1. Michael A. Hitt C. Chet Miller Adrienne Colella Slides by R. Dennis Middlemist Michael A. Hitt C. Chet Miller Adrienne Colella Chapter 13 Organizational Structure and Culture

2. 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.

3. Knowledge Objectives 4.Define organizational culture, and discuss the competing-values cultural framework. 5.Discuss socialization. 6.Describe cultural audits and subcultures.

4. Organizational Structure and Culture Organizational structure – The formal system of work roles and authority relationships that govern how associates and managers interact with one another Organizational culture – The values shared by associates and managers in an organization

5. Elements of Organizational Structure Structural characteristics – The tangible, physical properties that determine the basic shape and appearance of an organization’s hierarchy Structuring characteristics – Policies and approaches used to prescribe the behavior of managers and associates

6. Elements of Organizational Structure Height – The number of hierarchical levels in an organization, from the CEO to the lower-level associates Span of control – The number of individuals a manager directly oversees

7. Structural Characteristics: Span of Control Adapted from Exhibit 13-1: Average Span of Control: Effects on Height of the Hierarchy Average span of 4Average span of 10 Organizational Level Highest Lowest 334 111 Total number of managers 1000 Associates 250 Level 1 Mgrs. 63 Level 2 Mgrs. 16 Level 3 Mgrs. 4 Level 4 Mgrs. 1 Top Level Mgr. 1000 Associates 100 Level 1 Mgrs. 10 Level 2 Mgrs. 1 Top Level Mgr.

8. Structural Characteristics: Departmentation Adapted from Exhibit 13.2: Simplified Functional Organization The grouping of human and other resources into units, typically based on functional areas or markets VP Research and Development VP Research and Development VP Operations VP Human Resources VP Finance VP Marketing CEO

9. Structural Characteristics: Departmentation 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 2 Head of Operations Head of R&D Head of Human Resources Head of Finance Head of Marketing V.P. Product/Service Area 3

10. Structuring Characteristics Centralization – The degree to which authority for meaningful decisions is retained at the top of an organization Standardization – The degree to which rules and standard operating procedures govern behavior in an organization

11. Structuring Characteristics Formalization – The degree to which rules and operating procedures are documented on paper or in company intranets Specialization – The degree to which associates and managers have jobs with narrow scopes and limited variety

12. The Modern Organization Modern organization – Flexible empowering type of structure (i.e., organic, learning, or boundaryless) Fewer management levels Broader spans of control Lesser amounts of centralization, standardization, formalization, and specialization Departmentation at the top of the firm can be either functional or divisional Substantial freedom for lower-level managers and associates

13. Factors Affecting Structure Strategy – Corporate strategy Growth vs. diversification Internal vs. external Supporting structure includes – Divisional form – Delegation of authority to the divisions

14. Diversification Strategy and Structure Exhibit 13-4Matches between Diversification Strategy and Structure Single productFunctional Dominant product (few products)Functional Dominant product (several products)Divisional Related productDivisional Unrelated productDivisional Adapted from Exhibit 13-4: Matches between Diversification Strategy and Structure DiversificationStructure

15. Factors Affecting Structure Strategy – Business strategy Low cost/low price Product/service differentiation Supporting structure includes – Flexibility and initiative – A more organic structure

16. Role of the Environment Environment and basic structure – Environmental uncertainty Effective organizations experiencing high environmental uncertainty tend to be more organic Effective organizations experiencing low environmental uncertainty tend to be less organic Environment and integration – Structural arrangements that address information needs are particularly important when the environment is uncertain Creation of slack resources Creation of self-contained tasks Investment in information technology Creation of traditional lateral relations

17. Integration in Organizations 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

18. Integration in Organizations Slack resources – Reduces the need for interdepartmental information processing – Departments can operate more independently Self-contained tasks – Reduces the need for interdepartmental processing of information – Reduces the need for coordination between groups

19. Integration in Organizations Information technology – Facilitates the processing of information – Can help transfer information up and down the hierarchy and horizontally from department to department Lateral relations – Increases information flow at lower levels – Decisions requiring interdepartmental coordination need not be referred up the hierarchy

20. Lateral Relations Liaison RolesDirect ContactMatrix Designs Managerial Linking Roles Integrating RolesTeamsTaskforces Lateral Processes

21. Technology and Structure Manufacturing – Small-batch technology Unique or small batches of custom products Automation tends to be low Skilled craftsmen and craftswomen are central Associates operate with considerable autonomy – Mass production technology Large quantities of relatively standardized products Associates have relatively narrow jobs and rely heavily on sophisticated equipment in their work

22. Technology and Structure Manufacturing – Small-batch technology Few management levels and few managers Skilled craftsmen and craftswomen Work is varied, requiring independent judgment of associates – Mass-production technology More management levels and more managers per associate Associates handle relatively routine jobs in a less organic environment Staff specialists and managers design procedures in advance

23. Technology and Structure Manufacturing – Process technology Even more management levels and more managers per associate Tall hierarchies designed for monitoring various aspects of the organization Lower-level associates enjoy some level of discretion, as they must be free to act in emergencies Lower-level associates in process organizations are plant operators and maintenance specialists with strong training – Mass customization Flexible, organic environment

24. Technology and Structure: Broader Framework Technology – Task variability: the number of different problem types that are encountered over time and – Task analyzability: the degree to which problems can be solved using known steps and procedures – Four categories of technology Routine Craft Engineering Nonroutine

25. Diversification Strategy and Structure Adapted from Exhibit 13-6: Organizations and Technology Engineering Non-Routine RoutineCraft High Low HighLow Task Analyzability Task Variability Mass-Production Firm Public School Specialize Engineering Consulting Firm Research and Development Firm

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

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

28. Cultural Socialization Socialization – A process through which an organization imparts its values to newcomers Context: whether newcomers are exposed to key values through a collective or individual process, and whether they experience a formal or informal approach Content: whether newcomers are provided information on the probable sequence of development activities and job rotations for the first year or two in the organization, and whether they are given specific information on the likely duration of each activity Social dynamics: whether newcomers experience serial or disjunctive processes and whether they are exposed to an investiture or divestiture approach

29. Cultural Audit Analyze the process and content of the socialization of new associates and managers 1.Analyze process and content Interview those directly involved in socialization Associates and managers New and experienced Specialists such as HRM

30. Cultural Audit Analyze the process and content of the socialization of new associates and managers Analyze responses to critical incidents in the organization’s history 2.Analyze responses Construct organizational biography from Documents Interviews with past and present associates and managers

31. Cultural Audit Analyze the process and content of the socialization of new associates and managers Analyze responses to critical incidents in the organization’s history Analyze the values and beliefs of culture creators and carriers 3.Analyze values and beliefs Culture creators/founders Carriers/current leaders Observe/interview the founder and current leaders

32. Cultural Audit Analyze the process and content of the socialization of new associates and managers Analyze responses to critical incidents in the organization’s history Analyze the values and beliefs of culture creators and carriers Explore anomalies or puzzling features discovered in other analyses 4.Explore anomalies Initiate joint problem-solving sessions with current leaders in the organization