Organizational Culture,

Structure, and Design

Chapter 8
Organizational Structure
(Organizational Culture)
A system of shared beliefs and values that
develops within an organization and guides
the behavior of its members.
the personality of the organization
Organizational cultures can be
classified into four types:
Clan
Adhocracy
Market
Hierarchy
Clan Culture
An employee-focused culture valuing
flexibility, not stability
A clan culture has an internal focus and
values flexibility rather than stability and
control
Family type values collaboration, cohesion
through consensus, job satisfaction
Adhocracy Culture
A risk-taking culture valuing flexibility
An adhocracy culture had an external focus
and values flexibility
Adaptable, creative, and quick to respond to
changes


Market Culture
A competitive culture valuing profits over
employee satisfaction
A market culture has a strong external focus
and values stability and control
Driven by competition and a strong desire to
deliver results
Customers, productivity, and profits take
precedence over employee development and
satisfaction
Hierarchy Culture
A structured culture that has an internal focus
and values stability and control over flexibility.
Formalized, structured work environment
aimed at achieving effectiveness through a
variety of control mechanisms that measure
efficiency, timeliness, and reliability in the
creation and delivery of products
Three Levels of Organizational
Culture
Observable artifacts
Espoused values
Basic assumptions

Observable Artifacts
The most visible level
Physical manifestations
Manner of dress
Awards
Myths and stories about the company
Rituals and ceremonies
Decorations


Espoused Values
The explicitly stated values and norms
preferred by an organization
Hewlett Packard the HP Way
Basic Assumptions
Core values of the organization
Non observable
Represent the core values of an
organizations culture

Culture is transmitted to
employees in several ways;
Symbols
Stories
Heroes
Rites and rituals
WAL-MART Cheer
Give me a W!
Give me an A!
Give me an L!
Give me a Squiggly!
Give me an M!
Give me an A!
Give me an R!
Give me a T!
What's that spell?
Wal-Mart!
Who's number one?
The Customer! Always!
Symbols
Objects, acts, qualities, or events that convey
meaning to others.
e.g. 3M has a trophy known as the Gold Step
Award that is presented every year to employees
whose new products achieve significant revenue
levels
Stories
A story is a narrative based on true events,
which is repeated- and sometimes
embellished upon to emphasize a particular
value
Stories of events that go above and beyond the
call of duty
Heroes
A person whose accomplishments embody
the values of an organization.
Rites and Rituals
The activities and ceremonies, planned and
unplanned, that celebrate important
occasions and accomplishments in the
organizations life.
Mary Kay Cosmetics conventions to reward
sellers pink Cadillacs
An organizations culture has
four functions:
1. It gives members an organizational identity
2. It facilitates collective commitment
3. It promotes social-system stability
4. It shapes behavior by helping employees
make sense of their surroundings
Cultures for enhancing
economic performance
The Strength Perspective: assumes that the
strength of a corporate culture is related to a
firms long-term financial performance.
2. The Fit Perspective: assumes that an
organizations culture must align, or fit, with
its business or strategic context
a correct fit is expected to foster higher financial
performance.
3. The Adaptive Perspective:
Assumes that the most effective cultures
help organizations anticipate and adapt to
environmental changes.

Ways cultures become
embedded in organizations
Formal Statements
Wal-Mart: States three basic values as the core
of their culture:
Respect for individual
Service to customers
Striving for excellence
Slogans and Sayings

Snack, Crackle, Pop

Rice Crispies
Let your fingers do the walking
Yellow pages
Plop Plop fizz fizz oh what a relief it is
Alka Seltzer
Mm Mm Good
Campbells soup
Look ma, no cavities.
Crest
Stories, legends, and myths
Leader reactions to crises
Role modeling, training, and coaching
Physical design
Rewards, titles, promotions, and bonuses
Organizational goals and performance criteria
Measurable and controllable activities
Organizational structure
Organizational systems and procedures
Organization
A system of consciously coordinated
activities or forces of two or more people.
Three types of organizations;
For-profit organizations: Formed to make
money, or profits, by offering products or
services
Nonprofit organizations: formed to offer
services to some clients, not to make a profit
(hospitals, colleges)
Mutual Benefit organizations: Voluntary
collectives whose purpose is to advance
members interests (unions, trade
associations)
Organization Chart
A box-and-lines illustration showing the
formal lines of authority and the
organizations official positions or work
specializations.
Vertical hierarchy of authority (who reports to
whom)
Horizontal specialization (who specializes in what
works)
Common elements of
Organizations (Edgar Schein)
Common Purpose: unifies employees or
members and gives everyone an
understanding of the organizations reason
for being
Coordinated Effort: the coordination of
individual efforts into a group or organization-
wide effort
Division of Labor: (work specialization)
the arrangement of having discrete parts of a
task done by different people
Hierarchy of Authority: (chain of
command) a control mechanism for making
sure the right people do the right things at the
right time


Other Elements
Span of Control: the number of people
reporting directly to a particular manager
Authority, Responsibility, and Delegation:
Authority: the rights inherent in a managerial
position to make decisions, give orders, and
utilize resources.
Accountability: managers must report and
justify work results to the managers above
them.
Responsibility the obligation you have to
perform the tasks assigned to you.
Delegation the process of assigning
managerial authority and responsibility to
managers and employees lower in the
hierarchy.
Line Position: Line managers have authority
to make decisions and usually have people
reporting to them.
Staff Position: Staff personnel have
authority functions they provide advice,
recommendations, and research to line
managers
Centralization of Authority vs
Decentralization of Authority
Centralized Authority Important decisions
are made by higher-level managers
McDonalds, Kmart
Decentralized Authority Important decisions
are made by middle level and supervisory-
level managers
General Motors, Harley-Davidson
Simple Structure
An organization with a simple structure has
authority centralized in a single person, a flat
hierarchy, a few rules, and low work
specialization
Mom and pop stores
Functional Structure
In a functional structure, people with similar
occupational specialties are put together in
formal groups.
Departments: Production Department, Marketing
Department, Finance, etc.
Divisional Structure Grouping by
similarity of purpose
Product Divisions group activities around similar
products or services
Time Warner (magazines, cable tv, recordings, movies)
Customer Divisions tend to group activities around
common customers or clients
Ford: passenger car customers, large trucking customers
Geographic Divisions group activities around defined
regional locations
Federal Reserve Bank has 12 separate districts around the
US

Matrix Structure
An organization combines functional and
divisional chains of command in a grid so that
there are two command structures
Vertical and horizontal

See p 258
Team Based Structure
Teams or workgroups, either temporarily or
permanently, are used to improve horizontal
relations and solve problems throughout the
organization.
See page 259
Network Structure
The organization has a central core that is
linked to outside independent firms by
computer connections, which are used to
operate as if all were a single organization.
See page 259
Modular Structure
A firm assembles product chunks, or
modules, provided by outside contractors.
Contingency Design
The process of fitting the organization to its
environment
Environment
Size
Technology
Life Cycle
Life Cycle of an Organization
Four stages
The birth stage
The youth stage
The midlife stage
The maturity stage
Birth Stage
Nonbureaucratic stage
The stage in which the organization is created
Youth Stage
Prebureaucratic
The organization is in a prebureaucratic stage, s
stage of growth and expansion
Midlife Stage
The organization becomes bureaucratic
A period of growth evolving into stability
Maturity Stage
The organization becomes very bureaucratic,
large, and mechanistic.