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Management Quiz 2 Chapter Eight According to scholar Edgar Schein, organizational culture, sometimes called corporate culture, is a system of shared beliefs and values that develops within an organization and guides the behavior of its members. (Social glue) According to one common methodology known as the competing values framework, organizational cultures can be classified into four types: (1) clan, (2) adhocracy, (3) market, and (4) hierarchy. 1. Clan Culture: An Employee-Focused Culture Valuing Flexibility, Not Stability. A clan culture has an internal focus and values flexibility rather than stability and control. Like a family-type organization, it encourages collaboration among employees, striving to encourage cohesion through consensus and job satisfaction and to increase commitment through employee involvement. Southwest Airlines is a good example of a company with a clan culture. 2. Adhocracy Culture: A risk-taking culture valuing flexibility. An adhocracy culture has an external focus and values flexibility. This type of culture attempts to create innovative products by being adaptable, creative, and quick to respond to changes in the marketplace. W.L. Gore is an example of a company with an adhocracy culture. 3. Market Culture: A competitive culture valuing profits over employee satisfaction. A market culture has a strong external focus and values stability and control. Because market cultures are focused on the external environment and driven by competition and a strong desire to deliver results, customers, productivity, and profits take precedence over employee development and satisfaction. Merrill Lynch is an example of a company with a market culture. 4. Hierarchy Culture: A structured culture valuing stability & effectiveness. A hierarchy culture has an internal focus and values stability and control over flexibility. Companies with this kind of culture are apt to have a formalized, structured work environment aimed at achieving effectiveness through a variety of control mechanisms that measure efficiency, timeliness, and reliability in the creation and delivery of products. Dell computer is an example of a company with a hierarchical structure. The Three Levels of Organizational Culture Level 1: Observable ArtifactsPhysical Manifestations of Culture. At the most visible level, organizational culture is expressed in observable artifactsphysical manifestations such as manner of dress, awards, myths, and stories about the company, rituals and ceremonies, and decorations, as well as visible behavior exhibited by managers and employees.+ Level 2: Espoused Valuesexplicitly stated values & norms. Espoused values are the explicitly stated values and norms preferred by an organization, as may be put forth by the firms founder of top managers. Although managers may hope the values they espouse will directly influence employee behavior, employees dont always walk the talk, frequently being more influenced by enacted values, which represent the values and norms actually exhibited in the organization.

Level 3: Basic AssumptionsCore values of the organization. Basic assumptions, which are not observable, represent the core values of an organizations culturethose that are taken for granted and, as a result, are highly resistant to change. How Employees Learn Culture: Symbols, Stories, Heroes, & Rites & Rituals 1. Symbols: A symbol is an object, act, quality, or event that conveys meaning to others. In an organization, symbols convey its most important values. For instance, 3M has a trophy known as the Gold Step award, which is presented every year to employees whose new products achieve significant revenue levels. 2. Stories: A story is a narrative based on true events, which is repeatedand sometimes embellished uponto emphasize a particular value. Stories are oral histories that are told and retold by members about incidents in the organizations history. 3. Heroes: A hero is a person whose accomplishments embody the values of the organization. The accomplishments of heroes, past and present, are put forth to motivate other employees to do the right thing. The Ritz-Carlton beach attendant is an example of one such hero. 4. Rites & Rituals. Rites and rituals are the activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organizations life. Military units and sports teams have long known the value of ceremonies handing out decorations and awards, but many companies have rites and rituals as well. The Importance of Culture (four functions) Culture can powerfully shape an organizations long-term success. 1. 2. 3. 4. It gives members an organizational identity It facilitates collective commitment It promotes social-system stability It shapes behavior by helping employees make sense of their surroundings.

Cultures for Enhancing Economic Performance: Three Perspectives 1. The strength perspective: success results when a firm has a strong culture. The strength perspective assumes that the strength of a corporate culture is related to a firms long-term financial performance. A culture is said to be strong when employees adhere to the organizations values because they believe in its purpose. A culture is said to be weak when employees are forced to adhere to the organizations values through extensive procedures and bureaucracies. 2. The Fit Perspective: Success results when culture fits with the firms business context. The fit perspective assumes that an organizations culture must align, or fit, with its business or strategic context. A correct fit is expected to foster higher financial performance. 3. The Adaptive Perspective: Success results when culture helps the firm adapt. The adaptive perspective assumes that the most effective cultures help organizations anticipate and adapt to environmental changes.

Eleven Ways Cultures Become Embedded in Organizations 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Formal Statements Slogans & Sayings Stores, Legends, & Myths Leader reactions to crises Role Modeling, Training, & Coaching Physical Design Rewards, Titles, Promotions, & Bonuses Organizational Goals and Performance Criteria Measurable & Controllable Activities Organizational Structure Organizational Systems & Procedures

According to Chester I. Barnards classic definition, an organization is a system of consciously coordinated activities or forces of two or more people. The Organization: Three Types 1. For-profit organizations-These are formed to make money, or profits, by offering products or services. 2. Nonprofit organizations- These are formed to offer services to some clients, not to make profit (examples: hospitals, colleges) 3. Mutual-benefit organizations. These are voluntary collectives whose purpose is to advance members interests (examples: unions, trade associations). The Organization Chart (Figure 8.2) An organization chart is a box-and-lines illustration showing the formal lines of authority and the organizations official positions or work specializations. Two kinds of formation that organization charts reveal about organizational structure are (1) the vertical hierarchy of authoritywho reports to whom, and (2) the horizontal specializationwho specialized in what work. Common Elements of Organizations: Four Proposed by Edgar Schein 1. Common Purpose: The Means for Unifying Members The common purpose unifies employees or members and gives everyone an understanding of the organizations reason for being. 2. Coordinated Effort: Working Together for Common Purpose The common purpose is realized through coordinated effort, the coordination of individual efforts into a group or organizationwide effort. 3. Division of Labor: Work Specialization for Greater EfficiencyDivision of labor, also known as work specialization, is the arrangement of having discrete parts of a task done by different people.

4. Hierarchy of Authority: The Chain of CommandThe hierarchy of authority, or chain of command, is a control mechanism for making sure the right people do the right things at the right time. Finally, a principle stressed by early management scholars was that of unity of command, in which an employee should report to no more than one manager in order to avoid conflicting priorities and demands. Common Elements of Organizations: Three More That Most Authorities Agree On 5. Span of Control: narrow (or Tall) versus Wide (or Flat). The span of control, or span of management, refers to the number of people reporting directly to a given manager. There are two kinds of spans of control, narrow (or tall) and wide (or flat). Narrow Span of Control- This means a manager has a limited number of people reportingthree vice presidents reporting to a president, for example, instead of nine vice presidents. An organization is said to be tall when there are many levels with narrow spans of control. Wide Span of Control- This means a manager has several people reportingan organization is said to be flat when there are only a few levels with wide spans of control. 6. Authority, Responsibility, & Delegation: Line versus Staff Positions. With authority goes accountability, responsibility, and the ability to delegate ones authority. Accountability- Authority refers to the rights inherent in a managerial position to make decisions, give orders, and utilize resources. (Authority is distinguished from power) Authority means accountabilitymanagers must report and justify work results to the managers above them. Being accountable means you have the responsibility for performing assigned tasks. Responsibility is the obligation you have to perform the tasks assigned to you. Delegation is the process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy. Regarding authority and responsibility, the organization chart distinguishes between two positions, line and st