Organisational Design and Culture

Organisational Design and Culture

Learning Objectives Reading this chapter would enable you to understand: Various designs of an organisation Contents 3.1 Organisational Design 3.2 Dimensions of Organisational Design 3.3 Determinants of Organisational Design 3.4 Major Elements of Organisational Design 3.5 Factors Influencing Organisational Redesigning 3.6 What is Organisational Structure? 3.7 What is Organisational Culture? 3.8 Projection of the Organisational Culture 3.9 Characteristics of Organisational Culture 3.10 Factors Affecting Organisational Culture 3.11 Assessing Organisational Culture 3.12 Changing Organisational Culture

3.1 Organisational Design Organisations can be broadly classified on the basis of their age: a. An organisation, in its conceptual or embryonic stage b. An organisation just born and is ver y young c. An organisation, more than 25 years old. It is observed that almost all organisations, which are large today, were started as ver y small organisations many years ago. The organisations, that have taken care of designing their str uctures properly during the initial stages, are facing comparatively less problems of organisational behaviour as compared to the others. Organisational Designing is the basis for organisational str ucture viz. Line Organisation, Functional Organisation, Line and Staf f Organisation, Committee Organisation, Matrix Organisation, etc. Organisational structure and organisational culture are dif ferent, but at the same time interrelated and interdependent. Therefore, organisational designing is of vital impor tance in shaping organisational behaviour and in turn, the organisational culture. Thus, in words of Stephen Robbins, Organisational Design may be defined as: A process of determining as to how tasks are divided, grouped and co-ordinated for the successful achievement of the organisational goals. It is easier to design an organisation at the conceptual or embr yonic stage, than at a later stage. Obviously, it becomes increasingly dif ficult to design or edesign the organisation structure, as the organisation grows older. However, modern organisations review the design/str ucture once ever y five years and redesign and readjust the organisation to cope with changing situations, for example, changes in: the products/ser vices, methods and procedures, quantity and quality, systems and sub-systems, market demands and consumer preferences, etc. 3.2 Dimensions of Organisational Design

Basically, there are two dimensions of organisational design:

Organisational Design and Culture

a. The ver tical dimension relating to the hierarchy of the managerial levels of superiors and subordinates. b. The horizontal dimension relating to decentralisation, divisionalisation, depar tmentalisation, sectionalisation. 3.3 Determinants of Organisational Design

The major deter minants of organisational design are as follows: a. Ownership (Public/Private/Joint/Co-operative) b. Size (Small/Medium/Large, number of people, capital investment, sales turnover) c. Technology (old or new, automation, modernisation, computerisation) d. Strategy (goals, objectives, shor t term/long term, evaluation of alternatives) e. Environment (internal v/s external) 3.4 Major Elements of Organisational Design a. Work Specialisation This is based on Taylor's concept of Scientific Management. Both Fayol and Taylor have suggested division of labour' among employees as per their knowledge and skills. Division of labour based on work specialisation helps to improve the ef ficiency and ef fectiveness of the organisation. b. Depar tmentalisation

As the organisation grows it becomes necessar y to divide the work group, the activities and bring them under cer tain depar tments that can be directly managed by the depar tmental heads so that the organisation can be managed ef ficiently and ef fectively. Depar tmentalisation may be defined as a process of dividing the various activities into dif fer ent depar tments for proper administration of the organisation.' A few advantages of proper depar tmentalisation are as follows: 1. It permits utilisation of specialisation and exper tise of people. 2. 3. 4. 5. It creates a feeling of autonomy and job satisfaction among employees. It helps fix the authority-responsibility relationship of the managers. It facilitates per formance appraisals by managers. It helps the training, development and job rotations of managers

c. Chain of Command Organisational communication is an extremely impor tant factor for the success or failure of an organisation. Generally, organisational communication requires a chain of commands to flow downwards/upwards/lateral. In the absence of a proper chain of commands for organisational communication to flow, organisational behaviour becomes a more complex subject.

Organisational Design and Culture

d. Span of Control In large-scale organisations, activities are decentralised and the organisation is divided into dif ferent divisions or depar tments to per form cer tain specialised tasks that ultimately contribute to the organisational goals. Each department consists of one head and some subordinates who have to work as a team and achieve the depar tmental goal with the given resources viz. people, machines and materials. In this process, each depar tment consists of dif ferent numbers of people depending upon the nature of work, the quantity and quality of the finished product/ser vice and the resources available to complete the task in a given time limit. This requires the manager to plan, organise, direct, communicate, lead, motivate, super vise, control and co-ordinate all his activities as well as those of his subordinates. If the number of people to be super vised is too large, super vision and control becomes dif ficult. On the other hand, if the number is too small, super vision and control become too strict and critical. In both these situations, the per formance of the team may not be satisfactor y. Therefore, the span of management should be optimum for an optimum per formance. Thus, the span of control may be defined as the number of subordinates that can be ef ficiently and ef fectively managed by the superior for the optimum per formance of the work team. Centralisation v/s Decentralisation As long as the organisation is small it can be managed by a small group of managers. One manager has to look after a number of functions. In such an organisation there is centralisation of authority and decision-making as a result of which a few managers have the authority to take decisions and give instr uctions to their subordinates. Thus, centralisation may be defined as a systematic and consistent reser vation of authority and decision making at a central point in the organisation.' As long as the organisation is small, centralised authority and decision-making can manage it but, as it grows into a large-scale organisation, it has to decentralise activities in order to cope with the changing demands of the efficiency and effectiveness of the organisation. It becomes necessary todecentralise many functions like planning, organising, staffing, directing, controlling, etc. Thus, decentralisation may be defined as a process of dividing organisational activities into dif fer ent autonomous divisions/depar tments/sections, physically and functionally ' 3.5 Factors influencing Organisational Redesigning Changes In the knowledge requirements In the technology and the consequent skill requirement In the knowledge of human behaviour From centralised to de-centralised str uctures From ver tical and tall to horizontal and flat organisations In emphasis from command control to consensus self-control From From From From instability and uncer tainty to mechanistic systems generalisation to specialisation in management product orientation to function orientation mechanistic approach to human behaviour approach

Organisational Design and Culture

3.6 What is Organisational Structure? An organisation can be depicted by a line diagram, which is called as Organisation Char t. The organisation char t shows the organisational str ucture. It shows the positions of the people, their status/designations, authority-responsibility relationships, their span of control, etc. Organisation str ucture can be any one of the following: a. b. c. d. e. Line Organisational str ucture Functional Organisational structure Line and Staf f Organisational str ucture Committee Organisational structure Matrix Organisational str ucture

3.6.1 Dif ference between Organisational Str ucture and Organisational Culture Or ganisational cultur e i s differ ent fr om or ganisational str uctur e. Organisational culture relates to the perception, values, attitudes, morale and motivation, interpersonal communication, interpersonal relationships, cooperation and co-ordination among employees at dif ferent levels, the sense of belonging among employees, the treatment given to outsiders viz. customers, suppliers, contractors, gover nment of ficers, etc. Organisational str uctures can be created and changed overnight, but organisational culture cannot be changed overnight. It has to be built up over a period of time. Organisational structure is mechanistic and can be shown on paper. But, the organisational culture is to be experienced by actually working in the organisation.

Organisational Design and Culture

Thus, culture is an abstract concept that varies from organisation to organisation and from time to time. It has to be felt and experienced by the people over a period of time. It plays an extremely impor tant role in organisational image building, goodwill and reputation. It also helps to improve the morale and motivation and the sense of belonging among employees. 3.7 What is O r g a n i s a t i o n a l Culture? What is culture? It is observed that during the 21st century, world culture has been changing ver y fast as a result of the fast changing national and regional cultures. We find Eastern culture v/s Western culture, traditional culture v/s modern culture, agrarian culture v/s industrial culture, rural culture v/s urban culture, etc. Similarly, there is public sector culture v/s private sector culture, manufacturing sector culture v/s ser vice sector culture, large scale culture v/s small scale culture, etc. Individual culture is a result of the impact of parents + family + education + work experience + friends + society. Group culture is the sum total of the individual cultures. Organisational culture has been defined by: a. Edgar Schiene: As the sum total of the knowledge, beliefs, values, perceptions, attitudes, traditions, customs that are shared by the groups and resulting into the individual and group behaviour of the people working in the organisation over a period of time. b. Taguiri and Litwin: As a relatively enduring quality of the inter nal environment that is experienced by its members, that influences their behaviour and can be described in terms of a set of values. c. Forehand and Gilmer: As a set of characteristics that dif ferentiate one organisation from another and are relatively enduring over a period of time and influence the behaviour of the people in the organisation. d. Schneider and Snyder: As a process of manifestation of the perceptions, values and attitudes of the members of the organisation. Generally organisational culture flows from the top to the bottom. It is not developed overnight. It takes a long time to develop. The perceptions, values and attitudes of the employees form the core of organisational culture. Some of the indicators of organisational culture are as follows: Lack of knowledge Lack of skills Negative attitudes Resentful ser vice Lack of accountability Red tapism Bureaucracy Lack of discipline Lack of cleanliness/housekeeping Poor Quantity and Quality More bureaucratic culture

Organisational Design and Culture

Adequate knowledge of the job Adequate skills for the job Positive attitudes Cheer ful ser vice Less bureaucratic culture Accountability Responsibility Better discipline Better cleanliness and housekeeping Ef ficiency and Ef fectiveness Better Quantity and Quality 3.8 Projection of the Organisational Culture According to Edgar Schiene, organisational culture is projected at three levels as follows: a. Level I: Company Logo, Trade Mark, Code of Uniform, values, philosophy, ceremonies, festivals, rituals, rewards, appreciation, role models, etc. b. Level II: Shared values and beliefs among the employees in the organisation. c. Level III: Common assumptions of the management about the employees. 3.9 Characteristics of Organisational Culture The following are the characteristics of Organisational Culture: a. Pragmatic policies b. Strategic planning c. Decentralisation and Delegation d. Individual autonomy e. Par ticipation in decision-making f. Risk tolerance g. Integration with the organisational goals h. Management suppor t i. Innovation and creativity j. Self-esteem and identity k. Control systems l. Communication systems m. Conflict management n. Reward system 3.10 Factors Af fecting Organisational Culture The following are the factors that may af fect organisational culture: a. Organisational context b. Organisational str ucture c. Organisational processes d. Physical environment e. Values, norms and systems

Organisational Design and Culture

3.11 Assessing Organisational Culture Organisational culture and climate are abstract areas of experience. Some employees may be comfor tably happy working in the organisational climate, while some others may not be so happy. It is a subjective concept, which depends upon the beliefs, perceptions and values nur tured by the concerned employees. A lot of research has gone into the assessment of organisational climate though, it is dif ficult to measure it in any units as in Physics, Chemistr y, Biology or Mathematics. According to Rensis Liker t, organisational climate can be assessed on the basis of the following 7-point scale: 1. 2. 3. 4. 5. 6. 7. Leadership style Morale and Motivation Organisational communication Interaction-Influence process Decision making Goal setting Control

3.12 Changing Organisational Culture Organisational culture is not a matter of minutes, like fast food! It is a long- term process, like character building, which takes a long time. Therefore, changing organisational culture requires sustained ef for ts by all. It demands conviction, commitment and competence. Some of the changes that can bring about a change in organisational culture are as follows: a. Treat employees as individuals b. Respect individual identity and self-esteem c. Improve organisational communication d. Give training and development inputs at all levels e. Review systems and procedures f. Improve leadership and team building g. Give rewards and incentives in due recognition and appreciation. h. to improve autonomy i. Change from autocratic to par ticipative style of management. j. Develop a positive attitude towards the organisational goals

Delegate

Summing Up In this chapter we have discussed organisational design, the dimensions, the determinants and the major elements of organisational design. An organisation, if small, may be managed by a centralised authority, but as it grows bigger in size and scale it has to decentralise authority for the ef ficient functioning of the organisation. Ever y organisation has a culture which is dif ferent from its structure. The structure can be seen on paper, but culture can only be experienced. There are several factors working at several levels which project the culture of an organisation. We have also discussed how to assess and change the culture of an organisation.