3 Learning ObjectivesDiscuss why organizational structure and culture are important determinants of a company’s ability to pursue a profitable business model.Identify the relationship between organizational design, structure, culture and the environment.Identify the main types of organizational structure companies can choose from to group their activities, employees and resources.
4 Learning ObjectivesExplain why the need to coordinate functions and divisions is an important element in organizational design and list the main methods companies use to coordinate their activities.Identify the nature and sources of organizational culture and understand the way it influences and shapes employee behavior and attitudes.
5 Structure, Culture, and the Organization’s Business Model Organizational structurethe framework of task-and-authority relationships in a company that coordinates and motivates employees to work together toward a common goal
6 Structure, Culture, and the Organization’s Business Model Organizational culturethe set of shared company values and norms that shape the way employees and groups interact with one another
7 Structure, Culture, and the Organization’s Business Model Organizational designthe process of creating an organizational structure and culture so that a company can pursue its business model profitably
8 The Contingency Approach to Organizational Design a type of organizational design that depends on the changing forces in a firm’s competitive environment
9 Implementing a Profitable Business Model through Organizational Structure and Culture Figure 8.1
10 Question?What structure groups people together because of their expertise?FunctionalDivisionalProceduralGeographicThe correct answer is “A” – functional. See next slide.
11 Functional Structures a structure that groups people together because of their expertise or the type of activity they do (typically into departments)
14 Advantages of a Functional Structure Coordination advantagesMotivational advantages
15 Disadvantages of a Functional Structure When the range of goods and services a company makes increasesAs companies attract customers with different needsAs companies expand nationally and globally
16 Divisional Structures: Product, Market, and Geographic a structure that groups employees by function but allows them to focus their activities on a particular product line or type of customer
17 Divisional Structures: Product, Market, and Geographic Product structurea structure that groups functions into divisions that specialize in certain productsMarket structurea structure that groups functions into divisions that serve different types of customers
26 Matrix Coordination Advantages The company can develop new products more rapidlyIt can maximize communication and cooperation between team membersInnovation and creativity are the key to the company’s competitive advantage
27 Disadvantages of a Matrix Structure Dual reporting relationshipsBosses come into conflict over precisely who is in charge of which team members and for how longEmployees feel the lack of a stable “home base”
28 Coordinating Functions and Divisions Allocating authoritySpecifying work rulesUsing formal integrating mechanisms
29 Allocating Authority Tall and flat hierarchies Minimum chain of commandCentralization and decentralization of authority
31 Problems in Companies with Too Many Levels in the Hierarchy Figure 8.9
32 Allocating Authority Minimum chain-of-command principle the principle that a company’s structure should be designed with as few managerial levels as possible
33 Work Rules and Standard Operating Procedures Management by exceptionthe use of rules and standard operating procedures to coordinate operations whereby managers only intervene to take corrective action
34 Integrating Mechanisms organizing tools that managers use to increase communication and coordination among a company’s functions and divisions
35 Integrating Mechanisms Direct contactLiaison rolesTask forcesCross-functional teams
36 Four Kinds of Integrating Mechanisms Figure 8.10
37 Sony’s Cross-Functional Product Teams Figure 8.11
38 Values and Norms Company values Company norms the shared standards a company’s members use to evaluate whether or not they have helped the company achieve its goalsCompany normsbeliefs, attitudes, and behaviors that specify how a company’s members should behave
39 Sources of a Company’s Culture Values of the founderOrganizational socializationCeremonies and ritesStories and languageRead about one company’s shared values
41 Organizational Socialization the process by which newcomers learn and absorb a company’s values and norms and acquire the work behaviors and attitudes necessary to perform their jobs effectively
42 Characteristics of a Strong Culture Cohesive sets of values and norms that work together to motivate employeesCompanies communicate with employees their desire to invest in themRewards are directly linked to an employee’s performance and to the performance of the company as a whole
43 Video: NBBNBB is a high tech, environmentally conscious brewery that produces a world class beer. The corporate culture of NBB is strong and pervasive.What are the sources of a company’s corporate culture? Is this true at NBB?Discussion Questions:Why is corporate culture an important element in understanding businesses?Answer: As you can see from the success of New Belgium Brewery, strong, ethically driven corporate cultures built on employee participation, satisfaction, and relationships, is truly empowering. Modern employees look fore many other intangible rewards from their jobs. NBB core values and beliefs define its culture. Its organizational structure supports that culture. Its HR practices, the attitudes of the owners, and employee empowerment have demonstrated a direct and measurable impact on productivity, cost reduction, and profitability.What is the key difference between a company’s values and its norms?Answer: A company’s “values” are the shared standards which its members use to evaluate their contributions in achieving the company’s vision and goals. Company norms specify the kinds of shared beliefs, attitudes, and behaviors that its members should observe and follow. Norms are informal. In NBB, both values and norms are significant features of its corporate culture.What are the sources of a company’s corporate culture? Is this true at NBB?Answer: The following are the sources of a company’s culture (1) values of the founder; (2) ceremonies and rites; (3) organizational socialization; (4) stories and language. At NBB, there is clear evidence of all four of these factors operating. You may ask students to identify examples for each of the four sources.