Class 10 - Organizational Structure and Culture

Organizational Structure and Culture
MAN201: Organizational Behaviour Class 10

Centralization vs Decentralization
• How few or many individuals have the authority and responsibility to make decisions and
spearhead organizational direction.
• Advantages of high centralization include clarity in decision-making, streamlined
implementation of policies and initiatives, and control over the strategic direction of
the organization.
• Disadvantages of high centralization include limited opportunities for employees to
provide feedback, the slow speed of bureaucracy, and a higher risk of inflexibility.
• Advantages of high decentralization include quick decision and response times, better
ability to expand the organization, greater leveraging of skill specialization, increased
employee empowerment and morale, practical connection between compensation and
responsibility, and better use of lower and middle management.
• Disadvantages of high decentralization include coordination difficulties, increased
administrative costs due to effort duplication and overlap, operational incongruity
through misapplied autonomy, departmental siloing, and over-reliance on divisional or
departmental managers.
4 Aspects of Managerial Complexity to
Determine Optimal Spans of Control
 Time allocation: How much actual time is
the manager spending on her or his own
work versus time spent managing others?
 Process standardization: How standard
and formally structured is the work process?
 Work variety: How similar or different is
the work of individual direct reports?
 Team skills required: How much
experience and training do team members’
jobs require? How independent are the direct
reports?
11-3
Types of Organizational Structures
 Hierarchy (top-down): Upper leadership sets strategy; management
plans execution; employees are assigned tasks and make no decisions.
 Bottom-up structure: Employees provide input; organization-wide
collaboration; entire chain of command responsible for tasks and decisions.
 Functional structure: Similar to a hierarchy, but focuses on function.
 Divisional structure: Employees are organized into divisions (based on
e.g. geographic location/market; product) that have decision control over
their own resources.
 Matrix structure: Employees are spread across multiple functions;
working in one department while having responsibilities in another.
 Structures differ as a result of organizational size, strategy, technology,
and environment.
How Different Structures Affect Behaviour
 In hierarchical and functional structures, employees become highly

proficient and efficient in their roles, but demonstrate little creativity and
individual initiative.
 In bottom-up structures, employees demonstrate high creativity and
initiative, as well as enthusiasm, but low efficiency. The lack of
specialization and standardization can also affect morale and engagement.
 In divisional structures, each team has to behave like its own self-
contained business unit, and this brings out previously-unrealized
leadership talents and potential in team members.
 In matrix structures, because there are competing divisional and functional
considerations, there is a built-in potential for conflict and territorialism.
Strong and Weak Organizational Culture
Strong Cultures Weak Cultures
Values only accepted by a few people (usually top
Values are widely shared
management)
Everyone knows what is important Lack of clarity regarding what is important
Employees know the organization’s history and legacy Employees know very little about the organization
Employees strongly identify with the culture Employees have little/no identification with the culture
Strong connection between values and behaviour Little connection between values and behaviour
Organizational Culture vs Climate
 Organizational culture is based around the values “on paper” that are
shared within the organization. These values can include innovation and
risk-taking; attention to detail; outcome orientation; people orientation;
team orientation; aggressiveness; stability.
 Organizational climate is about whether these values are actually perceived
and experienced by employees “on the ground”.
 There can be a disconnect between culture and climate. Cultures can be
based on shared values in theory, while those values are not actually
perceived or experienced by employees in practice.
 It is extremely difficult to maintain a strong organizational culture when
there is a negative organizational climate.
How to Build a Strong and Positive Culture
 Explicitly define values: People want to believe that they are part of
something meaningful, that they are contributing to a common purpose.
 Be authentic: Your purpose and values will only create a solid foundation
for culture if you truly believe them. The process must be genuine.
 Actively listen and seek feedback constantly (get an impression of the
climate).
 Build psychological safety and flexibility: Foster trust and ensure that your
actions are in line with your organization's values.
 Accept mistakes, and learn from them.
 Monitor trends: Organizations are never static, and neither is the process
of updating culture.
Global Implications For Organizational Culture
 Values don’t always neatly translate from one national or cultural

context to another. (e.g. perspectives on conflict).
 Different countries also have different perspectives on ethics, and these
differential ethical perspectives can alter the degree to which values are
embraced, culture is strengthened, and climate is positively experienced.
 This can have particular implications when it concerns a multi-national
corporation (MNC) with multiple global offices or locations.
 MNCs that may be headquartered in countries where e.g.
aggressiveness is valued, but also have regional offices where
aggressiveness is not only not valued, but is culturally repudiated
(consider e.g. USA vs Vietnam).
The Authority to Self-Govern
 Organizations must be free to manage their own affairs, which also

means freedom to establish their own values, create their own cultures,
and evolve their own climates.
 This authority to self-govern also requires the freedom to establish the
right organizational structure for their own specific needs/requirements.
 The organization must have full authority to manage its own affairs
without excessive interference from the outside. “Authority” can mean
the power or right to give orders, make decisions, and enforce
obedience (i.e. structure + culture). But it can also mean the capacity
and power to author the organization's own experience of that structure
and culture (i.e. climate).
Collaborative Relations with Other Groups
 Teams and organizations do not exist in a vacuum: they have
fundamental relationships with other teams and other organizations.
 The key to the effectiveness of the Prosocial process is that it not only
helps small groups work well internally, but it helps groups work well
with other groups, and organizations with other organizations.
 If your team or organization has become prosocial enough to function as
a unit, then it should be able to work with like-minded groups and
organizations.
 Many organizations that we usually think of as a single entity, such as a
corporation, government, hospital, or school, are already a collection of
groups with as much potential for managing intergroup relations as
intragroup relations.

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What are the advantages and disadvantages of high centralization vs high decentralization in organizations?

What are some aspects managers should consider to determine the optimal span of control?

Organizational Structure and Culture

MAN201: Organizational Behaviour Class 10

 In hierarchical and functional structures, employees become highly

Everyone knows what is important Lack of clarity regarding what is important

 Values don’t always neatly translate from one national or cultural

 Organizations must be free to manage their own affairs, which also

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