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MGT 2900

Principles of Management
Chapter 8 - Organizational
Culture, Structure, & Design
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What Is an Organizational Culture?


Organizational Culture
System of shared beliefs and values that
develops within an organization and
guides the behavior of its members
Also called Corporate Culture

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What Is an Organizational
Structure?
Organizational Structure
Who reports to whom & who does what
It is a formal system of task and reporting
relationship that coordinate and motivates
an organizations members so that they can
work together to achieve the organizations
goals
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Culture + Structure

Figure 8.1

How Employees Learn Culture


Symbols
An object, act, quality, or event that conveys meaning to
others.

Stories
A narratives based on true events that is repeated frequently
and share among organizational members.

Heroes
A person whose accomplishments embody the values of the
organization.

Rites & Rituals


The activities and ceremonies that express and reinforce the
values of the organization.
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Organization Chart
Two kinds of information that organization charts reveal about
organizational structure are:
1. The vertical hierarchy of authority (Who reports to whom)
2. The horizontal specialization (Who specializes in what work)
A box-and-line illustration
showing the formal lines of
authority and the organizations
official positions or work
specializations.

Hospital Organization Chart


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Common Elements of Organizations: Four


Proposed by Edgar Schein
1.
2.

Common Purpose (the means for unifying members)

3.

Division of Labor or Division of Work (Work


Specialization for greater efficiency)

Coordinated Effort (Working together for common


purpose)

4.

It is realized through (2) coordinated effort, the coordination of having


discrete parts of a task done by different people.

Hierarchy of Authority (The chain of command)

A control mechanism for making sure the right people do the right
things at the right time.
Unity of command (An employee should report to no more than one
manager)
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Common Elements of Organizations: Three


More That Most Authorities Agree On
5.
Span of Control: Narrow (or tall) vs. Wide (or flat)
Refers to the number of people reporting directly to a given
manager

6.
7.

Narrow (or Tall) Span of Control


A manager has a limited number of people reporting

Wide (or Flat) Span of Control


A manager has several people reporting

Authority, Responsibility, & Delegation


Line vs Staff positions
Centralization vs Decentralization of Authority
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5. Contrasting Spans of Control

Tall Organizational Structure


(Small or Narrow Span of Control)
Advantages

Disadvantages

Have more levels of


More expensive (high cost of
reporting in the organization
management staff, office, etc.)
resulting in a more hierarchical
More supervisory
organization.
involvement in work could lead
Supervisors can spend time
to less empowerment and
with employees and supervise delegation and more
them more closely.
micromanagement.
Creates more development,
growth, and advancement
opportunities.

Tends to result in
communication difficulties and
excessive distance between the
top and bottom levels in the
organization.
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Flat Organizational Structure


(Broad or Wide Span of Control)
Advantages

Have fewer levels of


reporting in the organization,
resulting in a more flexible,
flatter organization.

Disadvantages

Tends to result in greater


communication efficiencies and
frequent exposure to the top
level of the organization.

Ideal for supervisors mainly May lead to overloaded


responsible for answering
supervisors if employees
questions and helping to solve require much task direction,
employee problems.
support, and supervision.
Encourage empowerment of May not provide adequate
employees by giving more
support to employees leading
responsibility, delegation and to decreased morale or job
decision-making power to
satisfaction.
them.
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6. Authority, Responsibility
and Delegation
Authority
refers to the rights inherent in a managerial position to
make decisions give orders, and utilize resources.

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

Delegation
The process of assigning managerial authority and
responsibility to manager and employees lower in the
hierarchy.
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http://www.transformationalleadershiphq.com/effective-delegation/

Line and Staff Position (6. continued)


Line Position (solid lines)
Line managers have authority to make decisions and usually have
people reporting to them.
Staff Position (dotted lines)
Staff personnel have authority functions; they provide advice,
recommendations, and research to line managers

Line Authority
-------- Staff Authority

Figure 8.5
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7. Centralization vs
Decentralization of Authority

Centralization

Decentralization

Important decisions are


made by higher-level
managers

Important decisions are made by


middle and supervisory-level managers

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Basic Types of Organizational


Structures
1.
2.
3.

Simple Structure
Functional Structure
Divisional Structure
3.1 Product Divisions
3.2 Customer Divisions
3.3 Geographic Divisions

4. Matrix Structure
5. Team-Based Structure
6. Hollow structure
7. Modular Structure
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1. Simple Structure: For the Small Firm


Top
Manager

Employee 1

Employee 2

Employee 3

An organization with a simple structure has authority


centralized in a single person, a flat hierarchy with few
rules and low work specialization

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2. Functional Structure: Grouping by


Similar Work Specialties

People with similar occupational specialties are put


together in formal groups

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3. Divisional Structure: Grouping by


Similarity of Purpose
In divisional structure, people with diverse
occupational specialties are put together in formal
groups by similar products or services, customers or
clients, or geographic regions.

3.1 Product Division Structure


3.2 Customer Division Structure
3.3 Geographic Division Structure

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3.1 Product Divisional Structure

Product divisions group activities around similar products


or services.

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3.2 Customer Divisional Structure

Customer divisions tend to group activities around


common customers or clients

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3.3 Geographic Divisional Structure

Geographic divisions group activities around defined


regional location

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4. Matrix Structure: A Grid of Functional &


Divisional for Two Chains of Command

An organization combines functional and divisional chains of command in a grid


so that there are two command structure vertical and horizontal
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5. Team-Based Structure: Eliminating


Functional Barriers to Solve Problems

Teams or workgroups, either temporary or permanent, are used to improve


horizontal relations and solve problems throughout the organization
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6. Hollow Structure

The organization has a central core of key functions and outsources


other functions to vendors who can do them cheaper or faster
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7. Modular Structure: Outsourcing Pieces of a


Product to Outside Firms

A firm assembles product chunks, or modules provided by outside contractors


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Contingency Design: Factors in


Creating the Best Structure

High specialization

Cross-functional teams

Rigid departmentalization

Cross-hierarchical teams

Clear chain of command

Free flow of information

Narrow spans of control

Wide spans of control

Centralization

Decentralization

High formalization

Low formalization
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