Key Terms
Definition
Non-wage components of a compensation package with direct value to employees.
Includes
Salary, benefits, and job requirements. Candidate must accept in writing before starting.
Responsibility
Managers communicate common purpose throughout the organization.
Specialization
Assigning narrow, specific, repeated tasks to individuals to improve efficiency.
Division of Labor
Degree to which tasks are divided into separate jobs or departments for efficiency.
TRADE-OFF
Specialization requires choosing between breadth and depth of knowledge.
Tall hierarchy
Many levels between entry-level and top (example: U.S. Army, approximately 20 ranks between private and general).
Flat hierarchy
Few levels; little or no management between workers and ownership (example: Valve, an independent game developer, has no
Span of Control
Number of employees who directly report to one manager.
Delayering
The trend of reducing headcount (often middle managers) to flatten structures and increase agility. Side effect - remain
Centralization
Decision-making concentrated at the top.
Decentralization
Decision-making pushed to managers closest to the work.
High formalization example
Airline pilots. FAA regulations govern behavior before, during, and after every flight.
Low formalization example
Pharmaceutical sales reps. They develop their own practices for getting access to doctors and report only on the number
Airline pilots illustrate the difference
Their jobs are both specialized AND highly formalized. But they can also function in each other's roles if needed, unlik