CHAPTER-08
ORGANIZATION STRUCTURE,
CULTURE, AND CHANGE
1
Dr. Gehan Shanmuganathan, (DBA)
PROCTER & GAMBLE
2
PROCTER & GAMBLE

Changing the structure (positions) of the
organization for cultural change
3
CHAPTER OBJECTIVES
4
9.1
LEARNING OBJECTIVES
1 Describe the bureaucratic organization structure and
discuss its advantages and disadvantages.
2 Explain the major ways in which organizations are divided
into departments.
3 Describe four modifications of the bureaucratic structure.
4 Identify key factors that influence the selection of
organization structure
5 Specify how delegation, empowerment, and decentralization
spread authority in an organization
6. Identify major aspects of organizational culture
7 Describe key aspects of managing change, including gaining
support for change.
BUREAUCRACY AS AN
ORGANIZATION STRUCTURE
6
ORGANIZATION STRUCTURE

The arrangement of people and tasks to accomplish
organizational goals

The structure specifies who reports to whom and who
does what

The structure specifies who has the power/authority

The structure specifies how to communicate

The structure specifies formal and informal social
group behaviors
7
BUREAUCRACY

A rational, systematic, and precise form of
organization in which rules, regulations, and
techniques of control are specifically defined
8
PRINCIPLES OF ORGANIZATION
IN A BUREAUCRACY
9
PRINCIPLES OF ORGANIZATION IN A
BUREAUCRACY

Hierarchy of authority- each lower organizational
unit is controlled and supervised by a higher one

Unity of command- each subordinate receives
assigned duties from one superior only and is
accountable to that superior

Task specialization- division of labor is based on
task specialization

Responsibilities and job description

Line and staff functions
10
THE BUREAUCRATIC FORM OF ORGANIZATION
High
Few
TopLevel
Managers
Power
and
Authority
Number of
Employees
Middle-Level
Managers
First-Level
Managers
Operative Employees
Low
Many
9.2
ADVANTAGES AND
DISADVANTAGES OF
BUREAUCRACY
12
ADVANTAGES AND DISADVANTAGES OF
BUREAUCRACY
Advantages
Know who is
responsible for what
 Helps vertical
integration
 Knows who has the
authority to make
decisions

Disadvantages
Rigid in handling
people and problems
 Create inconvenience
and inefficiency
 Competition between
departments
 Frustration caused by
red-tape
 Slow decision making

13
DEPARTMENTALIZATION
14
DEPARTMENTALIZATION

The process of subdividing total work into
departments
15
FUNCTIONAL DEPARTMENTALIZATION

An arrangement that defines departments by the
function each one performs, such as accounting or
purchasing

The advantage is to increase functional efficiencies
16
GEOGRAPHIC DEPARTMENTALIZATION

An arrangement of departments according to the
geographic area or territory served

Advantage is that it allows for decision making at a
local level, where the personnel are most familiar
with the problems and the local culture, including
taste, fashion, and food
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PRODUCT- SERVICE
DEPARTMENTALIZATION

The arrangement of departments according to
the products or services they provide

Advantage is to increase the product management
efficiencies
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MODIFICATIONS OF THE
BUREAUCRATIC ORGANIZATION
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9.4
Matrix
Organization
Team
Structure
Non-bureaucratic Forms
of Organization
Organization by
Process
(Instead of Task)
Flat
Structures,
Downsizing,
and
Outsourcing
PROJECT AND MATRIX ORGANIZATION

Project organization- A temporary group of specialists
working under one manager to accomplish a fixed
objective

Matrix organization- a project structure
superimposed on a functional structure

These organizations are capable of managing the
complexity
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MATRIX ORGANIZATIONAL STRUCTURE
22
FLAT STRUCTURES, DOWNSIZING,
AND OUTSOURCING
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FLAT ORGANIZATION STRUCTURE

A form of organization with relatively few layers
of management, making it less bureaucratic

Less span of control (number of subordinates
reporting directly to a manager )
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DOWNSIZING OR BUSINESS PROCESS
REENGINEERING (BPR)

Laying off employees temporarily or permanently
business process redesigning or engineering

The key motives of the downsizing are;

Less bureaucratic

Low cost

Higher profits and stock value

Downsizing also could be expensive

Early retirement pay

Disability claims

Lower productivity due to staff low moral

Against the social responsibility
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OUTSOURCING

The methodology of giving out part of the entire
business process to achieve cost, time, and
quality benefits by focusing on the organization
core competencies

Advertising

Research

Promotions campaigns

Productions
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HOME SHORING

Moving customer service into workers’ homes as
a form of telecommuting
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THE HORIZONTAL STRUCTURE
(ORGANIZATION BY TEAM AND
PROCESS)
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HORIZONTAL STRUCTURE

The arrangement of work by multidisciplinary
teams that are responsible for accomplishing a
process

New product development

Marketing research

Quality teams
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HORIZONTAL STRUCTURE
30
REENGINEERING

The radical redesign of work to achieve
substantial improvements in performance

Switching from a vertical (task) emphasis to
horizontal (process) emphasis could be done
through reengineering
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FOCUS OF TEAM OR PROCESS STRUCTURE

Reduce cycle time

Reduce cost

Reduce throughput time

Team members;

Need to develop a process mentality rather than a
task mentality
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A TEAMWORK FORMULA
Forming, Storming, Norming, Performing
Individual
Trust
Group
Team
4 stages
Triangle
Cohesiveness
[Bond]
Team
Congruence
TEAM APPROACH
TO A
PROCESS
Collective
Efforts
A
Results
B
C
INFORMAL ORGANIZATION
STRUCTURE AND
COMMUNICATION NETWORK
35
INFORMAL ORGANIZATION STRUCTURE

A set of unofficial relationships that emerge to
take care of events and transactions not covered
by the formal structure

Social network analysis- the mapping and
measuring of relationships and links between
and among people, groups, and organizations

Discuss how informal networks could be
influenced by the information technology. E.gemails, Skype, video conferencing
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POWER SHARING AT THE
HIGHEST LEVEL OF
MANAGEMENT
37
POWER SHARING AT THE HIGHEST LEVEL
OF MANAGEMENT

Top of the organization has the highest level of
power

Current trend is that one person holds two or
more positions such as CEO and Chairman

This avoids the confusion of understanding of
“who has the ultimate power to control”

This is designed in line with the flexible or
matrix organizations concept
38
KEY FACTORS THAT INFLUENCE
THE SELECTION OF AN
ORGANIZATION STRUCTURE
39
KEY FACTORS THAT INFLUENCE THE
SELECTION OF AN ORGANIZATION STRUCTURE

Strategy and goals - structure follows the strategy

Technology – high-tech companies use flexi organizations
as technology connects worker, supplier, and customer

Size – higher the size of the organization, highly
centralized the control would be

Financial condition of the firm – flatter organizations to
reduce the cost factor

Environmental stability – when the business faces
uncertain and unstable environments, they need flexi
organizations
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DELEGATION, EMPOWERMENT,
AND DECENTRALIZATION
41
DELEGATION AND EMPOWERMENT

Delegation- Assigning formal authority and
responsibility for accomplishing a specific task to
another person

Empowerment- The process by which managers
share power with group members, thereby enhancing
employees’ feeling of personal effectiveness
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9.5
INCREASING PRODUCTIVITY THROUGH
DELEGATION AND EMPOWERMENT
1. Assign
duties to the
right people
5. Obtain
feedback on
the delegated
task
4. Retain some
important
tasks for
yourself
2. Delegate the
whole task
3. Give as
much
instruction as
needed
DECENTRALIZATION AND CENTRALIZATION

Decentralization- The extent to which
authority is passed down to lower levels in an
organization

Centralization- The extent to which authority
is retained at the top of the organization
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ORGANIZATIONAL CULTURE
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ORGANIZATIONAL CULTURE (CORPORATE
CULTURE)- THE SOFT SIDE OF THE ORG:

The system of shared values and beliefs that
actively influence the behavior of organization
members

Subculture- a pocket in which the organizational
culture differs from the dominant culture and from
other pockets of the subculture
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DIMENSIONS OF
ORGANIZATIONAL CULTURE
47
DIMENSIONS OF ORGANIZATIONAL CULTURE

Values – the organization’s philosophy expressed through
values guides behavior on a day-to-day basis

Relative diversity – the degree of homogeneity

Resources allocations and rewards – resources
allocation send messages to employee what is valued in the
firm

Degree of change – influences the organizational culture

A sense of ownership – ownership of stocks will create a
culture of commitment and loyalty

Strength of the culture – strong cultures influence dayto-day behavior of the people
48
HOW WORKERS LEARN THE
CULTURE
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SOCIALIZATION

The process of coming to understand the values,
norms, and customs, essential for adapting to the
organization
50
CONSEQUENCES AND
IMPLICATIONS OF
ORGANIZATIONAL CULTURE
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9.7
CONSEQUENCES AND IMPLICATIONS OF
ORGANIZATIONAL CULTURE
Employee Productivity,
Quality, and Morale
The Culture of
an
Organization
Affects
Its Competitive Advantage in
the Marketplace
Person- Organization fit
Direction of Leadership
Activity
Adapted from Exhibit 9.9
MANAGING CHANGE
53
9.8
THE CHANGE PROCESS
To bring about change, you have to break old
habits, then create and solidify new habits . . .
Unfreezing
Changing
Refreezing
Adapted from Exhibit 9.10
GAINING SUPPORT FOR CHANGE
55
Invest time in
planning the
change
Allow for
discussion
and
negotiation
2
8
Build strong
working
relationships
Allow for
participation
3
How to Gain
Support for
Change
7
Ask effective
questions to
involve
workers
1
6
Gain political
support for
change
9.9
4
Point out the
financial
benefits
5
Avoid change
overload
SIX SIGMA

Refers to a philosophy of driving out waste and
improving quality, and the cost and the time
performance of a company
57
WRITE FIVE KEY THINGS (AREAS)
THAT YOU CAN CRITICALLY
REMEMBER IN TODAY’S
DISCUSSION
58
WHAT WE DISCUSSED TODAY?
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9.1
LEARNING OBJECTIVES
1 Describe the bureaucratic organization structure and
discuss its advantages and disadvantages.
2 Explain the major ways in which organizations are divided
into departments.
3 Describe four modifications of the bureaucratic structure.
4 Identify key factors that influence the selection of
organization structure
5 Specify how delegation, empowerment, and decentralization
spread authority in an organization
6. Identify major aspects of organizational culture
7 Describe key aspects of managing change, including gaining
support for change.
WEEKLY ASSIGNMENT
61
WEEKLY ASSIGNMENT

How can a manager tell whether an employee is
resisting change? Discuss with examples.
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