Because learning changes everything.

CHAPTER 8
ORGANIZATIONAL
CULTURE,
STRUCTURE, &
DESIGN

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 LEARNING OBJECTIVES

8-1 Explain why managers need to align organizational

culture, structure, and HR practices to support strategy.
8-2 Explain how to characterize an organization’s culture.
8-3 Describe the process of culture change in an
organization.
8-4 Identify the major features of an organization and
explain how they are expressed in an organization chart.
8-5 Describe the eight types of organizational structure.
8-6 Explain how to use the career readiness competencies
of understanding the business and personal adaptability
to better understand and change your level of fit with an
organization.
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 HOW TO GET NOTICED IN A NEW JOB: FITTING
INTO AN ORGANIZATION’S CULTURE IN THE FIRST
60 DAYS
• If you want to make a great impression and get ahead at
work, “You have to be sure to always overdeliver—with the
emphasis being on over.”
• Be Aware of the Power of First Impressions
• See How People Behave by Arriving Early and
Staying Late
• Network with People and Ask Questions about
How the Organization Works
• Seek Advice Instead of Feedback
• Overdeliver: doing more than what is
asked of you.
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 ALIGNING CULTURE, STRUCTURE, AND HUMAN RESOURCE
(HR) PRACTICES TO SUPPORT STRATEGY

How an Organization’s Culture, Structure, and HR Practices

Support Strategic Implementation

You can think of an

organization’s culture,
structure, and HR practices
as three strands in a single
rope. These strands must
be tightly woven together
to drive successful
strategic execution.

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 HOW AN ORGANIZATION’S CULTURE, STRUCTURE,
AND HR PRACTICES SUPPORT STRATEGIC
IMPLEMENTATION
• Organizational culture: Sometimes called corporate
culture, organizational culture is defined as the set of
shared assumptions that a group holds and that
determines how it perceives, thinks about, and reacts to
its various environments.
• Organizational culture helps employees understand
why the organization does what it does and how it
intends to accomplish its long-term goals.

• 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.

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 HOW AN ORGANIZATION’S CULTURE, STRUCTURE, AND HR
PRACTICES SUPPORT STRATEGIC IMPLEMENTATION

3.Human resource practices consist of all of the

activities an organization uses to manage its
human capital, including staffing, appraising,
training and development, and compensation.
• HR practices are the third key factor influencing a firm’s
ability to execute strategy.
• These practices focus on ensuring that employees have
the necessary skills, motivation, and opportunities to
contribute to the organization’s unique strategic goals.
Leadership creates alignment among culture, structure,
and HR practices.
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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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 PREPARING TO ASSESS (Personal –Organization)
P–O FIT BEFORE A JOB INTERVIEW

• Make a list of your values, strengths, and

weaknesses—try to be honest, as this is the best way to
accurately gauge fit.
• Spend some time learning about the organization
you plan to interview by talking with current employees
and researching the company online, then make a list of the
organization’s values, strengths, and weaknesses.
• Compare your list of personal values, strengths,
and weaknesses with those of the organization,
then use the information to prepare questions for the
interviewer about how well you might fit.

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 THE PROCESS OF CULTURE CHANGE
There are 12 ways a culture becomes established in an organization. The process is
accomplished by using one or more of the following mechanisms:
1. Formal statements: mission, vision, and values, as well as materials to use
for recruiting, selecting, and socializing employees.
2. Slogans and sayings: express the corporate culture in company language,
slogans, sayings, and acronyms.
3. Rites and rituals: they represent the planned and unplanned activities
and ceremonies that are used to celebrate important events or
achievements.
4. Stories, legends, and myths: A story is a narrative about an actual event
that happened within the organization and that helps to symbolize its vision
and values to employees.
5. Leader reactions to crises: How top managers respond to critical
incidents and organizational crises sends a clear cultural message.
6. Role modeling, training, and coaching: Many companies use
structured training, Others use coaching or mentoring programs that
provide employees with support and role models.
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 THE PROCESS OF CULTURE CHANGE

7. Physical design: Organizations experiment constantly to find the

best office layouts that will encourage employee productivity. Physical
design is an important change because it sends a strong and visible
message about an organization’s culture.
8. Rewards, titles, promotions, and bonuses: Rewards and
status symbols are among the strongest levers an organization can use
to embed or change its culture. This is because people have a strong
desire to be rewarded, and incentives fulfill this need.
9. Organizational goals and performance criteria: Many
companies establish organizational goals and criteria for recruiting,
selecting, developing, promoting, dismissing, and retiring people, all of
which act as levers for communicating the desired organizational
culture.

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 THE PROCESS OF CULTURE CHANGE

10. Measurable and controllable activities: An

organization’s leaders can pay attention to, measure, and control several
activities, processes, or outcomes that can foster a certain culture.

11. Organizational structure: Organizational structure is one of

the three key factors influencing an organization’s ability to successfully
implement its strategy.

12. Organizational systems and procedures:

Organizational systems and procedures are levers for embedding and
changing culture.

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 DON’T FORGET ABOUT PERSON–
ORGANIZATION FIT
• Recall that P–O fit reflects the extent to which
your personality and values match the climate
and culture in an organization.
• P–O fit is important because it can affect your
work attitude and performance.
• While it is possible to change an organization’s
culture and thus create a better fit, many
employees experiencing poor P–O fit end up
searching for new jobs.

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 THE MAJOR FEATURES OF AN ORGANIZATION

Major Features of Organizations: Four Proposed by

Edgar Schein

Major Features of Organizations: Three More That

Most Authorities Agree On

The Organization Chart

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 MAJOR FEATURES OF ORGANIZATIONS: FOUR
PROPOSED BY EDGAR SCHEIN
Common purpose: The means for unifying members.
-An organization without purpose soon begins to drift and become disorganized. -- The
common purpose unifies employees or members and gives everyone an understanding
of the organization’s reason for being.

Coordinated effort: Working together for a common purpose.

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

Division of labor: Work specialization for greater efficiency.

- It also known as work specialization, is the arrangement of having discrete parts of a
task done by different people.

The hierarchy of authority or the chain of command: is a

control mechanism for ensuring the right people do the right things at the right time.
- A flat organization is defined as one with an organizational structure with few or no
middle management levels between top managers and those reporting to them.
- In a unity of command, an employee should report to no more than one manager to
avoid conflicting priorities and demands.
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 MAJOR FEATURES OF ORGANIZATIONS: THREE
MORE THAT MOST AUTHORITIES AGREE ON
• Span of Control: Narrow (or Tall) versus Wide (or Flat).
- The span of control, or span of management, 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.
- Wide Span of Control: This means a manager has several people reporting
• Authority—Accountability, Responsibility, and Delegation.
- Authority refers to the rights inherent in a managerial position to make decisions, give
orders, and utilize resources.
- Accountability—managers must report and justify work results to the managers above them.
- Responsibility is the obligation you have to perform the tasks assigned to you.
- Delegation is the process of assigning managerial authority and responsibility to managers
and employees lower in the hierarchy.
• Centralization versus 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.

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 THE ORGANIZATION CHART

The vertical hierarchy of authority:

• Who reports to whom
The horizontal specialization:
• Who specializes in what work

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 FIGURE 8.6 THE ORGANIZATION CHART
An organization chart is a box-and-lines illustration showing the formal lines
of authority and the organization’s official positions or work specializations.

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 EIGHT TYPES OF ORGANIZATIONAL STRUCTURE

Traditional designs:
• Simple, functional, divisional, and matrix structures
The horizontal design:
• Eliminating functional barriers to solve problems
Designs that open boundaries between
organizations: hollow, modular, and virtual
structures.

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 TRADITIONAL DESIGNS: SIMPLE STRUCTURES

The Simple Structure:

for the small firm.
An organization with a
simple structure has
authority centralized in
a single person, a flat
hierarchy, few rules,
and low work
specialization.

Figure 8.7: Simple Structure: An example.

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 TRADITIONAL DESIGNS: FUNCTIONAL STRUCTURES

Figure 8.8:
In the functional
structure, people
with similar
occupational
specialties are put
together in formal
groups. This is a
quite
commonplace
structure, seen in
all kinds of
organizations,
both for-profit and
nonprofit.

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 TRADITIONAL DESIGNS: DIVISIONAL STRUCTURES

Figure 8.9
The Divisional Structure:
grouping by similarity of
purpose In a divisional
structure. People with
diverse occupational
specialties are put together
in formal groups by similar
products or services,
customers or clients, or
geographic regions.
Product divisions group activities
around similar products or services.
Customer divisions tend to group
activities around common
customers or clients.
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 TRADITIONAL DESIGNS: MATRIX STRUCTURES

Figure 8.10:
In a 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
functional structure
usually doesn’t
change—it is the
organization’s normal
departments or
divisions. The
divisional structure
may vary—as by
product, brand,
customer, or
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geographic region.
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 THE HORIZONTAL DESIGN: ELIMINATING FUNCTIONAL
BARRIERS TO SOLVE PROBLEMS

Figure 8.11: The

horizontal design with
a mix of functional
(vertical) and project-
team (horizontal)
arrangements.
In a horizontal
structure, also called a
team-based design,
teams or workgroups,
either temporary or
permanent, are used
to improve
collaboration and
work on shared
tasks by breaking
down internal
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boundaries.
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 FIGURE 8.12 THE HOLLOW STRUCTURE
The hollow structure is also called the network structure. The core of this type
of structure is kept small, and other functions are networked out, nationally, or
globally.
This is an example of a personal computer company that outsources noncore
processes to vendors.

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 CAREER CORNER: MODEL OF CAREER READINESS

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 CAREER CORNER: UNDERSTANDING THE
BUSINESS AND WHERE YOU “FIT” IN
• Questions to Ask of Your Prospective/New Colleagues:
• What projects are you working on right now?
• What do you hope to achieve here? What gets in your way?
• What kinds of people succeed in this organization? What kinds of people don’t succeed?

• Questions to Ask of Your Prospective/New Boss:

• Would you tell me about someone you hired here who was very successful?
• Would you tell me about someone you hired here who was not successful?
• What do you want to be praising me for at my first performance review?

• Questions to Ask Yourself:

• How do people respond to me when I walk by them in this organization? How do they respond to
each other?
• How do my career readiness competencies complement the organization’s goals? What can the
organization teach me?
• Do my values align with the organization’s values? If not, can I see myself adopting the
organization’s values?

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 CAREER CORNER: BECOMING MORE ADAPTABLE

Personal adaptability is defined as the ability and

willingness to adapt to changing situations.
Try the following suggestions to increase your level
of adaptability.
• Focus on being optimistic.
• Display a proactive learning orientation.
• Be more resourceful.
• Take ownership and accept responsibility.
• Expand your perspective by asking different questions.

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