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Constraints and Challenges for the Global Manager

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Contrast the actions of managers according to the omnipotent and symbolic views.Describe the constraints and challenges facing managers in todays external environment.Discuss the characteristics and importance of organizational culture.Describe current issues in organizational culture.Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall 2-# Copyright 2014 Pearson Education2-# The Manager: Omnipotent or Symbolic?Omnipotent View of Management - the view that managers are directly responsible for an organizations success or failure.Symbolic view of Management - the view that much of an organizations success or failure is due to external forces outside managers control.Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# How much difference does a manager make in how an organization performs? The dominant view in management theory and society in general is that managers aredirectly responsible for an organizations success or failure. We call this perspective the omnipotent view of management. In contrast, others have argued that muchof an organizations success or failure is due to external forces outside managers control. This perspective is called the symbolic view of management.3Exhibit 2-1Constraints on Managerial Discretion

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# In reality, managers are neither all-powerful nor helpless. But their decisions and actions are constrained. As you can see in Exhibit 2-1, external constraints come fromthe organizations environment and internal constraints come from the organizations culture.4Exhibit 2-2Components of External Environment

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# The term external environment refers to factors and forces outside the organization that affect its performance. As shown in Exhibit 2-2, it includes several differentcomponents.

The economic component encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, and businesscycle stages.

The demographic component is concerned with trends in population characteristics such as age, race, gender, education level, geographic location, income, and family composition. The political/legal component looks at federal, state, and local laws as well as global laws and laws of other countries. It also includes a countrys political conditions and stability.

The sociocultural component is concerned with societal and cultural factors such as values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behavior.

The technological component is concerned with scientific or industrial innovations.

And the global component encompasses those issues associated with globalization and a world economy5The Economic EnvironmentGlobal economic recession - began with US home mortgage and soon affected businesses as credit markets collapsed. It didnt take long for these economic troubles to spread worldwide.Economic inequality - As economic growth has languished and sputtered, social discontent over growing income gaps has increasedCopyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# began with turmoil in home mortgage markets in the United States when many homeowners found themselves unable to make their payments. The problems soonaffected businesses as credit markets collapsed. All of a sudden, credit was no longer readily available to fund business activities. It didnt take long for these economictroubles to spread worldwide.

As economic growth has languished and sputtered, and as peoples belief that anyone could grab hold of an opportunity and have a decent shot at prosperityhas wavered, social discontent over growing income gaps has increased. The bottom line is that business leaders need to recognize how societal attitudes in theeconomic context also may create constraints as they make decisions and manage their businesses6The Demographic EnvironmentBaby Boomers - those individuals born between 1946 and 1964Gen Y (or the Millennials) - those individuals born between 1978 and 1994.Post-Millennials - the youngest identified age group, basically teens and middle-schoolersCopyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Demographic age cohorts are important to our study of management because large numbers of people at certain stages in the life cycle can constrain decisions and actions taken by businesses, governments, educational institutions, and other organizations.7How the External Environment Affects ManagersJobs and employment - As external environmental conditions one of the most powerful constraints managers face is the impact of such changes on jobs and employment

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# As any or all external environmental conditions (economic, demographic, technological, globalization, etc.) change, one of the most powerful constraints managers face is the impact of such changes on jobs and employmentboth in poor conditions and in good conditions. The power of this constraint became painfully obvious during the recent global recession as millions of jobs were eliminated and unemployment rates rose to levels not seen in many years. Economists now predict that about a quarter of the 8.4 million jobs eliminated in theUnited States during this most recent economic downturn wont be coming back and will instead be replaced by other types of work in growing industries8Environmental Uncertainty and ComplexityEnvironmental Uncertainty - the degree of change and complexity in an organizations environment.Environmental Complexity - the number of components in an organizations environment and the extent of the organizations knowledge about those components.Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Another constraint posed by external environments is the amount of uncertainty found in that environment, which can affect organizational outcomes. Environmental uncertainty refers to the degree of change and complexity in an organizations environment. The first dimension of uncertainty is the degree of change. If the components in an organizations environment change frequently, its a dynamic environment. If change is minimal, its a stable one.

The other dimension of uncertainty describes the degree of environmental complexity, which looks at the number of components in an organizations environment and the extent of the knowledge that the organization has about those components. An organization with fewer competitors, customers, suppliers, government agencies, and so forth faces a less complex and uncertain environment9Exhibit 2-3Environmental Uncertainty Matrix

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# In Exhibit 2-3 each of the four cells represents different combinations of degree of complexity and degree of change.

Cell 1 (stable and simple environment) represents the lowest level of environmental uncertainty and cell 4 (dynamic and complex environment) the highest. Not surprisingly, managers have the greatest influence on organizational outcomes in cell 1 and the least in cell 4. Because uncertainty poses a threat to an organizations effectiveness, managers try to minimize it.10Managing Stakeholder RelationshipsStakeholders - any constituencies in the organizations environment that are affected by an organizations decisions and actions.Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Stakeholders are any constituencies in the organizations environment affected by an organizations decisions and actions. These groups have a stake in or are significantlyinfluenced by what the organization does. In turn, these groups can influence the organization. The idea that organizations have stakeholders is now widely accepted by both management academics and practicing managers11Exhibit 2-4 Organizational Stakeholders

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Exhibit 2-4 identifies some of an organizations most common stakeholders. Note that these stakeholders include internal and external groups. Why? Because both canaffect what an organization does and how it operates. 12What Is Organizational Culture?Organizational Culture - The shared values, principles, traditions, and ways of doing things that influence the way organizational members act.Strong Cultures - Organizational cultures in which key values are intensely held and widely shared.Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Organizational culture has been described as the shared values, principles, traditions, and ways of doing things that influence the way organizational members act and that distinguish the organization from other organizations. In most organizations, these shared values and practices have evolved over time and determine, to a large extent, how things are done around here.

First, culture is a perception. Its not something that can be physically touched or seen, but employees perceive it on the basis of what they experience within the organization. Second, organizational culture is descriptive. Its concerned with how members perceive the culture and describe it, not with whether they like it. Finally, even though individuals may have different backgrounds or work at different organizational levels, they tend to describe the organizations culture in similar terms. Thats the shared aspect of culture.

Strong culturesthose in which the key values are deeply held and widely sharedhave a greater influence on employees than weaker cultures. The stronger a culture becomes, the more it affects the way managers plan, organize, lead, and control.13Exhibit 2-5Dimensions of Organizational Culture

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Research suggests seven dimensions that seem to capture the essence of an organizations culture. These dimensions (shown in Exhibit 2-5) range from low to high,meaning its not very typical of the culture (low) or is very typical of the culture (high). Describing an organization using these seven dimensions gives a composite pictureof the organizations culture. In many organizations, one cultural dimension often is emphasized more than the others and essentially shapes the organizations personalityand the way organizational members work.14Exhibit 2-6Contrasting Organizational Cultures

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# In many organizations, one cultural dimension often is emphasized more than the others and essentially shapes the organizations personality and the way organizational members work. For instance, at Sony Corporation, the focus is product innovation (innovation and risk taking). The company lives and breathes new product development and employees work behaviors support that goal.

In contrast, Southwest Airlines has made its employees a central part of its culture (people orientation). Exhibit 2-6 describes how the dimensions can create significantlydifferent cultures.

Exhibit 2-6 describes how the dimensions can create significantly different cultures.15Exhibit 2-7Strong Versus Weak Cultures

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# (Exhibit 2-7 contrasts strong and weak cultures.) The more employees accept the organizations key values and the greater their commitment to those values, the strongerthe culture. Most organizations have moderate to strong cultures, that is, there is relatively high agreement on whats important, what defines good employee behavior,what it takes to get ahead, and so forth. The stronger a culture becomes, the more it affects the way managers plan, organize, lead, and control.16Where Does Culture Come From?Organization founderVision and missionPast practicesTop management behavior Socialization - The process that helps employees adapt to the organizations culture.

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# The original source of the culture usually reflects the vision of the founders. Once the culture is in place, however, certain organizational practices help maintain it. For instance, during the employee selection process, managers typically judge job candidates not only on the job requirements, but also on how well they might fit into the organization. The actions of top managers also have a major impact on the organizations culture. Through what they say and how they behave, top managers establish norms that filter down through the organization and can have a positive effect on employees behaviors. Finally, organizations help employees adapt to the culture through socialization, a process that helps new employees learn the organizations way of doing things. For instance, new employees at Starbucks stores go through 24 hours of intensive training that helps turn them into brewing consultants (baristas).17Exhibit 2-8Establishing and Maintaining Culture

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Exhibit 2-8 illustrates how an organizations culture is established and maintained.18How Do Employees Learn Culture?Stories - Narratives of significant events or people, e.g. organization founders, rule breaking, reaction to past mistakes etc.Rituals - Sequences of activities that express and reinforce the important values and goals of the organizationCopyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Employees learn an organizations culture in a number of ways. The most common are stories, rituals, material symbols, and language. Organizational stories typically contain a narrative of significant events or people, including such things as the organizations founders, rule breaking, reactions to past mistakes, and so forth. Managers at Southwest Airlines tell stories celebrating employees who perform heroically for customers.

Corporate rituals are repetitive sequences of activities that express and reinforce the important values and goals of the organization. One of the best-known corporate rituals is Mary Kay Cosmetics annual awards ceremony for its sales representatives. The company spends more than $50 million annually on rewards and prize incentives19How Employees Learn Culture (cont.)Material Artifacts and Symbols - Convey the kinds of behavior that are expected, e.g. risk taking, participation, authority, etc.Language - Acts as a common denominator that bonds membersCopyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# When you walk into different businesses, do you get a feel for what type of work environment it isformal, casual, fun, serious, and so forth? These reactions demonstrate the power of material symbols or artifacts in creating an organizations personality. . Material symbols convey to employees who is important and the kinds of behavior (for example, risk taking, conservative, authoritarian, participative, individualistic, and so forth) that are expected and appropriate.

Over time, organizations often develop unique terms to describe equipment, key personnel, suppliers, customers, processes, or products related to its business. Newemployees are frequently overwhelmed with acronyms and jargon that, after a short period of time, become a natural part of their language. Once learned, this languageacts as a common denominator that bonds members.20How Does Culture Affect Managers?Cultural Constraints on ManagersWhatever managerial actions the organization recognizes as proper or improper on its behalfWhatever organizational activities the organization values and encouragesThe overall strength or weakness of the organizational cultureCopyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# Because an organizations culture constrains what they can and cannot do and how they manage, its particularly relevant to managers. Such constraints are rarely explicit.Theyre not written down. Its unlikely theyll even be spoken. But theyre there, and all managers quickly learn what to do and not do in their organization.21Exhibit 2-9Managerial Decisions Affected by Culture

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# As shown in Exhibit 2-9, a managers decisions are influenced by the culture in which he or she operates. An organizations culture, especially a strong one, influencesand constrains the way managers plan, organize, lead, and control. 22Creating an Innovative CultureWhat does an innovative culture look like?Challenge and involvementFreedomTrust and openness Idea timePlayfulness/humorConflict resolutionDebatesRisk-taking

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# In a recent survey of senior executives, over half said that the most importantdriver of innovation for companies was a supportive corporate culture. What does an innovative culture look like? According to Swedish researcher Goran Ekvall, it would be characterized by the following:

Challenge and involvementAre employees involved in, motivated by, and committed to long-term goals and success of the organization?

FreedomCan employees independently define their work, exercise discretion, and take initiative in their day-to-day activities?

Trust and opennessAre employees supportive and respectful to each other?

Idea timeDo individuals have time to elaborate on new ideas before taking action?

Playfulness/humorIs the workplace spontaneous and fun?

Conflict resolutionDo individuals make decisions and resolve issues based onthe good of the organization versus personal interest?

DebatesAre employees allowed to express opinions and put forth ideas forconsideration and review?

Risk-takingDo managers tolerate uncertainty and ambiguity, and areemployees rewarded for taking risks

23Exhibit 2-10Creating a Customer-Responsive CultureHow Do You Create a Customer Responsive Culture?Hire the right type of employees (those with a strong interest in serving customers)Have few rigid rules, procedures, and regulationsUse widespread empowerment of employeesHave good listening skills in relating to customers messages

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# What does a customer-responsive culture look like? Exhibit 2-10 describes five characteristics of customer-responsive cultures and offers suggestions as to what managers can do to create that type of culture.24Spirituality and Organizational CultureWorkplace Spirituality - a culture where organizational values promote a sense of purpose through meaningful work that takes place in the context of communityCharacteristics of a Spiritual OrganizationStrong sense of purposeFocus on individual developmentTrust and opennessEmployee empowermentToleration of employees expressionCopyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# What is workplace spirituality? Its a culture in which organizational values promote a sense of purpose through meaningful work taking place in the context of community. Organizations with a spiritual culture recognize that people have a mind and a spirit, seek to find meaning and purpose in their work, and desire to connect with other human beings and be part of a community25Review Learning Outcome 2.1Contrast the actions of managers according to the omnipotent and symbolic views.Omnipotent view - managers are directly responsible for an organizations success or failure. Symbolic view - much of an organizations success or failure is due to external forces outside managers control.Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# According to the omnipotent view, managers are directly responsible for an organizations success or failure. The symbolic view argues that much of anorganizations success or failure is due to external forces outside managers control. The two constraints on managers discretion are the organizations culture(internal) and the environment (external). Managers arent totally constrained by these two factors since they can and do influence their culture and environment.26Review Learning Outcome 2.2Describe the constraints and challenges facing managers in todays external environment. External environment - factors outside the organization that affect its performance including economic, demographic, political/legal, sociocultural, technological, and global. Impacts on jobs and employment, environmental uncertainty, and stakeholder relationships.

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# The external environment includes those factors and forces outside the organization that affect its performance. The main components include economic, demographic,political/legal, sociocultural, technological, and global. Managers face constraints and challenges from these components because of the impact they have on jobs and employment, environmental uncertainty, and stakeholder relationships.27Review Learning Outcome 2.3Discuss the characteristics and importance of organizational cultureSeven dimensions of culture: attention to detail, outcome orientation, people orientation, team orientation, aggressiveness, stability, and innovation and risk taking In organizations with strong cultures, employees are more loyal and performance tends to be higherCopyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# The seven dimensions of culture are attention to detail, outcome orientation, people orientation, team orientation, aggressiveness, stability, and innovationand risk taking. In organizations with strong cultures, employees are more loyal and performance tends to be higher. The stronger a culture becomes, themore it affects the way managers plan, organize, lead, and control.

The original source of a culture reflects the vision of organizational founders. A culture is maintained by employee selection practices, the actions of top managers, and socialization processes. Also, culture is transmitted to employees through stories, rituals, material symbols, and language. These elements help employees learn what values and behaviors are important as well as who exemplifies those values. The culture affects how managers plan, organize, lead, and control.28Review Learning Outcome 2.4Describe current issues in organizational culture.Innovative culture Customer-responsive cultureWorkplace spiritualityCopyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-# The characteristics of an innovative culture are challenge and involvement, freedom, trust and openness, idea time, playfulness/humor, conflict resolution,debates, and risk-taking.

A customer-responsive culture has five characteristics: outgoing and friendly employees; jobs with few rigid rules, procedures, and regulations; empowerment; clear roles and expectations; and employees who are conscientious in their desire to please the customer.

Workplace spirituality is important because employees are looking for a counterbalance to the stresses and pressures of a turbulent pace of life. Aging baby boomers and other workers are looking for something meaningful in their lives, an involvement and connection that they often dont find in contemporary lifestyles, and to meet the needs that organized religion is not meeting for some of them. Spiritual organizations tend to have five characteristics: strong sense of purpose, focus on individual development, trust and openness, employee empowerment, and toleration of employee expression.29Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2014 Pearson Education2-#