Structure and Culture

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Organizational Structure &Organizational Structure &

CultureCulture

Organizational StructureOrganizational Structure

What is OrganizationalWhat is Organizational

Structure?Structure?

DefinesDefines how job tasks are formallyhow job tasks are formally – – DividedDivided

– – GroupedGrouped

– – CoordinatedCoordinated

Six key elementsSix key elements – – Work specializationWork specialization

– – DepartmentalizationDepartmentalization

– – Chain of commandChain of command

– – Span of controlSpan of control

– – Centralization & decentralizationCentralization & decentralization

– – FormalizationFormalization

Controls, coordinates & motivates employeesControls, coordinates & motivates employees

Work SpecializationWork Specialization

Degree to which tasks in organization areDegree to which tasks in organization aresubdivided into separate jobssubdivided into separate jobs

Efficiency gainsEfficiency gains

– – Payment related to skillPayment related to skill--level requiredlevel required – – Increase in performance in specific taskIncrease in performance in specific task

– – Encouraging creation of special inventionsEncouraging creation of special inventions

Efficiency lossesEfficiency losses

– – BoredomBoredom – – FatiguesFatigues

– – StressStress

– – Poor qualityPoor quality

– – High absenteeism & turnover High absenteeism & turnover specialization

P r o d u c t i vi t y

DepartmentalizationDepartmentalization

The basis by which jobs are grouped together The basis by which jobs are grouped together

Possible waysPossible ways – – By functions performedBy functions performed

E.g., engineering, accounting, personnel….E.g., engineering, accounting, personnel…. – – By type of productBy type of product

E.g., fuel, waxes, chemicalsE.g., fuel, waxes, chemicals

– – On basis of geographyOn basis of geographyE.g., western, southern, midwestern, eastern…E.g., western, southern, midwestern, eastern…

– – On basis of processOn basis of processE.g., Casting, press, tubing, finishing, inspect, pack, ship….E.g., Casting, press, tubing, finishing, inspect, pack, ship….

– – By type of customer By type of customer E.g., Service retail, wholesale, government customersE.g., Service retail, wholesale, government customers

Large companies might combine the forms!Large companies might combine the forms!

The Chain of CommandThe Chain of Command & Span of & Span of

ControlControl

Chain of commandChain of command – – Line of authority from top of the organization to lowest partLine of authority from top of the organization to lowest part

– – Specifies who reports to whomSpecifies who reports to whom

– – Each managerial position is given its place & degree of Each managerial position is given its place & degree of

authorityauthority

– – Unity of command principle preserves unbroken line of Unity of command principle preserves unbroken line of

commandcommand

Span of ControlSpan of Control

– – Number of subordinates a manager directsNumber of subordinates a manager directs

– – Wider spans more efficient in terms of costsWider spans more efficient in terms of costs

– – When span too large, performance suffersWhen span too large, performance suffers

– – Small spans make communication complex & encourageSmall spans make communication complex & encourage

Centralization & DecentralizationCentralization & Decentralization

CentralizationCentralization

– – degree to which decision making is concentrateddegree to which decision making is concentratedat a single pointat a single point

– – Only with respect to formal authorityOnly with respect to formal authorityDecentralizationDecentralization

– – Degree to which decision discretion lies withDegree to which decision discretion lies withlower lower--level employeeslevel employees

– – Advantages:Advantages:More quick in taking actionMore quick in taking action

More people provide input in decision makingMore people provide input in decision making

Employees less likely to feel alienated from decisionEmployees less likely to feel alienated from decisionmakersmakers

FormalizationFormalization

Degree to which jobs are standardizedDegree to which jobs are standardized

The more formalized,The more formalized,

– – The more rules, procedures, job descriptionsThe more rules, procedures, job descriptions

– – The less discretion job incumbent has over The less discretion job incumbent has over What is to be doneWhat is to be done

When it is to be doneWhen it is to be done

How it is to be doneHow it is to be done

– – The more consistent & uniform outputThe more consistent & uniform output

Degree of formalization can varyDegree of formalization can varybetween & within organizations!between & within organizations!

Organization ChartsOrganization Charts

A pictorial record showingA pictorial record showing

– – Formal relationsFormal relations

– – How the company is supposed to beHow the company is supposed to be

Organigraphs (Mintzberg & van der Heyden,Organigraphs (Mintzberg & van der Heyden,

1999)1999) – – Graphical representations of organizationsGraphical representations of organizations

– – Showing the way in which people organize at workShowing the way in which people organize at work

– – Less formal authority, rather relationships &Less formal authority, rather relationships &

proacessesproacesses

E l f O i tiE l f O i ti

Examples of OrganizationExamples of Organization

Charts ICharts I

E l f O i tiE l f O i ti

Examples of OrganizationExamples of Organization

Charts IICharts II

Matrix Structure

OrganigraphsOrganigraphs -- ExamplesExamples

Why Do Structures Differ?Why Do Structures Differ?

Contingency approach to organizationContingency approach to organization

structure: To be effective, organizationstructure: To be effective, organizationmust adjust structure consistent withmust adjust structure consistent with

– – The type of environment it works inThe type of environment it works in

– – The technology it usesThe technology it uses – – Its sizeIts size

– – Its strategyIts strategy

– – Other contextual factorsOther contextual factors

Links Between Strategy &Links Between Strategy &

StructureStructure

Structure should follow strategy or bothStructure should follow strategy or bothdevelop together?develop together?

Strategic choicesStrategic choices

– – Innovation strategy (“prospector”)Innovation strategy (“prospector”) --> organic> organicstructure, flexible structurestructure, flexible structure

– – Cost minimization strategy (“defender”)Cost minimization strategy (“defender”) -- >>mechanistic structuremechanistic structure

– – Imitation strategy (“analyzer)Imitation strategy (“analyzer) --> mechanistic> mechanistic

& organic; matrix structures& organic; matrix structures

Strategic Choice &Strategic Choice &

EnvironmentsEnvironments

Decisions about structure are based onDecisions about structure are based onpersonal beliefs & political decisions bypersonal beliefs & political decisions bysenior managerssenior managers

Evidence for thisEvidence for this

– – In same environments, firms with differentIn same environments, firms with different

structures successfulstructures successful – – Managers can create their own environmentsManagers can create their own environments

– – Environments can be perceived differentlyEnvironments can be perceived differently

– – Political factors coPolitical factors co--determine structural choicesdetermine structural choices

Links of Structures With EmployeeLinks of Structures With Employee

Performance & SatisfactionPerformance & Satisfaction

SpecializationSpecialization – – higher productivity & less satisfactionhigher productivity & less satisfaction – – But: Individual differences & differences in types of task!But: Individual differences & differences in types of task!

– – The higher educated, the less satisfaction from specialized jobThe higher educated, the less satisfaction from specialized job

No supported relationship between span of control andNo supported relationship between span of control and

performanceperformance – – Some people like to work aloneSome people like to work alone

– – Some people prefer security of boss availableSome people prefer security of boss available

– – Manager Manager´́s satisfaction increases with number of subordinatess satisfaction increases with number of subordinates

Centralization linked with job satisfactionCentralization linked with job satisfaction – – Less centralized organizationsLess centralized organizations – – more participatory decisionmore participatory decision

makingmaking – – more satisfactionmore satisfaction

– – Again dependent on individual characteristicsAgain dependent on individual characteristics

Organizational CultureOrganizational Culture

The ConceptThe Concept

Definitions (!)Definitions (!) – – H & B: “...the collection of relatively uniform & enduring values,H & B: “...the collection of relatively uniform & enduring values,

beliefs, customs, traditions & practices that are shared by anbeliefs, customs, traditions & practices that are shared by anorganizationorganization´́s members, learned by new recruits, & transmitteds members, learned by new recruits, & transmittedfrom one generation of employees to the next.”from one generation of employees to the next.”

– – Robbins: “A common perception held by the organizationRobbins: “A common perception held by the organization´́ss

members; a system of shared meaning.”members; a system of shared meaning.” – – Greenberg & Baron: “A cognitive framework consisting of attitudes,Greenberg & Baron: “A cognitive framework consisting of attitudes,

values, behavioral norms, & expectations, shared by organizationvalues, behavioral norms, & expectations, shared by organizationmembers.members.

Basic idea:Basic idea: – – Organizations have “something” giving them a unique identity.Organizations have “something” giving them a unique identity.

DevelopmentDevelopment – – Popular concept since the early 1980s.Popular concept since the early 1980s.

– – Interdisciplinary.Interdisciplinary.

– – Controversial concept!Controversial concept!

The Controversy AboutThe Controversy About

Organizational CultureOrganizational CultureManagement literature likes the conceptManagement literature likes the concept

– – Managers supposed to be able to influence theManagers supposed to be able to influence the

culture of the companyculture of the company

– – Strength of culture has influence on effectiveness of Strength of culture has influence on effectiveness of an organizationan organization

Academic critics state that the concept is of noAcademic critics state that the concept is of no

useuse

Academic supporters disagree aboutAcademic supporters disagree about

– – Concept itself Concept itself

– – Importance as explanatory toolImportance as explanatory tool

“Dark side” of the concept“Dark side” of the concept -- manipulativemanipulative

Organizational CultureOrganizational Culture

Edgar ScheinEdgar Schein´́s model of cultures model of culture

– – One of the most known conceptsOne of the most known concepts

– – Three levels, distinguished byThree levels, distinguished byVisibilityVisibility

AccessibilityAccessibility

The three levelsThe three levels – – Surface manifestationsSurface manifestations

– – ValuesValues

– – Basic assumptionsBasic assumptions

Surface ManifestationsSurface Manifestations

Most visible & accessible formsMost visible & accessible formsVisible & audible behaviour patterns & objectsVisible & audible behaviour patterns & objects – – Visible to employees, customers, visitors!Visible to employees, customers, visitors!

ExamplesExamples – – Artefacts & Physical layout (tools, furniture,Artefacts & Physical layout (tools, furniture,

clothes…)clothes…)

– – Ceremonials, Rites & RitualsCeremonials, Rites & Rituals

– – Courses (introduction, orientation, training)Courses (introduction, orientation, training)

– – Myths, Heroes & StoriesMyths, Heroes & Stories

– – LanguageLanguage

– – Mottoes & SlogansMottoes & Slogans

– – NormsNorms

– – SymbolsSymbols

An Amazing

Tie-Free Zone•Casual

•Intense

•Fun

•Different

Amazon.com

“… Bill Bowerman. Who is he? Legendary track

& field coach at the University of Oregon. A

teacher who showed athletes the secrets of

achievement. Co-founder of Nike. Husband,

father, mentor. From him we derive our mission.

Through his eyes we see our future.”

•Creative

•Challenging

•Frugal

•Energized

•Open

ValuesValues

Things that have personal or organizational worthThings that have personal or organizational worthfor for founders & senior managersfounders & senior managers

– – Based on moral, societal or religious principlesBased on moral, societal or religious principles

Not visible, but individuals can be aware of themNot visible, but individuals can be aware of them

– – Most important factor distinguishing organizationsMost important factor distinguishing organizations

– – Provide common direction for employees & guidelinesProvide common direction for employees & guidelines

for behaviour for behaviour

SourcesSources – – Past experiencesPast experiences

– – Views of the founder Views of the founder

Found in company reports, on websites…Found in company reports, on websites…

Delivering on our mission requires great people who are bright, creative, and energetic,

and who share the following values:

· Integrity and honesty.

· Passion for customers, partners, and technology.

· Open and respectful with others and dedicated to making them better.

· Willingness to take on big challenges and see them through.

· Self-critical, questioning, and committed to personal excellence and self-improvement.

· Accountable for commitments, results, and quality to customers,

shareholders, partners, and employees.

Microsoft

New Orleans Center for Science and Math

In a district of struggling schools and at-risk kids, this

urban high school is a model of achievement. These

students are not merely learning real-world tech skills,

they are realizing dreams they never thought attainable

Basic AssumptionsBasic Assumptions

Invisible, preconscious, “takenInvisible, preconscious, “taken--for for--granted” understandingsgranted” understandings

Held by individuals with respect toHeld by individuals with respect to

– – Aspects of human behaviour Aspects of human behaviour

– – Nature of realityNature of reality

– – OrganizationOrganization´́s relationship to itss relationship to its

environmentenvironment

Difficult to accessDifficult to access

Creating & Sustaining CultureCreating & Sustaining Culture

Creating CultureCreating Culture

– – Founders of an organizationFounders of an organization – – Experience with environmentExperience with environment

– – Contact with othersContact with others

Keeping a Culture aliveKeeping a Culture alive – – Selection practicesSelection practices

– – SocializationSocialization

– – Top management actionsTop management actions

What is learning?What is learning?

Definition: “ Learning is the process of Definition: “ Learning is the process of acquiring knowledge through experienceacquiring knowledge through experiencewhich leads to an enduring change inwhich leads to an enduring change inbehavior” (H & B)behavior” (H & B)

The result of this process: KnowledgeThe result of this process: Knowledge

Two types of learning:Two types of learning:

– – Procedural learning (learning how)Procedural learning (learning how)

– – Declarative learning (learning that)Declarative learning (learning that)

Behaviourist Vs. CognitiveBehaviourist Vs. Cognitive

ApproachApproach

Behaviourist psychologyBehaviourist psychology Cognitivist psychologyCognitivist psychology

StimulusStimulus--responseresponse Information processingInformation processing

Studies only observable behaviour Studies only observable behaviour Studies mental processes as wellStudies mental processes as well

Behaviour determined by learnedBehaviour determined by learned

sequences of muscle movementssequences of muscle movements

Behaviour determined by memory,Behaviour determined by memory,

mental processes, expectationsmental processes, expectations

We learn habitsWe learn habits We learn cognitive structures &We learn cognitive structures &alternative ways to achieve goalsalternative ways to achieve goals

Problem solving by trial and error Problem solving by trial and error Problem solving involves insight &Problem solving involves insight &

understanding as wellunderstanding as well

Behavior Modification OptionsBehavior Modification Options

ProcedureProcedure OperationalizationOperationalizationPositive reinforcementPositive reinforcement Manager compliments employeeManager compliments employee

each time work is completed oneach time work is completed on

scheduleschedule

Negative reinforcementNegative reinforcement Unpaid overtime continues to beUnpaid overtime continues to bemandatory until work is completedmandatory until work is completed

onschedule, then overtimeonschedule, then overtime

rewardedrewarded

PunishmentPunishment Manager asks employee to stayManager asks employee to staylate when work is not handed inlate when work is not handed in

on scheduleon schedule

ExtinctionExtinction Manager ignores the employeeManager ignores the employee

when work is handed in latewhen work is handed in late

Application: Socialization andApplication: Socialization and

Social LearningSocial Learning

Socialization: “The process through which anSocialization: “The process through which an

individualindividual´́s pattern of behaviour, and their s pattern of behaviour, and their

values, attitudes and motives, are influenced tovalues, attitudes and motives, are influenced to

conform with those seen as desirable in aconform with those seen as desirable in aparticular organization, society or subparticular organization, society or sub--culture.”culture.”

(H&B)(H&B)

Social learning (Bandura)Social learning (Bandura)

– – We learn new behaviours through observing &We learn new behaviours through observing &

copying the behaviour of otherscopying the behaviour of others

– – Without rewards or punishmentsWithout rewards or punishments

– – Still, reinforcement plays a role!Still, reinforcement plays a role!

Organizational SocializationOrganizational Socialization

“The process through which an individual“The process through which an individual´́sspattern of behaviour, their values, attitudes &pattern of behaviour, their values, attitudes &

motives are influenced to conform with those seenmotives are influenced to conform with those seen

as desirable in a particular organization.” (H & B)as desirable in a particular organization.” (H & B)

New employees learn about the companyNew employees learn about the company´́ss

cultureculture

– – Reduces variability of behavior Reduces variability of behavior

– – Enhances predictabilityEnhances predictability

IncludesIncludes

– – Selection of new membersSelection of new members

– – Instruction in appropriate ways of thinking & behavingInstruction in appropriate ways of thinking & behaving

– – Reinforcement of desired behavioursReinforcement of desired behaviours

How to Learn a CultureHow to Learn a Culture

StoriesStories – – Narratives of events about the founders, ruleNarratives of events about the founders, rule

breaking, organizational copingbreaking, organizational coping

– – Anchor the present in the pastAnchor the present in the past – – Provide explanations & legitimacy for currentProvide explanations & legitimacy for current

practicespractices

RitualsRituals – – Repetitive sequences of activitiesRepetitive sequences of activities

– – Express & reinforce key values of organization,Express & reinforce key values of organization,

most important goals & peoplemost important goals & people

How to Learn a Culture Cont.How to Learn a Culture Cont.

SymbolsSymbols – – Layout of headquarters & officesLayout of headquarters & offices

– – Types of automobiles given to executives....Types of automobiles given to executives....

– – Convey information aboutConvey information about

Who is importantWho is importantDegree of egalitarianismDegree of egalitarianism

Kinds of behavior appropriateKinds of behavior appropriate

LanguageLanguage

– – Special terminology used to describeSpecial terminology used to describeEquipmentEquipment

OfficesOffices

Key personnelKey personnel

Products…Products…

– – Members using this accept the culture & preserve itMembers using this accept the culture & preserve it

Functions of CultureFunctions of Culture

BoundaryBoundary--definingdefining

Conveys sense of identityConveys sense of identity

Facilitates generation of commitment to aimsFacilitates generation of commitment to aims

above self above self--interestinterestEnhances social system stabilityEnhances social system stability

SenseSense--making & control mechanismmaking & control mechanism

No clear link between culture & economicNo clear link between culture & economicperformance found yetperformance found yet

Problems of CultureProblems of Culture

Barrier to changeBarrier to change

Barrier to diversityBarrier to diversity

Barrier to mergers & acquisitionsBarrier to mergers & acquisitions

An illustrationAn illustration – – an experimental study of an experimental study of

cultureculture

The Link With National CultureThe Link With National Culture

Parallel discussion: Effect of national/societal cultureParallel discussion: Effect of national/societal cultureon organization cultureson organization cultures

– – How do national cultures affect organization culturesHow do national cultures affect organization cultures

Trait lists, like in personality researchTrait lists, like in personality research

– – Example: the US culture:Example: the US culture:

IndividualismIndividualism

Precise timePrecise time

Value of work & performanceValue of work & performanceRespect for diligenceRespect for diligence

….….

Comparative studies: Example: HofstedeComparative studies: Example: Hofstede (1984,(1984,

1986, 1991)1986, 1991)

The HofstedeThe Hofstede--StudiesStudies

CrossCross--cultural studycultural study

116 000 employees of 1 multinational116 000 employees of 1 multinational

companycompany

Located in 40 countriesLocated in 40 countries

Aim: identfy basic dimensions of Aim: identfy basic dimensions of differences between national culturesdifferences between national cultures

The HofstedeThe Hofstede--Studies Cont.Studies Cont.

Four (five) dimensionsFour (five) dimensions

– – Power distancePower distance

– – Uncertainty avoidanceUncertainty avoidance

– – IndividualismIndividualism--collectivismcollectivism – – MasculinityMasculinity--femininityfemininity

– – (+ long(+ long--termterm – – shortshort--term orientation)term orientation)

Each dimension represents continuumEach dimension represents continuum

– – Each country can be rated from high to lowEach country can be rated from high to low

– – Placed somewhere along each continuumPlaced somewhere along each continuum

Importance of organization culturalImportance of organization culturaldifferences stemming from societal culturaldifferences stemming from societal cultural

differencesdifferences

National & organizational cultures stronglyNational & organizational cultures stronglylinkedlinked

Important for Important for

– – Expatriate managementExpatriate management – – Cross cultural managementCross cultural management

– – Human resource management in differentHuman resource management in different

countries…countries…

Power distancePower distance low:low: – – less centralizationless centralization

– – Flatter organization pyramidsFlatter organization pyramids

– – Examples: australia, israel, denmark,Examples: australia, israel, denmark,swedensweden

Power distancePower distance highhigh

– – Greater centralizationGreater centralization – – Tall organization pyramidsTall organization pyramids

– – More supervisory personnelMore supervisory personnel

– – Examples: Mexico, Venezuela, IndiaExamples: Mexico, Venezuela, India

FemininityFemininity high:high: – – Gender roles minimizedGender roles minimized

– – More women in more qulified jobsMore women in more qulified jobs

– – Soft, yielding, intuitive skills rewardedSoft, yielding, intuitive skills rewarded

– – Life quality importantLife quality important – – Examples: Thailand, ScandinaviaExamples: Thailand, Scandinavia

MasculinityMasculinity highhigh – – Gender roles clearly differentiatedGender roles clearly differentiated

– – Fewer women in more qualified jobsFewer women in more qualified jobs – – Aggressiveness, competitiveness, decisivenessAggressiveness, competitiveness, decisiveness

rewardedrewarded

– – Stress on careersStress on careers

– – Examples: Japan, Italy, MexicoExamples: Japan, Italy, Mexico

CollectivismCollectivism high:high: – – Organization as familyOrganization as family

– – Organization defends employee interestsOrganization defends employee interests

– – Practices based on loyalty, sense of duty, groupPractices based on loyalty, sense of duty, group

participationparticipation

– – Examples: Venezuela, Taiwan, GreeceExamples: Venezuela, Taiwan, Greece

IndividualismIndividualism high:high:

– – Organizations more impersonalOrganizations more impersonal – – Practices encourage individual initiativePractices encourage individual initiative

– – Task prevails over relationshipsTask prevails over relationships

– – Examples: USA, Britain, NetherlandsExamples: USA, Britain, Netherlands

Uncertainty avoidanceUncertainty avoidance low:low: – – Less structuring of activitiesLess structuring of activities

– – Fewer written rulesFewer written rules

– – Greater willingness to take risksGreater willingness to take risks

– – Tolerance of deviant persons & ideasTolerance of deviant persons & ideas – – Examples: Denmark, Britain, USAExamples: Denmark, Britain, USA

Uncertainty avoidanceUncertainty avoidance high:high: – – More structuring of activitiesMore structuring of activities

– – More written rulesMore written rules – – Less willingness to take risksLess willingness to take risks

– – More ritualistic behavior More ritualistic behavior

– – Examples: Greece, Portugal, Japan, FranceExamples: Greece, Portugal, Japan, France

LiteratureLiterature

H & B chapter 19H & B chapter 19

Robbins chapter 17Robbins chapter 17

Greenberg & Baron chapter 14Greenberg & Baron chapter 14

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