13-1 Michael A. Hitt C. Chet Miller Adrienne Colella Organizational Structure and Culture Chapter 13 Organizational Structure and Culture Slides by Ralph R. Braithwaite

13-2 Integrated Portfolio at FedEx Exploring Behavior in Action With all the acquisitions by FedEx, there was a need to change their structure. It adopted a multi-divisional structure. Corporate provides strategic direction and consolidated financial reporting. Significant authority has been delegated to the divisions. Each division manages its own specialized network of services. Do you know of other companies that operate in a similar fashion? Is this a good model for organizations to follow as they grow and develop?

13-3 FedEx Freight FedEx Supply Chain FedEx Kinko’s Services FedEx Express FedEx Corp. FedEx Custom Critical FedEx Trade Network FedEx Ground FedEx Organization

13-4 Organizational Structure and Culture Organizational Structure Organizational Culture The formal system of work roles and authority relationships that govern how associates and managers interact with one another. Involves the values and norms shared by managers and associates that influence behavior. It is a powerful force in organizations.

13-5 Knowledge Objectives 1.Define key elements of organizational structure, including both structural and structuring dimensions. 2.Explain how corporate and business strategies relate to structure. 3.Explain how environment, technology, and size relate to structure. 4.Define organizational culture, and discuss the competing-values cultural framework. 5.Discuss socialization. 6.Describe cultural audits and subcultures. 7.Explain the importance of a fit between individual values and organizational culture.

13-6 Fundamental Elements of Organizational Structure Structural Characteristics Structuring Characteristics Hierarchy

13-7 Structural Characteristics Span of Control Height Departmentation

13-8 Span of Control Adapted from Exhibit 13-1: Average Span of Control: Effects on Height of the Hierarchy Average span of FourAverage span of Ten Highest Lowest Organizational Level Associates Associates 1000

13-9 Functional Organization Adapted from Exhibit 13-2: Simplified Functional Organization VP Research and Development VP Research and Development VP Operations VP Human Resources VP Finance VP Marketing CEO

13-10 Divisional Organization Adapted from Exhibit 13-3: Simplified Divisional Organization CEO Head of Operations Head of R&D Head of Human Resources Head of Finance Head of Marketing V.P. Product/Service Area 1 Head of Operations Head of R&D Head of Human Resources Head of Finance Head of Marketing V.P. Product/Service Area 1 Head of Operations Head of R&D Head of Human Resources Head of Finance Head of Marketing V.P. Product/Service Area 1

13-11 Structuring Characteristics CentralizationStandardizationFormalizationSpecialization

13-12 The Modern Organization Flexible empowering type of structure Organic Learning Boundaryless Mechanistic Non-Learning Traditional Fewer management levels, broader spans of control, less centralization, standardization, formalization and specialization.

13-13 Freedom Substantial freedom may exist, but 1.Freedom is not unlimited 2.Alternative mechanisms are used to ensure that individuals are working for the good of the organization 3.Values are shared 4.Reward systems are used to promote appropriate behavior

13-14 Factors Affecting Structure Corporate Strategy GrowthDiversification

13-15 Diversification Strategy and Structure Adapted from Exhibit 13-4: Matches between Diversification Strategy and Structure Holding CompanyUnrelated product DivisionalUnrelated product DivisionalRelated product DivisionalDominant product (several products) FunctionalDominant product (few products) FunctionalSingle product StructureDiversification

13-16 Business Strategy Low cost/low price Product/service differentiation Supporting structure including strategic business units – SBUs How a firm competes for success against other organizations in a particular market.

13-17 Experiencing Strategic OB IDEO and Differentiation Strategy IDEO demonstrates a differentiation strategy, highlights that occasionally organizations supplement their human capital, and they value teams with diverse members. Is this an effective approach to business? How can this approach help other businesses and organizations? What are your thoughts about IDEO’s approaches: Form a diverse team Team members brainstorm Team members engage in rapid prototyping Team members implement the fruits of their labors

13-18 Environment and Basic Structure Effective organizations experiencing high environmental uncertainty tend to be more organic. Effective organizations experiencing low environmental uncertainty tend to be less organic. Environmental uncertainty – the degree to which an environment is complex and changing; uncertain environments are difficult to monitor and understand. Jay W. Lorsch Paul R. Lawrence

13-19 Environment and Integration Adapted from Exhibit 13-5: Integration in Organizations Slack Resources Self-Contained Tasks Information Technology Lateral Relations Increasing Implementation Complexity Increasing Richness of Information Processing

13-20 Alternative Lateral Processes Liaison RolesDirect Contact Matrix Designs Managerial Linking Roles Integrating Roles TeamsTaskforces Lateral Processes

13-21 Technology and Structure Small-Batch Technology Mass Production Technology Process Production Technology Mass Customization Manufacturing Joan Woodward

13-22 Technology and Structure Charles Perrow Task Variability Task Analyzability Four categories of technology RoutineCraft EngineeringNonroutine

13-23 Organizations and Technology Adapted from Exhibit 13-6: Organizations and Technology HighLowTask Analyzability High Low Task Variability Specialized Engineering Consulting Firm Engineering Public School Craft Research and Development Firm Non-Routine Mass-Production Firm Routine

13-24 Experiencing Strategic OB Google Culture Attracts High-Quality Associates Larry Page and Sergy Brin Do you think Google would have enjoyed its success had a different type of structure and culture been introduced? What types of organizations could benefit with a similar structure and culture? What types of organizations might have difficulty? As Google continues to grow, will the culture survive or will it possibly be replaced by a more traditional culture?

13-25 Developing Organizational Culture Adapted from Exhibit 13-7: Process of Developing Organizational Culture Organizational Culture Norms Reinforcing Outcomes Shared Values Individual and Group Behavior

13-26 Organizational Culture Adapted from Exhibit 13-8: Competing Values Model of Organizational Culture Effectiveness Cohesion and Morale Leadership Mentors and Coaches Clan Effectiveness Creativity and Innovation Leadership Entrepreneurs and Innovators Adhocracy Effectiveness Goal Achievement and Winning Leadership Hard Drivers and Competitors Market Effectiveness Efficiency and Order Leadership Monitors and Organizers Hierarchy Internal Focus/IntegrationExternal Focus/ Differentiation Stability/Control Flexibility/ Discretion

13-27 Cultural Socialization A process through which an organization imparts its values to newcomers Context Content Social Dynamics

13-28 Cultural Audit A tool for assessing and understanding the culture of an organization. Use these five steps for conducting the cultural audit: Analyze process and content Analyze responses to critical incidents Analyze values and beliefs of culture creators Explore anomalies or puzzling features Examine linkage – culture with goals Subcultures – groups that share values that differ from the main values of the organization.

13-29 Managerial Advice Finding a Fit at Home Depot Robert Nardelli Do you agree that an individual’s management style and values should agree with the organization’s culture? Why or why not? Do you think Nardelli is what Home Depot needed at the time? Have you worked with a leader whose style was very different than the culture of the organization? What was that like? Can some organizations benefit from a major change in leadership philosophy?

13-30 Person-Organization Fit Abstract ideals that relate to proper life goals and methods for reaching those goals. Values Types of personal goals that one ought to have Types of behaviors that one ought to use in reaching those goals End-Means Dimension

13-31 Types of Personal Values Means (Behavior) Values End (Goal) Values Adapted from Exhibit 13-9: Types of Personal Values

13-32 The Strategic Lens 1.Consider an organization of which you are a member or an associate. What is the structure in this organization? Is it centralized or decentralized? Is it organic and flexible? How would you change the structure in this organization to make it more effective? 2.How would you describe the culture in the organization discussed in question #1? How does the culture affect members’ behavior in the organization? 3.When you become a manager, what type of culture will you establish in your unit? What values do you want to emphasize? Why?

13-33 Questions