1. Organizational Culture, Structure, and Design Chapter 8

2. Person-Organization Fit Reflects the extent to which your personality and values match the climate and culture in an organization.

3. 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.

4. Organizational Structure A formal system of task and reporting relationships that coordinates and motivates an organization’s members so that they can work together ot achieve the organization’s goals.

5. Organizational cultures can be classified into four types: Clan Adhocracy Market Hierarchy

6. 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

7. 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

8. 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

9. 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

10. Three Levels of Organizational Culture Observable artifacts Espoused values Basic assumptions

11. Observable Artifacts The most visible level Physical manifestations Manner of dress Awards Myths and stories about the company Rituals and ceremonies Decorations

12. Espoused Values The explicitly stated values and norms preferred by an organization Hewlett Packard – the “HP Way”

13. Enacted Values Represent the values and norms actually exhibited in the organization.

14. Basic Assumptions Core values of the organization Non observable Represent the core values of an organization’s culture

15. 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!

16. 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

17. 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

18. Heroes A person whose accomplishments embody the values of an organization.

19. Rites and Rituals The activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization’s life. Mary Kay Cosmetics – conventions to reward sellers – pink Cadillacs

20. An organization’s culture has four functions: 1. It gives members an organizational identity 2. It facilitates collective commitment 3. It promotes social-system stability 4. It shapes behavior by helping employees make sense of their surroundings

21. Cultures for enhancing economic performance The Strength Perspective: assumes that the strength of a corporate culture is related to a firm’s long-term financial performance.

22. 2. The Fit Perspective: assumes that an organization’s culture must align, or fit, with its business or strategic context a correct fit is expected to foster higher financial performance.

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

24. 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

25. Slogans and Sayings Snack, Crackle, Pop

26. Rice Crispies

27. Let your fingers do the walking

28. Yellow pages

29. Plop Plop fizz fizz oh what a relief it is

30. Alka Seltzer

31. Mm Mm Good

32. Campbell’s soup

33. Look ma, no cavities.

34. Crest

35. 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

36. Measurable and controllable activities Organizational structure Organizational systems and procedures

37. Organization A system of consciously coordinated activities or forces of two or more people.

38. 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)

39. Organization Chart A box-and-lines illustration showing the formal lines of authority and the organization’s official positions or work specializations. Vertical hierarchy of authority (who reports to whom) Horizontal specialization (who specializes in what works)

40. Common elements of Organizations (Edgar Schein) Common Purpose: unifies employees or members and gives everyone an understanding of the organization’s reason for being Coordinated Effort: the coordination of individual efforts into a group or organization- wide effort

41. 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

42. Division of Labor Work Specialization The arrangement of having discrete parts of a task done by different people.

43. 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.

44. 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.

45. 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

46. 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 supervisory- level managers General Motors, Harley-Davidson

47. 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

48. 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

49. Functional Structure In a functional structure, people with similar occupational specialties are put together in formal groups. Departments: Production Department, Marketing Department, Finance, etc.

50. Divisional Structure – Grouping by similarity of purpose Product Divisions – group activities around similar products or services Time Warner (magazines, cable tv, recordings, movies) Customer Divisions – tend to group activities around common customers or clients 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

51. Matrix Structure An organization combines functional and divisional chains of command in a grid so that there are two command structures Vertical and horizontal

52. 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.

53. Boundaryless Structure A fluid, highly adaptive organization whose members, linked by information technology, come together to collaborate on common tasks.

54. 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.

55. Modular Structure A firm assembles product chunks, or modules, provided by outside contractors.

56. Virtual Organization An 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.

57. Virtual Structure A company outside a company that is created “specifically to respond to an exceptional market opportunity that is often temporary.”

58. Contingency Design The process of fitting the organization to its environment Environment Size Technology Life Cycle

59. 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.

60. 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.