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  1. 1. Chapter Eight Organizational Culture, Structure & Design: Building Blocks of the Organization
  2. 2. <ul><li>Organizational Culture …… </li></ul><ul><li>is a system of shared beliefs and values that develops within the organization and guides the behavior of its members. </li></ul>What is an Organizational Culture?
  3. 3. <ul><li>“ Every company has their own unique organizational culture. Positive or negative, organizational cultures reflect how things are done within the company.” </li></ul>
  4. 4. <ul><li>Invisible Level: </li></ul><ul><ul><li>Not seen by the naked eye. </li></ul></ul><ul><ul><li>Values, beliefs and assumptions. </li></ul></ul><ul><ul><li>“ the right way to behave” </li></ul></ul>Layers of Organizational Culture <ul><li>Visible Level: </li></ul><ul><ul><li>Observable culture </li></ul></ul><ul><ul><li>Manifestations of culture: </li></ul></ul><ul><ul><ul><li>Symbols </li></ul></ul></ul><ul><ul><ul><ul><li>An object, act, quality or event that conveys meaning to others </li></ul></ul></ul></ul><ul><ul><ul><li>Stories </li></ul></ul></ul><ul><ul><ul><ul><li>A narrative based on true events to emphasize a particular value. </li></ul></ul></ul></ul><ul><ul><ul><li>Heroes </li></ul></ul></ul><ul><ul><ul><ul><li>A person whose accomplishments embody the values of the organization. </li></ul></ul></ul></ul><ul><ul><ul><li>Rites and rituals </li></ul></ul></ul><ul><ul><ul><ul><li>Activities & ceremonies that celebrate important occasions and accomplishments in the organization's life. </li></ul></ul></ul></ul>Article
  5. 5. 4 Functions of Organizational Culture Sense Making Device Collective Commitment Organizational Identity Social System Stability Organizational Culture It gives members an organizational identity It facilitates collective commitment It shapes behavior by helping employees make sense of their surroundings It promotes social-system stability Article
  6. 6. <ul><li>A system of consciously coordinated activities or forces of two or more people. </li></ul><ul><li>A a systematic arrangement of people brought together to accomplish some specific purposes. </li></ul>Organization <ul><ul><li>For profit organizations </li></ul></ul><ul><ul><li>to make money, profits </li></ul></ul><ul><ul><li>2. Nonprofit organizations </li></ul></ul><ul><ul><li> offer services to clients, not to make profit </li></ul></ul>
  7. 7. ORGANISATION CHART <ul><ul><li>Organization chart : </li></ul></ul><ul><ul><ul><li>An illustration showing the formal lines of authority and the organization's official positions or division of labor. </li></ul></ul></ul><ul><ul><ul><li>(Kinicki & Williams, 2006) </li></ul></ul></ul><ul><ul><ul><li>The organization's formal framework by which job tasks are divided, grouped and coordinated </li></ul></ul></ul><ul><ul><ul><ul><ul><li>(Robbins and Coulter, 1999) </li></ul></ul></ul></ul></ul>
  8. 8. The Organization Chart Director of Personnel Director of Admissions 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
  9. 9. <ul><li>Common purpose </li></ul><ul><li>Coordinated effort </li></ul><ul><li>Division of labor (work specialization) </li></ul><ul><li>Vertical hierarchy of authority </li></ul><ul><li>Span of control </li></ul><ul><li>Authority, responsibility & delegation </li></ul><ul><li>Centralization vs. decentralization </li></ul>Common Elements of Organizations Edgar Schein
  10. 10. Common purpose: means of unifying members Coordinated effort: working together for common purpose Elements of Organizations
  11. 11. <ul><li>Division of labor (work specialization) </li></ul><ul><ul><li> - the arrangement of having discreet parts of a task done by different people. </li></ul></ul><ul><ul><li>Adam Smith published Wealth of Nations (1700s) </li></ul></ul><ul><ul><li>Advocated that jobs should be divided into smaller parts. </li></ul></ul><ul><ul><li>Each part is completed by a separate individual. </li></ul></ul><ul><ul><li>Each employee has a set of specific steps to accomplish. </li></ul></ul>Common Elements of Organizations
  12. 12. Think!! <ul><li>Can you think of the disadvantages of work specialization? </li></ul><ul><li>What are the advantages? </li></ul>
  13. 13. <ul><li>Vertical hierarchy of authority (Chain of command) </li></ul><ul><ul><li>The continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies WHO REPORTS TO WHOM. </li></ul></ul><ul><ul><li>A control mechanism for making sure the right people do the right things at the right time. </li></ul></ul>Common Elements of Organizations
  14. 14. <ul><li>Span of Control </li></ul><ul><ul><li>Refers to the number of people reporting directly to a given manager. </li></ul></ul><ul><ul><li>2 types: </li></ul></ul><ul><ul><ul><li>Narrow </li></ul></ul></ul><ul><ul><ul><li>Wide </li></ul></ul></ul>Common Elements of Organizations
  15. 15. Spans of Control: Narrow versus Wide F CEO Narrow Key: T = Top manager M = Middle manager F = First-line (supervisory) manager T M M M F F F F F F F F F T M F F F M F F F T M M M F F F F F F F F M F F F Wide CEO M F F F M F F F M F F F M F F F M F F F M F F F M F F F M F F F M F F F
  16. 16. Common Elements of Organizations Authority, responsibility & delegation refers to the rights inherent in a managerial position to make decisions, give orders and utilize resources - Two related terms: responsibility delegation Centralization vs. decentralization centralized authority important decisions are made by higher levels managers decentralized authority important decisions are made by middle level and supervisory-level managers
  17. 17. Think!! <ul><li>Do you prefer to work in a centralized of decentralized organization? </li></ul>(What.. Again !!!!??) <ul><li>If top management makes the organization's key decisions with little or no input from lower level employees, then the organization adopts centralization / decentralization. </li></ul>
  18. 18. <ul><li>ORGANISATIONAL STRUCTURE </li></ul>
  19. 19. <ul><li>Simple structure: </li></ul><ul><ul><li>for the small firm </li></ul></ul><ul><li>Functional structure: </li></ul><ul><ul><li>grouping by similar work specialties </li></ul></ul><ul><li>Division structure: </li></ul><ul><ul><li>grouping by similarity of purpose </li></ul></ul><ul><li>Conglomerate structure: </li></ul><ul><ul><li>grouping by industry </li></ul></ul><ul><li>Hybrid structure: </li></ul><ul><ul><li>functional & divisional used within the same organization </li></ul></ul><ul><li>Matrix structure: </li></ul><ul><ul><li>a grid of functional & divisional for two chains of command </li></ul></ul>Eight Organizational Structures
  20. 20. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. Simple Structure for the small firm There is only one hierarchical level of management beneath the owner Owner Administrative Assistant
  21. 21. Functional Structure grouping by similar work specialties Structure for a business President Vice President, Marketing Vice President, Finance Vice President, Production Vice President, Human Resources
  22. 22. Divisional Structure grouping by similarity of purpose President Motion Pictures & TV Division 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
  23. 23. © 2006 The McGraw-Hill Companies, Inc. All rights reserved. Conglomerate Structure grouping by industry President Electronics Fire & Security Healthcare Plastics & Adhesives Engineered Products & Services This resembles the structure of Tyco International
  24. 24. Hybrid Structure functional & divisional used within the same organization Vice- President, Production Vice- President, Marketing Vice- President, Finance Vice- President, Human Resources 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
  25. 25. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. Matrix Structure a grid of functional & divisional for two chains of command Functional Structure Subordinate reports to both Vice President of marketing & to project Manager for Mustang Project structure Example of Ford motor company President Vice President, Engineering Vice President, Finance Vice President, Production Vice President. Marketing Project Manager, Taurus Project Manager, Mustang Project Manager, Explorer Project Manager, Expedition
  26. 28. <ul><li>That’s it ! </li></ul>