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Chapter 13 organizational structure and culture Michael A. Hitt
C. Chet Miller Adrienne Colella Mary Triana
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? Knowledge Objectives Define key elements of organizational structure, including both structural and structuring dimensions. Explain how corporate and business strategies relate to structure. Explain how environment, technology, and size relate to structure. Define organizational culture, and discuss the competing values cultural framework. Discuss socialization. Describe cultural audits and subcultures. Explain the importance of a fit between individual values and organizational culture.
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Organizational Structure Organizational Culture
Formal system of work roles and relationships Govern how associates and managers interact Organizational Culture Shared values and norms Influence behavior
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Elements of Organizational Structure
Structural Characteristics Structuring Characteristics Tangible, physical properties Determine basic shape and appearance of hierarchy height span of control departmentalization Policies and approaches Directly prescribe behavior of managers and associates centralization standardization formalization specialization
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Structural Characteristics
Height Departmentalization Span of Control
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4 17 63 250 1000 Associates Number of Managers at Each Level 1 1 10
Average Span of Four Average Span of Ten 1 4 17 63 250 1000 Associates 1 10 100 1000 Associates (Highest) Organizational Level Adapted from Exhibit 13-1: Average Span of Control: Effects on Height of the Hierarchy
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Functional Organization
CEO VP Research & Development VP Finance VP Operations VP Marketing VP Human Resources Adapted from Exhibit 13-2: Simplified Functional Organization
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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 V.P. Product/Service Area 2 V.P. Product/Service Area 3 Adapted from Exhibit 13-3: Simplified Divisional Organization
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Structuring Characteristics
Centralization Degree authority for decisions is retained at the top Standardization Degree rules and standard operating procedures govern behavior Formalization Degree rules and operating procedures are documented Specialization Degree associates and managers have jobs with narrow scopes and limited variety
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MODERN ORGANIZATION FLEXIBLE EMPOWERING TYPE OF STRUCTURE
Organic Mechanistic Fewer management levels Broader spans of control Less: centralization standardization formalization specialization Learning Nonlearning Boundaryless Traditional
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Role of Strategy Corporate Strategy Business Strategy
Approach used in interacting with its environment growth diversification How it competes for success against others in the market low cost/low price product/service differentiation
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Strategy and Structure
Diversification Strategy and Structure Holding Company Unrelated product Divisional Related product Dominant product (several products) Functional Dominant product (few products) Single product Structure Diversification Adapted from Exhibit 13-4: Matches between Diversification Strategy and Structure
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Role of the Environment
Environmental Uncertainty degree the environment is complex and changing uncertain environments are difficult to monitor and understand
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Environment and Basic Structure
Organic Lower-level managers and employees must think for themselves High Uncertainty Less Organic Mid- and senior-level managers create rules and procedures to follow Low Uncertainty
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Environment and Integration Lateral Relations Information Technology
Slack Resources Self-Contained Tasks Information Technology Lateral Relations Increasing Implementation Complexity Increasing Richness of Information Processing Adapted from Exhibit 13-5: Integration in Organizations
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Alternative Lateral Processes
Direct Contact Liaison Roles Task Forces Teams Integrating Roles Managerial Linking Roles Matrix Designs Least Complex Most
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Role of Technology Small-batch technology Mass-production technology
Manufacturing Small-batch technology Mass-production technology Continuous-process production technology Mass Customization
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Organizations and Technology
Low Task Analyzability High Task Variability Specialized Engineering Consulting Firm Engineering Public School Craft Research and Development Firm Non-Routine Mass-Production Firm Routine Adapted from Exhibit 13-6: Organizations and Technology
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ROLE OF ORGANIZATIONAL SIZE AS ORGANIZATIONS GROW BIGGER…
Becomes taller Formalization increases Centralization decreases Number of associates and managers increases
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Developing Organizational Culture
Shared Values Reinforcing Outcomes Norms Individual and Group Behavior Adapted from Exhibit 13-7: Process of Developing Organizational Culture
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Organizational Culture
Effectiveness- Cohesion and Morale Leadership- Mentors and Coaches Clan Creativity and Innovation Entrepreneurs and Innovators Adhocracy Goal Achievement and Winning Hard Drivers and Competitors Market Efficiency and Order Monitors and Organizers Hierarchy Internal Focus/Integration versus External Focus/Differentiation Stability/Control versus Flexibility/Discretion Adapted from Exhibit 13-8: Competing Values Model of Organizational Culture
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Cultural Socialization
Process through which an organization imparts its values to newcomers
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Tool for assessing and understanding the culture of the organization.
Cultural Audit Tool for assessing and understanding the culture of the organization. Analyze new associate socialization process and content. Analyze responses to critical incidents in the organization’s history. Analyze values and beliefs of culture creators and carriers. Explore anomalies discovered in analysis. Examine linkage of current culture to goals.
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Subculture Groups that share values that differ from the main values of the organization.
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Person-Organization Fit
Goals types of personal goals one ought to have Behavior types of behaviors one ought to use in reaching goals Values
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Types of Personal Values
End (Goal) Values Prosperity Stimulating Achievement World peace Harmony’ Equality Security Freedom Happiness Inner peace Love National security Pleasure Religion Self-respect Social respect Friendship Wisdom Means (Behavior) Values Ambition Open-mindedness Competence Cheerfulness Cleanliness Courageousness Forgiving Helpfulness Honesty Imagination Independence Intelligence Rationality Affection Obedience Courtesy Responsibility Self-discipline Adapted from Exhibit 13-9: Types of Personal Values
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Strategic Lens 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? How would you describe the culture in the organization identified in your answer to question 1? How does the culture affect members’ behavior in the organization? When you become a manager, what type of culture will you establish in your unit? What values do you want to emphasize? Why? Check out for daily articles related to management in the news .
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