CHAPTER 8

Organizational Culture,
Structure, & Design

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 LEARNING OBJECTIVES
8.1 Describe how managers align vision and strategies with the
organization’s culture and structure.
8.2 Explain how to characterize an organization’s culture.
8.3 Describe the process of culture change in an organization.
8.4 Compare the structures of for-profit, nonprofit, and mutual-
benefit organizations.
8.5 Identify the major elements of an organization.
8.6 Describe the eight organizational structures.
8.7 Identify the factors that affect the design of an organization’s
structure.
8.8 Describe how to use the career readiness competencies of
understanding the business and personal adaptability to assess
an organization’s internal context.
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HOW to STAND OUT in a NEW JOB: FITTING into
an ORGANIZATION’S CULTURE in the
FIRST 60 DAYS
• Be aware of the power of first impressions.
• See how people behave by arriving early and
staying late.
• Network with people and find out how the
organization works.
• Ask for advice.
• Overdeliver.

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 8.1 ALIGNING STRATEGY, CULTURE
AND STRUCTURE
The Big Picture
• The study of organizing, the second of the four functions in the management
process, begins with the study of organizational culture and structure, which
managers must determine so as to implement a particular strategy.
Organizational culture consists of the set of shared, taken-for- granted
implicit assumptions that a group holds in the workplace. Organizational
structure describes who reports to whom and who does what.
• How important is culture, the “social glue” that binds together
organizations?
“Culture and people are everything,” says Brett Wilson, CEO of TubeMogul, a
video advertising software company. “Nothing else matters, and our ability
to stay ahead is a function of having the best people and moving faster than
our competitors. . . . Creating an exceptional culture is the only way to build
a sustainable competitive advantage.
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 DRIVERS and FLOW of ORGANIZATIONAL
Figure 8.1 CULTURE

Strategy, as we saw in Chapter 6, consists of the large-scale action plans that

reflect the organization’s vision and are used to set the direction for the
organization. To implement a particular strategy, managers must determine the
right kind of organizational culture and organizational structure, which mutually
influence each other.

Realizing the Organizational Vision and Strategy: Get the Right Culture and the
Right Structure
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 ORGANIZATIONAL CULTURE: The Shared
Assumptions that Affect
How Work Gets Done
Organizational culture
• According to scholar Edgar Schein, organizational culture,
sometimes called corporate culture, is defined as the set of
shared, taken-for-granted implicit assumptions that a group
holds and that determines how it perceives, thinks about,
and reacts to its various environments.
• These are the beliefs and values shared among a group of
people in the workplace that are passed on to new
employees by way of socialization and mentoring, which
significantly affect work outcomes at all levels.

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 ORGANIZATIONAL CULTURE:
The Shared Assumptions that Affect
How Work Gets Done
Organizational culture
• The culture helps employees understand why the organization does what it does and how it
intends to accomplish its long-term goals.
• The cultural tone is often set in the hiring process. “The ultimate filter we use is that we only hire
nice people,” says Peter Miller, CEO of Optinose, a pharmaceutical company.
• MuleSoft, a software company, looks for people with “high integrity, being a great team player, and
they want to win as a company first, team second, individually third,” says CEO Greg Schott.
• TubeMogul CEO Brett Wilson, mentioned earlier, also prefers nice people. “I . . . really value people
who are kind to one another,” he says. “That makes the workplace better, and they end up having a
deeper sense of empathy with our clients.” In addition, “we want a culture where people aren’t
afraid to make mistakes. . . . Our ability to win is a function of how innovative we are. So making
mistakes is encouraged.” Finally, he says, “it’s a culture where we value the people who do what
they say—they have a high ‘do-to-say’ ratio.

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 ORGANIZATIONAL CULTURE:
The Shared Assumptions that Affect
How Work Gets Done
Organizational culture
• Culture can vary considerably, with different organizations having differing emphases on risk
taking, treatment of employees, teamwork, rules and regulations, conflict and criticism, and
rewards.
• As such, culture can have both positive and negative effects on employees and overall
corporate performance.
• Still other companies go beyond candor to fraudulent behavior, such as the case of
Volkswagen. The company admitted in 2015 that it cheated on its emission tests. Mitsubishi
also admitted to 25 years of company engineers’ intentionally manipulating fuel-economy tests.
• In addition, the elements that drive an organization’s culture also vary. They may represent the
values of the founder, the industry and business environment, the national culture, the
organization’s vision and strategies, and the behavior of leaders.

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 ORGANIZATIONAL STRUCTURE: WHO REPORTS to
WHOM and WHO DOES WHAT

Organizational structure
• Organizational structure is a formal system of task and
reporting relationships that coordinates and motivates an
organization’s members so that they can work together to
achieve the organization’s goals.
• Concerned with who reports to whom and who specializes in
what work.
• Whether an organization is for-profit or nonprofit, the
challenge for top managers is to align the organization’s vision
and strategies with its organizational culture and
organizational structure, as shown in the two gold boxes in
Figure 8.1
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 8.2 What Kind of Organizational Culture Will
You Be Operating In?
The Big Picture
• Organizational culture appears as three layers:
observable artifacts, espoused values, and basic
assumptions. Each level varies in terms of outward
visibility and resistance to change, and each level
influences another level.
• Cultures can be classified into four types: clan,
adhocracy, market, and hierarchy.
• Culture is transmitted to employees through symbols,
stories, heroes, rites and rituals, and organizational
socialization.
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 THREE LEVELS of ORGANIZATIONAL CULTURE

Level 1: Observable Artifact:

Physical Manifestations of Culture

Level 2: Espoused Values:

Explicitly Stated Values and Norms

Level 3: Basic Assumptions:

Core Values of the Organization

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 THREE LEVELS of ORGANIZATIONAL CULTURE
Level 1: Observable Artifacts—Physical Manifestations of
Culture.
• At the most visible level, organizational culture is expressed in
observable artifacts—physical manifestations such as manner of
dress; awards, myths and stories about the company; rituals and
ceremonies and decorations; as well as visible behavior exhibited
by managers and employees.
• Example: In a conference room reserved for sensitive discussions,
online travel company Kayak has a 2-foot-high stuffed elephant
named Annabelle—the “elephant in the room”—that is an
artifact believed to bring forth more honest and constructive
communications among employees. (The expression “elephant in
the room” is used in business and politics to mean an obvious
truth that is either being ignored or going unaddressed.)
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 THREE LEVELS of ORGANIZATIONAL CULTURE
Level 2: Espoused Values—Explicitly Stated Values and
Norms.
• Espoused values are the explicitly stated values and norms
preferred by an organization, as may be put forth by the firm’s
founder or top managers.

Example:
• The founders of technology company Hewlett-Packard stressed the “HP
Way,” a collegial, egalitarian culture that gave as much authority and job
security to employees as possible.
• Although managers may hope the values they espouse will directly influence
employee behavior, employees don’t always “walk the talk,” frequently being
more influenced by enacted values, which represent the values and norms
actually exhibited in the organization.

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 THREE LEVELS of ORGANIZATIONAL CULTURE
Level 3: Basic Assumptions—Core Values of the
Organization.
• Basic assumptions, which are not observable, represent the
core values of an organization’s culture—those that are taken
for granted and, as a result, are difficult to change.
• Example: At insurance giant AIG, people worked so hard that,
while employees commenting on Indeed.com generally call it a
great place to work, one said, “The workplace culture is work
hard. I didn’t know anyone that worked 9:00–5:00. There were
too many projects with tight deadlines to leave at 5:00.”

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 FOUR TYPES of ORGANIZATIONAL
CULTURE (1 of 2)
Adhocracy culture: A Risk-Taking
Clan culture: An Employee-Focused
Culture Valuing Flexibility
Culture Valuing Flexibility, Not Stability
• has an internal focus and values flexibility • External focus and Values flexibility.
rather than stability and control • This type of culture attempts to
• it encourages collaboration among create innovative products by being
employees, striving to encourage adaptable, creative, and quick to
cohesion through consensus and job respond to changes in the
satisfaction and to increase commitment marketplace.
through employee involvement. • Employees are encouraged to take
• Clan organizations devote considerable risks and experiment with new ways
resources to hiring and developing their of getting things done.
employees, and they view customers as
• Adhocracy cultures are well suited for
partners. Example: Chick-fil-A.
start-up companies, those in
• Example: “that if employees are given a
industries undergoing constant
fun, rewarding place to work where they
change, and those in mature
can express their creativity, in return the
industries that are in need of
firm will get innovation, diehard loyalty,
innovation to enhance growth.
and world-class customer service.”
Example: Google.
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 FOUR TYPES of ORGANIZATIONAL
CULTURE (2 of 2)
Market culture: A Competitive Hierarchy culture: A
Culture Valuing Profits over Structured Culture Valuing
Employee Satisfaction Stability and Effectiveness
• Focused on the external • Companies are apt to have a
environment formalized, structured work
• environment
Driven by competition and a strong
desire to deliver results, customers, • aimed at achieving
productivity, and profits take effectiveness through a variety
precedence over employee of control mechanisms that
development and satisfaction. measure efficiency, timeliness,
• and reliability in the creation
Employees are expected to work
and delivery of products.
hard, react fast, and deliver quality
work on time; those who deliver • Example: Amazon (especially
results are rewarded. to manage its vast shipping
• processes).
Example: Uber.
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 COMPETING VALUES FRAMEWORK

The horizontal dimension—inward or outward

focus? This dimension expresses the extent to which an
The vertical dimension–flexibility or stability? This dimension
organization focuses its attention and efforts inward on
expresses the extent to which an organization prefers flexibility
internal dynamics and employees (“internal focus and
and discretion versus stability and control. Combining these two integration”) versus outward toward its external
dimensions creates the four types of organizational culture environment and its customers and shareholders (“external
Figure 8.2
based on different core values—namely, clan, adhocracy, focus and differentiation”).
Source:
market, and Adapted from K.S. Cameron, R.E. Quinn, J. Degraff, and A.V. Thakor, Competing Values Leadership (Northampton, MA: Edward Elgar, 2006), p. 32.
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 HOW EMPLOYEES LEARN CULTURE
- Organizational socialization: the
- Symbols: an object, an act, a quality, or event process by which people learn the
that conveys meaning to others. The Nike swish.
values, norms, and required
Example: One of the most iconic products of
IKEA, maker of inexpensive home furnishings, behaviors of an
whose vision is “to create a better life for the organization.Converting from
many,” outsider into organizational inside
- Stories: narrative based on true events repeated occurs in three phases:
—and sometimes embellished upon—to + The first phase (anticipatory
emphasize a particular value. Stories are oral socialization phase) occurs before one
histories that are told and retold by members joins the organization .
about incidents in the organization’s history.
- Heroes: person whose accomplishments + The second phase (encounter phase)
embody the values of the organization. IKEA takes place when a person is first
employees are expected to work hard, inspired hired and comes to learn what the
by an anecdote from their late Swedish founder, organization is really like and how to
Invar Kamprad, in his 1976 “A Furniture Dealer’s adjust his or her expectations.
Testament. + The third phase (change and
- Rites and rituals: activities and ceremonies that acquisition phase) comes about once
celebrate important occasions and the employee understands his or her
accomplishment. Given a cruiser bicycle during work role and now must master the
their first year. After five years, they get a free necessary skills and tasks and learn to
brewery-hopping trip to Belgium, and after 10 adjust to the work group’s values and
years, a four-week paid sabbatical norms.
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 The IMPORTANCE of CULTURE
Figure 8.3
What organizational
benefits are
associated with
what organizational
cultures?
Source: A.Y. Ou, C. Harnell, A. Kinicki,
E. Karam, and D. Choi, “Culture in
Context: A Meta-analysis of the
Nomological Network of
Organizational Culture.” Presentation
as part of symposium Connecting
Culture and Context: Insights from
Organizational Culture Theory and
Research at the 2016 National
Academy of Management meeting in
Anaheim, California.

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 THE RESULTS REVEALED…
1. An organization’s culture matters. The type of 5. An organization’s financial
organizational culture can be a source of performance (profit and revenue
competitive advantage. growth) is related to market and
2. Employees have more positive work attitudes hierarchy culture. Clan and
when working in organizations with clan adhocracy cultures are not
cultures. Value flexibility over stability and related to financial performance,
control, satisfying the needs of employees so managers should not expect to
than those of shareholders or customers. see a direct increase in financial
3. Clan and market cultures are more likely to performance by encouraging
deliver higher customer satisfaction and these two types of culture.
market share. The positive employee attitudes On the other hand, research
associated with clan cultures motivate suggests that developing market
employees to provide better customer and hierarchical cultures can
service. prompt higher financial
4. Operational outcomes, quality, and innovation performance.
are more strongly related to clan, adhocracy, 6. Companies with market cultures
and market cultures than to hierarchical ones. tend to have more positive
Managers should avoid the use of too many organizational outcomes.
rules and procedures—hierarchical Managers are encouraged to
characteristics—when trying to improve these make their cultures more market
outcomes. oriented.
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 WHAT DOES IT MEAN to “FIT”? ANTICIPATING a
JOB INTERVIEW
The four most frequently asked interview questions used by hiring managers,
according to a survey involving
285,000 kinds of interview questions.

What’s your favorite What’s your favorite

movie? website?

What makes you What’s the last book you

uncomfortable? read for fun?

Person-organization fit
• Reflects the extent to which your personality and values
match the climate and culture in an organization.

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 8.3 The Process of Culture Change
A DOZEN WAYS to CHANGE
ORGANIZATIONAL CULTURE (1 of 2)
1. Formal statements: 7. Through physical design.
mission, vision, values. 8. With rewards, titles,
2. Language, slogans, promotions, and bonuses.
sayings, and acronym. 9. Establishing goals and
3. Rites and rituals. performance criteria.
4. Stories, legends, and 10. Through measurable and
myth. controllable activities.
5. Leader reactions to 11. By changing organizational
crises. structure.
6. Role modeling, training, 12. Using organizational systems
and coaching. and procedures.

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 8.3 The Process of Culture Change
A DOZEN WAYS to CHANGE
ORGANIZATIONAL CULTURE (1 of 2)
1. Formal statements: of organizational philosophy, mission, vision, and values,
as well as materials used for recruiting, selecting, and socializing employees.
Walmart’s website promotes four basic values that represent the core of the
retailer’s culture: (1) service to customers, (2) respect for the individual, (3)
strive for excellence, and (4) act with integrity.
2. Slogans and Sayings: Language, slogans, sayings, and acronym. The
slogan “The force” is short for “focused, responsible, collaborative, and
empowered.”
3. Rites and rituals: represent the planned and unplanned activities and
ceremonies that are used to celebrate important events or achievements.
4. Stories, legends, and myth: Example: OXO, an award-winning New York–based maker
of office products and Good Grips brand kitchen tools, has adopted the universal design philosophy,
meaning its products must be designed to be used by as many people as possible. In a ritual that
page 294reinforces this philosophy, employees collect gloves lost on the street for a display in the
company’s offices that’s meant to remind everyone of “the different hands our products need to
comfortably fit.”
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 8.3 The Process of Culture Change
A DOZEN WAYS to CHANGE
ORGANIZATIONAL CULTURE (1 of 2)
5. Leader reactions to crises: How top managers respond to critical
incidents and organizational crises sends a clear cultural message.
6. Role modeling, training, and coaching: Many companies provide
structured training to provide an in-depth introduction to their
organizational values. Others build learning into their culture. Incorporate
a larger role for continuous employee feedback and learning. “We have
begun to prize learning”.
7. Through physical design: There is constant experimenting to find the best
office layout that will encourage employee productivity and send a strong
message about the culture. Natural light, inspiring and creative artwork,
adjustable furniture, and space for collaboration.
8. Rewards, Titles, Promotions, and Bonuses: Rewards and status symbols are
among the strongest ways to embed organizational culture. United Airlines
had been giving each eligible employee up to $300 per quarter when the
company achieved the operational goals it had set.
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 8.3 The Process of Culture Change
A DOZEN WAYS to CHANGE
ORGANIZATIONAL CULTURE (1 of 2)
9. Establishing goals and performance criteria: Many organizations
establish organizational goals and criteria for recruiting,
selecting, developing, promoting, dismissing, and retiring
people, all of which reinforce the desired organizational
culture. Netflix has a corporate culture firmly focused on the expectation
that employees are adults who can achieve their goals without complicated
rules. Vacations are unlimited and the expense policy consists of just five
words: “Act in Netflix’s best interests.”
10. Through measurable and controllable activities: An
organization’s leaders can pay attention to, measure, and
control a number of activities, processes, or outcomes that can
foster a certain culture. Amazon, which has come under fire for putting
too much pressure on its warehouse workers,77 recently patented a
wristband that can vibrate to alert workers when they are not performing
productively. Although it is not in use, the device can collect information
about where workers are and what they are doing.
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 8.3 The Process of Culture Change
A DOZEN WAYS to CHANGE
ORGANIZATIONAL CULTURE (1 of 2)
11. Organizational Structure: By changing organizational structure:
The hierarchical structure found in most traditional organizations
is more likely to reinforce a culture oriented toward control and
authority compared with the flatter organization that eliminates
management layers in favor of giving employees more power.
Example: Zappos recently adopted a radical experiment in organizational
structure called holacracy, to encourage collaboration by eliminating
workplace hierarchy—no titles and no bosses.
12. Using organizational systems and procedures:Companies are
increasingly using electronic networks to increase collaboration
among employees, to improve innovation, quality, and efficiency.
A recent report by the McKinsey Global Institute revealed that 72 percent of
the more than 4,000 large and small companies studied had adopted social
tools like Slack, Yammer, Chatter, or Microsoft Teams to allow employees to
communicate.
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 8.4 Organization Structure
The ORGANIZATION: THREE TYPES
For-profit organizations
• Formed to make money, or profits, by offering products
or services.
Nonprofit organizations
• Formed to offer services to some clients, not to make a
profit (example: hospitals, colleges).
Mutual-benefit organizations
• Voluntary collectives whose purpose is to advance
members’ interests (example: unions, trade associations).

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 The ORGANIZATION CHART
Figure 8.4 Example for a Hospital

The Vertical Hierarchy of

Authority: Who Reports to
Whom
A glance up and down an
organization chart shows
the vertical hierarchy, the
chain of command. A
formal vertical hierarchy
also shows the official
communication network—
who talks to whom. In a
simple two-person
organization, the owner
The Horizontal Specialization: Who Specializes in What Work
might communicate with
A glance to the left and right on the line of an organization
just a secretary or an
chart shows the horizontal specialization, the different jobs or
assistant. In a complex
work specialization. The husband-and-wife partners in a two-
organization, the president
person desktop-publishing firm might agree that one is the
talks principally to the vice
“outside person,” handling sales, client relations, and finances
presidents, who in turn talk
and the other is the “inside person,” handling production and
to the assistant vice
research. A large firm might have vice presidents for each task
presidents, and so on.
—marketing,Access
finance, and
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for these on
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 8.5 COMMON ELEMENTS of ORGANIZATIONS (1 of 2)
Four proposed by Edgar Schein:
1. Common purpose: gives everyone an understanding of the
organization’s reason for being. The common purpose unifies employees
or members and gives everyone an understanding of the organization’s
reason for being.
2. Coordinated effort: the coordination of individual effort into
group-wide effort. Working Together for Common Purpose
3. Division of labor: having discrete parts of a task done by
different people. Work Specialization for Greater Efficiency.
4. Hierarchy of authority: making sure the right people do the
right things at the right time (unity of command). If
coordinated effort is to be achieved, some people— namely, managers—
need to have more authority, or the right to direct the work of others.

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 COMMON ELEMENTS of ORGANIZATIONS (2 of 2)
Three more that authorities agree on:
1. Span of control: the number of people reporting directly to a given manager;
narrow span: a manager has limited number of people reporting, or wide span:
a manager has several people reporting.
2. Authority: accountability, responsibility, and delegation; line versus staff
positions. Accountability: managers must report and justify work results to the
managers above them. Responsibility is the obligation you have to perform the
tasks assigned to you. Delegation is the process of assigning managerial
authority and responsibility to managers and employees lower in the hierarchy.
3. Centralized versus decentralized authority: who makes decisions; upper
management or middle. Line managers have authority to make decisions and
usually have people reporting to them. Staff personnel have authority
functions; they provide advice, recommendations, and research to line
managers . With centralized authority, important decisions are made by higher-
level managers. With decentralized authority, important decisions are made by
middle-level and supervisory-level managers.

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 8.5 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: SIMPLE STRUCTURE
Authority is centralized in a An Owner
single person with few rules An Administrative Assistant
and low work specialization.

Small firms all over the country

are organized in this way.

Figure 8.5

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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: FUNCTIONAL STRUCTURE
People with similar
occupational
specialties are put
together in formal
groups.
Figure 8.6

Examples: A manufacturing firm

will often group people with similar
work skills in a Marketing
Department, others in a Production
Department, others in Finance, and
so on. A nonprofit educational
institution might group employees
according to work specialty under
Faculty, Admissions, Maintenance,
and so forth.
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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: DIVISIONAL STRUCTURE
Product Divisions: Grouping by Similar Products or
Services. Product divisions group activities around
similar products or services.
Examples: The media giant Time Warner has
different divisions for magazines, movies,
recordings, cable television, and so on.

Customer divisions tend to group activities around

common customers or clients. Examples: Ford
Motor Co.page 306 has separate divisions for
passenger-car dealers, for large trucking
customers, and for farm products customers.

Geographic Divisions: Grouping by Regional Location.

Geographic divisions group activities around defined
regional locations. Example: This arrangement is
frequently used by government agencies. The Federal
Reserve Bank, for instance, has 12 separate districts
around the United States. The Internal Revenue
Service also hasAccess
several districts.
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Figure 8.7
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 BASIC TYPES of ORGANIZATIONAL STRUCTURES: MATRIX
STRUCTURE
Matrix structure: An
organization combines functional
and divisional chains of
command in a grid so that there
are two command structures—
vertical and horizontal. The
functional structure usually
doesn’t change —it is the
organization’s normal
departments or divisions, such as
Finance, Marketing, Production,
and Research & Development.
The divisional structure may vary
—as by product, brand,
customer, or geographic region.
Ford Motor Co.: The functional structure might be the departments of Engineering, Finance, Production, and
Marketing, each headed by a vice president. Thus, the reporting arrangement is vertical. The divisional
structure might be by product (the new models of Taurus, Mustang, Explorer, and Expedition, for example),
each headed by a project manager. This reporting arrangement is horizontal. Thus, a marketing person, say,
would report to both the vice president of marketing and the project manager for the Ford Mustang. Indeed,
Ford Motor Co. used the matrix approach to create the Taurus and a newer version of the Mustang.
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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: THE HORIZONTAL DESIGN
Horizontal
Design:
Teams or
workgroups,
either temporary
or permanent,
are used to
improve
collaboration and
work on shared
tasks by breaking
down internal
boundaries.
Figure 8.9.

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 BASIC TYPES of ORGANIZATIONAL
STRUCTURES: The HOLLOW or NETWORK
STRUCTURE
Hollow or Network
Structure:
The organization
has a central core
of key functions
and outsources
other functions to
vendors who can do
them cheaper or
faster.
Figure 8.10.

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 BASIC TYPES OF ORGANIZATIONAL
STRUCTURES:
THE MODULAR STRUCTURE
Modular structure
The firm assembles product chunks, or modules,
provided by outside contractors.

• Bombardier’s Continental business jet is built in Ireland

and shipped to Kansas to be assembled.
• Example of the modular structure is the massive 787
Dreamliner project, in which Boeing contracted with many
suppliers, each responsible for one component or
assembly, which were then integrated to make the
aircraft.
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 BASIC TYPES of ORGANIZATIONAL STRUCTURES:
The VIRTUAL STRUCTURE
Virtual organization
• Organization whose members are geographically distant, usually working
via e-mail, collaborative computing, and other computer connections.
Virtual structure
• Company outside a company that is created “specifically to respond to
an exceptional market opportunity” that is often temporary.
• An example is web-services company Automattic Inc., which has a San
Francisco office, but it’s only for occasional use. Its real offices are the
homes of its 123 employees working in 26 countries, 94 cities, and 28
U.S. states. Although occasionally employees hop on a plane and meet
face to face, they mainly transmit messages via text-based internal blogs
or, when misunderstandings occur, talk on the phone. With a virtual
structure, companies can “tap into a wider talent pool not limited by
geography,” says one report. “Firms can also save money on real estate,
though sizable travel budgets may partly offset that.”

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8.8 FACTORS in CREATING the BEST STRUCTURE

Contingency design
• The process of fitting the organization to its environment.
• Three factors to consider:
1. Environment: mechanistic versus organic.
2. Environment: differentiation versus integration.
3. Link between strategy, culture, and structure.
• Hotels often have mechanistic designs.

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 MECHANISTIC VERSUS ORGANIC
Table 8.2 ORGANIZATIONS
MECHANISTIC ORGANIC
ORGANIZATIONS ORGANIZATIONS
Centralized hierarchy of Decentralized hierarchy of
authority authority
Many rules and procedures Few rules and procedures
Specialized tasks Shared tasks
Formalized communication Informal communication
Few teams or task forces Many teams or task forces
Narrow span of control, Wider span of control, flatter
taller structures structures

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 DIFFERENTIATION VERSUS INTEGRATION
Differentiation Integration
• Tendency of the parts of an • Tendency of the parts of an
organization to disperse and organization to draw together
fragment. to achieve a common purpose.
• Different product divisions; • In a highly integrated
possible forces that push organization, the specialists
organization apart. work together to achieve a
• For example, a company common goal. The means for
producing dental floss, achieving this are a formal
deodorants, and other personal- chain of command,
care products might have standardization of rules and
different product divisions, each procedures, and use of
with its own production facility cross-functional teams and
and sales staff—a quite computer networks so that
differentiated organization. there is frequent
communication and
coordination of the parts.
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 LINK BETWEEN STRATEGY, CULTURE, and
STRUCTURE
Aligning strategy, culture, and structure
• Organizational culture and organizational
structure should be aligned with its vision and
strategies.
• If managers change the strategy of the
organization, they need to change the culture
and structure to support it.
• Similarly, as companies grow, the culture and
structure need to grow with it.

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