Is likely to take more risk [positively = less risk, they will have more sales]

If a company is interested in repeat sales, then their salespeople should be ____ Positively framed

Overestimate frequency of an event? [easily recalled = not always true] emotional, vivid, recent, specific --- makes easier to remember so cause you to

overestimate

Gambler’s fallacy, series unfortunate, next event? nearly a sure thing

Is decision-making a function of management? no, it’s a part of all function & its most closely associated w/ planning

Programmed decisions are associated w/ which of the following decision-making conditions? certainty & risk [non-programmed decisions = risk & uncertainty]

The behavioral model assumes that decisions are made under what conditions? “bounded rationality” - you don’t know everything

risk & uncertainty

What type of decision making is most likely to occur under conditions of the irrational man model? uncertainty, little information

A manager has a rule when hiring new salespeople: “if they have a weak handshake then they won’t make a good salesperson.” This is an example of

A programmed decision

An entertainment studio manager has to decide what films to invest in, given that about every 1 or 2 films out of ten will be a hit and make money. The decision made under

Risk

Which factors would bound one’s rationality? limited mental capacity, emotional state, unforeseeability of future events

Traditional economic model assumes that manager’s make decisions under…{a prescriptive model} certainty

Behavioral model assumes managers made decisions under… risk & uncertainty

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Which doesn’t evaluate alternatives generated? brainstorming

All of the following are true concerning satisficing except:1. Satisficing saves time and effort2. Satisficing entails selecting the first alternative that’s just good enough3. Satisficing can never lead to a maximizing solution4. Satisficing is quite rational given our limits as human beings

With the irrational/implicit favorite model, this type of decision-making is most likely to occur under conditions of Uncertainty

Which deemphasizes the group process to the greatest extent? Delphi Technique {brainstorming & synectics rely most!}

Rules of brainstorming? quantity, not quality is sought

NGT 5 Steps: members vote privately! {tries to deemphasize group somewhat}

Which uses analogy & fantasy to improve creativity? synectics [fantasy = super-hero technique]

Operations Research techniques are least applicable to decisions made under… uncertainty & top managers {most applicable = risk & 1st-line managers}

Assembly line worker job: low SV, low TI, relatively low TS, not much autonomy, fairly high performance

o feedback [self]o low in all, except feedbacko narrow breadth & shallow depth

Craftsman:high SV, TI, TS, lot autonomy, & feedback-- wide breadth & deep depth

{As sill variety increase, task identity increased…correlated}

When we downsize we give people more to do w/ less supervision giving them more autonomy…we’re enriching their jobcan enrich too much

Job make products from beginning to end & take pride in her work, this job would be high on…task identity

Which is most similar to job depth?autonomy [job breadth = skill variety]

The compromise that takes place in group decision-making lowering the quality of the decision but increasing the acceptance of the decision is known as ___.

1. An assembly effect2. The leveling effect3. Individual contributions4. Process loss5. All of the above except 3

The optimal size for a decision-making group is? 5 or 7 members

Which of the following would favor individual decision-making? Subordinates don’t share the goals of the organization

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An employee is given a job that allows her to make a product from beginning to end and to take pride in her work. From the facts presented, which of the following task characteristic would be increased the most by such action?

Task identity

When an employee is given discretion over her job to decide what’s to be done, how it’s to be done, and when it’s to be done, this employee’s job is high on

AutonomyWhich of the following job characteristics is most similar to the concept of job breadth?

Skill variety

In specialized jobs (assembly lines), Workers perform simple and repetitive tasks Efficiency is high but quality may suffer Performance feedback high, all other characteristics are low

Which of the following is not a disadvantage typically associated with specialized jobs? Low quantity performance

More technology determines, harder to redesign… Exxon Plastics = most difficult GM Shreveport Sally’s Craft Shop = easiest to redesign

More you specialize… Harder to coordinate

Job enlargement.. Job enrichment always leads to job enlargement It’s motivational benefits are long-lasting It increases skill variety and task identity Job rotation is a special case of enlargement.

Theoretical advantages of job enrichment are.. High motivation High satisfaction Low absenteeism Low turnover

When individuals are placed in teams and made responsible for completing an entire piece of work or process, this is known as ___

Form natural work units

Which step of the job enrichment process is most important? Vertical loading

Which step is the job enrichment process is the same as job enlargement Combing tasks

What most prevalent 1st part in IR? Primitive/agency decision

Not advantage w/ functional designs? Coordination is easier to achieve due to increased focus on specialists

When will use a functional design? The environment is stable

Matrix design is a combo of… Functional & product

Which design type was the most prevalent during the 1st part of the industrial revolution? Primitive/Agency design

Which of the following is not an advantage associated with functional designs Coordination is easier to achieve due to increased focus on specialties

Which of the following is a disadvantage associated with product designs?16

Less technical expertise is developed It’s less efficient because of duplication of specialists A change in product like can be disastrous Coordination between products can be difficult

A matrix design is a combination of? Functional and product designs

One would use a functional design when ____. The organization is small in size The environment is stable The organization has one product The organization’s strategy is a defender strategy

EXTRA CREDIT High school diploma 8 out of 10 good employees, 2 out of 10 no diploma bad employees 7 + / - 2 —how much information we can keep in our minds Social Loafing —less ideas developed in a group because people put less effort {tug-o-war} Employee Empowerment —increasing autonomy in their jobs ‘Auto’—self 360 Feedback —from supervisor, peer, subordinates, customers, to self PERFORMANCE = ability (“can do”) * motivation (“will do) * role clarity (“knows what to do”) We use to believe that the optimal span of control was 3-7 employees. Satisficing can lead to a maximizing situation, but must get lucky & you wouldn’t know if it occurred. Yerkes- Dodson law - inverted relationship (inverted U- curvilinear) between arousal (challenge) and performance

o PEAK PERFORMANCE- “the zone”- high performance and medium challenge (stress) Instrumental motivation to work—see the job as a means to an end (work because you have to) best suits to specialized Expressive—see the job as an end (creative expression) craft or enriched job

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