Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin2 Chapter 8: Organizational Culture, Structure, & Design Building Blocks of the Organization What Ki
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Chapter 8: Organizational Culture,
Structure, & Design
Building Blocks of the
Organization
What Kind of Organizational Culture Do We Have?
Developing High Performance Cultures
What is an Organization?
Elements of an Organization
Types of Organizational Cultures
Creating the Best Structure
Building a Learning Organization
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8.1 What Kind Of Organizational Culture
Will You Be Operating In?
WHAT IS AN ORGANIZATIONAL CULTURE?
develops within an organization and guides the
behavior of its members
It is the organization’s personality
There are two levels of corporate culture:
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Layers of Organizational Culture
Invisible Level: Core Culture
Not seen by the naked eye
Consists of values, beliefs, and assumptions
Core culture might be associated with “it’s the way we do things around here”
Often has two sources:
1) Visions, assumptions, and biases of founders
2) Outlook that initial employees learned from their own experiences
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Layers of Organizational Culture
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8.1 What Kind Of Organizational Culture
Will You Be Operating In?
-symbols are objects, acts, qualities, or events that
convey meaning to others
- stories are narratives based on true events which
are repeated and sometimes embellished to
emphasize a particular value
- heroes are people whose accomplishments
embody the values of the organization
- rites and rituals are the activities and ceremonies,
planned and unplanned, that celebrate important
occasions and accomplishments in the organization’s life
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8.1 What Kind Of Organizational Culture
Will You Be Operating In?
WHY IS CULTURE IMPORTANT?
1 Culture provides an opportunity to reinforce the
company’s message
2 Culture helps to get everyone on board
3 Culture helps companies manage conflict and
change effectively
4 Culture helps employees understand why the
company does what it does and how it will achieve its long term goals
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Four Functions of Organizational Culture
It gives members an organizational identity
It facilitates collective commitment
It promotes social-system stability
It shapes behavior by helping employees make
sense of their surroundings
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8.1 What Kind Of Organizational Culture
Will You Be Operating In?
Figure 8.1: Four Functions Of Organizational Culture
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8.2 Developing High-Performance Cultures
WHAT ORGANIZATIONAL CULTURE ENHANCES
ECONOMIC PERFORMANCE?
There are three perspectives of how culture can enhance
performance:
corporate culture is related to a firm’s long-term financial
success
must align or fit with its business or strategic context
cultures help organizations anticipate and adapt to
environmental changes
highest for firms with an adaptive culture
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8.2 Developing High-Performance Cultures
HOW CAN CULTURE BE EMBEDDED IN AN
ORGANIZATION?
The values and beliefs of a culture are shared with
members of the organization using a variety of mechanisms:
1 Formal Statements - culture can be embedded in an
organization through formal statements of philosophy, mission, vision, and values
2 Slogans & Sayings - corporate cultures can be promoted
through slogans and sayings
3 Stories, Legends, & Myths - telling stories, legends, and
myths can help embed desirable values in an organization
4 Leader Reactions to Crises - how top managers respond to critical incidents sends a message to employees
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8.2 Developing High-Performance Cultures
5 Role Modeling, Training, & Coaching - organizational
culture can be promoted through role modeling, training
programs, teaching, and coaching
6 Physical Design - the physical design of workspaces,
buildings, and so on can also help embed corporate culture
7 Rewards, Titles, Promotions, & Bonuses - companies use rewards, status symbols, promotions, and so on to encourage desirable organizational behavior
8 Organizational Goals & Performance Criteria - desired
organizational behavior and goals can be promoted through criteria for recruiting, selecting, promoting, and dismissing
people
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8.2 Developing High-Performance Cultures
9 Measurable & Controllable Activities - companies can
measure and control certain activities to foster a certain
culture
10 Organizational Structure - how an organization is
structured can send a clear message about its organizational culture
11 Procedures For Self-Development - procedures can be established to help employees develop according to
organizational goals
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Practical Action: Fitting into an Organization’s Culture
Get to know some people and listen to what they have to
say
Remember the seven second rule for first impressions
Make it easy for others to give you feedback
Get something done
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Practical Action: When You Should and Shouldn’t Delegate
Delegate routine and technical matters
Delegate tasks that help your subordinates grow
Don’t delegate confidential and personal matters
Don’t delegate emergencies
Don’t delegate special tasks that your boss asked you to do
—unless you have his or her permission
Match the tasks delegated to your subordinates’ skills and
abilities
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8.3 What Is An Organization?
Organization: is a system of consciously coordinated
activities or forces of two or more people
For profit organizations
Formed to make money by offering products or services
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8.3 What Is An Organization?
HOW ARE ORGANIZATIONS STRUCTURED?
Organizations can be represented in an organization chart (a box-and-lines illustration showing the formal lines of authority and the organization’s official positions)
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8.3 What Is An Organization?
Figure 8.2: Organization Chart
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The Organization Chart
Director of Nutrition &
Food Services
Director of X-Ray &
Laboratory Services
Chief Physician
Director of Pharmacy
Director of
Patient &
Public Relations
Director of Accounting Director of Surgery Director of Outpatient
Services
Board of Directors
Strategic Planning Advisor
Chief Executive Officer Legal Counsel
President Cost Containment Staff
Executive Administrative Director
Executive Medical Director
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The horizontal specialization shows the different
jobs or work specialization of an organization
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8.4 The Major Elements Of An Organization
WHAT ARE THE COMMON ELEMENTS OF AN
ORGANIZATION?
There are seven elements common to all organizations:
1 Common Purpose - a common purpose unifies employees
or members and gives everyone an understanding of the
firm’s reason for being - mission
2 Coordinated Effort - organizations achieve a common
purpose by coordinating individual efforts into a group or
organization-wide effort
3 Division Of Labor - the arrangement of having discrete parts
of a task done by different people is referred to as work
specialization
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8.4 The Major Elements Of An Organization
4 Hierarchy Of Authority - the control mechanism for making sure the right people do the right things at the right time is
called the hierarchy of authority or chain of command
5 Span Of Control - the span of control or span of
management refers to the number of people reporting directly
to a given manager
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Spans of Control: Narrow versus Wide
T
M M M
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8.4 The Major Elements Of An Organization
6 Authority, Responsibility, & Delegation – authority,
accountability, responsibility, and the ability to delegate are all part of an organization’s elements
7 Centralization Versus Decentralization - when important
decisions are made by higher-level managers, the
organization has centralized authority , when important
decisions are made by middle-level and supervisory-level
managers, the organization has decentralized authority
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Eight Organizational Structures
1) Simple structure : for the small firm
2) Functional structure : grouping by similar work specialties
3) Division structure : grouping by similarity of purpose
4) Conglomerate structure : grouping by industry
5) Hybrid structure : functional & divisional used within the same
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8.5 Basic Types Of Organizational Structures
WHAT ARE THE BASIC TYPES OF
ORGANIZATIONAL STRUCTURES?
1 The simple structure has authority
centralized in a single person, a flat hierarchy, few rules, and low work specialization and is often used in the very early stages of a firm
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8.5 Basic Types Of Organizational Structures
Figure 8.4: Simple Structure: An Example
There is only one hierarchical level of
management beneath the owner
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8.5 Basic Types Of Organizational Structures
WHAT ARE THE BASIC TYPES OF
ORGANIZATIONAL STRUCTURES?
2 In a functional structure , common in both profit and nonprofit organizations, people with similar occupational specialties are put
together in formal groups
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8.5 Basic Types Of Organizational Structures
Figure 8.5: Functional Structure: Two Examples
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8.5 Basic Types Of Organizational Structures
3 When people with diverse occupational specialties are put together in formal groups, a divisional
structure is in place
Product divisions group activities around similar
products or services
Customer divisions group activities around
common customers or clients
Geographic divisions group activities around
regional locations
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Music Division
Magazine &
Book Division
Internet Products Division
Product Divisional
Structure
President
Consumer Loans
Mortgage Loans
Business Loans
Agriculture Loans
Customer Divisional
Structure
President
Western Region
Northern Region
Southern Region
Eastern Region
Geographic
Divisional Structure
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8.5 Basic Types Of Organizational Structures
4 The conglomerate structure groups divisions
or business units around similar businesses or
industries
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& Services
This resembles the
structure of Tyco
International
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8.5 Basic Types Of Organizational Structures
5 A hybrid structure uses functional and divisional structures in different parts of the same organization
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Hybrid Structure
President,
Vice-Production
President, Marketing
President, Finance
President, Human Resources
Vice-Functional divisional structure
President
President Cadillac
President Buick
President Pontiac
President Chevrolet
Product Divisional Structure
Manager
Region I
Manager Region II
Manager Region III
Manager Region IV
Geographical divisional structure
A Hypothetical example of what GM might
use
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8.5 Basic Types Of Organizational Structures
6 When an organization combines functional and
divisional chains of command in a grid so that there a two command structures, vertical and horizontal, a
matrix structure is used
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8.5 Basic Types Of Organizational Structures
Example of Ford motor company
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8.5 Basic Types Of Organizational Structures
7 In a team-based structure , teams, both temporary
and permanent, are used to improve horizontal
relations and solve problems throughout the
organization
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8.5 Basic Types Of Organizational Structures
Figure 8.10: Team-Based Structure
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8.5 Basic Types Of Organizational Structures
8 The network structure or virtual 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