Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 7

An organizational consultant evaluates your division. She indicates that she does not like the divisional manager's top-down management style. She recommends setting up a board that consists of the divisional manager and his top 10 department managers. The consultant suggests that all major policy decisions be made by the board by a majority voting rule. She argues that this process will make for better use of information within the organization. She also argues that our political system is a democracy, which works well, and that the same concept could be applied beneficially within the corporation. Evaluate the recommendation.