Relco Industries recently purchased Arbeck, inc., a manufacturer of electrical components that the construction industry uses. Roland Ford has been appointed as chief financial officer of Arbeck, and the president of Relco, Martha Sanderson, has asked him to prepare an organizational chart for his department at Arbeck. The chart that Ford has prepared is shown in the figure designated as Problem.

Ford believes that the treasurer’s department should include the following employees: assistant treasurer, manager of counts receivable and four subordinates, manager of investments and three subordinates, and manager of stockholder relations and two subordinates a total of 13 employees besides the treasurer. The controller’s department should consist of an assistant controller, a manager of general accounting and four subordinates, a manager of fixed asset control and three subordinates, and a manager of cost accounting with four subordinates a total of 15 employees besides the controller.

When Ford presented his plans (chart A) to Sanderson, she told him that she believed the organizational structure was too tall and shoved him, by drawing Chart B. how she had envisioned his department at Arbeck. There would be a reduction in personnel, and 10 employees would report directly to the treasurer, while 13 employees would report directly to the controller.

Ford replied that be believed the span of control wits too broad for both the treasurer and the controller and would create problems. Sanderson said that she preferred a flat organizational structure, as she believed that its benefits outweighed the problems that could arise from too great a span of control.

Required

a. For the organizational structure chief financial officer Ford proposed, describe the

1. Advantage and disadvantages of that structure.

2. Impact of the resulting span of control.

3. Effect on employee behavior.

b. For the flat organizational structure Reko president Sanderson proposed, describe the

1. Advantage and disadvantages of that structure.

2. Impact of the resulting span of control.

3. Effect on employee behavior.

c. When determining the appropriate span of control for Arbcck, Inc., discuss the factors that Ford and Sanderson should consider.

Transcribed Image Text:

ORGANIZATIONAL STRUCTURE AND SPAN OF CONTROL Chart A Chlet Financlal Officer Treasurer Controller Assistant Assistant Treasurer Controller Manager Investments (3) Manager Fixed Asset Control (3) Manager Cost Accounting (4) Manager Accounts Recelvable (4) Manager Stockholder Relations Manager General Accounting (4) (2) Chart B Chlef Financlal Oficer Treasurer Controller (10) (13)