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Organizational Structure and
Culture
BCS 2743 ORGANIZATION BEHAVIOR
10-2
Learning Objectives
Identify the factors that influence managers choice of an organizational structure.
Explain how managers group tasks into jobs that are motivating and satisfying for employees.
Describe the types of organizational structures managers can design, and explain why they choose one structure over another.
10-3
Learning Objectives
Explain why managers must coordinate jobs, functions, and divisions using the
hierarchy of authority and integrating
mechanisms
List the four sources of organizational culture and differentiate between a
strong, adaptive culture and a weak,
inert culture
10-4
Organizational Structure
Organizational Architecture
The organizational structure, control systems, culture, and human resource
management systems that together
determine how
efficiently and
effectively
organizational
resources are used.
10-5
Designing Organizational Structure
Organizing The process by which managers establish
working relationships among employees to achieve goals.
Organizational Structure Formal system of task and reporting
relationships showing how workers use resources.
10-6
Designing Organizational Structure
Organizational design
The process by which managers create a specific type of organizational structure and
culture so that a company can operate in
the most efficient and effective way
10-7
Factors Affecting Organizational Structure
Figure 10.1
10-8
The Organizational Environment
The Organizational Environment
The quicker the environment changes, the more problems face managers.
Structure must be more flexible (i.e., decentralized authority) when environmental
change is rapid.
10-9
The Organizational Environment
Strategy
Different strategies require the use of different structures.
A differentiation strategy needs a flexible structure, low cost may need a more
formal structure.
Increased vertical integration or diversification also requires a more
flexible structure.
10-10
The Organizational Environment
Technology
The combination of skills, knowledge, tools, equipment, computers and machines used
in the organization.
More complex technology makes it harder for managers to
regulate the
organization.
10-11
The Organizational Environment
Technology
Technology can be measured by:
Task variety: the number of new problems a manager encounters.
Task analyzability: the availability of programmed solutions to a manager to solve problems.
10-12
The Organizational Environment
Human Resources
Highly skilled workers whose jobs require working in teams usually need a more
flexible structure.
Higher skilled workers (e.g., CPAs and doctors) often have internalized professional
norms and values.
10-13
The Organizational Environment
Human Resources
Managers must take into account all four factors (environment, strategy, technology
and human resources) when designing the
structure of the organization.
10-14
The Organizational Environment
The way an organizations structure works depends on the choices managers
make about:
1. How to group tasks into individual jobs
2. How to group jobs into functions and
divisions
3. How to allocate authority and
coordinate functions and divisions
10-15
Types of Organizational Structucture
1. Functional Structure
An organizational structure composed of all the departments that an organization requires to produce its goods or services.
10-16
Functional Structure
Advantages
Encourages learning from others doing similar jobs.
Easy for managers to monitor and evaluate workers.
Allows managers to create the set of functions they need in order to scan and
monitor the competitive environment
10-17
Functional Structure
Disadvantages
Difficult for departments to communicate with others.
Preoccupation with own department and losing sight of organizational goals.
10-18 Figure10.3
The
Functional
Structure of
Pier 1
Imports
10-19
Divisional Structures
Divisional Structure
Managers create a series of business units to produce a specific kind of product for a
specific kind of customer
10-20 Figure 10.4
Product,
Market, and
Geographic
Structures
10-21
Types of Divisional Structures
2. Product Structure
Managers place each distinct product line or business in its own self-contained division
Divisional managers have the responsibility for devising an appropriate business-level
strategy to allow the division to compete
effectively in its industry
10-22
Product Structure
Allows functional managers to specialize in one product area
Division managers become experts in their area
Removes need for direct supervision of division by corporate managers
Divisional management improves the use of resources
10-23
Types of Divisional Structures
3. Geographic Structure
Divisions are broken down by geographic location
Global geographic structure
Managers locate different divisions in each of the world regions where the organization
operates.
Generally, occurs when managers are pursuing a multi-domestic strategy
10-24
Types of Divisional Structures
Global Product Structure
Each product division takes responsibility for deciding where to manufacture its
products and how to market them in foreign
countries worldwide
10-25
Global Geographic and
Global Product Structures
Figure 10.5
10-26
Types of Divisional Structures
Market Structure Groups divisions according to the particular
kinds of customers they serve
Allows managers to be responsive to the needs of their customers and act flexibly in making decisions in response to customers changing needs
10-27
Matrix Design Structure
Matrix Structure An organizational structure that
simultaneously groups people and resources by function and product.
Results in a complex network of superior-subordinate reporting relationships.
The structure is very flexible and can respond rapidly to the need for change.
Each employee has two bosses (functional manager and product manager) and possibly cannot satisfy both.
10-28
Matrix Structure
Figure 10.6
10-29
Discussion Question?
Which is the most effective and efficient
organizational structure?
A. Matrix structure
B. Divisional structure
C. Market structure
D. Geographic structure
10-30
Product Team Design Structure
Product Team Structure Does away with dual reporting relationships
and two-boss managers
Functional employees are permanently assigned to a cross-functional team that is
empowered to bring a new or redesigned
product to work
10-31
Product Team Design Structure
Product Team Structure Cross-functional team is composed of a
group of managers from different
departments working together to perform
organizational tasks.
10-32
Product Team Structure
Figure 10.6
10-33
Hybrid Structures
Hybrid Structure The structure of a large organization that
has many divisions and simultaneously uses many different organizational structures
10-34
Federateds Hybrid Structure
Figure 10.7
10-35
Question?
What is the power vested in a manager to
make decisions?
A. Power
B. Influence
C. Authority
D. Control
10-36
Coordinating Functions:
Allocating Authority
Authority
The power vested in a manager to make decisions and use resources to achieve
organizational goals by virtue of his position
in an organization
10-37
Coordinating Functions:
Allocating Authority
Hierarchy of Authority
An organizations chain of command, specifying the relative authority of each
manager.
Span of Control: the number of subordinates who report directly to a
manager
10-38
Allocating Authority
Line Manager
Someone in the direct line or chain of command who has formal authority over
people and resources
Staff Manager
Managers who are functional-area specialists that give advice to line
managers.
10-39 Figure 10.8
The
Hierarchy
of Authority
and Span
of Control
at
McDonalds Corporatio
n
10-40
Tall and Flat Organizations
Tall structures have many levels of authority and narrow spans of control.
As hierarchy levels increase, communication gets difficult creating delays
in the time being taken to implement
decisions.
Communications can also become distorted as it is repeated through the firm.
Can become expensive
10-41
Tall Organizations
Figure 10.9
10-42
Tall and Flat Organizations
Flat structures have fewer levels and wide spans of control.
Structure results in quick communications but can lead to overworked managers.
10-43
Flat Organizations
Figure 10.9
10-44
Minimum Chain of Command
Minimum Chain of Command
Top managers should always construct a hierarchy with the fewest levels of authority
necessary to efficiently and effectively use
organizational resources
10-45
Centralization and Decentralization of
Authority
Decentralizing authority
giving lower-level managers and non-managerial employees the right to make
important decisions about how to use
organizational resources
10-46
Decentralizing Authority
Disadvantages
Teams may begin to pursue their own goals at the expense of organizational goals
Can result in a lack of communication among divisions
10-47
Integrating Mechanisms
Figure 10.10
10-48
Organizational Culture
Organizational culture
shared set of beliefs, expectations, values, and norms that influence how members of
an organization relate to one another and
cooperate to achieve organizational goals
10-49
Sources of an Organizations Culture
Figure 10.11
10-50
Characteristics of Organizational
Members
Ultimate source of organizational culture is the people that make up the
organization
Members become similar over time which may hinder their ability to adapt
and respond to changes in the
environment
10-51
Organizational Ethics
Organizational Ethics
moral values, beliefs, and rules that establish the appropriate way for an
organization and its members to deal with
each other and people outside the
organization
10-52
Employment Relationship
Human resource policies:
Can influence how hard employees will work to achieve the organizations goals,
How attached they will be to it
Whether or not they will buy into its values and norms
10-53
Organizational Structure
In a centralized organization:
people have little autonomy
norms that focus on being cautious, obeying authority, and respecting traditions emerge
predictability and stability are desired goals
10-54
Organizational Structure
In a flat, decentralized structure:
people have more freedom to choose and control their own activities
norms that focus on being creative and courageous and taking risks appear
gives rise to a culture in which innovation and flexibility are desired goals.
10-55
Strong, Adaptive Cultures Versus
Weak, Inert Cultures
Adaptive cultures
values and norms help an organization to build momentum and to grow and change
as needed to achieve
its goals and be
effective
10-56
Strong, Adaptive Cultures Versus
Weak, Inert Cultures
Inert cultures
Those that lead to values and norms that fail to motivate or inspire employees
Lead to stagnation and often failure over time
A Useful Description of Culture
A pattern of basic assumptions invented, discovered
or developed by a given group as it learns to cope
with its problems of external adaptation and internal
integration that has worked well enough to be
considered valid, and to be taught to new members
as the correct way to perceive, think, and feel in
relation to these problems.
(Ed Schein Organizational culture: What it is and how to change it in: Human Resource
Management in International Firms, P.Evans (ed.) London, Macmillan, 1990)
Another practical and useful definition of culture
Culture comes from within people and is put together by them to reward the capacities that they have in common.
Culture gives continuity and identity to the group. It balances contrasting contributions, and operates as a self-steering system which learns from feedback. It works as a pattern of information and can greatly facilitate the exchange of understanding. The values within a culture are more or less harmonious.
(Charles Hampden-Turner, Corporate Culture, J. Piatkus, 1994, p.21)
Characteristics of Corporate Culture
Each organization has behavioral norms for getting things done.
Strong culture is a powerful force in the organization, one that can shape the firms overall effectiveness and long-term success.
As an organization grows, its culture is modified,
shaped and refined by symbols, stories, heroes,
slogans and ceremonies.
Major power sources/bases in culture
types
Power/club culture personal, and resource
power
Role culture position power
Task culture expert power
Organisations can change their culture
Most start as power cultures, e.g. when
they are small, as they grow, they may
shift to a role culture, when confronted
with the need for greater flexibility, can
shift to task culture
Different departments - different
cultures
Within the organization different parts,
e.g.
departments can have different cultures
and
all of them can be combined.
Cultural diversity within oganizations: four
main activity types (Handy, C.)
Organizational Culture Profiles - Deal and Kennedy
Deal and Kennedy, Corporate Cultures
Driving c. Tough-guy, macho culture
Outgoing c. Work hard/play hard culture
Specialist c. Bet-your-company culture
Control c. Process culture
10-66
Movie Example: Apollo 13
What organizational
structure does
NASA use
to handle a moon
launch?