Why is this important for managing innovation?
The hierarchical levels within a company make up its organisational structure. There are two basic types of organisational structure; horizontal and vertical, which are sometimes referred to as flat and tall structures. These types of structures are based on the amount of authority levels within the organisation. More complicated structure types include; (i) functional, which focuses on the specific tasks that employees perform; (ii) divisional, which separates employees by either market or geographic divisions; (iii) matrix structures, which group employees into multiple divisions; and (iv) network structures, which co-ordinate all the organisations within a supply chain. Organisational culture is a combination of the values, beliefs, experiences and attitudes which make up the personality or ‘shape’ of the organisation. It could also be described as a set of norms and values, which are shared by the organisation’s people. These norms and values influence how people interact with each other and with external stakeholders, suppliers, shareholders and customers.
Organisational structure impacts on workplace culture. It does this through controlling, co-ordinating and motivating employees to work together to achieve company objectives. Johnson et al (2002, pp.
230) comment that in order to analyse culture, the way in which the organisation behaves should be observed. Johnson et al (2002, pp.230) offer a model known as the cultural web, which is a representation of the assumptions and physical manifestations of organisational culture. This includes routines, rituals, stories, structures and systems within the organisation. Routines are defined as the way things are generally done and suggest the workings of an organisation. Rituals emphasise the routines that portray how things are done. In particular, rituals are the part of organisational life that show what is important and can include formal processes such as training programmes, assessment procedures, promotions and sales conferences. Informal rituals focus more on the social element of organisational life, such as employee gatherings, the annual Christmas party and tea-break chats or gossip in the canteen. The stories told by members of staff represent the organisation’s history and highlight important events or people. Often the themes focus on heroes and villains and typically highlight organisational behaviours and norms. Organisational structures are also noted by Johnson et al (2002) as being part of the cultural web. The type of structure within an organisation is likely to reflect the power structure and highlight what is regarded as important. For example, formal hierarchical structures may emphasise that strategy is an area that only senior management is responsible for, where others in the organisation are given direct orders in line with achieving corporate strategy. Organisational systems such as measurement and reward systems are important in focusing on what is important to the organisation. Procedures can portray a certain culture. An example of this would be public sector organisations where focus on budgets and spending activity is perceived to be considered more important than service quality (Johnson et al, 2002, pp.235).
Reward systems have the potential to influence behaviour, and therefore, are considered important in attributing to organisational culture.
Krokosz-Krynke (1989, pp.6) developed a model that aimed to establish a relationship between organisational structure and culture. The model assumed that organisational structure could be measured in four dimensions; specialisation, standardisation, formalisation and centralisation; and culture could be measured in four dimensions; individualism/collectivism, power distance, uncertainty