LiPari Personnel Services Company has two operating divisions. The Clerical Services division places (finds jobs for) people who have clerical skills; the Computer Services division places individuals who have computer programming skills. A secretarial labor pool provides support to both divisions. Each of the two operating divisions has an Employee Search department that locates individuals seeking jobs and a Client Services department that identifies and serves companies seeking employees. LiPari has a chief executive officer (CEO) and a vice-president of operations. The vice-president of operations reports to the CEO and the managers of the two operating divisions report to the vice-president. LiPari also employs an administrative manager. The manager of the secretarial labor pool and an advertising manager report to the administrative manager, who reports to the CEO.

Required

a. Develop an organization chart that shows reasonable lines of authority for the primary responsibility centers of the LiPari Personnel Services Company.

b. Classify the responsibility centers shown on your organization chart as cost centers, profit centers, or investment centers.

c. Would you expect the CEO to know if the advertising manager is paying too much for radio advertising? Explain. Include a discussion of the decentralization concept.