The Environment and Corporate Culture

1. The Environment and Corporate Culture 0 Associate Professor Dr Haslinda Abdullah Week 3

2. 0 Learning Objectives • Describe the general and task environments and the dimensions of each. • Explain the strategies managers use to help organizations adapt to an uncertain or turbulent environment. • Define corporate culture and give organizational examples. • Explain organizational symbols, stories, heroes, slogans, and ceremonies and their relationship to corporate culture.

3. 0 Learning Objectives (contd.) • Describe how corporate culture relates to the environment. • Define a cultural leader and explain the tools a cultural leader uses to create a high-performance culture.

4. Organizational Environment • The organizational environment consists of all elements existing outside the boundary of the organization that have the potential to affect the organization • This environment consists of two layers: • The general environment • The task environment

5. 0 Organizational Environments Exhibit 3.1

6. The General Environment • Represents the outer layer of the environment • Affects the organization indirectly • Dimensions of general environment include: • International • Technological • Sociocultural • Economic • Legal /legislations • Political

7. The General Environment International Dimension • The international dimensions represents a context that influences all other aspects of the external environment • It provides new competitors, customers, and suppliers • It shapes social, technological and economic trends

8. The General Environment Technological Dimension • Includes scientific and technological advancements in a specific industry • Technology has created massive changes for organizations and industries • Examples: computer networks, internet access, video conferencing, cell phones, laptops • Impact • Competition • Relationship with Customers • Medical advances • Nanotechnology advances

9. The General Environment Sociocultural Dimension • Represents the demographic characteristics, norms, customs, and values of the general population • Sociocultural characteristics are • Population • Geographical distribution • population density, • Age • Education levels

10. The General Environment • Economic Dimension • Represents the general economic health of the country • consumer purchasing power, • Unemployment rate • Interest rate • The frequency of mergers and acquisitions represents a recent trend in the economic environment

11. The General Environment • The legal-political dimension • Federal, state, and local government regulations and political activities designed to influence company behavior • Examples can include: • OSHA • HRDF • Employment act • Women and fair employment act • Pressure groups within the legal-political framework can influence the way organization behave,

12. The Task Environment • Layer closest to the organisation and have a direct working relationship • Task environment includes: • Customers • Competitors • Suppliers • Labor market

13. 0 Labor Market Forces Labor Market Forces Affecting Organizations today • Growing need for computer literate information technology workers • Necessity for ongoing investment in human resources – recruitment, education, training • Effects of international trading blocks, automation, outsourcing, shifting plants & facility locations upon labor dislocations, creating unused labor pools in some areas and labor shortages in others

14. The Organization – Environment Relationship • Why care so much about factors in the external environment? • Because environment creates uncertainty for organization managers • Managers must respond by designing the organization to adapt to the environment • Environmental uncertainty must be managed to make organization more effective

15. The Organization – Environment Relationship How do we adapt to the environment? • Boundary-spanning roles – spanning the boundary to see what competitors, suppliers, customers and other elements in the environment are up to • Interorganizational partnerships – reduce boundaries and increase collaborations • Merger and joint ventures can reduce uncertainity

16. The Internal Environment: Corporate Culture • What is culture? • Defined as the set of values, beliefs, understandings and norms that members in an organization share • Levels of corporate culture • Visible – artifacts (symbols, slogans, dress code, etc) • Invisible – deep beliefs (care for each other) • The fundamental values that characterize an organization’s culture can be seen through the visible manifestations of symbols, stories, heroes, slogans and ceremonies

17. 0 Levels of Corporate Culture Exhibit 3.5 Culture that can be seen at the surface level Visible 1. Artifacts, such as dress, office layout, symbols, slogans, ceremonies Invisible Deeper values and shared understandings held by organization members 2. Expressed values, such as “The Penney Idea,” “The HP Way” 3. Underlying assumptions and deep beliefs, such as “people are lazy and can’t be trusted”

18. Environment and Culture Adaptive Cultures • There is a strong relationship between corporate culture and the external environment • Strong corporate culture does not ensure business success unless the culture encourages healthy adaptation to the external environment

19. Environment and Culture Types of Cultures • The adaptability culture – values that support the organization’s ability to adapt • The achievement culture – results-oriented culture that values competitiveness, aggressiveness, personal initiative and willingness to work long and hard to achieve success • The involvement culture – focus on the involvement and participation of employees to rapidly meet the changing demands from the environment • The consistency culture – values and rewards a methodical, rational and orderly way of doing things

20. 0 Four Types of Corporate Cultures Exhibit 3.7 Needs of the Environment Flexibility Stability External Achievement Culture Adaptability Culture Strategic Focus Involvement Culture Consistency Culture Internal

21. Managing the High-Performance Culture • Paying attention both to the cultural values and to business performance • Embodied shared adaptive values that guide decisions and business practices, and • Encourages individual employee ownership of both bottom-line results and the organization’s cultural backbone

22. Cultural Leadership • One way managers change norms and values to build high-performance culture is through cultural leadership • Articulates a visionthat employees can believe in • Defines and communicates central values that employees believe in • Values are tied to a clear and compelling mission, or core purpose • Heeds the day-to-day activities that reinforce the cultural vision – work procedures and reward systems match and reinforce the values