Organizational Culture and Structure

Outline:
What is Organizational Structure? What is Organizational Culture? What is the relationship between Organizational Structure and Culture?

What is Organizational Structure?

It is the formal system of task and reporting relationships that controls, coordinates, and motivates employees so that they cooperate to achieve the organizations goals.

Types of Organizational Structure Functional structure Divisional structure Matrix structure

Functional structure
: groups people together because they hold similar positions in organization, perform similar set of tasks, or use the same kind of skills : allows an organization to be effective

Functional structure
Advantages: Coordination 1. Easy communication among specialists 2. Quick decisions 3. Learning

Functional structure
Advantages: Motivation 1. Facilitates performance evaluation for supervisor 2. Facilitates performance evaluation for peers 3. Creates teamwork 4. Creates a career ladder

Functional structure
Disadvantages: 1. Serving needs of all products 2. Coordination 3. Serving needs of all regions

Divisional structure
: overlays functional groupings : allows an organization to coordinate intergroup relationships more effectively than functional structure : can be Product, Market or Geographic divisional structure

Divisional structure
Product : each product division contains the functions necessary to the service or specific goods it produces Market : group functions into divisions that can be responsive to the needs of particular types of customers Geographic : group functions into regional divisions to service customers in different geographic areas

Divisional structure
Advantages: Coordination 1. Quality products and customer service 2. Facilitates communication 3. Customized management and problem solving 4. Facilitates teamwork 5. Facilitates decision making

Divisional structure
Advantages: Motivation 1. Clear connection between performance and reward 2. Customized service 3. Identification with division

Divisional structure
Disadvantages: 1. High operating and managing costs 2. Poor communication between divisions 3. Conflicts among divisions

Matrix structure
: a complex form of organization used to control their activities results in matrix structure : simultaneously groups people into two ways by the function of which they are member and by the product team on which they are currently working : have two bosses: functional boss and product boss

Matrix structure
Advantages: Coordination Facilitates rapid product development Maximizes cooperation and communication between members Facilitates innovation and creativity Facilitates face-to-face problem solving Provides a work setting in which managers can decide to solve nonprogrammed problems Facilitates frequent product changes of membership in product teams

Matrix structure
Advantages: Motivation Freedom and autonomy to take responsibility for their work activities

Matrix structure
Disadvantages: Increase role conflict and role ambiguity High levels of work stress Limited opportunities for promotion

Stages in Internationalization; The Stages Can Overlap

The Import-Export Stage

Companies export for several reasons, among them

Excess capacity Foreign demand for the product Saturation of domestic markets If a product is exported without modifications and is in demand, the need for adaptation in communication is minimal. Formalities and communication can be handled by special export firms or a designated in-house person, typically someone from marketing. Translators can take care of the necessary translation requirements.

Communication in Import-Export Environment

Typical Export Structure

The Multinational Corporation (MNC)

The structures of MNCs can take several forms: National Subsidiary

Subsidiaries report directly to top management at headquarters. The company may use ethnocentric, polycentric, or geocentric staffing or a combination thereof in the subsidiary. The structure facilitates communication with headquarters but may limit communication between subsidiaries.

MNC National Subsidiary

The Multinational Corporation (MNC), cont.

The International Division The company is divided into a domestic and an international division. This structure can lead to a duplication of efforts and waste of resources. Communication goes from the field through the international division to other top managers. Communication between domestic and international division may be ineffective. The structure fosters an us versus them feeling.

MNC International Division

The Multinational Corporation (MNC), cont.

Some issues: What staffing patterns are most effective for MNCs? Who needs intercultural training? How can an MNC avoid the rivalry between domestic and international divisions? How can the MNC create a functional world-wide communication system?

The Global Firm

Characteristics of a global firm: There is no division into domestic and international divisions; everything is global. Global firms have no national identity and may have multiple headquarters. To be successful, a global firm requires Broad intercultural communication training A strong corporate culture A corporate language.

The Global Firm

Global firms typically have one of three structures which can be overlapping: A worldwide functional format

Advantages: Global operations report to appropriate functional managers in management, marketing, finance Disadvantages: Functional managers may not see the big picture. Advantages: It coordinates operations and communication between regions and facilitates adaptation to local conditions. Disadvantages: It does not pay enough attention to coordination between regions. Advantages: Communication relating to one product is efficient. Disadvantages: Each product may have its own sales force. There is not sufficient coordination and integration between product lines. A corporate language

A worldwide geographic format

A worldwide product format

Global FirmFunctional Organization

Global FirmGeographic Organization

Global FirmProduct Organization

What is Organizational Culture?

Gareth Morgan : set of beliefs, values and norms, together with symbols like dramatized events and personalities, that represents the unique character of the organization and provides the context for action in it and by it.

What is Organizational Culture?

Edgar Schein : a pattern of shared basic assumptions that the group has learned as it solved its problems that has worked well enough to be considered as valid and is passed on to the new members as the correct way to perceive, think and feel in relation to these problems.

Organizational Culture

Like national cultures, organizational cultures have a shared system of symbols and meanings. Employees go through a socialization process that is like growing up in a society. Each organization has its own inner structure for acceptable communication patterns and practices. Corporate culture is embedded in industry and national culture.

The Cultural Environment of Businesspeople

Individual Corporate culture Industry culture Business culture National culture

Types of Organizational Culture

Tough guy culture or macho culture Work hard/play hard culture Bet your company culture Process culture

Tough guy culture or macho culture

Tough guy culture or macho culture

Features: Quick feedback and high rewards Often associated with really fast financial activities such as currency trading and brokerage Apply to organizations such as police force or an individual athlete on a sports team Stressful type of organizational culture that requires a certain mentality to thrive and succeed

Work hard/play hard culture

Work hard/play hard culture

Features: Doesnt take a lot of risks, it does take a few, and all receive fast feedback Seen in very large companies dependent on strong customer service Often characterized by multiple team meetings, specialized jargons and buzzwords

Bet your company culture

Bet your company culture

Features: Huge decisions are made over high stakes endeavors The end results are not seen over months or years Common type are those companies performing experimental projects Examples: prospecting new oil fields and developing military weapons

Process culture

Process culture
Features: Most often found in organizations where there is no feedback Rarely a good culture Obsessed on how things are done and focus is lost on what the goal is Overly cautious and stuck with the letters of the law Only positive argument is the consistency of results makes it good for public services

Ten Point List of Characteristics of a Healthy Organizational Culture

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Organizational pride Ambition towards being better Obvious teamwork and communication Quality leadership Constant review of profits and costs Employee relationships Client and customer relations Honesty and safety Education and developmental programs Cutting edge thinking

What is the relationship between Organizational Structure and Culture?

Organizational structure is a mechanism through which effort and work is coordinated with supervision to produce the results that are hoped for from organizational culture.

What is the relationship between Organizational Structure and Culture?

The structure seems to be the conduits or lines of authority, the system set into place through which individuals can come together to fulfill the expectations of organizational structure.

What is the most important aspect of the relationship?

To make sure that each individual understands the full extent of responsibilities and work expected out of them

The BOTTOM Line

A strong culture is more likely to have a strong and efficient organizational structure. A weak culture is more likely to have a weak and less efficient organizational structure.

Allegorically
Organizational culture resembles the plumbing and the water while the organizational structure is the actual pipes. If the football team is the organizational culture, the specific coaches and players comprise the organizational structure.

Implications of Cultural Foundation of Structures for Intercultural Communication

Communication in Organizations Based on Credentials

Many Western countries have such organizations. Characteristics are:

Job qualifications and portable credentials, such as an MBA or CPA (certified public accountant) are important. The employee can enter and leave the firm at any level. Outside networks are crucial to identify better opportunities.. Loyalty is to oneself. Training is minimal. Employees always scan the environment for better opportunities.

Communication in Organizations Based on Context

This pattern is exemplified by Japan. Characteristics are:

Group belonging is crucial. Employees identify with the firm. Loyalty is to the company. The system is based on reciprocity. When hiring employees, companies look for people who fit in rather than possess specific skills. Training lasts a long time, since employees typically stay many years. Seniority matters.

Communication in Organizations Based on Family

This pattern is strong in Arab cultures, South Asia, Latin America, and Africa. Characteristics are:

Families take care of their own before they hire outsiders. Loyalty is to the family. The senior member is the major decision maker. Business is conducted at a personal rather than institutional level. The focus on hiring family members may hinder the growth of the firm.

Communication in Organizations Based on Political Principles

This form was practiced in some of the former Soviet bloc countries and China. It is still functional in state-owned enterprises. Characteristics are: The business organization is based on the concept of collective ownership. Political considerations often trump business considerations. Loyalty is to the political ideology. Ideological considerations are more important then skills when hiring employees. Even today the government has a major say in business decisions, allocation of resources, hiring, and setting of prices.

Organizational Culture
Clan
Flexibility/ Discretion Leadership Mentors and Coaches Effectiveness Cohesion and Morale

Adhocracy
Leadership Entrepreneurs and Innovators Effectiveness Creativity and Innovation

Stability/Control

Hierarchy
Leadership Monitors and Organizers Effectiveness Efficiency and Order Internal Focus/Integration

Market
Leadership Hard Drivers and Competitors Effectiveness Goal Achievement and Winning External Focus/ Differentiation

Adapted from Exhibit 13-8: Competing Values Model of Organizational Culture

Cultural Socialization
A process through which an organization imparts its values to newcomers

Context

Content

Social Dynamics

Cultural Audit
A tool for assessing and understanding the culture of an organization. Use these five steps for conducting the cultural audit:
Analyze process and content Analyze responses to critical incidents Analyze values and beliefs of culture creators Explore anomalies or puzzling features Examine linkage culture with goals

Subcultures groups that share values that differ from the main values of the organization.

Managerial Advice

Finding a Fit at Home Depot

Do you agree that an individuals management style and values should agree with the organizations culture? Why or why not? Do you think Nardelli is what Home Depot needed at the time? Have you worked with a leader whose style was very different than the culture of the organization? What was that like? Robert Nardelli Can some organizations benefit from a major change in leadership philosophy?

Person-Organization Fit
Types of personal goals that one ought to have

Values
Abstract ideals that relate to proper life goals and methods for reaching those goals. End-Means Dimension

Types of behaviors that one ought to use in reaching those goals

Types of Personal Values

End (Goal) Values

Means (Behavior) Values

Adapted from Exhibit 13-9: Types of Personal Values

Summary
Companies develop their own unique corporate cultures. The corporate culture is embedded in the national culture.

Stages in internationalization.

Typically, the internationalization starts with an importexport stage, followed by the multinational rm and then the global rm. Each stage has its own organizational structure and communication environment.

Implications of cultural aspects of business structures for communication in the international rm.

Effective intercultural communication in a rm is inuenced by the structure of the rm, which in turn is inuenced by cultural priorities.

Priorities for credentials, context, family, and political considerations inuence the way people are hired, trained, and promoted. As a result, communication patterns depend on the specic organizational context.

Conclusion

An international rm, no matter what its own organizational structure is, must deal with a variety of business structures around the world. As companies expand internationally, their communication needs change. In addition to adapting communication to the growing internal diversity, international rms must adapt to the varying communication practices of other rms around the world. To be effective, international managers need to understand how cultural priorities shape organizational structures and communication patterns.

The Strategic Lens

How would you describe the culture in your last internships organization ? How does the culture affect members behavior in the organization? When you become a manager, what type of culture will you establish in your own business? What values do you want to emphasize? Why?