Organizational

Culture and
CHAPTER
Environment:
The Constraints
LEARNI NG O UTLI N E 3–2

Follow this Learning Outline as you read and study this chapter.

The Manager: Omnipotent or Symbolic

• Contrast the action of manager according to the omnipotent
and symbolic views.
• Explain the parameters of managerial discretion.
The Organization’s Culture
• Describe the seven dimensions of organizational culture.
• Discuss the impact of a strong culture on organizations and
managers.
• Explain the source of an organization’s culture.
• Describe how culture is transmitted to employees.
• Describe how culture affects managers.
L E A R N I N G O U T L I N E (cont’d) 3–3

Follow this Learning Outline as you read and study this chapter.

Current Organizational Cultural Issues Facing

Managers
• Describe the characteristics of an ethical culture, an innovative
culture, and a customer-responsive culture.
• Discuss why workplace spirituality seems to be an important
concern.
• Describe the characteristics of a spiritual organization.
L E A R N I N G O U T L I N E (cont’d) 3–4

Follow this Learning Outline as you read and study this chapter.

The Environment (cont’d)

• Describe the components of the specific and general
environments.
• Discuss the two dimensions of environmental uncertainty.
• Identify the most common organizational stakeholders.
• Explain the four steps in managing external stakeholder
relationships.
The Manager: Omnipotent or 3–5

Symbolic?
 Omnipotent View of Management
 Managers are directly responsible for an organization’s
success or failure.
 The quality of the organization is determined by the
quality of its managers.
The Manager: Omnipotent or 3–6

Symbolic?
 Symbolic View of Management
 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.
Exhibit 3–1 Parameters of Managerial Discretion
3–7
The Organization’s Culture 3–8

 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.
Exhibit 3–2 Dimensions of Organizational Culture
3–9

© 2007 Prentice Hall, Inc. All rights reserved.

Organization A 3–10
This organization is a manufacturing firm. Managers are expected to fully
document all decisions, and “good managers” are those who can provide detailed
data to support their recommendations. Creative decisions that incur significant
change or risk are not encouraged. Because managers of failed projects are openly
criticized and penalized, managers try not to implement ideas that deviate much
from the status quote. One lower-level manager quoted an often-used phrase in
the company: “If it ain’t broke, don’t fix it.” Employees are required to follow
extensive rules and regulations in this firm. Managers supervise employees
closely to ensure there are no deviations. Management is concerned with high
productivity, regardless of the impact on employee morale or turnover. Work
activities are designed around individuals. There are distinct departments and
lines of authority, and employees are expected to minimize formal contact with
other employees outside their functional area or line of command. Performance
evaluations and rewards emphasize individual effort, although seniority tends to
be the primary factor in the determination of pay raises and promotions.
 3–11
Organization B
This organization is also a manufacturing firm. Here, however, management encourages and
rewards risk taking and change. Decisions based on intuition are valued as much as those
that are well rationalized. Management prides itself on its history of experimenting with
new technologies and its success in regularly introducing innovative products. Managers or
employees who have a good idea are encouraged to “run with it,” and failures are treated as
“learning experiences.” The company prides itself on being market driven and rapidly
responsive to the changing needs of its customers. There are few rules and regulations for
employees to follow, and supervision is loose because management believes its employees
are hardworking and trustworthy. Management is concerned with high productivity but
believes this comes through treating its people right. The company is proud of its reputation
as a good place to work. Job activities are designed around work teams, and team members
are encouraged to interact with people across functions and authority levels. Employees talk
positively about the competition between teams. Individuals and teams have goals, and
bonuses are based on achievement of outcomes. Employees are given considerable
autonomy in choosing the means by which the goals are attained.
Exhibit 3–3 Contrasting Organizational Cultures
3–12

Dimension Organization A Organization B

Attention to Detail High Low
Outcome Orientation Low High
People Orientation Low High
Team Orientation Low High
Aggressiveness Low High
Stability High Low
Innovation and Risk Taking Low High
Strong versus Weak Cultures 3–13

 Strong Cultures
 Are cultures in which key values are deeply held and widely held.
 Have a 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
Benefits of a Strong Culture 3–14

 Creates a stronger employee commitment to

the organization.
 Socialization of new employees.
 Fosters higher organizational
performance by instilling and
promoting employee initiative.
Organizational Culture 3–15

 Sources of Organizational Culture

 The organization’s founder
 Vision and mission
 Past practices of the organization
 The way things have been done
 The behavior of top management
 Continuation of the Organizational Culture
 Recruitment of like-minded employees who “fit”
 Socialization of new employees to help them adapt to the
culture
Exhibit 3–4 Strong versus Weak Organizational Cultures
3–16
How Employees Learn Culture 3–17

 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
 Some phrases and word meanings specific to an
organization
How Culture Affects Managers 3–18

 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
Exhibit 3–5 How an Organization’s Culture Is Established and
3–19
Maintained
Exhibit 3–6 Managerial Decisions Affected by Culture
3–20

• 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
Exhibit 3–6 Managerial Decisions Affected by Culture (cont’d)
3–21

• Leading
• The degree to which managers are concerned with increasing
employee job satisfaction
• What leadership styles are appropriate
• Controlling
• Whether to impose external controls or to allow employees to
control their own actions
• What criteria should be emphasized in employee performance
evaluations
Organization Culture Issues 3–22

 Creating an Ethical Culture  Creating an Innovative

 High in risk tolerance
Culture
 Challenge and involvement
 Focus on means as well as
outcomes  Freedom
 Trust and openness
 Idea time
 Conflict resolution
 Debates
 Risk-taking
Exhibit 3–7 Suggestions for Managers: Creating a More Ethical Culture
3–23

• Be a visible role model.

• Communicate ethical expectations.
• Provide ethics training.
• Visibly reward ethical acts and punish unethical
ones.
• Provide protective mechanisms so employees can
discuss ethical dilemmas and report unethical
behavior without fear.
Organization Culture Issues 3–24

(cont’d)
 Creating a Customer-Responsive Culture
 Hiring the right type of employees (ones with a strong interest in serving
customers)
 Having few rigid rules, procedures, and regulations
 Using widespread empowerment of employees
 Having good listening skills in relating to customers’ messages
 Providing role clarity to employees to reduce ambiguity and conflict and
increase job satisfaction
Exhibit 3–8 Suggestions for Managers: Creating a More Customer-Responsive
3–25
Culture

• Hire service-contact people with the personality and attitudes consistent

with customer service—friendliness, enthusiasm, attentiveness, patience,
concern about others, and listening skills.
• Train customer service people continuously by focusing on improving
product knowledge, active listening, showing patience, and displaying
emotions.
• Socialize new service-contact people to the organization’s goals and
values.
• Design customer-service jobs so that employees have as much control as
necessary to satisfy customers.
• Empower employees with the discretion to make day-to-day decisions on
job-related activities.
• As the leader, convey a customer-focused vision and demonstrate through
decisions and actions the commitment to customers.
Spirituality and Organizational 3–26

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
Benefits of Spirituality 3–27

 Improved employee productivity

 Reduction of employee turnover
 Stronger organizational performance
 Increased creativity
 Increased employee satisfaction
 Increased team performance
 Increased organizational performance
Defining the External 3–28

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.
Exhibit 3–9 The External Environment
3–29
Exhibit 3–10 Selected U.S. Legislation Affecting Business
3–30

• Occupational Safety and Health Act of 1970

• Consumer Product Safety Act of 1972
• Equal Employment Opportunity Act of 1972
• Worker Adjustment and Retraining Notification Act of 1988
• Americans with Disabilities Act of 1990
• Civil Rights Act of 1991
• Family and Medical Leave Act of 1993
• Child Safety Protection Act of 1994
• U.S. Economic Espionage Act of 1996
• Electronic Signatures in Global and National Commerce Act of 2000
• Sarbanes-Oxley Act of 2002
• Fair and Accurate Credit Transactions Act of 2003
How the Environment Affects 3–31

Managers
 Environmental Uncertainty
 The extent 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.
Exhibit 3–11 Environmental Uncertainty Matrix
3–32
Stakeholder Relationships 3–33

 Stakeholders
 Any constituencies in the organization’s environment that are affected by
the organization’s decisions and actions
 Why Manage Stakeholder Relationships?
 It can lead to improved organizational performance.
Managing Stakeholder 3–34

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.
Exhibit 3–12 Organizational Stakeholders
3–35
 Terms to Know 3–36

 omnipotent view of  workplace spirituality

management  external environment
 symbolic view of  specific environment
management
 general environment
 organizational culture
 environmental
 strong cultures
uncertainty
 socialization  environmental
complexity
 stakeholders