Influence of External Environment on Organizational Culture PDF

INFLUENCE OF THE EXTERNAL ENVIRONMENT AND ORGANIZATION' S CULTURE CHAPTER 3 THE MANAGER: HOW MUCH CONTROL?  Omnipotent View  Managers are directly responsible for an organization’s success or failure  The quality of the organization is determined by the quali...

INFLUENCE OF THE EXTERNAL ENVIRONMENT AND ORGANIZATION' S CULTURE CHAPTER 3 THE MANAGER: HOW MUCH CONTROL?  Omnipotent View  Managers are directly responsible for an organization’s success or failure  The quality of the organization is determined by the quality of its managers  Managers are held most accountable for an organization’s performance, yet it is difficult to attribute good or poor performance directly to their influence on the organization 2 THE MANAGER: HOW MUCH CONTROL? (CONT’D)  Symbolic View ◦ Much of an organization’s success or failure is due to external forces outside of managers’ control ◦ The ability of managers to affect outcomes is influenced and constrained by external factors:  The economy, customers, governmental policies, competitors, industry conditions, technology, and the actions of previous managers ◦ Managers symbolize control and influence through their action 3 EXHIBIT 2-1 CONSTRAINTS ON MANAGERIAL DISCRETION Managerial Managerial Organizational OrganizationalEnvironment Environment Discretion Organizational OrganizationalCulture Culture Discretion In reality, managers are neither all-powerful nor helpless. But their decisions and action options are constrained. Internal constraints come from the organization’s culture, and external constraints come from the organization’s external environment. 4  DEFINING THE EXTERNAL ENVIRONMENT  External Environment  Theforces and institutions outside the organization that potentially can 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 5  THE EXTERNAL ENVIRONMEN T Public Public Pressure Pressure Suppliers Suppliers Groups Groups THE THE ORGANIZATION ORGANIZATION Competitors Competitors Customers Customers 6 THE GENERAL ENVIRONMENT  Economic conditions  Include interest rates, inflation rates, changes in disposable income, stock market fluctuations, and the general business cycle, among other things  Political/legal conditions  Include the general political stability of countries in which an organization does business and the specific attitudes that elected officials have toward business  Federal and provincial governments can influence what organizations can and cannot do. Some examples of legislation include:  Canadian Human Rights Act  Canada’s Employment Equity Act  Competition Act  Marketing boards 7 THE GENERAL ENVIRONMENT (CONT’D)  Socio-cultural conditions  Include the changing expectations of society  Demographic conditions  Includephysical characteristics of a population (gender, age, level of education, geographic location, income and family composition)  Technological conditions  Include the changes that are occurring in technology  Global conditions  Include global competitors and global consumer markets 8 HOW THE EXTERNAL ENVIRONMENT AFFECTS MANAGERS  Jobs and Employment Changes in external environment has an impact on jobs and employment. Global Recession resulted in a massive job elimination. Challenges for manager is then to balance work demand and have the right kind of people It also affects how those jobs( flexible work arrangement, freelancing, temporary workers) are created and managed HOW THE ENVIRONMENT AFFECTS MANAGERS  Environmental Uncertainty  Theextent to which managers have knowledge of and are able to predict change. Their organization’s external environment is affected by:  Complexity of the environment: the number of components in an organization’s external environment  Degree of change in environmental components: how dynamic or stable the external environment is 10 EXHIBIT 2-3 ENVIRONMENTAL UNCERTAINTY MATRIX 11 STAKEHOLDER RELATIONSHIPS  Stakeholders  Anyconstituencies in the organization’s external environment that are affected by the organization’s decisions and actions  Why Manage Stakeholder Relationships?  Can lead to improved organizational performance  It’s the “right” thing to do given the interdependence of the organization and its external stakeholders 12 EXHIBIT 2-4 ORGANIZATIONAL STAKEHOLDERS Employees Customers Social and Political Unions Action Groups Shareholders Competitors Organization Trade and Industry Communities Associations Suppliers Governments Media 13 MANAGING STAKEHOLDER RELATIONSHIPS  Identify the organization’s external stakeholders  Determine the particular interests and concerns of the external stakeholders  Decide how critical each external stakeholder is to the organization  Determine how to manage each individual external stakeholder relationship 14 THE ORGANIZATION’S CULTURE  What Is Organizational Culture? A system of shared meanings and common beliefs held by organizational members that determine, to a large degree, how they act toward 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 a descriptive term 15 EXHIBIT 2-5 DIMENSIONS OF ORGANIZATIONAL CULTURE Degree to which employees are expected to exhibit precision, analysis, and attention to detail Degree to which Degree to which employees are managers focus on results encouraged to be or outcomes rather than innovative and on how these outcomes to take risks Attention to are achieved Detail Innovation and Outcome Risk-taking Orientation Organizational Culture People Stability Orientation Degree to which Degree to which management decisions organizational Team take into account the decisions and actions Aggressiveness effects on people in emphasize maintaining Orientation the organization the status quo Degree to which Degree to which work is organized employees are aggressive around teams rather and competitive rather than individuals than cooperative 16 ORGANIZATIONAL CULTURE  Sources of Organizational Culture Pastpractices of the organization The organization’s founder  Continuation of the Organizational Culture Recruitment of employees who “fit” Behaviour of top management Socialization of new employees to help them adapt to the culture 17 STRONG VS. WEAK CULTURES  Strong Cultures  Key values are deeply held and widely held  Have strong influence on organizational members  Factors Influencing the Strength of Culture  Size of the organization  Age of the organization  Rate of employee turnover  Strength of the original culture  Clarity of cultural values and beliefs 18 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 19 EXHIBIT 2-7 STRONG VERSUS WEAK CULTURES HOW EMPLOYEES LEARN CULTURE  Stories  Narrativesof significant events or actions of people that convey the spirit of the organization  Rituals  Repetitivesequences 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 22 HOW CULTURE AFFECTS 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 Simple rule for getting ahead in an organization: Find out what the organization rewards and do those things 23 EXHIBIT 2-9 TYPES OF MANAGERIAL DECISIONS AFFECTED BY CULTURE 24 CURRENT ISSUES IN ORGANIZATIONAL CULTURE FACING MANAGERS  Creating an Innovative Culture  Challenge and involvement  Freedom  Trust and openness  Idea time  Playfulness/humor  Conflict resolution  Debates  Risk-taking CURRENT ISSUES IN ORGANIZATIONAL CULTURE FACING MANAGERS  Creating a Customer-Responsive Culture Hire the right type of employees Have few rigid rules, procedures, and regulations Use widespread empowerment of employees Encourage good listening skills Provide role clarity to employees Have conscientious, caring employees CURRENT ISSUES IN ORGANIZATIONAL CULTURE FACING MANAGERS  Spirituality and Organizational Culture  Workplace spirituality The recognition that people have an inner life that nourishes and is nourished by 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