The organizational structure is flat, with the organization chart only having one vertical layer. This layer has Leakos at the top as the manager and all employees reporting to Leakos. The second layer is then divided by function into four areas: production, sales, office and retail. This provides a single chain of command. This single chain of command is effective for the business because all employees are clear on who they report to. This is also assisted by Leakos dealing with his employees on an individual basis. This individual attention means employees have a relationship with their superior. This single chain of command is effective because of the small size of the business and because Leakos makes himself available to employees. If the business were larger or were to expand, this single layer of management would not be sufficient for adequate control to be maintained. The span of control would be too great and either management layers would need to be introduced or other means of providing control introduced, such as adding rules and procedures that can govern employee's actions.
Work specialization is also low. While the organization is divided into functional areas, the tasks within these areas are not specialized. As the case reports, "the production roles in the bakery vary at different times. Workers are not forced to specialize in one skill." This lack of specialization is effective because it provides employees with variety and prevents the work from becoming tedious. It also means that the department works more as a team and gives workers a range of skills. This variety and wide skill level is also useful in enhancing flexibility, since if one employee is absent another one can complete their task. In this way, the employees work as one team rather than as individuals.
Decision making is also centralized with Leakos making all the decisions. The case study states that Leakos "feels centralization makes his business more flexible because he can act without delay when problems arise." This is true since the decisions do not need to flow through a number of management levels for a decision to be made. However, this centralization is only efficient because of the small size of the organization. If the organization were larger or were to expand, there may be a need to decentralize decision making and give more decision making power to employees, rather than have all the decision making power rest with the manager.
Leakos is the only supervisor at Dimitri's and so provides the leadership function. Leakos's leadership style varies with the situation and combines an interactive and a transactional approach.
An interactive leader is one who is more concerned with the environment than the tasks. An interactive leader encourages open communication and participation and strives to make the environment one without tension. Leakos develops close relationships with his workers and attempts to meet their needs. This includes such things as providing vacation time and being flexible with allowing leave for family duties. As the case study reports, "employees find themselves in a comfortable environment where they can speak their own language and affiliate with others with similar background and interests." This method of creating an informal environment for employees is effective because the employees are unskilled and have little formal education. Presumably, job opportunities for these individuals are limited, making Dimitri's a place they want to work. This leadership style would not be as suited to a diverse employee base including those more highly skilled. These individuals would be less likely to find the environment suitable and would prefer a high-achieving environment rather than one based on being comfortable.
Leakos is also a transactional leader, which is a leader who focuses on the needs of employees, clarifies roles and tasks and provides structure for employees. This is also suited to the unskilled workforce that require structure and to have tasks defined for them. Again, a higher skilled workforce would have more need to be independent and so this leadership approach would not be as effective.
As the case study notes, the time when Leakos has to change his leadership style is during peak seasons. Leakos, while having to be more authoritative and more focused on the tasks rather than the people, still maintains an approach where he treats his people fairly and avoids making the environment uncomfortable. This is achieved by using reward power, where employees who work overtime are rewarded for their efforts. It is important that Leakos does not use coercive power where punishment is used as a means of achieving results. Using coercive power would undermine the people-centered approach of Leakos and also prevent the community environment from being maintained. By using reward power Leakos achieves the task needs of the business while still maintaining the people side of the business.
Motivation at Dimitri's is provided by both extrinsic and intrinsic rewards. Extrinsic rewards are the rewards Leakos gives. These include the rate of pay, which is twice the legal minimum wage and the bonuses that are given for working overtime. These rewards are offered to encourage certain behaviors.
Intrinsic motivation is achieved by the community environment that is provided. This environment is similar to the one the Macedonian workforce have in their lives outside of work. Providing a comfortable working environment is a significant reward for the Macedonian workforce, with this comfortable working environment one they would have trouble finding elsewhere. This intrinsic reward matches the requirements of the workforce. Relating this to Maslow's hierarchy of needs, it can be seen that this environment gives employees a sense of belongingness and also a sense of esteem. This can also be related to ERG theory, which has three levels of needs. The work environment provides for the existence needs by giving employees generous pay that allows them to live comfortably. Secondly, the employees have their relatedness needs met by being part of the community. The third level is growth needs. With the workforce being unskilled, these growth needs are provided for by allowing people to become multi-skilled and just by giving people suitable employment. The unskilled workers do not require great needs for growth. This is one important reason why the work environment motivates the current workforce but would not motivate a more standard workforce. More skilled or educated employees would require more opportunities for advancement than Leakos provides. Once again, the reason the motivation is effective is because it meets the needs of the employees.
Motivation is also provided by job enlargement and job rotation. This job rotation and enlargement gives employees variation, while ensuring the work is not tedious. This increases employee satisfaction. Employee satisfaction then contributes to the positive environment. The positive environment ensures a cooperative workforce. This is a cause and effect relationship which results in a spiral, where satisfaction improves the environment and the environment increases employee satisfaction.
Vertical communication is informal and direct, with Leakos communicating with employees on an individual basis. This communication appears to be mainly downward with Leakos speaking to employees. His good relationship with employees also suggests that it also involves upward communication with Leakos listening to employees. It is also stated that Leakos manages all functions including working in production. This approach is similar to 'management by wandering around,' a technique that involves the manager interacting directly with all employees. It is these techniques that are likely to have created the open environment where Leakos has a good relationship with employees.
The informal community environment also suggests that communication between employees is informal and open, with employees communicating as a team or a community rather than via any specific channels.
Case Study: Action Realty Inc.
The organizational structure is flat, though the structure is not particularly clear on who reports to who. The accounting and clerical personnel report directly to Marie. All the other employees report to Harvey and Paul, though who is responsible to which manager is not clear. This means the chain of command is not clear, with employees not aware of who they report to.
The organization, including the management is also divided by functional area. The functional areas are the administrative department, the property management division, the residential department and the commercial real estate division. Management duties are not divided by functional area but rather by role. Harvey's principal managerial role is to "make sure the company reaches or exceeds sales goals." Paul looks after hiring and Marie manages accounting and clerical personnel. Various tasks including planning, controlling and administration are then performed by all three of the managers but not in any defined way.
This creates a confusion over who is responsible for what, especially in regards to employees not having a clear view of who they should speak to about certain problems. This is a problem where the organizational structure is not clearly defined. In this case, it is not the few layers of management that is the problem, but rather the confusing nature of management.