which building blocks do you consider more and least important in structuring a successful organization in todays environment, give reasons for your answer

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Unit 2
Structuring Organisations
In this course, our focus and unit of analysis are formal organisations. Edgar Schein (1988) defines formal organisations as: ‘The planned coordination of the activities of a number of people for the achievement of some common, explicit purpose or goal, through division of labour and function, and through a hierarchy of authority and responsibility’.
This definition contains elements common to most definitions of formal organisations: planned activities, coordination of these activities, explicit goals, division of work, and hierarchy. Mintzberg (1983) presents this graphically by saying that:
‘Every organised activity from the making of pots to the placing of a man on the moon gives rise to two fundamental and opposing requirements: the division of labour into the various tasks to be performed, and the coordination of these tasks to accomplish the activity. In large organisations, particularly, division of labour (or the dividing of the work), is a major task and coordinating that work is an arguably even more formidable task.’
Silverman (1978) offers a similarly graphic description of what is meant by the term ‘formal organisation’. He puts it this way. They:
Arise at ascertainable points in time; •
Are easier to perceive as artefacts, consciously established to serve certain purposes. • These purposes are generally stated at the time of the organisation’s establishment;
Are provided by their founders with a set of rules that generally lay down clear lines • of authority and communication with the intention of ensuring that their purposes are readily attained;
Are characterized by a pattern of relationships which is not taken-for-granted by the • stakeholders who seek to co-ordinate and control them;
Pay a relatively great amount of attention to the discussion and execution of planned • changes in social relations, and to the rules of the game on which they are based.
Formal organisations can therefore be said to be highly structured. Structure may be defined as the relatively enduring allocation of work roles and administrative and other responsibilities that create a pattern of interrelated work activities, and which allow the organisation to conduct, coordinate and control these work activities.
In this Unit, we will examine the challenge of designing an organisation’s structure. We will first consider the building blocks. Then we will explain how these blocks are put together in designing organisations. We will follow this with a discussion on traditional and contemporary structural forms; and we will close the Unit with a discussion on organisational cultures, including the impact of national culture.
This Unit is divided into three sessions as follows:
Session 1: Designing Organisations
Session 2: Traditional and Contemporary Structural Options
Session 3: Organisational Culture
Unit 2 Learning Objectives
At the end of this Unit, you will be able to:
describe the building blocks of organisational structures and explain how building • blocks are used to construct organisations;
identify and explain the factors that influence the choice of organisational design;•
differentiate between the mechanistic and organic forms of organisational structures;•
discuss the salient features of traditional organisational forms and compare them • with the contemporary ones;
define the term organisational culture and analyse the impact of culture on • organisational effectiveness, and the impact of national culture on organisational culture.
Session 1
Designing Organisations
There are two fundamental questions to be asked when designing organisations: how should we divide the work that the organisation is to do? And, how should we coordinate efforts when the work is being performed? The answers to these fundamental questions are obtained when we answer certain follow-up ones which we will discuss in this Session.
At the end of this Session, you will be able to:
identify and explain the choices to be made in designing an organisation;•
differentiate between organic and mechanistic organisations;•
identify and explain the factors to be considered in determining organisational • design choices.
Building Blocks
The first fundamental question to be asked is: how should we divide the work that the organisation is to do? The first follow-up question to be asked and answered is: to what degree are tasks to be subdivided into separate jobs? There are two extreme answers to this question. At one extreme we can choose to divide the work to be done into very small parts; or, at the other, we can choose to divide it into large chunks. There will obviously be points in between these extremes.
If we choose the first extreme, we will be selecting to create jobs with a high degree of specialisation. A person working in what we are referring to as a highly specialised job, will perform a limited number of tasks. This type of job design is characteristic of scientific management, as the early scientific management thinkers were of the view that a high degree of specialisation leads to high levels of competence on the part of employees, and therefore to high productivity.
If we choose the second extreme, we will be selecting to create jobs with a low degree of specialisation. The behavioural researchers concluded that highly specialised jobs demotivate and bore employees. Instead, they advocated job enlargement and enrichment. Job enlargement involves expanding jobs horizontally to include a variety of tasks; and job enrichment consists of expanding jobs vertically to add significant decision-making responsibility. The behaviourists argued that enriched and enlarged jobs are motivating and therefore lead to job satisfaction and better performance.
Designers of organisations must therefore weigh these arguments, assess the particulars of the situation before them and make a decision on the degree of specialisation. We might refer to the degree of specialisation as the first building block.
The second follow-up question to be asked and answered is: on what basis should jobs be grouped? This question concerns the issue of departmentalisation or the grouping of jobs which must follow some logic.
A designer might choose to group jobs according to functions, for example, finance and marketing. Or, she might choose to group jobs by the customers served, for example, age or income groups. A designer may also choose to group jobs by product, for example, employees working on cars and mini-vans. Again, she may choose to group jobs according to geography, that is, by location. Finally, the designer might choose to create rigid boundaries between departments so that communication between them is limited, or to create more permeable boundaries, so that communication and interaction are free flowing. More than one of these options would normally be applied simultaneously in the same organisation; and the grouping of jobs is referred to as departmentalisation. This is the second building block.
The third follow-up question to be asked and answered is: how many persons should one person supervise? This question addresses both the division and coordination of work. The number of persons reporting to a single supervisor is known as the span of control. Research cannot tell us what an ideal span of control might be. However, organisation designers have to make decisions on this matter. Span of control is the third building block.
The fourth follow-up question to be asked and answered also combines the issues of dividing and coordinating work. It is: to whom should individuals and groups report? Fayol (in Pugh and Hinckson, 1989) refers to reporting relationships so established as the scalar chain, or the chain of superiors ranging from the ultimate authority to the lowest ranks. In an organisation designed with narrow spans of control, the scalar chain is likely to be longer than the scalar chain of an organisation of the same number of members with a wide span of control. The longer the scalar chain or chain of command the taller the hierarchy. The chain of command is the fourth building block.
The fifth follow-up question to be asked and answered focuses on coordination. It is: where should decision-making authority lie? Designers might limit the responsibility for decision-making to the top management in the organisation; or they might extend the responsibility for making decisions to other levels of management in the organisation. Where decision-making authority is concentrated at the top, the organisation is regarded as being centralized. Where decision-making authority is distributed widely in the organisation, the organisation is considered decentralised. Centralisation / Decentralisation is the fifth building block.
The sixth and final follow-up question to be asked and answered also concerns the issue of coordination. It is: to what degree should rules and procedures be used to control behaviour? The more rules and written procedures, the more formalised the organisation. Degree of formalisation is the sixth and final building block.
Mechanistic Vs Organic Organisations
Depending on the choices we make in using the building blocks, we might design, on the extremes, two generic types of organisations; or we might arrive at a design representing a mixture of both. These two extreme forms are the highly mechanistic and the highly organic. Table 2.1 below (adapted from Moorhead and Griffin, 1995) illustrates the differences between the two forms.
Table 2.1 Mechanistic and Organic Structures: Distinction
High specialisation
Low specialisation: enriched and enlarged jobs
Rigid departmentalisation
Cross-hierarchical and cross-functional teams (cutting across departments)
Clear chain of command
Free flow of information
Narrow spans of control
Wide spans of control
High formalisation
Low formalisation
T. Burns, in his pioneering work published in 1963 (See Pugh, 1990, pp 64) first described the differences between these two generic types. Burns wrote that mechanistic systems are, in fact, the ‘rational bureaucracy’. He continued that for the individual it provides an ordered world of work, and that his own decisions and actions occur within a stable constellation of jobs, skills, specialised knowledge, and sectional responsibilities.
As one descends through the levels of management, one finds more limited information and less understanding of the human capacities of other members of the firm. One also finds each person’s task more and more clearly defined by his superior. Beyond a certain limit he has insufficient authority, insufficient information, and usually insufficient technical ability to be able to make decisions. He is informed quite clearly when this limit occurs; beyond it, he has one course open – to report to his superior (pp 68).
Burns contends that mechanistic organisations are suited to stable environments. On the other hand:
Organismic systems are adapted to unstable conditions, when new and unfamiliar problems and requirements continually arise which cannot be broken down and distributed among specialist roles within a hierarchy. Jobs lose much of their formal definition. The definitive and enduring demarcation of functions becomes impossible. Responsibilities and functions, and even methods and powers, have to be constantly redefined through interaction with others participating in common tasks or in the solution of common problems. Each individual has to do his job with knowledge of overall purpose and situation of the company as a whole.
Interaction runs laterally as much as vertically, and communication between people of different rank tends to resemble ‘lateral’ consultation rather than ‘vertical’ command. Omniscience can no longer be imputed to the boss at the top (pp 68).
Burns added:
For the individual, the important part of the difference between the mechanistic and the organismic is in the degree of his commitment to the working organisation. Mechanistic systems tell him what he has to attend to, and how, and also tell him what he does not have to bother with, what is not his affair, what is not expected of him – what he can post elsewhere as the responsibility of others. In organismic systems, such boundaries disappear. The individual is expected to regard himself as fully implicated in the discharge of any task appearing over his horizon. He has not merely to exercise a special competence, but to commit himself to the success of the concern’s undertakings as a whole (pp 69).
Note that in the current literature on organisations, the term organic, rather than organismic, is most often used.
At this point, please refer to the following
Coordinating Mechanisms
Let us now consider the second fundamental question to be asked when designing organisations: how should we coordinate efforts when the work is to be performed?
Division of work, as we have seen, leads logically to the need to coordinate it, if objectives are to be achieved. Henry Mintzberg (1983) has identified and described mechanisms by which organisations do this. These coordinating mechanisms he named: mutual adjustment, direct supervision and standardisation.
Mutual adjustment achieves the coordination of work by the simple process of informal communication. In this scenario, control of work is in the hands of the doers.
Direct Supervision achieves coordination by having one person take responsibility for the work by issuing instructions and monitoring actions.
Standardisation refers to the standardisation of work processes, outputs, and skills.
Reading 2.1
Burns, Tom. Mechanistic and Organismic Structures, edited by., Derek S. Pugh in Organisation Theory: Selected Readings, 4th ed., (Penguin Group, London, 1997), 64-75.
When the contents of the work are specified or programmed, as on an assembly line, 1. then the ‘work process’ is said to be standardised.
When the results of the work, for example, the dimensions of the product or the 2. performance, are specified, then the ‘output’ is standardised.
Finally, ‘skills’ are standardised when the kind of training required to perform the 3. work is specified. An organisation is likely to use all these forms of standardisation simultaneously, although there may be emphasis on one.
Mintzberg explained that these methods of coordination should be considered the most basic elements of structure, the glue that holds organisations together. He added significantly:
As organisational work becomes more complicated, the favoured means of coordination seems to shift from mutual adjustment to direct supervision to standardisation, preferably of work processes, otherwise of outputs, or else of skills, finally reverting back to mutual adjustment.
Chain of command, centralization/decentralization, formalization and span of control are subsumed in these coordinating mechanisms.
Design Considerations
Designers of organisations, as we said above, can arrange the basic building blocks of an organisation into a number of different permutations, which may ultimately result in either organic or mechanistic structures, or mixtures of both. We will now examine the basis upon which organisational designers might make sensible choices.
Factors to Consider
We will begin our examination by listing the factors to be considered in making design choices and then we will discuss each. The factors are:
Size of the organisation•
Stages in the organisational life-cycle•
Environment in which the organisation exists•
Technology used by the organisation•
Type of workforce employed in the organisation•
Business strategy and structure•
Size of the Organisation
A consequence of organisational growth is heightened departmentalisation. Each department tends to have unique environmental challenges with which to deal and so each develops different ways of interpreting the business world in which it exists, and distinctive structures by which to accomplish its work. The greater this differentiation, the greater is the need on the part of the organisation for integrating or coordinating mechanisms.
As you would have read above, Mintzberg observed that there is a tendency as organisations grow for coordinating mechanisms to change. Small organisations tend to be characterized by mutual adjustment, but as the organisation grows, direct supervision, standardisation, and formalization are the common means of coordinating.
We noted in Unit 1 that excessive formalisation and standardisation can heighten bureaucratic dysfunctions and inefficiency. To obviate these consequences, organisations might introduce organic mechanisms such as cross-functional teams.
Organisational designers must therefore consider size and its consequences when making design decisions.
Stages in the Organisational Life-cycle
Closely related to the issue of size is the issue of the ‘organisational life-cycle’. Life-cycle theory posits that organisations progress through stages in the course of their history. Gordon (1996) discusses a typical ‘life-cycle model’ (adapted from Quinn and Cameron, 1983). It consists of four stages:
Entrepreneurial: This period is characterized by entrepreneurial activities, when 1. many new ideas are generated, resources are marshalled, and a viable business is established. There is little planning and formal coordination, and activities move at a fast pace.
Collectivity: At this stage, innovation, informal communication, and informal 2. structure continue. There is a strong sense of mission and collectivity.
Formalisation: At this stage, rules and procedures increase leading to a more 3. formalised and stable structure.
Elaboration: The challenge at this stage is to avoid decay, to adapt to environmental 4. changes, and to renew the organisation. (See Table 2.2 below).
Table 2.2 Gordon’s Model of the Organisational Life Cycle
Entrepreneurial Stage
Collectivity Stage
Formalisation and Control Stage
Elaboration of Structure Stage
Marshalling of • resources
Lots of ideas•
Entrepreneurial • activities
Little planning and • coordination
Formation of a ‘niche’•
‘Prime mover’ has • power
Informal • communication and structure
Sense of collectivity•
Long hours spent•
Sense of mission•
Innovation • continues
High commitment•
Formalisation of • rules
Stable structure•
Emphasis on • efficiency and maintenance
Institutional • procedures
Elaboration of • structure
Domain expansion•
Adapted from Quinn and Cameron
It is obvious then, that age, size and life-cycle are related. An organisation tends to move from an organic form in its early life to a more mechanistic form in later stages. Life-cycle theory suggests that a fairly successful mechanistic design in the third stage can decline into rigidity, inefficiency and death. Many organisations attempt to prevent this by experimenting with downsizing the workforce (i.e., reducing its size), diversifying, or restructuring into organic designs.
Designers must be aware therefore of the stage in the life-cycle at which the organisation has arrived in order to better understand its challenges and to determine structural solutions.
Environment in which the Organisation Exists
The nature of the organisation’s environment is the third design consideration. Researchers have described organisational environments in many different ways. Essentially, all the models describe a continuum moving from certainty (predictability or stability) at one end, to uncertainty (unpredictability or turbulence) at the other. Robbins (1998) reported that research has helped clarify the meaning of environmental certainty/uncertainty.
Three key dimensions to an organisation’s environment have been identified. They are:
Capacityi. : The capacity of an organisation’s environment refers to the degree to which that environment can support growth. For example, we find nowadays that the information and communications industries seem to be able to support considerable growth. It is therefore safe to say that considerable capacity exists in the environments of those industries.
Volatilityii. : This refers to the degree to which there is unpredictable change in an organisation’s environment. In many industries, change is constant, rapid and discontinuous. Such environments are considered volatile. The information and communications industries may also be considered volatile.
Complexityiii. : Complexity has to do with the degree of heterogeneity and of concentration in the organisational environment. Simple environments are homogeneous and concentrated, while complex ones are heterogeneous and dispersed. Robbins suggests that the tobacco industry in America is homogeneous and concentrated because there are relatively few players. Each firm can, therefore, keep a close eye on the competition. On the other hand, firms operating in the internet-connection business may be said to be functioning in a heterogeneous and dispersed (or complex) environment.
It is argued that a mechanistic organisation can survive in a stable and simple environment. However, in turbulent environments, where organisational flexibility is required for survival, the organic form is more suitable.
Technology used by the Organisation
The technology an organisation uses is also to be considered in designing an organisation. Moorhead and Griffin (1995) define organisational technology as the mechanical and intellectual processes that transform inputs into outputs. Researchers have developed several models of categorising organisational technologies. These models all consider the adaptability to change of the technological system in question. Of these models, three main ones are described below:
Woodward’s model (in Pugh, 1984): This model classifies technology into four types: unit, mass production, continuous flow and technical batch.
A unit technology is one that produces custom-made products; 1.
A mass production technology refers to assembly line operations;2.
A continuous flow technology refers to an ongoing production process such as oil 3. refining; and
A technical batch process is similar to the unit except that the required knowledge 4. and skills are highly complex.
Mass production and continuous flow call for more mechanistic structures, while unit and technical batch require the organic form.
Burns and Stalker’s model (in Pugh, 1990): This model considers the rate of change to which the particular technology is subject, and identifies two types of changes: slow and rapid. In situations where technological change is slow, Burns and Stalker suggest that the mechanistic form can suffice, but that this form is unsuitable in situations where change is rapid.
Perrow’s model (in Mullins, 2005, pp. 640): Starting with the two dimensions of task variability and problem analysability, this model identifies four types of technology: routine, engineering, craft, and non-routine. The diagram below illustrates:
Task Variability
High Variety
Well Defined and Analysable
Ill Defined and Unanalysable
On the whole, the routine and engineering types of technology can function in mechanistic type organisations, while craft and non-routine require the organic.
Designers of organisations can adapt these models to specific situations to assist them in making their choices.
Types of Workforce Employed in the Organisation
The type of workforce the organisation employs is yet another design consideration. Gordon (1996) argues that professional and highly creative workers would chafe at the restraints of a bureaucratic structure (i.e., a mechanistic structure) and that for these types of employees the organic structure is more suitable. This issue is more relevant now than ever before, as many organisations are becoming increasingly knowledge-based.
Business Strategy and Structure
It is often said that structure follows strategy (Chandler, 1962). Some have also argued that once a structure is in place, it influences strategy (Hammond, 1994). It would appear that both assertions are true, and which ever point of view we adopt, we accept that there is a relationship between strategy and structure. The challenge for the designer is to establish a helicopter view of the situation before her and to determine an appropriate fit between type of structure and type of strategy.
Miles and Snow (1984 in Pugh, 1990) wrote:
The concept of fit plays an undeniably important role in managerial behaviour and organisational analysis. Fit is a process as well as a state – a dynamic search that seeks to align the organisation with its environment and to arrange resources internally in support of that alignment. In practical terms, the basic alignment mechanism is strategy, and the internal arrangements are organisational structure and management processes. Because in a changing environment it is very difficult to keep these major organisational components tightly integrated, perfect fit is most often a condition to be striven for rather than accomplished.
In confronting the difficulty of finding the correct fit, the designer can be assisted by an understanding of generic business strategies and their implications for organisational form.
Miles and Snow offered a typology of basic strategic postures that organisations might establish with its business environment (1978, in Anthony et al1999). The four postures are:
Defenders: Organisations that focus on a narrow line of products and strongly • defend their position in the market.
Prospectors: Organisations that are always looking for new market opportunities • and aggressively seek to develop both new products and new markets.
Analyzers: a mix of defender and prospector, for example, an Organisation that has • one product in a stable market and one in a changing market.
Reactors: Organisations that see major changes in their environments but have • difficulty adapting quickly enough to meet the changes.
Michael Porter (1985, pp. 12-15) offered another typology of generic strategies.
One strategy is cost leadership. A firm using this strategy sets out to be the low-cost producer in its industry.
Another strategy is differentiation, in which case a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers.
A third strategy is focus. A firm adopting this strategy selects a segment or group of segments in the industry and serves these to the exclusion of others. The focus strategy has two variants: cost focus, seeking cost advantage in a segment and differentiation focus, seeking differentiation in a target area.
The strategy that any particular organisation employs may not fit precisely into any of the categories identified above. However, its strategy is more than likely to cover significant elements of one, or some combination of these types. The task of the organisational designer is to determine the structure that will fit the unique strategy or combination of strategies that distinguishes the organisation being designed. In making a choice, the designer will have to consider the extent to which a strategy demands organisational flexibility in order to be successful.
In Table 2.3 below, certain general suggestions for accomplishing fit between strategy and structure are made. However, we must bear in mind that there are dysfunctions in all structural forms which must be obviated or minimised whenever these forms are used. For example, when we suggest that a mechanistic design might fit a ‘defender’ strategy, we are using relative terms. We know that extreme bureaucracy leads to many inefficiencies, and is not to be inflicted on any organisation, irrespective of its business strategy. Similarly, the organic form in its extreme might be inappropriate in some cases. Or, we might find that some parts of the organisation need to be more organic than others. In the end, it is the designer’s judgement that matters. Moreover, managers have a role to play. Managers must continuously assess organisational performance and make the necessary adjustments in strategy and structure.
Table 2.3 General Suggestions for Accomplishing Fit between Strategy and Structure
Miles and Snow
Mechanistic: tight control, extensive work specialisation, high formalisation and high centralisation.
Highly organic: a loose structure, low specialisation, low formalisation and decentralised.
A mixture of organic and mechanistic: mix of loose with tight properties; tight controls over current activities and looser controls for new undertakings.
Cost Leadership
Mechanistic: tight control, extensive work specialisation, high formalisation and high centralisation.
Organic: a loose structure, low formalisation and decentralised.
Focus: cost
Focus: Differentiation
Choose an accessible organisation and examine its structure to determine whether it is organic or mechanistic. Discuss your findings with your classmates
In this Session, we saw that designing organisations concerns making appropriate choices regarding division and coordination of work. We also discussed the factors that must be considered when designers are arranging the various building blocks to produce a structure for an organisation. We wish to emphasise that these factors must be considered together. Even so, we might venture to say that of the various factors, the organisation’s business environment and its strategy or strategies are the most important, as all others follow from these.
In the next Session, we will discuss the more widely used structural options.
Session 2
Traditional and Contemporary Structural Options
In this Session, we begin by discussing three traditional structural options: functional, market-oriented and matrix. We will then discuss three organisational forms that are currently emerging: dynamic networks, horizontal organisations, and virtual organisations. In all cases, we will outline their advantages and disadvantages.
You will observe that the traditional forms tend to be mechanistic; while the contemporary forms are organic. Moreover, you are likely to discern that the matrix is an intermediate form. Essentially, these comprise the generic choices available to managers at present.
At the end of this Session, you will be able to:
evaluate the functional, market-oriented, and matrix structural forms; •
analyse three contemporary organisational forms;•
evaluate the advantages and disadvantages of each structural form. •
Functional Structures
In a functional structure, departments are grouped according to functions, for example, finance, operations, and human resource management. Depending on their size, organisations so structured may be characterised by a high degree of both vertical and horizontal differentiation.
Functionally structured organisations may be grouped into the following three types (Mintzberg, 1983):
Simple: The simple structure is typically found in small, young organisations. As they grow, they tend to become organised along functional lines, with the top manager having control. Even so, they tend to be organic in form, using a mixture of mutual adjustment and direct supervision as coordinating mechanisms.
Machine bureaucracy: Machine bureaucracies such as manufacturing and public service organisations are typical of many larger, hierarchical organisations that have become highly formalised. The coordinating mechanisms are two-fold: direct supervision and standardisation of work processes.
Professional bureaucracy: Professional bureaucracies, such as universities and hospitals, are typically knowledge-based and display the same level of formalisation as do machine bureaucracies. However, their main coordinating mechanism is the standardisation of skills.
Figure 2.1 Functional Structure
Gordon (1996) argues that the functional structure works best when:
Roles or jobs in the organisation can be easily placed in functional areas; •
A relatively small amount of communication outside the groupings is required; •
The organisation has a well-developed product or service; •
Few exceptions occur and therefore rapid communication is less necessary; •
Environmental conditions are relatively benign, such as a stable and predictable • market demand;
The organisation is small to medium-sized, making face-to-face communication • feasible.
Even in those circumstances, these organisations could be subject to the typical bureaucratic dysfunctions, resulting in ineffective communication, slow decision-making processes and destructive conflict between functional units.
Market-oriented Structures
Organisations structured along market-oriented lines departmentalize according to the markets they serve. Departments may be formed around products, clients, geographic areas or combinations of these. Functional sub-groups normally exist within each of these larger groupings. Hence, there can be functional units within a geographical division.
Where these organisations become very large, they are often described as being divisionalized, each division often functioning as an autonomous company. In its extreme form, the organisation becomes a conglomerate with a single parent company owning a number of independent companies. While all others are used, the main coordinating mechanism in market-oriented organisations tends to be standardisation by outputs.
Figure 2.2 Divisionalised Market-Oriented Structure
Gordon points out that the market-oriented structure works best under the following circumstances:
The organisation faces a relatively dynamic and unpredictable market situation; •
Rapid communication is essential; •
Responding to rapidly changing conditions is important; •
The organisation has abundant resources for meeting customer needs. •
While this structure facilitates flexibility and quick response to the marketplace, it often leads to costly duplication of skills and knowledge throughout the organisation. Moreover, where the divisions become too large, they may loose their flexibility, succumbing to the typical bureaucratic dysfunctions.
Matrix Structures
A matrix structure combines functional and market departmentalisation. It seeks to obtain the advantages of both methods, while minimising the disadvantages. Robbins (1998) concludes as follows:
The strength of functional departmentalisation lies in putting like specialties together, which minimises the number necessary, while it allows the pooling and sharing of specialised resources across products. Its major disadvantage is the difficulty of coordinating the tasks of diverse functional specialists so their activities are completed on time and within budget. Product departmentalisation, on the other hand, has exactly the opposite benefits and disadvantages. It facilitates coordination among specialties to achieve on-time completion and meet budget targets. Furthermore it provides clear responsibility for all activities related to a product, but with duplication of activities and costs.
The matrix form attempts to obtain the best of both worlds. This form is probably best
understood if considered from the point of view of the employee. An employee in such
an organisation would initially hold a position in a functional area, reporting to a supervisor in that unit. He or she would also be appointed as a member of one or more
permanent cross-functional teams and she would report to the leaders of the teams to
which she belongs. The matrix therefore violates Fayol’s unity-of-command prescription.
In fact, the major problem with the matrix system derives precisely from this characteristic. Workers may experience stress reporting to two bosses; and bosses may compete for the time of the employees, which can lead to dysfunctional power struggles. In its defence, though, the matrix does benefit from the advantages of the two systems of which it is comprised. Some of the advantages and disadvantages of the matrix form of organisational structures, given by Banner and Gagne (1995), are listed in Table 2.4 below. This is followed by a simple diagram of the matrix structure illustrated in Figure 2.3.
Table 2.4 Advantages and Disadvantages of Matrix Structures
Creative solutions to problems – as a result • of inputs coming from a variety of sources.
Enhanced risk taking.•
Greater utilisation of resources.•
Faster response to market.•
Faster rollout of new products.•
Better planning.•
Enhanced communication and information • transfer.
Enhanced managerial growth.•
Tendency toward anarchy.•
Power struggles.•
Severe groupitis (i.e., over use of group • meetings and group decision-making).
Collapse during economic crunch.•
Excessive overhead costs.•
Decision strangulation (i.e., climate • in which everyone wants to vote on everything).
Figure 2.3 A Simple Matrix: Functional Departments and Cross-Functional Teams
Project C
Project B
Project A
Project D
The matrix form of organisational structure is considered to be an intermediate one, that is, it falls between the traditional and what is sometimes referred to as the post-industrial.
Contemporary/Emerging Structures
Banner and Gagne (1995) are among those scholars on organisations who see the matrix as only an intermediate structural form. They suggest that a new paradigm is in the process of replacing the old, and that the traditional mechanistic form will eventually disappear and be replaced by new organic ones typical of post-industrial society.
Banner and Gagne define a paradigm as the set of beliefs, attitudes, expectations, assumptions and values that determines how people construct their own personal reality. A paradigm shift occurs when there is a dramatic shift in the way a group of people construct their personal realities. Banner and Gagne hold the view that such a shift is now occurring and that this is reflected in the new organisational forms that are currently emerging.
It appears that contemporary theorists are moving away from the contingency view, which holds that situational factors should guide organisational designers in choosing a structural option. These theorists argue that mechanistic bureaucracy is a product of the industrial age and is now a dysfunctional relic in the post-industrial era, and consider the organic form more relevant for the new age. Banner and Gagne (pp. 86), for example, refer to Peter Senge, who uses the term metanoic, a word used by the early Christians to describe a reawakening of intuition and personal responsibility, to articulate a fundamentally new organisational model with five common traits. These five traits are:
A clear vision or sense of purpose;•
“Alignment” of employees around that purpose;•
A corporate culture that values individual growth, i.e., empowering people; •
Decision-making and financial responsibility at the lowest level possible, i.e., • structural integrity;
A balance of reason and intuition.•
The matrix form of organisational structure is considered to be an intermediate one, that is, it falls between the traditional and what is sometimes referred to as the post-industrial.
Contemporary/Emerging Structures
Banner and Gagne (1995) are among those scholars on organisations who see the matrix as only an intermediate structural form. They suggest that a new paradigm is in the process of replacing the old, and that the traditional mechanistic form will eventually disappear and be replaced by new organic ones typical of post-industrial society.
Banner and Gagne define a paradigm as the set of beliefs, attitudes, expectations, assumptions and values that determines how people construct their own personal reality. A paradigm shift occurs when there is a dramatic shift in the way a group of people construct their personal realities. Banner and Gagne hold the view that such a shift is now occurring and that this is reflected in the new organisational forms that are currently emerging.
It appears that contemporary theorists are moving away from the contingency view, which holds that situational factors should guide organisational designers in choosing a structural option. These theorists argue that mechanistic bureaucracy is a product of the industrial age and is now a dysfunctional relic in the post-industrial era, and consider the organic form more relevant for the new age. Banner and Gagne (pp. 86), for example, refer to Peter Senge, who uses the term metanoic, a word used by the early Christians to describe a reawakening of intuition and personal responsibility, to articulate a fundamentally new organisational model with five common traits. These five traits are:
A clear vision or sense of purpose;•
“Alignment” of employees around that purpose;•
A corporate culture that values individual growth, i.e., empowering people; •
Decision-making and financial responsibility at the lowest level possible, i.e., • structural integrity;
A balance of reason and intuition.•
Banner and Gagne (1995, pp. 86) further comment that:
Practitioners of the transformational approach envision that getting organisations to work this way creates a whole new way of thinking, a new consciousness about influence, information, planning, decision-making and resource sharing. It breaks down divisional/departmental barriers as well as the barriers between an organisation and the world outside it. The culture of the organisation therefore becomes refreshed by the culture of the rest of the world.
Let us now look at three practical examples of the emerging paradigm.
Dynamic Networks
A dynamic network is typically composed of a group of businesses, partnerships, or individuals who subcontract their services to a broker core. This broker core provides coordination, supervision, and control of a given project or contract. In this way, the network organisation maintains human resources at a very low level, while increasing its flexibility and responsiveness to customers.
Some examples of the dynamic networks that are now emerging are joint ventures, subcontracting, licensing agreements across borders, and intrapreneurship. Banner and Gagne (1995, pp. 184) refer to Miles and Snow (1986) who have categorised the major design features of these new forms:
Vertical disaggregation1. : Here business functions such as finance, marketing and product design are performed by independent organisations united in a single network. In his classic book Megatrends (1982), John Naisbitt heralds the advent of networking as a replacement for the hierarchy of conventional bureaucracies. Naisbitt sees networks as offering what bureaucracies can never deliver – the horizontal link. He also points out that while the old boy network is elitist, the new network is egalitarian.
Brokers:2. Brokers who play a lead role by subcontracting for needed services bring the separate functions together. In other cases, various brokers specialising in particular services or functions can facilitate linkages among equal partners.
Market mechanisms:3. The major functions are bound together by market mechanisms rather than by formalised structures and plans. Contracts and payments are based on performance and close supervision is not the norm.
Full-disclosure information systems:4. Participants in the network are linked together by elaborate information systems so that individual contributions (that is, value added) can be mutually and instantaneously verified.
Figure 2.4 Dynamic Network: An Illustration
Banner and Gagne (1995, pp. 185) argue that this new form offers a number of advantages:
‘The individual participant gets to pursue a distinctive competence.’•
‘Because each part of the network is a complementary part of the whole, there is a • synergistic relationship among the parts. In other words, (the whole is greater than the sum of the parts).’
‘This complementarity allows for the creation of elaborate networks to handle • complex projects.’
‘Because continued participation is based on results produced (that is, accountability • is strict and a broker can fire a firm for non-compliance), everyone is encouraged to participate responsibly.’
‘Each firm plays a role of implicit interdependence with other firms in the network.’ •
This structure is not possible where sophisticated and reliable information and communication technologies are unavailable.
Horizontal Organisations
Horizontal organisations eliminate the management hierarchy and emphasise the empowerment of workers. Other names for this type of organisation are ‘team-based’ or ‘lateral’. In these organisations, the key processes (such as new product development or order generation and fulfilment) are identified and cross-functional teams given the responsibility to manage them from start to finish. The focus of these types of organisations tends to be customer satisfaction. Gordon (1996) lists the seven characteristics of horizontal organisations. She explains that horizontal organisations:
Are organised around process, not task;1.
Result in a flattening of the hierarchy;2.
Use teams to manage everything;3.
Use customer satisfaction to drive everything;4.
Reward members for team performance;5.
Result in maximisation of contact with suppliers and customers;6.
Make information and training widely available to all employees.7.
Figure 2.5 Horizontal, Lateral or Team-Based Organisations
We might add that team-based organisations are required to spend time and money on team building. They also must find creative ways to reward teams and to deal with non-performing team members. Intensive teamwork might also be stressful for some, and so, arrangements must be made to assist staff with stress management. The benefits of horizontal organisations lie in their flexibility and responsiveness to customers and other stakeholders.
Virtual Organisations
Figure 2.6 Virtual Organisations The virtual organisation is a network that is more temporary and opportunistic than others. Gordon (1996, pp. 365) describes these organisations as networks of independent suppliers, customers and even competitors, typically tied together by computer technology, and they share skills, costs and access to markets.
Virtual organisations have five major characteristics (Gordon, 1996):
Technology• : Computer networks link far-flung companies … … and partnerships are based on electronic contracts.
Excellence• : Each partner brings its core competencies to the corporation thus allowing the creation of a ‘best-of-everything’ organisation.
Opportunism• : Partnerships are less permanent, less formal and more opportunistic. Companies band together to meet a specific market opportunity and then disband after meeting the need.
Trust• : The relationships in a virtual corporation require mutual trust because the participating companies are more reliant on each other than previously.
No Borders• : The virtual corporation redefines the traditional boundaries of the company. Increased co-operation among competitors, suppliers and customers makes it difficult to determine the companies’ borders.
This is a form of network organisation and so possesses the same advantages and disadvantages.
We began this Session with a discussion on traditional organisational forms and then we considered three forms that have recently emerged. We also highlighted their advantages and disadvantages.
What does the future hold? Banner and Gagne foresee the emergence of the pure organismic organisation which they predict will be found primarily in the information/service/knowledge arena initially, since mass-production technology demands a more structured approach. They predict that these organisations will be:
…decentralized, with many autonomous work groups, probably of a temporary matrix character. These configurations will come together and disband as needed in the accomplishment of the organisation’s purposes. The key feature of this structure will be flexibility and adaptability…. Where the bureaucratic structure is held together or integrated by rules, regulations, policies, procedures, and finite goals, the organic organisation will use vision or purpose as organisational glue (Banner and Gagne, 1995, pp 189).
We conclude this Session with the comment that the new innovations in organisational structures are occurring at a faster rate in the developed countries and in certain industries such as information/service/knowledge. These new innovations in organisational structures are also emerging in Caribbean countries, but at a slower rate.
Which factors in today’s business environment make network organisations feasible? Discuss with your classmates
Session 3
Organisational Culture
Organisational culture serves to bind an organisation together, giving it a distinct identity and providing something to which members could become committed. Organisational culture guides and shapes behaviour and may be either an asset or a liability. We can easily see or identify aspects of the organisation such as its technology, its organisation chart, its stated objectives, its buildings, and so on. Its culture, that is, its norms, values, basic assumptions and beliefs, are aspects of an organisation which we cannot easily see.
In this Session, we will define culture and the elements of culture. We will also discuss the levels at which organisational culture is analysed, the factors that influence the development of culture, and the relationship between organisational culture and effective performance. Finally, we will examine the relationship between national culture and organisational culture.
At the end of this Session, you will be able to:
identify the key elements of culture and define organisational culture;•
examine the factors that influence the development of organisational culture;•
analyse the relationship between culture and effective organisational performance; •
analyse the relationship between national culture and organisational culture.•
Defining Organisational Culture
The constituents of culture typically identified by anthropologists and sociologists are norms, folkways, mores, symbols, ceremonies and rites, myths, jargon, language, artefacts and values. An understanding of them will assist us in understanding what is meant by the term ‘organisational culture’.
Norms are unwritten standards of behaviour to which members of a group or organisation adhere.
Folkways are the traditional behaviour of a people. Forms of greeting or ways of expressing gratitude are examples of folkways.
Mores are customs or conventions that are regarded as essential to or characteristic of a community. Mores may be considered a stronger type of folkway, in that they identify right and wrong behaviour.
Symbols are things conventionally regarded as typifying, representing, or recalling something meaningful to a group, organisation or community.
Ceremonies and Rites are planned, formal and public occasions that celebrate a particular event or anniversary.
Myths are narratives involving events and persons, true or imaginary, embodying cherished or popular ideas.
Jargon consists of words or expressions used by a particular group or profession.
Language is the method of human communication, either spoken or written, consisting of the use of words in an agreed way.
Artefacts are products of human art and workmanship.
Values are principles and standards that serve to guide proper behaviour.
Let us now consider definitions of culture.
Hofstede (1991) defines culture as ‘the collective programming of the mind which distinguishes the members of one group or category of people from another’. (Hofstede was referring to national culture, but we can use it to define organisational culture as well).
This definition places emphasis on what culture does to the individual, having as one of its central phrases ‘the collective programming of the mind’. The word socialization can be substituted for this phrase. In fact, it is the word commonly used. When one is raised in a community, one is ‘programmed’ or ‘socialized’ by that community.
Hofstede’s definition also broaches the issue of cultural differences amongst peoples. He states that ‘the collective programming of the mind’ distinguishes one group from another. The same is true for organisations, and the fact of these differences between organisations raises the question of the relationship between culture and effectiveness. Is it that certain cultural characteristics contribute to effectiveness and others do not?
Organisational researchers and managers have been paying special attention to this and other questions, and we will pursue them later in this Session.
Let us consider another definition. This one is given to us by Edgar Schein (1985), and it challenges us to look at culture from another perspective. It states that organisational culture consists of:
… basic assumptions and beliefs that are shared by members of an organisation, that operate unconsciously, and that define in a basic ‘taken-for-granted’ fashion an organisation’s view of itself and its environment. These assumptions and beliefs are learned responses to a group’s problems of internal integration. They come to be taken for granted because they solve those problems repeatedly and reliably. This deeper level of assumptions is to be distinguished from the ‘artefacts’ and ‘values’ that are manifestations or surface levels of the culture but not the essence of the culture.
This definition leads us to consider the constituents of culture and the different levels at which we might study organisational culture. Schein asserts that basic assumptions and beliefs are the essence of culture, and that values and artefacts are more superficial. Hence, we may consider organisational culture to consist of the following layers:
Artefacts: ‘The most visible level of the culture … … includes physical space and 1. layout, the technological output, written and spoken language and the overt behaviour of group members’ (Mullins, 2005, pp. 892). Norms, myths, jargon, symbols and ceremonies may also be placed in this layer.
Values: These are ‘social ideals or normative beliefs about proper behaviour in 2. various situations’ (Banner and Gagne, 1995, pp. 371).
Basic Assumptions: These are ‘unconsciously held learned responses. They are 3. implicit assumptions that actually guide behaviour and determine how group members perceive, think and feel about things’ (Mullins, 2005, pp. 892).
Figure 2.7 Layers of Organisational Culture
Having considered these definitions, let us now examine the factors that lead to the development of organisational culture.
The Development of Culture
There appears to be a consensus that the factors that influence organisational culture are as follows (Handy in Mullins, 2005, pp. 894; and Handy in Martin, 1998, pp. 343):
History and ownership1. : The values and philosophy of the founders and the major events that occur from time to time play a key role in the development of an organisation’s culture.
Primary function and technology2. : The industry in which an organisation is located influences its technology. Technology in turn influences structure and culture.
Size3. : As we saw earlier, size influences structure, in particular, the degree of formalization and other mechanisms designed to control the behaviour of members. In turn, the degree of formalization and other types of control mechanisms influence the nature of an organisation’s culture.
Goals and objectives4. : In addition to financial success, the emphasis that organisations place on issues such as customer satisfaction, preserving the natural environment, risk avoidance, or long-term survival impacts on culture.
Location and environment5. : organisations placed in different countries or different parts of the same country can develop different cultures, because different geographic locations and business environments bring different types of staff, customers, suppliers, financial markets and governmental influences.
Management and staff6. : Management style, employee preferences, and the dominant psychological contract also influence culture.
The idea that organisational culture develops over time as a result of all the above influences, raises the question of change. Does culture change? If so, how does culture change? The word ‘development’ itself implies change. Furthermore, there is the implication that these various influences themselves change over time.
From the above, we can infer that major unanticipated events and the consequent organisational responses leave deep impressions, and may even precipitate fundamental cultural change. When they occur, we can refer to such events as cases of unplanned change.
We can also infer that transformational leaders could plan and create fundamental culture change by communicating and implementing new vision. They might strengthen the new culture through their personnel selection and socializing processes, by introducing rewards that reinforce and are consistent with a new culture, by attempting to maintain a relatively stable workforce, and by instituting frequent reinforcing ceremonies and rituals (McShane and Von Glinow, 2005, pp. 488). When this occurs, we can refer to it as planned change. We will discuss organisational change in more detail in Unit 10.
Organisational Culture and Performance
Another issue of significance to managers and researchers is the relationship between organisational culture and effective performance. In fact a genre of popular management literature has surfaced addressing this very issue. A famous example is In Search of Excellence (1982) by Peters and Waterman. Their study of excellent companies revealed that these organisations possessed eight key cultural characteristics:
They display ‘a bias for action, for getting on with it’.1.
They stay ‘close to the customer’ (learning from the people they serve).2.
They facilitate ‘autonomy and entrepreneurship’, that is, they foster leaders and 3. innovators throughout the organisation.
They emphasise ‘productivity through people’, that is, they treat the rank and file as 4. the root source of quality and productivity.
Their leaders display ‘hands on, and value driven’ behaviour.5.
They ‘stick to the knitting’, that is, they stay close to their core business.6.
They use simple structures, and maintain lean staffing levels.7.
Their structures posses ‘simultaneous loose-tight properties’, that is, they are both 8. centralized and decentralized.
Commenting on this study, Mullins (2005, pp. 898) noted that while a number of the original, excellent companies studied by Peters and Waterman have ‘fallen from grace’, the importance of culture to effective organisational performance still stands and has been reinforced by Heller’s (1997) study of Europe’s top companies, and by studies of exceptional companies around the world conducted by Goldsmith and Clutterbuck (1998). Indeed, much has been written in this vein, and the various studies differ to some extent regarding the specific cultural characteristics required for success. One characteristic seems to be common, and that is what Peters and Waterman refer to as ‘productivity through people’. (See Ouchi, 1982).
Banner and Gagne (1995, pp. 390-391), in their attempt to consolidate views on the issue of effective organisational cultures, offer that cultures seem to range on a continuum from effective to ineffective as follows:
Reactive organisations1. that are always struggling to keep abreast of changes in their internal and external environments.
Responsive organisations2. that respond to their own needs, their customers’ needs, and changing environmental needs, and are satisfactory in stable environments.
Proactive organisations3. that seek to anticipate changes and adapt accordingly.
Interactive organisations4. that are vision based and function as a whole. Whole-centeredness refers to the distinctive organisational practice of approaching itself as a totality, in which the parts have no separate existence apart from the whole.
Inspired organisations5. that are ‘self-actualised’, and go beyond the constraints of structure and form.
Figure 2.8 Continuum of Ineffective to Effective Cultures
They conclude that ‘if cultural behaviour is consistent with spoken values, if the culture enhances the strategic direction of the organisation, and if the culture allows for individual expression and creativity, that culture is likely to be effective’.
National Culture and Organisational Culture
Yet another issue of concern to contemporary business leaders and researchers is the impact of national culture on organisational culture. We indicated above that geographical location influences culture. By that statement we acknowledged that national cultures and regional cultures (within the same national jurisdiction) differ, and that they have an impact on organisational culture. In an age of heightened international business dealings, the nature of these differences concerns managers. Let us examine this issue more closely.
Students of the international dimensions of organisational culture have two options: They may seek to examine each country or region individually and in isolation. Or they may establish a general framework by which to compare countries. It would seem that the second option dominates among scholars in the field. In this regard, Hofstede’s and Trompenaars’ frameworks are quoted most often.
Hofstede uses the term ‘society’ rather than ‘nation’. In his words (Hofstede, 1984)2:
The word ‘culture’ is usually reserved for societies (in the modern world we speak of nations) or for ethnic or regional groups, but it can be applied equally to other human collectivities or categories: an organisation, a profession, or a family. … … Societies merit special consideration in the study of cultures because they are the most “complete” human groups that exist; a society is a social system “characterized by the highest level of self-sufficiency in relation to its environments” (Parsons, 1977: 6).
He argues that societies maintain cultural patterns across many generations because of stabilizing mechanisms that operate in and around them. In Figure 2.9 below, Hofstede’s view of the operations of those mechanisms is illustrated. He describes this system as being a self-regulating quasi-equilibrium that explains the longevity of culture.
We should note that Hofstede’s system posits that the structure and functioning of institutions are among the consequences of culture. If this is so, it follows that cultural differences between societies must account to some degree for differences in the culture of their organisations.
Hofstede’s theorizing and research led him to identify four dimensions of culture that could be used as a basis for comparing societies. ‘A dimension is an aspect of culture that can be measured relative to others’ (Hofstede, 1984, pp. 14). The four dimensions are: power distance (from large to small), individualism versus collectivism, masculinity versus femininity, and uncertainty avoidance (from weak to strong). (Some years later, he identified a fifth dimension: a long-term orientation in life versus a short-term orientation).
Power distance (the first dimension) is the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.
In the large power distance situation superiors and subordinates consider each other as existentially unequal; the hierarchical system is felt to be based on this existential inequality. Organisations centralize power as much as possible in a few hands. Subordinates are expected to be told what to do. There are a lot of supervisory personnel structured into tall hierarchies of people reporting to each other. Salary systems show wide gaps between top and bottom of the organisation (Hofstede, 1994, pp. 35).
2 The discussion paraphrases Hostede’s (1984) work.
Figure 2.9 The Stabilizing of Culture Patterns
The second dimension is individualism versus collectivism. Hofstede (1994, pp. 51) explains: ‘Individualism pertains to societies in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family’. In individualist societies, identity is based in the individual.
Education/diplomas increase economic worth and/or self-respect; the relationship between employer and employee is a contract based on mutual advantage; hiring and promotion decisions are supposed to be based on skills and rules only; management is management of individuals; and task prevails over relationships (ibid, 1994, pp. 67).
‘Collectivism pertains to societies in which people from birth onwards are integrated into strong, cohesive in-groups, which throughout people’s lifetime continue to protect them in exchange for unquestioning loyalty’. In collectivist societies, identity is based on the social network to which one belongs; education/diplomas provide entry to groups of a higher status; the employer-employee relationship is like a family link; hiring and promotion decisions take employees’ in-group into account; management is management of groups; and relationships prevail over tasks (Hofstede, ibid, pp. 67).
Outside Infuences
Forces of nature
Forces of man
Trade, conquest
Scientific discovery
Ecological factors:
Societal Norms
Value systems of major groups of population
Structure and functioning of institutions:
Family patterns
Role differentiation
Social stratifications
Socialisation emphases
Political structure
Theory development
Masculinity versus femininity is another dimension. Hofstede (ibid, pp. 82) defines these poles as follows: ‘masculinity pertains to societies in which social gender roles are clearly distinct (i.e., men are supposed to be assertive, tough, and focused on material success whereas women are supposed to be more modest, tender, and concerned with the quality of life); femininity pertains to societies in which social gender roles overlap (i.e., both men and women are supposed to be modest, tender, and concerned with the quality of life).
In feminine societies, people work in order to live; while in masculine societies, people live to work. Managers in feminine societies use intuition and strive for consensus; in masculine societies, they are expected to be decisive and assertive. In feminine societies, stress is placed on equality, solidarity, and quality of work life; while in masculine societies, stress is placed on equity, competition among colleagues, and performance. Finally, in feminine societies, conflicts are resolved by compromise and negotiation; while in masculine societies, they are resolved by fighting them out (ibid, pp.96).
The fourth dimension is uncertainty avoidance, which is defined as the extent to which the members of a culture feel threatened by uncertain or unknown situations.
In societies that are weak with respect to uncertainty avoidance, there is tolerance of deviant and innovative ideas and behaviour; motivation is by achievement and esteem or belongingness; precision and punctuality have to be learned; there is the view that there should be no more rules than is strictly necessary; time is a framework for orientation; and people are hard-working when needs be.
Where uncertainty avoidance is strong, there is an emotional need for rules, even if these will never work; time is money; there is an emotional need to be busy, an inner urge to work hard; precision and punctuality come naturally; there is suppression of deviant ideas and behaviour and resistance to innovation; and motivation is by security and esteem or belongingness (ibid, pp. 125).
Hofstede (ibid, pp. 140) concludes that of the four dimensions, power distance and uncertainty avoidance in particular affect our thinking about organisations. Organising always demands the answering of two questions: (1) who has the power to decide what? And (2) what rules or procedures are to be followed to attain the desired ends? The answer to the first question is influenced by cultural norms of power distance; the answer to the second question is influenced by cultural norms about uncertainty avoidance. The remaining two dimensions, individualism and masculinity, affect our thinking about people in organisations rather than about organisations themselves.
Trompennars (1994)2 uses a different set of dimensions to compare cultures. He contends that people everywhere are confronted with three sources of challenge: relationships with other people, management of time and aging, and coming to terms with the external nature of the world, be it benign or threatening; and he derived his cultural dimensions from them.
2 The discussion paraphrases Trompenaars’ (1994) explanation.
He uses the following five dimensions to examine the way people relate to each other:
Universalism versus particularism (rules versus relationships).1.
Individualism versus collectivism (the individual versus the group).2.
Neutral versus affective/emotional (the range of feelings expressed).3.
Specific versus diffuse (the range of involvement).4.
Achievement versus ascription (how status is accorded).5.
Let us examine each dimension.
Universalist Vs Particularist: Universalists organisations strive for consistency and uniform procedures. People belonging to universalist cultures value professional arguments and presentations that seek to convince; they do not take impersonal, get-down-to- business attitudes as rude; and in doing business, they carefully prepare the legal ground with a lawyer if in doubt. In such cultures the focus is on rules rather than relationships. Hence, legal contracts are readily drawn up. A trustworthy person is one who honours his or her word or contract; and there is only one truth or reality, that which has been agreed. A deal is a deal.
Particularists build informal networks and create private understandings; they try to alter accustomed patterns of activity by informal means; they modify relationships with you so that you can change the system; they pull levers privately; and they seek fairness by treating all cases on their special merits. Their focus is more on relationships than on rules.
Legal contracts are readily modified; and a trustworthy person is one who honours changing mutualities.
Individualist Vs Collectivist: In individualist cultures, organisations try to adjust individual needs to organisational needs; they introduce methods of individual incentives like pay-for-performance, individual assessment, and Management By Objectives; they expect job turnover to be high; they seek out high performers, heroes, and champions for special praise; and they give people the freedom to take individual initiatives. There is more frequent use of the ‘I’ form; in negotiations, decisions are made on the spot by representatives; and people ideally achieve alone and assume personal responsibility.
In collectivist cultures, organisations seek to integrate personality with authority within the group; they give attention to esprit de corps, morale, and cohesiveness; they have lower turnover and mobility; they extol the whole group and avoid showing favouritism; and they hold up superordinate goals for all to meet. There is more frequent use of the ‘We’ form; in negotiations, decisions are referred back by delegates of the organisation; and people ideally achieve in groups which assume joint responsibility.
Neutral Vs Affective: In neutral cultures, people do not reveal what they are thinking. Warm, expressive, and enthusiastic behaviours are interpreted as lack of control; and emotions are often dammed up, occasionally exploding.
In affective/emotional cultures, a detached, ambiguous and cool demeanour is interpreted as disdain, dislike and social distance. Persons belonging to this culture easily reveal thoughts and feelings verbally and nonverbally; and their emotions flow
effusively, vehemently, and without inhibition.
Specific Vs Diffuse: In specific cultures, private and business agendas are kept separate from each other; and conflicts of interests are frowned upon. People belonging to specific cultures are direct, to the point, and purposeful in relating. For them, principles and consistent morals stand independent of the person being addressed.
In diffuse oriented cultures, private and business issues interpenetrate; and an employee’s whole situation is considered before he is judged. People belonging to this culture display situational morality, depending on the person and context encountered. They tend to be evasive, tactful, ambiguous, and even opaque.
Achievement Vs Ascriptive: In achievement-oriented cultures, titles are used only when relevant to the competence brought to a task; and respect for superiors is based on the superior’s effectiveness, and level of expertise. In organisations belonging to these cultures, senior members are of varying age and gender and achieve their positions on the basis of proficiency and performance.
In ascriptive-oriented cultures, titles are used extensively to clarify status in the organisation. Respect for a superior in the hierarchy is seen as a measure of commitment to the organisation; and most senior managers are male, middle-aged, and qualified by their backgrounds.
Let us now examine two additional cultural dimensions not included in the foregoing frameworks: time and relationship with nature.
Time: Trompenaars contends that how we think of time also has its consequences: ‘Especially important is whether our view of time is sequential, a series of passing events, or whether it is synchronic, with past, present and future all interrelated so that ideas of the future and memories of the past all shape present action’ (ibid, pp. 117).
In sequential cultures, the corporate ideal is the straight line and the most direct, efficient, and rapid route to objectives. Employees feel rewarded and fulfilled by achieving planned future goals; their most recent performance is the major issue, along with whether their commitments for their future can be relied upon. Managers plan employees career jointly with them, stressing landmarks to be reached by certain times.
In synchronous cultures, the corporate ideal is the interacting circle in which past experience, present opportunities, and future possibilities cross-fertilize. Employees feel rewarded and fulfilled by achieving improved relationships with supervisors/customers; their whole history with the company and future potential is the context in which their current performance is reviewed.
Relationship with Nature: With respect to the relationship with nature, there are two orientations: inner-directed and outer-directed. Inner-directed cultures hold as a basic assumption that people should control nature by imposing their will upon it. People belonging to inner-directed cultures often display a dominating attitude bordering on aggressiveness towards the environment. For them, conflict and resistance is anindication of one’s convictions. The focus is on self, function, own group, and own organisation. They are uncomfortable when the environment seems out of control or changeable.
Outer-directed cultures see man as part of nature and must go along with its laws, directions, and forces. People belonging to outer-directed cultures often display a flexible attitude, willing to compromise and keep the peace. They focus on the other, that is, customer, partner, and colleague. They are also comfortable with environmental shifts if these are natural.
Hofstede and Trompenaars have offered two somewhat different frameworks for analysing culture. They have also used their frameworks to assess various nations. Their work provides useful guidelines for business leaders and managers involved in international business.
It should be emphasised that they approached their work from the perspective of ‘cultural relativists’, that is, they did not judge the various cultural patterns they discovered; nor did they attempt to determine which cultural characteristics led to success in business. The thrust of their contribution is that cultural diversity must be accepted as a reality with which we must work.
It is self-evident that there are successful and unsuccessful businesses in all societies. This suggests that success or failure cannot be explained only on the basis of national culture. In addition, our discussion in the previous section implied that organisations belonging to the same society possess different cultural characteristics. Perhaps, these cultural peculiarities might be more helpful in explaining differences in performance.
Wrap Up
In this Unit, we discussed the building blocks or dimensions of structure and the two generic forms of organisational structure: mechanistic and organic, and we pointed out the differences between them.
We then identified the building blocks and the factors that the designers of organisations should consider in arranging these building blocks. The factors we discussed were size, stages in organisational life-cycle, environment, technology, type of workforce and business strategy and structure.
We then examined the three traditional organisational structures (functional, market-oriented and matrix), and three contemporary forms (dynamic networks, horizontal organisations and virtual organisations). We closed the Unit with a discussion on organisational culture. In our discussion, we focused on the relationship between organisational culture and effective organisational performance and the relationship between national culture and organisational culture.
Using Hofsted or Trompenaars framework, give your views on the cultural characteristics of your country. Discuss with your classmates.