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Summary Unit 3 - Chapter 7 - Managing Organisational Structure and Culture
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- University Of Pretoria (UP)
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Part A: Organising and Controlling OBS 124Unit 3: Chapter 7
Managing Organisational Structure and Culture
Learning Objectives:
✓ Identify the factors that influence a manager’s choice of organisational structure.
✓ Explain how managers group tasks into jobs that are motivating and satisfying for
employees.
✓ Describe types of organisational structures managers can design and explain
why they choose one structure over another.
✓ Explain why managers must coordinate job functions, and divisions using the
hierarchy of authority and integrating mechanisms.
✓ List the four sources of organisation culture and explain why and how a
company’s culture can lead to competitive advantage.
Introduction
Organisational culture is a powerful influence on how employees work. In a quickly
changing business environment, it is important for managers to identify the best way
to organise people and resources to increase efficiency and effectiveness.
To organise and control – two of the four tasks of management – managers must
design an organisational architecture that makes the best use of resources to
produce the goods and services customers want.
Organisational architecture is the combination of organizational structure, culture,
control systems, and human resource management systems that together
determines how efficiently and effectively organisational resources are used.
Designing organisational structure
Organizing is the process by which managers establish the structure of working
relationships among employees to allow them to achieve an organization's goals
efficiently and effectively.
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, Organisational structure Organisational culture Organisational design
A formal system of task The shared set of beliefs, The process by which
and reporting values, and norms that managers make specific
relationships that influence how people and organising choices that
coordinates and groups work together to result in a particular kind
motivates organisational achieve an organisation’s of organisational
members, so they work goals. structure.
together to achieve
organisational goals.
The formal system of task The process by which
and job reporting managers create a
relationships that specific type of
determines how organisational structure
employees use resources and culture so a company
to achieve an can operate in the most
organization's goals. efficient and effective way.
Once a company decides what kind of work attitudes and behaviours it wants from
its employees, managers create a particular arrangement of task and authority
relationships, and promote specific cultural values and norms, to obtain these
desired attitudes and behaviours.
The challenge facing all companies is to design a structure and a culture that:
1. Motivates managers and employees to work hard and to develop supportive job
behaviours and attitudes.
2. Coordinates the actions of employees, groups, functions, and divisions to ensure
they work together efficiently and effectively,
According to contingency theory, managers design organisational structures to fit the
factors or circumstances that are affecting the company the most and causing the
most uncertainty.
,There is no one best way to design an organization: design reflects each
organisation's specific situation, and researchers have argued that stable,
mechanistic structures may be most appropriate in some situations, whereas in
others flexible, organic structures might be the most effective.
Four factors are important determinants of the type of organisational structure or
culture managers select:
1. The nature of the organisational environment
2. The type of strategy the organisation pursues
3. The technology (particularly information technology) the organisation uses
4. The characteristics of the organisation's human resources
Factors affecting organisational structure:
The organisational environment
The more quickly the external environment is changing and the greater the
uncertainty within it, the greater are the problems managers face in trying to gain
access to scarce resources.
• To speed decision making and communication and make it easier to obtain
resources, managers typically make organising choices that result in more
flexible structures and entrepreneurial cultures.
, • They are likely to decentralize authority, empower lower-level employees to make
important operating decisions, and encourage values and norms that emphasize
change and innovation – a more organic form of organizing.
If the external environment is stable, resources are readily available, and uncertainty
is low, then less coordination and communication among people and functions are
needed to obtain resources.
• Managers can make organising choices that bring more stability or formality to
the organisational structure and can establish values and norms that emphasize
obedience and being a team player.
• Managers in this situation prefer to make decisions within a clearly defined
hierarchy of authority and to use detailed rules, standard operating procedures
(SOPs), and restrictive norms to guide and govern employees' activities – a more
mechanistic form of organizing.
Change is rapid in today's marketplace, and increasing competition both at home
and abroad is putting greater pressure on managers to attract customers and
increase efficiency and effectiveness.
• Consequently, interest in finding ways to structure organizations – through
empowerment and self-managed teams – to allow people and departments to
behave flexibly has been increasing.
Strategy
Once managers decide on a strategy, they must choose the right means to
implement it.
• Different strategies often call for the use of different organizational structures and
cultures.
• A differentiation strategy aimed at increasing the value customers perceive in an
organization's goods and services succeeds best in a flexible structure with a
culture that values innovation.
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