CHAPTER 3

THE MANAGEMENT ENVIRONMENT AND ORGANISATIONAL

CULTURE

The components of an organization’s culture are as complex as the different aspects of an

individual’s personality. Today’s managers must understand how the forces of an
organization’s internal and external environment influence, and sometimes constrain, its
productivity. Managers must realize that organizational culture and organizational
environment have important implications for the wayan organization is managed. Two
perspectives concerning the role that managers play in an organization’s success or failure have
been proposed.

The omnipotent view of management maintains that managers are directly responsible for the
success or failure of an organization. This view of managers as being omnipotent is consistent
with the stereotypical picture of the “take-charge” executive who can overcome any
obstacle in carrying out the organization’s objectives. When organizations perform poorly,
someone must be held accountable and according to the omnipotent view, that “someone” is
management. The symbolic view of management upholds the view that much of an
organization’s success or failure is due to external forces outside managers’ control. The
influence that managers do have is seen mainly as a symbolic outcome.

Organizational results are influenced by factors outside of the control of managers, including
the economy, market changes, governmental policies, competitors’ actions, the state of the
particular industry, the control of proprietary technology, and decisions made by previous
managers in the organization. The manager’s role is to create meaning out of randomness,
confusion, and ambiguity. According to the symbolic view, the actual part

that management plays in the success or failure of an organization is minimal. Reality suggests a
synthesis; managers are neither helpless nor all powerful. Instead, the more logical approach is to
see the manager as operating within constraints imposed by the organization’s culture and
environment

THE ORGANIZATION’S CULTURE

Just as individuals have a personality, so, too, do organizations. We refer to an
organization’s personality as its culture. Organizational culture is the shared values, principles,
traditions, and ways of doing things that influence the way organizational members act. This
definition implies:

• Individuals perceive organizational culture based on what they see, hear, or

experience within the organization.
• Organizational culture is shared by individuals within the organization.
• Organizational culture is a descriptive term. It describes, rather than evaluates.

Martins and Martins (2003) defines Organisational culture as a system of shared meaning
held by members, distinguishing the organisation from other organisations.

Arnold (2005) defines Organisational culture is the distinctive norms, beliefs, principles and
ways of behaving that combine to give each organisation its distinct character

TY PES OF CORPORATE CULTURE

In an organisation, corporate culture plays a vital role in bonding people. There are different
cultures present across organisations depending on their vision, philosophy, and values.
Moreover, there can be more than one culture existing in organisations. Irrespective of its type,
culture prevails in an organisation in the form of dominant culture and subculture. Dominant
culture is present predominantly in an organisation and shared by all its employees, while
subculture is limited to a particular department or division of the organisation. Apart from this,
there are various types of cultures that can be found in an organisation.

Mechanistic culture: This type of culture is static in nature where emphasis is laid on following
stringent rules and regulations. Organisations that inculcate this culture mainly adopt
bureaucratic administration to manage their employees. In such organisations, employees cannot
communicate their problems, doubts, and grievances to their superiors. All the decisions are
taken by the top management and passed to the lower management through specified channels.
In such culture, change is not embraced easily.

Organic culture: This type of culture focuses on the accomplishment of tasks through the
collective efforts of people rather than compliance with rules. Organisations that adopt organic
culture lay emphasis on teamwork. People working in such organisations are free to share their
ideas and convey their concerns to their superior.

Authoritarian culture: In this culture, top-level managers take all decisions that have to be
followed by subordinates. This culture is based on a belief that leaders have complete knowledge
and they cannot take any wrong decision. In case of disobedience, employees are penalized so
that the same mistake cannot be repeated in the future
CORPORATE CULTURE 55NMIMS Global Access - School for Continuing Education
Participative culture: Participative culture promotes total participation of people in the
decision-making process. This culture is based on an assumption that people are important to the
accomplishment of tasks, and if they are involved in decision making, the chances of their
resistance are reduced. Thus, in this culture, people are encouraged to freely share their opinions
and ideas.

Seven dimensions of an organization’s culture have been proposed

a) Innovation and risk taking (the degree to which employees are encouraged to be
innovative and take risks)
b) Attention to detail (the degree to which employees are expected to exhibit
precision, analysis, and attention to detail)
c) Outcome orientation (the degree to which managers focus on results or outcomes
rather than on the techniques and processes used to achieve those outcomes)
d) People orientation (the degree to which management decisions take into
consideration the effect on people within the organization)
e) Team orientation (the degree to which work activities are organized around teams
rather than individuals)
f) Aggressiveness (the degree to which people are aggressive and competitive rather
than easygoing and cooperative)
g) Stability (the degree to which organizational activities emphasize maintaining the
status quo in contrast to growth)

Strong versus Weak Cultures

Strong cultures are found in organizations where key values are intensely held and widely
shared. Whether a company’s culture is strong, weak, or somewhere in between depends on
organizational factors such as size, age, employee turnover rate, and intensity of original
culture. A culture has increasing impact on what managers do as the culture becomes stronger.
Most organizations have moderate-to-strong cultures. In these organizations, high
agreement exists about what is important and what defines “good” employee behavior. Culture
is transmitted and learned by employees principally through stories, rituals, material
symbols, and language.
An innovative culture should have these characteristics:

• Challenge and involvement

• Freedom
• Trust and openness
• Idea time
• Playfulness/humor
• Conflict resolution
• Debates
• Risk taking

The Organization’s Environment

The general environment includes these broad external conditions that may affect the
organization: economic, political/legal, sociocultural, demographic, technological, and global
conditions.

• Economic conditions include interest rates, inflation rates, changes in disposable

income, stock market fluctuations, and the general business cycle.
• Political/legal conditions include the general political stability of countries in which an
organization does business and the specific attitudes that elected officials have
toward business.
• Socio-cultural conditions include the changing expectations of society. Societal
values, customs, and tastes can change, and managers must be aware of these
changes.
• Demographic conditions, including physical characteristics of a population (e.g.,
gender, age, level of education, geographic location, income, composition of
family) can change, and managers must adapt to these changes.
• Technological conditions, which have changed more rapidly than any other element of
the general environment.
• Global factors include global competitors and global consumer markets. Environments
differ in their amount of environmental uncertainty, which relates to

(1) the degree of change in an organization’s environment and (2) the degree of
complexity in that environment
Degree of change is characterized as being dynamic or stable. In a dynamic environment,
components of the environment change frequently. If change is minimal, the environment
is called a stable environment.

The degree of environmental complexity is the number of components in an organization’s

environment and the extent of an organization’s knowledge about those components. If the
number of components and the need for sophisticated knowledge is minimal, the environment is
classified as simple. If a number of dissimilar components and a high need for sophisticated
knowledge exist, the environment is complex.

As uncertainty is a threat to organizational effectiveness, managers try to minimize

environmental uncertainty.