Final Exam Notes of Organizational Design: Culture & Control PDF

Final Exam Notes of Organizational Design Culture & Control 11 What is Culture? Culture encompasses an organization's values, norms, beliefs, and shared understandings. It guides new members on the proper ways to think, feel, and act, reflecting the informal organization. Levels...

Final Exam Notes of Organizational Design Culture & Control 11 What is Culture? Culture encompasses an organization's values, norms, beliefs, and shared understandings. It guides new members on the proper ways to think, feel, and act, reflecting the informal organization. Levels of Organizational Culture: Levels Description Visible Artifacts & Observable Behaviors: How people dress and act. Office layouts. Surface-Level Control systems and power structures. Symbols, stories, rites, ceremonies, and slogans. These are the elements reflect deeper values in members' minds Comprise unconscious values, beliefs, assumptions, thought processes, attitudes, behaviors, and feelings that define Underlying Values the culture Purpose of Culture Purpose Description Develops a collective identity among members, fostering effective collaboration. Internal Integration Provides guidance on day-to-day relationships, communication, acceptable behavior, and the allocation of power and status Helps the organization achieve goals and interact with external stakeholders. External Adaptation Directs employees’ daily activities and decision-making, even in the absence of formal rules or policies. Both functions contribute to building the organization’s social capital by shaping positive or negative relationships internally and externally. Interpreting & Shaping Culture Observable aspects, artifacts, and activities from social interactions can be analyzed to understand an organization's culture or be utilized by managers to influence and shape that culture. There are 6 Key Observable Aspects: Rites & Ceremonies Stories & Sayings Symbols Organization Structure Power Relationships Control Systems Rites & Ceremonies Elaborate, planned activities for special events, often performed for an audience. Benefits Demonstrates company values Builds bonds among members Reinforces values. Celebrates key individuals & activities. Types Types Description Rite of Passage Helps employees transition into new roles. Rite of Integration Strengthens bonds and commitment Stories & Sayings Types Description Stories Narratives about company events or heroes, shared to convey values. Sayings Mottos or mantras that encapsulate core values. Benefits Keeps primary values alive. Provides shared understanding among employees. Symbols Physical artifacts representing cultural values. Organization Structure Design and hierarchy of the organization. Rigid mechanistic vs. flexible organic. Tall vs. flat hierarchy Degree of flexibility and autonomy. Arrangement of people and departments. Power Relationships Identifies key powerholders and their influence. Distinguishes formal (based on position) vs. informal (based on expertise, character) power. Control Systems Internal mechanisms for managing people and operations. Information management. Quality and financial control systems. Reward systems and decision-making processes. Examines whether managers rely on behavior or outcome control. Culture & Org. Design Managers align culture with organizational goals, strategies, and structures to enhance performance and effectiveness. For success, culture must support and reinforce the strategy and structure, not just be secondary to them. Key Dimensions to Assess Culture Does the competitive environment require flexibility or stability? Is the strategic focus and strength internal or external? Types of Organizational Culture Culture Focus Key Traits Environment External environment, emphasizing Adaptability flexibility and responsiveness to Promotes change, innovation, creativity, and risk-taking. Rapidly changing industries. customer needs. Stable environment with performance-based Clear vision with measurable goals rewards for achieving goals. Stable industries with many customers Achievement for achieving organizational purpose. Emphasizes effectiveness, competitiveness, and goal but little need for rapid change. orientation. Values involvement, collaboration, teamwork, and Meeting employees' needs to drive participation. Clan Rapidly changing expectations. performance. Creates responsibility, ownership, commitment, and high performance. Values policies, rules, tradition, order, and stability. Consistency, stability, and efficiency Bureaucratic High control with low personal involvement. Stable environments. in internal operations. Promotes collaboration, consistency, and conformity. Culture Strength The level of agreement among organizational members about the importance of specific values. Level of Consensus Indicates High Strong, Cohesive culture. Low Weak culture Characteristics of a Strong Culture Characteristic Description Well-defined values and social norms guide behavior. Clear Expectations Minimal deviation and low tolerance for nonconformity. Resistance to Change Members appreciate the culture and prefer maintaining the status quo. Symbolic Practices Regular use of rites, ceremonies, stories, sayings, and symbols to reinforce culture. Aligned Structures and Processes Organizational structures and processes are designed to support cultural values. Subculture Groups within an organization that form distinct subcultures based on shared problems, goals, and experiences. What Are They? Incorporate core values of the dominant organizational culture while adding unique values. Subcultures arise even in strong organizational cultures. Power Relationships Common in large organizations or after mergers and acquisitions. Can form within specific teams, departments, branches, or physically separated units Potential conflicts arise, especially in weak organizational cultures. Are They Harmful? If subcultures grow too strong & overshadow corporate values, they may harm overall org. performance. Culture & Performance Companies that intentionally manage cultural values outperform those that do not. The right culture boosts business performance by aligning motivated employees with the organization's mission and goals Creating a High-Performance Culture Managers must focus on both cultural values and business performance to ensure sustainable success. This alignment fosters shared adaptive values, employee ownership, and goal-oriented decision-making. Four Organizational Outcomes Quadrant Focus Outcome A Bottom-line results; neglects organizational values. Short-term profitability but unsustainable success. Represents a "High-Performance Culture," driven by purpose B Balances cultural values and business results. and adaptive values. C Neglects both values and performance. The company fails to survive. Strong cohesive culture without linking values to D Culture fails to support the organization during challenges. strategic goals. Emphasizing both cultural values and performance metrics is critical for achieving high performance. Neglecting either can compromise long-term success. The Cultural Focus of Control Processes Changing Philosophy of Control Control processes reflect organizational goals, culture & managerial beliefs about control. Shift toward employee participation and empowerment has led many companies to adopt decentralized control over hierarchical models. Hierarchical vs. Decentralized Control Aspect Hierarchical Control Decentralized Control Basic Assumptions Employees lack self-discipline and require close monitoring. Employees perform best when fully committed to organizational goals. Uses strict rules, formal control systems, and detailed procedures. Relies on shared values, group/self-control, and socialization. Utilizes flexible authority, flat structure, and expert power; quality is monitored Employs top-down authority, formal hierarchy, and supervision. collectively. Actions Task-oriented job descriptions. Results-oriented job descriptions focused on achieving goals. Emphasizes extrinsic rewards (pay, benefits, status). Combines extrinsic and intrinsic rewards (meaningful work, growth opportunities). Adaptive culture; uses culture to unite team, individual, and organizational goals for Rigid culture; distrusts norms as a control mechanism. effective control. Employees comply but lack initiative. Employees take initiative and assume responsibility. Consequences Indifference toward work, leading to higher absenteeism and turnover. High engagement and commitment, resulting in lower turnover. Models Used in Control Systems Model Description Effective control systems incorporate feedback to evaluate organizational performance and make adjustments to ensure success. Feedback Control Model Purpose: Helps determine if performance aligns with established standards, guiding necessary changes in activities, performance standards, or goals. Set strategic goals for departments or the entire organization. Establish metrics and performance standards. Cycle of Control Compare actual performance against these standards. Make adjustments to activities or goals as needed. Used by companies like Google, Intel, and the Gates Foundation. OKRs (Objectives & Key Results) OKRs establish organizational targets and benchmark key results to monitor progress toward achieving them. At the Org. Level of Control Balanced Scorecard Balanced Scorecard is a comprehensive management control system that balances traditional financial measures with operational measures related to critical success factors. It Has 4 Key Perspectives: Financial Performance Customer Service Internal Business Processes Capacity for Learning & Growth Key Performance Indicators KPIs are identified within each perspective to track performance. These KPIs are integrated and reinforce each other, aligning with the overall mission, strategy, and goals of the organization. Strategic Map (Cause-Effect Control Technique) A Strategic Map visually represents the key drivers of an organization's success and illustrates how specific outcomes are linked. It highlights the cause-effect relationships between the factors in the balanced scorecard, helping to align activities with strategic objectives. Cause-Effect Relationships Effective learning and growth performance is foundational for excellent internal business processes. Excellent business processes lead to high customer service and satisfaction. High customer satisfaction helps achieve financial goals and optimizes organizational value for stakeholders. What can managers do with the score-card or strategic map? Set goals, track metrics, assess performance, determine rewards, make any needed changes, allocate resources, plan budgets At the Department Level of Control Behavior vs. Outcome Control At the department level, managers focus on evaluating and controlling employee performance and allocating rewards. There are two main approaches to this: Control Focus Management Approach Evaluation & Rewards Direct supervision and heavy monitoring. Based on specific criteria like Attention to the methods Behavior How work is done. appearance, punctuality, skills, employees use to complete tasks. and activities Ensure rules and instructions are followed. Achieving results, Employees are given autonomy over Based on the achievement of Outcome regardless of how they’re how to perform their jobs, as long as desired results, not the process. achieved. the outcomes are favorable.