Question

Which one of the following falsely characterizes a centralized organizational structure?

A. Top executives should retain authority over most strategic and operating decisions and keep a tight rein on business-unit heads, department heads and the managers of key operating units
B. Strict enforcement of detailed procedures backed by rigorous managerial oversight is the most reliable way to keep the daily execution of strategy on track
C. Tight control by the manager in charge makes it easy to fix accountability when things do not go well
D. Most company personnel have neither the time nor the inclination to direct and properly control they work they are performing and that they lack the knowledge and judgment to make wise decisions about how best to do their work
E. A company that draws on the combined intellectual capital of all of its people can outperform a company that relies on command-and-control

Answer 1

Option E falsely characterizes a centralized organizational structure by suggesting that such a structure could outperform one that leverages the collective intellectual capital of its workforce, which contradicts the nature of centralized control.

Step-by-step explanation:

The statement that falsely characterizes a centralized organizational structure is that a company that draws on the combined intellectual capital of all of its people can outperform a company that relies on command-and-control (Option E). In a centralized organization, authority and decision-making are concentrated at the top levels of management. Such organizations tend to discourage broad-based employee involvement in decision-making, which contrasts with the idea of drawing on the collective intellectual capital of all employees. This structure is marked by a hierarchy of authority, rigorous enforcement of rules, and strict managerial oversight to maintain efficiency and control.

While centralized structures depend on the top executives for strategic decisions and lean on tight controls for consistency and accountability (Options A, B, and C), they may not fully capitalize on the insights and innovations that can come from a more decentralized or flat organizational model (Option E). Lastly, Option D misrepresents the workforce's capabilities in a centralized structure, which does not necessarily imply that employees lack the knowledge or judgment to make wise decisions; rather, the structure does not routinely engage them in decision-making processes.