Organizational Structure: “Who reports to whom and who does what.”

Person-Organization Fit - Reflects the extent to which your personality and values match the climate and culture in an organization.

Organizational (Corporate) Culture - According to Edgar Schein, is defined as the set of shared, taken-for-granted implicit assumptions that a group holds and that determines how it perceives, thinks about, and reacts to its various environments.

Organizational Structure - A formal system of task and reporting relationships that coordinates and motivates an organization's members so that they can work together to achieve the organization’s goals.

Organizational Culture Types:
Clan
Adhocracy
Market
Hierarchy
C | A
H | M

Clan Culture - Has an internal focus and values flexibility rather than stability and control.

Like a family-type organization. Encourages collaboration. Views customers as partners.

Adhocracy Culture - Has an external focus and values flexibility.

Employees are encouraged to take risks. Well suited for start-up companies.

Market Culture - Has a strong external focus and values stability.

Customers, productivity, and profits take precedence over employee development & satisfaction.

Kia Motors and Wall Street companies fire executives immediately who fail to meet sales goals.

Hierarchy Culture - Has an internal focus and values stability and control over flexibility.

Formalized, structured work environment aimed at achieving effectiveness through control mechanisms.



Three Levels of Organizational Culture:
Observable Artifacts - Physical Manifestations of Culture
Espoused Values - Explicitly Stated Values & Norms
Basic Assumptions - Core Values of the Organization

Observable Artifacts - Most visible level, physical manifestations such as manner of dress, awards, myths and stories about the company, rituals and ceremonies, and decorations, as well as visible behavior exhibited by managers and employees.

Espoused Values - The explicitly states values and norms preferred by an organization.
Enacted Values - The values and norms actually exhibited in the organization. More often, employees followed enacted values rather than espoused values.

Basic Assumptions - Not observable, represent the core values of an organization’s culture - those that are taken for granted and, as a result, are difficult to change.

At AIG, people worked so hard that the joke around the offices was “Thank heavens it’s Friday, because that means there are only two more working days until Monday.”



Culture is transmitted through symbols, stories, heroes, and rites and rituals.

Symbols - An object, act, quality, or event that conveys meaning to others. Symbols convey a company’s most important values.

E.g. One of the most iconic products of IKEA, maker of inexpensive home furnishing, whose vision is “to create a better life for the many,” is the LACK table, a 22” by 22” side table that sells for only $9.99.”

Story - A narrative based on true events, which is repeated - and sometimes embellished upon - to emphasize a particular value.

Hero - A person whose accomplishments embody the values of the organization.

IKEA employees are expected to work hard, inspired by an anecdote from their Swedish founder, Invar Kamprad.

Rites and Rituals - The activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization’s life.



Dozen Ways to Change Organizational Culture:
Formal Statements
Slogans & Sayings
Rites & Rituals
Stories, Legends, & Myths
Leader Reactions to Crises
Role Modeling, Training, & Coaching
Physical Design (Office Layout)
Rewards, Titles, Promotions, & Bonuses
Organizational Goals & Performance Criteria
Measurable & Controllable Activities
Organizational Structure
Organizational Systems & Procedures



Organization - According to Chester Barnard’s classic definition, a system of consciously coordinated activities or forces of two or more people.

Organization Chart - A box-and-lines illustration showing the formal lines of authority and the organization’s official positions or work specializations.



Schein’s FOUR Common Elements:
Common Purpose - The Means for Unifying Members
Coordinated Effort - Working Together for Common Purpose
Division of Labor - Work Specialization for Greater Efficiency
Hierarchy of Authority - The Chain of Command

Common Purpose - Unifies employees or members and gives everyone an understanding of the organization’s reason for being.

Coordinated Effort - The coordination of individual efforts into a group or organization-wide effort.

Division of Labor (Work Specialization) - The arrangement of having discrete part of a task done by different people.

Hierarchy of Authority (Chain of Command) - A control mechanism for making sure the right people do the right things at the right time.

Flat Organization - Defined as one with an organization structure with few or no levels of middle management between top managers and those reporting to them.

Unity of Command - An employee should report to no more than one manager.



THREE Other Common Elements:
Span of Control - Narrow/Tall vs Wide/Flat
Authority, Responsibility, & Delegation - Line vs Staff Positions
Centralization vs Decentralization of Authority

Span of Control - Refers to the number of people reporting directly to a given manager.

	Narrow Span of Control - This means a manager has a limited number of people
Reporting. An organization is TALL if there are many levels, with narrow spans of control.

Wide Span of Control - This means a manager has several people reporting. An organization is FLAT if there are few levels, with wide spans of control.

Authority, Responsibility, & Delegation

	Authority (Accountability) - Refers to the rights inherent in a managerial position to
make decisions, give order, and utilize resources. Authority is distinguished from power.

Accountability - Managers must report and justify work results to the managers above them.

Responsibility - The obligation you have to perform the tasks assigned to you.

Delegation - The process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy.

Line Position

	Line Managers - Have authority to make decisions and usually have people
reporting to them.

Staff Position

	Staff Personnel - Have authority functions; they provide advice,
recommendations, and research to line managers. Staff personnel are indicated on the organization chart by a dotted line (usually a horizontal line).

Centralization vs Decentralization of Authority

	Centralized Authority - Important decisions are made by higher-level managers.

	Decentralized Authority - Important decisions are made by middle-level and
	Supervisory-level managers.



Organizational Design - Is concerned with designing the optimal structures of accountability and responsibility that an organization uses to execute its strategies.

THREE Types of Design:
Traditional Designs
Horizontal Designs
Designs that Open Boundaries between Organizations



Traditional Designs: Simple, Functional, Divisional, & Matrix

The Simple Structure - For the Small Firm

Simple Structure - Has authority centralized in a single person, a flat hierarchy, few rules, and low work specialization.
The Functional Structure - Grouping by Similar Work Specialties

Functional Structure - People with similar occupational specialties are put together in formal groups.

The Divisional Structure - Grouping by Similarity of Purpose

Divisional Structure - People with diverse occupational specialties are put together in formal groups by similar products or services, customers or clients, or geographic regions.

	Products Divisions - Group activities around similar products or services.
	Customer Divisions - Tend to group activities around common customers or clients.
	Geographic Divisions - Group activities around defined regional locations.

The Matrix Structure - A Grid of Functional & Divisional for Two Chains of Command

Matrix Structure - An organization combines functional and divisional chains of command in a grid so that there are two command structures - vertical and horizontal.



The Horizontal Design: Eliminating Functional Barriers to Solve Problems

Horizontal (Team-Based) Design - Used to improve collaboration and work on shared tasks by breaking down internal boundaries.



Designs That Open Boundaries between Organizations: Hollow, Modular & Virtual Structures

Boundaryless Organization - A fluid, highly adaptive organization whose members, linked by information technology, come together to collaborate on common tasks. The collaborators may include not only coworkers but also suppliers, customers, and even competitors.

Hollow (Network) Design - The organization has central core of key functions and outsources other functions to vendors who can do them cheaper or faster.
Modular Structure - A firm assembles product chunks, or modules, provided by outside contractors.

Virtual Organization - An organization whose members are geographically apart, usually working with e-mail, collaborative computing, and other computer connections.

Virtual Structure - A company outside a company that is created “specifically to respond to an exceptional market opportunity that is often temporary.”



THREE Factors to Be Considered in Designing an Organization’s Structure:
Environment - Mechanistic vs Organic
Environment - Differentiation vs Integration
Link between Strategy, Culture, and Structure

Contingency Design - The process of fitting the organization to its environment.



The Environment: Mechanistic vs Organic Organizations - the Burns & Stalker Model

Mechanistic Organization - Authority is centralized, tasks and rules are clearly specified, and employees are closely supervised.

Organic Organization - Authority is decentralized, there are fewer rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks.


Mechanistic Organizations
Organic Organizations
Centralized hierarchy of authority
Many rules and procedures
Specialized tasks
Formalized communication
Few teams or task forces
Narrow span of control, taller structures

Decentralized hierarchy of authority
Few rules and procedures
Shared tasks
Informal communication
Many teams or task forces
Wider span of control, flatter structures



The Environment: Differentiation vs Integration - the Lawrence & Lorsch Model

Differentiation - The tendency of the parts of an organization to disperse and fragment. Occurs when forces push the organization apart.

Integration - The pure tendency of the parts of an organization to draw together to achieve a common purpose. Occurs when forces pull the organization together.