The Influence of Organisational Structure on Organisational Culture Essay

The success or failure of an organisation can often be attributed to the sum of their parts such as staff, profit, products, strategy, technology, environment, structure and culture. These parts or factors can directly contribute to the strengths or weaknesses of an organisation and they are all interrelated. This essay will examine organisational structure and organisational culture and the influence mechanistic and organic structures have on organisational culture.

Organisational structure, as defined by Hodge, Anthony & Gales (1996), is “the sum total of the way in which an organisation divides it’s labour into distinct tasks and then coordinates them” (p. 32). It is a set of structural elements used to manage the total organisation (Davidson, Simon, Woods & Griffin, 2009) and it defines work tasks and processes and define the skills required to perform the required work tasks and processes helping the organisation to meet its goals and objectives (Mintzberg, 1979).

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As well as defining the division of labour, an organisational structure outlines how authority is distributed amongst staff, departments and divisions. (Hill, Jones, Galvin & Haidar, 2007). There are two primary formats used to distribute authority across an organisation; decentralisation, where the authority is delegated to middle and lower levels managers; and centralisation, where authority is retained by higher level managers.

In a decentralised organisation managers are located at different levels of the organisational structure, sharing responsibility for decisions and ensuring tasks are achieved in accordance with business goals or objectives. In a centralised organisation final authority, decision-making and responsibility of the outcomes of the business ultimately lies with the head of the company, such as a chief executive officer or a president (Davidson, Simon, Woods & Griffin, 2009). Organisational structures can be configured in many different designs.

Five typical corporate designs are the simple design, the functional design, the divisional design, the conglomerate design and the matrix design (Wood, Zeffane, Fromholtz, Weisner, Creed, Schermerhorn, Hunt & Osborn, 2010). Each style of design has it’s own characteristics distinct strengths and potential weaknesses. The simple design, also known as an entrepreneurial design is where a chief executive officer or an owner of a business takes on the central directive role and has all decision-making authority. This structure is designed to be responsive and s often seen in small organisations or at the beginning or development stage of a business (Mintzberg, 1979). This structure is best for organisations that are simple, informal and flexible. Communication is be informal and there is little requirement for formalised behaviour. Whilst this structure is agile, dynamic and highly responsive it also relies heavily on the skill and knowledge of the executive. This structure results in an organisation being static without much change or growth. An organisation would need to reconfigure its structure to enable it to expand, change or grow.

The functional design involves grouping similar or related organisational functions or processes together to create a business unit or division such as manufacturing, operations, marketing, human resources and finance. Organisations with this structure have a sharp division of labour, tend to be deterministic, authoritative, centralised and bureaucratic and have a large managerial hierarchy with large support staff. Communication and behaviour is formal and decision-making is guided by standard operating procedures (Hill & Jones, 2010).

A functional structure can provide several advantages. Firstly staff can learn from one another by being grouped together when performing similar tasks becoming better at their jobs and more productive, secondly tasks can be monitored or checked by members of the same group ensuring efficiency and effectiveness of the work completed and a functional design can also stop a hierarchy from getting too tall by spreading the managerial responsibility horizontally across many different groups rather than vertically (Hill et al, 2007).

A major weakness of this structure can be its effect on communication. Communication in this model often travels vertically from teams to senior management rather than across all functional groups. This can cause a duplication of efforts, where multiple teams are trying to achieve the same objective or doing the same work, a lack of cooperation between groups where they only focus in what is in their own best interests and the change of focus from the business goals to the individual groups goals (Banner & Gagne, 1995). Divisional and conglomerate designs have some similarities.

Both are based on separate businesses operating under the larger framework of a parent company or organisation, however, in a divisional structure the businesses are directly related to each other whereas with a conglomerate structure the businesses are unrelated separate entities. Both structures are based on product departmentalisation, which is where each business is responsible for producing their own service or goods, responsible for profits and losses and have their own independent general managers (Davidson et al, 2009).

A divisional design will often report into a central head office and is able to utilise shared services such as human resources, site services and payroll. This structure allows each separate business to focus solely on their specific objectives, products or services. With greater autonomy divisional managers can plan, adapt delegate and coordinate their activities in line with their own specific goals and objectives. There can be an issue for divisional designs trying to compete with each other for services and resources from the central office.

There can also be issues with competition between entities, duplication of staff, tasks, technology and facilities (Wood et al, 2010). A conglomerate design often has complex problems arising from the difficulty and complexity of having many unrelated businesses across a diverse range of operations or industries and it is difficult to compare and evaluate businesses that have no synergy (Griffin, 2008). The matrix design is a “simultaneous structure … [that] blends functional or bureaucratic structure with temporary project teams of specialists pulled together to undertake particular projects” (Banner & Gagne, 1995, p. 77). A matrix structure has an emphasis on dual reporting relationships and authority resulting in complexity and communication issues. This structure encourages risk taking, supports better planning and is often faster to respond to issues and demands. This structure can utilise existing employees skills and interests and often motivate staff by providing opportunities of movement within an organisation, provide a learning environment to develop new skills and provide staff with flexibility and freedom.

A matrix structure can be expensive to maintain given the requirement of skilled project staff, in addition to current staff and can it can also cause disruption and lack of cohesion within teams where staff are constantly being moved around for different projects (Hill et al, 2007). Organisational structures can also be created using two or more of the designs outlined creating a hybrid style of structure. All these structural designs fall into two separate and very different categories; mechanistic structure and organic structure.

Mechanistic structure “emphasises vertical specialisation, hierarchical levels, tight control and coordination through rules, policies and other impersonal methods” (Wood et al, 2010, p. 293). Characteristics of this structure include high complexity, high formalisation, downward communication and little decision-making authority by lower level staff members. Organisational structures with high levels of bureaucracy, routine tasks and processes and standard operating procedures are mechanistic.

An organisation that has a mechanistic structure where there is tighter control over workers and slow formal methods of communication through many layers of management could be a government department. In a bureaucracy like a government agency approval is passed down through the hierarchy before actioning a task. This often results in staff feeling that they have no or little control or responsibility over their work. These organisations are often considered rigid and inflexible with staff perceived to be dogmatic or unhappy.

In contrast, an organic structure is characterised by a low degree of formalisation and complexity and it “emphasises horizontal specialisation, an extensive use of personal coordination and loose rules, policies and procedures” (Wood et al, 2010, p. 293). This structure allows communication to move fluidly across the entire organisation. An organic structure is less formal, more flexible and able to adjust to a changing environment. There is also a high degree of participation among the employees in the decision-making process.

A company with an organic structure would have decisions made horizontally across the board of workers or teams with some influence from management or goals and objectives. An organisation with an organic structure would appear less formal and more flexible with the perception of staff being happy and relaxed. A company such as Google would be an example of an organic structure, where staff are highly valued and acknowledged to be vital to the success of the company and changes occur in association with the changing environment and it’s needs (Life at Google, n. d. ). Where structure is the body of an organisation, culture is the personality. Culture consists of the language, values, attitudes, beliefs and customs of an organisation” (Muchinsky, 1993, p. 270). It helps to distinguish companies from one another and provides a sense of uniqueness and helps to define what a business is about or the way things are done. (Wood, et al, 2010). Whilst not a tangible item the culture of an organisation can have just as much of an impact on the success or failure of a business as profit or loss. A good or strong culture can motivate and encourage employees, create a sense of inclusion and help a business to meet its goal and objectives.

Organisations where the rules constantly change and employee input is not encouraged can be demotivating for staff resulting in a negative culture. Most organisations could not survive without the support of all employees and any business that develops a negative culture could be extremely limited in growth, or will fail to survive. Culture can also be influenced by the structure of the organisation as well as by staff and management styles. A mechanistic structure could result in an organisational culture being inert. “Inert cultures are cautious and conservative, do not value initiative … f middle and lower level managers and may even discourage such behaviour” (Hill et al, 2010 p. 308). An inert culture does not encourage progression, growth or change. Much like a bureaucracy, an inert culture is stagnant, prefers to remain unchanged and is inflexible. For these reasons inert cultures, like some mechanistic structures are likely to experience strategic problems and struggle in the long term by not being able to change or amend goals and objectives according to a changing environment (Hill & Jones, 2010). In comparison, an organic structure can influence a culture to be adaptive.

Adaptive cultures “are innovative and able to respond to change” and “encourage and reward initiatives by middle and lower managers” (Hill et al, 2010, p. 308). Adaptive cultures are flexible, less formal and can introduce change required to meet the demands of it environment. Adaptive cultures are more likely to survive and even thrive in a changing environment resulting in better performance and survival than an organisation with an inert culture (Hill & Jones, 2010). All organisations are made up of structure, processes, technology and people.

Where structure, processes and technology can be replicated from company to company culture cannot. The first building block of an organisation is determining the structure or the foundations of how the business will achieve its desired outcomes. What needs to be considered is how that structure will influence the organisations culture, which in turn could influence or even determine it success or failure. References: Banner, D. K. & Gagne, E. T. (1995). Designing Effective Organisations: Traditional & Transformational Views. Thousand Oaks: Sage Publications. Davidson, P. Simon. A. , Woods, P. & Griffin, R. W. (2009). Management: Core Concepts and Applications (2nd ed. ). Milton: John Wiley & Sons. Griffin, R. W. (2008). Management. (9th ed. ). Boston: Houghton Mifflin Company. Hill, C. W. L. & Jones, G. R. (2010). Strategic Management Theory. (9th ed. ). Mason: South- Western Cengage Learning Hill, C. W. L, Jones, G. R. , Galvin, P. & Haidar, A. (2007). Strategic Management: An Integrated Approach. (4th ed. ). Milton: John Wiley & Sons. Hodge, B. J. , Anthony, W. P. & Gales, L. M. (1996). Organisation theory: a strategic approach. 5th ed. ). New Jersey: Prentice Hall Life at Google. (n. d. ). Retrieved December 3, 2010 from http://www. google. com. au/intl/en/jobs/lifeatgoogle Muchinsky, P. M. (1993). Psychology Applied to Work. (4th ed. ). Belmont: Brooks/Cole Publishing Company. Mintzberg, H. (1979). The structuring of organizations: a synthesis of the research. New Jersey: Prentice Hall. Wood, J. , Zeffane, R. , Fromholtz, M. , Weisner, R. , Creed, A. , Schermerhorn, J. , Hunt, J. & Osborn, R. (2010) Organisational Behaviour Core Concepts and Applications (2nd ed. ). Milton: John Wiley & Sons.

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