Organizational Culture, Structure, and DesignChapter 8

Person-Organization FitReflects 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 StructureA 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:ClanAdhocracyMarketHierarchy

Clan Culture An employee-focused culture valuing flexibility, not stabilityA clan culture has an internal focus and values flexibility rather than stability and controlFamily type values collaboration, cohesion through consensus, job satisfaction

Adhocracy CultureA risk-taking culture valuing flexibilityAn adhocracy culture had an external focus and values flexibilityAdaptable, creative, and quick to respond to changes

Market Culture A competitive culture valuing profits over employee satisfactionA market culture has a strong external focus and values stability and controlDriven by competition and a strong desire to deliver results Customers, productivity, and profits take precedence over employee development and satisfaction

Hierarchy CultureA 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 CultureObservable artifactsEspoused valuesBasic assumptions

Observable ArtifactsThe most visible levelPhysical manifestationsManner of dressAwardsMyths and stories about the companyRituals and ceremoniesDecorations

Espoused ValuesThe explicitly stated values and norms preferred by an organizationHewlett Packard the HP Way

Enacted ValuesRepresent the values and norms actually exhibited in the organization.

Basic AssumptionsCore values of the organizationNon observableRepresent the core values of an organizations culture

Culture is transmitted to employees in several ways;SymbolsStoriesHeroesRites and ritualsWAL-MART CheerGive 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!

SymbolsObjects, 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

StoriesA story is a narrative based on true events, which is repeated- and sometimes embellished upon to emphasize a particular valueStories of events that go above and beyond the call of duty

HeroesA person whose accomplishments embody the values of an organization.

Rites and RitualsThe 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:It gives members an organizational identityIt facilitates collective commitmentIt promotes social-system stabilityIt shapes behavior by helping employees make sense of their surroundings

Cultures for enhancing economic performanceThe Strength Perspective: assumes that the strength of a corporate culture is related to a firms long-term financial performance.

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.

The Adaptive Perspective: Assumes that the most effective cultures help organizations anticipate and adapt to environmental changes.

Ways cultures become embedded in organizationsFormal StatementsWal-Mart: States three basic values as the core of their culture:Respect for individualService to customersStriving 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 mythsLeader reactions to crisesRole modeling, training, and coachingPhysical designRewards, titles, promotions, and bonusesOrganizational goals and performance criteria

Measurable and controllable activitiesOrganizational structureOrganizational systems and procedures

OrganizationA 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 servicesNonprofit 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 ChartA 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 beingCoordinated 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 peopleHierarchy of Authority: (chain of command) a control mechanism for making sure the right people do the right things at the right time

Division of LaborWork SpecializationThe 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 managerAuthority, 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 AuthorityCentralized Authority Important decisions are made by higher-level managersMcDonalds, KmartDecentralized Authority Important decisions are made by middle level and supervisory-level managersGeneral Motors, Harley-Davidson

Organizational DesignConcerned with designing the optimal structures of accountability and responsibility that an organization uses to execute its strategiesTraditional designsHorizontal designsDesigns that open boundaries between organizations

Simple StructureAn organization with a simple structure has authority centralized in a single person, a flat hierarchy, a few rules, and low work specializationMom and pop stores

Functional StructureIn 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 purposeProduct Divisions group activities around similar products or servicesTime Warner (magazines, cable tv, recordings, movies)Customer Divisions tend to group activities around common customers or clientsFord: passenger car customers, large trucking customersGeographic Divisions group activities around defined regional locationsFederal Reserve Bank has 12 separate districts around the US

Matrix StructureAn 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 DesignTeams or workgroups, either temporarily or permanently, are used to improve horizontal relations and solve problems throughout the organization.

Boundaryless StructureA 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 StructureA firm assembles product chunks, or modules, provided by outside contractors.

Virtual OrganizationAn organization whose members are geographically apart, using working with e-mail, 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 StructureA company outside a company that is created specifically to respond to an exceptional market opportunity that is often temporary.

Contingency DesignThe process of fitting the organization to its environment EnvironmentSizeTechnologyLife Cycle

Mechanistic OrganizationAuthority 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.

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