Organisational Structure and Culture

Organisational Structure and Culture are two fundamental aspects of how a business or
institution operates. They influence each other and directly affect performance,
communication, and employee satisfaction.

1. Organisational Structure
This refers to how activities such as task allocation, coordination, and supervision are
directed toward achieving organisational goals. It outlines how roles, responsibilities, and
authority are distributed.

Types of Organisational Structures:

Structure
Description Example
Type
Groups people by function (e.g., marketing, A marketing department, HR
Functional
finance). department, etc.
A company with separate
Organised by product lines, markets, or
Divisional divisions for North America,
geography.
Europe, etc.
Combines functional and divisional structures.
Common in tech and
Matrix Employees report to two managers (e.g.,
consulting companies.
functional and project).
Fewer management layers, more employee Startups or small creative
Flat autonomy. firms.
Traditional corporations or
Hierarchical Clear chain of command from top to bottom.
government agencies.

2. Organisational Culture
Culture refers to the shared values, beliefs, and norms that influence the way employees
think, feel, and behave. It’s the social and psychological environment of an organisation.

Elements of Organisational Culture:

 Core values (e.g., integrity, innovation, customer service)

 Norms and behaviours (how people communicate, dress, solve conflicts)
 Symbols and rituals (celebrations, meetings, language)
 Leadership style (authoritative vs. participative)

Types of Organisational Culture (according to Charles Handy):

Culture
Description Example
Type
Power Centralised power in a few individuals. Quick Small businesses, family-
Culture decisions. owned firms.
Clearly defined roles and procedures.
Role Culture Bureaucratic. Government agencies.

Task Project-based firms, creative

Team-based, task-focused. Adaptable.
Culture agencies.
Person Individuals are central. Often seen in
Law firms, consultancies.
Culture professional services.

How Structure and Culture Interact:

Structure Cultural Impact
Hierarchical May support a formal, rule-based culture.
Flat Encourages open communication, innovation, and collaboration.
Matrix Demands a culture of flexibility, teamwork, and adaptability.
Functional Often reinforces a silo mentality unless balanced by collaborative culture.

Why They Matter:

 A well-aligned structure and culture improve efficiency, innovation, and morale.
 Misalignment can lead to confusion, low engagement, and high turnover.

Would you like an example from a real company or help creating one for a specific business
scenario?

Concept of Organisational Culture:

Organisational culture refers to the shared values, beliefs, norms, and practices that
shape how people behave and interact within an organisation. It is often described as "the
way things are done around here."

It includes:

 Values – what is important to the organisation (e.g., innovation, customer service,

integrity).
 Norms – expected behaviors and unwritten rules.
 Symbols – logos, slogans, dress code.
 Rituals & traditions – team meetings, celebrations.
 Leadership style – how leaders influence and communicate.
Impact of Organisational Culture:

Organisational culture has a significant effect on various aspects of business performance and
employee behavior:

✅ Positive Impacts:
Area Effect

Employee Engagement Strong culture boosts morale, motivation, and loyalty.

Performance Aligned culture drives productivity and efficiency.

Innovation Open and supportive cultures encourage risk-taking and creativity.

Collaboration A cooperative culture enhances teamwork and communication.

Reputation Healthy cultures improve brand image and attract talent.

❌ Negative Impacts (if culture is toxic or misaligned):

Area Effect

Resistance to Change Rigid cultures resist innovation and adaptation.

High Turnover Poor culture leads to dissatisfaction and attrition.

Low Morale Lack of recognition or poor leadership causes disengagement.

Conflict Unclear values or clashing subcultures create internal tension.

Cultural Liabilities:

Cultural liabilities are aspects of an organisation’s culture that hinder its success or create
risks. These are the “dark side” of culture.

Common Types of Cultural Liabilities:

Liability Type Description Example

A culture filled with fear, blame, or

Toxic Culture Employees avoid taking initiative.
politics.

Resistance to change due to deeply Company fails to adapt to digital

Inflexibility
embedded traditions. trends.

Departments operate in isolation, Marketing doesn't coordinate with

Silo Mentality
limiting collaboration. product teams.

Pressure to conform limits creativity

Groupthink Bad ideas go unchallenged.
and dissenting views.
Liability Type Description Example

Overemphasis on Results are prioritized over ethics or

Employees burn out or cut corners.
Performance wellbeing.

Creating and Sustaining a Positive Employee Culture

Building a strong organisational culture doesn't happen by accident — it's the result of
deliberate actions by leadership and consistent reinforcement across all levels. Here's how
organisations can create and sustain a positive employee culture:

✅ 1. Creating a Positive Culture

a. Define Core Values and Purpose

 Establish clear mission, vision, and core values.

 Make sure these values are genuine, visible, and actionable — not just words on a
wall.

b. Lead by Example

 Leaders must model desired behaviours.

 Authentic leadership builds trust and sets the tone for the entire culture.

c. Hire for Cultural Fit (and Add)

 Integrate cultural fit into the recruitment process.

 Also look for candidates who add diversity and strength to the culture.

d. Create Clear Communication Channels

 Encourage transparency and open dialogue.

 Use town halls, feedback tools, or suggestion boxes to keep employees informed and
engaged.

e. Foster Psychological Safety

 Employees should feel safe to speak up, make mistakes, and share ideas without fear
of retaliation.

🔁 2. Sustaining Employee Culture

a. Onboarding and Training
 Use onboarding to introduce new employees to the culture.
 Ongoing training helps reinforce expectations and values.

b. Recognise and Reward the Right Behaviour

 Celebrate employees who embody the culture.

 Use recognition programs, awards, or shout-outs to highlight positive behaviours.

c. Monitor and Adapt Culture

 Conduct regular culture audits, surveys, or focus groups.

 Be willing to adjust cultural practices to fit changing needs or challenges.

d. Empower Middle Management

 Train managers to reinforce culture in day-to-day operations.

 Managers are the "culture carriers" and shape employees' everyday experience.

e. Promote Inclusivity and Belonging

 A culture that values diversity and inclusion is more resilient and attractive.
 Encourage employee resource groups (ERGs), inclusive policies, and respect for all
voices.

f. Align Policies and Processes

 Make sure performance management, promotions, communication, and even physical

workspace all reflect cultural values.

📈 Outcomes of a Strong Employee Culture

 Higher employee engagement and retention
 Improved productivity and collaboration
 Greater adaptability and innovation
 Stronger employer brand and talent attraction

Creating a Positive and Ethical Organisational Culture

A positive and ethical culture promotes trust, respect, fairness, and accountability. It not
only enhances employee engagement and reputation but also protects an organisation from
ethical breaches and reputational risks.

Here’s a clear guide to building and maintaining a positive and ethical culture:
✅ 1. Define Ethical Values and Cultural Principles
a. Establish a Clear Code of Ethics

 Create a written Code of Conduct or Ethical Standards.

 Cover topics like integrity, fairness, respect, anti-discrimination, and conflict of
interest.

b. Set a Clear Vision and Core Values

 Define what "ethical" means in your context (e.g., honesty, transparency, social
responsibility).
 Values should be actionable — employees need to know how to live them daily.

🧭 2. Leadership Commitment
a. Model Ethical Behaviour

 Leaders must walk the talk — employees follow actions, not words.
 Admit mistakes, act with integrity, and be transparent in decision-making.

b. Hold Everyone Accountable

 Enforce standards at all levels — no double standards for top performers or

executives.
 Ethical breaches must have consequences regardless of rank.

👥 3. Embed Ethics into Daily Practices

a. Hiring and Onboarding

 Hire for values, not just skills. Include ethics scenarios in interviews.
 Use onboarding to reinforce the company’s ethical expectations.

b. Training and Awareness

 Conduct regular ethics training and workshops.

 Include real-life dilemmas and interactive elements to improve understanding.

c. Transparent Communication

 Encourage open dialogue about ethical issues.

 Create safe channels (e.g., anonymous reporting hotlines) for raising concerns without
fear.

🌱 4. Foster a Positive Work Environment

a. Promote Respect and Inclusion

 Create a culture where all voices are heard and diversity is valued.
 Encourage collaboration and discourage toxic or discriminatory behavior.

b. Reward Positive Behaviour

 Recognise employees who go above and beyond to act ethically or support others.
 Align performance reviews and promotions with both results and values.

🔍 5. Monitor, Evaluate, and Improve

a. Conduct Regular Culture Assessments

 Use surveys, interviews, and focus groups to assess culture and values alignment.
 Monitor key indicators like whistleblower reports, turnover, and employee
satisfaction.

b. Respond to Issues Promptly

 Investigate complaints seriously and fairly.

 Use outcomes to learn and improve, not just punish.

Concept of Organisational Structure

Organisational structure is the formal system by which job tasks are divided, grouped, and
coordinated within an organisation. It defines how roles, responsibilities, and authority are
distributed and how information flows between different levels of management and
departments.

🔧 Key Components of Organisational Structure:

1. Hierarchy (Chain of Command)
o Who reports to whom?
o Establishes authority levels and decision-making power.
2. Division of Labour
o Specialisation of tasks.
o Helps improve efficiency by assigning specific roles.
3. Span of Control
o Number of employees a manager directly oversees.
o Can be wide (many subordinates) or narrow (few subordinates).
4. Departmentalisation
o Grouping of jobs into departments (e.g., marketing, HR, sales).
o Can be functional, geographical, product-based, etc.
5. Centralisation vs. Decentralisation
o Centralised: Decisions made at the top.
o Decentralised: Authority delegated to lower levels.
6. Formalisation
o The extent to which rules, procedures, and responsibilities are clearly written
and followed

Prevalent Organisational Design Models (Modern Trends)

Organisational design refers to the process of shaping an organisation’s structure, roles, and
systems to align with its strategy and environment. Today’s most prevalent organisational
designs are influenced by the need for agility, innovation, globalisation, and digital
transformation.

Here are the most commonly used organisational design models in today’s business
environment:

🔹 1. Functional Design
➤ What it is:

Employees are grouped by specialty or function (e.g., marketing, finance, HR).

➤ Strengths:

 Clear hierarchy and career paths

 Efficiency within departments

➤ Challenges:

 Silo mentality
 Limited cross-functional collaboration

🔹 2. Divisional Design
➤ What it is:

Organised by product lines, customer types, or geographic regions.

➤ Strengths:

 Focus on product or market performance

 Better accountability at the division level

➤ Challenges:

 Resource duplication
 Potential inconsistency between divisions

🔹 3. Matrix Design
➤ What it is:

Employees report to both a functional manager and a project/product manager.

➤ Strengths:

 Encourages collaboration across functions

 Flexible resource use

➤ Challenges:

 Dual reporting can cause confusion

 Potential for conflict between managers

🔹 4. Team-Based/Agile Design
➤ What it is:

Small, cross-functional teams work collaboratively on specific projects or products.

➤ Strengths:

 High adaptability and innovation

 Empowered employees

➤ Challenges:
 Requires strong communication
 May struggle with scale and consistency

🔹 5. Network Design
➤ What it is:

An organisation maintains a small core and outsources many functions (e.g., manufacturing,
IT, logistics).

➤ Strengths:

 Cost-effective
 High flexibility

➤ Challenges:

 Risk of losing control over quality and culture

 Heavy reliance on partners

🔹 6. Flatarchy (Flat + Hierarchy)

➤ What it is:

Combines a flat structure with temporary hierarchies for decision-making or project

leadership.

➤ Strengths:

 Promotes innovation
 Reduces bureaucracy

➤ Challenges:

 Not suited for large, complex organisations

 Potential for unclear roles

📈 Emerging Trends in Organisational Design:

Trend Description
Trend Description
Popular in tech and innovation-focused industries; teams iterate
Agile Design
rapidly and adapt to change.
Digital Operating Incorporate AI, automation, and data-driven decision-making into
Models structure.
Hybrid/Remote Work
Adjust structures to manage geographically dispersed teams.
Models
Purpose-Driven Align structure around sustainability, social impact, or customer
Structures experience.

New and Emerging Organisational Design Options (2020s and Beyond)

As organisations face rapid technological changes, global competition, and evolving

employee expectations, new design models are emerging to support agility, collaboration,
innovation, and purpose. Here are the most forward-thinking organisational design
options being adopted today:

🌀 1. Agile Organisation Design

➤ What it is:

A flexible, team-based structure where cross-functional, self-managed teams work in short

cycles (sprints) to solve problems and deliver value quickly.

➤ Best for:

Tech companies, startups, innovation teams, product development.

➤ Key Features:

 Flat hierarchy
 Rapid iteration and continuous feedback
 Customer-focused design thinking
 Shared leadership

🌍 2. Networked/Decentralised Organisations
➤ What it is:

A “hub-and-spoke” or distributed structure where independent units (or teams) are connected
but operate semi-autonomously. Common in global companies and ecosystems.
➤ Best for:

Multinationals, franchise models, large digital businesses.

➤ Key Features:

 Minimal central control

 Strong digital infrastructure
 Knowledge sharing across nodes
 Adaptable and scalable

🌐 3. Platform-Based Design
➤ What it is:

Structure is built around a digital platform that connects creators, users, and partners — seen
in companies like Airbnb, Uber, or Amazon.

➤ Best for:

Digital businesses and marketplaces.

➤ Key Features:

 Core digital infrastructure (tech + data)

 Scalable and modular teams
 Ecosystem of partners and contributors
 Low internal hierarchy

🤝 4. Holacracy
➤ What it is:

A self-management structure where traditional job titles and managers are removed. Work is
organized around roles and “circles” (teams), with distributed authority.

➤ Best for:

Innovative, flat organisations willing to experiment with radical decentralisation.

➤ Key Features:
 No bosses or fixed job titles
 Roles change based on the organisation’s needs
 Emphasises autonomy, transparency, and purpose

🏢 5. Hybrid Work Design (Post-Pandemic Model)

➤ What it is:

A design that blends remote, in-office, and flexible working arrangements, supported by
digital collaboration tools and asynchronous workflows.

➤ Best for:

Knowledge-based industries, companies embracing remote work.

➤ Key Features:

 Digital-first communication
 Output-based performance measures
 Virtual team-building and leadership
 Redesign of physical offices into collaboration hubs

🌱 6. Purpose-Driven or Mission-Centric Design

➤ What it is:

Structure is built around purpose, values, and impact, not just profit. Common in B Corps,
NGOs, and sustainable enterprises.

➤ Best for:

Social enterprises, NGOs, progressive businesses.

➤ Key Features:

 Decision-making aligned with social or environmental goals

 Stakeholder—not just shareholder—value
 Flat structures and inclusive governance models