Management Chapter 3 PDF

Management Thirteenth Edition Chapter 3 Managing the Environment and the...

Management Thirteenth Edition Chapter 3 Managing the Environment and the Organization’s Culture Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Learning Objectives 3.1 Contrast the actions of managers according to the omnipotent and symbolic views. 3.2 Describe the constraints and challenges facing managers in today’s external environment. Develop your skill at scanning the environment so you can anticipate and interpret changes taking place. 3.3 Discuss the characteristics and importance of organizational culture. Know how to read and assess an organization’s culture. 3.4 Describe current issues in organizational culture. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Reading an Organization’s Culture: Find One Where You'll Be Happy “A key to success in management and in your career is knowing how to “read” an organization’s culture so you can find one in which you’ll be happy.” Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Scanning the Environment Do background work. Check out the company’s web site. What impression do you get from it? Are corporate values listed? Mission Statement? Observe the physical surroundings and corporate symbols. Notice visible symbols of organizational culture, such as, logos, signs, posters, pictures, photos, style of dress, etc. How would you characterize the people who work there? Are they formal? Casual? Serious? Jovial? Open? Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved 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. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Managerial Constraints In reality, managers are neither all-powerful nor helpless. But their decisions and actions are constrained. As you can see in Exhibit 3-1, external constraints come from the organization’s environment and internal constraints come from the organization’s culture. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-1 Constraints on Managerial Discretion Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved The External Environment: Constraints and Challenges LO2 Digital technology has disrupted all types of industries—from financial services and retail to entertainment and automotive. Choosing to embrace these changes, BMW borrowed a page from Apple’s playbook and decided to replace its old way of doing things at dealerships.5 Rather than the standard rows of cars, banners, and showroom cubicles, they’re bringing in “product geniuses” to help shoppers better understand and to demonstrate the complex technology now in cars. Other car manufacturers are doing similar things. For instance, General Motors is working with its dealerships to install “connection centers” in showrooms. Anyone who doubts the impact the external environment has on managing just needs to look at what’s happened in the automotive industry and many other industries during the last few years. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved The External Environment (1 of 3) The External Environment: Those factors and forces outside the organization that affect it’s performance. The external environment includes several different components. – Economic – Encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, and business cycle stages. – Demographic – Concerned with trends in population characteristics such as age, race, gender, education level, geographic location, income and family composition. – Political/Legal – Concerned with federal, state and local laws, and global laws. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved The External Environment (2 of 3) Technological – Concerned with scientific or industrial innovations. The Sociocultural – Concerned with societal and cultural factors such as values, attitudes, trends, traditions and lifestyles, beliefs, tastes, and patterns of behavior. Global – Encompasses issues associated with globalization and a world economy. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved The External Environment (3 of 3) – 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. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-2 Components of the External Environment Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Factors Impacting Global Businesses Like many global businesses, Nestlé is facing increased commodity (raw materials) costs. Nestlé, the maker of products from Crunch chocolate bars to Nescafé coffee to Purina pet foods, spends more than $30 billion a year on raw materials. Commodity costs are just one of the many volatile economic factors facing organizations. Managers need to be aware of the economic context so they can make the best decisions for their organizations. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved The Global Economy and the Economic Context The lingering global economic challenges – once described as the “Great Recession” by some analysts – began with the turmoil in the United States housing market. As credit markets collapsed, businesses were impacted. Credit was no longer readily available to fund businesses. Economic difficulties spread across the globe. The fragile economic recovery continues to be a business constraint. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Economic Inequality and the Economic Context As economic growth has languished and sputtered, and as people’s belief that anyone could prosper declined, social discontent over growing income gaps has increased. Business leaders must realize that societal attitudes in the economic context have the potential to create constraints. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved The Demographic Environment (1 of 2) Gen Y is an important demographic at Facebook, where most employees are under 40. The company values the passion and pioneering spirit of its young employees who embrace the challenges of building groundbreaking technology and of working in a fast-paced environment with considerable change and ambiguity. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved The Demographic Environment (2 of 2) The size and characteristics of a country’s population can have a significant effect on what it’s able to achieve in politics, economics, and culture. Baby Boomers – Born between 1946 and 1964, one of the largest and most influential demographic groups in history. Gen Y or (Millennials) – Children of Baby Boomers, born between 1978 and 1994, making an impact on technology and the workplace. Post-Millennials – The youngest group identified age group—basically teens and middle-schoolers. They have also been called the iGeneration because advances in technology have customized everything to the individual. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Assessing Environmental Uncertainty Environmental uncertainty refers to the degree of change and complexity in an organization’s environment. – The first dimension of uncertainty is change. 1. Organizations are stable, minimal change 2. Organizations are dynamic, frequent change Organizational Complexity refers to the number of components in an organization’s environment and the extent of the organization’s knowledge about those components. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-3 Environmental Uncertainty Matrix Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Managing Stakeholder Relationships The nature of stakeholder relationships is another way in which the environment influences managers. The more obvious and secure these relationships, the more influence managers will have over organizational outcomes. Stakeholders – Any constituencies in an organization’s decisions and actions. Exhibit 3-4 identifies some of the organization’s most common stakeholders which includes both internal and external constituent groups. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-4 Organizational Stakeholders Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved The Benefits of Good Stakeholder Relationships Improved predictability of environmental changes Increased successful innovations Increased trust among stakeholders Greater organizational flexibility to reduce the impact of change Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Organizational Culture: Constraints and Challenges Just as each individual has a unique personality — traits and characteristics influence the way we act and interact with others. An organization, too, has a personality, which is referred to as organizational culture. An organization’s culture can make employees feel included, empowered, and supported or it can make them feel the opposite. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Organizational Culture Organizational Culture —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. Cultural Values and practices evolve over time. Organizational Culture is: – Perception — based on employee experience within the organization. – Descriptive — how members describe it. – Shared — employees share perception and experiences. Research suggests seven dimensions of culture that seem to capture the essence of an organization’s culture. These dimensions are shown in Exhibit 3-5 and range from low to high. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-5 Dimensions of Organizational Culture Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Contrasting Organizational Culture (1 of 2) In many organizations, one cultural dimension is often emphasized more than others and essentially shapes the organization’s personality and the way the organization works. For example, Sony Corporation focuses on product innovation and risk-taking. The company “lives and breaths” innovations, and employees’ behaviors support that goal. (Product Orientation). Conversely, Southwest Airlines focuses on it’s employees and has made them a central focus of it’s culture. (People Orientation). Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-6 Contrasting Organizational Culture Risk-taking and change Risk-taking and change discouraged rewarded Creativity discouraged Creativity and innovation rewarded Close managerial supervision Management trusts employees Work activities designed around the individual employee Work designed around teams Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Contrasting Organizational Culture (2 of 2) Exhibit 3-6 illustrates how the dimensions of culture can create significantly different cultures. Both Organization A and Organization B are manufacturing firms, but each company emphasizes a different dimension that have shaped organizational culture. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-7 Contrasting Organizational Culture Strong Cultures Weak Cultures Values widely shared Values limited to a few people— usually top management Culture conveys consistent Culture sends contradictory messages about what’s important messages about what’s important Most employees can tell stories Employees have little knowledge of about company history or heroes company history or heroes Employees strongly identify with Employees have little identification culture with culture Strong connection between shared Little connection between shared values and behaviors values and behaviors Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Strong Cultures (1 of 2) All organizations have cultures, but not all cultures equally influence employees’ behaviors and actions. Strong Cultures—Organizational cultures in which the key values are intensely held and widely shared. The more employees accept the organization's key values and greater their commitment to those values, the stronger the culture. The stronger the culture becomes, the more it affects the way managers plan, organize, lead, and control. Strong Cultures are associated with high organizational performance. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Strong Cultures (2 of 2) Apple’s strong culture of product innovation and customer-service reflects the core values of it’s visionary cofounder, Steve Jobs. Jobs instilled these core values in all employees, from top executives to sales associates, such as the Genius Bar employee shown here training a customer at the Apple Store in Manhattan. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Where Culture Comes From and How it Continues Exhibit 3-8 illustrates how an organization’s culture is established and maintained. Organizational Culture usually reflects the vision of the founder. The small size of most new organizations makes it easier to establish organizational culture. Once culture is established, organizational practices help to maintain it. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-8 Establishing and Maintaining Culture Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved How Employees Learn Culture (1 of 2) Employees “learn” an organization’s culture in a number of ways. The most common are stories, rituals, material symbols, and language. Stories — organizational stories abut significant events in the life of the company help keep culture alive. Rituals — repetitive sequences of activities that express and reinforce important organizational values and goals. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved How Employees Learn Culture (2 of 2) Material Artifacts and Symbols — convey to employees what is important and the kinds of expected behaviors, ex. Risk-taking, etc. Language — many organizations or units of an organization use language to identify and unite members of a culture. New employees are frequently overwhelmed with acronyms and jargon that quickly becomes a part of their language. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-9 Types of Managerial Decisions Affected by Culture Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Creating an Innovative Culture Challenge and involvement—Are employees involved in, motivated by, and committed to the 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 of each other? Idea time—Do individuals have time to elaborate on new ideas before taking action? Playfulness/humor—Is the workplace spontaneous and fun? Canadian-based Peer 1 Hosting created a culture that supports creativity Conflict resolution—Do individuals make decisions and and innovation. At its European resolve issues based on the good of the organization versus headquarters, the youthful staff of the personal interest? global Web infrastructure and cloud Debates—Are employees allowed to express opinions and hosting provider interact in a casual and put forth ideas for consideration and review? playful environment of trust and Risk taking—Do managers tolerate uncertainty and openness, personal and professional ambiguity, and are employees rewarded for taking risks? challenge, and involvement, freedom, debate, and risk taking. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Exhibit 3-10 Creating a Customer-Responsive Culture Characteristics of Customer- Responsive Culture Suggestions for Managers Type of employee Hire people with personalities and attitudes consistent with customer service: friendly, attentive, enthusiastic, patient, good listening skills Type of job environment Design jobs so employees have as much control as possible to satisfy customers, without rigid rules and procedures Empowerment Give service-contact employees the discretion to make day-to-day decisions on job-related activities Role clarity Reduce uncertainty about what service-contact employees can and cannot do by continual training on product knowledge, listening, and other behavioral skills Consistent desire to satisfy and Clarify organization’s commitment to doing whatever it delight customers takes, even if it’s outside an employee’s normal job requirements Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Creating a Customer-Responsive Culture Research shows that customer satisfaction is directly related to customer spending and consumption. Satisfied customers will be repeat customers for businesses. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Spiritually and Organizational Culture Workplace Spiritually — A culture where organizational values promote a sense of purpose through meaningful work that takes place in the context of community. Organizations with a spiritual culture recognize that people: – Have a mind and spirit. – Seek to find meaning and purpose in their work. – Desire to connect with others and be a part of a community. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Five Cultural Characteristics of Spiritual Organizations Research indicates that Spiritual Organizations have five characteristics: 1. Strong sense of purpose, culture built around meaningful purpose. 2. Focus on individual development, recognize worth and value of individuals. 3. Trust and openness, characterized by mutual trust, honesty, and openness. 4. Employee empowerment, managers trust employees to make good decisions. 5. Tolerance of employee expression, employees free to express emotions. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Review of Learning Objective 3.1 Contrast the actions of managers according to the omnipotent and symbolic views. 1. Omnipotent View — Managers are directly responsible for the organization’s success or failure. 2. Symbolic View — Much of the organization’s success or failure is due to external forces outside of the manager’s control. 3. The two constraints on managers' discretion are organizational culture (internal) and the environment (external). Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Review of Learning Objective 3.2 Describe the constraints and challenges facing managers in today’s external environment. 1. The external environment includes those factors and forces outside the organization that affect its performance. 2. The main components of the external environment are, economic, demographic, political/legal, Sociocultural, technological, and global. 3. Managers face constraints and challenges from these components because they have an impact on jobs, environmental uncertainty, and stakeholder relationships. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Review of Learning Objective 3.3 Discuss the characteristics and importance of organizational culture. 1. The seven dimensions of culture are: attention to detail, outcome orientation, people orientation, team orientation, aggressiveness, stability, innovation and risk taking. 2. The stronger the culture, the greater the impact on the way managers plan, organize, lead, and control. 3. The original source of the organizational culture reflects the founder’s vision. 4. Culture is transmitted through stories, rituals, material symbols, and language. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Review of Learning Objective 3.4 Describe current issues in organizational culture. 1. The characteristics of an innovative culture are challenge and involvement, freedom, trust and openness, idea time, playfulness/humor, conflict resolution, debates, and risk taking. 2. A customer responsive culture has five characteristics: outgoing and friendly employees; jobs with few rigid rules, procedures, and regulations; empowerment; clear roles and expectations; and employees who are conscientious in their desire to please the customer. 3. Spiritual organizations have five characteristics: strong sense of purpose, focus on individual development, trust and openness, employment, and toleration of employee expression. Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved Copyright Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved