The rapidly changing roles in companies

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Business organizations in all parts of the world are changing very quickly. This is an important point for all effective managers. As respects to globalization and competitive markets in new century, organizations should continuously study their systems, structures and review their environment to verify their necessity integrity and adaptability with any changes. An organization becomes what its people become. So only the organizations which esteem human resources and social investments like building safe, warm and trustful atmosphere can survive. It seems that successful organizations pay more attention to their internal structure and integrity because of its worth. Proper organizational structure facilities the way organization must go to achieve their goals. In other words accurate structure can enable organizations to evolve in their life.

In this research we would like to design the proper structure for one of the Iranian most reputable EPC Contractors in the fields of Water and Waste Water Industries. Although it has structure now, we want to verify it.

For this purpose we study the organization in phases by several techniques to determine the organization's organic degree. Therefore we design the appropriate structure. Application of an organization chart is often to represent the relationship between the employees and identify the managerial relationships clearly. Consequently our final is Top Chart for Shafab Company.


Today Companies act in an unstable environment. Companies, whom want to have an acceptable market share, should change. Thus, the dynamic and changing environments that organizations face today require adaptation, sometimes calling for deep and rapid responses.

"Change management means to plan, initiate, realize, control, and finally stabilize change processes on both, corporate and personal level. Change is the continuous adoption of corporate strategies and structures to changing external conditions. Today, change is not the exception but a steady ongoing process". [12]

Every business to growth and become development change is an essential process. Techniques that work in one organization may not work and even fail, in another organization within the same culture/country and countries. Since organizations differ in many ways, any change intended, for it to implement effectively should be congruent with the dynamism, complexity and uniqueness of an organization.

Once an organization has defined its desired state, it has to identify the appropriate leverage that would assist it move from the present to the desired state. This leverage could be organizational structure. This change in the organization could be called organizational restructuring. This will be followed by some of the process and people oriented strategic leverages.

Here I attend to the organizational structure of the Shafab Company as a leverage of organizational change. As it will be explained in the organizational recognition, this company is faced to changes. It will be expanding its services and likewise its market. A need for some change based on future goals and marketing audition is felt.

One of the most important elements of a successful organization which is facilitated the organization change, is its structure. To have an effective organization structure, managers should use authentic models to reorganize their organization.

For evaluating the organization, here I use Richard L. Daft's model (it will explain in the methodology). In this model, according to the Mintzberg structures, the most important thing is to determine the degree of organic structure that a company needs.

By studying present structure of the Shafab's organization and the nature of the company activities, it seems that it should have an organic structure. In this company many departments are in the direct control of the manager, so the structure is very flat.

The organic/ mechanic degree of an organization is depending on several items. So to evaluate the degree, first the status of the company should evaluate in each context.

To analyze the assumption, the degree of the organic or mechanic structure which is fit with the organization conditions should be computed.

Finally the accuracy or inaccuracy of the assumption is shown in the result chapter.

chapter1: LIterature review

An overview

Since organization and management science emerged in the early 1900s in conjunction with the industrial revolution, concepts of organization's function and the nature of them changed. [1] These concepts have grown in dynamic trend with in the organizations and institutions. In the twenty century many colleges, universities and other knowledge resources have focused on the management science and especially organization structure's concepts. Success at the task would most likely depend on how well the consultant grasped some basic principals about organizations.

This chapter provides a very brief description of the major concepts in the organization and management sciences, specifying key contributors in these fields of research.

Some Basic Definitions

There are three terms that have important impact on organization themes, and a useful frame for viewing an organization's needs. They are organization, organization structure and organization design. To study organization theory and design, first these terms should be defined.

There are different definitions from this term. But one of the most credible and simple is the definitions which are mentioned in the Robbin's book.

An organization is "a consciously coordinated social entity, with a relatively identifiable boundary, that functions on a relatively continuous basis to achieve a common goal or set of goals". [2]

"The words consciously coordinate imply management. Social entity means that the unit is composed of people or groups of people who interacts with each other. "

People in an organization have some continuing bond. This bond, of course, does not mean lifelong membership. On the contrary, organizations face constant change in their membership, although they are members, the people in organization participate with some degree of regularity.

Organization wants to achieve something. This something is goals. In the people viewpoint, these goals may be unattainable. But if members of the organization work together, they can achieve the goals effectively. Another definition implies that: "Organizations are 1) social entity that are 2) goals directed, 3) are design as deliberately structured and coordinated activity system, and, 4) are linked to the external environment."[3]

The key element of an organization is not a building or a set of policies, and procedures. People are the most important element of an organization and their relationships have an important role in an organization success.

As it's demonstrated, the definition of Organization shows the need for formal interaction patterns of people in the organizations. Organization structure specifies how tasks to be allocate, who reports to whom, and formal coordinating mechanisms and interaction partners that will be followed. [2]

There is much different organization's structure. Some of them are defined Complexity, formalization and centralization as three components of organization's structure. These elements will define in the next chapters.

The terms of organization design concerned with constructing and changing an organizations structure to achieve the organization's goals. [2]

More specifically, Organization Design is a formal, guided process for integrating the people, information and technology of an organization. Organization structure helps organizations to achieve desired purposes. Through the process of organization design, they endeavor to improve the collective efforts of the members and guide them in the way which implies organizations to the success.

Typically, design is approached as an internal change under the guidance of an external facilitator of the environment. Managers and members work together to meet the organization's needs most effectively.

Organization theory

From the previous definitions, it is not difficult to deduce what it means by the term organization theory. It is the discipline that studies the design and structure of an organization. It studies both descriptive and perspective aspects of the discipline. It focuses on how organizations are actually structured and offers suggestions on how they can be constructed to improve their effectiveness. [2]

In the other word, "Organizational theory (OT) is the study of organizations for the benefit of identifying common themes for the purpose of solving problems, maximizing efficiency and productivity, and meeting the needs of stakeholders.  Broadly OT can be conceptualized as studying three major subtopics: individual processes, group processes and organizational processes". [2]

The importance of organization theory

But the important thing is that why study OT?

Organizations are the dominant form of institutions in the society. People are born in the Hospital, and educated in the schools. Both of them are organizations.

Organizations pervade all aspects of people's life in the society. It is not unreasonable, then to expect people to understand this phenomenon that is so intertwined in the people lives. Even though people may have no desire to apply their knowledge, they may simply seek an answer to why organizations with which they interact are structured the specific way.

At the more sophisticated level, people may want to replace their intuitive theories of organization with ones that have been derived scientifically and systematically.

Almost every issue within OT can be cataloged as answer to one of the five followed questions:

How do managers know if an organization is successful?

What are the components of an organization?

What determines the structure of an organization?

What option do managers have for designing their organization and when should each be used?

How do managers apply knowledge of organization theory to the resolution of current management problems?

Because of five questions are critical ones in OT, answers of them should be framework of OT.

organizational EFFECTIVENESS

The proper organization structure makes an organization effective. The way people and jobs come together and define their roles and relationships is an important determinant in whether an organization successful.

Efficiency and effectiveness were originally concepts in the field of the industrial engineering that came of age in the early twentieth century. Some Management theorists like Taylor and Frank and Lillian Gilbreth were the first group of expert which studied to improve efficiency. Work simplification also led to terminology like streamlined processes and efficiency experts, but the emphasis was still on time and motion. Effectiveness, means attaining the goals of organization. The concept of efficiency is the ratio of organization's outputs in related to inputs.

Companies should measure organizational efficiency and effectiveness and should inform to their stakeholders like customers, suppliers, executives and process owners. These stakeholders should adapt themselves to the organization desired results.

There are different approaches to appropriate measure of effectiveness. There Early models of organizational effectiveness generally focused on a single criterion of organizational success. The most popular of these was profit maximization.

Our final goal in designing the proper structure is increasing the amount of efficiency and effectiveness.

The next figure can show the relation between effectiveness and organizational structure.

Organizational Effectiveness

Dimensions of organization design

The next step to design an organization and its structure is to spot two important dimensions in the organizational design. These dimensions proffer a fit way to the organization in the context of personality and physical traits.

Organizational dimension fall into two types: structural and contextual. Structural dimensions provide labels to describe the internal characteristics of an organization. These dimensions enable organization comparison. Contextual dimensions characterized the whole organization, including size technology, environment and goals. They describe the organizational settings that influences and shapes the structural dimensions. Contextual dimension can be confusing because they represent both the organization and environment. Contextual dimensions can be envisioned as a set of overlapping elements that underlie an organization's structure and work processes. Managers should consider both structural and contextual dimension to have a whole view of their organization.

In the following section of this chapter these two dimensions of organization design will be describe in detail.

Contextual Dimensions


Organization s in their lives try to accomplish something. Research have been identified a number of variables as determinants, some looking a great deal more promising than others. Strategy is now just on in the last set of variables. [2]

As Robbins mentioned in his book, "strategy is a plan for interacting with the competitive environment to achieve organizational goals". [2] Managers think of goals and strategic interchangeable, but here goals are define where organization wants to go and strategies define how it will get there. If a goal of an organization achieve 10 percent annual growth, company's strategy should adopt strong advertising to attract new customers, motivating salesperson to increase the average size of customer purchase, and acquiring other business that produce similar products.

Briefly, strategy considers both means and ends. The goals and decision making of an organization's strategy may be planned ahead of time or may just evolve as a pattern in a stream of significant decisions. Either way, those advocates of strategy determines structure position perceive decision makers as choosing the structure they have.

Strategy and structure

Linking Structure to Strategy It will be noted that every one of the circumstances, either proximal or underlying , that gives rise to organization studies might equally well indicate the need to reexamine the basic strategy of the enterprise.

One of good experience in this context is the experience of the McKinsey which indicate that strategy and structure should view to each other. Mangers would, however, give first priority to the mission, the goals, the commitments of resources, and the major programs that constitute the strategy of the enterprise. They would do so because in our experience the most serious problems of large enterprises are strategic rather than organizational.

The failure to survive, to produce effectively, or to meet the aspirations of those who own or direct the enterprise is more often than not the result of bad strategic decisions: enterprises try to continue to operate on a scale that is no longer economic; manufacturers fail to produce a new product, or produce the wrong product at the wrong time; resource-based industries fail to protect their supplies or integrate forward to protect their markets; single market firms fail to diversify. Reallocating tasks, authorities, and information flow can, to be sure, improve organizational effectiveness by raising productivity and, at least temporarily, arresting declines in cost or profit performance. But the introduction of improved organizational forms rarely produces a dramatic change in organizational performance except as it makes possible new and superior strategic decision making. Organization design at one time was conducted in a static context. The tasks essential to the current business of the enterprise were identified and then aggregated in ascending hierarchical levels to form the classical pyramid. Today, however, no organization design for a large enterprise would be based solely on present operations. It is absolutely essential that it reflect any proposed change in the basic mission of die enterprise and that it be fashioned in the light of top management goals and strategic programs. The analysis of organization structure, then, must begin with an understanding of die strategy of the enterprise. The analytical process itself is essentially the same whether the enterprise is diversified or homogenous, public or private, in an advanced nation or a developing country. [7]

Historian Alfred Chandler studied the relations between a firm's strategy, its environment, and its structure, and concluded that structure follows strategy. Specifically his findings suggest that a strategy diversification typically need for firm to decentralize. Chandler investigated thesis by analyzing the administrative histories of about 100 of American's largest industrial enterprises. Information was obtained from such sources as annual reports, articles and government publications, as well as selected interviews with CEOs. [5]

He found that a changing economic environment in American led companies to developed new strategies, which in turn necessitated new organizational structure.

Thus, structure followed strategy. A strategy aimed at increasing volume and production efficiency led to an environment that was relatively stable and undifferentiated.

Similar findings have been obtained in a developing country. Researchers collected from 30 manufacturing firms in India, a variety of industries that included chemical, pharmaceuticals, cosmetics, machine tools, and soft drinks. They found that results of their study provide further evidences in support of a contingency theory of organizations. They could not include that dynamic, competitive market conditions necessitated decentralization whereas stable conditions necessitated centralization. However, they did find that the decentralized structure was more important for firm's effectiveness when the environment was dynamic than when it was stable. [6]

So it is clear that strategy affects structure. Choice of strategy affects internal organization characteristics. Organization design characteristics need to support the firm's competitive approach.

Strategy and structure theory

As it noted previously, strategy is broad concept and every one can view it from different aspect.

One of the most important strategy and structure theories - which are used in this thesis, is the model which is developed by Miles and Snow. Miles and Snow study different type of the organizations in small or large corporations. Then they developed a theory which indicates that there is a very clear direction between organization's mission statement and the organization's corporate and functional strategies.

Their classification of four strategic types, based on the rate at which an organization changes its product or markets, is currently most popular framework for defining strategy and impact on structural design.

Four strategic types:

Miles and Snow classify organization into one of the four strategic types:

Defenders, prospectors, analyzers and reactors

While their discussion centers on business firms, the categories they use probably have their counterpart in nonprofit organizations as well.

In the figure Miles and Snow's four strategies are described as falling along a continuum that ranges from a low to high terms of environmental change and uncertainty. [2]

Miles & Snow strategic approach

Environment strategy continuum

Management perceives little or no change and uncertainty in the environment under the defender strategy. The successful structure under such conditions should be designs for optimum efficiency. This efficiency can best be achieved through high divisions of labor, standardization of operations, high formalization, and centralized decision making.

Organizations following a reactor strategy respond to change reluctantly. Management perceives some change and uncertainty, but they are not likely to make any substantial adjustment until forced to by environmental pressures. So this structure is likely to look very much like the one describes defender.

Managers pursuing an analyzer strategy perceive a considerable degree of change and uncertainty but wait until competitors develop a viable response, and then they quickly adopt it. In the analyzer strategy, managers try to develop flexible structure for the new activities because their face stronger uncertainty.

Finally, prospector's strategies require the greatest degree of structural flexibility. There is the lot of change and uncertainty, so structures should be highly adaptive. This would translate into low complexity, low formalization, and decentralized decision making.

Organizational size and lifecycle

Organization size

In this section the question about the large versus small organization and how size is related to the structure will be answered. Organization size is a contextual variable that influences organizational design and functioning just as do the contextual variables technology, environment, goals.

In the 1990,s American's management argue, Peter Drucker, declared that the fortune 500 is over ; yet the dream of practically every businessperson is still to have his or her company become a member of fortune 500 list- to grow fast and grow large. Sometimes this goal is more urgent than to make the best products or show the greatest profit. Many observations identify that USA is entering "new era of bigness". The reason is that, in the universal dimension companies can compete better.

There are other pressures for organization to grow. Many executives believe that growth help organizations to become health in the economic aspect. To stop growing is to stagnate. To be stable means that customers may not have their demands of fully or those competitors will increase market share at the expense of your company. Scale is crucial to economic health in marketing intensive companies such as Coca Cola. Greater size gives these companies power in the market place and thus increased revenues. In addition growing organizations are very exciting places to attract and keep quality employees.

When the number of employees expanding, the company can offer many challenges and opportunities for advancement.

Large versus small

Organization feel completed to grow, how much and how large? What size organization is better poised to compete in a global environment?

Large: huge resources and economies of scale are needed for many organizations to compete globally. Large organizations also are standardized, often mechanistically run, and complex. The complexity offers hundred of functional specialists within the organization to perform complex tasks and produce complex products. More ever, large organizations, once established, can be presence that stabilizes a market for years. Managers can join the company and expect a career reminiscent of the organization men of 1950's and 1960's. The organization can provide longevity, raises and promotions.

Small: the competing argument says small is beautiful the crucial acquirements for success in global economy are responsiveness and flexibility in fast- changing markets. While the US economy contains many large organizations, researches shows that as a global trades has accelerated, smaller organization had become a norm. Today fully 96% of experts are small business. The development of the Internet has provided fertile ground for the growth of small firms. In addition, the rapidly growing service sector, also contributes to a decrease in average organization size, since most service companies remain to be responsive to customers.

Organizational lifecycle

A useful way to think about organizational growth and change in the concept of an organization lifecycle, which suggest the organization are born, grow older, and eventually become die, organization structure, leadership style, and administrative system follow a fairly predictable pattern through stages in the lifecycle. According to this concept the sequential process is as follow:

Entrepreneurial stage:

When an entrepreneur builds a business or a company try to create a new product they devote their full energies to the technical activities of production and marketing. The organization is informal and non bureaucratic. The hours of work are long. Control is based on the owners' personal supervision. Growth is from a creative new product or service.

Crisis: need for leadership. As the organization starts to grow, the larger number of employees causes problem. The creative and technically oriented owners are confronted with management issues, At this time entrepreneurs must either adjust the structures of the organization to accommodate continues growth or else bring in strong managers who can do so.

Collectivity stage:

Is the leadership crisis is resolved, strong leadership is obtain and the organization beings to develop clear goals and direction. Departments are established along with a hierarchy of authority and job assignments. In this stage there are a few formal systems in the organization. The communication between the members almost is informal. The work hours are long and the employees spend much time to their organization's success.

Crisis: need for delegation. If the new management has been successful, lower level employees gradually find themselves restricted by strong op to down leadership. An autonomy crisis occurs when to p management, who were successful because of their strong leadership and vision; do not want to give up responsibility. Top managers want to make sure that all parts of the organization are coordinate and pulling together. The organization needs to find the mechanism of control and coordinate departments without direct supervision from the top.

Formalization stage:

This stage involves the installation and use of rules, procedures and control systems. Unlike the collectivity stage, the communications between employees are informal. Human resource specialist, different engineers and other staff may be added. Top management becomes with issue such as strategy and planning, and leaves the operation of the firm to middle management. Product groups or other decentralized units may be formed to improve coordination. Incentive systems based on profits may be implemented to ensure that managers work toward what is best for the overall company.

Crisis: too much Red Tape. As this point to the organization's development, the proliferation of systems and programs may being to strangle middle- level executives. The organization seems bureaucratized. Middle management may resent the intrusion of staff people. Innovation may be restricted. The organization seems too large and complex to be managed through formal programs.

Elaboration stage:

Team work is the best solution for the red tape crisis. Management develops skills confronting problems and working together. Bureaucracy may have reached its limited. Formal systems may be simplified and replaces by manager teams and task forces. To achieve collaboration, teams are often formed across functions and divisions of the company. The organization may also be split into multiple divisions to maintaining a small company philosophy.

Crisis: need for revitalization. After the organization reaches to maturity, it may enter period of organizations decline. After twenty years of organization's life, this crisis may be occurred. In this stage, renewing is needful for every organization. The organization shifts out of alignment with the environment or perhaps becomes slow moving or over bureaucratized and must go through a stage for streamlining and innovation. Top managers are often replaced during this period



Non bureaucratic


Pre bureaucratic




Very bureaucratic


Informal, one person show

Mostly informal, some procedures

Formal procedures, divisions of labor, new specialties added

Team work within bureaucracy, small- company thinking


Single product or services

Major product or service with variations

Line of products or services

Multiple products or services lines

Reward and control systems

Personal paternalistic

Personal contribution to success

Impersonal formalized system

Extensive, tailored to product and department


By owner manager

By employees and managers

By separate innovation group

By institutionalized R&D department




Internal stability, market expansion

Reputation, complete organization

Top management style

Individualistic, entrepreneurial

Charismatic, directing- giving

Delegation with control

Team approach, attack bureaucracy

Specifications of organization lifecycle stages


There is general agreement among OT researchers about the definition of the technology in the organizations. As Robbins stated "technology refers to the information, equipment, techniques, and process required transforming input to output". [2] There is also agreement that the concept of technology, despite its mechanical or manufacturing connotation, is applicable to all types and kinds of organizations. Regardless of whether the organization is a manufacturing firm, a bank, or a military squadron, it will use a technology of some sort to produce its product or service.

Perrow's model for assessing organization technology

One of the major disabilities of technology assessments models was that they could not analyze service firms. Because service firms represent a large number of organizations, it is necessary to define the concept of the technology in the service companies. [2] Charles Perrow has a useful model in this case.

As Robbin's stated in his book Charles Perrow assumes that: "the type of technology determines an organization's most effective structure and success in the market". [2]There are two dimensions for Perrow's model: Task variability and task analyzability. Task variety means that a worker faced two how many exceptions in a work day. Task with high degree has analytical methods to do works. According to these two types there four types of organization's technology. These four forms are represented as follows:


These types of the organizations are some like traditional manufacturing. There isn't any important exception in doing works. The tasks are completely analytical.


There isn't any important exception too' but the outcomes are not predictable. An example of this type of organization's technology is to dissolve a extent problem with new methods.


In this type of technologies, people face to many exceptions, but the work is analytical. It means that there are standard methods to do things. Most engineers and accountants use this type of technology in their work.


It is characterized by many exceptions and poor comprehension. There isn't any accepted method to do things.

The more routine the technology, the more highly structured the organization should be. Conversely, non-routine technologies require greater structural flexibility. Perrow then identified the key aspects of structure that could be modified to the technology: (1) the amount of discretion that can be exorcized for completing tasks, (2) the power of groups to control the unit's goals and basic strategies, (3) the extent of interdependence between these groups, and (4) using either feedback or the planning of others. The table summarizes Perrow's predictions.




Span of control

Coordination and control





Planning and rigid rules





Reports and meetings





Training and meetings





Group norms and group meetings


Defining and measuring of the environment

Scanning the external environment of an organization is the subject which is very important in most management's decisions. One the most usable theory in this context is contingency theory. The scanning process of the external business environment should be examined on the basis of systems theory, the phenomenon of human communication, and, finally, the classic research of Aguilar (1967) and Lawrence and Lorsch's (1967, 1969, 1970) contingency theory. Through this approach, it is possible to arrive at a new organizational model, which can possibly clarify some conceptual issues in relation to scanning. Its primary conceptual issue is based on the assumption that all organizations are open systems and survive through their external environments. Finally, contingency theory attempts to explain the way organizations function under different conditions of the external environment. In other words, this approach arrives at the conclusion that the external environment within which an organization chooses to function, determines the internal structure, and the overall procedures of this specific organization.

So, organizations with different external environment and different types of tasks need different structure. Management professionals in this context face to a question: which types of organizations characteristics are needed in order to effectively face the different external environments, such as the different markets, technological conditions, etc.? As a consequence, in the last few years, the researchers pay attention to the linkage between organization and its external environment, which is the scanning process. But, despite the fact that the issue of scanning is of vital importance to the viability of the organization, there are certain managers, who are trapped by the faulty assumption that somehow the external environment does not really matter so much since it cannot be controlled anyway. On the other hand, managers try to collect as much data as possible, are faced with a strong contradiction, which is the uncertainty of the fast changing environment. This uncertainty relates to all those external events that affect the organization. Therefore, I can safely conclude that the different kinds of hierarchies, organizational practices, and strategies, which have been developed in the past, do not seem to fulfill the needs, the demands and the provocation of the present. There is no doubt that managers who insist on scanning the environment through outdated organizational structures and practices sooner or later are led to the wrong conclusions about the state of affairs of the external environment.

The recent developments in contingency theory and organizational development [31], despite the fact that they are on the right track, do not seem to move towards a deeper theoretical or conceptual inquiry of the phenomenon of scanning and communication.

A model for evaluating environment

In this section, common threads in the studied about environment will look. Since the goal is integration and clarity rather than merely the presentation of lots of diverse research findings, it's important to seek some common ground in the environmental literature. One popular device for integrating the environmental literature has been to break environmental uncertainty down into two dimensions that can be depicted as a two- by two matrix with four cells.

The two dimensions consider the degree of change and complexity in the environment and their impact on the managerial decision making. Environmental change ranges from static (where there is little change) to dynamic. The more dynamic the environment, the more it is difficult it is for management to accurately predict the probabilities associated with various decision alternatives.

All other things being equal, management would prefer to face static or unchanging environment because it provides high predictability. Environmental complexity refers to the number of external components that can influence the organization's operations. When it is simple, there tend to be few components that management needs to monitor, and the components tend to be homogeneous. Increases in complexity lead to decentralization, which enables the organization to more effectively and more closely monitor an expanding array of heterogeneous environmental components.

A model for evaluating environment

Organizations operating in static-simple environments (cell1) experience the least amount of perceived uncertainty in decision making, whereas organizations in dynamic-complex environments (cell 4) experience the greatest amount of perceived uncertainty. Researches, however suggest that however, suggests that the two dimensions do not have an equal impact on uncertainty. The test data, based on twenty two decision making groups in six organizations, revealed that the static-dynamic dimensions made the largest contribution to perceived uncertainty. Specifically, decision units with dynamic environment always experience significantly more uncertainty in decision making regardless of whether their environment simple or complex.

Assuming the company wanted to asses an organization's environment, in terms of the degree of thee uncertainty it faces, how would managers go about it?

That's certainty affair question, but implies agreement on a measure of environmental uncertainty. Of course modifications will be necessary to reflect an organization's specific environment and domain in which it has a chosen to operate.

Different researches show that organizations which face to the more complex and uncertain environment should be more organic in their structure and mechanistic structures are suitable for the statistic and simple environment.

These conclusions align with the discussion of technology and structure in the previous chapter. Routine technologies operate in relative uncertainty, whereas Nonroutine technologies imply relative uncertainty. High environmental uncertainty or technology of a Nonroutine nature both require organic types structures. Similarly, low environmental uncertainty or routine technology can be managed more effectively in the mechanistic structures.


In 1980's, the concept of organizational culture was in common use. First researches focused on the organization's corporate climate, but later it replaces with the concept of culture. [9] Climate was redefined as the visible expression of organizational culture. There is no generally accepted definition of either concept. Organizational culture is said to mean, for example, an organization's values an organizations generally accepted system of meaning or an organization's operating philosophy despite the uncertainty of the concepts definition, the significance of culture is understood, particularly in the corporate world. Traditional mechanistic management models have been found to be inadequate and contrary to fundamental human nature. [10]

Culture's Function

There are a lot of different functions for the culture within the organization. First, we can different the organizations with their cultures. Second, culture creates an organizational personality for the members. Third, it makes commitment to the organizational interests. Fourth, culture improves the stability of social systems. Consequently, culture helps to create a mechanism to guide the employee's attitude in the organization shape.

Now the most important question here is that how can managers asset their organization's culture. There is no similar answer to this question. Some researches use quantitative methods to evaluate organization's culture, like Denison. [16]

Some researchers, however, refuse to apply quantitative methods at all. According to Ernst, these divergent opinions are due to different perspectives on corporate culture. Apart from different underlying cultural paradigms, however, the decision to apply qualitative or quantitative methods can be made depending on the cultural level to be analyzed. For example, the measurement of deep elements is difficult via a standardized questionnaire. These cultural elements require the researcher "to tap subconscious, but taken-for-granted, learned responses" Therefore, qualitative analysis using in-depth interviews, case studies and observations are more likely to yield meaningful results. In this regard, it is more useful to discover the data about the organizational culture than the quantitative research methods, based on answers of organizational members to written questions, are more appropriate to measure organizational members' perceptions of their organizational work practices. Thus, quantitative research methods tap facets of the surface level of corporate culture. A major advantage of using quantitative research methods is that it convert fuzzy concept of the culture to the reliable data. [16] This approach help specialist to compare the results. Second, from a practitioner's perspective, is very useful to identify the gaps between the existing and the desired state of culture. For organizational development or culture change programs, it is an attractive tool to measure the impact and/ or progress of those initiatives.

Literature often refers to a typology that has been suggested by Burns and Stalker who distinguish between mechanistic and organic organizations. Both terms - mechanistic and organic - describe organizational structures as well as organizational cultures. In the organic culture, communication is lateral. An example for this type of the vulture is that, employees from the R&D department talk directly to their coworkers in the marketing department. In mechanistic cultures, communication is rather vertical, involving the boss or supervisor. Decision-making in organic cultures is not on the basis of the structural hierarchy. The employees have enough knowledge and experience to make decisions.

Employees working in organic cultures have more opportunities to be more receptive and open to new ideas, technologies, or market insights than those working in mechanistic cultures. Finally, organic cultures are assumed to be more flexible in processing information and exchanging ideas and, thus, are more likely to recognize the potential of a (radical) innovation. The differences between both types are summarized in Table.




Communication is vertical along hierarchical lines, largely from boss to subordinate, telling them what to do.

Communication is lateral, allowing, for example, for marketing and engineering to talk to each other directly and more often.

Locus of influence

Influence rests more with those higher up in the hierarchy.

Those with expertise of knowledge have the influence

Job responsibilities

Well- defined job responsibilities

Job responsibilities are not well- defined, allowing for objectivity in receiving and evaluating ideas.

Information flow

Emphasis is on unidirectional top- down flow of information.

Emphasis is on exchange of ideas and not unidirectional top - down flow of information

Conduciveness to innovation

Least conductive to recognizing the potential of innovation

Most conductive to recognizing the potential of an innovation.

The differences between organic and mechanistic culture

In addition to the mechanistic-organic dimension, Quinn and colleagues as well as Cameron and Freeman use a second dimension in order to measure corporate culture. This second dimension differentiates between a focus on internal orientation and integration and an emphasis on external orientation and differentiation. Together, the resulting four cultural dimensions, which are labeled clan, hierarchy, adhocracy, and market, constitute the competing values framework, which is illustrated in the next figure.

Types of organizational culture in the competing values framework [17]

The lower right quadrant market culture identifies an external and control (mechanistic) focus and emphasizes competitiveness and goal achievement. Employees in a market culture are expected to be goal-oriented producers. In the organization with market culture wants to maximize the productivity to increase their competitive advantage and to finally attain market dominance. The market culture type stands in direct contrast to the values that constitute the clan culture in the upper left quadrant of Figure. The clan culture has an internal and flexible (organic) focus and emphasizes cohesiveness, participation, and teamwork. Similar to a family, managers mentor the member's task or parent-figures, and people share their personal values and goals. Clan cultures emphasize the development of human resources, team cohesion, as well as employee morale and commitment. In this culture's type, personal satisfaction is more important to the managers than the market share or other financial performance.

Hierarchy culture type identifies an internal and control (mechanistic) focus. The underlying set of values in a hierarchy culture put strong emphasis on formalized rules, procedures, and policies that govern employees' actions in the organization. The strategic emphasis of a hierarchy culture is on stability, predictability, and efficient operations. The competing set of values is found in the adhocracy culture, which is depicted in the upper right quadrant of Figure. The adhocracy culture identifies an external and flexible (organic) focus and emphasizes entrepreneurship and creativity. The most important characteristics of this type of organization's culture are dynamic and creative workplace where individual initiative, experimentation, flexibility, and freedom are important. Its overall goal is to find new markets and new directions for growth, new technologies and new market opportunities

As stressed by Deshpand, Farley and Webster, firms usually have several types of cultures. Thus, different business units of one firm may have different cultures.

For assessment, the method of Organizational Culture Assessment Instrument is used according to this typology for culture. The assessment method will explain in the methodology chapter.