By Prof.

Neha Gupte
 Decision making:

 3.1. Introduction

 3.2. Decision making environment- Decision making

under certainty, under uncertainty, under risk

 3.3. Types of Decision, decision making processes &

Tools

 3.4. Individual Vs Group decision making

 3.5. Herbert Simon's Model & Principle of Rationality

 https://www.youtube.com/watch?v=SUSSl5v
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 Decision making in management is the process of making a choice
between two or more options.

 This involves evaluating the pros and cons of various choices and
choosing the best option to achieve a desired outcome.

 In management, decision making is about acting in a way that meets

organizational goals and objectives.

 Management decision is an important part of managing any

organization.

 It allows managers to set goals and figure out what actions are
needed to meet those goals and evaluate whether those actions are
working as intended.

 Management decision meaning refers to managers guiding their

organizations down the right path toward success.
 The quality of the decisions made in an organization will dictate
the success or failure of the said business.

 The decisions are taken in different types of environment. The

type of environment also influences the way the decision is
made.

 Three types:
 Certainty

 Uncertainty

 Risk
 Such type of environment is very sure and certain by its nature.
This means that all the information is available and at hand. Such
data is also easy to attain and not very expensive to gather.

 the manager has all the information he may need to make an

informed and well thought out decision. All the alternatives and
their outcomes can also be analyzed and then the manager
chooses the best alternative.
 In the decision making environment of uncertainty, the
information available to the manager is incomplete, insufficient
and often unreliable.

 In an uncertain environment, everything is in a state of flux.

Several external and random forces mean that the environment is
most unpredictable.
 Under the condition of risk, there is the possibility of more than one
event taking place. Which means the manager has to first ascertain
the possibility and probability of the occurrence or non-occurrence
of the event.

 The manager will generally rely on past experiences to make this

deduction.

 In this scenario too, the manager has some information available to

him. But the availability and the reliability of the information is not
guaranteed. He has to chart a few alternative courses of actions
from the data he has.
 Programmed and non-programmed decisions

 Routine and strategic decisions

 Tactical (Policy) and operational decisions

 Organizational and personal decisions

 Major and minor decisions

 Individual and group decisions

 Routine Decisions: Routine decisions are those that
the manager makes in the daily functioning of the organization.
Such decisions do not require a lot of evaluation, analysis or in-
depth study. In fact, high-level managers usually delegate these
decisions to their subordinates.

 Strategic Decisions: strategic decisions are the important decisions

of the firm. These are usually taken by upper and middle-level
management. They usually relate to the policies of the firm or the
strategic plan for the future. Hence such decisions require analysis
and careful study. Because strategic decisions taken at this level
will affect the routine decisions taken daily.
 Programmed Decisions: Programmed decisions relate to those
functions that are repetitive in nature. These decisions are dealt
with by following a specific standard procedure. These decisions
are usually taken by lower management. For example, granting
leave to employees, purchasing spare parts etc are programmed
decisions where a specific procedure is followed.

 Non-programmed decisions: Non-programmed decisions arise out

of unstructured problems, i.e. these are not routine or daily
occurrences. So there is no standard procedure or process to deal
with such issues. These decisions are important to the organization.
Such decisions are left to upper management. For example,
opening a new branch office will be a non-programmed decision.
 Policy Decisions: Tactical decisions pertaining to the policy and
planning of the firm are known as policy decisions. Such decisions
are usually reserved for the firm’s top management officials.
They have a long term impact on the firm and require a great
deal of analysis.

 Operating decisions: These are the decisions necessary to put

the policy decisions into action. These decisions help implement
the plans and policies taken by the high-level managers. Such
decisions are usually taken by middle and lower management.
Say the company announces a bonus issue. This is a policy
decision. However, the calculation and implementation of such
bonus issue is an operating decision.
 Organizational Decision: When an executive takes a decision in
an official capacity, on behalf of the organization, this is
an organizational decision. Such decisions can be delegated to
subordinates.

 Personal Decisions: If the executive takes a decision in a

personal capacity, that does not relate to the organization in any
way this is a personal decision. Obviously, these decisions cannot
be delegated.
 Individual Decisions: Any decision taken by an individual in an

official capacity it is an individual decision. Organizations that

are smaller and have an autocratic style of management rely on
such decisions.

 Group decisions: These are taken by a group or a collective of

the firm’s employees and management. For example, decisions
taken by the board of Directors are a group decision.
 Tools and strategies for decision-making are ways to assist people
or groups in making wise choices. These instruments and methods
may change depending on the circumstance and the choice that
needs to be made. Brainstorming, SWOT analysis, cost-benefit
analysis, decision trees, and pilot plans are a few popular tools
and methods for making decisions.

 With the aid of these techniques, individuals or groups can

investigate the situation, gather data, evaluate their choices,
and select the best course of action based on reason and proof.
 SWOT analysis is a strategy for determining a company’s or
project’s strengths, weaknesses, opportunities, and threats. In
businesses, it is a common tool for making wise decisions. One
might perform a SWOT analysis by creating a decision analysis
matrix to visually arrange the information and honestly assess the
facts.
Opportunities:
 Identify the opportunities that the decision or project presents.
 Determine how to capitalise on the opportunities.
 Use the opportunities to enhance the outcome.
Strengths:
 Identify the decision’s or project’s strengths.
 Ascertain the benefits the choice has over alternative courses of
action.
 Take advantage of the strengths to maximize the result.
Weaknesses:
 Reduce the bad effects by mitigating the flaws.
 Determine the decision’s or project’s shortcomings.
 Identify any drawbacks the choice has in comparison to other
possibilities.
Threats:
 Identify the threats that the decision or project faces.
 Determine how to mitigate the threats.
 Use the threats to prepare for potential challenges.
 Cost-benefit analysis is a process used to measure the benefits of a
decision or taking action minus the costs associated with taking that
action. It is a versatile method that can be applied to virtually any
decision-making process, whether business-related or otherwise. The
following are the steps involved in conducting a cost-benefit analysis.
 Identify the decision or project to be analysed.

 List all the costs associated with the decision or project.

 List all the benefits associated with the decision or project.

 Assign a dollar value to each cost and benefit.

 Tally the total value of benefits and costs and compare them.

 Evaluate the results and make an informed, final recommendation.

 Businesses and organisations can analyse their resources and make better
choices by using cost-benefit analysis.
 Game theory is a mathematical framework for analysing decision-
making involving multiple parties. Here are some key points to
help define game theory in decision-making:
 It can help decision-makers understand the incentives and motivations
of other players and how they might respond to different choices.

 Game theory can be used to identify optimal strategies for different

players and to predict the likely outcomes of different scenarios.

 It can also be used to study the effects of different rules or regulations

on strategic behaviour and to design mechanisms that encourage
cooperation or discourage conflict.

 Game theory is widely used in economics, political science,

psychology, and other fields to study decision-making and strategic
behaviour.
 Political, economic, social and technological (PEST) analysis can
allow you to examine the many external factors that may
influence the outcome of a decision.

 This method is commonly useful when faced with problems that

require you to pay attention to current trends and predict future
ones.

 For instance, organizations may use this tactic to make decisions

with the goal of becoming more competitive in a given market.
 A fishbone diagram, also called an Ishikawa or cause-and-effect
diagram, is a visual strategy utilised in decision-making to
identify the potential source of an issue or an effect. Follow
these key points:

 The diagram has a fish-like structure, therefore called a fishbone

diagrams like a fish skeleton, with the effect or problem at the
head of the fish and the potential causes branching off like
bones.

 The diagram is typically created by a team of people who

brainstorm the possible causes of the problem or effect.

 The main categories of causes are typically listed on the diagram,

such as people, processes, equipment, materials, and
environment.
 Six Thinking Hats is a decision-making technique that helps individuals

and groups to think more effectively and thoroughly about a problem or

decision. The technique involves wearing different “hats” or perspectives

to approach the problem from different angles. Here are the six hats and

their corresponding perspectives:

 Blue Hat: This hat represents control and organisation. Individuals focus

on the big picture, the process, and the overall direction of the

discussion or decision-making process.

 White Hat: This hat represents facts and information. One can focus on

data, statistics, and objective information about the problem or decision.

 Black Hat: It represents critical thinking and caution. One can focus on

potential risks, drawbacks, and negative consequences of the problem or

decision.

 Green Hat: This hat represents creativity and innovation. Individuals

focus on generating new ideas, solutions, and alternatives to the problem

or decision.

 Yellow Hat: This hat represents optimism and positivity. One can focus on

potential benefits, opportunities, and positive outcomes of the problem

or decision.

 Red Hat: This hat represents emotions and feelings. Individuals focus on

intuition, gut feelings, and emotional responses to problems or decisions.

 The Delphi method is a decision-making process that involves a
panel of experts. Here are some key points:

 The goal is to reach a group consensus.

 The process involves several rounds of questions.

 Experts fill out questionnaires and provide their opinions.

 The gathered information is summarised in a report.

 Experts can examine other answers and change their minds.

 The method is often used for forecasting.

 The process of making decisions can be approached individually
or collaboratively in groups.

 Both individual and group decision-making have their distinct

advantages and challenges, impacting the quality and
effectiveness of the decisions made.
 Individual decision-making is the process wherein an individual
assesses a situation, considers available alternatives, and selects
the most appropriate course of action without seeking external
input.

 This approach is common in personal decision-making, such as

choosing a career path, making consumer purchases, or
addressing moral dilemmas.
 Problem Identification

 Information Gathering

 Alternative Generation

 Evaluation

 Decision-making

 Implementation

 Evaluation
 Speed and Efficiency

 Accountability

 Unbiased Decision-Making

 Privacy

 Expertise Utilization
 Speed and Efficiency: Individual decision-making allows for quicker
decisions as there is no need for group consensus or deliberation,
making it suitable for time-sensitive situations.

 Accountability: The decision-maker is solely responsible for the

outcome, which fosters a sense of ownership and accountability.

 Unbiased Decision-Making: Individual decision-makers are less

susceptible to group biases and conformism, leading to more
objective choices.

 Privacy: Personal matters or confidential decisions can be handled

without involving others, preserving privacy.

 Expertise Utilization: In situations where an individual possesses

specialized knowledge or skills, their decision-making can capitalize
on their expertise.
 Limited Perspective

 Emotional Biases

 Risk of Overconfidence

 Lack of Diverse Ideas

 Limited Perspective: An individual’s decision-making can be limited
by their own experiences, knowledge, and biases, potentially leading
to suboptimal choices.

 Emotional Biases: Emotions can impact individual decisions, leading

to irrational choices or avoiding tough decisions altogether.

 Risk of Overconfidence: An individual might be excessively confident

in their judgment, leading to underestimating risks or ignoring
alternative viewpoints.

 Lack of Diverse Ideas: Individual decision-making might lack the

variety of perspectives and creative ideas that group collaboration
can offer.
 Group decision-making involves a collaborative approach where
multiple individuals come together to analyze a problem,
generate ideas, and reach a consensus on the best course of
action.

 This approach is frequently utilized in various settings, including

businesses, government bodies, and social organizations.
 Group Formation

 Problem Identification

 Information Sharing

 Idea Generation

 Discussion and Evaluation

 Consensus Building

 Decision-making

 Implementation

 Evaluation
 Group Formation: Assembling individuals with diverse backgrounds, expertise, and
perspectives.

 Problem Identification: Clearly defining the issue requiring a decision.

 Information Sharing: Sharing relevant information with all group members.

 Idea Generation: Encouraging all members to propose possible solutions or

alternatives.

 Discussion and Evaluation: Analyzing each proposed solution and weighing the pros
and cons.

 Consensus Building: Seeking agreement among group members to identify the best
option.

 Decision-making: Reaching a final decision based on collective agreement.

 Implementation: Putting the chosen decision into action.

 Evaluation: Monitoring the decision’s outcomes and making adjustments if necessary.

 Diverse Perspectives

 Improved Problem-Solving

 Better Information Processing

 Reduced Bias

 Enhanced Acceptance
 Diverse Perspectives: Group decision-making allows for the integration of
multiple viewpoints and expertise, leading to comprehensive analysis and
creative solutions.

 Improved Problem-Solving: Combining the cognitive abilities of multiple

individuals can lead to more effective problem-solving and innovative ideas.

 Better Information Processing: Groups can collectively gather, process, and

assess a larger volume of information than individuals alone.

 Reduced Bias: Group decision-making can minimize individual biases through

open discussion and deliberation.

 Enhanced Acceptance: When group members actively participate in the

decision-making process, they are more likely to support the final decision,
promoting buy-in and acceptance.
 Time-Consuming

 Groupthink

 Decision Paralysis

 Domination and Polarization

 Social Loafing
 Time-Consuming: The process of reaching a consensus in a group can be
time-consuming, particularly in larger groups or complex decision
scenarios.

 Groupthink: Groupthink is a psychological phenomenon where the

desire for harmony and conformity in a group can lead to a narrow focus
and a rush to consensus, potentially ignoring critical issues or
alternatives.

 Decision Paralysis: Groups may struggle to make decisions when faced

with conflicting opinions or resistance to compromise.

 Domination and Polarization: Strong personalities or power dynamics

within a group can lead to domination of certain members and
polarization of views, hindering the decision-making process.

 Social Loafing: Some group members may rely on others to do the work,
reducing overall group productivity and effectiveness.
 Herbert Simon made key contributions to enhance our understanding
of the decision-making process.

 He pioneered the field of decision support systems. According to

(Simon 1960) and his later work with (Newell 1972), decision-
making is a process with distinct stages.

 He suggested for the first time the decision-making model of human

beings.
 His model of decision-making has three stages:
⦁ Intelligence which deals with the problem identification and the
data collection on the problem.

⦁ Design which deals with the generation of alternative solutions

to the problem at hand.
⦁ Choice which is selecting the 'best' solution from amongst the
alternative solutions using some criterion.
 This is the first step towards the decision-making process. In this step the

decision-maker identifies/detects the problem or opportunity.

 A problem in the managerial context is detecting anything that is not

according to the plan, rule or standard. An example of problem is the

detection of sudden very high attrition for the present month by a HR

manager among workers.

 Opportunity seeking on the other hand is the identification of a promising

circumstance that might lead to better results.

 An example of identification of opportunity is-a marketing manager gets

to know that two of his competitors will shut down operations (demand

being constant) for some reason in the next three months, this means that

he will be able to sell more in the market.

 Thus, we see that either in the case of a problem or for the purpose of
opportunity seeking the decision-making process is initiated and the first
stage is the clear understanding of the stimulus that triggers this process. So if
a problem/opportunity triggers this process then the first stage deals with the
complete understanding of the problem/opportunity.
 Intelligence phase of decision-making process involves:

 Problem Searching: For searching the problem, the reality or actual is

compared to some standards. Differences are measured & the differences are
evaluated to determine whether there is any problem or not.

 Problem Formulation: When the problem is identified, there is always a risk

of solving the wrong problem. In problem formulation, establishing relations
with some problem solved earlier or an analogy proves quite useful.
 Design is the process of designing solution outlines for the problem.
Alternative solutions are designed to solve the same problem.

 Each alternative solution is evaluated after gathering data about the

solution. The evaluation is done on the basic of criteria to identify the
positive and negative aspects of each solution.

 Quantitative tools and models are used to arrive at these solutions. At

this stage the solutions are only outlines of actual solutions and are
meant for analysis of their suitability alone.

 A lot of creativity and innovation is required to design solutions.

 It is the stage in which the possible solutions are compared against one
another to find out the most suitable solution. The 'best' solution may
be identified using quantitative tools like decision tree analysis or
qualitative tools like the six thinking hats technique, force field
analysis, etc.

 This is not as easy as it sounds because each solution presents a

scenario and the problem itself may have multiple objectives making
the choice process a very difficult one. Also uncertainty about the
outcomes and scenarios make the choice of a single solution difficult.
 The main purpose of this theory is to find a rational decision that
can benefit the system and its ingredients. There are several
methods that can be used to improve the rationality of
organizational decisions.

 Improving the specialization.

 Use of scientific tools to improve the outcomes.

 Understanding the market mechanism and enhancing the operations

involved.

 Providing a vast information base to improve problem-solving

techniques.

 Improving the political-institutional system.

 Definition and Need for Organization

 Introduction to OB, Organizing Process

 Organizational structure (Functional organization, Product

Organization, Territorial Organization)

 Introduction- Development and Levels of Organizational

Culture

 Types of Corporate Culture

 An organization is a body built for a collection of individuals
who join together to achieve some common goals and
objectives bounded by legal entities. Organizations are often
referred to as a company, institution, association, government
body, etc.

 The person or people who start the organization are often called
the founders. The founders are responsible for performing the
above legal procedures or hiring someone for the same.

 Once an organization is formed, it needs someone to lead and

make important decisions. This person is called the leader or the
head of the organization. The leader is responsible for guiding
the group and ensuring everyone is working towards the goal.
 World Health Organization (WHO): A specialized agency of the United Nations

focussing on global public health issues. It coordinates international efforts to

combat diseases and improve healthcare.

 Google: A multinational technology company that offers internet-related

services, including search engines, online advertising, cloud computing, and

software.

 Tesla: An electric vehicle and clean energy company that designs and

manufactures electric cars, solar energy products, and energy storage

solutions.

 Microsoft: A technology company that develops and sells software, hardware,

and services. It is known for products like Windows OS and Microsoft Office

suite.

 Apple Inc.: A multinational technology company that is known for its

innovative products such as the iPhone, iPad, and Mac computers.

 A tool for achieving objectives: Organization is an important
tool in the hands of management for accomplishing the
objectives of an enterprise.

 It facilitates administration and management: A sound

organization increases efficiency, avoids duplication of work,
avoids delay in work, improves managerial skills and motivates
employees to perform their duties.

 It ensures optimum use of human resource: Good organization

establishes individuals with interests, knowledge, skills, abilities
and viewpoints.

 It enhances creativity: A well-conceived and comprehensive

organization is the source of creative thinking and initiation of
new ideas.
 Prevents Corruption: Enterprises which lack sound organization
most of the times have problem of corruption. Sound
organization helps to prevent corruption by raising morale of the
employees. As a result of which employees are encouraged to
work with higher efficiency, commitment and honesty.

 Fosters growth of enterprise: Good organization plays a key role

not only in growth but also in the expansion and diversification of
an enterprise.
 Eliminates overlapping and duplication of efforts: In a
situation, where the distribution of work is not clearly identified
and the work is performed in a haphazard manner there will be
duplication and overlapping of efforts. As a good organization
requires that the work be clearly assigned amongst employees,
such overlapping and duplication is to be eliminated.

 Coordination: Various jobs and positions are linked together by

structural relationship of the organization. The organizational
process exercises its due and balanced emphasis on the
coordination of different activities.
 Step 1- Identifying goals and objectives: The first step in the
process of the organization includes setting goals that define the
purpose and nature of work that the organization wants to
achieve. These goals are divided into further team objectives so
that individuals are encouraged and motivated toward unified
aspirations.

 Step 2- Determining functions and division of work: This step

focuses on the activities that would be performed by the
organization to achieve the common goal and how work is to be
divided. To avoid wastage of resources and duplication of duties,
proper division of work among individuals is done.
 Step 3- Categorizing groups and departments: Individuals
possess different talents and competencies and are accordingly
categorized into common groups thus forming departments of an
organization. Each department is responsible for specific
activities. Examples are sales, marketing, HR, finance, etc.

 Step 4- Setting hierarchies: A hierarchical structure of an

organization ensures effective cross-department communication
and collaboration. All employees must be aware of their point of
contact and to whom they report to. This creates a sense of
accountability and responsibility.
 Step 5- Delegating responsibilities and authority: The leaders of
various departments are responsible for delegating work and
duties to their subordinates to achieve organizational goals. They
also contain the authority to maintain work performance in their
teams to foster overall productivity.
 Organisational Behaviour tries to understand human behaviour in
the organization. OB is a part of total management but plays a
very important role in every area of management and has been
accepted by all the people concerned.

 The mangers now understand that to make their organization

more effective, they have to understand and predict the human
behaviour in the organization.
 According to Stephen P Robbins - “Organisational behaviour is a
field of study that investigates the impact that individuals,
groups and structure have on behaviours within the organizations
for the purpose of applying such knowledge towards improving an
organizations effectiveness”.

 According to Fred Luthans - “Organisational behaviour is directly

concerned with the understanding production and control of
human behaviour in organization”.

 According to Raman J Aldag – “Organisational behaviour is a

branch of the social sciences that seeks to build theories that can
be applied to predicting, understanding and controlling behaviour
in work organizations”
 An organizational structure is a system that outlines how certain
activities are directed in order to achieve the goals of an
organization. These activities can include rules, roles, and
responsibilities.

 The organizational structure also determines how information

flows between levels within the company.

 For example, in a centralized structure, decisions flow from the

top down, while in a decentralized structure, decision-making
power is distributed among various levels of the organization.
Having an organizational structure in place allows companies to
remain efficient and focused.
 A functional organizational structure is a form of business
organization that is made up of several departments based on
specific skills and areas of expertise.

 Examples of departments in a functional organization structure

could be a human resources department, a marketing
department, a sales department, a finance department etc.

 This type of structure is very common, particularly among large

corporations.
 Advantages:

 Specialization: By grouping employees based on their function,

organizations can cultivate a high level of expertise in specific
areas. Prioritizing specialization allows each team member to
become an expert in their specific area, enhancing the quality
and efficiency of their work.

 Clear reporting structure: This structure provides clear

reporting lines and a well-defined management hierarchy.
Employees know who to report to, and managers know whom
they are responsible for, which simplifies supervision and
accountability.
 Clear career paths: Employees have clear career paths within
their functional areas, which can help with career development
and progression planning.

 Stability and predictability: Functional structures are generally

stable and predictable, making it easier to manage long-term
planning and day-to-day operations.

 Simplified training process: Training programs can be more

efficiently designed and implemented as they are focused on
specific functional areas. This leads to more effective skill
development.
 Stronger coordination: Departments in a functional structure are
designed to operate independently, which can lead to more
streamlined and coordinated efforts within each function.
 Limitations :

 Silos and isolation: Departments in a functional organizational

structure often operate in silos, leading to limited
communication and collaboration with other departments. This
can result in a lack of understanding of the broader company
goals and reduced synergy across departments.

 Slow decision-making: Centralized decision-making often leads

to slower response times, as it often requires the input and
approval of multiple departments. This can be especially
problematic in rapidly changing industries where quick decisions
are crucial.
 Resistance to change: Functional organizations can be less
adaptable to changes in the market. New ideas may meet
resistance from functional units unwilling to alter traditional
ways.

 Resource allocation issues: In a functional structure, some

departments may end up with more resources than needed, while
others might be under-resourced. This imbalance can affect the
overall performance and efficiency of the organization.
 Product organisational structure is a framework in which a business is
organised in separate divisions, each focusing on a different product or
service and functioning as an individual unit within the company.

 In a product-based structure (also known as a divisional structure),

assign employees into self-contained divisions according to:

 the particular line of products or services they produce

 the customers they deal with

 the geographical area they serve

 For example, a computer software business may divide its structure

according to its two distinct customer groups - home users and business
users. In such an arrangement, all employees working on the
development, sales or promotion of business software would be in one
division, while everyone working on software for home users would be
in another.
 Advantages:

 Organizes products by categories

 Focus on specific market segments

 Allows for specialization

 Can encourage healthy competition between departments

 Disadvantages:

 Other product teams might be cut off from innovations and

learning opportunities by other teams at the same company

 Can create inefficient/duplicative functions and resources

 Can nurture negative rivalries across departments

 The process of creating departments along the geographical
areas that the enterprise serves is termed territorial
departmentation.

 This method is adopted when an organization operates in

different geographical areas, each with distinct needs and
dynamics.

 Territorial Departmentation makes it easier for the organization

to cope with variations in laws, local customs and customer
needs.
 Public utilities like transport companies, insurance companies,
etc., adopt territorial departmentation. Similarly, a large scale
organization operating both in domestic and international
markets may have separate departments for both the markets.

 Different departments or divisions may be created for different

regions of the world. Many multinational companies organize
their global activities with regional headquarters in different
regions of the world.
 Advantages:

 Territorial departmentation makes it possible to concentrate on

markets and marketing channels in different geographical areas;

 Develops opportunities for more efficient marketing activities

because of better face-to-face communication with local
stakeholders; and

 Makes possible effective utilization of locally available resources

besides being able to cater to the region specific variations in
terms of preferences and sentiments of the people.
 Disadvantages:

 In this type of departmentation, there are problems in training

people to think in terms of markets rather than products;

 Requires more persons with general managements abilities; and

 Increases problem of top management control because of the

distance between the corporate headquarters and the regional
officers.
 Organization development (OD) is an effort that focuses on
improving an organization’s capability through the alignment of
strategy, structure, people, rewards, metrics, and management
processes.

 It is a science-backed, interdisciplinary field rooted in psychology,

culture, innovation, social sciences, adult education, human
resource management, change management, organization behavior,
and research analysis and design, among others.

 Organization development involves an ongoing, systematic, long-

range process of driving organizational effectiveness, solving
problems, and improving organizational performance. It is also one
of the capabilities identified in the Talent Development Capability
Model.
 Organizational culture is the set of values, beliefs, attitudes,
systems, and rules that outline and influence employee behavior
within an organization. The culture reflects how employees,
customers, vendors, and stakeholders experience the
organization and its brand.

 Organizational culture affects all aspects of your business, from

punctuality and tone to contract terms and employee benefits.
When workplace culture aligns with employees, they’re more
likely to feel more comfortable, supported, and valued.
 Basic underlying assumptions

 These are the foundations on which culture is based. Handy

described this as "the ways things get done around here". The
underlying assumptions are often difficult to describe, are
intangible and are often only really understood by people who've
become accustomed to the way the organisation works.

 Imagine you are new to an organisation and you find it is taking

time to "fit in". That's because you haven't yet got to grips with
these underlying assumptions that those in the organisation who've
been there a while seem to take for granted.

 Underlying assumptions are usually invisible. You won't find them

written down anywhere. People may not want to talk about them.
But they exist and are often powerful.
 Espoused Values

 These are the public statements about what the organisational

values are about. Many organisations now communicate what
their "core values" are - the espoused values by which the
organisation conducts its business.

 Artifacts

 Artifacts are the visible signs of an organisation's culture. They

are visible; they can be seen, heard and felt. For example, what
the dress code is; what kind of offices and layout is used; how
employees address each other and how they communicate
internally and externally.
 Primary Focus: Mentorship and teamwork.

 Motto: “We’re all in this together.”

 About Clan Culture:

 A clan culture is people-focused in the sense that the company

feels family-like.

 This is a highly collaborative work environment where every

individual is valued and communication is a top priority.

 Clan culture is often paired with a horizontal structure, which

helps to break down barriers between the C-suite and employees,
and it encourages mentorship opportunities.

 These companies are action-oriented and embrace change, a

testament to their highly flexible nature.
 Advantages of Clan Culture:

 Clan cultures boast high rates of employee engagement, and

happy employees make for happy customers.

 Because of its highly adaptable environment, there’s a great

possibility for market growth within a clan culture.

 Disadvantages of Clan Culture:

 A family-style corporate culture is difficult to maintain as the

company grows.

 Plus, with a horizontal leadership structure, day-to-day

operations can seem cluttered and lacking direction.
 Example of this culture type:

 Online shoe and clothing retailer, Zappos, is often praised for

having a positive culture – so much so that the company’s CEO
literally wrote a book (Delivering Happiness ) on their culture of
happiness.

 With “build a positive team and family spirit” as one of their ten
core values, they best fit the clan culture model.
 Primary Focus: Risk-taking and innovation.

 Motto: “Risk it to get the biscuit.”

 About Adhocracy Culture:

 Adhocracy cultures are rooted in innovation and adaptability. These are the

companies that are on the cutting-edge of their industry — they’re looking to

develop the next big thing before anyone else has even started asking the right

questions.

 To do so, they need to take risks. Adhocracy cultures value individuality in the

sense that employees are encouraged to think creatively and bring their ideas to

the table.

 Because this type of organizational culture falls within the external focus and

differentiation category, new ideas need to be tied to market growth and

company success.
 Advantages of Adhocracy Culture:

 An adhocracy culture contributes to high profit margins and

notoriety.

 Employees stay motivated with the goal of breaking the mold.

 Plus, with a focus on creativity and new ideas, professional

development opportunities are easy to justify.

 Disadvantages of Adhocracy Culture:

 Risk is risk, so there’s always a chance that a new venture won’t

pan out and may even hurt your business.

 Adhocracy cultures can also foster competition between

employees as the pressure to come up with new ideas mounts.
 Example of this culture type:

 Google didn’t become one of the most well-known tech

companies in the world by resting on its laurels. The company is
all about innovating to improve search and launch new offerings,
which means their culture is best described as an adhocracy
culture.

 Another good example of adhocracy culture is Facebook,

although their “move fast and break things” mentality has had to
shift recently due to increased consumer vigilance.
 Primary Focus: Competition and growth.

 Motto: “We’re in it to win it.”

 About Market Culture:

 Market culture prioritizes profitability. Everything is evaluated

with the bottom line in mind; each position has an objective that
aligns with the company’s larger goal, and there are often several
degrees of separation between employees and leadership roles.

 These are results-oriented organizations that focus on external

success rather than internal satisfaction.

 A market culture stresses the importance of meeting quotas,

reaching targets and getting results.
 Advantages of Market Culture:

 Companies that boast market cultures are profitable and successful.

 Because the entire organization is externally focused, there’s a key

objective employees can get behind and work toward.

 Disadvantages of Market Culture:

 On the other hand, because there’s a number tied to every decision,

project and position within the company, it can be difficult for
employees to meaningfully engage with their work and live out their
professional purpose.

 There is also risk for burnout in this aggressive and fast-paced

environment.
 Example of this culture type:

 Amazon often made headlines for a company culture that can only
be described as, well… relentless.

 Employees have spoken openly about the fact that they’re expected
to deliver results and climb the ladder, no matter the personal cost.

 While Amazon would likely refute these claims, the company’s

obvious emphasis on success means they still fit the market culture
mold. One of Amazon’s leadership principles is to “deliver results.”

 “Leaders focus on the key inputs for their business and deliver them
with the right quality and in a timely fashion,” the company says
of their values. “Despite setbacks, they rise to the occasion and
never settle.”
 Primary Focus: Structure and stability.

 Motto: “Get it done right.”

 About Hierarchy Culture:

 Companies with hierarchy cultures adhere to the traditional

corporate structure.

 These are companies focused on internal organization by way of

a clear chain of command and multiple management tiers that
separate employees and leadership.

 In addition to a rigid structure, there’s often a dress code for

employees to follow. Hierarchy cultures have a set way of doing
things, which makes them stable and risk-averse.
 Advantages of Hierarchy Culture:

 With internal organization as a priority, hierarchy cultures have

clear direction.

 There are well-defined processes that cater to the company’s main

objectives.

 Disadvantages of Hierarchy Culture:

 The rigidity of hierarchy cultures leaves little room for creativity,

making these companies relatively slow to adapt to the changing
marketplace.

 The company takes precedence over the individual, which doesn’t

necessarily encourage employee feedback.
 Example of this culture type:

 A good chunk of government organizations will subscribe to a

hierarchy culture.

 Because they face a lot of regulations and are often under their fair
share of scrutiny, they prioritize policies and procedures above
nearly anything else.

 They have to do things by the book, so to speak.

 Additionally, paths to advancement are clearly outlined for

employees. There’s no guesswork.