CHAPTER 8

Organizational Culture,
Structure, & Design

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 LEARNING OBJECTIVES
8.1 Describe how managers align vision and strategies with the
organization’s culture and structure.
8.2 Explain how to characterize an organization’s culture.
8.3 Describe the process of culture change in an organization.
8.4 Compare the structures of for-profit, nonprofit, and mutual-
benefit organizations.
8.5 Identify the major elements of an organization.
8.6 Describe the eight organizational structures.
8.7 Identify the factors that affect the design of an organization’s
structure.
8.8 Describe how to use the career readiness competencies of
understanding the business and personal adaptability to assess
an organization’s internal context.
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HOW to STAND OUT in a NEW JOB: FITTING into
an ORGANIZATION’S CULTURE in the
FIRST 60 DAYS
• Be aware of the power of first impressions.
• See how people behave by arriving early and
staying late.
• Network with people and find out how the
organization works.
• Ask for advice.
• Overdeliver.

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 ORGANIZATIONAL CULTURE: The SHARED
ASSUMPTIONS THAT AFFECT
HOW WORK GETS DONE
Organizational culture
• 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.
What drives an organizational culture?
• Founder’s values.
• Industry and business environment.
• National culture.
• Organization’s vision and strategy.
• Behavior of leaders.

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 DRIVERS and FLOW of ORGANIZATIONAL
Figure 8.1 CULTURE

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 ORGANIZATIONAL STRUCTURE: WHO REPORTS
to WHOM and WHO DOES WHAT

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.
• Concerned with who reports to whom and who
specializes in what work.

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 THREE LEVELS of ORGANIZATIONAL CULTURE

Level 1: Observable Artifact:

Physical Manifestations of Culture

Level 2: Espoused Values:

Explicitly Stated Values and Norms

Level 3: Basic Assumptions:

Core Values of the Organization

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 FOUR TYPES of ORGANIZATIONAL
CULTURE (1 of 2)
Clan culture
• Internal focus.
• Flexibility over stability.
• Collaboration among employees.
Adhocracy culture
• External focus.
• Values flexibility.
• Adaptable, creative, and quick to respond to changes in the
marketplace.

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 FOUR TYPES of ORGANIZATIONAL
Market culture CULTURE (2 of 2)
• Focused on the external environment
• Values stability and control
• Driven by competition and a strong
desire to deliver results
• Uber
Hierarchy culture
• Has an internal focus
• Values stability and control over
flexibility
• Formalized, structured work
environment
• Amazon
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 COMPETING VALUES FRAMEWORK

Figure 8.2
Source: Adapted from K.S. Cameron, R.E. Quinn, J. Degraff, and A.V. Thakor, Competing Values Leadership (Northampton, MA: Edward Elgar, 2006), p. 32.

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 HOW EMPLOYEES LEARN CULTURE
• Symbols: an object, an act, a quality, or event that conveys
meaning to others.
• Stories: narrative based on true events repeated—and
sometimes embellished upon—to emphasize a particular value.
• Heroes: person whose accomplishments embody the values of
the organization.
• Rites and rituals: activities and ceremonies that celebrate
important occasions and accomplishment.
• Organizational socialization: the process by which people learn
the values, norms, and required behaviors of an organization.

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 QUESTION #1
In the Mary Kay Cosmetics Co., the best salespeople
receive pink Cadillacs in special awards ceremonies.
This is an example of
A. a symbol.
B. a value.
C. a rite or ritual.
D. both a symbol and a rite.

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 The IMPORTANCE of CULTURE
Figure 8.3
What organizational
benefits are
associated with
what organizational
cultures?
Source: A.Y. Ou, C. Harnell, A. Kinicki,
E. Karam, and D. Choi, “Culture in
Context: A Meta-analysis of the
Nomological Network of
Organizational Culture.” Presentation
as part of symposium Connecting
Culture and Context: Insights from
Organizational Culture Theory and
Research at the 2016 National
Academy of Management meeting in
Anaheim, California. s

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 THE RESULTS REVEALED…
1. An organization’s culture matters.
2. Employees have more positive work attitudes when working
in organizations with clan cultures.
3. Clan and market cultures are more likely to deliver higher
customer satisfaction and market share.
4. Operational outcomes, quality, and innovation are more
strongly related to clan, adhocracy, and market cultures than
to hierarchical ones.
5. An organization’s financial performance is not strongly
related to organizational culture.
6. Companies with market cultures tend to have more positive
organizational outcomes.

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 WHAT DOES IT MEAN to “FIT”? ANTICIPATING a
JOB INTERVIEW
The four most frequently asked interview questions used by hiring managers,
according to a survey involving
285,000 kinds of interview questions.

What’s your favorite What’s your favorite

movie? website?

What makes you What’s the last book you

uncomfortable? read for fun?

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

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 A DOZEN WAYS to CHANGE
ORGANIZATIONAL CULTURE (1 of 2)

1. Formal statements: mission, vision, values.

2. Language, slogans, sayings, and acronym.
3. Rites and rituals.
4. Stories, legends, and myth.
5. Leader reactions to crises.
6. Role modeling, training, and coaching.

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 A DOZEN WAYS to CHANGE
ORGANIZATIONAL CULTURE (2 of 2)

7. Through physical design.

8. With rewards, titles, promotions, and bonuses.
9. Establishing goals and performance criteria.
10. Through measurable and controllable activities.
11. By changing organizational structure.
12. Using organizational systems and procedures.

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 The ORGANIZATION: THREE TYPES
For-profit organizations
• Formed to make money, or profits, by offering products
or services.
Nonprofit organizations
• Formed to offer services to some clients, not to make a
profit (example: hospitals, colleges).
Mutual-benefit organizations
• Voluntary collectives whose purpose is to advance
members’ interests (example: unions, trade associations).

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 QUESTION #2
The United Way, a charitable organization, is considered
a ______ organization.
A. for-profit
B. nonprofit
C. mutual-benefit
D. governmental

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 The ORGANIZATION CHART
Figure 8.4 Example for a Hospital

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 COMMON ELEMENTS of ORGANIZATIONS (1 of 2)
Four proposed by Edgar Schein:
1. Common purpose: gives everyone an understanding of the
organization’s reason for being.
2. Coordinated effort: the coordination of individual effort into
group-wide effort.
3. Division of labor: having discrete parts of a task done by
different people.
4. Hierarchy of authority: making sure the right people do the
right things at the right time (unity of command).

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 COMMON ELEMENTS of ORGANIZATIONS (2 of 2)
Three more that authorities agree on:
1. Span of control: the number of people reporting directly to a
given manager; narrow or wide.
2. Authority: accountability, responsibility, and delegation; line
versus staff positions.
3. Centralized versus decentralized authority: who makes
decisions; upper management or middle.

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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: SIMPLE STRUCTURE
Authority is centralized in a An Owner
single person with few rules An Administrative Assistant
and low work specialization.

Small firms all over the country

are organized in this way.

Figure 8.5

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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: FUNCTIONAL STRUCTURE

People with similar

occupational
specialties are put
together in formal
groups.
Figure 8.6

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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: DIVISIONAL STRUCTURE
People with diverse
occupational specialties are
put together in formal
groups by similar products,
customers or geographic
regions.

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Figure 8.7
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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: MATRIX STRUCTURE
Matrix structure:
Combines
functional and
divisional chains
of command in a
grid so that there
are two command
structures: vertical

and horizontal.
Figure 8.8

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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: THE HORIZONTAL DESIGN
Horizontal
Design:
Teams or
workgroups,
either temporary
or permanent,
are used to
improve
collaboration and
work on shared
tasks by breaking
down internal
boundaries.
Figure 8.9.

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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: The HOLLOW or NETWORK
STRUCTURE
Hollow or Network
Structure:
The organization
has a central core
of key functions
and outsources
other functions to
vendors who can do
them cheaper or
faster.
Figure 8.10.

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 BASIC TYPES OF ORGANIZATIONAL
STRUCTURES:
THE MODULAR STRUCTURE
Modular structure
The firm assembles product chunks, or modules,
provided by outside contractors.
• Bombardier’s Continental business jet is built in Ireland
and shipped to Kansas to be assembled.

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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: The VIRTUAL STRUCTURE

Virtual organization
• Organization whose members are geographically distant,
usually working via e-mail, collaborative computing, and
other computer connections.
Virtual structure
• Company outside a company that is created “specifically
to respond to an exceptional market opportunity” that is
often temporary.

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 QUESTION #3
XYZ Hospital has a chief of medical services, a director
of administrative services, and a director of outpatient
services. XYZ has a ___________ structure.
1. functional
2. simple
3. divisional
4. matrix

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 FACTORS in CREATING the BEST STRUCTURE
Contingency design
• The process of fitting the organization to its
environment.
• Three factors to consider:
1. Environment: mechanistic versus organic.
2. Environment: differentiation versus
integration.
3. Link between strategy, culture, and structure.
• Hotels often have mechanistic designs.

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 MECHANISTIC VERSUS ORGANIC
Table 8.2 ORGANIZATIONS
MECHANISTIC ORGANIC
ORGANIZATIONS ORGANIZATIONS
Centralized hierarchy of Decentralized hierarchy of
authority authority
Many rules and procedures Few rules and procedures
Specialized tasks Shared tasks
Formalized communication Informal communication
Few teams or task forces Many teams or task forces
Narrow span of control, Wider span of control, flatter
taller structures structures

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 DIFFERENTIATION VERSUS INTEGRATION
Differentiation
• Tendency of the parts of an organization to disperse and
fragment.
• Different product divisions; possible forces that push
organization apart.
Integration
• Tendency of the parts of an organization to draw together
to achieve a common purpose.
• Formal chain of command, standard rules and procedures,
frequent communication and coordination.

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 LINK BETWEEN STRATEGY, CULTURE, and
STRUCTURE
Aligning strategy, culture, and structure
• Organizational culture and organizational
structure should be aligned with its vision and
strategies.
• If managers change the strategy of the
organization, they need to change the culture
and structure to support it.
• Similarly, as companies grow, the culture and
structure need to grow with it.

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 CAREER
CORNER Managing Your Career Readiness

Understanding the business

1. Assess where and how you fit in the context.
2. Decide how you can effectively adapt to this context.
Become more adaptable
3. Focus on being optimistic.
4. Display a proactive learning orientation.
5. Be more resourceful.
6. Take ownership and accept responsibility.
7. Expand your perspective by asking different questions.

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 CAREER
CORNER Model of Career Readiness

Figure 8.11
©2018 Kinicki and Associates, Inc.

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 APPENDIX: IMAGE DESCRIPTIONS FOR
UNSIGHTED STUDENTS

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