Chapter 13
Organization: Structure, Culture, and Climate
JUMP START
The purpose of this chapter is to introduce students to the various organizational structures and
the advantages and disadvantages of each. The fact that organizations change for various reasons
is pointed out. If students realize the reasons for structural changes and are able to recognize signs
of impending change, they should be better able to cope with it. Formal and informal
communication channels are addressed as well as the dangers of the grapevine. An understanding
of the channels of communication within an organization is essential to effective performance.
Lastly the importance of corporate cultures and climates is discussed.
Answer to Jump Start Questions
Answers may vary depending on student experiences. Students need to be realistic and realize
that they will all most likely work for organizations that restructure one or more times. Ask
students to name changes in communication equipment in the past five years. They should
mention changes such as wireless and digital. Ask them to think about how these changes affect
how a large company like Nortel operates. If Nortel does not change, it is likely they will either
go out of business or be bought by another organization.
CHAPTER PREVIEW
OBJECTIVES
After studying this chapter, you should be able to:
13.1 Discuss what organizational structures are and why they exist.
13.2 Explain who has authority in an organization and how authority originates.
13.3 Describe how organizational structure affects communication.
13.4 Identify signs that signal future organizational changes.
13.5 Explain corporate cultures and climates and their importance.
PRESENTATION OUTLINE
I. Why organizations need structure
A. Ask Yourself
II. Authority and how it originates
A. In The News
B. Line and Staff Structure
(T.M. 13.1)
(Application 1—Nowhere to Run, Nowhere to Hide)
C. Matrix structure
D. Technology Connection
(T.M. 13.2)
E. Modular organization
F. Virtual organization
G. Distribution of authority
H. Span of control
I. Ethics Connection
J. Ask Yourself
Chapter 13 Organization Savvy: Structure, Culture, and Climate 1
(Application 2—Order From Chaos)
III. How structure affects communication
A. Ask Yourself
(Supplementary Exercise 13.1)
IV. Why structures change
A. Ask Yourself
(Supplementary Exercise 13.2)
V. The importance of culture and climate
A. Global Connection
B. Ask Yourself
(Human Relations in Action)
TEACHING-LEARNING SUGGESTIONS
13.1 Why Organizations Need Structure
Structure is the relationship among parts. Organization structure affects productivity, quality,
employee morale, customer satisfaction, and, ultimately, the success of the entire business.
Without it we do not know what our job or responsibilities are. Because companies are forced to
change their structure frequently it is important to understand why structures change and to
recognize when structure may be changing.
Answers to Ask Yourself
13.2 Authority and How it Originates
The chain of command is the direction in which authority is exercised and policies and other
information are communicated to lower levels. The classic pyramidal hierarchy shows authority
at the top, with information and commands being passed down to lower levels. Today’s
organizations use a variety of different structures to allow flexibility and cost savings.
Making decisions becomes increasingly difficult as organizations grow in size and complexity.
The two most common forms of authority are centralized, where upper-level management makes
decisions, and decentralized, where decisions are made at lower levels.
Answers to Case Studies in the News
Answers to Technology Connection
1. Answers will vary.
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Answers to Ethics Connection
1. Answers will vary.
2. Answers will vary. Suggest to students that they should model behavior that does not focus
Answers to Ask Yourself
1. Answers will vary but should demonstrate a clear understanding of the importance of the
2. Answers will vary.
13.3 How Structure Affects Communication
Communication that flows up or down the formal organizational structure is called formal
communication and is controlled by the chain of command. Downward communication is
communication that begins at higher levels of the organization and flows downward.
Informal communication is the most common type of communication and travels through a
channel often called the grapevine. This is an informal person-to-person means of circulating
information or gossip.
Answers to Ask Yourself
1. Answers will vary.
2. Answers will vary. When information comes through the grapevine it can be incorrect.
3. Answers will vary.
Supplementary Exercise 13.1
Have students sit or stand in a line. Begin by whispering a message to the first individual. The
message, once said, cannot be repeated. The individual who received the message then whispers
it to the next person. The message proceeds to the last individual who then announces aloud what
he/she heard. The results of the grapevine then should be compared to the original message and
implications for real-life situations made.
13.4 Why Structures Change
Organization structures change because products become obsolete and disappear, with new
products taking their place. New industries develop; old industries either adjust or die. As
competition develops, companies reengineer to improve their business processes. This most often
results in changes in organization structure.
Answers to Ask Yourself
1. Answers will vary. Rotary telephones, eight track tapes, vinyl records, and the black and
Chapter 13 Organization Savvy: Structure, Culture, and Climate 3
2. Answers will vary. Television sets, as we know them today, may soon be on the way out.
3. Answers will vary. With all the change and reorganization happening today, the more you
Supplementary Exercise 13.2
Provide an example of an organizational chart by drawing one for an organization with which you
are familiar. It can be a school, church, work, or volunteer organization. Have students identify
the span of control, whether it is a complex organization with line and staff or matrix, and where
the organization is in its life cycle.
13.5 The Importance of Culture and Climate
Organizational culture is frequently unwritten. To fit into an organization, however, you must be
able to recognize and then navigate the culture. The organizational climate is the environment
created by the style and attitudes of management. The climate, in turn, can affect creativity and
productivity.
Answers to Global Connection
1. Answers will vary. Emphasize to students that having a company hero who is not American
2. Answers will vary. By giving local control the organization will most likely be run
Answers to Ask Yourself
1. Answers will vary.
2. Answers will vary. Students should observe and ask questions. Suggest students identify
3. Answers will vary. However, failing to master the culture could possible lead to unhappiness
KEY TERMS DEFINITIONS
chain of command The direction in which authority is exercised and policies and other
information are communicated to lower levels.
pyramidal hierarchy Triangle shape of an organization with the single head of the organization
at the top. Smaller pyramids appear within the larger.
line and staff structure A complex organization structure in which the line (production
employees) is given support by staff in such areas as law and safety.
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functional authority Authority given to staff personnel to make decisions in their area of
expertise and to overrule line decisions.
SUGGESTED RESPONSES TO REVIEW QUESTIONS
1. Organizational structure helps organizations divide work and delegate tasks. If organizations
2. The hierarchical pyramid is the triangular organization shape with the singular head of the
Chapter 13 Organization Savvy: Structure, Culture, and Climate 5
4. The chain of command is the way in which power is distributed within the organization.
5. The number of employees that can be effectively supervised at one time generally ranges
6. Formal communication is the communication that flows up or down the formal organizational
7. Formal communication can be one way or two way. One-way communication, such as using
8. Informal communication does not follow formal channels but often flows through a channel
9. The life cycle causes changes in organizational structure. Corporations go through cycles
10. The components of organizational culture include equipment and other physical objects,
11. Organizational climate is the environment created by the managerial style and attitudes
SUGGESTED RESPONSES TO CRITICAL THINKING QUESTIONS
1. All firms should not attempt to decentralize authority. Factors that must be taken into
2. The difficulty of accepting authority of those at our level or below is that we might not feel
3. Student answers will vary. Encourage students to discuss how fueling the grapevine can be
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4. Student answers will vary. The discussion can be facilitated with magazine and newspaper
5. Answers will vary. Use the five components of organizational culture to help elicit answers.
6. Answers will vary. Ask students how changes in the economy or new leaders have made a
difference.
CASE STUDIES
Answers to Case Study 1 Questions (Nowhere to Run, Nowhere to Hide)
1. Gina is in a very tough spot. She should ultimately follow Hernando’s directions as
2. A line and staff organizational structure is being used.
3. The structure has allowed for two different opinions on the same situation.
4. Yes. If the human resource manager had functional authority to approve all
terminations, Hernando would have to defer to the human resource manager.
Answers to Case Study 2 Questions (Order from Chaos)
1. Reginald does not need to restructure at this point. His organization is neither large nor
2. Reginald needs to add another layer of management in the stores. He does not have time to
3. Reginald can decentralize the purchasing and hiring decisions in the plant, leaving these
4. One individual can appropriately supervise each outlet because the tasks performed in the
CHAPTER PROJECT
If students are unable to visit an organization have them research companies on the internet and
find organization charts. Direct them to use the types of organizations described in 13.2 to
redesign the organization.
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