Lecture3 chap2
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This document discusses organizational culture and the external environment faced by managers. It covers different views of management, constraints on managerial discretion from external forces, and key aspects of the external environment including economic, demographic, and stakeholder factors. The document defines organizational culture and examines how culture is established and learned within an organization. It explores how culture can influence managers' decisions and the challenges of creating innovative or customer-focused cultures.
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Lecture3 chap2
- 1. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-1 Environment and Corporate Culture Lecture 3 BMG1014 Management
- 2. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 2-2Copyright © 2014 Pearson Education 2-2 Contrast the actions of managers according to the omnipotent and symbolic views. Describe the constraints and challenges facing managers in today’s external environment. Discuss the characteristics and importance of organizational culture. Describe current issues in organizational culture.
- 3. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-3 The Manager: Omnipotent or Symbolic? • Omnipotent View of Management - the view that managers are directly responsible for an organization’s success or failure. • Symbolic view of Management - the view that much of an organization’s success or failure is due to external forces outside managers’ control.
- 4. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-4 Exhibit 2-1 Constraints on Managerial Discretion
- 5. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-5 Exhibit 2-2 Components of External Environment
- 6. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-6 The Economic Environment • Global economic recession - began with US home mortgage and soon affected businesses as credit markets collapsed. It didn’t take long for these economic troubles to spread worldwide. • Economic inequality - As economic growth has languished and sputtered, social discontent over growing income gaps has increased
- 7. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-7 The Demographic Environment • Baby Boomers - those individuals born between 1946 and 1964 • Gen Y (or the “Millennials”) - those individuals born between 1978 and 1994. • Post-Millennials - the youngest identified age group, basically teens and middle- schoolers
- 8. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-8 How the External Environment Affects Managers • Jobs and employment - As external environmental conditions one of the most powerful constraints managers face is the impact of such changes on jobs and employment
- 9. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-9 Environmental Uncertainty and Complexity • Environmental Uncertainty - the degree of change and complexity in an organization’s environment. • Environmental Complexity - the number of components in an organization’s environment and the extent of the organization’s knowledge about those components.
- 10. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-10 Exhibit 2-3 Environmental Uncertainty Matrix
- 11. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-11 Managing Stakeholder Relationships • Stakeholders - any constituencies in the organization’s environment that are affected by an organization’s decisions and actions.
- 12. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-12 Exhibit 2-4 Organizational Stakeholders
- 13. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-13 What Is Organizational Culture? • Organizational Culture - The shared values, principles, traditions, and ways of doing things that influence the way organizational members act. • Strong Cultures - Organizational cultures in which key values are intensely held and widely shared.
- 14. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-14 Exhibit 2-5 Dimensions of Organizational Culture
- 15. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-15 Exhibit 2-6 Contrasting Organizational Cultures
- 16. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-16 Exhibit 2-7 Strong Versus Weak Cultures
- 17. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-17 Where Does Culture Come From? • Organization founder • Vision and mission • Past practices • Top management behavior • Socialization - The process that helps employees adapt to the organization’s culture.
- 18. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-18 Exhibit 2-8 Establishing and Maintaining Culture
- 19. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-19 How Do Employees Learn Culture? • Stories - Narratives of significant events or people, e.g. organization founders, rule breaking, reaction to past mistakes etc. • Rituals - Sequences of activities that express and reinforce the important values and goals of the organization
- 20. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-20 How Employees Learn Culture (cont.) • Material Artifacts and Symbols - Convey the kinds of behavior that are expected, e.g. risk taking, participation, authority, etc. • Language - Acts as a common denominator that bonds members
- 21. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-21 How Does Culture Affect Managers? • Cultural Constraints on Managers – Whatever managerial actions the organization recognizes as proper or improper on its behalf – Whatever organizational activities the organization values and encourages – The overall strength or weakness of the organizational culture
- 22. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-22 Exhibit 2-9 Managerial Decisions Affected by Culture
- 23. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-23 Creating an Innovative Culture • What does an innovative culture look like? – Challenge and involvement – Freedom – Trust and openness – Idea time – Playfulness/humor – Conflict resolution – Debates – Risk-taking
- 24. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-24 Exhibit 2-10 Creating a Customer-Responsive Culture • How Do You Create a Customer Responsive Culture? – Hire the right type of employees (those with a strong interest in serving customers) – Have few rigid rules, procedures, and regulations – Use widespread empowerment of employees – Have good listening skills in relating to customers’ messages
- 25. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2014 Pearson Education 2-25 Spirituality and Organizational Culture • Workplace Spirituality - a culture where organizational values promote a sense of purpose through meaningful work that takes place in the context of community •Characteristics of a Spiritual Organization – Strong sense of purpose – Focus on individual development – Trust and openness – Employee empowerment – Toleration of employees’ expression
- 26. The End… Any Questions Image Source: http://granitegrok.com/
Editor's Notes
- How much difference does a manager make in how an organization performs? The dominant view in management theory and society in general is that managers are directly responsible for an organization’s success or failure. We call this perspective the omnipotent view of management. In contrast, others have argued that much of an organization’s success or failure is due to external forces outside managers’ control. This perspective is called the symbolic view of management.
- In reality, managers are neither all-powerful nor helpless. But their decisions and actions are constrained. As you can see in Exhibit 2-1, external constraints come from the organization’s environment and internal constraints come from the organization’s culture.
- The term external environment refers to factors and forces outside the organization that affect its performance. As shown in Exhibit 2-2, it includes several different components. The economic component encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, and business cycle stages. The demographic component is concerned with trends in population characteristics such as age, race, gender, education level, geographic location, income, and family composition. The political/legal component looks at federal, state, and local laws as well as global laws and laws of other countries. It also includes a country’s political conditions and stability. The sociocultural component is concerned with societal and cultural factors such as values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behavior. The technological component is concerned with scientific or industrial innovations. And the global component encompasses those issues associated with globalization and a world economy
- began with turmoil in home mortgage markets in the United States when many homeowners found themselves unable to make their payments. The problems soon affected businesses as credit markets collapsed. All of a sudden, credit was no longer readily available to fund business activities. It didn’t take long for these economic troubles to spread worldwide. As economic growth has languished and sputtered, and as people’s belief that anyone could grab hold of an opportunity and have a decent shot at prosperity has wavered, social discontent over growing income gaps has increased. The bottom line is that business leaders need to recognize how societal attitudes in the economic context also may create constraints as they make decisions and manage their businesses
- Demographic age cohorts are important to our study of management because large numbers of people at certain stages in the life cycle can constrain decisions and actions taken by businesses, governments, educational institutions, and other organizations.
- As any or all external environmental conditions (economic, demographic, technological, globalization, etc.) change, one of the most powerful constraints managers face is the impact of such changes on jobs and employment—both in poor conditions and in good conditions. The power of this constraint became painfully obvious during the recent global recession as millions of jobs were eliminated and unemployment rates rose to levels not seen in many years. Economists now predict that about a quarter of the 8.4 million jobs eliminated in the United States during this most recent economic downturn won’t be coming back and will instead be replaced by other types of work in growing industries
- Another constraint posed by external environments is the amount of uncertainty found in that environment, which can affect organizational outcomes. Environmental uncertainty refers to the degree of change and complexity in an organization’s environment. The first dimension of uncertainty is the degree of change. If the components in an organization’s environment change frequently, it’s a dynamic environment. If change is minimal, it’s a stable one. The other dimension of uncertainty describes the degree of environmental complexity, which looks at the number of components in an organization’s environment and the extent of the knowledge that the organization has about those components. An organization with fewer competitors, customers, suppliers, government agencies, and so forth faces a less complex and uncertain environment
- In Exhibit 2-3 each of the four cells represents different combinations of degree of complexity and degree of change. Cell 1 (stable and simple environment) represents the lowest level of environmental uncertainty and cell 4 (dynamic and complex environment) the highest. Not surprisingly, managers have the greatest influence on organizational outcomes in cell 1 and the least in cell 4. Because uncertainty poses a threat to an organization’s effectiveness, managers try to minimize it.
- Stakeholders are any constituencies in the organization’s environment affected by an organization’s decisions and actions. These groups have a stake in or are significantly influenced by what the organization does. In turn, these groups can influence the organization. The idea that organizations have stakeholders is now widely accepted by both management academics and practicing managers
- Exhibit 2-4 identifies some of an organization’s most common stakeholders. Note that these stakeholders include internal and external groups. Why? Because both can affect what an organization does and how it operates.
- Organizational culture has been described as the shared values, principles, traditions, and ways of doing things that influence the way organizational members act and that distinguish the organization from other organizations. In most organizations, these shared values and practices have evolved over time and determine, to a large extent, how “things are done around here.” First, culture is a perception. It’s not something that can be physically touched or seen, but employees perceive it on the basis of what they experience within the organization. Second, organizational culture is descriptive. It’s concerned with how members perceive the culture and describe it, not with whether they like it. Finally, even though individuals may have different backgrounds or work at different organizational levels, they tend to describe the organization’s culture in similar terms. That’s the shared aspect of culture. Strong cultures—those in which the key values are deeply held and widely shared—have a greater influence on employees than weaker cultures. The stronger a culture becomes, the more it affects the way managers plan, organize, lead, and control.
- Research suggests seven dimensions that seem to capture the essence of an organization’s culture. These dimensions (shown in Exhibit 2-5) range from low to high, meaning it’s not very typical of the culture (low) or is very typical of the culture (high). Describing an organization using these seven dimensions gives a composite picture of the organization’s culture. In many organizations, one cultural dimension often is emphasized more than the others and essentially shapes the organization’s personality and the way organizational members work.
- In many organizations, one cultural dimension often is emphasized more than the others and essentially shapes the organization’s personality and the way organizational members work. For instance, at Sony Corporation, the focus is product innovation (innovation and risk taking). The company “lives and breathes” new product development and employees’ work behaviors support that goal. In contrast, Southwest Airlines has made its employees a central part of its culture (people orientation). Exhibit 2-6 describes how the dimensions can create significantly different cultures. Exhibit 2-6 describes how the dimensions can create significantly different cultures.
- (Exhibit 2-7 contrasts strong and weak cultures.) The more employees accept the organization’s key values and the greater their commitment to those values, the stronger the culture. Most organizations have moderate to strong cultures, that is, there is relatively high agreement on what’s important, what defines “good” employee behavior, what it takes to get ahead, and so forth. The stronger a culture becomes, the more it affects the way managers plan, organize, lead, and control.
- The original source of the culture usually reflects the vision of the founders. Once the culture is in place, however, certain organizational practices help maintain it. For instance, during the employee selection process, managers typically judge job candidates not only on the job requirements, but also on how well they might fit into the organization. The actions of top managers also have a major impact on the organization’s culture. Through what they say and how they behave, top managers establish norms that filter down through the organization and can have a positive effect on employees’ behaviors. Finally, organizations help employees adapt to the culture through socialization, a process that helps new employees learn the organization’s way of doing things. For instance, new employees at Starbucks stores go through 24 hours of intensive training that helps turn them into brewing consultants (baristas).
- Exhibit 2-8 illustrates how an organization’s culture is established and maintained.
- Employees “learn” an organization’s culture in a number of ways. The most common are stories, rituals, material symbols, and language. Organizational “stories” typically contain a narrative of significant events or people, including such things as the organization’s founders, rule breaking, reactions to past mistakes, and so forth. Managers at Southwest Airlines tell stories celebrating employees who perform heroically for customers. Corporate rituals are repetitive sequences of activities that express and reinforce the important values and goals of the organization. One of the best-known corporate rituals is Mary Kay Cosmetics’ annual awards ceremony for its sales representatives. The company spends more than $50 million annually on rewards and prize incentives
- When you walk into different businesses, do you get a “feel” for what type of work environment it is—formal, casual, fun, serious, and so forth? These reactions demonstrate the power of material symbols or artifacts in creating an organization’s personality. . Material symbols convey to employees who is important and the kinds of behavior (for example, risk taking, conservative, authoritarian, participative, individualistic, and so forth) that are expected and appropriate. Over time, organizations often develop unique terms to describe equipment, key personnel, suppliers, customers, processes, or products related to its business. New employees are frequently overwhelmed with acronyms and jargon that, after a short period of time, become a natural part of their language. Once learned, this language acts as a common denominator that bonds members.
- Because an organization’s culture constrains what they can and cannot do and how they manage, it’s particularly relevant to managers. Such constraints are rarely explicit. They’re not written down. It’s unlikely they’ll even be spoken. But they’re there, and all managers quickly learn what to do and not do in their organization.
- As shown in Exhibit 2-9, a manager’s decisions are influenced by the culture in which he or she operates. An organization’s culture, especially a strong one, influences and constrains the way managers plan, organize, lead, and control.
- In a recent survey of senior executives, over half said that the most important driver of innovation for companies was a supportive corporate culture. What does an innovative culture look like? According to Swedish researcher Goran Ekvall, it would be characterized by the following: Challenge and involvement—Are employees involved in, motivated by, and committed to long-term goals and success of the organization? Freedom—Can employees independently define their work, exercise discretion, and take initiative in their day-to-day activities? Trust and openness—Are employees supportive and respectful to each other? Idea time—Do individuals have time to elaborate on new ideas before taking action? Playfulness/humor—Is the workplace spontaneous and fun? Conflict resolution—Do individuals make decisions and resolve issues based on the good of the organization versus personal interest? Debates—Are employees allowed to express opinions and put forth ideas for consideration and review? Risk-taking—Do managers tolerate uncertainty and ambiguity, and are employees rewarded for taking risks
- What does a customer-responsive culture look like? Exhibit 2-10 describes five characteristics of customer-responsive cultures and offers suggestions as to what managers can do to create that type of culture.
- What is workplace spirituality? It’s a culture in which organizational values promote a sense of purpose through meaningful work taking place in the context of community. Organizations with a spiritual culture recognize that people have a mind and a spirit, seek to find meaning and purpose in their work, and desire to connect with other human beings and be part of a community