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CHAPTER 12: LEADING PEOPLE WITHIN ORGANIZATION

LEADERSHIP

May be defined as the act of influencing others to work toward a goal. Leadership is the ability of an
individual or a group of individuals to influence and guide followers or other members of an
organization.

Types of Leadership

Formal leadership – that holds a position of authority that may utilize the power that comes from
position, as well as their personal power to influence others.

Informal leadership- are without a formal position of authority within the organization but demonstrate
leadership by influencing others through personal forms of power.

What makes leaders effective?

WHO IS A LEADER?

“ TRAITS APPROACHES TO LEADERSHIP”

INTELLIGENCE

General mental ability which psychologists refers to as “g” and which often called “IQ” in everyday
language has been related to a person’s emerging as a leader within a group. Specifically, people who
have high mental abilities are more likely to be viewed as leaders in their environment.

In addition to having IQ, effective leaders tend to have high emotional intelligence. People with high EQ,
demonstrate a high-level self-awareness, motivation, empathy, and social skills.

BIG 5 PERSONALITY TRAITS

Psychologist have proposed various systems for categorizing the characteristics that make up an
individual’s unique personality; one of the most widely accepted is the “Big Five” model.

Openness- Being curious, original, intellectual, creative, and open to new ideas.

Conscientiousness- Being organized, systematic, punctual, achievement-oriented, and dependable.

Extraversion- Being outgoing, talkative, sociable, and enjoying social situations.

Agreeableness- Being affable, tolerant, sensitive, trusting, kind, and warm.

Neuroticism- Being anxious, irritable, temperamental, and moody.

SELF-ESTEEM- is not one of the Big Five personality traits, but it is an important aspect of one’s
personality. The degree to which a person is at peace with oneself and has an overall positive
assessment of one’s self worth and capabilities seem to be relevant to whether someone is viewed as a
leader.
It is possible that those with high self-esteem have greater levels of self-confidence and this affects their
image in the eyes of the followers. Self-esteem may also explain the relationship between some physical
attributes and leader emergence.

INTEGRITY - Research also shows that people who are effective as leaders tend to have a moral compass
and demonstrate honesty and integrity. Spiritual values and practices related to leadership
effectiveness. Leaders whose integrity is questioned lose their trustworthiness, and they hurt their
company’s business along the way.

KEY TRAITS ASSOCIATED WITH LEADERSHIP

There are also some traits that are negatively related to leader emergence and being successful in that
position. For example, agreeable people who are modest, good natured, and avoid conflict are less likely
to be perceived as leaders.

Despite problems in trait approaches, these findings can still be useful to managers and companies. For
example, knowing about leader traits helps organizations select the right people into positions of
responsibility. The key to benefiting from the findings of trait researchers is to be aware that not all
traits are equally effective in predicting leadership potential across all circumstances. Some
organizational situations allow leader traits to make a greater difference.

What do leaders do?

“ Behavioral Approaches to Leadership”

Leaders Behavior- is the traits and characteristics that make some effective as a leader. Leaders utilize
their behavior to help them guide, direct, and influence the work of their team

Two- Broad Categories of Behavior

1. Task-oriented leader behavior- involve structuring the roles of subordinates, providing them
with instructions, and behaving in ways that will increase the performance of the group.
2. People-oriented leader behaviors- include showing concern for employee feelings and treating
employee with respect.

Leader Decision Making- Focused on how leaders actually make decisions and the influence of decision-
making styles on leader effectiveness and employee reaction.

Types of decision-making style

1. Authoritarian decision making- occurs when leaders make the decision alone without
necessarily involving employees in the decision-making process.
2. Democratic decision making- occurs when leaders and employees participate in the making of
the decisions.
3. Laissez-faire decision making- occurs when leaders leave employees alone to make the
decision. The leader provides minimum guidance and involvement in the decision.

WHAT IS THE ROLE OF THE CONTEXT ?


“CONTINGENCY APPROACHES TO LEADERSHIP”

Fielder's Contingency Theory

The earliest and one of the most influential contingency theories was developed by Frederick Fiedler.
Fledler, F.(1967). A theory of leadership effectiveness. According to the theory, a leader's style is a
measured by a scale called Least Preferred Coworker scale or LPC. People who are filling out this survey
are asked to think of a person who is their least preferred coworker. Then, they rate this person in terms
of how friendly, nice and cooperative this person is.

The theory predicts that in "favorable" and "unfavorable" situation, a low LPC leader- one who has a
feeling of dislike for coworkers who are difficult to work with- would be successful. When situational
favorableness is medium, a high LPC leader- one who is able to personally like coworkers who are
difficult to work with- is more likely to succeed.

Situational Leadership

Another contingency approach to leadership is Kenneth Blanchard and Paul Hersey's Situational
Leadership Theory or SLT which argues that leaders must use different leadership styles depending on
their followers' development leader.

According to this model, employee readiness (defined as a combination of their competence and
commitment levels) is the key factors determining the proper leadership style.

Path- Goal Theory of Leadership

Robert's Houses path-goal theory of leadership is based on the expectancy theory of motivation. House
R.J.(1971). A path goal theory of leader effectiveness. The expectancy theory of motivation suggests that
employees are motivated when they believe or expect that;

a. their effort will lead to a high performance.

b. their high performance will be rewarded.

c. the rewards they will receive are valuable to them.

According to the path-goal theory of leadership, the leaders main job is to make sure that all three of
these condition exist. Thus, leaders will create satisfied and high-performing employees by making sure
that employee efforts leads to performance, and their performance is rewarded by desired rewards.

Vroom and Yetton's Normative Decision Model

Yale School of Management Professor Victor Vroom and his colleagues Philip Yetton and Arthur Hago
developed a decision-making tool to help leaders determine how much involvement they should seek
when making decisions.

The model starts by having leaders answer several key question and working their way through a
decision tree based on their responses

Decision- Making Style

Decide - The leader makes the decision alone using available information
Consult Individually- The leader obtains additional information from group members before making the
decision alone.

Consult as a group- The leader shares the problem with group members individually and makes the final
decision alone.

Facilitate- The leader shares information about the problem with group members collectively, and acts
as a facilitator. The leader sets the parameter of the decision.

“Contemporary Approaches to Leadership”

Transformational Leadership theory- is a recent additional to the literature, but more research has
been conducted on this theory than all the contingency theories combined.

 Transformational leaders – who lead employees by aligning employee goals with the leader’s
goal.
 Transactional leaders – who ensure that employees demonstrate the right behaviors and
provide resources in exchange. These leaders provide contingent rewards and manage by
exception.

Four Tools Transfomational Leaders have:

1. Charisma – refers to behaviors leaders demonstrate that create confidence in commitment to,
and admiration for the leader.
2. Inspirational motivation - coming up with a vision that is inspiring to others.
3. Intellectual stimulation – which means that they challenge organizational norms and status and
they encourage employee to think creatively and work harder.
4. Individual consideration – which means that they show personal care and concern for the well
being of their followers.

Three Different Methods of Transactional Leaders

1. Contingent rewards- means rewarding employee for their accomplishments


2. Active management by exception - involves leaving employees to do their jobs without
interference, but at the same time proactively predicting potential problems and preventing
them from occurring.
3. Passive management by exception- is similar in that it involves leaving employee alone, but in
this method the manager wits until something goes wrong before coming to the rescue.

Servant leadership - Is a leadership approach that defines the leader’s role as serving the needs of the
others. According to this approach, the primary mission of the leader is to develop employees and help
them reach their goals.

Authentic leadership- A leadership approach advising leaders to stay true to their own values.

The Roles of Ethics and National Culture

Ethics- refer to the desirable and appropriate values and morals according to an individual or the society
at large. Ethics deal with the purity of individuals and their intentions.
Ethical decisions are complex and even to people who are motivated to do the right thing, the moral
component of decision may not be obvious.

Leadership around the Globe

Is leadership universal?

People who are perceived as leaders in one society may have different traits compared to people
perceived as leaders in a different culture, because each society has a concept of ideal leader
prototypes.

CHAPTER 13: Power and Politics

What is POWER ?

Power is the ability of one person or department in an organization to influence other people to bring
about desired outcomes.

Positive & Negative Effect of Power

Positive

 Leadership responsibilities
 Organizational and Personal Goals
 Inspire Commitment
 Creativity

Negative

 Bully Bosses
 Manipulator
 Sexual Harassment

Conformity- Refers to people’s tendencies to behave consistently with social norms.

-Can refer to small things such as how people tend to face forward in an elevator. There’s no rule listed
in elevator saying which way to face, et it is expected that everyone will face forward.

There are three classic sets of studies illustrate how important it is to create checks and balances to help
individuals resist the tendency to conform or to abuse authority, these are the MILGRAM STUDY, ASCH
STUDY, and ZIMBARDO STUDY

Relationship Between Dependency and Power Dependency

Dependency

- directly related to power

- the more that a person or unit is dependent on you, the more power you have

- You know how dependent you are on someone when you answer the following three key questions:
Scarcity- Refers to the uniqueness of a resource

-The more difficult something is to obtain, the more valuable it tends to be

Importance- Refers to the value of the resource

-The more vital the resources that you control, the more power you will have

Substitutability- Refers to one’s ability to find another option that works as well as the one offered

The harder it is to find a substitute, the more dependent the person becomes and the more power
someone else has over them

Types of POWER

Legitimate Power – is power you derive from your formal position or office held in the organization’s
hierarchy of authority

Example: The president of a corporation has certain powers because of the office he holds in the
corporation

Reward Power – simply the power of a manager to give some type of reward to an employee as a
means to influence the employee to act. Rewards can be tangible and Intangible

Example: Tangible – monetary awards, bonuses, certificates, medals etc.

Intangible – praise, positive feedback, recognition, etc.

Coercive Power – is the ability of a manager to force an employee to follow an order by threatening the
employee with punishment if the employee does not comply with the order

Example: Demotions, pay cuts, termination

Expert Power – based upon employees’ perception that a manager or some member of organization has
a high level of knowledge or a specialized set of skills that other employees do not possess

Information Power – similar to expert power but differs in its source. It is a power that comes from
access to and control over information

Example: Knowing price information gives a person information power during negotiation

Referent Power – stems from the personal characteristics of the person such as the degree to which we
like, respect, and want to be like them. It is often called Charisma

Influence- The capacity or power of persons or things to be compelling force on or produce effects on
the actions, behavior, opinions, etc., of others

Responses to influence attempts include:

Resistance – occurs when the influence target does not wish to comply with the request and either
passively or actively repels the influence attempt

Compliance – occurs when the target does not necessarily want to obey, but they do.
Commitment – occurs when the target not only agrees to the request but also actively supports it as
well.

9 Influence Tactics

Rational Persuasion- a tactic that is used to try and convince someone with a valid reason, rational logic,
or realistic facts

Inspirational appeals – a tactic that builds enthusiasm by appealing to emotions, ideas and/ or values

Consultation- a tactic that focuses on getting others to in the planning process, making decisions, and
encourage changes

Ingratiation- a tactic that emphasizes on getting someone in a good mood prior to making a request. It
includes being friendly, helpful, and using praise or flattery

Personal appeals- a tactic that refers to friendship and loyalty while making a request

Exchange – A tactic that suggests that making express or implied promises and trading favors

Coalition tactics- refers to a tactic that prescribes getting others to support your effort to persuade
someone

Pressure- a tactic that focuses on demanding compliance or using intimidation or threats

Legitimating tactics- this tactic suggests that basing a request on one’s authority or right, organizational
rules or policies, or express or implied support from superiors, is a best.

Impression Management

 Actively shaping the way you are perceived by others


 By using impression management strategies, you control information that make others see you
in the way you want to be seen
 As Harvard Bus. School Prof. Laura Morgan Roberts puts it “ When you present yourself in a
manner that is both true to self and valued and believed by others, impression management can
yield a host of favorable outcomes for you, your team, and your organization

3 Main Impression Management Strategies

1. Nonverbal Impression Management – includes the clothes you choose to wear and your demeanor

Example: Body art, including piercing and tattoos

2. Verbal Impression Management – includes tone of your voice, rate of speech, what you choose to say
and how you say it

3. Behavior Impression Management – includes how you perform on the job and how you interact with
others

Direction of Influence
Upward Influence – the ability to influence your boss and others in position higher than yours. It may
include appealing to a higher authority or citing the firm’s goals as an overarching reason for others to
follow your cause

Downward Influence – ability to influence employees lower than you

Peer Influence – occurs all the time. But to be effective within organizations, peers need to be willing to
influence each other without being destructively competitive

POLITICS – is power in action

ORGANIZATIONAL POLITICS – Involves intentional acts of influence to enhance or protect the self-
interest of individuals or groups

Why do we have Politics?

 Different values, ideas, interest and goals


 Limited resources (money)
 Outcome is not clearly known

Antecedent of Political Behavior

INDIVIDUAL ANTECEDEN T

Political Skill- Ability to relate to others, self-monitor, alter their reaction depending upon the situation
they are in and inspire confidence and trust

Political Skill- When a person expects that they will be successful in changing an outcome, they are
more likely to engage in political behavior

Investment in the Organization- If a person is highly invested in an organization either financially or


emotionally, they will be more likely to engage in political behavior because they care deeply about the
fate of the organization

Internal Locus of Control- believe that they can make a difference in organizational outcomes.

Antecedent of Political Behavior

ORGANIZATIONAL ANTECEDENT

Scarcity of Resources- breeds politics. When resources such as monetary incentives or promotions are
limited, people see the organization as more political.

Promotion- This can also lead to greater political behavior

Performance Evaluations- This human resource practice can lead to greater political behavior such as
impression management, throughout the organization.

Role Ambiguity- role ambiguity allows individuals to negotiate and redefine their roles.

Democratic Decision Making- leads to more political behavior. Since many people have a say in the
process of making decisions, there are more people available to be influenced.
Social Networking

SOCIAL NETWORK- social networking refers to the use of internet-based social media sites to stay
connected with friends, family, colleagues, customers, or clients. Social networking can have a social
purpose, a business purpose, or both, through sites like Facebook, Twitter, LinkedIn, and Instagram.
Social networking is also a significant base for marketers seeking to engage customers.

How Social Networking Works?

- Social networking involves the development and maintenance of personal and business relationships
using technology. This is done using social networking sites, such as Facebook, Instagram, and Twitter.
These sites allow people and corporations to connect with one another so they can develop
relationships and so they can share information, ideas, and messages.

- Family members who are far apart may remain connected through personal social networking sites like
Facebook.

- Social networking is commonly used by marketers to increase brand recognition and encourage brand
loyalty.

- Marketers use social networking to improve conversion rates. Building a following provides access to
and interaction with new, recent, and old customers. Sharing blog posts, images, videos, or comments
on social media allows followers to react, visit the company’s website, and become customers.

Advantage and Disadvantage of Social Networking

ADVANTAGE

 Allows people to connect with others, including friends and family


 Companies can reach new and existing clients as well as build and improve their brand name
 Corporations can demonstrate their customer service

DISADVANTAGE

 Helps spread misinformation


 Complaints about companies can spread and create public relations issues
 Costs to advertise and develop corporate profiles can be high

Why Are Social Networks Important?

Social networks are important because they allow people to develop relationships with others with
whom they might not otherwise be able to connect. It also helps boost business productivity when used
for public relations, marketing, and advertising purposes.

The Role of Ethics and National Culture

Ethics and Power

Ethics - a set of moral principles: a theory or system of moral values

-Power brings a special need for ethics, because circumstances of power make it easy for misuse to
occur
Power around the Globe

-Without a culture emphasizing the importance of integrity, honesty, and trust, the mandatory ethics
training programs are often doomed to fail.

-The values, norms, and beliefs of a company may also be at least partially imposed by the national
culture.

Power and Politics

-Power and politics in organizations are common

-Power can lead to conformity from those around us and this occurring conformity can breed corruption

-Methods for obtaining more power in an organization can

Chapter 4: Organizational structure

Organizational structure- Refers to how the work of individuals and teams within an organization is
coordinated. In order to achieve organizational goals and objectives individual work needs to be
coordinated and managed.

An organizational structure defines show activities such as task allocation coordination and supervision
are directed toward the achievement of organizational aims.

Centralization- Is the degree to which decision-making authority is concentrated at higher levels in an


organization. In centralized companies many important decision are made at higher levels of hierarchy
wheareas in decentralized companies decision are made and problems are solved at lower levels by
employees who are closer to the problem in question.

Building Blocks of Structure- A decentralized organizational structure is one in which senior


managements has shifted the authority for some types of decision making to lower levels in the
organization.

Centralization- is the process of concentrating power and authority in the hands of senior management.
On the other hand, decentralization refers to the top down delegation of power and authority to
functional-level management.

Formalization- Is the extend to which policies procedures job descriptions and rules are written and
explicitly articulated. In other words formalized structures are those in which there are many written
rules and regulations. These structures control employee behavior using written rules and employees
have little autonomy to make decision on a case-by-case basis.

A formalized structure is associated with reduced motivation and job satisfaction as well as a slower
pace of decision making.

Hierarchical Levels

Another important element of a company’s structure is the number of level it has in the hierarchy.
Keeping the side of the organization constant tall structures have several layers of management
between frontline employees and the top level while flat structures consist of few layers. A closely
related concept is span of control or the number of employees reporting to a single manager.

 Tall structure is an organizational structure with many levels of hierarchy.


 Flat structure is an organizational structure with a limited number of levels of hierarchy.
 A narrow span of control is seen in a tall structure, in a flat structure the span of control is wide.

Departmentalization refers to the formal structure of the organization composed of various


departments and managerial position and their relationships with each other.

Organizational structures differ in terms of departmentalization. Organizations using functional


structures group jobs based on similarity in functions. Such structures may have departments such as
marketing, manufacturing, finance, accounting, human resources, and information technology. In these
structures each person serves a specialized role and handles large volumes of transactions.

In organizations using divisional structures departments represent the unique products, service,
customers, or geographic locations the company is serving.

Functional structures tend to be effective when an organization does not have a large number of
products and services requiring special attention. When a company has a diverse product line, each
product will have unique demands, deeming traditional structures less useful for promptly addressing
customer demands and anticipating market changes. Functional structures are also more effective in
stable environments that are slower to change. In contrast, organizations using product departments
are more agile and can perform better in turbulent environments. The type of employee who will
succeed under each structure is also different. Research shows that when employees work in product
departments in turbulent environments, because activities are diverse and complex, their performance
depends on their general mental abilities.

Two Configuration: Mechanistic and Organic Structures

Mechanistic Structures- Similar to bureaucracies as they are highly formalized and centralized.
Communication tends to follow formal channels, and employees are given specific job descriptions
delineating their roles and responsibilities. Mechanistic organizations are often rigid and resist change,
making them unsuitable for being innovative and taking quick action. These forms have the downside of
inhibiting entrepreneurial action and discouraging the use of individual initiative on the part of
employees.

Organic Structures- are flexible, decentralized structures with low levels of formalization.
Communication lines are more fluid and flexible. Employee job descriptions are broader, and employees
are asked to perform duties based on the specific needs of the organization at the time as well as their
own expertise levels. Organic structures tend to be related to higher levels of job satisfaction on the part
of employees. These structures are conducive to entrepreneurial behavior and innovativeness.

MATRIX ORGANIZATION- have a design that combines a traditional functional structure with a product
structure. Instead of completely switching from a product-based structure, a company may use a matrix
structure to balance the benefits of product-based and traditional functional structures. Specifically,
employees reporting to department managers are also pooled together to form project or product
teams. As a result, each person reports to a department manager as well as a project or product
manager.

An example of a matrix structure at a software development company. Business analysts, developers,


and testers each report to a functional department manager and to a project manager simultaneously.

Boundaryless organization is a term coined by Jack Welch during his tenure as CEO of GE; it refers to an
organization that eliminates traditional barriers between departments as well as barriers between the
organization and the external environment.

Many different types of boundaryless organizations exist:

One form is the modular organization, in which all nonessential functions are outsourced. The idea
behind this format is to retain only the value-generating and strategic functions in-house, while the rest
of the operations are outsourced to many suppliers. An example of a company that does this is Toyota.
By managing relationships with hundreds of suppliers, Toyota achieves efficiency and quality in its
operations.

Strategic alliances constitute another form of boundaryless design. In this form, similar to a joint
venture, two or more companies find an area of collaboration and combine their efforts to create a
partnership that is beneficial for both parties. In the process, the traditional boundaries between two
competitors may be broken.

LEARNING ORGANIZATIONS- is one whose design actively seeks to acquire knowledge and change
behavior as a result of the newly acquired knowledge. In learning organizations, experimenting, learning
new things, and reflecting on new knowledge are the norms. At the same time, there are many
procedures and systems in place that facilitate learning at all organization levels.

Why Do Organizations Change?

Organizational Change- is the movement of an organization from one state of affairs to another.
Organizational change can take many forms. It may involve a change in a company’s structure, strategy,
policies, procedures, technology, or culture.

Workforce Demographics- organizational Change is often a response to changes in the environment.

Technology- the application of scientific knowledge to the practical aims of human life or, as it is
sometimes phrased, to the change and manipulation of the human environment.

Globalization- is the word used to describe the growing interdependence of the world's economies,
cultures, and populations, brought about by cross-border trade in goods and services, technology, and
flows of investment, people, and information.

Market Conditions- Changes in the market conditions may also create changes as companies struggle to
adjust.

Organizational growth- is a stage a company reaches when it can consider expansion and may look for
additional options to generate more revenue. Organizational growth is often a function of industry
growth trends, business lifecycle and the owners' desire for equity value creation.
Poor performance or underperformance- often shows up as: Failure to do the duties of the role or meet
the standard required. Non-compliance with workplace policies, rules or procedures. Unacceptable
behavior at work. Disruptive or negative behavior that affects co-workers.

Resistance to Change- Changing organization is often essential for a company to remain competitive.
Failure to change may influence the ability of a company to survive.

 Active resistance is the most negative reaction to a proposed change attempt. Those who
engage in active resistance may sabotage the change effort and be outspoken objectors to the
new procedures.

Why Do People Resist to Change?

1. Disrupted Habits
2. Personality
3. Feelings of Uncertainty
4. Fear of Failure
5. Personal Impact of Change
6. Prevalence of Change

Planning and Executing Change Effectively

Kurt Lewin’s Three-Stage Model of Planned Change

Kotter’s Eight-Stage Process for Change

How Organizations may Want to Approach Change

1. Unfreezing Prior to Change

When employees are not prepared, they are more likely to resist the change effort and less likely to
effectively function under the new system.

2. Create a Vision for Change

When vision is exciting and paints a picture of a future that employees would be proud to be part of,
people are likely to be more committed to change.

3. Communicating a Plan for Change

When employees know what is going to happen, and when and why, they may conquer their discomfort
with change.

4. Develop a Sense of Urgency

People are more likely to accept change if they feel that there is a need for it.

5. Building a Coalition
Instead of trying to get everyone on board at the same time, it may be more useful to convince and
prepare the opinion leaders.

Opinion leaders- people who have strong influence over the behaviors and attitudes of others.

6. Provide Support

Management may prepare employees for change by providing:

Emotional support

Instrumental support

7. Allow Employees to Participate

Studies show that employees who participate in planning change efforts tend to have more positive
opinions about change.

8. Executing Change

The organization implements the planned changes on technology, structure, culture, or procedures.

9. Continue to Provide Support

Management has an important role in helping employees cope with stress by displaying support,
patience, and continuing to provide support to employees even after the change is complete.

10. Create Small Wins

If people see changes, improvements, and successes along the way, they will be inspired and motivated
to continue the change effort.

11. Eliminate Obstacles

There may be obstacles rooted in a company’s structure, existing processes, or culture.

12. Refreezing

After the change is implemented, the long-term success of a change effort depends on whether change
becomes part of the company’s culture.

13. Publicize Success

In order to make change permanent, the organization may benefit from sharing the results of the
change effort with employees.

14. Build on Prior Change

Instead of declaring the victory early, the company is advised to make continuous improvements to how
business is conducted.

15. Rewards Change Adoption

Organizations may benefit from rewarding those who embrace the change effort.
16. Make Change a Part of Organizational Culture

If change occurs only in superficial elements, it would be misleading to declare change a success.

THE ROLE OF ETHICS AND NATIONAL CULTURE

● When corporate culture is too rigid and hierarchical, employees have fewer opportunities to develop
their moral intelligence.

● Organizational change is a time when managers are expected to behave ethically, because many
more dilemmas are likely to emerge when an organization is faced with change.

○ Downsizing- permanent reduction of labor force.

○ Alternatives:

■ Retraining employees in different areas

■ Early retirement programs

■ Hiring freezes

■ Job sharing

Organizational Structure, Change, and Ethics

➢ Layoffs- if companies take precautions to soften the blow of layoffs, such downsizing is likely to be
perceived as more ethical.

○ Rightsizing- reorganizing the company to meet new objectives.

■ Eliminating staff positions

■ Cutting costs

■ Rearranging upper management

Contemporary Forms of Organizational Structures Matrix Organizations

● Japan- Japanese organizations are much more centralized.

○ Ringi system- decision making system that involves proposals at lower levels being signed and passed
along to higher level management in an effort to build consensus.

● US and Australia- characterized by higher levels of decentralization.

● Singapore and Hong Kong- emphasizes group-centered decision making and higher levels of
centralization. Individualism

● Individualistic cultures attach great importance to autonomy and personal freedom. Therefore, in
these cultures, structures giving responsibility to lower-level employees will be more common.

National cultures
● Germany and France- uncertainty avoidant cultures. They are relatively uncomfortable with change
and prefer structured situations that reduce ambiguity.

● US and China- cultures with low uncertainty avoidance. They are more comfortable with change.

○ US’ influence strategy- change agents are more likely to use inspirational appeals and rational
persuasion.

○ China’s influence strategy- asking for the help of a higher-level person to ensure the success of the
change process.

CHAPTER 15: ORGANIZATIONAL CULTURE

ORGANIZATIONAL CULTURE- refers to a system of shared assumptions, values, and beliefs that show
employees what is appropriate and inappropriate behavior. Culture is by and large invisible to
individuals. Even though it affects all employee behaviors, thinking, and behavioral patterns, individuals
tend to become more aware of their organization's culture when they have the opportunity to compare
it to other organizations.

WHY DOES ORGANIZATIONAL CULTURE MATTER?

An organization's culture may be one of its strongest assets, as well as its biggest liability. In fact, it has
been argued that organizations that have a rare and hard-to-imitate organizational culture benefit from
it as a competitive advantage. Culture, or shared values within the organization, may be related to
increased performance. Researchers found a relationship between organizational cultures and company
performance, with respect to success indicators such as revenues, sales volume, and stock prices.

LEVELS OF ORGANIZATIONAL CULTURE

Organizational culture consists of some aspects that are relatively more visible, as well as aspects that
may lie below one's conscious awareness. Organizational culture can be thought of as consisting of three
interrelated levels.

 ASSUMPTIONS -Assumptions are taken for granted, and they are reflect beliefs about humasn
nature and reality.
 VALUES -Values are the shared principles, standards, and goals.
 ARTIFACTS -Or visible, tangible aspects of organizational culture.

Characteristics of Organizational Culture

Dimensional Culture- Summarize the extent to which cultural groups are found empirically to differ
from one another in terms of psychological attributes such as values, beliefs, Self construals, personality,
and behaviors

Innovative Culture- companies that have innovative cultures are flexible and adaptable, and experiment
with new ideas. These companies are characterized by a flat hierarchy in which titles and other status
distinctions tend to be downplayed.
Aggressive Culture- A Companies with aggressive cultures value competitiveness and outperforming
competitors: By emphasizing this, they may fall short in the area of corporate social responsibility.

Outcome-oriented cultures as those that emphasize achievement, results, and action as important
values. A good example of an outcome-oriented culture may be Best Buy Co. Inc. Having a culture
emphasizing sales performance, Best Buy tallies revenues and other relevant figures daily by
department.

Stable cultures are predictable, rule-oriented, and bureaucratic. These organizations aim to coordinate
and align individual effort for greatest levels of efficiency. When the environment is stable and certain,
these cultures may help the organization be effective by providing stable and constant levels of output.

People-oriented cultures value fairness, supportiveness, and respect for individual rights. These
organizations truly live the mantra that “people are their greatest asset.” In addition to having fair
procedures and management styles, these companies create an atmosphere where work is fun and
employees do not feel required to choose between work and other aspects of their lives. In these
organizations, there is a greater emphasis on and expectation of treating people with respect and
dignity.

Team-oriented cultures are collaborative and emphasize cooperation among employees. For example,
Southwest Airlines Company facilitates a team-oriented culture by cross-training its employees so that
they are capable of helping each other when needed. The company also places emphasis on training
intact work teams. Detail-oriented cultures are characterized in the OCP framework as emphasizing
precision and paying attention to details. Such a culture gives a competitive advantage to companies in
the hospitality industry by helping them differentiate themselves from others.

Service Culture Detailed-Oriented

Service culture is not one of the dimensions of OCP, but given the importance of the retail industry in
the overall economy, having a service culture can make or break an organization. Some of the
organizations we have illustrated in this section, such as Nordstrom, Southwest Airlines, Ritz-Carlton,
and Four Seasons are also famous for their service culture.

Safety culture provides a competitive advantage, because the organization can reduce accidents,
maintain high levels of morale and employee retention, and increase profitability by cutting workers’
compensation insurance costs. Some companies suffer severe consequences when they are unable to
develop such a culture.

Strength of Culture- A strong culture is one that is shared by organizational members. A culture’s
content is more likely to affect the way employees think and behave when the culture in question is
strong.

So far, we have assumed that a company has a single culture that is shared throughout the organization.
However, you may have realized that this is an oversimplification. In reality there might be multiple
cultures within any given organization.

Do Organizations Have a Single Culture?

CREATING AND MAINTAINING ORGANIZATIONAL CULTURE


How are cultures created?

FOUNDER’S VALUE- A company’s culture, particularly during its early years, is inevitably tied to the
personality, background, and values of its founder or founders, as well as their vision for the future of
the organization.

INDUSTRY DEMANDS- While founders undoubtedly exert a powerful influence over corporate cultures,
the industry characteristics also play a role. Industry characteristics and demands act as a force to create
similarities among organizational cultures.dd

ATTRACTIOAN-SELECTION-ATTRITION

Attraction- “Attracted to organizations where they will fit in”.

Selection- Just as candidates are looking for people who will fit into their current corporate culture.

Attrition- Refers to the natural process in which the candidates who do fit in will leave the company.

How are Cultures maintained?

NEW EMPLOYEE ONBOARDING

Another way in which an organization’s values, norms, and behavioral patterns are transmitted to
employees is through onboarding (also referred to as the organizational socialization process)

*ONBORDING- Refers to the process through which employees learn the attitudes, knowledge, skills and
behaviors required to function effectively within an organization.

FORMAL ORIENTATION PROGRAM

A formal orientation program indoctrinates new employees to the company culture, as well as
introduces them to their new jobs and colleagues.

*Gather Information. Try to finds as much about the company and the job as you can before your first
day.

*Manage Your First Impression. First impressions may endure, so make sure that you dress
appropriately, are friendly, and communicated your excitement to be a part of the team.

*Invest In Relationship Development. The relationships you develop with your manager and co-workers
will be essential for you to adjust to your new job.

*Seek Feedback. Ask your manager or co-workers how well you are doing and whether you are meeting
expectations. Listen what they are telling you and also listen to what they are not saying.

*Show success early on. In order to gain the trust of your new manager and colleagues, you may want to
establish a history of success early.

What can employees do during onboarding?


WHAT CAN ORGANIZATIONAL INSIDERS DO DURING ONBOARDING?

LEADERSHIP

Leaders are instrumental in creating and changing an organization’s culture. There is a direct
correspondence between a leader’s style and an organization’s culture.

Namely supervisors, coworkers, and mentors.

REWARD SYSTEMS- The company culture is shaped by the type of reward systems used in the
organization, and the kinds of behaviors and outcomes it chooses to reward and punish.

MISSION STATEMENT- A mission statement is a statement of purpose, describing who the company is
and what it does.

RITUALS- Refers to repetitive activities within an organization that have symbolic meaning.

RULES AND POLICIES- Companies create rules to determine acceptable and unacceptable behavior, and
thus the rules that exist in a company will signal the type of values it has. Policies about issues such as
decision making, human resources, and employee privacy reveal what the company values and
emphasizes.

VISUAL ELEMENTS OF ORGANIZATIONAL CULTURE

PHYSICAL LAYOUT

A company’s building, including the layout of employee offices and other work spaces, communicates
important messages about a company’s culture. The building architecture may indicate the core values
of an organization’s culture

STORIES

Perhaps the most colorful and effective way in which organizations communicate their culture to new
employees and organizational members is through the skillful use of stories.

How do you find out a company’s culture?

HOW DO YOU FIND OUT OF ORGANIZATIONAL CULTURE?

Culture influence the way members of the organization think, behave, and interact with each one
another. Thus, one of the best way of finding out about the company’s culture is by observing
employees or interviewing them. At the same time, culture manifests, itself in some visible aspects of
organization’s environment.

MISSION STATEMENT – A Statement of purpose, describing who the company is and what is does.

RITUALS – Repetitive activities within an organization that have symbolic meaning.

Rules and Policies - Another way in which an observer may find out about a company’s culture is to
examine its rules and policies. Companies create rules to determine acceptable and unacceptable
behaviour, and thus the rules that exist in a company will signal the type of values it has. Policies about
issues such as decision making, human resources, and employee privacy reveal what the company
values and emphasizes.

Physical Layout - A company’s building, including the layout of employee offices and other work spaces,
communicates important messages about a company’s culture. The building architecture may indicate
the core values of an organization’s culture.

Stories - A story can highlight a critical event an organization faced and the collective response to it, or
can emphasize a heroic effort of a single employee illustrating the company’s values

CREATING CULTURAL CHANGE

How do cultures Change

Culture is part of a company’s DNA and is resistant to change efforts. Unfortunately, many organizations
may not even realize that their current culture constitutes a barrier against organizational productivity
and performance. Changing company culture may be the key to the company turnaround when there is
a mismatch between an organization’s values and the demands of its environment.

Creating a Sense of Urgency - involves doing what needs to be done immediately, without being asked
and in the most thorough way possible in order to create change.

Changing Leaders and Other Key Players - Leaders need to possess the ability to explain to employees
why change is necessary, how change will impact them, and what each person must do to make the
change initiative a success. A leader’s vision is an important factor that influences how things are done
in an organization. Thus, culture change often follows changes at the highest levels of the organization.

Role Modeling - Role modeling is the process by which employees modify their own beliefs and
behaviors to reflect those of the leader.

Training - Training allows employees to acquire new skills, sharpen existing ones, perform better,
increase productivity and be better leaders. A well-crafted training programs may be instrumental in
bringing about culture change by teaching employees the new norms and behavioral styles.

Changing the Reward System -The criteria with which employees are rewarded and punished have a
powerful role in determining the cultural values in existence. Organizations undergoing change have
many opportunities to leverage rewards to support the change and demonstrate to employees the
personal benefits of transformation.

Creating New Symbols and Stories - The success of the culture change effort may be increased by
developing new rituals, symbols, and stories.

THE ROLE OF ETHICS AND NATIONAL CULTURE

Organizational Culture and Ethics

A recent study of 3000 employees and managers in United States confirms that the degree to which
employees in an organization behave ethically depends on the culture of organization. Gebler D. (2006)

Without a culture emphasizing the importance of integrity, honesty and trust, mandatory ethics training
programs are often doomed to fall.
Organizational Culture around the world

The values, norms, and beliefs of a company may also be at least partially imposed by national culture.

When an entrepreneur establishes an organization, the values transmitted to the organization may be
because of the cultural values of the founder of the overall society.

It is important for managers to know the relationship between national culture and company culture,
because the relationship explains why it would sometimes be challenging to create the same company
culture globally.

To summarize, in this chapter we have reviewed what defines organizational culture, how it is created
and how it can be change. Corporate culture may be the greatest strength or serious limitation fir a
company depending on whether the values held mare in line with corporate strategy and environmental
demands. Even though changing an organization’s culture is difficult, success of the organization may
require the change. Leaders through their actions role modeling, rulemaking , and story creation, serve
as instrumental change agents.

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