Organizational Culture A firm’s shared values, beliefs, traditions, philosophies, rules and role models for behavior (aka corporate culture) Ensures that organizational members: Share values Observe common rules Share problem solving approaches Programs and policies can enhance and support an organization’s culture. …continued on next page FHF 7-3

Organizational Culture Formal expression Mission statement Code of ethics Manuals Ceremonies Memoranda Formal expressions of corporate culture: mission statement, code of ethics, memos, manuals, organizational ceremonies …continued on next page FHF 7-4

Organizational Culture Informal Expression Dress code (or lack of one) Work habits Extracurricular activities Informal expressions: dress codes (or lack of them), work habits, extracurricular activities. …continued on next page FHF 7-5

Organizational Culture Helps ensure that all members of a company share values Suggests rules for how to behave and deal with problems Has a significant impact on performance and employee retention Sets a positive tone for decision making and building efficient organizational structure …continued on next page FHF 7-6

Organizational Structure Is the arrangement or relationship of positions within an organization Structure develops as: Managers assign work tasks to individuals and groups Coordination of diverse activities to attain objectives Some kind of organizational structure, be it explicitly defined or implied, is almost always needed to help obtain organizational objectives. An organizational structure develops when managers assign work tasks and activities to individuals and groups and coordinate the activities required to reach organizational objectives. …continued on next page FHF 7-7

Organizational Charts Visual displays of the organizational structure, lines of authority, staff relationships, permanent committee arrangements and lines of communication Growth requires organizing, and organizational charts can help an organization remain organized as it expands. …continued on next page FHF 7-9

The Evolution of a Clothing Store Organizational Chart The Evolution of a Clothing Store Phases 1, 2, and 3 8-7 7

Assigning Tasks Specialization Why specialize? Managers divide the labor into small, specific tasks and assign employees individual tasks to accomplish Why specialize? Efficiency Ease of training Activities too numerous for one person Assigning tasks requires managers to determine what activities are required to achieve its objectives. Specialization occurs after the manager identifies all the activities that must be accomplished. Specialization helps to improve efficiency through having employees master one specific task and not waste time shifting from one task to another. FHF 7-10

Risks of Overspecialization Employees become bored Job dissatisfaction Poor quality work Increased injuries Increased employee turnover While specialization has definite positive benefits for a firm, there are negative consequences as well. Employees may become bored and work quality will suffer. Repetitive use injuries go up when people perform the same motions all day every day. Employee turnover may be high if employees become especially dissatisfied. FHF 7-11

Departmentalization Grouping of jobs into working units (departments, units, groups, divisions) Functional departmentalization Product departmentalization Geographical departmentalization Customer departmentalization Different organizations may organize departments in different ways depending on what suits the firm and industry the best. FHF 7-12

Functional Departmentalization 8-11 11

Product Departmentalization 8-12 12

Geographical Departmentalization 8-13 13

Customer Departmentalization 8-14 14

Delegation of Authority [ ] Giving employees tasks and empowering them to make commitments, use resources and take action to carry out tasks Assigning authority is an important decision. Some organizations have skilled employees and need to make decisions quickly. These would likely delegate authority as much as possible. Other organizations are highly centralized and authority remains concentrated among top managers. As an organization grows and decision making becomes more complex, it becomes impossible for one person to make all decisions. FHF 7-13

Responsibility Obligation placed on employees to perform assigned tasks and be held accountable for proper execution Accountability Employees who accept an assignment and the responsibility to complete it are answerable to a superior for work outcomes Delegating authority helps to establish a pattern of relationships and accountability between a superior and his/her subordinates. Delegating authority DOES NOT relieve superiors of accountability. FHF 7-14

Degree of Centralization Centralized Organizations Authority is concentrated at the top level Very little delegation to lower levels Decentralized Organizations Decision making authority is delegated as far down the chain of command as possible Centralized organizations have very concentrated authority at the top level, with little delegation to lower levels. The U.S. Army is a good example of a centralized organization. Decentralized organizations delegate decision making far down the chain of command. Decentralized organizations tend to be able to respond more quickly to challenges. Toyota gives lower-level employees a high level of decision making authority. FHF 7-15

…continued on next page Span of Management The number of subordinates who report to a particular manager A wide span of management exists when a manager directly supervises a very large number of employees A narrow span of management exists when a manager directly supervises only a few subordinates Span of management is how many subordinates a manager manages. This can vary widely from organization to organization. A rule of thumb is that top managers should not supervise more than 4-8 people, regardless of the size or structure of the organization. Lower-level managers can supervise much larger numbers of employees. …continued on next page FHF 7-16

Forms of Organizational Structure Line Structure Line-and-staff structure Multidivisional structure Matrix structure In addition to determining span of management, an organizational structure will take one of the above forms. FHF 7-17

Line Structure The line structure results in a very flat organization. Is the simplest organizational structure. FHF 7-18

Line-and-Staff Structure A line-and-staff structure is considerably more complex and taller than a simple line structure. It has a traditional line relationship between superiors and subordinates and specialized managers are available to assist line managers. FHF 7-19

Multidivisional Structure Organizes departments into larger groups called divisions Occurs as organizations grow larger and more diversified Divisions can be formed on the same bases as departments Customer Product Geography Delegation of authority and divisionalized work As companies grow larger, line structures become difficult to manage and communication becomes slower and more cumbersome. Many larger firms decide to restructure into divisions. The divisions are based largely on the same criteria as departments and will vary from firm to firm. FHF 7-20

Matrix Structure Also called a project management structure because it is often used as a temporary structure on major projects. Sets up teams from different departments, which creates intersecting lines of authority. The matrix structure brings together specialists from different areas to work on a project. The downsides are the fact that this structure is expensive, complex, and can confuse subordinates as to whose authority to follow. FHF 7-21

Organizational Communications Organizational communications can move in all directions, with horizontal communication between first-line managers, and upward, downward and diagonal communications between CEOs, Presidents, Vice Presidents and Managers FHF 7-25

Technology and Communication Technology has generated many alternatives to face-to-face communication Voice mail E-mail Online newsletters Videoconferencing Online meeting services Technology has increased the speed of communication, and in many cases has increased the amount of communication. FHF 7-26

Formal Communication Flow of communication within the formal organizational structure as depicted on organizational charts. Upward communication Downward communication Horizontal communication Diagonal communication Formal communication channels are intentionally defined and designed by the organization. Formal communications can move in virtually any direction, via pre-determined channels. FHF 7-27

Informal Communication Separate from management’s formal, official communication channels Also known as the Grapevine Managers can utilize informal communications as a sounding device Informal communications arise organically and are not defined or controlled by the organization. Information communications can be a valuable source of information for managers. FHF 7-28