9. Decentralization

decentralization

implies limits on the decision-making discretion of people at the top of the organization

efficient

decentralization is often _______

reputational, discrimination, computers, pursuit

Sears and horizontal dilemmas:

* there was decentralization
* store managers used strategies that had negative _______ effects on the firm:
* bait and switch: attract customers in stores with discounts for a small quantity of items and once in the store they consume more → increases traffic
* store managers used racial and sexual ______
* hired married men
* hired women for jobs with lower commissions
* VP was opposed to _______ so they were the last to adopt them
* buyers bribed store managers

→ subgoal _________

they used selection by hiring a psychologist who developed personality tests to assess future employees’ personality

what was Sears’ solution for its horizontal dilemmas and how was it implemented?

* analytic department: whiz kids
* production department: people who had experience in producing vehicles and selling them

→ resulted in conflict because the 2 groups were entirely different and couldn’t cooperate

how did tribalism develop at Ford?

due to asymmetry of information:

* the employee knows what rate would be superior to the efforts he would put in → wants to convince employer that this pay is thus necessary → opportunism
* the employer doesn’t know that

why is it hard to determine rates of pay?

because when these specialists arrive, employees can make the work seem difficult to secure the highest possible piece rate → opportunism

why do time and motion study specialists, hired to determine piece rates, don’t always succeed?

stable

to use incentive pay, the characteristics of the job must be reasonably ________ because if not the rates would have to be continually renegotiated

by offering a base salary and piece rates/commissions added to the base

how do some companies attract employees to insure them against risk?

supervision

joint force contracting reduces or eliminates the need for _______ because people monitor each other’s efforts

because it is played over multiple rounds

why we call the prisoner’s dilemma iterated?

shirking

there is a prisoner’s dilemma confronting workers as a group so we can end up with worker ________

contract

de facto employment security originates in private _______ between employers and employees

reverse, one, retaliation, 1

if the iterated prisoner’s dilemma has a final endpoint, it causes _______ induction because:

* the last round is a ______-shot game
* the last round doesn’t offer the possibility of _______
* so all the previous rounds then become a one-shot game, all the way to round __

strategy

the indefiniteness of the duration of the game is necessary for the choice of a tit-for-tat ________

effort

time server: when an employee exerts minimal ________ until they retire, exemplifying reverse induction

welfare capitalism

things such as cafeterias, gardens, athletic facilities…

security

Kodak, Sears, and Thompson all provided employment _______ to their employees and were very successful

to eliminate or reduce the gap between labour and capital

what is the goal of decentralization through employee ownership?

performance

employees in employee stock ownership plans are motivated to work hard because it affects the _______ of the firm, and the money they get

supplement

Pacific NW cooperative degenerated as people were employed to ________ the cooperative workforce at a lower pay, thus ceasing to be a cooperative

innovation, refused

San Francisco scavenger companies fell apart because:

* there was technical _______ that made the garbage removal business more capital intensive
* sons _______ to enter the occupation so Italians had to sell their memberships to black and Latino employees

output

Pacific NW cooperative failed to increase _______ when demand rose, so consumer relied on other capitalist producers to meet the demand increase

ethnic

the functioning of cooperatives does seem to rest on ________ exclusiveness