DETERMINANTS OF

ORGANIZATION STRUCTURE
AND CULTURE
 Organizational
Organizational Structure
Structure
• Organizational Architecture
The organizational structure, control systems,
culture, and human resource management systems
that together determine how efficiently and
effectively organizational resources are used.
 Determinants
Determinants of
of Structure
Structure
• The Organizational Environment
The quicker the environment changes, the more
problems face managers.
Structure must be more flexible (i.e., decentralized
authority) when environmental change is rapid.
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Mechanistic and Organic Structures

Mechanistic Structures Organic Structures

Tall, centralized hierarchy
of authority
Top-down communication
and decision making
Great use of standardization:
many detailed rules and
standard operating procedures
Clearly specified tasks and roles
and a defined division of labor
Flat, decentralized hierarchy
of authority
Lateral communication and
decision making between people
in different departments
Great use of mutual adjustment:
much face-to-face communication
in task forces and teams
Deliberately ill-defined tasks and
roles and a loose division of labor

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 What is Organizational Culture?
 Shared values, beliefs, norms
– influence the way employees think, feel, and
behave towards each other and towards people
outside the organization

 Pattern of shared basic assumptions

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Advice to Managers
• Analyze the set of forces in the environment
surrounding organization and the degree of
uncertainty associated with each force.
• Evaluate the way organizational structure and culture
are designed to manage these forces. Is organization
sufficiently mechanistic or organic?
• Implement organizational design changes that will
improve organization’s ability to respond to its
environment.

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 Technology
Technology
• Technology
The combination of skills, knowledge, tools,
equipment, computers and machines used in the
organization.
More complex technology makes it harder for
managers to regulate the organization.
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Woodward’s Model of Technology

• Small-batch technology relies on the skills and
knowledge of individual workers to produce one-
of-a-kind, customized goods and services or small
quantities of goods and services.
• Mass production technology results in the
production of large numbers of identical products.
• Continuous-process technology is one in which
the manufacturing process is entirely mechanized
and the workers’ role is to monitor the machines
and computers that actually produce the goods.
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Perrow’s Model of Technology

• Task Variety: The number of new
and different demands that a task
places on an individual or a function.
• Task Analyzability: The degree to
which standardized solutions are
available to solve problems that
arise.
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The Effects of New

Information Technology
• IT has increased the mechanistic side of
organizations because it has made it much
easier to coordinate between jobs and functions
and has given managers much more power to
monitor and control organizational activities.
• IT has increased the organic side of
organizations because people and teams far
down the hierarchy have access to more
information so that they can perform their jobs
more autonomously.
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Advice to Managers
• Use Woodward’s, Thompson’s, and Perrow’s
frameworks to identify the main contingencies
associated with operating the technologies in your
organization.
• Decide whether your organization’s current structure
and culture are matched to the needs of your
technology.
• Implement any changes in organizational design, such
as decentralizing authority or raising the level of
integration by empowering workers, that may allow
you to operate your technology more effectively.

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Strategy

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Benefits of Organizational Design

Organizational design can help an
organization achieve increases in
efficiency, quality, innovation and
creativity, and responsiveness to
customers.
Increasing efficiency is most closely
associated with a cost-leadership strategy.
Increases in quality, innovation, and
customer responsiveness are most closely
associated with a differentiation strategy.
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Increasing Efficiency
• Designing structure
– Keep the structure as flat as possible
– Decentralize authority
– Reevaluate form of differentiation being
used
– Reevaluate integrating mechanisms being
used
• Managing culture
– Create a cost-cutting culture
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Increasing Quality
• Designing structure
– Keep the structure as flat as possible
– Decentralize authority
– Use cross-functional teams
– Increase standardization
• Managing culture
– Create a quality-oriented culture

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Increasing Innovation
• Designing structure
– Use a matrix structure
– Use cross-functional teams
• Managing culture
– Create a creative and innovation-oriented
culture
– Stress instrumental values of risk taking
and exploration
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Increasing Customer Responsiveness

• Designing structure
– Employ a geographic structure
– Employ a market structure
• Managing culture
– Create a quality-oriented culture
– Promote instrumental values of caring for
customers, attentive service, and speedy
after-sales support
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Advice to Managers
• Evaluate the way you are currently pursuing your
strategy, and decide how you might improve
efficiency, quality, innovation, or customer
responsiveness to increase performance.
• Consider implementing a T.Q.M. program to
discover ways to increase performance.
• Evaluate how your organization’s structure and
culture are helping or hurting organizational
performance, and implement any organizational
design changes that will help to increase your
competitive advantage.
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