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Chapter 7 – Organizing for Action
Learning Objectives 2
Class Roadmap 4
Sustainability Box 12
Lecturettes 14
Examples 24
Supplemental Features 32
Chapter Videos 32
Self-Assessment 34
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Chapter 7 – Organizing for Action
LEARNING OBJECTIVES
This chapter is such a wealth of information that you may be overrun with student questions as you lec-
ture. Two popular topics for questions include specifics about organizational design, and delegation. For
instance, your students may ask:
1. “What is the most widely used approach to organizational structure in
U.S. businesses and what are the reasons it is used most?”
2. “What is the difference between the board of directors and the chief
executive officers?”
3. “How can a manager overcome his or her fears of delegating?”
4. “What different things can managers do to increase the likelihood that
their associates will follow through with delegated tasks?”
While these questions generally have straightforward answers, they also provide opportunities to examine
some of the complexities of organizational structure. For example:
1. While most mid- to large-size organizations in the U.S. today have a functional structure, the majority
of U.S. companies are small, entrepreneurial firms. These firms tend to have very organic structures
since they have few employees, so all employees must do everything.
2. The apparent answer to this question is that the CEO is an employee of the organization, while the
board of directors is an outside governing body, whose members are not employees of the organiza-
tion. Most organizations have strict independence standards which apply to the board of directors.
However, when answering this question, you might also discuss how boards of directors pick new
members (they are typically chosen by the CEO) and what kinds of rewards people get for being on
boards of directors (everything from deferred compensation, to life insurance, to limousine service!)
3. The answer here is that “fear” is often a manager’s sense that what has been delegated will not be
done, or will be done incorrectly. This can be overcome by working with the employee to clarify ex-
pectations, giving the employee the right training to do the job, and setting up regular checkpoints to
assess progress. This question also presents a good opportunity to discuss how delegation differs from
the perspective of the employee and the manager.
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Chapter 7 – Organizing for Action
Teaching Tip:
Ask everyone in the class to write down what they think the word “fear” refers to in this question.
Then get students who have been managers to share their answers, followed by students who
have been employees. The employee group is likely to see ‘fear’ as worry about being upstaged
by an employee, while the manager group is likely to see “worry” as concern that the employee
won’t do the job right.
4. Employees will be more likely to follow through on their tasks if they know why they are doing those
tasks, if they consider the tasks to be important, and they have a say in how to do the tasks, and if they
are rewarded for those tasks. In addition, clear expectations, training, and regular checkpoints also
help to be sure that the tasks will be done on time.
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Chapter 7 – Organizing for Action
CLASS ROADMAP
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Chapter 7 – Organizing for Action
b. Usually comprised of the CEO, president, chief operating officer, chief finan-
cial officer, and other key executives.
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Chapter 7 – Organizing for Action
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Chapter 7 – Organizing for Action
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Chapter 7 – Organizing for Action
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Chapter 7 – Organizing for Action
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Chapter 7 – Organizing for Action
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Chapter 7 – Organizing for Action
Accountability The expectation that employees will perform a job, take corrective action when neces-
sary, and report upward on the status and quality of their performance
Authority The legitimate right to make decisions and to tell other people what to do
Broker A person who assembles and coordinates participants in a network
Centralized organization An organization in which high-level executives make most decisions and pass
them down to lower levels for implementation
Continuous process A process that is highly automated and has a continuous production flow
Coordination The procedures that link the various parts of an organization for the purpose of achieving
the organization’s overall mission
Coordination by mutual adjustment Units interact with one another to make accommodations to achieve
flexible coordination
Coordination by plan Interdependent units are required to meet deadlines and objectives that contribute
to a common goal
Decentralized organization An organization in which lower-level managers make important decisions
Delegation The assignment of new or additional responsibilities to a subordinate
Departmentalization Subdividing an organization into smaller subunits
Differentiation An aspect of the organization’s internal environment created by job specialization and
the division of labor
Division of labor the assignment of different tasks to different people or groups
Divisional organization Departmentalization that groups units around products, customers, or geograph-
ic regions
Dynamic network Temporary arrangements among partners that can be assembled and reassembled to
adapt to the environment
Formalization the presence of rules and regulations governing how people in the organization interact
Functional organization Departmentalization around specialized activities such as production, market-
ing, and human resources
High-involvement organization An organization in which top management ensures that there is consen-
sus about the direction in which the business is heading
Integration the degree to which differentiated work units work together and coordinate their efforts
ISO 9001 A series of quality standards developed by a committee working under the International Or-
ganization for Standardization to improve total quality in all businesses for the benefit of producers
and consumers
Just-in-time (JIT) A system that calls for subassemblies and components to be manufactured in very
small lots and delivered to the next stage of the production process just as they are needed
Large batch Technologies that produce goods and services in high volume
Lean manufacturing An operation that strives to achieve the highest possible productivity and total
quality, cost-effectively, by eliminating unnecessary steps in the production process and continually
striving for improvement
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Chapter 7 – Organizing for Action
Learning organization An organization skilled at creating, acquiring, and transferring knowledge, and at
modifying its behavior to reflect new knowledge and insights
Line departments Units that deal directly with the organization’s primary goods and services
Mass customization The production of varied, individually customized products at the low cost of stand-
ardized, mass-produced products
Matrix organization An organization composed of dual reporting relationships in which some managers
report to two superiors – a functional manager and a divisional manager
Mechanistic organization A form of organization that seeks to maximize internal efficiency.
Modular network temporary arrangements among partners that can be assembled and reassembled to
adapt to the environment; also called virtual network
Network organization A collection of independent, mostly single-function firms that collaborate on a
good or service
Organic structure An organizational form that emphasizes flexibility.
Organization chart the reporting structure and division of labor in an organization
Responsibility The assignment of a task that an employee is supposed to carry out
Small batch Technologies that produce goods and services in low volume
Span of control The number of subordinates who report directly to an executive or supervisor
Specialization A process in which different individuals and units performs different tasks
Staff departments Units that support line departments
Standardization Establishing common routines and procedures that apply uniformly to everyone
Strategic alliance A formal relationship created among independent organizations with the purpose of
joint pursuit of mutual goals
Technology The systematic application of scientific knowledge to a new product, process, or service
Total quality management (TQM) An integrative approach to management that supports the attainment
of customer satisfaction through a wide variety of tools and techniques that result in high-quality
goods and services
Unity-of-command principle A structure in which each worker reports to one boss, who in turn reports
to one boss
SUSTAINABILITY BOX
Pie in the sky? That’s what venture capitalists told Matt and Jessica Flannery when the pair outlined
their idea for a person- to-person micro-lending organization. Yet today Kiva is making a difference
in the lives of hundreds of thousands of entrepreneurs in developing countries.
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Chapter 7 – Organizing for Action
Here’s how this network organization works. Would-be lenders visit Kiva’s website
(www.kiva.org), review the pictures and stories of the entrepreneurs profiled there, select one or
more to support (lending $25 to $150 per individual entrepreneur), and wire the money. PayPal
forwards the cash to a microfinance institution (MFI) in the entrepreneur’s country. The MFI pro-
cesses the loan, delivering the money in local currency to the individual’s home. These “bankers on
bikes” charge, on average, 20 percent interest—a far cry from the going rate of 100 to 200 percent
in developing countries.
Since its launch six years ago, Kiva has facilitated over $264 million in loans to 690,000 entrepre-
neurs in 61 countries. Over 649,000 Kiva users have funded a loan, with the average amount of each
loan being $385. Most are repaid within a year; only about 1 percent go into default.
The first recipient of Kiva funding was a Ugandan woman who operated a fish market. A $550 loan
enabled her to expand her business and hire extra help. She repaid the loan within months.
Who provides the loans? Contributors are evenly distributed from ages 25 to 60. Slightly more than
half are male; two- thirds earn more than $50,000 a year. By contrast, more women than men re-
ceive Kiva loans (women also have a higher repayment rate). While most not-for- profit organiza-
tions siphon off as much as 50 percent of contributions for administrative expenses, 100 percent of
the money donated to Kiva goes for loans.
Shah remarks, “The concept of getting a little bit of credit and someone taking a bet on you so you
can pull yourself up by your bootstraps is very American.” Maybe so, but its impact has been felt in
dozens of countries.
1. How might the flexibility of a network organization enable Kiva to meet a need
more effectively than traditional lenders can?
The bureaucratic organizational structure of traditional lenders would not be able to meet
the needs of the entrepreneurs in the Kiva program. While traditional lenders would look
at a person’s credit score to determine the feasibility of loaning money to an entrepre-
neur, individual investors are making the decision to take the risk an invest in a person’s
business.
2. Who are the collaborators in Kiva? How does the organization cultivate trust
among these participants?
The collaborators include the lenders, the individual entrepreneurs and the Kiva organiza-
tion. The Kiva organization is more of a dynamic network that provides critical strategic
information that promotes trust and transparency. Since the information is available for
lenders to view, they are more willing and trusting to invest money in potential individual
entrepreneurs. All three collaborators bring a strength to the network, the lenders bring
money, the individual entrepreneurs bring the business plan and the motivation to suc-
ceed and Kiva brings the communication and coordination. The complementary
strengths provided by each collaborator make for a strong network.
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Chapter 7 – Organizing for Action
LECTURETTES
1. The managerial span of control refers to the number of subordinates that a given manager can effec-
tively direct. For decades, management thinkers have struggled with the issue of the managerial span
of control because it directly impacts the size and shape of the organizational structure of a business,
and it impacts both the effectiveness and efficiency of the work process.
GRAICUNAS’S THEORY
1. In 1933, A.V. Graicunas published an article, “Relationship in Organization,” in The Bulletin of the
International Management Institute in which he established his theory of the span of managerial con-
trol. Graicunas noted that when dealing with subordinates, the manager had to consider not only the
direct relationships between himself or herself and each subordinate as an individual, but also his or
her relationships with different groups of subordinates as well as the cross relationships among all
members of the work group. Graicunas recognized that the total of these relationships was quite nu-
merous within a large work group.
2. Graicunas’ research led him to find that the manager’s direct relationships increased in proportion to
the additional size of the group. However, he found that the group and cross relationships increased
more than proportionately.
3. The resulting Granicunas Theory calculates the number of possible relationships in a work group
from the formula:
R = n (2(n-1) + n – 1)
Where R = the number of relationships, and n = the number of subordinates managed. For example,
if a manager must supervise three subordinates, the total number of possible relationships in the work
group is calculated as R = 3(22 + 3 – 1) = 18. As the number of subordinates is increased, the total
number of possible relationships grows rapidly. For instance, if the number of subordinates is in-
creased to five, the number of relationships increases
to R = 5(24 + 5 – 1) = 100.
1. Since the number of relationships with which a manager must deal increases geometrically as subor-
dinates are added to the work group, the span of management becomes a critical organizational factor.
For many jobs, it is found that a manager has difficulty directing more than five or six people. In oth-
er jobs, spans of managerial control have been expanded to 50 or more.
2. Where the work is unstructured, as in a research laboratory, the span of management is quite low.
However, on an assembly line, where the work is highly structured, larger spans of control are usually
possible.
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Chapter 7 – Organizing for Action
3. Subordinate relationships are more positive and control is maximized by small or “narrow” spans of
management. However, narrow spans of control cost money in terms of salaries, fringe benefits,
space and other support factors. Perhaps an even more serious problem with narrow spans of control
is the cost of longer communication and authority channels. Narrow spans slow down the flow of es-
sential information and delimit the delegation of authority.
4. On the other hand, wide spans of managerial control often result in overworked and stressed-out
managers, ineffective decision-making, and inefficient operations that tend to go out of control.
1. Obviously, it is in the best interests of the organization to keep the spans of control as wide as possi-
ble without allowing the process to get out of control. As a result, researchers have established a
number of ways by which organizations may attempt to increase the span of management without ad-
verse effects on the organization. Some of those techniques for increasing the span of control are
listed below:
1. Max Weber, a German sociologist, made his mark on management theory when he developed his
concept of bureaucracy. As large organizations were evolving out of the industrial revolution, they
1 Adapted from G.G. Fisch, “Stretching the Span of Management,” Harvard Business Review, September-October 1962, 80-81; A.V
Graicunas, “Relationship in Organization,” Bulletin of the International Management Institute, 1933; Harold KoontZ, “Making Theory
Operational: The Span of Management,” The Journal of Management Studies, October 1966, 229-243; Lyndall Urwick, “The Man-
ager’s Span of Control,” Harvard Business Review, May-June 1956, 39-47; Lyndall Urwick, Scientific Principles and Organization
(New York; American Management Association, 1938).
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Chapter 7 – Organizing for Action
clearly lacked a basis for orderly organization and management. To meet this need, Weber designed
his “ideal bureaucracy” to improve the operations of large, complex organizations.
2. Weber coined the term “bureaucracy” based on the German word, “buro,” which meant office. We-
ber’s ideal bureaucracy was a large organization that operated on a rational basis.
3. Weber understood that the “ideal bureaucracy” did not exist anywhere, but he advocated that manag-
ers should work to that end by creating organizations with the following characteristics:
Specialization of Labor Tasks should be broken down into routine, well-defined activi-
ties so that all employees would know exactly what is expected
of them and would become, in a short time, expert in their spe-
cific task assignments.
Formal Rules and Procedures There should be a documentation of rules and procedures that
would clearly:
Impersonality Once rules, procedures, and sanctions are documented, and they
should be uniformly applied to all employees, with no adjust-
ment for personalities or other personal considerations.
Well-defined Hierarchy Positions should be placed in multiple levels, with precise report-
ing relationships among levels. The hierarchy provides for the
supervision of lower-level offices by higher-level ones, a method
for handling exceptions, and the ability to establish accountabil-
ity.
Career Advancement Based Employee selection, placement, and promotion on Merit should
be based on the individual qualifications and performance of the
employee.
1. According to Weber, one of the critical features of the ideal bureaucracy was the appointment of its
officers. It was his contention that all organizational officers (managers) should be appointed and
should function according to the following criteria:
➢ Officers (managers) are free as individuals and are subject to organizational authority only in
terms of their impersonal, official obligations.
➢ Officers (managers) are to be organized in a clearly established hierarchy of offices.
➢ Each managerial office should have a clearly defined sphere of competence.
➢ Each managerial office should be filled in a spirit of a free contractual relationship.
➢ Candidates for the managerial offices should be selected on the basis of technical qualifications.
➢ Officers (managers) should be compensated through fixed salaries, with salary scales graded pri-
marily on the basis of rank in the organizational hierarchy. The employing institution would not
have the right to terminate an officer’s appointment, except under certain circumstances. Howev-
er, the officer is always free to resign the position.
➢ Once appointed to a position, that office should be treated as the sole, or at least the fundamental,
occupation of the office-holder.
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Chapter 7 – Organizing for Action
1. Contemporary management writers, reflecting the public’s negative attitude toward modern-day bu-
reaucracies with their red tape and complexities, argue that bureaucracies will die unless they are able
to adapt to the change in their environments.
2. Weber would agree because he never envisioned the sort of bureaucracy that has evolved and re-
placed his “ideal bureaucracy.”
Over the years, bureaucracies have moved away from Weber’s ideal and have assumed a number
of negative characteristics, which will probably cause their demise. Specifically, they:
➢ No longer allow for adequate personal growth and development.
➢ Foster “groupthink” and stubborn conformity to norms.
➢ Fail to consider the informal organization and the people problems therein.
➢ Have obsolete control systems.
➢ Have no judicial process.
➢ Have no mechanism for resolving differences and conflicts that occur between ranks and be-
tween functional work groups.
➢ Stifle communication and creative ideas.
➢ Fail to utilize the full value of their human resources due to employee fear and mistrust.
➢ Cannot assimilate the wave of new technology.
➢ Modify the personalities of their members who reflect the dull and conditioned “organization
man.”
3. Bureaucracies must clean up their acts or die.2
1. The concept of organizational culture has evolved from a number of definitions, such as:
➢ The way we do things around here.
➢ A belief system that is shared by members of the organization.
➢ The collective programming of the mind.
➢ Collective understandings.
➢ Strong, widely shared core values.
➢ A set of shared beliefs communicated through a variety of symbolic media.
➢ A set of symbols, ceremonies, and myths that communicate the fundamental values and beliefs of
the organization to its employees.
2. Texts define corporate culture as a set of important assumptions about the organization and its goals,
problems, and practices that members of the company share.
3. It seems clear that these definitions of organizational culture agree; that it is a shared system of core
values.
2 Adapted from Warren Bennis, “The Coming Death of Bureaucracy,” Think, March 1986, 30-35; Warren Bennis, “Beyond Bureau-
cracy,” American Bureaucracy, 1970, 3-16; Max Waber, “The Ideal of Bureaucracy,” from M Weber, The Theory of Social and Eco-
nomic Organizations, translated by A. Henderson and T. Parsons (New York: the Free Press, 1947); William Wolf, the Management
of Personnel (San Francisco: Wadsworth Publishing Co., Inc., 1961), 8-43.
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Chapter 7 – Organizing for Action
1. Those shared organizational values that define organizational culture have the following characteris-
tics:
➢ Individual initiative – that degree of responsibility, freedom, and independence that individuals
enjoy.
➢ Risk Tolerance – that degree to which members are encouraged to be innovative and risk-taking.
➢ Direction – that degree to which the organization creates clear performance objectives.
➢ Integration – that degree to which organizational work units are encouraged to work in a coopera-
tive manner.
➢ Management Support – that degree to which management provides open communication, assis-
tance, trust, and support to subordinates.
➢ Control – the amount of rules and regulations and the amount of close supervision that is utilized
to control subordinates.
➢ Identity – that degree to which members identify with the organization.
➢ Reward System – that degree to which rewards are allocated based on employee performance.
➢ Conflict Tolerance – that degree to which employees are encouraged to air conflicts and criti-
cisms openly.
➢ Communication Patterns – that degree to which organizational communication is restricted to the
formal hierarchy.
2. The shared beliefs and core values that constitute organizational culture are transmitted to employees
by way of rites and ceremonies, stories, legends, and myths.
➢ Rites and ceremonies are elaborately planned activities at a special event. There are four types of
rites used by organizations to transmit culture to their members. The rites of:
➢ Passage facilitates the transition of a member into new roles. For instance, all new employees go
through new employee indoctrination.
➢ Enhancement emphasizes social identity and status. For example, some firms have annual awards
dinners.
➢ Renewals are developmental activities that increase member status. For an example, a member
might be selected to attend a special training program.
➢ Integration creates common bonds among members and commitment to the organization. For ex-
ample, a department might hold an annual picnic.
➢ Stories are true narratives through which organizational information is shared among members.
➢ Legends are organizational history stories that may be, at least, partly fictional.
➢ Myths convey consistent values but are not based on fact.
3. An organization’s dominant culture delineates the core values that are shared by most of the mem-
bers.
4. Subcultures are minicultures that tend to exist within specific departments or work groups.
5. Core values are the dominant values of an organization that are shared by all its members.
1. Major organizational change must be preceded by changes in the organization’s culture. Therefore,
culture is seen as a phenomenon that management must learn to manage. Organizational culture can
be changed by using the following strategies:
➢ Conduct a cultural audit to be sure the present culture is well understood.
➢ Create a cultural vision, a cultural dream that exemplifies desired core values.
➢ Involve organizational members in the change process.
➢ Communication is the key tool for the management of culture.
➢ Reward systems must be made to reinforce the new culture and its core values.
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Chapter 7 – Organizing for Action
1. What are some advantages and disadvantages of being in the CEO position?
The advantage of being a CEO is that, from an organizational perspective, this is the position of pow-
er. In theory, whatever he or she says is implemented. It is a position that provides the individual
with an opportunity to focus on the overall strategy and development of the company. Also, a CEO’s
compensation generally consists of relatively high salary and a bonus package as well as many perks
such as a company car, an expense account, etc.
The disadvantages of the position are that the CEO is often responsible to a board of directors and
stockholders. He or she is the person on whom everybody focuses when things go wrong. The posi-
tion usually involves a lot of work and can be extremely stressful.
2. Would you like to sit on a board of directors? Why or why not? If you did serve on a board,
what kind of organization would you prefer? As a board member, in what kinds of activities do
you think you would most actively engage?
The idea of serving on a board of directors will appeal to some students and not to others. Some will
see it as an opportunity to be involved, on a limited basis, in the direction of an organization, and
some may mention the financial benefits of board membership (although many board members serve
on a voluntary basis—especially in the case of nonprofit organizations). Others, however, will be
afraid of the responsibility given the increased visibility of board members and their growing legal re-
sponsibility for the actions of the organization.
As to the type of organization they would prefer, many may choose a nonprofit essentially as a means
of serving society. They will feel there is great satisfaction to be gained from giving time and effort
to helping those who are less fortunate. Others may see serving on the board of a business entity as a
more meaningful role. And there may be the compensation!
Students will see their potential involvement in terms of their own interests. Some may see them-
selves serving on the finance committee while others may feel more comfortable on the compensation
committee.
3 Adapted from R. Draft, Organization Theory and Design (Saint Paul, MN.: West Publishing Co., 1992), 317-325; B Duhaime, “Cre-
ating a New Company Culture,” Fortune, January 15, 1990, 127; K. Gregory, “Native-View Paradigms: Multiple Cultures and Culture
Conflicts in Organizations,” Organizational Behavior, 3rd ed. (Boston: Houghton Mifflin Co., 1992, 624-639; R. Pascale, “Fitting New
Employees into the Company Culture.” Fortune, May 28, 1984, 28; Harrison Trice and Janice Beyer, “Studying Organizational Cul-
tures through Rites and Ceremonies,” Academy of Management Review 9, 1984, 654-659.
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Chapter 7 – Organizing for Action
3. Interview a member of a board of directors and discuss the member’s perspectives on his or her
role.
Suggest to the students that they ask some of the following questions:
➢ How much time do you devote each month to the board’s activities? Do you think this is suffi-
cient? Or too much?
➢ Do you feel you really understand what is going on in the organization? Or do you feel you are
getting a distorted view?
➢ Do you really understand the financial data with which you are provided?
➢ Are the board meetings meaningful? Or do you sometimes feel they are a waste of time?
4. Pick a job you have held and describe it in terms of span of control, delegation, responsibility,
authority, and accountability.
Those students who have not held a management position may not relate to the aspects of authority
and span of control. However, they should be able to describe the responsibilities that were delegated
to them and the ways in which they were accountable.
Those students who have held a managerial position may be able to demonstrate the various factors
(such as span of control, delegation, and etc.) by drawing an organization chart and showing the
working relationships.
5. Why do you think managers have difficulty delegating? What can be done to overcome these
difficulties?
Ultimately, in any organization, managers are responsible for the activities of those individuals who
report to them. If they do something themselves, they know that it was done correctly (or at least in
the way they think it should be done). Delegating responsibility represents a loss of control, and
managers are often reluctant to do so because it puts their reputation and, possibly their career, in the
hands of somebody else.
What can be done to overcome this? Managers can be trained to delegate. There are numerous
courses offered on “how to delegate” and “effective delegation for the manager.” From a practical
point of view, managers can delegate a task to subordinates, oversee their efforts, and ensure ongoing
reporting so that, at no time is the task out of control. Then, as subordinates learn and demonstrate
their ability, the supervision and reporting can be withdrawn until, eventually, the managers are con-
fident that the subordinates will do the task as well as they could.
6. Consider an organization in which you have worked, draw its organization chart, and describe
it using terms in this chapter. How did you like working there, and why?
Most students will have held a position in some organization and thus should be able to draw the or-
ganization chart. It may help for them to do it by name rather than position.
Among the terms that should be used are span of control, delegation, responsibility, and authority.
In terms of whether or not they liked working there, it may be helpful to ask whether or not the way
the organization was structured (i.e., the organization chart and the reporting relationships) helped in
making it enjoyable, or was it one of the reasons why students did not enjoy working for the organiza-
tion.
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Chapter 7 – Organizing for Action
A functional organization is one in which the unit or group focuses on one activity (e.g., production,
marketing, finance, etc.), whereas, in a product organization, the group handles all the functional ac-
tivities (such as production and marketing) for the product.
Some students may prefer the functional organization because they wish to specialize and become
highly skilled in that specialization. They may comment that they “want to be accountants not mar-
keters.” Others may see the product organization as giving them a much wider range of opportunities
and may state that it will: offer the opportunity to learn everything about the business.”
Question: why do some students select one approach and some another? Answer: different person-
ality types, different goals and objectives, etc.
8. If you learned that a company had a matrix structure, would you be more or less interested in
working there? Explain your answer. How would you prepare yourself to work effectively in a
matrix?
It might be appropriate to start the discussion question with another question, namely: What differ-
ence do you think working for a company with a matrix organization has from the employee’s per-
spective.
Some students will welcome the idea of working for two superiors. They will feel that it will give
them a broader perspective on the company and provide more opportunities for learning and ad-
vancement. Others, however, will view the prospect of working for two superiors rather frightening.
They will feel uncomfortable working in an environment with multiple demands and, sometimes,
conflicting orders.
The key to working for two bosses is communication and working in a matrix organization probably
means that the individual has to be more proactive or aggressive in determining exactly what is re-
quired and in communicating effectively with both individuals when there is conflict or ambiguity.
9. Brainstorm a list of methods for integrating interdependent work units. Discuss the activities
that need to be undertaken and the pros and cons of each approach.
Interdependent units are often integrated by people who have boundary roles. Boundary roles are
those in which an individual spends time outside the organization, interacting with other people and
organizations. Examples of boundary roles are jobs in sales, purchasing, customer service, public re-
lations, advertising, and recruiting, and the roles of these individuals should be reasonably easy to de-
fine. Student responses will vary according to the pros and con’s associated with their chosen ap-
proach. The advantages and disadvantages may depend on the business experiences of the student.
10. What is a core competence? Generate some examples of companies with distinctive competen-
cies, identifying what those competencies are. Brainstorm some creative new products and
markets to which these competencies could be applied.
A core competence is the capability – knowledge, expertise or skill – that underlies a company’s abil-
ity to be a leader in providing a range of specific goods and services.
It may help students if they address this question in terms of the functional areas of business. For ex-
ample, Intel obviously has a core competence in the research and development area. It continues to
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 7 – Organizing for Action
develop new chips that enable it to be a leader. To date, other firms always have been one step be-
hind. Coca Cola and Pepsi Cola both have core competencies in the advertising and marketing areas
that enable them to lead the field. Firms located in China, Hong Kong, Taiwan, and South Korea have
core competencies in the production area as a result of their low labor costs, etc.
11. If you were going into business for yourself, what would be your core competencies? What
competencies do you have now, and what competencies are you going to develop? Describe
what your role would be in a network organization and the competencies and roles of other
firms you would want in your network.
Students (especially those at the undergraduate level) may feel that although they have a number of
attributes (enthusiasm, willingness to work hard, a bright idea for a new product or service, etc.), they
have no core competencies (nothing that will enable them to be leaders in a specific field). They may
well argue that not very many people are leaders and that relatively few firms have core competencies
unmatched by their competition.
Students should be instructed to make a list of their skills and attributes…and of the skills and attrib-
utes they plan to develop in the years ahead. This will enable them to develop some ideas as to their
core competencies.
As students identify their core competencies with regard to a network organization, they should also
begin to recognize some of their personal weaknesses and thus the skills that they would hope to find
in others in the network. An accounting student might want to see expertise in the areas of sales and
marketing while a student who felt at home in the production area might look for an individual with
engineering capabilities.
12. Using an Internet search engine, search for “strategic alliance,” and identify three recently
formed alliances. For each alliance, identify whether the companies’ other products are gener-
ally competitors or complementary products. What are the goals of the alliance? What brought
them together? Discuss whether you think a strategic alliance is an effective way for these or-
ganizations to meet their goals.
Students are likely to find examples of recent alliances between major corporations – especially in
high-tech areas such as computers, telephones, cable television, entertainment, data and information
transfer. These alliances bring together firms with very different skills as they attempt to position
themselves for the coming education and information revolution.
13. What skills will you need to work effectively in (1) a network organization; (2) a learning organ-
ization; (3) a high-involvement organization. Be specific, generating long lists. Would you enjoy
working in these environments? Why or why not? What can you do to prepare yourself for
these eventualities?
To work effectively in these three types of organizations requires many of the same business skills
and capabilities since the three types are not mutually exclusive. The management of many firms
would probably argue that they had some of the characteristics of all three-organization types.
The network organization describes a web of interrelationships among many firms. They are flexible
arrangements among designers, suppliers, producers, distributors, and customers where each firm is
able to pursue its own distinctive competence.
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Chapter 7 – Organizing for Action
Whether or not individual students will think they will enjoy working in these different types of or-
ganizations will depend largely on their personalities. Individuals who see themselves, as loners will
probably not feel at home in a high—involvement organization. And those who prefer a very stable
environment will obviously not wish to be employed by a learning organization that prides itself on
its ability to change rapidly.
Obviously additional education and training (in both technical areas and in communications, decision
making, etc.) would help prepare individuals to function better in these various types of organizations.
However, changing an individual’s personality is far more difficult, and many students, finding them-
selves in one of these organizations, may be better advised to look for other corporate environments
more consistent with their personal style.
14. Considering the potential advantages of large and small size, would you describe the “feel” of
your college or university as big, small, or small-within-big? Why? What might make it feel dif-
ferent?
In the case of a college or university, size normally (but not always) offers prestige, a broader range
of courses and facilities, greater support for students, greater academic achievement on the part of the
faculty, and stability. A small college or university, by contrast, generally offers smaller classes and a
greater sense of intimacy and friendliness. However, it often has limited facilities, a limited range of
courses, and ongoing concerns over its fiscal stability. At some colleges and universities, the life of
the institutions is built around individual houses, fraternities and sororities, clubs, etc., and it achieves
a “small-within-big” environment.
Changing the environment or “feel” of a college is not an easy task. A large institution can establish
individual colleges and actively foster close interactions both among the students and between the
faculty and students to try to create a “smaller” atmosphere. By contrast, a small college can seek to
match the facilities of the larger institutions in both the academic and sporting areas.
Students will have had very different experiences. Some will describe companies where people ar-
rived early and left late, where people brought brown bag lunches so that they could work through the
lunch period, and where people took a certain pride in how many Saturdays and Sundays they were in
the office. Others will describe companies where people went to a local pub after work or got together
on weekends for parties. And yet others will describe the job as merely being from 9 to 5 with every-
body coming in at different times and not really paying much attention to what others did.
The text suggests four sources of clues about the corporate culture:
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Chapter 7 – Organizing for Action
Students will probably comment first on the business practices of the organization, and then remem-
ber the symbols, rites and ceremonies, and finally start to tell stories.
Question: does this mean that the corporate mission statement and the official goals aren’t too im-
portant in setting culture?
EXAMPLES
Example 7.1 - Integration: The KSS Design Group is an architectural and design practice that
was founded in 1991. Their core competency is integration - their home page boasts that “Our
range of services includes master planning, architecture, interior design, graphics and branding,
and we can bring these disciplines together into a seamless package for any given project.” In an
article in “Design Week”, Sara Wilkins discusses the need to break down the traditional division-
al structure of most creative companies - KSS tries to “actively and positively mix our varied skill
sets.”4 She stresses the role education and communication have played in helping to integrate the
various functions of her organization, and she says that KSS continually invests in training, both
for their employees and their clients. They also pull people together by making sure that every-
one in the organization works in all of the diverse industry sectors served by KSS, and by having
regular internal project reviews, where everyone in the organization is given the opportunity to
offer objective opinions about projects.
Example 7.2 – Board of directors: Real Estate Investment Trusts (REITs) provide their inves-
tors with income based on owning and operating real estate, including apartments, shopping cen-
ters, homes, and other properties. Like many other types of organizations, their boards of direc-
tors have seen changes related to the Sarbanes-Oxley Act. One REIT, the Mills Corporation, was
acquired in 2007 after an SEC investigation found problems with the company’s accounting rec-
ords. The CEO stepped down as a result of the investigation, but there were several questions
raised about whether or not the company’s board of directors should have reined in Mills’ expan-
sion plans before they got out of control. An example of more appropriate board behavior can be
found in the story of Developers Diversified Realty (DDR), which was considering going into a
joint development venture in China. DDR’s board of directors voted down the plan, saying that
any investment in China should be part of a long-term strategy, and not a one-time deal.5
Example 7.3 – Span of control: The Friendly Ice Cream Corporation manufactures and serves
ice cream, along with operating 530 company and franchised restaurants throughout the North-
east. In 2005 Friendly’s restructured their management team, and 1) reduced spans of control for
front-line and second-line supervisors, 2) created a new recognition and reward program for serv-
ers, and 3) created an Internet-based guest feedback system. These changes were designed to
help Friendly’s obtain higher margin revenues by helping employees to work more efficiently.6
4
Design Week, “The one stop creative shop” September 20, 2007, pg. 22.
5
Filisko, G.M., “Looking out for shareholders.” National Real Estate Investor. Aug. 2007, Issue 8, pg. 40
6
Business Wire. “Friendly Ice Cream Corporation reports second quarter 2005 results.” August 4, 2005. Online at
http://biz.yahoo.com/bw/050804/45877.html.
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 7 – Organizing for Action
Example 7.4 - Delegation: Students may not realize it, but one of the most important things a
first level fire officer does when first arriving on the scene of a fire is to delegate responsibilities.
The way firefighters approach a fire depends on the officer’s ability to:
According to a 2007 article in “Firehouse”7, these actions are equivalent to “calling a play” in
football. If the fire officer calls the right play, all of the responding firefighters will know exactly
what they are to do, and chances of injury will be minimized.
Example 7.5 – Functional and divisional organization: The Allstate Insurance Company com-
bines functional and divisional organization structures by separating the company into three divi-
sions - Personal Property & Casualty, Business Insurance, and Financial (Life and Savings).
Within each of these divisions are functional departments such as Human Resources, Finance,
Underwriting, etc. The Sales and Claims departments are company-wide departments, since all
Allstate sales agents sell all three kinds of insurance, and claims representatives can handle any
type of claim.
Example 7.6 – Matrix structure: Phillips, a large Dutch electrical company, has had a matrix
structure from the end of World War II, organized on both national lines and product divisions.
For example, the head of a washing machine division in Italy might report to both the head of
Philips in Italy as well as a washing machine executive in the Netherlands. Recently, however,
the company began modifying its matrix structure to improve accountability within the organiza-
tion. Under the slogan “One Phillips”, the company is gradually encouraging employees to col-
laborate with people outside of their divisions, and to move around in their careers, rather than
staying in one geographical location or with one product.8
Example 7.7 – Network organization: Jay Galbraith has coined the term “The Front-Back Or-
ganization” to refer to companies, which are structured one way near customers, and another way
near operations. For example, The Gap organizes its stores geographically, giving individual
store managers a fair amount of autonomy in operations. However, the manufacturing operations,
research and design, accounting, and other corporate departments are organized functionally,
making them more efficient. The “go-between” is the Marketing Department, which is charged
with taking information from the stores and making sure it gets to the corporate departments, and
vice-versa.9
Example 7.8 - Standardization: According to the telecom glossary the International Standards
Organization (ISO) is “An organization established to promote the development of standards to
facilitate the international exchange of goods and services, and to develop mutual cooperation in
areas of intellectual, scientific, technological, and economic activity.” Most large global high-
tech companies proudly display banners stating that they are “ISO XXXXX certified.” In 2009,
ISO will publish an International Standard for social responsibility.10 If a company chooses to
follow ISO 26000, it will be one more way for it to coordinate the activities of its employees with
regard to social responsibility around the world.
7
Emery, Mark. “The ten commandments of intelligent and safe fireground operations.” Firehouse. Aug. 2007, Vol. 32, Iss. 8, pg. 72.
8
The Economist. “The matrix master. January 21, 2006.
9
Galbraith, Jay. Designing Organizations: An Executive Briefing on Strategy, Structure, and Process. Jossey-Bass, 1995.
10
Parkinson, Alex. “ISO takes steps to standardize social responsibility.” The Accountant. Oct. 31, 2006, pg. 7.
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 7 – Organizing for Action
Example 7.9 – Strategic alliance: Verizon and SoftBank Telecom have entered into a strategic
alliance agreement that benefits multinational customers of both companies doing business in Ja-
pan.11
Example 7.10 – Scale vs. scope economies: Another way of defining the difference between
economies of scale and economies of scope is given by Gary Wolff of the Pacific Institute:
• A ‘scale economy’ exists when a bigger facility will be less expensive per unit
• A ‘scope economy’ exists when one facility delivers two services at a lower cost than two fa-
cilities, each delivering one service. In economies of scope, a single change can have bene-
fits across multiple sectors. For example, rainwater harvesting can both improve the water
supply, and reduce the need for runoff management.12
Example 7.11 – Being big and small: Bell Business Solutions of Montreal is clearly a big busi-
ness - it has 800 people on staff. But because the company developed out of a merger of many
smaller telecom ventures, they use an entrepreneurial style of management to stay small. They
have four line units and two support units, which serve as resources to the line units. All of the
units are individual profit centers, and consumers see the heads of each division as being at the
top of the company.13
Example 7.12 – Organizing for customer responsiveness: Jim Yee, at the Union Bank of Cali-
fornia knows that his company serves a niche market, and that customer attention is critical to
providing the services people have come to expect. He focuses on supporting the bank’s strategy
by running a process engineering department that is commissioned to look at foundational pro-
cesses across the bank from a customer point of view.14
Example 7.13 – Lean manufacturing: Buck Knives in Post Falls, Idaho had a problem. They
were warehousing large amounts of partially made knives, and those knives took up floor space,
and had to be tracked. Lean manufacturing, or looking at production from the perspective of the
customer, solved this problem. Now the company uses value stream analysis to determine which
actions have the most value for the customer, and Kaizen Events to determine how to do these ac-
tions most effectively. The company uses work cells of 12 to 13 people to make products from
beginning to end, thereby increasing efficiency. At any given point in time, the company will
have knife parts or completed knives, but nothing in-between, thereby avoiding the inventory
problems the company had earlier.15
11
Verizon Business. “Verizon enters strategic alliance.” Total Telecom, June 25, 2007.
12
Cascio, Jamais. “World Environment Day -- Water Challenges” Online at http://www.worldchanging.com/archives/002826.html.
13
Belford, Terrence. “Big lessons from little divisions: Intrapreneurship 101” National Post’s Financial Post and FP Investing (Cana-
da), March 23, 2006, Pg. SR3.
14
Valentine, L. “Reengineering with a Customer Focus.” Bank Systems and Technology, June 1, 2007, pg. 22.
15
Satren, Mike. “Learning Lean.” Post Falls Press, August 14, 2005. Online at
www.postfallspress.com/articles/2005/08/14/business/bus01.prt
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Chapter 7 – Organizing for Action
These expanded PowerPoint slides can be used to supplement the lecture material.
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Chapter 7 – Organizing for Action
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Chapter 7 – Organizing for Action
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Chapter 7 – Organizing for Action
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Chapter 7 – Organizing for Action
EXPANDED POWERPOINT
SLIDE 40
Chapter Video
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Chapter 7 – Organizing for Action
SUPPLEMENTAL FEATURES
CHAPTER VIDEOS
Starbucks, which began over 40 years ago with a single store in Seattle, has grown to over 17,000 stores
around the globe. In 2000, CEO Howard Schultz stepped down to focus on expansion. However, the
recession that began in 2007 had a significant impact on Starbucks, and Schultz returned to the CEO role
in 2008 and closed hundreds of stores to reduce costs. Schultz says there is now a renewed focus on cof-
fee, the product that put Starbucks on the map. Every day in the tasting room in the Seattle headquarters
the tasting team “tests” dozens of batches of coffee from around the world. Starbucks is now steaming
ahead in a more controlled growth mode these days.
1. Schultz claims that Starbucks is in the people business of serving coffee, but the compa-
ny is releasing new products such as tea, nutrition bars, etc. Will introducing these new
products help Starbucks build on its existing core competencies, or will it dilute the com-
pany’s focus?
Some people will claim that it will build upon Starbuck’s core business, while others will say
that it will dilute their core competency, coffee. The reality is, most companies have complimen-
tary items or what Schultz’s refers to as adjacent products in their business strategy. Starbucks is
now realizing that they don’t need to stand on coffee alone. These ancillary products can and
will make up a significant amount of revenue in their business model.
Organizational agility has to do with building around a well-developed core competency. Part of
promoting this agility has to do with re-investing in the company’s core competency for the fu-
ture. This was evident with the tasting room where partners slurped and tasted different coffee
on a daily basis looking for the next great taste. In addition, the video discussed the new brewing
equipment that makes the world’s best cup of coffee. This innovative equipment gives them a
competitive advantage over their competitors.
3. Based upon the video, would you describe Starbucks as a high-involvement organiza-
tion? Why or why not?
A high-involvement organization is one in which top management ensure that there is consensus
about the direction of the organization and the organizational structure is flat and decentralized.
Starbucks refers to their employees as partners, so from this perspective, you might conclude that
they are a high-involvement organization. On the other hand, it is hard to conclude from a small
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Chapter 7 – Organizing for Action
video clip of whether or not the employees had input into the direction of promoting adjacent
products, developing a new brewing system, etc.
4. Starbucks customers expect a Vanilla Latte to taste the same, whether they are in Mos-
cow, Russia or Moscow, Idaho. How does this affect the concept of decentralization in an
organization like Starbucks?
From this perspective, you would have to say that Starbucks is not decentralized. This is not a
bad thing though. As mentioned in the question, you want a Vanilla Latte to taste the same
whether in Russia or the U.S. The only way to make this happen is by having some central con-
trol on how a Vanilla Latte is made at each location. A decentralized organization is allowing
lower-level managers or partners make important decisions. This can still happen within Star-
bucks by allowing them to make important decisions, they just don’t have the authority to change
the way products are made.
Zappos’ CEO Tony Hsieh has created a unique organization, not only for its customers (who get free
shipping and free returns for up to a year), but also for its employees. Zappos has kept its call center in
the U.S. and its employees are part of the “customer loyalty team.” Call center employees are given no
scripts and no time limit for phone calls. They are given leeway to do whatever it takes to make a cus-
tomer happy. Hsieh also wants to make his 1,400 employees happy. He says that he wants them to see
their work as a calling, not just a job or a career. The company promotes a fun environment and empow-
erment for its workers. The company goes as far as offering employees up to $3000 to quit work as a way
to test the quality of their employee friendly environment. Hsieh believes that ultimately this approach
makes the world a better place.
1. Zappos gives its employees flexibility to “do whatever it takes” to make the customer
happy. What are the potential disadvantages to this approach?
The biggest disadvantage is that empowering the employee to make a decision could cost the
company money. For example, the Customer Loyalty Team Member could accept back a pair of
shoes that a customer had worn for a year and decided they wanted to return them. In the long
run, is this a bad decision though? The philosophy is, if you have a happy customer, you will
have a repeat customer.
2. Would you be comfortable working in a freewheeling, zany culture like the one at Zap-
pos? Why or why not?
Everyone will have to make his or her own decision about this question. Some people will love
this work environment, while other employees will not. Some employees like structure and
boundaries. If you were this type of person, you probably would not fit well in this type of work
environment or company culture.
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Chapter 7 – Organizing for Action
3. Zappos delegates significant responsibility to its customer loyalty team. What steps can
Zappos managers take to ensure that this delegation is effective for both the company and
the employee?
SELF-ASSESSMENTS
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Another random document with
no related content on Scribd:
—Qu’y avait-il dans ce verre? dis-je épouvanté.
—Du poison, me répondit Pauline.
—Et vous l’avez bu! m’écriai-je.
—Savais-je que vous alliez venir? me dit Pauline en s’appuyant
contre la grille; car alors seulement elle se rappela qu’elle avait vidé
ce verre une heure ou deux avant mon arrivée.
—Souffrez-vous? lui dis-je.
—Pas encore, me répondit-elle.
Alors un espoir me vint.
—Et y avait-il longtemps que le poison était dans ce verre?
—Deux jours et deux nuits à peu près, car je n’ai pas pu calculer
le temps.
Je regardai de nouveau le verre, le détritus qui en couvrait le
fond me rassura un peu: pendant ces deux jours et ces deux nuits,
le poison avait eu le temps de se précipiter. Pauline n’avait bu que
de l’eau, empoisonnée il est vrai, mais peut-être pas à un degré
assez intense pour donner la mort.
—Il n’y a pas un instant à perdre, lui dis-je en l’enlevant sous un
de mes bras, il faut fuir pour trouver du secours.
—Je pourrai marcher, dit Pauline en se dégageant avec cette
sainte pudeur qui avait déjà coloré son visage.
Aussitôt nous nous acheminâmes vers la première porte, que
nous refermâmes derrière nous; puis nous arrivâmes à la seconde,
qui s’ouvrit sans difficulté, et nous nous retrouvâmes sous le cloître.
La lune brillait au milieu d’un ciel pur; Pauline étendit les bras, et
tomba une seconde fois à genoux.
—Partons, partons, lui dis-je, chaque minute est peut-être
mortelle.
—Je commence à souffrir, dit-elle en se relevant. Une sueur
froide me passa sur le front, je la pris dans mes bras comme j’aurais
fait d’un enfant, je traversai les ruines, je sortis du cloître et je
descendis en courant la montagne: arrivé sur la plage, je vis de loin
le feu de mes deux hommes.
—A la mer, à la mer! criai-je de cette voix impérative qui indique
qu’il n’y a pas un instant à perdre.
Ils s’élancèrent vers la barque et la firent approcher le plus près
qu’ils purent de la rive, j’entrai dans l’eau jusqu’aux genoux; ils
prirent Pauline de mes bras et la déposèrent dans la barque. Je m’y
élançai après elle.
—Souffrez-vous davantage?
—Oui, me dit Pauline.
Ce que j’éprouvais était quelque chose de pareil au désespoir:
pas de secours, pas de contre-poison; tout-à-coup je pensai à l’eau
de mer, j’en remplis un coquillage qui se trouvait au fond de la
barque, et je le présentai à Pauline.
—Buvez, lui dis-je.
Elle obéit machinalement.
—Qu’est-ce que vous faites donc? s’écria un des pêcheurs; vous
allez la faire vomir, c’te p’tite femme.
C’était tout ce que je voulais: un vomissement seul pouvait la
sauver. Au bout de cinq minutes elle éprouva des contractions
d’estomac d’autant plus douloureuses que, depuis trois jours, elle
n’avait rien pris que ce poison. Mais, ce paroxisme passé, elle se
trouva soulagée; alors je lui présentai un verre plein d’eau douce et
fraîche, qu’elle but avec avidité. Bientôt les douleurs diminuèrent,
une lassitude extrême leur succéda. Nous fîmes au fond de la
barque un lit des vestes de mes pêcheurs et de mon paletot: Pauline
s’y coucha, obéissante comme un enfant; presque aussitôt ses yeux
se fermèrent, j’écoutai un instant sa respiration; elle était rapide,
mais régulière: tout était sauvé.
—Allons, dis-je joyeusement à mes matelots, maintenant à
Trouville, et cela le plus vite possible: il y a vingt-cinq louis pour vous
en arrivant.
Aussitôt mes braves bateliers, jugeant que la voile était
insuffisante, se penchèrent sur leurs rames, et la barque glissa sur
l’eau comme un oiseau de mer attardé.
V.