BMMA-REPORT7-8.1pptx (2).pptxgggggggggggggg

Organizational
Structure and
Change
CHAPTER 07

Organizational structure simply shows how people in a company or group work together—
who does what, who reports to whom, and how things get done. But since organizations
are always growing and adapting, changes in structure happen to keep everything running
smoothly.
ORGANIZATIONAL STRUCTURE
INTRODUCTION

Organizational design is one of the three tasks that fall into the organizing function in the
planning-organizing-leading-controlling (P-O-L-C) framework.
refers to how individual and team work within an organization are coordinated. To achieve
organizational goals and objectives, individual work needs to be coordinated and managed.

is the degree to which decision-making authority is concentrated at higher levels in an
organization. In centralized companies, many important decisions are made at higher
levels of the hierarchy, whereas in decentralizedcompanies, decisions are made and
problems are solved at lower levels by employees who are closer to the problem in
question.
Building Blocks of Structure
1. Centralization

is the extent to which an organization’s policies, procedures, job descriptions, and
rules are written and explicitly articulated. Formalized structures are those in which
there are many written rules and regulations. These structures control employee
behavior using written rules, so that employees have littleautonomy to decide on a
case-by-case basis. An advantage of formalization is that it makes employee behavior
more predictable. Whenever a problem at work arises, employees know to turn to a
handbook or a procedure guideline. Therefore, employees respond to problems in a
similar way across the organization; this leads to consistency of behavior.
2. Formalization

Another important element of a company’s structure is the number of levels it has in its
hierarchy. Keeping the size of the organization constant, tall structures4 have several
layers of management between frontline employees and the top level, while flat
structures5 consist of only a few layers. In tall structures, the number of employees
reporting to each manager tends to be smaller, resulting in greater opportunities for
managers to supervise and monitor employee activities. In contrast, flat structures involve
a larger number of employees reporting to each manager. In such a structure, managers
will be relatively unable to provide close supervision, leading to greater levels of freedom
of action for each employee.
3. Hierarchical Levels

Organizational structures differ in terms of departmentalization, which is broadly
categorized as either functional or divisional.
• Functional structures group jobs based on similarity in functions. Such structures may
have departments such as marketing, manufacturing, finance, accounting, human
resources, and information technology. In these structures, each person serves a
specialized role and handles large volumes of transactions. For example, in a
functional structure, an employee in the marketing department may serve as an event
planner, planning promotional events for all the products of the company.
4. Departmentalization

• divisional structures departments represent the unique products, services,
customers, or geographic locations the company is serving. Thus each unique product
or service the company is producing will have its own department. Within each
department, functions such as marketing, manufacturing, and otherroles are
replicated. In these structures, employees act like generalists as opposed to
specialists. Instead of performing specialized tasks, employees will be in charge of
performing many different tasks in the service of the product. For example, a
marketing employee in a company with a divisional structure may be in charge of
planning promotions, coordinating relations with advertising agencies, and planning
and conducting marketing research, all for the particular product line handled by his
or her division.

are those that resemble a bureaucracy. These structures are highly formalized and
centralized. Communication tends to follow formal channels and employees are given
specific job descriptions delineating their roles and responsibilities.
Two Configurations: Mechanistic and Organic
Structures
1. Mechanistic Structures
2. Organic Structures
are flexible and decentralized, with low levels of formalization. In Organizations with an
organic structure, communication lines are more fluid and flexible. Employee job
descriptions are broader and employees are asked to perform duties based on the
specific needs of the organization at the time as well as their own expertise levels.
Organic structures tend to be related to higher levels of job satisfaction on the part of
employees. These structures are conducive to entrepreneurial behavior and
innovativeness.

For centuries, technological advancements that affected business came in
slow waves. Over 100 years passed between the invention of the first reliable
steam engine and the first practical internal combustion engine. During these
early days of advancement, communication would often go hand in hand with
transportation.
CONTEMPORARY FORMS OF ORGANIZATIONAL
STRUCTURES

have a design that combines a traditional functional structure with a product structure.
Instead of completely switching from a product based structure, a company may use a
matrix structure to balance the benefits of product-based and traditional functional
structures. In a matrix structure, product managers have control and say over product-
related matters, while department managers have authority over matters related to
company policy. Matrix structures are created in response to uncertainty and dynamism
of the environment and the need to give particular attention to specific products or
projects. Using the matrix structure as opposed to product departments may increase
communication and cooperation among departments because project managers will
need to coordinate their actions with those of department managers.
CONTEMPORARY FORMS OF ORGANIZATIONAL STRUCTURES
1. Matrix organizations

is a term coined by Jack Welch during his tenure as CEO of GE; it refers to an
organization that eliminates traditional barriers between departments as well as
barriers between the organization and the external environment.
CONTEMPORARY FORMS OF ORGANIZATIONAL STRUCTURES
2. Boundaryless organization

• Modular Organization
The idea behind this format is to retain only the value-generating and strategic
functions in-house, while the rest of the operations are outsourced to many suppliers.
An example of a company that does this is Toyota. By managing relationships with
hundreds of suppliers, Toyota achieves efficiency and quality in its operations.
• Strategic Alliances
In this form, similar to a joint venture, two or more companies find an area of
collaboration and combine their efforts to create a partnership that is beneficial for
both parties. In the process, the traditional boundaries between two competitors may
be broken. As an example, Starbucks formed a highly successful partnership with
PepsiCo to market its Frappuccino cold drinks.
Forms of Boundaryless Organization

• Learning Organization
Is one whose design actively seeks to acquire knowledge and change behavior as a
result of the newly acquired knowledge. In learning organizations, experimenting,
learning new things, and reflecting on new knowledge are the norms. At the same time,
there are many procedures and systems in place that facilitate learning at all
organization levels.
Forms of Boundaryless Organization

Organizational change is the movement of an organization from one state of
affairs to another. A change in the environment often requires change within
the organization operating within that environment.
Technology change is motivating corporations to change their technology
rapidly. Sometimes technology produces such profound developments that
companies struggle to adapt.
Globalization is another threat and opportunity for organizations, depending
on their ability to adapt to it.
ORGANIZATIONAL CHANGE

Growth It is natural for once small start-up companies to grow if they are
successful.
Poor Performance Change can also occur if the company is performing poorly
and if there is a perceived threat from the environment.
Personality Some people are more resistant to change than others. Recall that
one of the Big Five personality traits is Openness to Experience; obviously,
people who rank high on this trait will tend to accept change readily.
Fear of Failure People also resist change when they feel that their performance
may be affected under the new system.

Planning and Executing Change Effectively

Communicating a Plan for Change Do people know what the change entails, or are they hearing about
the planned changes through the grapevine or office gossip?
Provide Support Employees should feel that their needs are not ignored. Therefore, management may
prepare employees for change by providing emotional and instrumental support.
Allow Employees to Participate Studies show that employees who participate in planning change
efforts tend to have more positive opinions about the change.
Create Small Wins During a change effort, if the organization can create a history of small wins, change
acceptance will be more likely.
Reward Change Adoption To ensure that change becomes permanent, organizations may benefit from
rewarding those who embrace the change effort (an aspect of the controlling function).

Organizational
Culture
CHAPTER 08

Culture can be understood in terms of seven different culture dimensions, depending on what is
most emphasized within the organization. For example, innovative cultures are flexible, adaptable,
and experiment with new ideas, while stable cultures are predictable, rule-oriented, and
bureaucratic. Strong cultures can be an asset or liability for an organization but can be challenging
to change. Multiple cultures may coexist in a single organization in the form of subcultures and
countercultures.
Organizational culture is a system of shared assumptions, values, and beliefs that helps individuals
understand which behaviors are and are not appropriate within an organization. Cultures can be a
source of competitive advantage for organizations. Strong organizational cultures can be an
organizing as well as a controlling mechanism for organizations. And finally, organizational culture
consists of three levels: assumptions that are below the surface, values, and artifacts
What Is Organizational Culture?

Organizational culture can be a company’s biggest strength or weakness. If it is strong, unique, and
hard to copy, it can give the company a competitive advantage, just like a good strategy. The right
culture helps improve sales, revenue, market share, and stock value.
But culture must match the industry. For example, high-tech companies need innovative and flexible
cultures, while very strict, rule-focused cultures may slow them down.
Culture also guides employee behavior better than rules. For instance, if a company values
customer service, employees will focus on keeping customers happy instead of just following strict
policies. This is why managers must understand and shape culture it’s a key part of running and
controlling an organization.
Why Organizational Culture Matters?

1. Basic Assumptions (Deepest Level) – Unconscious beliefs taken for granted, such as the idea that
happy employees lead to better organizational performance.
Example: “Happy employees make organizations successful.”
2. Values (Middle Level) – Shared principles and goals, like teamwork, fairness, or enjoyment at
work.
Example: Egalitarianism, teamwork, fun at work
3. Artifacts (Surface Level) – Visible expressions of culture, such as office layout, dress code,
policies, or company traditions (e.g., open-door policies, game areas, or company outings).
Example: Open office layout, casual dress code, company picnics, open-door policy
Artifacts are the easiest to observe but only provide a partial view of culture. To fully understand an
organization’s culture, one must also look at underlying values and assumptions revealed through
behaviors, interactions, and beliefs about what is “right” in the workplace.
Levels of Organizational Culture
According to Schein, organizational culture has three levels:

Organizational culture is shaped by the values of a company. Even though culture is not always easy
to see, identifying these values makes it easier to describe, measure, and manage the culture.One
widely studied framework is the Organizational Culture Profile (OCP), which highlights seven key
values that characterize organizational culture.
MEASURING ORGANIZATIONAL CULTURE
Dimensions of Culture

Companies with innovative cultures are flexible and open to new ideas. They don’t focus much on
hierarchy, and employees are encouraged to take risks—even failures are seen as part of learning.
Examples like Google, Genentech, and W. L. Gore give workers freedom (like Google’s “20% time”
for personal projects) to spark creativity. This kind of culture helps companies keep innovating and
stay ahead in the market.
Innovative Cultures (OCP Framework)
Seven Dimensions of Organizational Culture (OCP
Framework)
1. Innovative Culture
Flexible, adaptable, encourages new ideas and risk-taking
Example: Google, W. L. Gore & Associates
2. Detail-Oriented Culture
Focused on precision, quality, and attention to detail
Example: Hotels emphasizing excellent service quality
3. Outcome-Oriented Culture
Emphasizes results, achievement, and performance over processes
Example: Best Buy rewarding employee sales performance

4. People-Oriented Culture
Values fairness, respect, and support for individuals
Example: Starbucks’ employee-centered policies and benefits
5. Team-Oriented Culture
Encourages collaboration, cooperation, and collective effort
Example: Southwest Airlines promoting teamwork among staff
6. Aggressive Culture
Competitive, goal-driven, and focused on outperforming rivals
Example: Microsoft in its earlier years competing aggressively in tech
7. Stable Culture
Emphasizes consistency, predictability, and rule-following
Example: Government agencies or traditional financial institutions

Aggressive cultures focus on winning and beating competitors, sometimes ignoring social
responsibility. For example, Microsoft has faced lawsuits and conflicts because of its competitive
drive. In these companies, phrases like “kill the competition” are common, but this attitude can also
cause legal and ethical problems.
Aggressive Cultures (OCP Framework)
Outcome-Oriented Cultures (OCP Framework)
Outcome-oriented cultures focus on getting results and achieving goals. For example, Best Buy
tracks daily sales and rewards workers based on performance, not seniority. Programs like Results
Oriented Work Environment (ROWE) give employees freedom as long as they meet targets. These
cultures usually perform better than others, but if pushed too far, the pressure can cause unethical
behavior, unhealthy competition, and short-term thinking.
Stable Cultures (OCP Framework)
Stable cultures are strict, rule-based, and predictable. They work well in environments
that don’t change much, like public institutions. But in fast-changing industries, they
often fail. For example, Kraft Foods had too many rules and layers of approval, which
slowed innovation and shut down good ideas. When they tried to fix it by adding new
processes, it only created more bureaucracy and made change harder.

People-oriented cultures focus on fairness, support, and respect for employees. Workers are treated
well, which makes them happier and more likely to stay. For example, Starbucks pays higher wages,
gives health care, tuition help, and even free coffee. Because of this, employees are more loyal and
leave less often than in other companies.
People-Oriented Cultures (OCP Framework)
Team-Oriented Cultures (OCP Framework)
Team-oriented cultures focus on working together and helping each other. Employees build good
relationships with coworkers and managers. For example, Southwest Airlines trains employees to do
different jobs so they can support one another. They also hire people who value teamwork, creating a
friendly and cooperative workplace.
Detail-Oriented Cultures (OCP Framework)
Detail-oriented cultures focus on being precise and paying attention to small things. This is especially
useful in industries like hospitality, where service quality matters a lot. For example, Four Seasons and
Ritz Carlton remember guest preferences, like what newspaper they read or what pillow they like. By
noticing these details, they create better customer experiences and build loyalty.

A strong culture means most employees agree on the same values, which strongly influences how
they work. This can be good or bad depending on the values shared.
• Good side: If the values match the company’s goals (like great customer service or teamwork),
the company can perform very well.
• · Bad side: If the values focus too much on results without ethics (like Enron), it can harm the
company.
Strong cultures are hard to change because employees don’t want to give up their usual ways. For
example, at Home Depot, shifting from a flexible style to a strict system caused big problems. In
mergers, strong cultures can also conflict. The Daimler-Chrysler merger failed because Daimler’s
strict and elite culture didn’t match Chrysler’s more relaxed and budget-friendly style.
Strength of Culture

Organizations don’t always have just one culture. Different groups can create
their own subcultures for example, sales staff may have a different culture than
warehouse workers. These form because of employee personalities, work
conditions, or leaders.
Sometimes, a counterculture appears, where a group’s values go against the
main company culture. For example, a creative and risk-taking team may exist
in a strict, rule-based company. Countercultures can help if they bring good
results, but they might also be seen as a threat, so leaders may try to control
or remove them.
Do Organizations Have a Single Culture?

CREATING AND MAINTAINING ORGANIZATIONAL CULTURE
• Organizational Culture
Organizational culture is the system of shared values, beliefs, and norms that influences how people
think, feel, and behave within an organization. It defines acceptable behavior, shapes work practices,
guides decision-making, and affects relationships both inside and outside the organization. Culture
acts as the personality of the organization, providing members with identity and direction.
• How Culture is Created
Culture is formed through the values and preferences of founders, the demands of the industry, and
the reinforcement of early practices that lead to success. Founders shape the initial vision,
industries impose expectations, and successful solutions to challenges become embedded as
organizational values.

• How Culture is Maintained
Culture is preserved through processes that ensure alignment between employees and organizational
values. These include:
Attraction–Selection–Attrition (ASA): People join organizations that match their values, are selected
if they fit, and leave if they do not.
Onboarding: Training, mentoring, and socialization practices communicate expected norms.
Leadersip behavior: Leaders model values, reward aligned actions, and discourage behaviors that
conflict with culture.
Reward systems: Incentives reinforce desired practices, shaping whether collaboration, competition,
or innovation thrives.

Visible Signs of Culture
Culture becomes visible through tangible and symbolic elements in the organization, including:
Mission statements that communicate purpose and principles.
Rituals and ceremonies that reinforce shared values and traditions.
Policies and rules that show what is prioritized, such as flexibility or control.
Physical layout that signals openness, collaboration, or hierarchy.
Stories and legends that communicate values and highlight past successes or failures.

CREATING CULTURE CHANGE
How Do Cultures Change?
As emphasized throughout this chapter, culture is a product of its founder’s values,
its history, and collective experiences. Hence, culture is part of a company’s DNA
and is resistant to change efforts.
Creating a Sense of Urgency
For the change effort to be successful, it is important to communicate the need for
change to employees. One way of doing this is to create a sense of urgency on the
part of employees, explaining to them why changing the fundamental way in which
business is done is so important.

Changing Leaders and Other Key Players
A leader’s vision is an important factor that influences how things are done in an
organization. Thus, culture change often follows changes at the highest levels of the
organization. Moreover, to implement the change effort quickly and efficiently, a
company may find it helpful to remove managers and other powerful employees
who are acting as a barrier to change.
Role Modeling
Role modeling is the process by which employees modify their own beliefs and
behaviors to reflect those of the leader.

Training
Well-crafted training programs may be instrumental in bringing about culture
change by teaching employees the new norms and behavioral styles.
Changing the Reward System
The criteria with which employees are rewarded and punished have a powerful role
in determining the cultural values of an organization. Switching from a
commission-based incentive structure to a straight salary system may be
instrumental in bringing about customer focus among sales employees.
Creating New Symbols and Stories
Finally, the success of the culture change effort may be increased by developing
new rituals, symbols, and stories.

BMMA-REPORT7-8.1pptx (2).pptxgggggggggggggg

More Related Content

Similar to BMMA-REPORT7-8.1pptx (2).pptxgggggggggggggg(20)

More from oscarringor18(6)

Recently uploaded(20)

BMMA-REPORT7-8.1pptx (2).pptxgggggggggggggg