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Organizational structure determines the organizational behavior and influences the organizational culture. In addition, design of the organizational structure often determines how flexible or adaptable it is to change.
The linkages between the design of the organizational structure and its resistance or acceptance to change are indeed deep. For instance, it is common for technology organizations to have a relatively flat structure because of the nature of the industry that is rapidly changing.
Considering that technology companies ought to be flexible and adaptable to changes in their environment that is fast paced and always in flux, such organizations design their structure with less hierarchy and more openness.
On the other hand, manufacturing organizations have well developed and deep hierarchies mainly because they need the differentiation between blue collar workers and white collar executives. These terms have come about because the shop floor workers often wear blue uniforms whereas the executives and the engineers often wear white shirts. Having said that, it must be noted that this is not always the case and since the terms have been in use throughout the history of organizational behavior, they are used for convenience.
Manufacturing organizations also need hierarchies since they operate on a command and control mode meaning that the decisions are made at the top and percolate to the bottom instead of the knowledge organizations or the services sector wherein the employees often are more autonomous in addition to their being creative and innovative.
Turning to the relationship between organizational structure and culture, we find that in manufacturing organizations, the employees address each other with honorifics rather than on an informal or first name basis as is the case with the services sector. This creates a culture that is more formal and governed by rules and regulations covering all aspects of organizational culture.
Indeed, it is very common for manufacturing organizations to have separate canteens and lunch areas for the workers and the engineers and the executives. One rarely finds a manufacturing organization that has workers and executives mingling with each other except for business purposes.
On the other hand, most software companies and financial services companies have codes of conduct that specify addressing each other on a first name basis in addition to having common public areas and dining halls where there is no difference between the software engineers and the managers or for that matter even senior management.
Of course, some multinationals have executive dining halls mainly because of the fact that external clients tend to visit for meetings and hence, the negotiations and discussions are carried out over lunch and dinner as well.
The reason for mentioning all these aspects of organizational culture is that each industry has different environmental characteristics and drivers of growth and hence, the organizations in them have their own sets of rules that determine the structure and design of job roles and responsibilities. For instance, workers in manufacturing organizations just need to work as they are told and that too in a routine and repetitive manner.
Further, the assembly line mode of manufacturing means that unless there is significant innovation and improvement, the basic work remains the same. On the other hand, the technology companies have jobs where each day is different and each project and parcel of work has to be handled differently and in a new manner. This means that there is constant change and hence, the culture as well as the design of the organizational structure has to be as adaptable and flexible as possible to encourage innovation and stimulate creativity.
Finally, the design of the organizational structure is also determined according to the geography, type of organization, and the vision of the founders and the continuing vision of the CEOS.
For instance, it is common for western multinationals to be informal and flexible whereas Asian companies are often rigid and strict and formal in their approach. Even the technology companies in Asia often have different designs of organizational structure when compared to technology multinationals.
The design of the organizational structure depends to a great extent on how the original founders want the organization to be and how well the same vision is either being carried forward or being changed by the new incumbents. This can be seen in many family promoted/owned businesses which once the initial founders retire often have major changes in the way the organizational structure is designed.
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