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Chapter 13 Organizational Structure and Culture. Michael A. Hitt C. Chet Miller Adrienne Colella. Slides by Ralph R. Braithwaite. Integrated Portfolio at FedEx. Exploring Behavior in Action.

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chapter 13 organizational structure and culture

Chapter 13Organizational Structure and Culture

Michael A. Hitt

C. Chet Miller

Adrienne Colella

Slides by Ralph R. Braithwaite

integrated portfolio at fedex
Integrated Portfolio at FedEx

Exploring Behavior in Action

With all the acquisitions by FedEx, there was a need to change their structure. It adopted a multi-divisional structure. Corporate provides strategic direction and consolidated financial reporting. Significant authority has been delegated to the divisions. Each division manages its own specialized network of services.

Do you know of other companies that operate in a similar fashion?

Is this a good model for organizations to follow as they grow and develop?

fedex organization
FedEx Organization

FedExSupplyChain

FedExFreight

FedExCustomCritical

FedExCorp.

FedExExpress

FedExTradeNetwork

FedExKinko’sServices

FedExGround

organizational structure and culture
Organizational Structure and Culture

OrganizationalStructure

OrganizationalCulture

The formal system of work roles andauthority relationships that governhow associates and managersinteract with one another.

Involves the values and normsshared by managers and associatesthat influence behavior. It is apowerful force in organizations.

knowledge objectives
Knowledge Objectives
  • Define key elements of organizational structure, including both structural and structuring dimensions.
  • Explain how corporate and business strategies relate to structure.
  • Explain how environment, technology, and size relate to structure.
  • Define organizational culture, and discuss the competing-values cultural framework.
  • Discuss socialization.
  • Describe cultural audits and subcultures.
  • Explain the importance of a fit between individual values and organizational culture.
fundamental elements of organizational structure

Hierarchy

Structural Characteristics

Structuring Characteristics

Fundamental Elements of Organizational Structure
span of control

Highest

1

1

10

4

100

17

Organizational Level

1000

63

Associates

250

1000

Associates

Lowest

Span of Control

Average span of Four

Average span of Ten

Adapted from Exhibit 13-1: Average Span of Control: Effects on Height of the Hierarchy

functional organization

CEO

VP

Research and

Development

VP

Research and

Development

VP

Operations

VP

Human

Resources

VP

Marketing

VP

Finance

Functional Organization

Adapted from Exhibit 13-2: Simplified Functional Organization

divisional organization

Head of Human Resources

Head of Human Resources

Head of Human Resources

Head of Finance

Head of Finance

Head of Finance

Head of R&D

Head of R&D

Head of R&D

Head of Operations

Head of Operations

Head of Operations

CEO

Head of Marketing

Head of Marketing

Head of Marketing

V.P. Product/Service Area 1

V.P. Product/Service Area 1

V.P. Product/Service Area 1

Divisional Organization

Adapted from Exhibit 13-3: Simplified Divisional Organization

structuring characteristics

Standardization

Centralization

Specialization

Formalization

Structuring Characteristics
the modern organization
The Modern Organization

Flexible empowering type of structure

Organic

Mechanistic

Learning

Non-Learning

Boundaryless

Traditional

Fewer management levels, broader spans of control, less centralization, standardization, formalization and specialization.

freedom
Freedom
  • Substantial freedom may exist, but
  • Freedom is not unlimited
  • Alternative mechanisms are used to ensure that individuals are working for the good of the organization
  • Values are shared
  • Reward systems are used to promote appropriate behavior
diversification strategy and structure

Diversification

Structure

Single product

Functional

Dominant product (few products)

Functional

Dominant product (several products)

Divisional

Related product

Divisional

Unrelated product

Divisional

Unrelated product

Holding Company

Diversification Strategy and Structure

Adapted from Exhibit 13-4: Matches between Diversification Strategy and Structure

business strategy
Business Strategy

How a firm competes for success against other organizations in a particular market.

  • Low cost/low price
  • Product/service differentiation
  • Supporting structure including strategic business units – SBUs
ideo and differentiation strategy
IDEO and Differentiation Strategy

IDEO demonstrates a differentiation strategy, highlights that occasionally organizations supplement their human capital, and they value teams with diverse members.

Is this an effective approach to business?

How can this approach help other businesses and organizations?

What are your thoughts about IDEO’s approaches:

  • Form a diverse team
  • Team members brainstorm
  • Team members engage in rapid prototyping
  • Team members implement the fruits of their labors

ExperiencingStrategic OB

environment and basic structure

Paul R. Lawrence

Jay W. Lorsch

Environment and Basic Structure

Environmental uncertainty – the degree to which an environment is complex and changing; uncertain environments are difficult to monitor and understand.

  • Effective organizations experiencing high environmental uncertainty tend to be more organic.
  • Effective organizations experiencing low environmental uncertainty tend to be less organic.
environment and integration

Lateral Relations

Information Technology

Increasing Richness of Information Processing

Self-Contained Tasks

Slack Resources

Increasing Implementation Complexity

Environment and Integration

Adapted from Exhibit 13-5: Integration in Organizations

alternative lateral processes

Direct Contact

Liaison Roles

Matrix Designs

Taskforces

Lateral Processes

Managerial Linking Roles

Teams

Integrating Roles

Alternative Lateral Processes
technology and structure

Manufacturing

Joan Woodward

Technology and Structure

Mass Production Technology

Process Production Technology

Small-Batch Technology

Mass Customization

technology and structure22

Charles Perrow

Four categories of technology

Technology and Structure

Task Variability

Task Analyzability

Routine

Craft

Engineering

Nonroutine

organizations and technology

Non-Routine

Engineering

Specialized Engineering Consulting Firm

Research and Development Firm

High

Task Variability

Routine

Craft

Mass-Production Firm

Low

Public School

High

Task Analyzability

Low

Organizations and Technology

Adapted from Exhibit 13-6: Organizations and Technology

google culture attracts high quality associates
Google Culture Attracts High-Quality Associates

Larry Page and Sergy Brin

Do you think Google would have enjoyed its success had a different type of structure and culture been introduced?

What types of organizations could benefit with a similar structure and culture? What types of organizations might have difficulty?

As Google continues to grow, will the culture survive or will it possibly be replaced by a more traditional culture?

ExperiencingStrategic OB

developing organizational culture

Shared Values

Organizational Culture

Reinforcing Outcomes

Norms

Individual and Group Behavior

Developing Organizational Culture

Adapted from Exhibit 13-7: Process of Developing Organizational Culture

organizational culture

Clan

Adhocracy

Leadership

Entrepreneurs and Innovators

Leadership

Mentors and Coaches

Flexibility/Discretion

Effectiveness

Cohesion and Morale

Effectiveness

Creativity and Innovation

Hierarchy

Market

Leadership

Hard Drivers and Competitors

Leadership

Monitors and Organizers

Stability/Control

Effectiveness

Goal Achievement and Winning

Effectiveness

Efficiency and Order

Internal Focus/Integration

External Focus/Differentiation

Organizational Culture

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

cultural socialization
Cultural Socialization

A process through which an organization imparts its values to newcomers

Content

Context

SocialDynamics

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

Cultural Audit

A tool for assessing and understanding the culture of an organization. Use these five steps for conducting the cultural audit:

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

finding a fit at home depot
Finding a Fit at Home Depot

ManagerialAdvice

Robert Nardelli

Do you agree that an individual’s management style and values should agree with the organization’s 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?

Can some organizations benefit from a major change in leadership philosophy?

person organization fit
Person-Organization Fit

Values

Abstract ideals that relate to proper life goals and methods for reaching those goals.

End-Means Dimension

Types of personal goals

that one ought to have

Types of behaviors thatone ought to use in reaching those goals

types of personal values
Types of Personal Values

End(Goal)Values

Means(Behavior)Values

Adapted from Exhibit 13-9: Types of Personal Values

the strategic lens
The Strategic Lens
  • Consider an organization of which you are a member or an associate. What is the structure in this organization? Is it centralized or decentralized? Is it organic and flexible? How would you change the structure in this organization to make it more effective?
  • How would you describe the culture in the organization discussed in question #1? How does the culture affect members’ behavior in the organization?
  • When you become a manager, what type of culture will you establish in your unit? What values do you want to emphasize? Why?