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Organizational Culture,

Structure, and Design


Chapter 8

Person-Organization Fit
Reflects

the extent to which your personality


and values match the climate and culture in
an organization.

Organizational Culture
(Corporate Culture)
A system of shared beliefs taken for granted
implicit assumptions that the group holds and
that determines how it perceives, thinks
about, and reacts to its various environments.

Organizational Structure
A

formal system of task and reporting


relationships that coordinates and motivates
an organizations members so that they can
work together ot achieve the organizations
goals.

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

Enacted Values
Represent

the values and norms actually


exhibited in the organization.

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.
2.
3.
4.

It gives members an organizational identity


It facilitates collective commitment
It promotes social-system stability
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 organizationwide 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

Division of Labor
Work

Specialization
The arrangement of having discrete parts of a
task done by different people.

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 supervisorylevel managers

General Motors, Harley-Davidson

Organizational Design
Concerned

with designing the optimal


structures of accountability and responsibility
that an organization uses to execute its
strategies

Traditional designs
Horizontal designs
Designs that open boundaries between
organizations

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

Customer Divisions tend to group activities around


common customers or clients

Time Warner (magazines, cable tv, recordings, movies)

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

Horizontal Design or
Team Based Design
Teams

or workgroups, either temporarily or


permanently, are used to improve horizontal
relations and solve problems throughout the
organization.

Boundaryless Structure
A

fluid, highly adaptive organization whose


members, linked by information technology,
come together to collaborate on common
tasks.

Network Structure
(Hollow 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.

Modular Structure
A

firm assembles product chunks, or


modules, provided by outside contractors.

Virtual Organization
An

organization whose members are


geographically apart, using working with email, collaborative computing, and other
computer connections, while often appearing
to customers and others to be a single,
unified organization with a real physical
location.

Virtual Structure
A

company outside a company that is created


specifically to respond to an exceptional
market opportunity that is often temporary.

Contingency Design
The

process of fitting the organization to its


environment

Environment
Size
Technology
Life Cycle

Mechanistic Organization
Authority

is centralized, tasks and rules are


clearly specified, and employees are closely
supervised.
Organic Organization authority is
decentralized, there are fewer rules and
procedures, and networks of employees are
encouraged to cooperate and respond
quickly to unexpected tasks.

Differentiation
The

tendency of the parts of an organization


to disperse and fragment.
Integration the tendency of the parts of an
organization to draw together.