Organisational Structure and Culture

Organisation and Macro-level of OB

  • An organisation is formed when groups are combined.

  • The organisation’s structure influences:

    • Relationships among employees

    • Formality of relationships

    • Work outcomes

  • Structure may evolve with organisational growth and contraction.

  • Focuses on how employees structure their working relationships and interact with external environmental forces.

Designing Organisation

  • Focuses on the arrangement of jobs and tasks within an organisation.

  • Defines job task division, grouping, and coordination.

  • Key elements to consider in design:

Key Elements of Organisational Structure

1. Work Specialisation

  • Definition: Degree to which tasks are divided into separate jobs.

  • Individuals focus on part of the activity to improve efficiency.

  • Specialisation aids in skill development through repetitive work.

  • Managers believe it enhances efficiency by targeting employee training.

2. Departmentalisation

  • Definition: Basis for grouping jobs together.

  • Reasons:

    • Facilitates coordination among employees performing similar tasks.

  • Grouping can occur by:

    • Function

    • Product

    • Geographical region

    • Process

    • Customer

  • Large organisations often combine multiple forms.

3. Chain of Command

  • Definition: Unbroken authority line from top to bottom of the organisation.

  • Clarifies reporting relationships.

  • Key Concepts:

    • Authority: Managerial rights to give orders.

    • Unity of Command: Employee reports to one supervisor only.

    • Dual Reporting: Employee reports to two supervisors simultaneously.

  • Facilitates coordination and defines authority at each level.

4. Span of Control

  • Definition: Number of employees a manager can effectively supervise.

  • Reason: Enables close management control.

5. Centralisation and Decentralisation

  • Centralisation: Decision-making concentrated at a single organisational point; top managers make decisions.

  • Decentralisation: Decision-making pushed down to managers or employees close to action (empowerment).

  • Focuses on defining the decision-making process.

6. Formalisation

  • Definition: Level of job standardisation in an organisation.

  • High Formalisation: Minimum discretion for employees.

  • Low Formalisation: Employees have more freedom and discretion in their work.

7. Boundary Spanning

  • Definition: Relationships between employees and external coworkers.

  • Occurs within and between organisations.

  • Encouraging boundary spanning can:

    • Improve operational flexibility

    • Enhance decision-making, knowledge sharing, and overall performance.

Organisation Design Options

Common Design - Simple Structures

  • Characteristics:

    • Low departmentalization

    • Wide span of control (flat organisation)

    • Authority centralized in one person

    • Little formalization

Common Design - Bureaucracy Structure

  • Characteristics:

    • Routine tasks achieved through specialisation

    • Highly formalized rules and regulations

    • Functional departmental grouping

    • Centralized authority

    • Narrow span of control

    • Decision-making follows the chain of command.

Common Design - Matrix Structure

  • Definition: Creates dual lines of authority.

  • Combines functional and product departmentalisation.

  • Functional departments support product development teams.

Alternate Design Options

  • Virtual Structure: Centralised organisation with outsourced major functions.

  • Team Structure: Eliminates chain of command; relies on empowered teams.

Approaches to Structure

  • Mechanistic Structure:

    • Highly standardised processes

    • High formalization

    • High managerial hierarchy

  • Flat Structure:

    • Fewer formal procedures

    • Multiple decision-makers

    • Emphasizes flexibility.

Reasons for Structural Variation

  • Contingency Factors:

    • Size, technology, and environmental uncertainty influence structure.

  • Large organisations adopt mechanistic structures; small organisations tend towards organic structures.

  • Structure is key in achieving organisational objectives.

Downsizing

  • Definition: Efforts to make an organisation leaner by reducing staff or units.

  • Strategies to mitigate negative impacts include:

    • Invest: Focus efforts on core competencies and high-involvement practices.

    • Communicate: Early discussions help reduce employee anxiety.

    • Participate: Employee involvement reduces worries and enhances morale.

    • Assist: Offering severance and support shows care for employees.

Organisational Culture

  • Definition: Shared meanings (values, beliefs, assumptions) that differentiate the organisation.

  • Dominant Culture vs Subcultures:

    • Dominant culture expresses core values; subcultures reflect specific team experiences.

  • Strong vs Weak Culture:

    • Strong cultures have intensely held values.

    • Weak cultures are less cohesive.

Frameworks of Organisational Culture

  • Culture types based on

  • Stability: Communication, formalization, routine

  • Flexibility: Growth, stimulation, autonomy

  • Internal: Human affiliation, trust, support

  • External: Achievement, competence, competition.

Managing Culture

  • Definition: Creating and sustaining a positive culture for organisational success.

  1. Create a culture understanding founders’ vision.

  2. Sustain culture through people management practices.

Creating a Culture

  • Begins with founders imparting their vision.

  • Methods:

    • Hire like-minded employees.

    • Socialize employees to the company’s values.

    • Role model behavior that reflects company values.

Sustaining a Culture

  • Use people management practices to maintain culture:

    • Selection: Hire individuals with necessary capabilities.

    • Top Management: Role models for behaviour establishment.

    • Socialisation: Helps employees align with the organisation’s values.

Socialisation Process

  • Stages:

    1. Prearrival: Expectations before joining.

    2. Encounter: Discomfort upon facing reality vs expectation.

    3. Metamorphosis: Behaviour adjustment to align with company culture.

Means to Transmit Culture

  • Through:

    • Stories: Historical events influencing culture.

    • Rituals: Regular activities indicative of culture.

    • Material Symbols: Physical representations of values.

    • Language: Unique jargon understood by members.

Artifacts of Organisational Culture

  • Components include:

    • Physical structures

    • Language

    • Rituals and ceremonies

    • Shared values

    • Shared assumptions.

Revision Activities

Quiz Questions

  1. Organizational Structure: Which structure does a small grocery store likely have?

    • A. Simple Structure

  2. Work Specialisation: The degree of task subdivision is called?

    • C. Work Specialization

  3. Work Specialisation Effects: Which statement is true?

    • B. Work specialization decreases the time spent in changing tasks.

  4. Organisational Culture: Which statement is true?

    • C. A dominant culture expresses the core values shared by a majority of the members.

Conclusion

  • Summary of key concepts in organisational structure and culture.