Organisational Design and Culture

O r ganisationa l Desig n an d Cultu r e

Learning Objectives
Reading this chapter would enable you to understand:
Various designs of an organisation
Contents
3! Organisational Design
3" Di#ensions of Organisational Design
33 Deter#inants of Organisational Design
3$ %ajor &le#ents of Organisational Design
3' (actors )nfluencing Organisational Redesigning
3* +hat is Organisational ,tructure-
3. +hat is Organisational Culture-
3/ 0rojection of the Organisational Culture
31 Characteristics of Organisational Culture
3!2 (actors 3ffecting Organisational Culture
3!! 3ssessing Organisational Culture
3!" Changing Organisational Culture
3! Organisational Design
Organisations can be broadly classified on the basis of their age:
a 3n organisation4 in its conceptual or e#bryonic stage
b 3n organisation just born and is ver y young
c 3n organisation4 #ore than "' years old
)t is observed that al#ost all organisations4 which are large today4 were started as ver y s#all
organisations #any years ago 5he organisations4 that have ta6en care of designing their str
uctures properly during the initial stages4 are facing co#paratively less proble#s of organisational
behaviour as co#pared to the others Organisational Designing is the basis for
organisational str ucture vi7 Line Organisation4 (unctional Organisation4 Line and ,taf f
Organisation4 Co##ittee Organisation4 %atri8 Organisation4 etc Organisational structure
and organisational culture are dif ferent4 but at the sa#e ti#e interrelated and interdependent
5herefore4 organisational designing is of vital i#por tance in shaping organisational behaviour
and in turn4 the organisational culture
5hus4 in words of ,tephen Robbins4 Organisational Design #ay be defined as: 93 process of
deter#ining as to how tas6s are divided4 grouped and
co:ordinated for the successful achieve#ent of the organisational goals;
)t is easier to design an organisation at the conceptual or e#br yonic stage4
than at a later stage Obviously4 it beco#es increasingly dif ficult to design or
edesign the organisation structure4 as the organisation grows older <owever4
#odern organisations review the design=str ucture once ever y five years and
redesign and readjust the organisation to cope with changing situations4 for
e8a#ple4 changes in: the products=ser vices4 #ethods and procedures4 >uantity
and >uality4 syste#s and sub:syste#s4 #ar6et de#ands and consu#er
preferences4 etc
3" Di#ensions of Organisational Design
?asically4 there are two di#ensions of organisational design:
Organisational Design and Culture
a 5he ver tical di#ension relating to the hierarchy of the #anagerial levels
of superiors and subordinates
b 5he hori7ontal di#ension relating to decentralisation4 divisionalisation4
depar t#entalisation4 sectionalisation
33 Deter#inants of Organisational Design
5he #ajor deter #inants of organisational design are as follows:
a Ownership @0ublic=0rivate=Aoint=Co:operativeB
b ,i7e @,#all=%ediu#=Large4 nu#ber of people4 capital invest#ent4 sales
turnoverB
c 5echnology @old or new4 auto#ation4 #odernisation4 co#puterisationB
d ,trategy @goals4 objectives4 shor t ter#=long ter#4 evaluation of
alternativesB
e &nviron#ent @internal v=s e8ternalB
3$ %ajor &le#ents of Organisational Design
a +or6 ,pecialisation
5his is based on 5aylorCs concept of ,cientific %anage#ent ?oth (ayol and
5aylor have suggested Ddivision of labourC a#ong e#ployees as per their
6nowledge and s6ills Division of labour based on wor6 specialisation helps
to i#prove the ef ficiency and ef fectiveness of the organisation
b Depar t#entalisation
3s the organisation grows it beco#es necessar y to divide the wor6 group4
the activities and bring the# under cer tain depar t#ents that can be directly
#anaged by the depar t#ental heads so that the organisation can be #anaged
ef ficiently and ef fectively
Depar t#entalisation #ay be defined as Da process of dividing the various
activities into dif fer ent depar t#ents for proper ad#inistration of the
organisationC
3 few advantages of proper depar t#entalisation are as follows:
! )t per#its utilisation of specialisation and e8per tise of people
" )t creates a feeling of autono#y and job satisfaction a#ong e#ployees
3 )t helps fi8 the authority:responsibility relationship of the #anagers
$ )t facilitates per for#ance appraisals by #anagers
' )t helps the training4 develop#ent and job rotations of #anagers
c Chain of Co##and
Organisational co##unication is an e8tre#ely i#por tant factor for the success or failure of an
organisation Eenerally4 organisational co##unication re>uires a chain of co##ands to flow
downwards=upwards=lateral )n the absence of a proper chain of co##ands for organisational
co##unication to flow4 organisational behaviour beco#es a #ore co#ple8 subject
Organisational Design and Culture
d ,pan of Control
)n large:scale organisations4 activities are decentralised and the organisation is divided into dif
ferent divisions or depar t#ents to per for# cer tain specialised tas6s that ulti#ately contribute to the
organisational goals &ach depart#ent consists of one head and so#e subordinates who have to
wor6 as a tea# and achieve the depar t#ental goal with the given resources vi7 people4 #achines
and #aterials
)n this process4 each depar t#ent consists of dif ferent nu#bers of people depending upon the
nature of wor64 the >uantity and >uality of the finished product=ser vice and the resources
available to co#plete the tas6 in a given ti#e li#it 5his re>uires the #anager to plan4 organise4
direct4 co##unicate4 lead4 #otivate4 super vise4 control and co:ordinate all his activities as well as
those of his subordinates )f the nu#ber of people to be super vised is too large4 super vision
and control beco#es dif ficult On the other hand4 if the nu#ber is too s#all4 super vision and
control beco#e too strict and critical )n both these situations4 the per for#ance of the tea# #ay
not be satisfactor y 5herefore4 the span of #anage#ent should be opti#u# for an opti#u#
per for#ance
5hus4 the span of control #ay be defined as Dthe nu#ber of subordinates that can be ef ficiently
and ef fectively #anaged by the superior for the opti#u# per for#ance of the wor6 tea#F
Centralisation v=s Decentralisation
3s long as the organisation is s#all it can be #anaged by a s#all group of #anagers One
#anager has to loo6 after a nu#ber of functions )n such an organisation there is centralisation of
authority and decision:#a6ing as a result of which a few #anagers have the authority to ta6e
decisions and give instr uctions to their subordinates
5hus4 centralisation #ay be defined as Da syste#atic and consistent reser vation of authority and
decision #a6ing at a central point in the organisationC
3s long as the organisation is s#all4 centralised authority and decision:#a6ing can #anage it but4
as it grows into a large:scale organisation4 it has to decentralise activities in order to cope
with the changing de#ands of the efficiency and effectiveness of the organisation )t beco#es
necessary todecentralise #any functions li6e planning4 organising4 staffing4 directing4
controlling4 etc
5hus4 decentralisation #ay be defined as Da process of dividing organisational
activities into dif fer ent autono#ous divisions=depar t#ents=sections4
physically and functionally C
3' (actors influencing Organisational Redesigning Changes
)n the 6nowledge re>uire#ents
)n the technology and the conse>uent s6ill re>uire#ent
)n the 6nowledge of hu#an behaviour
(ro# centralised to de:centralised str uctures
(ro# ver tical and tall to hori7ontal and flat organisations
)n e#phasis fro# co##and control to consensus self:control
(ro# instability and uncer tainty to #echanistic syste#s
(ro# generalisation to specialisation in #anage#ent
(ro# product orientation to function orientation
(ro# #echanistic approach to hu#an behaviour approach
Organisational Design and Culture
3* +hat is Organisational ,tructure-
3n organisation can be depicted by a line diagra#4 which is called as
Organisation Char t 5he organisation char t shows the organisational
str ucture )t shows the positions of the people4 their status=designations4
authority:responsibility relationships4 their span of control4 etc Organisation
str ucture can be any one of the following:
a Line Organisational str ucture
b (unctional Organisational structure
c Line and ,taf f Organisational str ucture
d Co##ittee Organisational structure
e %atri8 Organisational str ucture
3*! Dif ference between Organisational ,tr ucture and
Organisational Culture
Or ganisational cultur e i s differ ent fr o# or ganisational str uctur e
Organisational culture relates to the perception4 values4 attitudes4 #orale and
#otivation4 interpersonal co##unication4 interpersonal relationships4 co:
operation and co:ordination a#ong e#ployees at dif ferent levels4 the sense of
belonging a#ong e#ployees4 the treat#ent given to outsiders vi7 custo#ers4
suppliers4 contractors4 gover n#ent of ficers4 etc Organisational str uctures
can be created and changed overnight4 but organisational culture cannot be
changed overnight )t has to be built up over a period of ti#e
Organisational structure is #echanistic and can be shown on paper ?ut4 the
organisational culture is to be e8perienced by actually wor6ing in the
organisation
Organisational Design and Culture
5hus4 culture is an abstract concept that varies fro# organisation to
organisation and fro# ti#e to ti#e )t has to be felt and e8perienced by the
people over a period of ti#e )t plays an e8tre#ely i#por tant role in
organisational i#age building4 goodwill and reputation )t also helps to i#prove
the #orale and #otivation and the sense of belonging a#ong e#ployees
3. +hat is Or ga ni s a t i ona l Culture-
+hat is culture- )t is observed that during the "!st century4 world culture
has been changing ver y fast as a result of the fast changing national and
regional cultures +e find &astern culture v=s +estern culture4 traditional
culture v=s #odern culture4 agrarian culture v=s industrial culture4 rural culture
v=s urban culture4 etc ,i#ilarly4 there is public sector culture v=s private
sector culture4 #anufacturing sector culture v=s ser vice sector culture4 large
scale culture v=s s#all scale culture4 etc )ndividual culture is a result of the
i#pact of parents G fa#ily G education G wor6 e8perience G friends G society
Eroup culture is the su# total of the individual cultures
Organisational culture has been defined by:
a &dgar ,chiene: 3s the su# total of the 6nowledge4 beliefs4 values4
perceptions4 attitudes4 traditions4 custo#s that are shared by the groups and
resulting into the individual and group behaviour of the people wor6ing in the
organisation over a period of ti#e
b 5aguiri and Litwin: 3s a relatively enduring >uality of the inter nal
environ#ent that is e8perienced by its #e#bers4 that influences their
behaviour and can be described in ter#s of a set of values
c (orehand and Eil#er: 3s a set of characteristics that dif ferentiate one
organisation fro# another and are relatively enduring over a period of ti#e
and influence the behaviour of the people in the organisation
d ,chneider and ,nyder: 3s a process of #anifestation of the perceptions4
values and attitudes of the #e#bers of the organisation
Eenerally organisational culture flows fro# the top to the botto# )t is not
developed overnight )t ta6es a long ti#e to develop 5he perceptions4 values
and attitudes of the e#ployees for# the core of organisational culture
,o#e of the indicators of organisational culture are as follows:
Lac6 of 6nowledge
Lac6 of s6ills
Hegative attitudes
Resentful ser vice
Lac6 of accountability %ore bureaucratic culture
Red tapis#
?ureaucracy
Lac6 of discipline
Lac6 of cleanliness=house6eeping
0oor Iuantity and Iuality
Organisational Design and Culture
3de>uate 6nowledge of the job
3de>uate s6ills for the job
0ositive attitudes
Cheer ful ser vice
Less bureaucratic culture 3ccountability
Responsibility
?etter discipline
?etter cleanliness and house6eeping
&f ficiency and &f fectiveness
?etter Iuantity and Iuality
3/ 0rojection of the Organisational Culture
3ccording to &dgar ,chiene4 organisational culture is projected at three levels
as follows:
a Level ): Co#pany Logo4 5rade %ar64 Code of Jnifor#4 values4
philosophy4 cere#onies4 festivals4 rituals4 rewards4 appreciation4 role
#odels4 etc
b Level )): ,hared values and beliefs a#ong the e#ployees in the
organisation
c Level ))): Co##on assu#ptions of the #anage#ent about the
e#ployees
31 Characteristics of Organisational Culture
5he following are the characteristics of Organisational Culture:
a 0rag#atic policies
b ,trategic planning
c Decentralisation and Delegation
d )ndividual autono#y
e 0ar ticipation in decision:#a6ing
f Ris6 tolerance
g )ntegration with the organisational goals
h %anage#ent suppor t
i )nnovation and creativity
j ,elf:estee# and identity
6 Control syste#s
l Co##unication syste#s
# Conflict #anage#ent
n Reward syste#
3!2 (actors 3f fecting Organisational Culture
5he following are the factors that #ay af fect organisational culture:
a Organisational conte8t
b Organisational str ucture
c Organisational processes
d 0hysical environ#ent
e Values4 nor#s and syste#s
Organisational Design and Culture
3!! 3ssessing Organisational Culture
Organisational culture and cli#ate are abstract areas of e8perience ,o#e e#ployees #ay
be co#for tably happy wor6ing in the organisational cli#ate4 while so#e others #ay not be
so happy )t is a subjective concept4 which depends upon the beliefs4 perceptions and
values nur tured by the concerned e#ployees 3 lot of research has gone into the
assess#ent of organisational cli#ate though4 it is dif ficult to #easure it in any units as in
0hysics4 Che#istr y4 ?iology or %athe#atics 3ccording to Rensis Li6er t4 organisational
cli#ate can be assessed on the basis of the following .:point scale:
! Leadership style
" %orale and %otivation
3 Organisational co##unication
$ )nteraction:)nfluence process
' Decision #a6ing
* Eoal setting
. Control
3!" Changing Organisational Culture
Organisational culture is not a #atter of #inutes4 li6e fast foodK )t is a long: ter# process4
li6e character building4 which ta6es a long ti#e 5herefore4 changing organisational culture
re>uires sustained ef for ts by all )t de#ands conviction4 co##it#ent and co#petence ,o#e
of the changes that can bring about a change in organisational culture are as follows:
a 5reat e#ployees as individuals
b Respect individual identity and self:estee# c )#prove
organisational co##unication
d Eive training and develop#ent inputs at all levels e Review
syste#s and procedures
f )#prove leadership and tea# building
g Eive rewards and incentives in due recognition and appreciation h Delegate
to i#prove autono#y
i Change fro# autocratic to par ticipative style of #anage#ent
j Develop a positive attitude towards the organisational goals
Summing Up
In this chapter we have discussed organisational design, the dimensions, the determinants and the major
elements of organisational design. An organisation, if small, may be managed by a centralised authority, but as it
grows bigger in size and scale it has to decentralise authority for the ef ficient functioning of the organisation.
Ever y organisation has a culture which is dif ferent from its structure. he structure can be seen on paper,
but culture can only be e!perienced.
here are several factors wor"ing at several levels which project the culture of an organisation. #e have also
discussed how to assess and change the culture of an organisation.