Relationship between Organizational Theory, Structure, Culture, and Design and Change

People and managers knowledgeable about organizational designOpens in new window and change Opens in new window are able to analyze the structure and culture of the organization for which they work, diagnose problems and make adjustments that help the organization to achieve its goals.

The figure below outlines the relationship among organizational theory, structure, culture, design and change.

chiasmus diagram showing abba pattern Figure 1.1 The Relationship among Organizational Theory and Organizational Structure, Culture and Design and Change

Organizational Theory

Organizational theory is not a collection of facts; it is a way of thinking about organizations. Organizational theory is a way to see and analyze organizations more accurately and deeply than one otherwise could.

It examines the principles that underlie the design, operation, change and redesign of organizations to maintain and increase their effectiveness.

The way we see and think about organization is based upon patterns and regularities in organizational design and behavior. Organization scholars search for these regularities, define them, measure them, and make them available for use.

The lessons of organizational design and change are as important at the level of first-line supervisor as they are at the level of CEO, in small or large organizations and in settings as diverse as the no-for-profit organization or the assembly line of a manufacturing company. The facts from the research are not as important as the general patterns and insights into organizational functioning.

Organizational Structure

Organizational structure Opens in new window is the formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals.

Organizational tasks are deliberately sub-divided into separate departments and sets of activities. Sub-division achieves efficiencies in the work process.

The deliberate structure is used to coordinate and direct separate groups and departments. The principle purpose of organizational structure is to control and coordinate the action of people to achieve organizational goals.

The term control means to motivate people to achieve goals of the organization. For any organization, an appropriate structure is one that facilitates effective responses to problems of coordination and motivation.

Organizational Culture

Organizational culture Opens in new window refers to a system of shared meaning. It is a set of shared values and norms that controls organizational members’ interactions with each other and with suppliers, customers, and other people outside the organization.

In every organization, there are patterns of beliefs, symbols Opens in new window, rituals, myths and practices that have evolved over time.

An organization’s culture is the underlying set of key values, beliefs, understandings and norms shared by employees.

These underlying values may pertain to ethical behavior, commitment to employees, efficiency, or customer service, and they provide the glue to hold organization members together.

Organizational culture Opens in new window provides members with a sense of organizational identity and generates a commitment to beliefs and values that are larger than themselves.

Though ideas that become part of culture generally begin with a founder or early leader who anticipates and implements particular ideas and values as a vision, philosophy or business strategy, culture serves two critical functions in organizations:

  1. To integrate members so that they know how to relate to one another, and
  2. To help the organization adapt to the external environment.

When ideas and values lead to success, they become institutionalized and an organizational culture emerges that reflects the vision and strategy of the founder or leader. An organization culture Opens in new window is unwritten but can be observed in its stories, slogans, ceremonies, and dress and office layout.

Organizational Design and Change

An organization is created and designed to achieve some end which is determined by the top management team. Organizational structure and design is an outcome of this purpose.

According to Henry Mentzberg, “The primary responsibility of top management is to determine an organization’s goals, strategy and design, therein adapting the organization to a changing environment”.

Organizational design Opens in new window is the process by which manager selects and manages aspects of structure and culture so that an organization can control the activities necessary to achieve its goals.

Therefore, organization design emphasizes the management side of organization theory. It is concerned with constructing and changing an organization’s structure to achieve the organization’s goals.

Organization design is the principle behind an organization’s operation. It is a task that requires managers to strike a balance between external pressures from the organization’s environment and internal pressures. Looking outward, the design can cause organizational members to view and respond to the environment in different ways. Achieving the proper balance helps to ensure that the organization will survive in the long-run.

Organizational change is the process by which organizations move from their present state to some desired future state to increase their effectiveness.

The goal of organizational change Opens in new window is to find new or improved ways of using resources and capabilities to increase an organization’s ability to create value and hence its performance.

People usually decide to make a change when things are not going the way they would like. From the managerial angle, the need for change usually occurs when there is a problem with system. It may be that output has fallen below expected levels that an atmosphere of discouragement has emerged; the people in the system are not learning and developing needed skills and abilities, or some combination of these.

Organizational structure and culture are a principle means or fulcrum. Managers use to change the organization so it can achieve its future desired state.

Organizational design and change are thus highly interrelated. Indeed, organizational change can be understood as the process of organizational redesign and transformation.

Unfortunately, it is exceedingly difficult to manage change in order to produce desired result. Most people, groups and organizations have a remarkable tendency to return to the old system as soon as the pressure is out.