Organizational Culture and Structure
Dr Bassam Abu Hamad

What is Culture?
• Culture is a social construct
• “Culture makes the un-natural seem natural”
• Culture is man made & learned
• Culture = Problem solving
• “Culture is the way a group of people solves problems and reconciles dilemmas.”
• Culture is not static

Globalization and culture
Besides information technology, the other major environmental context
impacting organizational behavior is globalization.
Today, well-known U.S.-based multinational corporations have more than half
their assets overseas.
With trends toward similar clothes, entertainment, material possessions, and
recognition that English is the international business language, people around the
world still think and behave in different ways.
The starting point of how the globalization environment affects and is affected by
organizational behavior is culture.

Looking Across Cultures
Heaven is where…
The police are British,
The cooks are French,
The mechanics are German,
The lovers are Italian and
it’s all organized by the Swiss
Hell is where…
The police are German,
The cooks are British,
The mechanics are French,
The lovers are Swiss and
it’s all organized by the Italians

Organizational culture
• Shared/held meaning, shared/held understanding and shared/held
sense making (Morgan, 1986).
• The way we do things around here (Deal and Kennedy 1988).
• The commonly held and relatively stable beliefs, attitudes and
values that exist within an organization (Williams, 1989).

Organizational culture
• A culture cannot be precisely defined, for it is something that is
perceived, something felt (Handy, 1993).
• The deeper level of basic assumptions and beliefs that are shared by
members of an organization that operate unconsciously and that define
in a basic “taken for granted” fashion an organization view of itself and its
environment (Schein, 1985).

Organizational culture
• The training, development, and refinement of mind, tastes,
and manners; the condition of being thus trained and refind
(The Oxford English Dictionary, 1998).

Culture versus formalization versus national?
• Culture Versus Formalization
• A strong culture increases behavioral consistency and can act as a substitute for
formalization.
• Organizational Culture Versus National Culture
• National culture has a greater impact on employees than does their
organization’s culture.
• Nationals selected to work for foreign companies may be atypical of the
local/native population.

What Do Cultures Do?
Culture’s Functions:
1. Defines the boundary between one organization and others.
2. Conveys a sense of identity for its members.
3. Facilitates the generation of commitment to something larger than self-
interest.
4. Enhances the stability of the social system.
5. Serves as a sense-making and control mechanism for fitting employees in the
organization.

Why to have culture
• Ideological purpose
• Provides efficient mechanisms to coordinate the activities of
employees
• Limitation of managerial power

Iceberg?

Seven S system

Factors affecting culture
• Purpose and goals
• Organizational structure, policies, rules and procedures
• Work group
• Management style
• Organizational characteristics
• Communication channels
• Decision making mechanisms
• Use of technology
• Employee skills and attitudes

Layers of Culture
• Outer Layer: Explicit Products
• Observable reality
• Symbols of deeper layers
• Middle Layer: Norms & Values
• Core: Assumptions about existence

Dilemmas in Defining Culture
• Understanding own culture:
• “THE FISH IS THE LAST TO KNOW IT IS IN WATER.” (Proverb)
artefacts
• Hard to see own culture
• Trying to understand cultures does not give us license to stereotype:
• Culture is a normal distribution
• We tend to recognize elements of other cultures that are different than our own,
and use our values to determine if good or bad.

How do Global Managers use these frameworks?
• Can never fully understand another culture. Use the framework to:
• Understand own cultural baggage
• Integrate and Reconcile
• Best Practices for international business interactions:
• “A truly inter-cultural person is one who is comfortable being uncomfortable.”

The Impact of Culture on Organizational Behavior
• How do Cultures Vary?
• How People See Themselves
• People’s Relationship to Their World
• Individualism versus Collectivism
• The Time Dimension
• Public and Private Space

The Impact of Culture on Organizational Behavior
• Hofstede’s Cultural Dimensions
• Individualism/Collectivism
• Power Distance (high and low power distance)
• Uncertainty Avoidance
• Masculinity/ Feminity

Do Organizations Have Uniform Cultures?
Dominant Culture
Expresses the core values that are shared
by a majority of the organization’s
members.
Subcultures
Mini-cultures within an organization,
typically defined by department
designations and geographical separation.

Do Organizations Have Uniform Cultures?
Core Values
The primary or dominant values that are accepted throughout
the organization.
Strong Culture
A culture in which the core values are intensely held
and widely shared.

Types of culture

Types of culture

Types of culture

Types of culture

Types of culture

Contrasting Organizational Cultures “A’
• Managers are expected to fully document all decisions.
• Formal structure
• Creative decisions that incur significant change or risk are not
encouraged.
• Conservations-“If it ain’t broke, don’t fix it.”
• There are extensive rules and regulations
• Close supervision
• Management is concerned with high productivity
• Little attention to employee morale or turnover.
• Work activities are designed around individuals.
• Seniority based promotions.
11/9/2022

Contrasting Organizational Cultures (B)
•Risk taking
•Not formal
•Decisions based on intuition
•Experimentation-“learning experiences.”
•Responsive
•There are few rules and regulations
•Supervision is loose
•Morale is important
•Team work and autonomy
•Employees talk freely
•Performance related pay
11/9/2022

Robert E. Quinn and Kim S. Cameron

Diffuse versus specific cultures
This dimension refers to how people communicate and interact
with one another in their society.
Specific cultures are more direct using clear descriptive words,
frankness and facts.
Germans are known for clear, precise, descriptive language to
convey what they want, Americans are more.

Characteristics of Diffuse Cultures
Diffuse cultures accept, understand and prefer indirect communication that may
carefully use contextual clues to convey understanding.
• Indirect, Evasive, tactful and ambiguous
• Highly situational
• Life is a whole
• Losing face
PRIVATE
PUBLIC

Which cultural norms underpin successful organizational improvement?
• Shared goals
“We know where we are going”
• Responsibility for success
“We must succeed”
• Collegiality
“We are working on this together”
• Continuous improvement
“We can be better”
• Lifelong learning
“Learning is for everyone”
“we learn by trying something new”

Which cultural norms underpin successful organizational improvement?
• Support
“there’s always someone there to help”
• Mutual respect
“everyone has something to offer”
• Openness
“we can discuss our differences”
• Celebration and humor
“we feel good about ourselves”
(Stoll and Fink, 1996)

Healthy culture Unhealthy culture
• Stated and unstated values are
congruent
• Stated and unstated values conflict
• Employees are certain about what
the organization stands for
• Employees are uncertain about
what the organization stands for
• Employees are committed to
values
• Employees are apathetic
• Violation of values are seriously
treated
• Violations of procedures may be
treated seriously
• New values emerge by building
consensus
• New values only emerge during
temporary crises

Develop cultural intelligence
• The ability to “think about thinking,” and to develop and expand your
behavioral repertoire, often on the spot
• Observe cues to the other person’s behavior and assemble them to make
sense of what the other person is actually experiencing
• Have the motivation to persist in their attempts to understand the other
person
• Choose and execute the right actions to respond appropriately

Understand culture shock
A sense of disorientation in interpreting the myriad unfamiliar
environmental, business, and social cues they encounter

Structure
• Is the pattern of relationships among positions and members of the
organization.
• The primary purpose of structure is to influence the behavior of
individuals and groups to achieve effective performance
• Organization design is a management decisions and actions that result
in a specific organization structure
• Those features of the organization that serve to control or distinguish its
parts

Managing Learning Organizations
• How to Streamline Organizational Decision Making
• Downsize
• Reduce management layers
• Establish mini-units
• How to Cultivate Employees’ Personal Mastery
• Provide continuous learning opportunities.
• Foster inquiry and dialogue.
• Establish mechanisms to ensure that the organization is continuously aware
of and can interact with its environment.

Challenges in Organization
• Merging separate organizations with different structures
• Changing an existing organization to meet external or internal
changes in conditions
• Conflicts between departments or groups
• Interdependence between organizational units
• Centralization vs. decentralization

Objectives of having a structure
• Efficiency
• Monitoring
• Accountability
• Co-ordination
• Flexibility
• Satisfaction/clarity

Key decisions affecting structure
• Dividing the work
• Delegation of authority
• Departmentalization of jobs into groups
• Determining span of control

Division of labor
•Process of dividing work into relatively specialized jobs to
achieve advantages of specializations.
•It can occur in three ways
• Personal (occupational and professional specialties)
• Natural sequence of the work (Horizontal specialization)
• Vertical plane (hierarchy of authority)

Departmentalization: Creating Departments
• Departmentalization
• The process through which an organization’s activities are grouped together
and assigned to managers; the organization wide division of work.

Departmentalization
• Process in which an organization is structurally divided by combining jobs
in departments according to some shared characteristics
• Functional
• Territorial
• Product
• Customer
• Combined (matrix)

Departmentalization
• Functional
• The grouping of activities by functions performed
• Product
• The grouping of activities by product produced
• Customer
• The grouping of activities by common customers
• Geographic
• The grouping of activities by territory
• Process
• The grouping of activities by work or customer flow

Span of Control
• Number of individuals/employees who report to specific manager
including committees
• Ideally around 5 persons.
• Scalar chain, refers to the number of different levels in the
structure of the organization
• Too wide: difficult to supervise, slowness, poor performance,
waste of time
• Too narrow: coordination, communication, morale, costs

Organizational Structure
• Chain of command
• The management principle that no person should report to more than one boss
• Authority
• The rights inherent in a managerial position to give orders and expect them to be
obeyed
• Responsibility
• An obligation to perform assigned activities
• Power
• An individual’s capacity to influence decisions

Chain of Command

Stages of Organizational Development
• Simple structure
• An organization that is low in specialization and formalization but high in
centralization
• Functional structure
• An organization in which similar and related occupational specialties are grouped
together
• Divisional structure
• An organization made up of self-contained units

Stages of Organizational Development
• Matrix structure
• An organization in which specialists from functional departments are assigned to
work on one or more projects led by a project manager
• Team-based structure
• An organization that consists entirely of work groups or teams
• Boundaryless organization
• An organization that is not defined or limited by boundaries or categories imposed by
traditional structures

Mechanistic and Organic Organizations
• Mechanistic organization
• The bureaucracy; a structure that is high in specialization, formalization, and
centralization
• Organic organization
• An adhocracy; a structure that is low in specialization, formalization, and
centralization
• Structure follows strategy

Burns and Stalker

Delegation
• Delegation of authority, process of distributing authority downward in an organization
• General: Grant of authority by one party (the delegator) to another (the delgatee) for
agreed purpose(s). Under the legal concept of vicarious/indirect liability, the delegator
remains responsible for the delegatee's acts or omissions in carrying out the purpose of the
delegation.
• Agency: Transfer of an agent's right to act for the principal (such as from a contractor to a
sub-contractor) that can take place only (1) with the permission of the principal, (2) where
it is customary/norms, or (3) where it is necessary for the performance of the entrusted
duty.
• Management: Sharing or transfer of authority and the associated responsibility, from an
employer or superior (who has the right to delegate) to an employee or subordinate.

Principles of Delegation
 The manager can delegate authority but cannot delegate responsibility.
 Clarify the assignment.
 Delegate, don’t abdicate.
 Know what to delegate.
 Specify the subordinate’s range of discretion/freedom of choice.
 Authority should equal responsibility.
 Make the person accountable for results.
 Beware of backward delegation.

Dimensions of Structure
• Formalizations, extent to which an organization relies on written
rules and procedures to predetermine actions of employees.
• Decentralization degree to which top management delegates
authority to make decisions
• Complexity number of different job titles and authority levels in an
organization

Centralization and Decentralization
• Centralization
• A function of how much decision-making authority is pushed down to
lower levels in an organization; the more centralized an organization, the
higher the level at which decisions are made
• Decentralization
• The pushing down of decision-making authority to the lowest levels of an
organization

Decentralize?
• Decentralized Organization
• Organizational authority for most departmental decisions is delegated to the
department heads.
• Control for major companywide decisions is maintained at the headquarters office.
• Decentralization Rules:
• Decentralize decisions that affect only one division or area and that would take a
long time for upper management to make.
• Centralize decisions that could adversely affect the entire firm and that upper
management can fairly quickly and easily.

Problems With Size
• “There is a fairly common perception that large organizations tend to behave much less
“intelligently” than their size suggests. They often lose the decisiveness seen in small groups and
may seem "stupid" to people within them who work with ideas and knowledge.”
• “There appears to be a fundamental upper limit on the average per capita decision rate that an
organization can sustain, depending inversely on the organization's entropy. If the limit is
broached/approached, impaired productivity among knowledge managers may result and large
organizations may be disadvantaged when performing knowledge-intensive tasks that require
efficient use of intellectual capital.”
Janow, R. Shannon “Entropy and Productivity: Why Big Organizations Can Seem Stupid”. Analytic Solutions Group, LLC. 2/28/2004 http://physics.njit.edu/~janow/Paper20040228njit.pdf

Which works better

Advantages of centralization
• Providing/Implementation of a common strategy and policy
• Preventing subunits independency (too)
• Easier coordination and control
• Common services
• Basis for grouping into teams
• Costs
• Greater use of specialization
• Improved decision making

In contrast, decentralization allows
• Quick Decision-Making-Closer to the operation level decisions
• Increased responsiveness
• Improved level of Customer Service
• Chance for Training/Executive Development
• More Motivation and morale
• Reduces the burden on top executives
• Facilitates diversification
• To provide services emphasis
• Better control and supervision

Disadvantages of decentralization
Decentralization can be extremely beneficial. But it can be dangerous unless
it is carefully constructed and constantly monitored for the good of the
organization as a whole.
• Uniform policies not Followed
• Problem of Co-Ordination
• More Financial Burden
• Require more Qualified Personnel
• Conflict
• Emergency
• Control;
• Require adequate information for decision making

What works for health
• Organization for public health services, requires a combination of centralized and
decentralized responsibilities.
• The overriding national responsibility can best be met by setting policy goals and standards,
while assuring regional and social equity.
• Decentralization allows local authorities direct operational responsibility, with means and
accountability. Diffusion of responsibility means that many agencies operate at different
levels of the national entity. Each has its own sphere of interest, and these link together to
form a working whole, with checks, balances, and cooperation among them.
• A centralized health organization that controls policy, administration, financing, services,
manpower training, research, and regulation may lack checks and balances needed to prevent
authoritarian control.

What works for health
• Formerly highly centralized health systems are seeking decentralization as a means
of infusing additional funding, a sense of localism, pride, privacy, and quality in their
health systems. Combining this with universal access and regional, ethnic, and social
equity. Comprehensiveness and cost constraint are the challenges of organization of
public health systems.
• There are advantages to a federal structure in the division of responsibilities for
health. The senior level of government serves as the overall policy level with
financing and regulatory roles. By its very nature, the state level is close to the
community and represents regional interests, while the local health government is
closest to the community and, with state and federal backing, can serve to promote
community health interests subject to state and federal guidelines and
accountability.

This type of a model makes sense for linear work where no brain power is
required and where the people who work there are treated like expendable cogs.

“Flatter" structure seeks to open up the lines of communication and collaboration while
removing layers within the organization. As you can see there are fewer layers and that
arrows point both ways.

Meaning there are usually no job titles, seniority, managers, or executives. Everyone is seen as
equal. Flat organizations are also oftentimes called or referred to as self-managed
organizations

Somewhere in between hierarchies and flat organizations lie flatarchies.

A self-management practice for running purpose-driven, responsive
companies

Creating Matrix Organizations
• Matrix Organization
• An organization structure in which employees are permanently attached to
one department but also simultaneously have ongoing assignments in which
they report to project, customer, product, or geographic unit heads.

Matrix Organization Departmentalization

Matrix Organizations
Advantages
• Access to expertise.
• Stability of permanent department
assignments for employees.
• Allows for focus on specific
projects, products, or customers.
Disadvantages
• Confusion of command.
• Power struggles and conflicts.
• Lost time in coordinating.
• Excess overhead for managing
matrix functions.

Abolishing Organizational Boundaries
• Boundaryless Organization
• An organization in which management strips away the “walls” which typically
separate organizational functions and hierarchical levels, through
the widespread use of teams, networks, and similar structural mechanisms.

The Four Organizational Boundaries That Matter

Depicting the Organization
• Organization Chart
• A chart that shows the structure of the organization
including the title of each manager’s position and,
by means of connecting lines, who is accountable to
whom and who has authority for each area.

Informal organization
• A network of personal and social relationships that arise spontaneously as
people associate with one another in a work environment. It is composed
of all the informal groupings of people within a formal organization.
• The informal organization is the interlocking social structure that governs
how people work together in practice.
• The informal organization evolves, and the complex social dynamics of its
members also.

Informal organization
• It's primarily a social creature - made up of the sum total of social norms,
relationships, and interactions that affect how an organization works.
• While a formal organization is cold and impersonal, an informal
organization is intensely personal. It's all about social interactions and
relationships between the members.
• Members of an informal organization can certainly hold official offices and
have formal duties, but they also bring their own values, personal interests
and assumptions into the equation of how they act.
• Members develop friendships, alliances, enemies, trusted sources of
information, and preferences on how tasks should be performed.

In some respects, you can think of an informal organization as:
• An organization within the formal organization working with it
• An organization beside the formal organization working towards the same
goals but not necessarily together
• Or an organization working outside the formal organization and against it

Types
Horizontal Groups:
• Persons whose positions are on the same level of the organization belong
to horizontal groups.
Vertical Groups:
• Vertical groups are often the result of outside interest or various
employment relationships within the same department.
Mixed Groups:
• A mixed group may be formed by two or more people who belong to
different levels of the formal organization and in different work areas.

Why People Form Informal Groups
• Need for satisfaction
• Proximity and interaction
• Similarity

The functions performed by informal groups
• They maintain the social and cultural values the group members are
supposed to have in common
• They provide group members not only opportunity for status but also
opportunity for social interaction and fulfillment
• They provide necessary information for their members
• They influence the work environment

Informal groups do have the potential to be helpful to managers as
• They establish, enforce and perpetuate social and cultural norms and
values important to group members.
• They stimulate effective and dynamic communication.
• They provide the members with the social satisfaction and status the
formal organization is unable to give.

Major benefits provided by the informal organization
• Improving organizational effectiveness
• Support service to management
• Useful communication
• Better management

Negative Impact of informal power
Resistance to change
Conflict
Rumors
Pressure to conform

Strategies for Working with the Informal Organization:
• Understand and accept its presence
• Know the different groups, know the leader of each
• Every manager must seek the support and co-operation of the informal
leader.
• The manager should provide open and complete communications by using
both formal and informal channels.
• The manager should control rumor
• Finally, the manager should keep the activities of the formal organization
from unnecessarily threatening the informal organization; in general, he
should be sensitive to its existence.

Formal vs. Social Structure
Cross, Rob. A bird's-eye view: Using social network analysis to
improve knowledge creation and sharing. IBM Executive strategy
report 04Jun2002 http://www-
1.ibm.com/services/us/index.wss/xs/imc/a1001262
Rarely do the communication
patterns match the formal
structure

• Everything is vague to a degree you do not realize till you have tried to
make it precise
• If everyone had to think outside the box, maybe it was the box that
needed fixing

Thank you