CORPORATE CULTURE & EMPLOYER-EMPLOYEE RELATIONS IB BUSINESS & MANAGEMENT – A COURSE COMPANION p135-143

CORPORATE CULTURE & EMPLOYER-EMPLOYEE RELATIONS

IB BUSINESS & MANAGEMENT – A COURSE COMPANION p135-143

ORGANIZATIONAL & CORPORATE CULTURES

• The term organizational culture or corporate culture refers to the attitudes, experiences, beliefs and values of an organization.

• The way that individuals in an organization dress or treat each other and those outside the organization often reflect the culture of the organization.

• If an individual joins an organization and does not share its values and beliefs it is highly likely that the person will not stay there any longer.

• This situation is described as a cultural clash.

Cultural Clash & School Culture

• If you find yourself constantly clashing with the authorities in your school it is likely that you are experiencing a cultural clash.

Influences on Organizational Culture

• Managers may try to influence the culture of an organization, but this can be extremely difficult , especially in established and old institutions with low staff-turnover.

• Setting the values and the way things get done is a key role of managers so it is likely that new managers will spell out their beliefs and values to staff and will expect staff to behave in a manner that reflects the beliefs managers have set.

Charles Handy on Organizational Culture

• Handy (1986) introduced a highly memorable way of viewing organizational culture.

• Handy describes four distinct organizational cultures. They are

Power Culture Role Culture Task Culture Person Culture

CHARLES HANDYPower Culture

• The power culture describes an organization in which a few individuals retain the essential power.

• Control comes from these individuals and spreads out across the organization.

• Power cultures have few rule and procedures.• People are usually judged by their results rather than

how those results are achieved, since ends are more important than means.

• Swift decision making can result, but the decisions may not be in the long-term interests of the organization.

CHARLES HANDYPower Culture

• The collapse of Enron and Barings Bank are attributed to a dominant power culture by many who have studied their demise.

• Family businesses and merchant banks are often described as having power cultures.

CHARLES HANDY Role Culture

• In a role culture, employees have clearly defined roles and operate in a highly controlled and painfully detailed organization structure.

• These organizations are usually from tall hierarchical bureaucracies with a long chain of command.

• Power stems from a person’s position and this position and the rule book play dominant roles in decision making.


• Decision making is often slow and detailed and risk taking is often avoided.

• The Civil Service, The Army and nationalized industries are often said to have a role culture.

• The symbol Handy uses to describe a role culture is a temple or building.

• These temples or buildings are likely to have been around for some time and they operate in stable environments.


• If you look at the oldest buildings in your town, then the chances are that the organizations in them operate within a role culture – government offices and the main post office are often the oldest building in town.

CHARLES HANDY Task Culture

• The task culture describes a situation when short term plans are formed to address specific problems.

• Power within a team culture shifts from person to person since the team can be led at different times by different people with the requisite skills to work on given project or task.


• Many people like the idea of a task culture because they work in a rapidly changing environment.

• A strong team spirit can emerge, but decisive decisions can have a seriously detrimental impact on the team, since this is often a great deal of emotional energy invested in the team.

• This passion can be fantastically constructive, but the reverse can also be true.

• The task culture often features the crossing lines of a matrix structure


• Handy uses the image of net to describe the task culture since the strength of the net relies on all its different strands.

• The task culture is often found in management consultancies where a team forms to enter an organization and work on a given project.

• Once the project is completed, the team will break up and a new team (or net) will form for another project

• In a school the drama department may resemble a task culture as teams form for a major drama production, and then a new team emerges for the next one.

CHARLES HANDYPerson Culture

• A person culture exists where individuals believe themselves to be superior to the organization and just want to do their own thing.

• The organization is very much a place where they simply go to work and they see themselves as separate from it since they are free spirits.

• Some professional partnerships, such as architects and some university departments can be predominately person cultures as each specialist brings a particular expertise to the organization.

CHARLES HANDYPerson Culture

• The image Handy uses to represent the person culture is a constellation of stars.

• Each star (or person) is unique and different and operates on his or her own.

• Clearly the person culture can be difficult to manage.

• Individuals who prefer this culture will often find it difficult to work in organizations, because the constraints they impose of these in individuals can be unbearable.

EDGAR SCHEIN

Schein described three levels of organizational culture:

• Organizational Attributes• Professed Culture• Organizational Assumptions

EDGAR SCHEIN Organizational Attributes

• These are the things that you sense when you walk into an organization.

• As you enter a government building in a communist country you may often observe stern signs or warnings. There may be a picture or statue of a dominant leader.

• People may speak in hushed tones and dress in a conformist fashion.

• Outsiders may be viewed with suspicion. • The things you see, hear and feel reflect the culture

EDGAR SCHEIN Professed Culture

• When you receive a letter or brochure from an organization if may contain slogans, statements or images that project a certain image.

• These documents give clues as to how things are supposed to be done.

• If you look at the websites of most last organizations, they will give clear statements about their commitment to employees, customers, charities and other stakeholders.

• All these things are Schein would classify as the professed culture.

EDGAR SCHEIN Organizational Assumptions

• If you talk to people who have been with an organization for a long time they will often talk about “how things really get done” as opposed to the “official” channels.

• These people are referring to the organizational assumptions.

• This aspect of the organization is the most ephemeral. (short lived)


• It is difficult to describe the organizational assumptions because people will often be afraid to talk about them or will not really be able to articulate them.

• The people most likely to understand the organizational assumptions in an organization are the ones who have been there the longest.

• They know how things really get done – even in the “official” organizational structure and literature states otherwise.


• The insight offered by Schein’s organizational assumptions goes some way to understanding the difficulty that people new to an organization often have in fitting in.

• The best way to get to grips with the third level is to work closely with someone who has been with the organization for some time.

• However, even if that person knows how things really work, the truth may be “unmentionable”

• The existence of organizational assumptions also helps explain why some managers new to an organization may find it difficult to initiate change.

EMPLOYER & EMPLOYEE RELATIONSCollective Bargaining

• When management and workers have representatives who negotiate on the terms and conditions of employment, this is called collective bargaining.

• It would be far too time consuming for a large organization to negotiate with each of its employees.

• It therefore makes sense for both parties to have employer and employee representatives to negotiate on their behalf.


• Sometimes the collective bargaining system may not work and industrial dispute may arise.

• Most students believe that the next sentence should contain the work strike.

• However, there are many other ways to resolving labour disputes other than strikes.

• Employee representatives may try to keep negotiating.


Go Slow Action• This is when employees deliberately work below their

potential. Work to Rule• This involves working strictly by the company rule book

and following every rule – following every rule in the organization would probably bring it to a standstill. In this case the organization may find it difficult to operate

Strike Action• When workers withdraw their labour – refuse to work.


Employer Responses to Worker Unrest• An employer can use a PR campaign to try to

put forward its case.• The employer might also threaten workers

with redundancy or make changes to their contract of employment.

• It might also lock employees out.

EMPLOYER & EMPLOYEE RELATIONSConciliation & Arbitration

Conciliation• Sometimes the employer and employee

representatives will seek help from a third party to resolve a dispute.

• This process is often referred to as conciliation.• The aim of conciliation is to bring together the

groups in a dispute and help them to find a solution.

EMPLOYER & EMPLOYEE RELATIONSConciliation & Arbitration

Arbitration • With conciliation, the mediator cannot always

impose a binding judgment.• With arbitration, a binding judgment is usually

possible.• The mediator will allow both parties to outline

their positions by providing appropriate evidence.• The evidence is then assessed and judgment is

made.

EMPLOYER & EMPLOYEE RELATIONSNo-Strike Agreement

• A situation where a trade union has agreed not to undertake industrial action unless procedural steps have first been undertaken is no strike agreement.

• It can also mean that a union has agreed to rule out any possibility of taking industrial action.

• Such a union undertaken is likely to have been made if the management has agreed to certain conditions.

• Eg: The management may have agreed to inflation-proof pay rises, or agreed to refer all disputes to arbitration should no agreement be made between management and unions.

EMPLOYER & EMPLOYEE RELATIONSSingle Union Agreement

• Where one union is recognized as the only representative of employees it is called a single-union agreement.

• This situations saves managers the difficulties of negotiating with several unions and reduces competition between the unions to get a higher pay rise than rival unions.

• It also helps to avoid the disruption to the organization if one of several unions is in dispute with management, yet disrupts the production process for the whole organization.

EMPLOYEE PARTICIPATION & INDUSTRIAL DEMOCRACY

• In industrial democracy, there is partial or complete participation by the workforce in the running of an organization.

• At one extreme industrial democracy implies worker control over industry, perhaps linked with workers ownership of the means of production, as with producer cooperatives.

• Another approach is the appointment of worker or trade union representatives to company boards or governing bodies

EMPLOYEE PARTICIPATION & INDUSTRIAL DEMOCRACY

• Industrial democracy can also take the form of worker participation such as collective bargaining in which trade unions negotiate with managers.

• Another approach places less stress on power sharing and more on consultation and communication: managers are seen as retaining all responsibility for decisions but make arrangements to consult worker representatives before changes are introduced.

CRISIS MANAGEMENT

• Crisis management is an organization’s systematic effort to avoid crises or to manage and limit the damage when a crisis occurs.

• This involves assessing, understanding, and coping with any urgent and series threat to an organization.

• When a major, unpredictable event threatens to harm an organization, it faces a crisis.

• Although crisis events by their nature are unpredictable, they may not be totally unexpected.

• Memorable crises include currency collapse, natural disasters such as earthquakes and tsunamis, mad cow disease and bird flu.

CONTINGENCY PLANNING

• Contingency planning is an organizations attempt to put in place plans to deal with a crisis.

• It is the first step in crisis management.• Crisis management teams can propose the most

likely crisis to face their organization and then simulate the crisis to use as a drill.

• The most obvious crisis to face your school is likely to be a fire and you will certainly have simulated evacuating your school in the event of a fire.


• Part of the simulation will often involve communicating with stakeholders.

• The best policy here is have one spokesperson so that a consistent message is communicated. This will also ensure that accurate information is provided both internally and externally.

• The contingency plan should also guide the crisis management team to help make decisions that will limited both short and long term danger.


• The obvious benefit of having a crisis management team and preparing contingency plans is that the plans can be put in place when minds are focused on working on a theoretical (rather than real) crisis.

• If a crisis emerges and there is no contingency plan in place it is likely that decisions will be made under great stress and urgency.

• In this situation, there’s a good change that the wrong decision will be made.


• While the crisis management team will not be able to anticipate every crisis, the fact that they are a team and have a contingency plan means, that they will at least be prepared.

• If the crisis that occurs is similar to one that has been simulated then the chances of the damage being limited is even greater.

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CORPORATE CULTURE & EMPLOYER-EMPLOYEE RELATIONS IB BUSINESS & MANAGEMENT – A COURSE COMPANION p135-143