Culture- differentiates good organizations from bad ones. ◦ Shared things ◦ Shared sayings ◦ Shared actions ◦ Shared feelings COMPOSIOTION OF CUTURE: ◦ Beliefs ◦ Values
“ culture as a strength can also be a weakness” Characteristics of weak culture: Many subcultures Few values & behavioral norms Rare traditions Lack of sense of commitment, loyalty, identity Politicized environment Hostility to change Characteristics of strong culture: Explicit set of values & principles Considerable time devoted by the management for communication Values shared widely across the organization
Factors contributing for strong culture: A founder or an Influential leader who established desired values Sincere and dedicated commitment to operate business of the organization according to these desired values Genuine concern for the well-being of the organizations stake holders
Approaches to create strategy supportive culture:4) To ignore corporate culture5) To adapt strategy implementation to suit corporate culture6) To change corporate culture to suit strategy requirements7) To change strategy to fit the corporate culture
All corporate culture include a political component, so all organizations are political in nature. Organizational members bring with them their likes and dislikes, views and opinions, prejudices and inclinations, when they enter into organization. Managerial behavior cannot be purely rational and, therefore, an understanding is to be acquired of how corporate politics works and how the use of power is to be made for effective strategic management.
Power is defined as ‘the ability to influence others’ and corporate politics is ‘the carrying out of activities not prescribed by policies for the purpose of influencing the distribution of advantages within the organization. Managers derive power within an organization from five types of sources.3. Reward power arises from the ability of managers to reward positive outcomes4. Coercive power arises from the ability of managers to panelize negative outcomes5. Legitimate power arises from the ability of managers to use position to influence behavior6. Referent power arises from the ability of managers to create liking among subordinates due to charisma or personality7. Expert power arises from the managers’ competence, knowledge and expertise that is acknowledged by others
The nature of organization itself creates the conditions for power and politics to manifest. For instance, the manner in which the organization structure is created leads to power and politics. Since material rewards, promotions, prestige and ego are involved, each organization more or less is affected by corporate politics. The exercise of power and use of politics has two connotations: negative and positive. When viewed negatively, power and politics are means for domination, manipulation and subjugation. They entail self-serving behavior involving deception and dishonesty for achieving individual or group interest, leading to conflict and disharmony in the organization.
When taken positively, power and politics are means for achieving organizational objectives. The use of power and politics is the means to resolve conflicts and bridge genuine differences of opinions through a process of negotiations and seeking collaboration. Political considerations and use of power, therefore, are a part of behavioral implementation by strategists.
Strategy implementation is basically about change management. Therefore corporate politics and use of power have a definite role to play in strategy implementation. Politics and power affect the way a strategy is formulated and implemented. A manager cannot effectively formulate and implement strategy without being perceptive about company politics. Political consideration affect which type of objectives take precedence over others and what strategy the firm has to choose.
Generally, there is more politics in implementing strategy than in formulating it. In implementation, politics and power affect a number of elements. The nature of strategy implementation requires consensus building, managing coalitions and creating commitments. Few examples, resource allocation is ultimately a rational- political decision, which results in the sharing of scares resources among different organizational units, structure result in the distribution of authority and responsibility and decides how power will be exercised, and corporate culture is itself partly, the outcome of the use of politics and power. Having an understanding of the use of politics and power, strategist can perform the tasks of strategic management better. ‘Indeed, having astute political skill is a definite and even a necessary, asset for a general manager to have in orchestrating the whole strategic process.
The typical approaches to a strategic use of power and politics may involve one or more of the tactics mentioned below. First of all, to accept the inevitability of politics being there in the organization. Understand how an organization’s power structure works, who wields real power and influence and who are the individuals and groups whose opinions carry weight and cannot be disregarded. To be sensitive and alert to political signals emanating from different part of the organization.
To know when to tread softly and rely on coalition management and consensus-building and when to push through decisions and actions by a selective and judicious use of ‘Machiavellian’ methods. To lead strategy and not to dictate it, being patient till the consensus emerge. To let most negative decisions emerge as a group consensus rather than as a directive from the top To gather support for acceptable proposals and let the unaccepted ideas die a natural death To reward organizational commitment and penalize negative or indifferent attitude To practice principled politics and use openness and honesty to counter unprincipled politics
In the Indian context, the presence of politics and use of power are, perhaps, more visible than in other culture. This may be due to two factors: the nature of Indian society and the higher level of enviousness exhibited by Indian managers J.L. Pearce describe India as a nonfacilitative organization context The person-oriented nature of Indian society suggests an emphasis on particularistic rather than universalistic treatment of employees, which leads to reliance on personal characteristics in hiring, promoting and rewarding employees.
Employees feel that competence alone may not enable them to progress in their career. Some may resort to manipulative or ingratiatory behavior. One research study in Indian firms found that employees’ actual political behavior was related to feelings of alienation and interpersonal mistrust in the work place. Another factor could be pervasive enviousness exhibited in Indian organizations. Manager have not only to deal with – and be affected by – intracorporate politics, but also intercorporate politics between rival
At a higher level, Indian companies are plagued with politics between associations and federations of business and industry, public versus private sector, small versus large sector, multinational versus local firms, and technocrats versus bureaucrats. In such condition, strategists have to be aware of not only internal political consideration but also the politics and power play present in other organization, particularly government departments and ministries, with whom they have to deal with on a continual basis.
PERSONAL VALUES AND BUSINESS ETHICS Values Personal values refer to a conception of what an individual or groups regard as desirable. A value is a view of life and a judgement of what is desirable, which is very much a part of person’s personality and a groups morale. e.g A benign attitude to labour welfare is a value which may prompt an industrialist to do much more for workers than what labour laws stipulate. Service mindedness is a value, manifests in better customer satisfaction Personal values imbibed from parents, teachers, elders and an individual grows, values are adapted and refined in light of new knowledge and experience. Within organization, values are imparted by founder entrepreneur or a dominated CEO and these remain in some form for a long time after a person is not there 17
Business ethics In the discipline of management studies, business ethics is The study of how personal moral norms apply to activities and goals of a commercial enterprise. It is not a separate moral standard, but the study of how the business context poses its own unique problems for the moral person who acts as the agent of this system. Practically, business ethics operates as a system of values and is concerned primarily with the relationship of business goals and techniques to “specifically human ends” means viewing the needs and aspirations of individuals not merely as individuals but as a part of society It also means the realization of the personal dignity of human beings. A major task of leadership is to inculcate personal values and impart a sense of business ethics to the organizational members. At one end, values and ethics shape the corporate culture and dictate the way how politics and power will be used, and at the other end, clarify the social responsibilities of the organization. 18
Importance of values and ethics Increased awareness around the world about ethical practices in business. International organizations like world bank and IMF concerned whether aid provided is used for intended purpose and not fritterd away by corrupt Govt officials. Transparency international brings out annual rating of countries on an index of corruption that serves as guideline for foreign investors and international donor agencies. Corruption in industry is a major by-product of degradation of values and ethics, which is also related to discretionary powers of regulatory system designed and administered by an unholy alliance of bureaucrats and politicians. 19
Values, ethics and strategy The intentions of individuals, that is, their “purity of mind” as decision makers within an organization matter a lot in strategic management. There has to be a right connection between values, ethics and strategy. The decisions should not only be on the basis of purely economic reasons but also consider values and ethics. Business ethics is considered to integrate core values such as honesty, trust, respect, fairness into strategic management, policy making, practicing management and decision making. It has been percieved as a set of a legally driven codes, in the form of a list of do’s and don’ts for the company executives, which have to be complied with. Business ethics is being identified as a major source of competitive advantage. 20
Values are personal in nature ( e.g. belief in providing customersatisfaction and being a good paymaster ) while ethics is a generalisedvalue system (e.g. avoiding discrimination in recruitment and adoptingfair business practices )business ethics can provide the general guidelines based on whichstrategic management can operate.Values, however, offer alternatives to choose from.Organizations derive values and ethics from their corporate culture.Corporate culture is the outcome of shared assumption that individualmembers of the organisations have. The right set of values and code of ethics have to be formulated by anorganization on the basis of founding philosophy, cherished traditions,norms of ethical behavior and social requirements.
Inculcating values and ethics Considering values and ethics in recruitment and selection to ensure compatibility of the character traits of potential employees to the ethical system of the organization. Incorporating the statement of values and code of ethics into employee training and educational programmes . Example setting by top management in terms of actions and behaviour that reinforce the values. Communication of values and code of ethics through wide publicity and explanation of compliance procedures. Constant monitoring of compliance by superior staff and top management. Consistent nurturing of values within the organization through their integration into policies, practices and actions. Paying special attention to those parts of the organization that are susceptible to ethically- sensitive activities such as purchase and procurement, dealing with Govt and other external agencies. 22
Reconciling divergent values Strategists have to reconcile divergent values and if necessary. A typical case of value divergence may arise while setting objectives and determining the precedence of different objectives. One group- production oriented objectives, say , standardization and mass production Another group- Marketing related objectives, say, quality, variety and small lot production CEO should reconcile these divergent values in the light of strategic requirements and environmental considerations. Modifying values to create consistency Modification of values is frequently required in strategy implementation It is difficult, if not impossible, to change, like culture. A judicious use of politics and power, redesigning of corporate culture and making systematic changes in the organization can help to modify the values gradually. 23
Strategic planning provides answer to what organization “might & can do” Personal values determines what organization “wants to do” Social responsibility relates to what organization “ ought to do” So social responsibility should be made explicit and meaningful
View 1 View 2 Function of business is Business organizations just to achieve are part of society economic efficiency Have to serve societal and maximize profit interests and not just Social functions should profit be left to institutions Allocate resources for of society this purpose
There are four models of CSR operating in India :2. Gandhian model = voluntary commitment3. Nehruvian model = state driven policies4. Milton Friedman model = owner objectives5. Freeman model = stake holders responsiveness
1. Market based pressures and incentives2. Civil society pressures3. Regulatory environment
Generally top management decides on major decisions taken in CSR So alignment of social responsiveness with strategic management is necessary Hence role of strategists will be affected by social responsiveness