Thismodule willfocusesonunderstandingtheoriginsofOrganizationalCulture.

Ourgoalis
tounderstandthetradeoffsmadewhenorganizationschooseastructure,andanalyzethe
relationshipbetweenstructureandculture.

Organizationalcultureisthesetofshared,takenforgrantedimplicitassumptionsthata
groupholdsandthatdetermines
howitperceives,thinksabout,andreactstoitsvariousenvironments.
Observableartifacts
Consistofthephysicalmanifestationofanorganizationsculture.AttheDuPont
experimentstationplaqueshangonthecafeteriawalldescribingtheachievements
offamousDuPontinventors.
Values
conceptsorbeliefsthatpertaintodesirableendstates whichguidetheselectionof
behaviorandareorderedbyrelativeimportance
Espousedvalues
representtheexplicitlystatedvaluesandnormsthatarepreferredbyan
organization
Enactedvalues
representthevaluesandnormsthatareactuallyexhibitedorconvertedinto
employeebehavior
Basicassumptions
Constituteorganizationalvaluesthathavebecomesotakenforgrantedovertime
thattheybecomeassumptionsthatguideorganizationalbehavior

TheCompetingValuesFrameworkisaframeworkforcategorizingorganizationalculture.
Asyoucansee,thisframeworkisbasedontwocontinuumsoforganizationaleffectiveness.Oneaxispertainsto
whetheranorganizationfocusesitsattentionandeffortsoninternaldynamicsandemployeeoroutwardtowardits
externalenvironmentanditscustomersandshareholders.
Thesecondaxesshowsanorganizationspreferenceforflexibilityorcontrolandstability.Theseaxescreatefourtypesof
organizationalculturesthatarebasedondifferentcorevaluesandcriteriaforassessingorganizationaleffectiveness.
Thefirstistheclanculture.Thiscultureischaracterizedhashavinganinternalfocusandvaluingflexibility.Thistypeof
organizationencouragescollaborationbetweenemployeesandiscommittedtohavingacohesiveworkgroupand
highjobsatisfaction.
Theadhocracyculturehasanexternalfocusandvaluesflexibility.Thistypeofculturefosterscreationofinnovative
productsandservicesbybeingadaptable,creative,andfasttorespondtochangesinthemarketplace.Centralized
powerandauthoritywouldnotbeeffectivestructuresinanadhocracy.Theseorganizationspromotecreativity,
innovation,andknowledgesharing.
Themarketculture hasastrongexternalfocusandvaluesstabilityandcontrol.Thistypeofculturefocusesonthe
customeroveremployeedevelopmentandsatisfactionbecausethegoalofmanagersistodrivetowards
productivity,profits,andcustomersatisfaction.Thisculturerewardsemployeeswhodeliverresults.
Thehierarchyculturehasaninternalfocusandaformalized,structuredworkenvironment.Itwilltendtohavereliable
internalprocessesandcontrolmechanisms(e.g.,Dellwhosefocusisoncostcuttingandefficiency.)
Thiscategorizationshowshowanorganizationscorevaluesaffectitsculture.Manycompaniesstrugglewith
attemptingtoembodyconflictingvalues(e.g.,RitzCarltonvaluesbothemployeesandcustomersbyempowering
employeesandprovidinghighqualitycustomerservice)

Cultures are stable over time because of a number of factors that perpetuate the
culture.
1.
2.
3.
4.
5.
6.

Organizational members teach each other about the organizations preferred

values, beliefs, expectations, and behaviors
Formalstatementsoforganizationalphilosophy,mission,vision,values,and
materialsusedforrecruiting,selectionandsocialization
Thedesignofphysicalspace,workenvironments,andbuildings
Slogans,language,acronyms,andsayings
Deliberaterolemodeling,trainingprograms,teachingandcoachingbymanagersand
supervisors
Explicitrewards,statussymbols(e.g.,titles),andpromotioncriteria

Intentionally alteringtheseelementsofculturemayenableculturalchange.

Toseehowculturesfitwithin organizationalstructureswemustfirstdefineorganizations
andtypicalstructures.
AnOrganizationisasystemofconsciouslycoordinatedactivitiesamongtwoormore
people.
Therearefourcommon elementsthatmakeupthestructureofanorganization
Coordination
Commongoals
Divisionoflabor
Hierarchyofauthority.
mostorganizationsabidebytheprincipleofunityofcommandwhichstatesthateach
employeeshouldreporttoasinglemanager.

Organizationaldesignis definedbythestructuresofaccountabilityandresponsibility

usedtodevelopandimplementstrategies,andbythehumanresourcepractices,
informationandbusinessprocessesthatactivatethosestructures
Thispartialorganizationchartrevealsfourbasicdimensionsoforganizational
structure:
(1) hierarchyofauthority(whoreportstowhom),onthevertical
(2)divisionoflabor,Whoisresponsibleforwhat,onthehorizontal
(3)spansofcontrolthenumberofpeoplereportingdirectlytoagivenmanager.
Generally,thenarrowerthespanofcontrol(fewerpeople),thecloserthe
supervisionandthehighertheadministrativecostsasaresultofahighermanager
toworkerratio.
(4)lineandstaffpositions. Staffpersonneldobackgroundresearchandprovide
technicaladvice,andrecommendationstolinemanagers.LineManagershave
authoritytomakeorganizationaldecisions.

Traditionalorganizational designsinclude..
Functionalstructure
groupspeopleaccordingtothebusinessfunctionstheyperform,forexample,
manufacturing,marketing,andfinance
Divisionalstructure
groupstogetheractivitiesrelatedtooutputs,suchastypeofproductorcustomer
Matrixstructure
combinesfunctionalanddivisionalchainsofcommandtoformagridwithtwo
commandstructures thisviolatestheunityofcommandprinciple anrequires
advancedmanagementcoordination.

IntheexampleshowninFigure173,Fordmightsetupvicepresidentsforeachfunctional
groupandprojectmanagersforeachmakeofcar.Employeeswouldreporttotwo
managers:oneinchargeofthefunctiontheyperformandtheotherinchargeofthe
projecttheyareworkingon.

Horizontalorganizations.
Organizearoundcompleteworkflowprocesses
They Flattenhierarchyanduseteamstomanageeverything
TheAppointprocessteamleaderstomanageinternalteamprocesses
Horizontal organizationsLetsupplierandcustomercontactdriveperformance
AndProviderequiredexpertisefromoutsidetheteamasrequired

While traditionalstructuresaredesignedtobuffertheorganizationfromits
environment,moderndesignsarespecificallyintendedtoopentheboundariesbetween
organizationsthuscreatingmoreinterorganizational collaborations..
Hollowstructureorganizationidentifiescorecompetenciesandoutsourcesnoncore
processestovendorswhocandothemcheaperorfaster
Modularstructures outsourcepartsofaproductinsteadofprocesses
Virtualorganizations identifypartnerswiththeneededtalentsandnegotiatesan
agreementinwhichtheparticipantstypicallyworkinseparatefacilities,linkedby
technology

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Contingencyapproachtoorganizationdesignassumesthat
organizationstendtobemoreeffectivewhentheyarestructuredtofitthe
demandsofthesituation

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Structures anddecisionmakinggohandinhand.
Mechanisticorganizations
Rigidbureaucracieswithstrictrules,narrowlydefinedtasks,andtopdown
communication.
Organicorganizations
Flexiblenetworksofmultitalentedindividualswhoperformavarietyoftasks

Centralizeddecisionmaking
keydecisionsaremadebytopmanagement
Decentralizeddecisionmaking
importantdecisionsaremadebymiddle andlowerlevelmanagers

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AsillustratedinTable172,eachofthemechanisticorganiccharacteristicsisamatterof
degree.Organizationstendtoberelativelymechanisticorrelativelyorganic.

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Afunctional structurecansavemoneybygroupingtogetherpeoplewhoneedsimilar
materialsandequipment
Divisional structuresincreaseemployeesfocusoncustomersandproducts
Asuccessfulmatrix structurerequiressuperiormanagerswhocommunicateextensively,
fostercommitmentandcollaboration,manageconflictandnegotiateeffectivelyto
establishgoalsandprioritiesconsistentwiththeorganizationsstrategy
Horizontal designsimprovecoordinationandcommunication
Organizationsthatbecomehollow,modular,or virtual cangeneratesuperiorreturnsby
focusingonwhattheydobest,butmaylosesomedegreeofcontrolover internal
processesthatcaninfluenceculture.
Asyouconsidertheinterplaybetweenstructureandculture,considerwhatconstitutes
effectivestructuresforagivenbusinesssituation.Forexample,inacommoditybusiness
wherepricesarecontrolledbystiffcompetitionamongfirms,thereareverysmallprofit
margins.Inthesesituationsitisimperativetocontrolcosts.Functionalstructuresare
moreeconomicalandthusmaybeneeded.Incontrast,inindustriesthataredifferentiated
bythereresponsivenesstocustomers,greatercustomerfocusisneededandthusa
divisionalstructuredividedbymarketsegmentationmaybemoreeffective.
Itisimportanttounderstandhowanappropriatecultureisdevelopedandmaintained
throughtheactionsofmanagersandleaders.

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