Business unit 2 chapter 4

handy’s model of organisational culture

power culture pros and cons

Pros: 

• Quick decision making

• Head management has the most business knowledge so decision making is made with expertise 

Cons:

• Demotivated workers (have little autonomy) → high labour turnover

• Stressed head management → little delegation

• Difficult to maintain control

• Low morale

• heavily reliant on the skills of the person in charge 

role culture pros and cons

Pros:

• Clear roles, everyone knows what they’re doing 

• Good promotion chances → motivates workers

• Can acquire specialist expertise

Cons:

• Tall structure, many layers of management → lots of supervision and bad communication 

• High labour costs → many layers and managers whose pay is higher 

• Slow decision making

• difficult to adapt to change

• inflexibility

person culture pros and cons

Pros:

• Lots of autonomy → workers motivated 

• Good if workers can be trusted to get their work done

• creativity 

Cons: 

• Some workers can’t be trusted to get work done

• low loyalty to the company

task culture pros and cons

(think matrix structure)

Pros:

• Team work motivates

• Workers can be allocated to teams based on their strengths

Cons: 

• Teams may develop own objectives 

• Groups might need time to become functional → by the time they become functional, project is over 

• Potential conflicts with who is working under who

strong culture definition & pros

- deeply fixed into the way a business does things

- however, if too rigid, a business won’t be able to respond to changes quickly 

PROS:

• Provides a sense of identity for employees

• Better teamwork 

• Increased commitment of workers → lower labour turnover 

• Motivation → productivity 

• Better understanding and less misunderstandings

• Reinforce company values 

weak culture

• difficult to identify the factors making up the culture or a lot of subcultures exist

• views, rules, etc. not easily adopted by the workers. Poor work alignment 

• possible inconsistent behaviour resulting in poor performance 

• identified by poor customer service

• inconsistent with business values

factors leading to strong or weak culture in a business

Surface manifestations (appearances)

• Availability of training 

• Language “colleagues” “crew members”

• Mottoes 

• Ceremonials 

• Norms (eg always being late to meetings can lead to weak culture) 

• Organizational plan 

Core organizational values

• Can reflect the actual culture of a business, but, they might not

• Workers at the bottom of the hierarchy might have very different values from the ones that senior management want them to have

Basic assumptions

• Unspoken beliefs & ways of working 

• Workers may share a general attitude, which affects quality of work 

• Hard to see and change

changing a culture → why and challenges

Why change?

• A firm’s culture can provide it with an advantage over its competitors 

Challenges in changing

• Difficult to identify the factors that contribute towards a specific culture 

• Hard to manage people’s attitudes 

• Training can be successful in changing a culture if the benefits of the desired culture are emphasised

how corporate culture is formed

• Based on the leaders attitudes

• Based on the success of a company → more successful = higher expectations

• Based on the type of product → determines level of skill needed by workers

ways to identify a corporate culture

• how customers are treated

• method & style of communication

• how decisions are made

potential conflicts between shareholders and stakeholders

Shareholders vs employees

• If the needs of employees are met (higher pay, better working conditions..) there’ll likely be a decrease in profit and dividends 

• Shareholders may insist that the rewards to employees shouldn’t come at the expense of dividends

• Employees may threaten with industrial action

Shareholders vs customers 

• Likely to occur if business charges prices that are too high 

• Customers upset if R&D or customer service is neglected 

• less R&D spending = higher dividends

Shareholders vs directors and managers 

• Problems arise if directors and managers prioritize their own benefits eg remuneration 

• Common conflict is the balance between paying dividends and retaining profit for investment 

Shareholders vs the environment  

• Environmentally responsible ways of production likely more expensive

Hofstede’s cultural dimensions → definition

underlying values that affect the cultural differences in businesses → useful in international business

Hofstede’s cultural dimensions → five variables?

Power distance

• How much more power do managers have over subordinates

• High distance suggests little communication 

Individualism 

• How people see themselves within the organization 

• When it’s high, people tend to focus on their own success

Masculinity vs femininity 

• Masculine organisation might be described as competitive and assertive 

• Feminine, caring and co-operative 

Uncertainty avoidance

• Level at which an organisation will accept risk 

• Low uncertainty avoidance = will take risks 

Long-term vs short-term orientation

• A low score = organisation makes decision to get short-term rewards and immediate gratification in terms of shareholder value 

Business audits and CSR

• Some businesses respond to concerns about CSR by auditing relevant activities → eg use of child labour

• Auditing involves checking evidence against established standards

• Audits are then made public

Examples of social and environmental audits

• Employment indicators

• Human rights indicators

• Ethics → eg animal testing

• The communities in which the business operates

• Product responsibility → eg safety

• The environment: can form a separate audit

→ amount of energy/raw materials used eg water

→ amount of waste produced

→ amount of recycled material