Lecture 7: Organisational Structure, Culture and Development

**INDUSTRIAL PSYCHOLOGY** **ORGANISATIONAL STRUCTURE, CULTURE AND DEVELOPMENT** **Introduction** In an effort to run more efficiently, some businesses implement organizational structures in their workplace. Depending on the size of the company and the way it operates, some structures might be mor...

**INDUSTRIAL PSYCHOLOGY** **ORGANISATIONAL STRUCTURE, CULTURE AND DEVELOPMENT** **Introduction** In an effort to run more efficiently, some businesses implement organizational structures in their workplace. Depending on the size of the company and the way it operates, some structures might be more beneficial than others. Knowing how your company operates will help you perform in line with what\'s expected of you and help you become a better employee overall. **What is organisational structure?** Organizational structure refers to the arrangement of positions in an organization and the authority and responsibility relationships among them. This means that every organization is made up of persons holding particular positions or playing certain roles in an organization. The organization's structure is then determined by the interrelationships among the responsibilities of these various positions or roles. Organizational structure is the method by which work flows through an organization. It allows groups to work together within their individual functions to manage tasks. Traditional organizational structures tend to be more formalized---with employees grouped by function (such as finance or operations), region or product line. Less traditional structures are more loosely woven and flexible, with the ability to respond quickly to changing business environments. **Types of organisational structure** There are four types of organisational structure; Functional structure, divisional structure, matrix structure and flat structure. **Functional Structure** In a functional structure, organizations are divided into specialized groups with specific roles and duties. Under a functional organization structure, people who do similar tasks are grouped together based on specialty. So all the accountants are placed in the finance department and so on for the marketing, operations, senior management and human resources departments. The advantages of this kind of structure include quick decision making, because the group members can easily communicate. They can also learn from each other, since they already possess similar skill sets and interests. A functional organizational chart with the president at the top and then one line below showing different departments **Divisional Structure** In a divisional organizational structure, the company is divided into different business units that have complete control of their budget, resources, and strategy -- essentially acting as an independent company. Each division can have its own dedicated marketing, sales, product, and IT teams. A divisional structure works well with large enterprises who have multi-product offerings, have acquired or merged with multiple business entities, service many geographical regions, and serve different industries. Examples of companies applying a divisional structure are McDonald's Corporation and Disney. These brands can't help but split the entire organization by location to be able to adjust their strategies for audiences representing different markets.  **Matrix Organizational Structures** A matrix structure combines the functional and divisional structures to create a dual-command situation. In a matrix structure, an employee reports to two managers who are jointly responsible for the employee\'s performance. Typically, one manager works in an administrative function, such as finance, HR, information technology, sales or marketing, and the other works in a business unit related to a product, service, customer or geography. Employees working for companies using the matrix structure have the potential to widen their skill set since they might be assigned to various projects requiring different levels of expertise or skills. A matrix organizational chart with the president at the top, and departments listed below and product managers on the left axis **Flat Structure** In a flat structure, there are little to no levels of management. A company using this structure could have only one manager in between its executive and all other employees. It is called a flatarchy because it is a hybrid of a hierarchy and a flat organization. This type of organizational structure is used more by smaller companies since they have fewer employees, though it can be used in companies of all sizes. While some companies grow out of this organizational structure, others continue to use it. **What is organisational culture?** Organizational culture --- often called company culture --- is defined as the shared values, attitudes and practices that characterize an organization. It's the personality of your company, and it plays a large part in your employees' overall satisfaction. Simply put, organizational culture is how leadership tends to, cultivates, or takes care of its business, stakeholders, and employees. Culture can be defined as the consistent organizational behaviors of employees and leaders (norms). **Types of organisational culture** **Clan culture** A clan culture is people-focused in the sense that the company feels family-like. This is a highly collaborative work environment where every individual is valued and communication is a top priority. Clan culture is often paired with a horizontal structure, which helps to break down barriers between the C-suite and employees, and it encourages mentorship opportunities. These companies are action-oriented and embrace change, a testament to their highly flexible nature. Benefits: Clan cultures boast high rates of employee engagement, and happy employees make for happy customers. Because of its highly adaptable environment, there's a great possibility for market growth within a clan culture. Drawbacks: A family-style corporate culture is difficult to maintain as the company grows. Plus, with a horizontal leadership structure, day-to-day operations can seem cluttered and lacking direction. **Adhocracy Culture** Adhocracy cultures are rooted in innovation and adaptability. These are the companies that are on the cutting-edge of their industry --- they're looking to develop the next big thing before anyone else has even started asking the right questions. To do so, they need to take risks. Adhocracy cultures value individuality in the sense that employees are encouraged to think creatively and bring their ideas to the table. Because this type of organizational culture falls within the external focus and differentiation category, new ideas need to be tied to market growth and company success. Benefits: An adhocracy culture contributes to high profit margins and notoriety. Employees stay motivated with the goal of breaking the mold. Plus, with a focus on creativity and new ideas, professional development opportunities are easy to justify. Drawbacks: Risk is risk, so there's always a chance that a new venture won't pan out and may even hurt your business. Adhocracy cultures can also foster competition between employees as the pressure to come up with new ideas mounts. **Market Culture** Market culture prioritizes profitability. Everything is evaluated with the bottom line in mind; each position has an objective that aligns with the company's larger goal, and there are often several degrees of separation between employees and leadership roles. These are results-oriented organizations that focus on external success rather than internal satisfaction. A market culture stresses the importance of meeting quotas, reaching targets and getting results. Benefits: Companies that boast market cultures are profitable and successful. Because the entire organization is externally focused, there's a key objective employees can get behind and work toward. Drawbacks: On the other hand, because there's a number tied to every decision, project and position within the company, it can be difficult for employees to meaningfully engage with their work and live out their professional purpose. There is also risk for burnout in this aggressive and fast-paced environment. **Hierarchy Culture** Companies with hierarchy cultures adhere to the traditional corporate structure. These are companies focused on internal organization by way of a clear chain of command and multiple management tiers that separate employees and leadership. In addition to a rigid structure, there's often a dress code for employees to follow. Hierarchy cultures have a set way of doing things, which makes them stable and risk-averse. Benefits: With internal organization as a priority, hierarchy cultures have clear direction. There are well-defined processes that cater to the company's main objectives. Drawbacks: The rigidity of hierarchy cultures leaves little room for creativity, making these companies relatively slow to adapt to the changing marketplace. The company takes precedence over the individual, which doesn't necessarily encourage employee feedback. **What is organisational development?** Organizational development can be defined as an objective-based methodology used to initiate a change of systems in an entity. Organizational development is achieved through a shift in communication processes or their supporting structure. Studying the behavior of employees enables professionals to examine and observe the work environment and anticipate change, which is then effected to accomplish sound organizational development. Organizational development often involves altering the organization's work structure or influencing workers' attitudes or behavior to help the organization to adapt to fluctuating external and internal conditions. **Organizational Development Process** **Problem diagnosis:** The organization development process begins by recognizing problems. The method of diagnosis usually takes the form of data gathering, assessment of cause, as well as an initial investigation to ascertain options. **Feedback and assessment:** The feedback and assessment step often involves proper investigation of identified problems so that there is a deep understanding of the challenge at hand. This can include an appraisal of documents, focus groups, customer or employee surveys, hiring consultants, and interviewing current employees. Information gathered is used to re-evaluate the challenges in the first step. **Planning:** Once an organization defines and understands its challenge, an action plan is put together. The plan lays down all the intervention measures that are considered appropriate for the problem at hand. Usually, the measures include such things as training seminars, workshops, team building, and changing the makeup or structure of teams. Additionally, measurable objectives, which define the expected results, form an integral part of the overall plan. **Intervention and implementation:** Once a plan is in place, the intervention phase commences. Since the organizational development process is complicated, implementation processes are a key element of the model. As an example, if training classes are preferred over other methods, test results will form the basis upon which the training process is evaluated. The objective at this point is to ensure the required changes take place. If that is not the case, feedback is assessed and used to bring about the required change. **Evaluation:** As soon as the intervention plan is complete, the outcome of the change in the organization is assessed. If the required change does not take place, the organization looks for the cause. Adjustments are made to ensure the obstacle is eliminated. **Success:** Success denotes that the desired change took place. A proper plan and efficiency standards are put in place to ensure that the new switch is sustainable. Ongoing monitoring is needed to ensure that implemented changes last. Furthermore, as markets and organizations change, new problems can arise, leading to the push for further development. Great organizations evolve continuously.