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Organization Design
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Purpose and Overview
• Overview
– The Meaning of Organizational Design
– Levels of Organization Design
– Systemati !ssessment "efore Design
– Designs for a #ariety of $ealth Servies
Organizations
– %nfluenes on &uture Organization Designs
– Organization in Transition
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The Meaning of Organizational Design
• "uilding (lo)s of organization are
arranged to improve effetiveness and
adaptive apaity
– !uthority
– *esponsi(ility
– !ounta(ility – %nformation
– *ewards
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Dimensions of Organization Design
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The Determinant of Organizational Structure
• Long-term Organizational Goals" The management #hooses an organi$ational str%#t%re &ery #are'%lly. It
e&al%ates (hether it (ants to )elegate a%thority to its employees or
(hether it (ants to ma*e all the 'inal )e#isions.
" I' it )e#i)es on *eeping a%thoritati&e po(ers (ith itsel'+ it #hooses a
hori$ontal organi$ational str%#t%re. Here+ there are &ery 'e( le&els o'
hierar#hies an) the management al(ays ma*es %ltimate )e#isions,
(hether small or big.
" Ho(e&er+ (hen the s#ale o' operations in#rease+ it be#omes )i''i#%lt 'or
the management to get in&ol&e) in small matters+ an) it may )e#i)e on
)elegating po(ers an) a%thority.
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Size of Operations
• The size and sale of operations is a ma7or determinant of the
organizational struture/
• ! restaurant (usiness an afford to entralize its authority and deision
ma)ing- (ut a large omputers manufaturing firm annot/
• !s the (usiness e.pands- it (eomes mandatory to deentralizeauthority and departmentalize all important strategi funtions/
• ! large organization has different departments for different funtions li)e
mar)eting- prodution- finane and human resoures 8$*9/ :ah
department ta)es are of its funtion- and later all hores are ollated to
form organizational tas)s/
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Skills of Employees
" The s*ills an) e)%#ational -%ali'i#ations o' the employees also
in'l%en#e the #hoi#e o' the type o' the str%#t%re.
" A la( 'irm (o%l) be #onstit%te) o' attorneys. These in)i&i)%als (o%l)
ha&e &ast pro'essional an) e)%#ational epertise an) eperien#e.
" It (o%l) get &ery )i''i#%lt to maintain a%thority o&er them at all times.
They m%st be gi&en a 'ree han) to ma*e their o(n )e#isions. /ther(ise+
there are #han#es o' ego #lashes bet(een the employees an) the
management. It is &ery easy to maintain a%thority o&er lo(r%ng
laborers.
•
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Technologies Used
The types o' te#hnologies %se) by the organi$ation
also )etermine the type o' organi$ational str%#t%re.
A #ompany that has a%tomate) its operations #an#hoose to )e#entrali$e its a%thority. The systems
(o%l) monitor progress o' the employee thro%gho%t.
Hen#e+ the tas* o' the employee1s imme)iate
s%perior (o%l) be to pro&i)e g%i)an#e as an) (henre-%ire).
•
e omponents o
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e omponents oOrganizational Structures
• ork !unctions
• !lso referred to as the ;division of la(or-; wor) funtions are
separated and defined in an organizational struture/
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• "o# Groups
• %n organizational strutures- similar 7o( funtions are grouped
together to form separate departments/ Offiially referred to as
;departmentalization-; organizations group 7o(s aording to
funtion- geographi loation- produt or mar)et/ &untional
departmentalization groups 7o(s aording to a ommon tas)- suh
as human resoures- mar)eting or aounting/ Produt
departmentalization groups 7o(s aording to the produt that their
ativities relate to> this type of departmentalization spans several
disiplines/ Mar)et departmentalization groups 7o( funtions
aording to the lient they serve- for e.ample- a third?party ontatenter that groups wor)ers aording to aount/
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• Span of Control
• !nother aspet of organizational strutures is deiding the num(er of
employees that will report to a single manager- or the span of ontrol/
! su(aspet of span of ontrol is deiding the num(er of management
layers that will e.ist/ &or e.ample- a sales organization might employ
hundreds of front?line representatives who report to a front?line sales
manager in groups of 56/ :ah front?line sales manager might report
to a division sales manager who- in turn- might report to a regional
sales vie president/
•
*ead more@
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tures/htmlCi.zz2.L5E6*h
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• Decision-making $uthority
– %n traditional hierarhial strutures- the hain of ommand starts with
the ompany,s top e.eutives and flows downward/ This ulminates in
front?line staff implementing the strategi deisions that top
management has handed down/ :mployees might have little
involvement in the poliies and proedures they must omply with/ !ninformal struture involves giving deision?ma)ing authority to all levels
of employees/ %n this type of struture- front?line employees an
partiipate in the development of the ompany,s poliies and ma)e
deisions onerning their daily wor) routines/
•
e u ng oc s o
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e u ng oc s oOrganizational Structure
• &ierarchy
• One of the primary omponents of any organizational struture is
the hierarhy- or how many layers the organization has/ ! layer
typially signifies a level of management that an order or idea must
pass through/ The e.eutive (oard is the top layer of the (usiness-
and the (ottom layer is made of the entry level wor)s/ Sometimes
many levels of managers are found in (etween the two- espeially in
mehanial strutures/ Sometimes there is only one or two levels of
management- whih ours more often in organi strutures/
•
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• !ormalization
• &ormalization refers to how orders- deisions and ompany
standards are transmitted to all employees throughout the ompany/
This is tightly tied to leadership and hierarhy/ Some (usinesses
prefer a very (ureaurati system of administering orders (y strit
methods and pu(lishing them through dependa(le hannels that are
unFuestiona(le/ Gonversely- other (usinesses prefer to olla(orate
when ma)ing deisions- inviting employee dissent and enouraging
alternative ideas or a reversal of plans even after they are reated/
Ghannels of ommuniation are not as rigid in these types of
organizational strutures/
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• Di'isions
• $ow a ompany sets up its divisions is also a very important
omponent of an organization,s struture/ Small (usinesses an
often get away with only one division that handles all operations/
Some larger ompanies- meanwhile- divide the ompany (ased on
departments- with aounting- %T- $* and other departments
reated as needed/ Other organizations reate divisions that
produe different produts ?? for e.ample- one division for vauum
leaners and another for washing mahines/
•
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• Temporary Constructs
– Temporary onstruts are those elements of a (usiness
organization that are freFuently used to solve pro(lems (ut do
not last as individual entities themselves/ Many (usinesses
reate temporary teams in order to omplete speifi pro7ets/Some (usinesses do not li)e to use teams (ut will assign a
speial pro7et to a dediated trou(leshooter/ $ow a ompany
aepts or re7ets these more fluid elements (eomes an
important part of the organization/
•
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Organization Gulture
The values and (ehaviors that ontri(ute to the uniFue
soial and psyhologial environment of an organization/
Organizational ulture inludes an organization,s
e.petations- e.perienes- philosophy- and values thathold it together- and is e.pressed in its self?image- inner
wor)ings- interations with the outside world- and future
e.petations/
%t is (ased on shared attitudes- (eliefs- ustoms- andwritten and unwritten rules that have (een developed
over time and are onsidered valid/
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Organization Gulture
" Also #alle) #orporate #%lt%re+ it1s sho(n in
34 the (ays the organi$ation #on)%#ts its b%siness+ treats its
employees+ #%stomers+ an) the (i)er #omm%nity+
24 the etent to (hi#h 'ree)om is allo(e) in )e#ision ma*ing+
)e&eloping ne( i)eas+ an) personal epression+54 ho( po(er an) in'ormation 'lo( thro%gh its hierar#hy+ an)
4 ho( #ommitte) employees are to(ar)s #olle#ti&e ob7e#ti&es.
Organizational culture is uni(ue for e'eryorganization and one of the hardest things to
change)
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Le'els of
OrganizationalCulture
$rtifacts * ssym(ols of
ulture in the physial
and soial wor) environment
+aluesEspoused, what mem(ers of
an organization say they valueEnacted, refleted in the way
individuals atually (ehave
$ssumptions * deeply held (eliefs that guide (ehavior and tell
mem(ers of an organization how
to pereive and thin) a(out things
Le'els of
OrganizationalCulture
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Types of !rtifats
• Geremonies and *ites
• Stories – !(out the (oss
– !(out getting fired
– !(out reloating
– !(out promotions
– !(out risis situations
• *ituals
• Sym(ols
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&untions Of Organization Gulture
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Understanding OrganizationalCulture
Antecedents
• Founder’s values
• Industry &
businessenvironment
• National culture
• Senior leaders’vision andbehavior
Organizational Structure &
Practices
• Reward
systems• Organizational
design
OrganizationalCulture
• Observableartifacts
• s!oused values
• "asic
assum!tions
Group &Social
Processes• Socialization
• #entoring
• $ecisionma%ing
• rou!dynamics
• 'ommunication
• In(uence &em!owerment
• )eadershi!Organizationa
l Outcomes
• *ectiveness
• Innovation &stress
CollectiveAttitudes &
Behavior
• +or% attitudes
• ,obsatisfaction
• #otivation
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mportance of Culture in Organizations
• Unity, ! shared organizational ulture helps to unite employees of
different demographis/ Many employees within an organization ome
from different (a)grounds- families and traditions and have their own
ultures/ $aving a shared ulture at the wor)plae gives them a sense
of unity and understanding towards one another- promoting (etter
ommuniation and less onflit/
• Loyalty, Organizational ulture helps to )eep employees motivated and
loyal to the management of the organization/ %f employees view
themselves as part of their organizationHs ulture- they are more eager
to want to ontri(ute to the entity,s suess/ They feel a higher sense of
aomplishment for (eing a part of an organization they are a(out andwor) harder without having to (e oered/
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mportance of Culture in Organizations
• Competition, $ealthy ompetition among employees is
one of the results of a shared organizational ulture/
:mployees will strive to perform at their (est to earn
reognition and appreiation from their superiors/ This in
turn inreases the Fuality of their wor)- whih helps theorganization prosper and flourish/
• Direction, Iuidelines ontri(ute to organizational ulture/
They provide employees with a sense of diretion and
e.petations that )eep employees on tas)/ :ah employeeunderstands what his roles and responsi(ilities are and how
to aomplish tas)s prior to esta(lished deadlines/
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mportance of Culture in Organizations
• dentity, !n organizationHs ulture defines its
identity/ !n entity,s way of doing (usiness is
pereived (y (oth the individuals who omprise
the organization as well as its lients andustomers- and it is determined (y its ulture/
The values and (eliefs of an organization
ontri(ute to the (rand image (y whih it
(eomes )nown and respeted/
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Types of Organization Gulture
• Clan oriented ultures are family?li)e- with a fous on
mentoring- nurturing- and Jdoing things together/K
• $dhocracy oriented ultures are dynami and
entrepreneurial- with a fous on ris)?ta)ing- innovation-
and Jdoing things first/K
• .arket oriented ultures are results oriented- with a
fous on ompetition- ahievement- and Jgetting the 7o(
done/K
• &ierarchy oriented ultures are strutured and
ontrolled- with a fous on effiieny- sta(ility and Jdoing
things right/K
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Types of Organization Gulture
" Normative Culture: In a normati&e organi$ation+ the organi$ation stresses on
implementing the organi$ational pro#e)%res in the #orre#t manner+ an)
a##or)ing to the norms an) r%les )e'ine). This *in) o' #%lt%re is per#ei&e) to
portray a high stan)ar) o' b%siness ethi#s.
" Pragmatic Culture: In #ontrast to normati&e #%lt%res+ stress is lai) on satis'yingthe (ish o' their #lients. In this type o' organi$ational str%#t%re+ the #lient is
&irt%ally )ei'ie). The prime #on#ern o' e&ery employee is to #ater to the nee)s o'
the #lient+ attain+ an) retain the b%siness they may in&ite thro%gh the #lients.
"
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Types of Organization Gulture
" Academy Culture: In this *in) o' #%lt%re+ employees
are highly s*ille)+ an) the organi$ation pro&i)es an
en&ironment 'or the )e&elopment+ an) honing o'
employee s*ills. amples o' this *in) o' #%lt%re arehospitals+ %ni&ersities+ an) large #orporations.
mployees ten) to stay (ith the organi$ation+ an)
gro( (ithin4 it.
.
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" Collaborate Work Culture: An organi$ation that a)opts a
#ollaborate #%lt%re o''ers a #ongenial an) amiable
en&ironment to (or* in. The 'eeling one )eri&es (hile
(or*ing in this type o' organi$ation is that o' #om'ort an) high
moti&ation. This organi$ation #onsists o' s%periors (ho pro&i)e more o' g%i)an#e+ an) less o' go&ernan#e.
" The organi$ation is base) on (or*er(el'are+ (here yo% ha&e
the employees1 interest in the 'oregro%n) (ith his s*ills
&al%e)+ an) per'orman#es han)somely re(ar)e). De&elopingteam(or* is the most &ital element o' the organi$ation
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Types of Organization Gulture
" Adhocracy Work Culture: It is a type o' organi$ation i)eas are
en#o%rage)+ an) o%to'thebo thin*ing is appre#iate). Dynamism
is )e'ine) best (hen the (or*'or#e has the 'ree)om to thin* ne( 8
)i''erent, the )e&elopment o' (hi#h+ may lea) to s%##ess,
ina)&ertently+ to higher le&els o' morale+ an) monetary in#enti&es." Macho Culture: The most important aspe#t o' this *in) o' #%lt%re
is big re(ar)s+ an) -%i#* 'ee)ba#*. This *in) o' #%lt%re is mostly
asso#iate) (ith -%i#* 'inan#ial a#ti&ities, li*e+ bro*erage+ an)
#%rren#y tra)ing. It #an also be relate) to a#ti&ities+ li*e+ a sports
team+ a poli#e team+ or bran)ing o' an athlete.
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Types of Organization Gulture
" Club Culture: 9s%ally+ the employees stay (ith the organi$ation 'or a
long time+ an) get promote) to a senior post+ or le&el. These employees
are the one (ho possess the spe#i'i# s*ills re-%ire) an) )esire)+ by the
organi$ation. amples o' this *in) o' organi$ation are la( 'irms+ the
military+ et#.
" Baseball Team Culture: In this *in) o' #%lt%re+ the employees are
1'ree agents1+ an) are highly pri$e). These employees 'in) employment
easily in any organi$ation+ an) are highly in )eman). There is+
ho(e&er+ a #onsi)erable amo%nt o' ris* atta#he) to this #%lt%re+ as it is
&ery 'astpa#e). amples o' this *in) o' #%lt%re are a)&ertising+ an)in&estment ban*ing+ to name a 'e(.
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Types of Organization Gulture
"
Work Hard/Play Hard Culture: This type o' organi$ation )oes not in&ol&e
m%#h ris*+ as the organi$ations+ alrea)y+ #onsist o' a 'irm base #o%ple) (ith a
strong #lient relationship. This *in) o' #%lt%re is pre)ominantly opte) by the
larges#ale) organi$ations that ha&e gaine) their #%stomers1 tr%st an) s%pport. The
organi$ation is -%ali'ie) (ith m%ltipleteam meetings.
Bet Your Coma!y Culture: In this *in) o' #%lt%re+ the #ompany ma*es big+ an)
important )e#isions o&er high sta*e en)ea&ors. It ta*es time to see the
#onse-%en#e o' these )e#isions. Companies that post%late eperimental pro7e#ts+
an) resear#hes as their #ore b%siness proposition+ a)opt this *in) o' #%lt%re, 'or
instan#e+ a #ompany )esigning eperimental military (eapons may implement thesai) type o' #%lt%re.
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Types of Organization Gulture
" Process Culture: This type o' #%lt%re )oes not
in#l%)e the pro#ess o' 'ee)ba#*. In this *in) o'
#%lt%re+ the organi$ation is etremely #a%tio%s abo%t
the a)heren#e to la(s+ an) pre'ers to abi)e by them.This #%lt%re besto(s #onsisten#y %pon the
organi$ation+ pre)ominantly meant 'or p%bli#
ser&i#es.
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Organizational Gulture
• One of the most diffiult tas)s to underta)e in an organization- is to hange
its wor) ulture/ ! hange in the organizational ulture reFuires an
organization to ma)e amendments to its poliies- wor)plae ethis- and
management system/ %t needs to start right from its (ase funtions>
inluding- support funtions- operations- and the prodution floor- whih
finally affets the overall output of the organization/ %t reFuires a omplete
overhaul of the entire system- and not many organizations prefer it as the
proess is a long- and tedious one- whih reFuires patiene- and endurane/
$owever- when an organization sueeds in ma)ing a hange on suh a
massive level- the results are almost always positive- and fruitful/ The
different types of organizational ultures aforementioned- surely- must have
helped you to understand them/ ou an also adopt one of them for yourown organization> however- persistene- and patiene- ultimately- is the
essene/
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Constructive Culture
High priority on constructiveinterpersonal relationships, and ocuson !or" group satisaction
A#liative
Participative, employee
centered, andsupportive
Humanistic$encouraging
%alue sel$developmentand creativity
Sel$actualizing
Goal and achievementoriented
Achievement
OrganizationalCharacteristics
ormativeBelies
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Passive Defensive Culture
egative re!ard system and 'eensiveavoid accounta(ility
Avoidance
onparticipative, centralized decisionma"ing, and employees do !hat theyare told
'ependent
Conservative,(ureaucratic, andpeople ollo! the rules
Conventional
Avoid con)ict, strive to
(e li"ed (y others, andapproval oriented
Approval
OrganizationalCharacteristics
ormativeBelies
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Aggressive-DefensiveCulture
Perectionistic, persistent, and hard!or"ing
Perectionistic
*inning is values and a!in$lose approach isused
Competitive
onparticipative, ta"echarge o 'eensivesu(ordinates, andresponsive to superiors
Po!er
Conrontation and
negativism re!arded
Oppositional
OrganizationalCharacteristics
ormativeBelies
O i ti l C lt
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Organizational CultureResearch Suggests:
+ Organizational culture correlated !ithemployee attitudes and (ehavior
- Congruence (et!een an individual.s valuesand the organization.s values associated
!ith organizational commitment, /o(satisaction, intentions to 0uit, andturnover
1 Organizational culture did not predict acompany.s 2nancial perormance
3 4ergers re0uently ailed due toincompati(le cultures
-h i th l ti hi
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-heories on the relationshi!between organizational culture and
!erformance
Strong Culture /erspecti'e
!it /erspecti'e
$dapti'e /erspecti'e
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Strong Gulture
an organizational culture 0ith a
consensus on the 'alues that dri'e
the company and 0ith an intensity that
is recogniza#le e'en to outsiders
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BECAUSE BECAUSE • They are haraterized (y goal
alignment• They reate a high level of motivation
(eause of shared values (y the
mem(ers• They provide ontrol without the
oppressive effets of (ureauray
Strong 'ultures Facilitate.erformance
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&it Perspetive
$ culture is good only if it fits the
industry or the firm1s strategy
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Three partiular industryharateristis affet ulture@
5/Gompetitive environment
2/Gustomer reFuirements
'/Soietal e.petations
Fit .ers!ective
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!daptive Gulture
$n organizational culture that encourages
confidence and risk taking among employees2
has leadership that produces change2 and
focuses on the changing needs of customers
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/da!tive vs0 Nonada!tive 'ultures
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Most %mportant :lements
in Managing Gulture
•
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Organizational Socialization
• Phase 5@ !ntiipatory
• Phase 2@ :nounter
• Phase '@ Ghange and aFuisition
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Organizational Soialization Proess
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Organizational Socialization
Phases Perceptual andSocial Processes
+ Anticipatorysocializationlearning thatoccurs prior to /oining theorganization
Anticipating realitiesa(out the organization
and the ne! /o(
Anticipatingorganization.s needs orone.s s"ills and a(ilities
Anticipating
organization.s sensitivityto one.s needs andvalues
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Organizational Socialization
Phases Perceptual andSocial Processes
- 5ncounter values,s"ills, andattitudes start toshit as ne!recruit discovers!hat theorganization is
truly li"e
4anaging liestyle$versus$!or" con)icts
4anaging intergroup rolecon)icts
See"ing role de2nitionand clarity
Becoming amiliar !ith
tas" and group dynamics
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Organizational Socialization
Phases Perceptual andSocial Processes
1 Change andac0uisition recruitmasters s"ills androles and ad/uststo !or" group.svalues and norms
Competing role demandsare resolved
Critical tas"s aremastered
Group norms and valuesare internalized
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5
Outcomes of Socialization
ewomers who are suessfully
soialized should e.hi(it@
– Iood performane
– $igh 7o( satisfation
– %ntention to stay with organization
– Low levels of distress symptoms
– $igh level of organizational ommitment
How cultures are embedded in
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How cultures are embedded in
organizations
• &ormalApu(li statements
• Physial Layout
• Slogans- o/ lingo
• Mentoring- modeling• :.pliit rewards- promotion riteria
• Stories- legends- myths
• Proesses and outomes- measurement
•
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'
Mentoring
• Outomes for Mentees
• Outomes for Mentors
• Outomes for Organizations
• Maintaining the Gulture
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+
Functions of Mentoring
• Career 6unctions1 Sponsorship
1 57posure$and$%isi(ility
1 Coaching
1 Protection
1 Challenging Assignments
• Psychological 6unctions1 8ole 4odeling
1 Acceptance$and$Con2rmation
1 Counseling
1 6riendship
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0
Organizational Gulture %nventory
&ouses on (ehaviors that help employees fitinto the organization and meet owor)ere.petations
Nses MaslowHs hierarhy ofneeds to measure twelveultural styles
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ilmann?Sa.ton Gulture?Iap Survey
&ouses on what atually happens in theorganization and the e.petations of others
Two underlying dimensions – tehnialAhuman andtime/
Interventions for Changing
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Interventions for Changing
Organizational Culture
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uestions on Culture
• Gan the organizational ulture hange
– $ow
•
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