3.1 Organizational Culture and Structure

Organizational culture shapes behavior through shared values, visible artifacts, and underlying assumptions. It impacts employee performance by guiding decisions, aligning goals, and fostering a sense of belonging. Strong cultures often lead to higher retention and set ethical standards.

Organizational structure determines how a company is arranged, with types including functional, divisional, matrix, flat, and network. Structure and culture are intertwined, with structure reflecting cultural values and influencing information flow. The right structure can support desired cultural traits and facilitate integration during organizational changes.

Organizational Culture

Components of organizational culture

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• Organizational culture shapes employee behavior through shared values and beliefs
• Artifacts include visible elements like office layout and dress code (open floor plans, casual attire)
• Espoused values are explicitly stated principles guiding organizational decisions (customer-first approach, innovation)
• Basic assumptions form unconscious beliefs influencing daily operations (trust in employee autonomy)
• Cultural strength measures employee adherence to shared values (high commitment to quality)
• Cultural adaptability determines responsiveness to external changes (pivoting business models during market shifts)

Culture's impact on employee performance

• Shapes decision-making by providing guidelines for appropriate actions (ethical considerations in negotiations)
• Aligns individual goals with organizational objectives boosting motivation (performance-based bonuses)
• Determines acceptable communication styles and channels (open-door policy, use of collaborative platforms)
• Creates sense of belonging and purpose influencing job satisfaction (team-building activities, clear mission statements)
• Strong cultures often lead to higher retention rates (Google's employee perks)
• Sets standards for ethical behavior within the organization (codes of conduct, whistleblower protection)
• Can foster or hinder creativity and new ideas (3M's 15% time for personal projects)

Organizational Structure

Types of organizational structures

• Functional structure groups departments by specialized functions (marketing, finance, HR)
  • Promotes efficiency and clear career paths
  • Can create silos and slow decision-making
• Divisional structure organizes by product lines, regions, or customer types (Nike's sport categories)
  • Enhances customer focus and adaptability
  • May lead to resource duplication and conflicts
• Matrix structure combines functional and divisional approaches (aerospace industry projects)
  • Offers flexibility and efficient resource use
  • Can cause dual reporting issues and role confusion
• Flat structure has few hierarchical levels and wide span of control (Valve Corporation)
  • Enables quick decision-making and open communication
  • Risks overloading managers and unclear career progression
• Network structure relies on external partnerships and outsourcing (virtual organizations)
  • Provides flexibility and access to specialized expertise
  • May reduce control and create coordination challenges

Structure vs culture in organizations

• Organizational structure reflects and reinforces cultural values (hierarchical structure in traditional banks)
• Structure determines information flow impacting cultural dissemination (open-plan offices promoting transparency)
• Hierarchical structures may create subcultures at various levels (executive suite vs frontline employees)
• Structures should support desired culture (agile teams for innovation-focused companies)
• Flexible structures often promote adaptive cultures (startup environments)
• Certain structures foster more innovative cultures (Google's 20% time policy)
• Structures affecting autonomy influence cultural perceptions of employee engagement (self-managed teams)
• Structural changes can facilitate or hinder cultural integration in mergers and acquisitions (integrating acquired companies)