ORGANIZATIONAL CULTURE AND ENVIRONMENT

Parameters of Managerial Discretion

ORGANIZATIONAL CULTURE– A system of shared meanings and common

beliefs held by organizational members that determines, in a large degree, how they act towards each other.

– “The way we do things around here.”• Values, symbols, rituals, myths, and practices

– Implications:• Culture is a perception.• Culture is shared.• Culture is descriptive.

DEFINITION OF ORGANISATIONAL CULTURE

• According to Ralph Linton, culture refers to the set of values that help members understand what the organization stands for, how it does things, and what it considers important.

• According to Linda Smircich, organizational culture is a system of shared values, assumptions, beliefs, and norms that unite the members of an organization.

• Ricky W. Griffin states that organizational culture is the collection of shared (stated or implied) beliefs, values, rituals ,stories, myths and specialized language that foster a feeling of community among organization members.

Dimensions of Organizational Culture

Characteristics/ Attributes of Organizational Culture

• It is distinctive: mission , vision , goal• It is based on certain norms.• It promotes dominant and stable values.• It leads to common behavioral aspects.• It shapes philosophy rules.• Its strength varies.

STRONG VERSUS WEAK CULTURES

Strong Culture– Are cultures in which key values are deeply

held and widely held.– Have a strong influence on organizational

members.– Commit members to do things that are in

the best interests of the organization.– Discourage dysfunctional work behavior.– Encourage functional work behavior.

• The best organizations have strong cultures that:–Are performance-oriented.– Emphasize teamwork.–Allow for risk taking.– Encourage innovation.–Value the well being of people.

Factors Influencing the Strength of Culture

1. Size of the organization2. Age of the organization3. Rate of employee turnover4. Strength of the original culture5. Clarity of cultural values and beliefs

Benefits of a Strong Culture• Creates a stronger employee commitment

to the organization.

• Aids in the recruitment and socialization of new employees.

• Fosters higher organizational performance by instilling and promoting employee initiative.

Creation and Maintenance of Organizational Cultures

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Organizational HeroesOrganizational HeroesOrganizational StoriesOrganizational Stories

Company FounderCompany Founder

How Employees Learn Culture• Stories– Narratives of significant events or actions of

people that convey the spirit of the organization• Rituals– Repetitive sequences of activities that express

and reinforce the values of the organization• Material Symbols– Physical assets distinguishing the organization

• Language– Acronyms and jargon of terms, phrases, and

word meanings specific to an organization

How an Organization’s Culture Is Established and Maintained

Organizational Socialization Process

It refers to the process that helps new employee adapt to the organization's culture.

Org uses several resources to the same which include company newsletter, manual, handbook, orientation and training , citation of role models.

Stories can also play vital role as it is powerful tolls for conveying values.

Another method for conveying values is the participation of senior officer in training program designed to help new employees understand the corporate culture.

• Culture is often defined by the system that are used, the processes that are followed., and the rituals, symbols, and stories that abound in the organization.

• It is also reflected in how meetings are held in the organization

Steps in the Socialization ProcessThe organization should identify and select those

candidates whose values are compatible with the organization's culture.

The new employee should be moved closer emotionally and make them cohesive as a group.

They will be given practical training, leading to mastery of the core discipline of the business.

The performance should be measured and reward the individual performance.

By adopting the company’s values , the employee show that they trust the organization

• The last step is acknowledging the good work of employees by promoting them to higher position. These people can act as role models for the new employees.

Managing the organizational Culture and Change

• There are seven dimensions of an organizational culture, namely, attention to detail, innovation and risk taking, outcome orientation, stability, people orientation, aggressiveness, and team orientation.

• Every single person comes from different background and lifestyle , so there are various factors which affect managing organizational culture.:-

Factors Affecting Org Culture

• Organizational Change• Communication• Service• Compensation• Organizational Culture• Decision-Making• Individual

Competencies

• Morale• Performance Evaluation• Quality• Supervision• Training & Development• Mission

CHANGEChange Management is a structured approach to

shifting/transitioning individuals, teams and organizations from a current state to a desired future state.

It is aimed at empowering employee to accept and embrace change in existing business environment

It allows for new technology and new ways of doing the same task more efficient and cost effective manner.

Change can be un comfortable but surre can make someone stronger and more knowledgeable in long run.

Process of Change ManagementIdentifying the need for change in organization.Designing need specific changes to curb with the

requirement of the organizations.Making others understand why changes is necessary for

the purpose.Altering the organizational process like processes,

technology and performance meters to incorporate the changes

Managing the production and changes to ensure that customer and the stake holder continue to be bonded with each other over thee long run.

How is Change Effective

Successful change management is more likely to occur if the following are included.:-

• Effective communication that informs various stakeholder of the reason for the change (why?),the benefits of the successful implementation (What is in it for us, and you) as well as the details of the change (When ? Where ? How much will it cost ?)

• Devise an effective education, training and skill upgrading schemes for the organization.

• Counter Resistance from the employees of companies and align them to overall strategies direction of the organization.

• Provide personal counseling to alleviate any change related fears.

• Monitoring of the implementation and fine-tuning as required.

Resistance to Change

• Fear of the unknown• Fear of Failure• Disagreement with thee need for change• Losing something of value• Leaving a comfort zone• False beliefs• Misunderstanding and lack of trust.• Inertia.

Group

• Two or more people/individuals coming into contact on a continuing basis, personally & meaningfully could be referred to as a group.

• Informal Group– Informal group comprise of a small number of

people who frequently participate in activities and sharre feelings for the purpose of a meeting their mutual needs

• Formal Group– Formal group and institution on the other hand

could be defined as the rules that are readily observable through written documents or rules that are determined & executed through formal position such as authority or ownership.

– They include explicit incentives, contractual terms, & firm boundaries as defined by equity position, organizational charts and job description generally reflect the formal structure or prescribed network in a given organization

Leadership

• Leadership is a process by which a person influences others to accomplish an objective and directs the organization

• Leadership is a process where an individual influences a group of individual to achieve a common goal.

• Leadership Style– Leadership style is the manner and approach of

providing direction, implementing plans, and motivating people.

Leadership Style

• Authoritarian or Autocratic• Participative or democratic• Delegative or Free Reign

Authoritarian or Autocratic

• Here, leader tell their employees what he want done and hoe he want it to accomplished, without getting the advice of his followers.

• It used when leaders have all the information to solve the problem, they are short on time, and their employees are self motivated.

• This style can be vehicle for yelling, using demeaning language, and leading by threats and abusing their power.

• It is about ‘Bossing People Around’

Participative or democratic

• This style involves the leader including one or more employees in the decision making process (determining what to do and how to do it).

• However leader maintain the final decision. • It is normally used when employees are

knowledgeable and skillful.• Using this style is of mutual benefit-it allows

them to become part of the team and allows leader to make better decision

Delegative or Free Reign

• Here, the leader allows the employees to make the decisions. However , the leader is still responsible for outcome of the decision.

• It is useful when employees are able to analyze the situation and determine what needs to be done and how to do it.

• A Leader must set the priorities and delegate certain tasks..

• This style is helpful when leader s have full trust and confidence in employees.

Managerial Decisions Affected by Culture

• Planning• The degree of risk that plans should contain• Whether plans should be developed by

individuals or teams• The degree of environmental scanning in which

management will engage• Organizing

• How much autonomy should be designed into employees’ jobs

• Whether tasks should be done by individuals or in teams

• The degree to which department managers interact with each other

• Leading • The degree to which managers are concerned

with increasing employee job satisfaction• What leadership styles are appropriate• Whether all disagreements—even constructive

ones—should be eliminated •Controlling

• Whether to impose external controls or to allow employees to control their own actions

• What criteria should be emphasized in employee performance evaluations

• What repercussions will occur from exceeding one’s budget

Defining the External Environment

• External Environment◦Those factors and forces outside the

organization that affect the organization’s performance.

• Components of the External Environment◦Specific environment: external forces that have

a direct and immediate impact on the organization.

◦General environment: broad economic, socio-cultural, political/legal, demographic, technological, and global conditions that may affect the organization.

The External Environment

Managing Stakeholder Relationships

1. Identify the organization’s external stakeholders.

2. Determine the particular interests and concerns of the external stakeholders.

3. Decide how critical each external stakeholder is to the organization.

4. Determine how to manage each individual external stakeholder relationship.

Organizational Stakeholders

MGT/M5/SS

Social responsibility and Managerial ethics

Chapter – 5

“Business of Business is Business”

-Milton Friedman

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility is the continuing commitment by business to

behave ethically and contribute to economic development while improving the quality of life of the workforce and

their families as well as of the local community and society at large

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Arguments in Favor of CSR• It is in best interest of business to promote &

improve the communities where it does business

• It is an ethical• Long –run survival of the business concerns• Profitable for the business concerns• Moral and social commitment • Improvement in public image• Helps in avoiding government regulation

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Arguments Against CSR• It violates profit maximization• Social actions can not be measured• Cost –benefit analysis• Business Lack skill and competence to solve

societal problems • Transfer of social costs(a) Increase in price(b) Reduction in wage(c) Reduction in profit

resources 44

Is CSR the same as business ethics?

• There is clearly an overlap between CSR and business ethics

• Both concepts concern values, objectives and decision based on something than the pursuit of profits

• And socially responsible firms must act ethically• The difference is that ethics concern individual actions

which can be assessed as right or wrong by reference to moral principles.

• CSR is about the organization's obligations to all stakeholders – and not just shareholders.

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There are four dimensions of corporate responsibility

• Economic - responsibility to earn profit for owners

• Legal - responsibility to comply with the law (society’s codification of right and wrong)

• Ethical - not acting just for profit but doing what is right, just and fair

• Voluntary and philanthropic - promoting human welfare and goodwill

• Being a good corporate citizen contributing to the community and the quality of life 46

Business firm’s Responsibilities

Owners/Shareholder

Government

Society

Employees

Customer/Consumer

Competitors

Business firm’s Responsibilities towards different group

Responsibilities towards Customer

• Fair Price• Product must meet the need of the group• Superior Quality• Followed by Superior Service• Superior Product Design• Quick & Complete Information

Responsibilities Towards Employees

• Meaningful work• Fair Salaries & Benefits• Job Satisfaction• Participation in Key Decisions• Succession planning & Development• Best quality of work life• Member of Trade Union• Collective Bargaining• Right to strike

Responsibilities Towards owners/Shareholder

• Fair & Reasonable Dividend• Solvent & Efficient Business• Optimum use of Resources• Planned Growth• Effective Communication by report

Responsibilities Towards Competitor

• Fair Competition• Cooperation for sharing of scare resources and

facilities• Good Advertisement• Collaboration for maximization

Responsibilities Towards Government

• Payment of Taxes, Custom Duties etc• Abide by the Laws • Observe the politics• Maintain Law & Security

Responsibilities Towards Society/community

• Employment without discrimination• Employment to disadvantaged person• Community welfare services• Business Morality of Business Efficiency• Maintaining Pollution free environment• Maintaining ecological balance

Ethics

• Derived from ‘ethos’ means character• It’s science of Morals, being right, just, honest, good.• A study concerned with human character and

conduct, Principles or ideals of human conduct.

Business Ethics

• Refers to the application of moral values, accepted character and behavior during

performance of all business activities, dealings, offers, practices and other corporate

issues.

Tools of Business Ethics

• To protect the interest of the society and to maximize human welfare

• To convince the business to respect its competitors role in the economy

• To respect customer’s interest and their role in the business

• Improves the confidence of customer, employers, suppliers, bankers etc in the process of protecting their interest

• Regulate the roles and activities of all the players in business activities.

• Make the business to discharge its role toward government more fairly.

• To perform fair role in the social issues, ecology and environmental protection, consumerism, energy crisis, technology development and unemployment, resources utilization and the like.

Principle of Ethics by: Mr Woodrow Wilson

• The rule of publicity• The rule of equivalent price• The rule of conscience in business• The rule of spirit of service