Organizational Structure and Culture

What is the most appropriate structure for an organization?
The two most extreme structure types are: mechanistic and organic.


Most organizations adopt a structure which is somewhere in-between these two types. The specific structure that an organization adopts though depends on contingency factors.

Characteristics of a Mechanistic Organizational Structure:

  1. Rigid hierarchical relationships
  2. Fixed duties
  3. Many rules
  4. Formalized communications channels
  5. Centralized decision authority
  6. Taller internal structures

Characteristics of a Organic Organizational Structure:

  1. Collaboration (both vertical and horizontal)
  2. Adaptable duties
  3. Few rules
  4. Informal communications
  5. Decentralized decision authority
  6. Flatter internal structures

What contingency factors affect specific organizational structure choice?

  1. Strategy
  2. Size
  3. Technology
  4. Environment

How does Strategy affect structure?

  1. An organization’s structure should facilitate goal achievement.
  2. When goals are simple, a simple structure often is most appropriate: i.e. centralized decision making, low complexity, and low formalization.
  3. However, as goals become more complex, so structure also should become more complex.

How does size affect structure?
Large organizations tend to have more specialization, departmentalization, centralization, and rules and regulations than small organizations.

How does technology affect structure?

  1. Every organization uses some form of technology to convert its inputs into outputs.
  2. How formalized and centralized an organization becomes often depends upon how routine is its technology.
  3. More routine leads to more formalization and centralization.

How does environment affect structure?

  1. The environment often is a constraint on managerial discretion.
  2. When the environment is very competitive, for example, managers will adopt a structure that will promote organizational speed and flexibility.

What traditional organizational designs can managers use?

Traditional Organizational Designs: Simple

  1. Definition: The simple structure is an organizational design with low departmentalization, wide spans of control, authority centralized in a single person, and little formalization. It is most widely used in smaller businesses.
  2. Strengths: fast, flexible, inexpensive to maintain, clear accountability.
    Weaknesses: not appropriate as an organization grows, reliance on one person is risky.

Traditional Organizational Designs: Functional

  1. Definition: A functional structure is an organizational design that groups similar or related occupational specialties together. It is like functional departmentalization applied to the entire organization.
  2. Strengths: cost saving advantages from specialization, employees are grouped with others who have similar tasks.
    Weaknesses: pursuit of functional goals can cause managers to lose sight of what’s best for the overall organization, functional specialists become insulated and have little understanding of what other units are doing.

Traditional Organizational Designs: Divisional

  1. Definition: The divisional structure is an organizational structure made up of separate business units or divisions. Each division has limited autonomy, with a divisional manager who has authority over his or her unit and is responsible for performance. The parent corporation typically acts as an external overseer to coordinate and control the various divisions.
  2. Strengths: focuses on results – division managers are responsible for what happens to their products and services.
    Weaknesses: duplication of activities and resources increases costs and reduces efficiency.

What contemporary organizational designs can managers use?

As mentioned earlier, the most appropriate structure for an organization to use will depend on contingency factors.

Contemporary Organizational Designs: Team

  1. Under this design, the entire organization is made up of work groups or teams. Employee empowerment is crucial, because there is no line of authority from the top to the bottom. Employee teams design and do the work as they think best, but are held responsible for all work performance results in their respective areas.
  2. Strengths: employees are more involved and empowered, reduced barriers among functional areas.
    Weaknesses: no clear chain of command, pressure on teams to perform.

Contemporary Organizational Designs: Matrix-Project

  1. Under a matrix structure, specialists from different functional areas are assigned to work on projects, but return to their areas when the project is completed. Under a project structure, employees continuously work on projects. As one project is completed, employees move on to the next project.
  2. One of the odd aspects of the matrix structure is that it creates a dual chain of command where an employee can have two managers. To prevent potential conflicts, the responsibilities of each manager over an employee usually are clearly defined. One manager has project specific responsibility and the other overall company responsibility.
  3. Strengths: fluid and flexible design that can respond to environmental changes, faster decision making.
    Weaknesses: complexity of assigning people to projects, task and personality conflicts.

Contemporary Organizational Designs: Boundary-less Structure

  1. Definition: This organizational structure is not defined by or limited to artificial horizontal, vertical, or external boundaries. It includes virtual and network types of organizations.
  2. Strengths: highly flexible and responsive, utilizes talent wherever it is found.
    Weaknesses: lack of control, communications difficulties.
  3. A virtual organization consists of a small group of full time employees and outside specialists temporarily hired as needed to work on projects. A network organization is pretty much the same, except certain continuous functions are performed by outside networks.

What are the organizational design challenges of today?

  1. Keeping employees connected.
  2. Dealing with global differences.
  3. Building learning organizations.

What is a Learning Organization?


Definition: This is an organization that has developed the capacity to continuously learn, adapt, and change. The important characteristics of a learning organization concern organizational design, information sharing, leadership, and culture.

Characteristics:

  1. Information sharing: open, timely, accurate.
  2. Leadership: shared vision, collaboration.
  3. Organizational Culture: strong mutual friendships, sense of community, caring, trust.
  4. Organizational Design: boundary-less, teams, empowerment.

Organizational culture

  1. Definition: An organization’s traits and characteristics that influences the way it acts and interacts with others is called an organization’s culture.
  2. Organizational culture has been described as the shared values, principles, traditions, and ways of doing things that influence the way organizational members act.

How can an organization’s culture be assessed?
Research has determined seven dimensions can describe an organization’s culture.

  1. Attention to detail
  2. Outcome orientation
  3. People orientation
  4. Team orientation
  5. Aggressiveness
  6. Stability
  7. Innovation and Risk taking
  1. Describing an organization using measures of each of these seven dimensions gives a general composite picture of the organization’s culture.
  2. In many organizations, one dimension often is emphasized more than the others and in turn shapes the organization’s personality and the way members work.
  1. An organization’s culture usually reflects the vision or mission of the organization’s founders.
  2. Organizational employees generally learn from stories (tales of significant events in the organization’s history), rituals (repeated activities to reinforce values and goals), material symbols (uniforms, workplace design, etc.), and language (words and phrases).