Organisational Structure and Its Influence on Culture

Introduction

In recent days, organisational behaviour has a huge influence on individuals, groups and organisations; furthermore, the success of an organisation is generally dependent on effective management of its employees. According to Fred Luthans, organizational behaviour is directly concerned with the understanding, prediction, and control of human behaviour in organizations. The study of organisational behaviour examines human behaviour in a work environment and determines its impact on job structure, performance, communication, motivation and leadership. (Luthans, 2010) Therefore, it is essential to study organisational behaviour in order to become a successful manager or leader in the real business world and the historical background of organisational behaviour as well.

Over the past century, many scholars have studied organisational behaviour and developed by applying their studies to real business. Now, it becomes a significant part in every business. Organisational behaviour can trace its roots back to the period of the industrial revolution, which led to significant social and cultural change, including new forms of organisation. In the 1900’s, organisational behaviour was forming it as an academic discipline with the advents of scientific management and human relations movement. Scientific management emphasized the improving labour productivity; whereas, human relations movement focused on exploring the connection between employee’s satisfaction or wellbeing and workplace productivity. Starting in the 1980’s, cultural explanations of organisations and change became a significant part of study. (Luthans, 2010)

By studying organisational behaviour, manager or leader can develop a relationship between organisation and employees creating a positive working environment. In addition, organisational behaviour helps to motivate employees to achieve their individual goals such as promotion or development of new skills. For instance, as the manger cares about the needs of employees, employees feel that they are an important part of the company. In this way, employees will be more loyal to the company and put more effort into their work. Moreover, when employees are given opportunities to improve themselves, they are easily motivated to take personal initiative to perform better at their workplaces. For these reasons, it is very important to understand organisational behaviour in order to achieve both personal and organisational goal. (Leonard, 2019)

In order to be a successful manager or leader, it is vital to learn not only organisational behaviour, but also organisational structure and culture, motivational theories and group dynamics. This report will not only discuss factors such as organisational structure and culture that influence individual’s behaviour, but also discuss the difference between a manger and leader and different motivational theories. Furthermore, it will also discuss group dynamics and how individual’s behaviour can be modified by a group.

In modern business, organizational structure and culture are the base of any organizations, and they are interrelated. An organizational structure defines the rules, policies, strategies and moral values which ultimately creates the organizational culture. Furthermore, the organizational structure and culture has a huge impact on the performance of the employees. In order to be a successful organization, the structure and culture must be open and creative in which the employees can easily adjust and obtain satisfaction from the work environment.

Due to the importance of the organizational structure and culture, an organization must establish its own organizational structure depend on the situation in terms of organization size or environment. If the organizational structure has a strict hierarchy and the centralized authority from the top management, the performance of the employees would not be excellent because of lack of freedom and employee’s involvement in the organization. Thus, the culture would be less effective and rigid. On the other hand, decentralized structure causes the employees to communicate and participate in the business. Moreover, sharing decision-making with the employees at all level highly motivates them to perform better and increases their loyalty to the organization. Therefore, the culture would be more creative and accountable. (Gartenstein, 2019)

As an example of real business, Samsung is based on a product-type divisional organizational structure. The structure uses product categorization as a basis for determining which resources and business operations belong to certain divisions. Thus, each division has a certain product category such as consumer electronics, device solutions or IT & Mobile communications. Accordingly, each division is managed separately, considering the characteristics of their products that have implications on new product development, marketing, selling and other aspects of the business. Moreover, Samsung Electronics has more than 200 subsidiaries around the world. Finally, the organizational structure of Samsung emphasizes on development of product and technological innovation in order to achieve its vision and mission statement. (Evans, 2019)

It is vital to understand two different types of organizational culture in the business. One is a strong culture, and the other is a weak culture. A strong culture has more positive influences than a weak culture does, and it helps the organization to be more successful by motivating the employees to do a better performance. The Organization with a strong culture highly emphasizes a teamwork and involvement of employee. Working as a team, employees try to achieve the same goal on the same side, and they can enhance their skills by learning from other team members. In addition, employee’s involvement leads employees perform a better job due to a higher responsibility. In contrast, employees in a weak culture do not perform better due to a strict authority and poor motivation. Employees just do what they are assigned to do rather than working hard to achieve an organizational or individual goal. The words "manger" and "leader" are the most commonly used words in the business and are often used interchangeably. However, these terms have different meanings. According to Henri Fayol, management is to forecast and to plan, to organise, to command, to coordinate and to control.

Whereas, leadership is the process of influencing the activities of others towards high level of goal and achievement. In other words, a manager ensures goals are met through planning, budgets, resource allocation and problem-solving. In contrast, a leader establishes direction or organisational goal and share these with others, influencing others to achieve goals and can influence by motivating and inspiring. (Monnappa, 2019) Even though the concepts of a manger and leader are slightly different, both need to motivate their employees in order to achieve both organizational and individual goals.

In order to manage employees effectively, it is crucial to study different management theories and leadership styles that can be applied to the different business situations. Those management theories and leadership styles can motivate employees in different ways to achieve their goals. Influencing employees to strive their goals at the workplace, the organization can also achieve its goal. Motivational theories can be divided into several categories such as scientific or human relations management theories. Furthermore, these theories require different types of leadership styles to be applied to the organisation or motivate individual.

For instance, Frederick W. Taylor, who is known as "father of scientific management", focused to develop better understanding among employees and managers by improving efficiency of all. In order to maximize efficiency, every task is divided into small and simple segments which can be easily taught. In addition, workers are mainly motivated by financial rewards rather than social or psychological needs. Although its goal was providing workers the tools necessary for maximizing their efficiency and output, it is also criticized for creating an assembly-line atmosphere, where employees do only menial jobs. (Farooq, 2016) Under this system, autocratic leadership style is based on scientific management theory. A single leader makes a final decision which is communicated downward for all individuals to follow. In modern days, McDonald’s is the most successful case for scientific management. Since McDonald’s is the biggest franchising company in the world, it must follow scientific management system from producing to selling to maximize profit. Employees at McDonald’s do the same job again and again, and they do not have to move too much steps. In this way, McDonald’s can maximize its profit due to efficient performance of workers; however, it has high staff turnover rate because workers are treated like a machine not human. (Nawaz, 2011)

On the other hand, human relations management theory advocates that workers desire to be significant part of the organisation or group. Therefore, it focuses on individual psychological and social needs. For example, Elton Mayo found that employees can be better motivated by positive relational factors such as attention or recognition rather than financial reward. Thus, productivity can be increased. According to Elton Mayo’s studies, paternalistic leadership style is based on his motivational theory. A leader must create such an amicable ambience at the workplace and treat employees as a large extended family in order to motivate them. (Dininni, 2010) For example, Tesco, best food retail company in the UK, follows Mayo’s motivation theory to motivate employees through training and development. Managers of the company provide meaningful feedback and opportunity to the whole employees for continuous personal improvement. As a result, this system helps employees to maximize their full potential.

Since the organizational structure and culture emphasize that working as a team plays a significant role in the organization, it is crucial to understand how to group employees in the organization. Group dynamics means that the interactions that influence the attitudes and behaviour of people when they are grouped with others through either choice or accidental circumstances. (Pathak, 2012) There are two different types of groups: formal and informal. Formal groups are established by an organization to achieve its goal, taking the form of command, task or functional. Whereas, informal groups are formed naturally in order to share the common interest or values of individuals. Therefore, formal group targets to fulfil the task with a systematic and hierarchical structure; however, people create informal group to satisfy their social and psychological needs by themselves without the approval of the organization.

Both formal and informal groups affect individual’s behaviour in the workplace in the different ways. Some people might be more influenced by formal group because of improvement of skill. On the other hand, other people might be affected by informal group due to social needs. Under the formal group, people must focus more on jobs than people and follow the rules and authority because importance is given to position; therefore, personal feelings are ignored. In addition, task is divided into smaller units and assigned to individuals based on their skills. Although formal group does not satisfy social needs, people who are more affected in formal group can develop their skills by challenging hard works, and career advancement and promotion are clearly defined. In contrast, informal group does not have any formal structure and does not follow rules, regulations and chain of command. However, it strengthens social needs of friendship and support by sharing common interests or feelings. Therefore, people in informal group can enhance relationship and promote creativity by discussing and resolving problems from their work and outside of the organization.

Teamwork is an essential part in an organization in recent days. Bruce Tuckman’s stages of group development indicates how group is formed in real life, and this theory can be applied to real business. According to Tuckman theory, there are five steps to form a group: forming, storming, norming, performing and adjourning. In forming stage, individuals make a group without clear roles and objectives. Thus, leader must be prepared to organize group members well in this stage. Storming stage indicates that members have conflicts with others due to different personalities or working styles. Therefore, the team must be focus on its goals to avoid obstacles such as emotional issues. However, norming stage shows that the team starts developing the relationship among the team by understanding each other’s difference. Furthermore, the group in performing stage becomes stable and focuses on achieving the common goals. Member now can resolve any disagreements or conflicts within the team positively. Finally, adjourning stage is the break-up of the group when the task is completed. (Abudi, 2010)

Conclusion & Recommendations

In modern business, it is crucial that the organization must establish its own organizational structure and culture in order to achieve success. Organization structure provides clear guidance to all employees; therefore, employees can easily understand the tasks, policies and objectives of the organization. Furthermore, organizational culture helps the organization to create its own identity by developing the value within the organization. Organizational culture becomes strong by promoting positive relationship amongst the employees who are from different background. Thus, strong culture has a great influence on performance and employees’ wellbeing.

Organizational structure and culture are not only factors that have a huge impact on employees’ behaviour and performance, but suitable leadership style also influences on them. It is significant to satisfy employees’ needs at the workplace in order to perform better and achieve organizational objectives. There are four different types of leadership style: participative, autocratic, paternalistic and delegative, and these leadership styles have both positive and negative impacts and different ways to motivate employees. In addition, leadership style should be used in the right circumstances, otherwise it will cause negative effects.

In order to success the organization, leader must understand different types of organizational structure, culture and leadership style. Therefore, leader can apply them to the organization, motivating employees to do better performance. In terms of organizational structure and culture, functional structure would be suitable to thrive the company. Functional structure emphasizes that an experienced employee with a high ability and skills can manage the team effectively by understanding the entire work. Moreover, the team members can learn new skills by sharing their thoughts or knowledge within the team. In this way, the employees become more specialized in their fields, performing tasks quickly and efficiently and reducing work-related mistakes at the same time. By working as a team, functional structure creates the organizational culture based on teamwork. Therefore, functional structure with teamwork-oriented culture make employees to be highly motivated to advance their careers in order to move up their hierarchy in the organization.

Leadership style is as vital as organizational structure and culture to employees’ motivation and organizational performance. Paternalistic leadership style would be most suitable with functional structure and teamwork-oriented culture among any other leadership styles. Since paternalistic leadership creates an amicable ambience at the workplace, employees’ social needs are met, and a strong relationship is formed between employees. As the relationship between employees becomes stronger, the organizational culture also becomes stronger. Therefore, the organization will further develop and prosper, as employees’ loyalty and company reputation increases.