Ch.10 Org. Culture and Ethical Values

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Ch.10- Org. Culture and Ethical Values

• What is culture? It is the set of values, guiding
  beliefs, understandings, and ways of thinking
  that are shared by members of an organization and
  taught to new members as correct.
• It represents the unwritten, feeling part of the
  organization.
• It exists at two levels- the observable and the
  underlying unobservable.

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• Culture provides the members of an organization
  with identity and generates a commitment to
  beliefs and values that are larger than
  themselves.
• Cultures serve two functions in organizations
• they integrate members into the organization
• they can help the organization adapt to the
  external environment.

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How to define an organizations. culture?

• Through observing rites and ceremonies
• different types of rites, to include passage
  (induction into the army and basic training)
• enhancement (annual awards night)
• renewal (organizational development activities)
• integration (office Christmas party).

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• Through the use of stories, or narratives based
  on true events. Many stories are about company
  heroes who serve as models or ideals. Some
  stories are considered legends or myths.
• Through symbols, physical and otherwise.
• Through language, or specific sayings, slogans,
  metaphors, or other forms of language that convey
  a meaning (people people, etc.)

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What about the fit between culture, strategy,
structure, and the environment?

• Influenced by the extent to which the competitive
  environment requires flexibility or stability,
  and the extent to which the strategic focus and
  strength is internal or external.
• From this, four categories emerge
• adaptability/entrepreneurial, mission, clan, and
  bureaucratic.

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The adaptability / entrepreneurial culture...

• Characterized by strategic focus on the external
  environment through flexibility and change to
  meet customer needs. The culture encourages norms
  and beliefs that support the ability to read the
  environment and respond to it quickly.
• 3M is a company whose values promote individual
  initiative and entrepreneurship.

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The mission culture...

• Characterized by emphasis on a clear vision of
  the organization's purpose and on the achievement
  of goals, such as sales growth, profitability, or
  market share.
• Managers shape behavior by envisioning and
  communicating a desired future state for the
  organization.
• PepsiCo set a vision to be the best consumer
  products company in the world.

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The clan culture...

• Has as a focus the involvement and participation
  of the organizations members and on rapidly
  changing expectations from the external
  environment.
• Focuses on the needs of employees as the route to
  high performance. Involvement and participation
  create a sense of responsibility and ownership
  and, hence, greater commitment to the
  organization.

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The bureaucratic culture...

• Has an internal focus and a consistency
  orientation for a stable environment. It has a
  culture that supports a methodical approach to
  doing business. Symbols, heroes, and ceremonies
  support cooperation, tradition, and following
  established policies and practices as a way to
  achieve goals.

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More on cultures...

• Culture strength refers to the degree of
  agreement among members of an org. about the
  importance of specific values.
• A culture can be cohesive and strong or weak.
• A culture may not be uniform throughout the
  organization.
• Subcultures may develop to reflect the common
  problems, goals, and experiences that members of
  a team, department, or other unit share.

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And more on cultures...

• A strong organizational culture may not always be
  a good thing, especially if it interferes with
  adapting to environmental changes.
• Thus, a learning organization will be one that
  has a strong adaptive culture that incorporates
  several values
• the whole is more important than the parts
• equality is a primary value
• the culture encourages risk taking, change, and
  improvement.

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Thus,

• The culture of a learning organization encourages
  openness, boundarylessness, equality, continuous
  improvement, and risk-taking.

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Ethics...

• Of the values that make up an organizations
  culture, ethical values are very important.
• Ethics is the code of moral principles and values
  that governs the behaviors of a person or group
  with respect to what is right or wrong. Ethical
  values set standards as to what is good or bad in
  conduct and decision making.
• Ethics is distinct from behaviors governed by
  law.

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• Unethical conduct in organizations is very
  widespread (consider Enron, Worldcom, etc.).
• Managerial ethics are principles that guide the
  decisions and behaviors of managers with regard
  to whether they are right or wrong in a moral
  sense.
• Social responsibility is an extension of this
  idea and refers to mgts. obligation to make
  choices and take action so that the org.
  contributes to the welfare and interest of
  society as well as to itself.

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What forces shape managerial ethics?

• Personal ethics (beliefs and values)
• organizational culture (rituals, stories, heroes,
  language, slogans, etc.)
• organizational systems (structure, policies,
  rules, code of ethics, reward system selection,
  training, etc.)
• External stakeholders (govt. agencies, customers,
  special interest groups, etc.)

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Forces That Shape Managerial Ethics
Personal Ethics
Organizational Culture
Beliefs and Values Moral Development Ethical
Framework
Rituals, Ceremonies Stories, Heroes Language,
Slogans Symbols Founder, History
Is Decision or Behavior Ethical
and Socially Responsible?
External Stakeholders
Organizational Systems
Government Regulations Customers Special Interest
Groups Global Market Forces
Structure Policies, Rules Code of Ethics Reward
System Selection, Training
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Does it pay to be good?

• Studies have provided varying results but
  generally have found that there is a small
  positive relationship between ethical and
  socially responsible behavior and financial
  results.
• Companies that put ethics on the back burner in
  favor of fast growth and short term profits
  ultimatley suffer.

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How do managers implement values?

• Through values based leadership (where leaders
  are willing to uphold values)
• Through formal structure and systems (by
  assigning responsibility for ethical values to a
  specific position- an ethics committee or ethics
  ombudsperson, or by the development of a whistle
  blowing policy, a code of ethics, and by the
  development of training programs

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Ch. 11- Innovation and Change

• This chapter explores how organizations change
  and how managers direct the innovation and change
  process. It also examines incremental and/or
  radical change, the types of change, and how each
  change is facilitated by organizational structure
  and management approach.

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Innovate or perish...

• Large organizations must find ways to act like
  small, flexible organizations.
• Change can be incremental or radical, with
  incremental change occurring through the
  established structure and management processes,
  while radical change involves the creation of a
  new structure and management processes.

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Strategic types of change...

• Managers can focus on 4 types of change within
  organizations to achieve strategic advantage.
• 1.Technology changes are changes in an
  organizations production process, including its
  knowledge and skill base, that enable distinctive
  competence.
• 2. Product and service changes pertain to the
  product or service outputs of an organization.
• 3. Strategy and structural changes pertain to the
  administrative domain in an organization.
• 4. Culture changes refer to changes in the
  values, attitudes, expectations , beliefs,
  abilities, and behavior of employees.

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More on technology change...

• Must constantly develop, acquire, or adapt new
  technology.
• There must be congruence between organic and
  mechanistic structures in the org. The
  ambidextrous approach is recommended.
• Techniques for encouraging technology change
  include the use of creative departments, venture
  teams, corporate entrepreneurship (idea champions
  and technical or product champions), etc.

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Technology change is not unlike new product
development...

• Experts estimate that about 80 of new products
  fail upon introduction and another 10 disappear
  within five years.
• To be considered successful, a new product had to
  pass three stages of development technical
  completion, commercialization, and market success.

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Reasons for new product success

• Successful innovating companies had a better
  understanding of customer needs and paid much
  more attention to marketing.
• Successful innovating companies made more
  effective use of outside technology and outside
  advice, even though they did more work in-house.
• Top mgt. support in the successful innovating
  companies was from people who were more senior
  and had greater authority.

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More on strategy and structure change...

• All orgs. need to make changes in their
  strategies and structures from time to time.
• Incremental changes have given way to making
  radical changes in strategy, structure, and
  management processes to adapt to new competitive
  demands.
• A dual-core approach incorporates change in both
  the technical and administrative cores of the
  organization.

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• The findings from research comparing
  administrative and technical change suggest that
  a mechanistic organization structure is
  appropriate for frequent administrative changes,
  including changes in goals, strategy, structure,
  control systems, and personnel.
• The innovation approaches associated with
  administrative versus technical change are
  summarized in Exhibit 11.8 on Page 418.

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Barriers to change...

• 1. Excessive focus on costs.
• 2. Failure to perceive benefits.
• 3. Lack of coordination and cooperation.
• 4. Uncertainty avoidance.
• 5. Fear of loss (power, status, or jobs).

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Techniques for implementation...

• 1. Identify a true need for change.
• 2. Find an idea that fits the need.
• 3. Get top management support.
• 4. Design the change for incremental impl.
• 5. Develop plans to overcome resistance.
• Alignment with needs and goals of users,
  communication and training, participation and
  involvement, and possible use of force.
• 6. Create change teams.
• 7. Foster idea champions.

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Ch.12- Decision-Making Processes

• This chapter examines what decision- making is
  like in the organizational setting.
• This chapter also looks at how organizations can
  and should make decisions.

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• Organizational decision making is defined as the
  process of identifying and solving problems.
• Decisions can be categorized as programmed
  (repetitive and well defined) and non-programmed
  (novel and poorly defined).
• The process contains two major stages
• problem identification
• problem solution.

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Another perspective on individual decision
making...

• Can be described in two ways
• The rational approach examines how managers
  should try to make decisions.
• The bounded rationality perspective describes how
  decisions actually have to be made under severe
  time and resource constraints.

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Steps in the Rational Approach to Decision-Making
(See next two slides for detail)
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The rational approach...

• Eight steps (From Exhibit 12.2 Page 446)
• 1. Monitor the decision environment (internal and
  external environment to identify deviations from
  planned or acceptable behavior).
• 2. Define the decision problem (the where, when,
  who was involved stage).
• 3. Specify decision objectives (what outcomes
  should be achieved by a decision).
• 4. Diagnose the problem (what is the cause).

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More on rational decision-making

• 5. Develop alternative solutions.
• 6. Evaluate alternatives (using statistical
  techniques or personal experience).
• 7. Choose the best alternative (this is the core
  of the decision making process).
• 8. Implement the chosen alternative.

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Re bounded rationality perspective...

• Note that attempts to be rational are limited by
  time constraints and the complexity of many
  problems.
• Thus, intuitive decision making, where experience
  and judgment, rather than sequential logic or
  explicit reasoning, may be used to make decisions.

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So...

• Organizations are composed of managers who make
  decisions using both rational and intuitive
  processes.
• But, many decisions are made by several managers,
  which involves organizational decision making, as
  opposed to individual decision making.

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4 approaches to org. decision making...

• 1. The management science approach- similar to
  the rational approach used by individual
  managers.
• Very analytical- consider the battleship analogy
• The Carnegie Model- where decisions are made
  based on coalitions of managers.

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More on the Carnegie Model

• Coalitions are needed when goals are ambiguous
  and inconsistent, and, thus, mgrs. disagree about
  problem priorities. They must bargain about
  problems and build a coalition around the problem
  to address.
• Secondly, individual mgrs. have limitations, and
  the use of the group compensates for limitations
  on time, resources, or mental capacity.

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More on the Carnegie Model...

• Under this model, then, decisions are made to
  satisfice rather than to optimize problem
  solutions.
• Secondly, managers, under this model, might be
  concerned with immediate problems and short run
  solutions. Problemistic search means managers
  look around in the immediate environment for a
  quick solution.

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Lastly,

• The Carnegie Model is very useful at the problem
  identification stage and a coalition of key
  department managers can also allow for smooth
  implementation of a decision.
• Weaknesses appear to include the satisficing
  issue.

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Incremental decision process model...

• This approach places less importance on the
  political and social factors of the Carnegie
  Model and more emphasis on structured sequence of
  activities undertaken from the discovery of a
  problem to its solution.
• It appears that major decisions are usually
  comprised of small choices that combine to
  produce the major decision.

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Under the incremental approach..

• Organizations move through several decision
  points and may hit barriers along the way
  (referred to as decision interrupts).
• Three major decision phases are identified by
  Mintzberg
• the identification phase (recognition and
  diagnosis)
• the development phase (search/screen and design)
• the selection phase (judgement/evaluation-choice,
  analysis/evaluation, bargaining/evaluation-choice,
  and authorization.

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Garbage Can Model...

• A recent development in the organizational
  decision making process.
• When extreme uncertainty exists, organized
  anarchy may exist.
• Organized anarchies exist when goals, problems,
  alternatives, and solutions are ill defined when
  cause-and-effect relationships within the org.
  are hard to define and when there is high
  turnover.

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• The organized anarchy describes organizations
  characterized by rapid change and a collegial,
  non-bureaucratic environment.
• In this model, the decision process is not a
  sequence of steps that begins with a problem and
  ends with a solution. Indeed, an idea may be
  proposed as a solution when no problem has been
  identified.

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In the Garbage Can Model...

• 4 streams around which decision-making occurs
  include
• problems
• potential solutions (workers may simply be
  attracted to certain ideas and push them as
  logical choices regardless of problems)
• participants
• choice opportunities (when contracts need to be
  signed, people are hired, a new product is
  authorized, etc.).

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• The overall pattern of organizational decision
  making in the Garbage Can Model takes on a random
  quality. Problems, solutions, participants, and
  choices all flow through the organization.
• The organization, in a sense, is one large
  garbage can in which these streams are being
  stirred. When a problem, solution, and
  participant happen to connect at one point, a
  decision may be made and the problem may be
  solved.

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4 consequences of the garbage can decision
process

• 1. Solutions may be proposed even when problems
  do not exist.
• 2. Choices are made without solving problems.
• 3. Problems may persist without being solved.
• 4. A few problems may be solved.

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In the final analysis...

• Having different approaches to decision making
  may be desirable.
• In high-velocity environments, the need for quick
  and timely decisions is heightened. When speed
  matters, a slow decision is as ineffective as the
  wrong decision.
• Lastly, a dangerous mistake is to persist in a
  course of action when it is failing.

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• Why would managers continue to invest time and
  money into a solution despite strong evidence
  that it is not working?
• Managers might block or distort negative
  information when they are personally responsible
  for a negative decision.
• A second explanation for escalating commitment to
  a failing decision is that consistency and
  persistence are valued in contemporary society.

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Ch.13- Conflict, Power, Politics

• This chapter examines inter-group conflict,
  characteristics of organizations that encourage
  conflict, and how to manage conflict. It also
  looks at power and politics, and how power is
  used and its relationship to authority.

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What is inter-group conflict?

• It is the behavior that occurs among
  organizational groups when participants identify
  with one group and perceive that other groups may
  block their groups goal achievement or
  expectations.
• Conflict is similar to competition but much more
  severe.
• Competition means rivalry among groups in the
  pursuit of a common prize, while conflict
  presumes direct interference with goal
  achievement.

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• Inter-group conflict requires three ingredients
• group identification
• observable group differences
• frustration

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Contributors to conflict...

• Goal incompatibility (the goals of one dept. can
  interfere with the goals of another).
• Differentiation, or the differences in cognitive
  and emotional orientations among managers in
  different functional depts.
• Task interdependence, or the dependence of one
  unit on another for materials, resources, or
  information.
• Limited resources.

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• The sources, then, of inter-group conflict (goal
  incompatibility, differentiation,
  interdependence, and conflict over limited
  resources) determines whether a rational or
  political model of behavior is used within the
  organization to accomplish goals.
• If there is goal alignment, little
  differentiation, etc., than managers can use a
  rational model of organization.

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Conversely...

• When differences are great, organizational groups
  have separate interests, goals, and values, then
  disagreement and conflict are normal, so power
  and influence are needed to reach decisions. This
  is the political model.
• Note that the rational model is an ideal that is
  not fully achievable and is characterized by
  centralized power and control and an efficiency
  orientation.

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Different kinds of personal power

• Legitimate power goes with the position.
• Reward power stems from the ability to bestow
  rewards.
• Coercive power authority to punish.
• Expert power derives from a persons higher
  skill or knowledge.
• Referent power personal characteristics that
  people admire.

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• In organizations, however, power is often the
  result of structural characteristics.
• What is power?
• It is the ability of one person or department in
  an organization to influence other people to
  bring about desired outcomes.
• It is the potential to influence others within
  the organization with the goal of attaining
  desired outcomes for power holders.

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How does power relate to authority?

• The concept of formal authority is related to
  power but is narrower in scope. Authority is also
  a force for achieving desired outcomes, but only
  as prescribed by the formal hierarchy and
  reporting relationships.
• Three characteristics of authority
• 1. It is vested in an organizational position.
• 2. It is accepted by subordinates.
• 3. It flows down the vertical hierarchy.

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Vertical sources of power...

• Power that derives from your formal position in
  the hierarchy.
• Power that derives from control over resources.
• Power that derives from control over decision
  making. Control of decision premises means that
  top managers place constraints on decisions made
  at lower levels.
• Power that derives from being centrally located
  in the organization or in the midst of a network.

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Horizontal sources of power...

• All vice presidents are usually at the same level
  on the organization chart, but this does not mean
  that they have the same level of power. The fact
  that each department makes a unique contribution
  to organizational success influences the amount
  of power a department, and that departments
  manager, might have. A department that is
  strategic will tend to have more power.

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What makes a department strategic?

• Other departments being dependent on your
  department for materials, information, or other
  resources
• Your department having control over financial
  resources
• A departments centrality, or being at the center
  of the organizations primary activity.
• There being no substitute for what your
  department does
• Departments that are able to better cope with
  uncertainty have more power.

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What about the use of politics?

• Politics are more likely to occur at the top
  levels of an organization and around certain
  issues and decisions.
• What is politics?
• If power is the available force or potential for
  achieving desired outcomes, politics is the use
  of power to influence decisions in order to
  achieve those outcomes.

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• Although politics can be used in a negative,
  self-serving way, the appropriate use of
  political behavior can serve organizational
  goals.
• Politics can be viewed as the process of
  bargaining and negotiation that is used to
  overcome conflicts and differences of opinion.

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When is political activity used?

• Because managers at the top of the organization
  deal with more non-programmed decisions than do
  managers at the lower levels, more political
  activity will appear.
• Also, some issues are associated with inherent
  disagreement, i.e. resource allocation.
• Further, organizational changes such as hiring
  new executives, promotions, etc., have great
  political significance.

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How to increase department power?

• Enter areas of high uncertainty.
• Control over uncertainties will increase your
  standing.
• Create dependencies.
• For materials, information, knowledge, skills
• Provide resources.
• Money, information, facilities, etc.
• Satisfy strategic contingencies.

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How to effectively use power?

• Build coalitions.
• Expand networks.
• Control decision premises.
• Enhance legitimacy and expertise.
• Make preferences explicit, but keep power
  implicit.

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Power and Political Tactics in Organizations
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Negotiating Strategies

• Win-Win Strategy
• Define the conflict as a mutual problem
• Pursue joint outcomes
• Find creative agreements that satisfy both groups
• Use open, honest, and accurate communication
• Avoid threats
• Communicate flexibility

• Win-Lose Strategy
• Define the conflict as a win-lose situation
• Pursue self outcomes
• Force other group into submission
• Use deceitful, inaccurate communication
• Use threats
• Communicate rigidity

Source Adapted from David W. Johnson and Frank
P. Johnson, Joining Together Group Theory and
Group Skills (Englewood Cliffs, N. J.
Prentice-Hall, 1975), 182-83.
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Lastly, some ideas about excellence...

• Effective and successful companies have a
  strategic orientation.
• They are close to the customer, provide fast
  response, have a clear business focus and goals,
  and establish inter-organizational linkages.
• They are customer driven.

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• With regard to top management
• There exists a strong leadership vision
• there is a bias toward action, change, and
  learning
• they promote a foundation of core values
• and top management facilitates knowledge
  management ( they know of its importance and want
  to share it).

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Further...

• Excellent organizations are characterized by five
  design attributes
• simple form and lean staff
• empowerment to increase entrepreneurship
• horizontal structure and collaboration
• there is a balance between financial and
  non-financial measures of performance
• there is a use of electronic technology and
  e-commerce.

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Lastly,

• Regarding corporate culture
• it creates a climate of trust
• it shares information
• it encourages productivity through people
• it takes a long-term view
• and it values adaptation and learning.

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Factors Associated with Organizational Excellence
Top Management

• Leadership
• vision
• Bias toward action/
• change/learning
• Foundation of core
• values
• Facilitating
• knowledge
• management

Strategic Orientation

• Close to the customer
• Fast response
• Clear business focus
• and goals
• Establishing
• inter-organizational
• linkages

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The importance of empowerment

• Empowerment is giving employees the power,
  freedom, and information to make decisions and
  participate fully in the organization.
• Many managers believe that giving up centralized
  control will promote speed, flexibility, and
  decisiveness.
• One study suggests that reasons for empowering
  include the fact that other organizations are
  doing it and because it is strategically
  necessary to improve products or services.

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The act of empowerment...

• Empowering employees means giving them 4 elements
  that enable them to act more freely to accomplish
  their jobs
• 1. Information about company performance
• 2. Giving employees knowledge and skills to
  contribute to company goals
• 3. Give the employee enough power to make
  substantive decisions
• 4. Reward employees based on company performance.

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What kinds of leaders can best lead the
organization?

• Transformational leaders- they have the ability
  to bring about change, innovation, and
  entrepreneurship.
• They motivate employees to not just follow them
  personally but to believe in the vision of
  corporate transformation, to recognize the need
  for revitalization, to sign on for the new
  vision, and to help institutionalize a new
  organizational process.

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In short, the transformational leader...

• 1. Creates a compelling vision.
• 2. Mobilizes commitment.
• 3. Empowers employees.
• 4. Institutionalizes a culture of change.
• Failure to lead may lead to organizational
  decline, or a condition in which a substantial,
  absolute decrease in an organizations resource
  base occurs over a period of time.

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Other factors that can lead to organizational
decline

• Failure to make changes through the life cycles
• Vulnerability to shifts in consumer tastes or in
  the economic health of the larger community
• Increased competition and environmental decline
  (reduced energy and resources available to
  support an organization).

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Stages of decline

• 1. Blinded Stage (internal and external changes
  that require the org. to tighten up)
• 2. Inaction Stage (denial occurs despite signs of
  deteriorating performance)
• 3. Faulty Action Stage (the org. is facing
  serious problems and indicators of poor
  performance cannot be ignored)
• 4. The Crisis Stage (the org. has still not been
  able to deal with decline effectively and is
  facing a panic)
• 5. Dissolution Stage (this stage is irreversible,
  and the org. is facing loss of markets and
  reputation, personnel, etc.).
• The End Finis Thats All Folks!!!!!!