Certified Legal Manager (CLM) Organizational Development and Management Flashcards

24 sample cards from the Organizational Development and Management deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What is the key difference between a C corporation and an S corporation?

   A C corporation is taxed separately (double taxation—corporate and shareholder dividends); an S corporation elects pass-through taxation to shareholders (avoiding double taxation) but is limited to 100 shareholders who must be U.S. individuals/eligible entities and one class of stock.

2. What is a Professional Corporation (PC) / Professional Limited Liability Company (PLLC)?

   An entity formed by licensed professionals (e.g., lawyers, doctors, accountants) to provide professional services; owners get liability protection from business debts but generally not from their own professional malpractice.

3. What is the principle of limited liability?

   The legal principle that owners/shareholders of a corporation or LLC are not personally responsible for the company's debts and liabilities beyond the amount they invested.

4. What does 'piercing the corporate veil' mean?

   A court action holding shareholders or members personally liable for corporate debts, disregarding limited liability—typically when the entity is used for fraud, is undercapitalized, or fails to observe corporate formalities (commingling funds, alter ego).

5. What is a sole proprietorship?

   The simplest business structure, owned and run by one individual with no legal distinction between owner and business—the owner has full control but unlimited personal liability and reports business income on personal taxes.

6. What is corporate governance?

   The system of rules, practices, structures, and processes by which an organization is directed and controlled, balancing the interests of stakeholders such as shareholders, management, customers, and the community.

7. What is the primary role of a board of directors?

   To provide oversight and strategic direction, hire/supervise the CEO, set policy, ensure accountability and legal/fiduciary compliance, and protect the interests of shareholders/stakeholders—not to manage day-to-day operations.

8. What are the three core fiduciary duties of directors and officers?

   Duty of Care (act with reasonable diligence and informed judgment), Duty of Loyalty (act in the entity's best interest, avoid conflicts of interest), and Duty of Obedience/Good Faith (act within authority and lawful purpose).

9. What is the difference between the shareholder primacy model and the stakeholder governance model?

   Shareholder primacy holds that the corporation's main duty is to maximize shareholder value; the stakeholder model holds that the organization should balance the interests of all stakeholders (employees, customers, community, suppliers) alongside shareholders.

10. What is the business judgment rule?

    A legal presumption that directors act on an informed basis, in good faith, and in the honest belief that their decisions are in the company's best interest—shielding them from liability for honest business decisions even if they turn out poorly.

11. What are common types of board committees in corporate governance?

    Audit Committee, Compensation Committee, Nominating/Governance Committee, and often Risk and Executive committees.

12. What are the main types of organizational structure?

    Functional (by department/specialty), Divisional (by product, market, or geography), Matrix (dual reporting—functional and project), Flat/Horizontal (few hierarchy levels), and Network/Team-based structures.

13. What is a matrix organizational structure and its main drawback?

    A structure where employees report to two managers (e.g., a functional manager and a project manager) to share resources across projects; its main drawback is potential confusion, conflicting priorities, and power struggles from dual authority.

14. What is the difference between centralization and decentralization in organizational design?

    Centralization concentrates decision-making authority at the top of the hierarchy; decentralization distributes decision-making authority down to lower levels and units.

15. What does 'span of control' mean?

    The number of subordinates or direct reports that a single manager can effectively supervise; a wide span means more reports and flatter structure, a narrow span means fewer reports and taller structure.

16. What is the difference between a tall and a flat organizational structure?

    A tall structure has many hierarchical levels with narrow spans of control (more managers, centralized control); a flat structure has few levels with wide spans (fewer managers, faster communication, more autonomy).

17. What is the difference between the formal and informal organization?

    The formal organization is the official structure of roles, authority, and reporting relationships (org chart); the informal organization is the network of personal/social relationships and unofficial communication that arises naturally among employees.

18. What are the seven C's of effective communication?

    Clear, Concise, Concrete, Correct, Coherent, Complete, and Courteous.

19. What is active listening?

    A communication technique requiring the listener to fully concentrate, understand, respond to, and remember what is said—using paraphrasing, clarifying questions, nonverbal cues, and withholding judgment.

20. What is the difference between upward, downward, and lateral communication?

    Downward flows from higher to lower levels (directives, feedback); upward flows from lower to higher levels (reports, suggestions, concerns); lateral/horizontal flows between peers at the same level (coordination).

21. What are common barriers to effective communication?

    Physical barriers, language/semantic differences, perceptual or cultural differences, emotional barriers, information overload, noise, filtering, and lack of feedback.

22. What are the five stages of Tuckman's team development model?

    Forming (orientation), Storming (conflict), Norming (cohesion/establishing norms), Performing (high productivity), and Adjourning (disbanding).

23. What are the five dysfunctions of a team (Lencioni)?

    Absence of trust, fear of conflict, lack of commitment, avoidance of accountability, and inattention to results.

24. According to Edgar Schein, what are the three levels of organizational culture?

    Artifacts (visible structures, symbols, behaviors), Espoused Values (stated strategies, goals, philosophies), and Basic Underlying Assumptions (unconscious, taken-for-granted beliefs and perceptions).

What this deck covers

Organizational Development and Management flashcards FAQ