DESIGNING ORGANIZATION

STRUCTURE & CULTURE

ORGANIZATIONAL STRUCTURE
Organizational Structure is the division of labor as well as
the patterns of coordination, communication, workflow,
and formal power that direct organizational activities

Organizational Structure and Culture 1

 ORGANIZATIONAL DESIGN

• Organizational Design
• Organizational Structure
• Organizational chart

COORDINATING MECHANISMS IN
ORGANIZATIONS
FORM OF COORDINATION DESCRIPTION SUBTYPES/STRATEGIES
Informal communication Sharing information on • Direct communication
mutual tasks; forming • Liaison roles
common mental models • Integrator roles
to synchronize work • Temporary teams
activities

Formal hierarchy Assigning legitimate • Direct supervision

power to individuals, who • Formal communication
then use this power to channels
direct work processes and
allocate resources
Standardization Creating routine patterns • Standardized skills
of behavior or output • Standardized processes
• Standardized output

Organizational Structure and Culture 2

 ORGANIZATION STRUCTURE

MAIN ELEMENTS OF
ORGANIZATION STRUCTURE

• Span of control
• Centralization and Decentralization
• Formalization
• Mechanistic versus Organic Structures
• Departmentalization

Organizational Structure and Culture 3

 SPAN OF CONTROL

CENTRALIZATION AND
DECENTRALIZATION

Organizational Structure and Culture 4

 THE DEGREE OF FORMALIZATION

MECHANISTIC VERSUS ORGANIC

STRUCTURES
• Mechanistic: a narrow span of control and high degree
of formalization and centralization

• Organic: a wide span of control,

decentralized decision making and
little formalization

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Organizational Structure and Culture 5

 DEPARTMENTALIZATION

The basis by which jobs are grouped together is called

Departmentalization.
The various ways by which Departmentalization can be
done are:
- Simple - by product
- Functional - by customer
- Divisional - by location
- Team-based
- Matrix
- Network

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COMMON BASE OF DEPARTMENTALIZATION

• Functional Structure

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Organizational Structure and Culture 6

 ORGANIZATIONAL STRUCTURE BY
FUNCTION

• Functional
Departmentalization
– The grouping of jobs
involving the same or
similar activities.

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COMMON BASE OF DEPARTMENTALIZATION

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Organizational Structure and Culture 7

 TERRITORIAL DIVISIONALISATION

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TERRITORIAL DIVISIONALISATION
The grouping of jobs on the basis of defined geographic sites or
areas.
• Advantage
– Enables the organization to
respond easily to unique
customer and environmental
characteristics.
• Disadvantage
– Large administrative staff
may be needed to keep track
of units in scattered locations.

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Organizational Structure and Culture 8

 PRODUCT DIVISIONALISATION

The grouping of activities

around products or
product groups.

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PRODUCT DIVISIONALISATION

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Organizational Structure and Culture 9

 CUSTOMER/MARKET DIVISIONALISATION

• Customer Departmentalization
– Grouping activities to respond to and interact with
specific customers and customer groups.
• Advantage
– Skilled specialists can deal
with unique customers or
customer groups.
• Disadvantage
– A large administrative staff
is needed to integrate activities
of various departments.

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TEAM-BASED STRUCTURE

• Self-directed teams
• Organic
• Wide span of control
• No formal leader
• Decentralized

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Organizational Structure and Culture 10

 MATRIX ORGANIZATION STRUCTURE

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MATRIX ORGANIZATION STRUCTURE

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Organizational Structure and Culture 11

 NETWORK STRUCTURE

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NETWORK STRUCTURE

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Organizational Structure and Culture 12

 CONTINGENCIES OF
ORGANIZATIONAL DESIGN

• External environment
• Organizational size
• Technology
• Organizational strategy

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Organization Culture

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Organizational Structure and Culture 13

 ORGANIZATIONAL
CULTURE

The values and

assumptions shared
within an
organization

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VISIBLE

INVISIBLE

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Organizational Structure and Culture 14

 How Organizational
Cultures Form

Top
Management

Philosophy
of the Organizational
Organization’s Selection Culture
Founders

Socialization

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Organizational Structure and Culture 15

 Do Organizations Have Uniform Cultures

Dominant Subcultures
Culture
Core
Values

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Organizational Structure and Culture 19

 ADAPTIVE ORGANIZATIONAL
CULTURES

An organization culture in which employees are receptive to change,

including the ongoing alignment of the organization to its environment
and continuous improvement of internal processes

• External focus -- firm’s success depends on continuous change

• Focus on processes more than goals

• Employees assume responsibility for organisation

performance
– They seek out opportunities

• Proactive and responsive

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MERGING DIFFERENT
OGANIZATIONAL CULTURES

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Organizational Structure and Culture 20

 BICULTURAL AUDIT

• Part of due diligence in merger

• Minimizes risk of cultural collision by diagnosing
companies before merger
• Three steps in bicultural audit:
1. Examine artifacts
2. Analyze data for cultural conflict/compatibility
3. Identify strategies and action plans to bridge
cultures

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CHANGING AND STRENGTHENING

ORGANIZATIONAL CULTURE (1)

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Organizational Structure and Culture 21

 CHANGING AND STRENGTHENING
ORGANIZATIONAL CULTURE (2)
• Actions of founders & leaders
– Founder’s personality, values, habits, and critical events
– Stories and legends about the founder that symbolize the core
values.
• Align artifacts with the desired culture
– Mechanisms that keep the culture in
place or shift the culture to
a new set of values and assumptions
– The desired state of affairs. These
systems and structures are artifacts,
such as the workplace layout, reporting
structure, office rituals, type of
information distributed, and language that
is reinforced or discouraged

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CHANGING AND STRENGTHENING

ORGANIZATIONAL CULTURE (3)
• Introduce culturally consistent rewards/recognition
– Powerful effect on strengthening or reshaping an organization’s
culture.
• Support workforce stability and communication
– A strong culture depends on a stable workforce
– And a workplace where employees regularly interact with each
other
• Use attraction, selection and socialization
for cultural ‘fit’
– Recruiting, selecting, and retaining
applicants whose values are congruent
with the organization’s culture is
explained by attraction–selection–
attrition (ASA) theory.

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SOCIALIZATION:
PSYCHOLOGY CONTRACT

• Transactional
–short-term economic exchanges
• Relational
– long-term attachments that encompass
a broad array of subjective mutual
obligations

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 STAGES OF SOCIALIZATION

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