Organizational structure and culture are interdependent. The management structure determines the work culture, with a hierarchical structure leading to less autonomy and a decentralized approach leading to more input and accountability. The allocation of power and authority determines employee behavior and the resulting work culture.
Organizational structure and organizational culture have a dependent relationship with each other. In the business world, the management structure determines the behaviors, attitudes, dispositions and ethics that create the work culture. If a company’s organizational structure is strictly hierarchical, with centralized decision-making at the top, the company’s culture will likely reflect a lack of freedom and autonomy at lower levels. If a company’s management structure is decentralized, with power and authority shared at all levels, the culture is likely to be more independent, personalized and accountable.
How a company allocates power and authority determines employee behavior. These choices manifest themselves in the organizational structure and organizational culture of a company. Organizational structure is how a company organizes its management and lines of authority. Determine roles, responsibilities and information flow within the company. Work culture comes from these decisions.
Most companies use a hierarchical structure that looks like a pyramid on paper. The CEO or president sits at the top of the pyramid. Direct reports of him, usually the vice presidents, are in line with him. Their direct reports are online below them. The pyramid extends outward and downward according to the number of levels of management the company needs to operate according to its objectives.
Upper management uses organizational structure to control who holds power and authority in the company. For example, if a president of a company only wants to deal with the major decisions and wants to leave the day-to-day decision making to someone else, the organizational structure would have the president on the front line with the VP of operations alone in the back row. This effectively means that the VP of operations is the only executive with a direct line to the president, and everyone else reports to him. In this scenario, the VP of operations has great power.
Conversely, the president could allow many of his executives direct access to it. It is a decentralized approach to organizational structure, allowing more people to have input into the decision-making process. Decentralized power gives more autonomy to individual departments and managers. In this way, organizational structure and organizational culture are related.
A decentralized power structure means there is more room for employee input into decisions. Employees are more accountable because they have more responsibilities. They function more independently, because they don’t always need top management approvals to proceed. The organizational culture reflects these freedoms.
Similarly, organizational structure and organizational culture can negatively impact each other if power and authority are highly centralized at the top of the pyramid. In this case, employees have little control over decisions and simply have to do their job. The kind of culture this facility is capable of engendering is one of no accountability at the lowest levels, hostility and an environment where employees do not feel invested in the company or the work.
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