Organizational Culture &

Various Stakeholders In A
Business
Key Concepts

• Definition of culture

• Culture and structures

• Informal organization

• Stakeholders

• Mendelow Matrix
Definition of culture

• By Hofstede: It is a collective programming of mind which distinguishes the

member of one category of people from another.

• By Edgar Schein: It is set of shared, taken for granted, implicit assumptions(implicit

assumption is an assumption that underlies a logical argument, course of action,

decision, or judgment that is not explicitly voiced nor necessarily understood by

the decision maker or judge.) that a group holds and that determines how it

perceives (assumes, thinks about) and reacts to its environment.

Organisational culture
The way we do things around here is known as organizational culture handy
Components of culture
1. A set of norms of behavior
2. Symbols and symbolic action
3. A set of shared values and beliefs
• Norms guide people’s behavior, suggesting what is or is not appropropriate e,g
informal dress code
• Symbols or symbolic actions e.g rituals such as buying the office a cake on your
birthday.
• Shared values and beliefs underlie the culture by identify what is important e.g a
belief in the importance of people as individuals.
Factors that shape the culture of the
organisation
• Size. How large is the organization in terms of turnover, physical size employees
numbers etc
• Technology. How technologically advanced is the organization either in terms of
its product or its productive processes
• Diversity . How diverse is the company either in terms of product range,
geographical spread etc
• Age. How old is the business or the managers of the business etc
• History. What worked in the past? Do decision makers have past successes to
draw upon, are they willing to learn from their mistakes
• Ownership. Is the organization owned by a sole trader? Are there a small or large
number of shareholders etc
Culture definition by Schein
In order to try and define culture schien describe three levels.
1. Artefacts. These are the aspects of culture that can easily seen e.g the way
people dress, interior etc
2. Espoused values. These are the strategies and goals of an organization including
company slogans Nike – Just Do It, Apple – Think Different. etc
3. Basic assumptions and values. These are difficult to identify as they are unseen
and exist mainly at the unconscious level
Practice
BlueBell company’s CEO, Jim, has always had a luxury car. It is a part of his
remuneration and he likes to tell the employees that ‘the better the company
performs, the shinier the car’. Employees believe that the car is a reward for
company’s outstanding performance. According to Schein, what level of culture has
been specified?
a) Espoused values
b) Artefacts
c) Basic assumptions and values
d) Attitudes
Culture & Structures

• Handy identifies four distinct types of cultural in an organizations

➢Power culture

➢Role culture

➢Task culture

➢Person culture
Power Culture

• Handy associated this type of culture with the Greek god Zeus.

Here, power is concentrated in the hands of one person. This culture

is often found in small businesses(sole trader). Rules and regulations

are very flexible. Fast but perhaps random decisions can be made.
Role Culture

• Handy linked this type of culture to Apollo. Structure is defined and operations are

predictable, rules and regulations are very strict in this culture. where individuals

know their job, report to their superior. This is characterized by a traditional

organizational structure in which jobs are arranged by function and seniority. Role

culture is suitable for a large scale or is adopted in a beau acratic organisations

Task Culture

• Handy linked this culture to the goddess Athena. Teams are formed

to solve particular problems. Power is derived from membership in

teams Here, the emphasis is on getting the job(target) done.

Flexibility and creativity is encouraged.

Person Culture

• Each individual(employees) is seen as valuable(important)as and

more important than the organization itself. Dionysus is the god of

person culture. In this culture the individual is the central point. The

organization is seen as serving the individuals within it. Normally this

culture is adopted in a service sector

Practice
ABC plc is a traditional organization, growing from a sole proprietorship 10 years
ago to a listed company now. Since operations are growing, the company has
adopted a more divisional role where every division has a senior manager leading
it. Which kind of culture will be found within ABC Plc?
a) Power culture
b) Task oriented culture
c) Role culture
d) Existential Culture/ person culture
Practice
Adam’s is the very old furniture manufacturing company. The current CEO, Tim
Adams, inherited this business from his father and has been the CEO since his
father passed away 15 years ago. Tim is a difficult, hard headed person and often
takes decisions regarding the company without consulting the rest of the board.
The culture at Adams’ is most likely to be:
a) Existential culture
b) Power culture
c) Task Culture
d) Role Culture
Hofstedes Cultural Dimensions
1. Power Distance: Power distance is simply the degree to which an authority figure can
exert power and how difficult it is for a subordinate to contradict them. High power
distance prevails in countries where subordinates are afraid of their boss. They usually
have paternalistic and autocratic style. Low power distance countries in which
subordinates and their boss have some sort of informal relation. (They usually have
democratic and consultative management style.)

High power distance is found in Centralized organizations with complex hierarchies.

There are large gaps in compensation. Low power distance is found in Flatter
organizations where supervisors and employees are considered almost as equals
2. Uncertainty Avoidance: Uncertainty avoidance describes an organization's
comfort level with risk-taking. Organizations need to be comfortable with analyzing
and taking risks as the higher the risk, the higher the return. Strong/high
Uncertainty avoidance: where people tend to avoid uncertain events, their
uncertainty to avoid risks. They do not face these events, Weak/low Uncertainty
avoidance: where people tend to face uncertain events, risk and they face these
risks to eliminate, in this people are more creative.
Organizations with high uncertainty avoidance may find themselves unwilling to
change and may lose market share if they don’t adapt to changing external factors.
Organizations that exhibit low uncertainty avoidance may be open to change and
innovation and may readily adapt to changing environmental factors.
3. Masculinity vs. Femininity: This refers to the way that behavior is characterized
as "masculine" or "feminine" within an organization. For example, an aggressive
and hyper-competitive culture is likely to be defined as masculine. Staff in feminine
culture will be motivated more by work life balance, quality of life and relationship
at work.
Organizations exhibiting high masculinity may show strong egos where feelings of
pride and importance are attributed to status. Money and achievement are
important factors and rewards are thought of in those terms. Organizations that
exhibit high femininity may focus more on interactive relationships at work with a
view to enhance the quality of working environment.
4. Individualism vs. Collectivism: This could best be described as the degree to
which an organization integrates a group mentality and promotes a strong sense of
community (as opposed to independence) within the organization. It means that in
a few countries people work individually whereas in other countries the same work
is carried out in the form of groups or collectively.
A high IDV indicates weak interpersonal connection among those who are not part
of a core "family." Here, people take less responsibility for others' actions and
outcomes. In a collectivist society, however, people are supposed to be loyal to the
group to which they belong, and, in exchange, the group will defend their interests.
The group itself is normally larger, and people take responsibility for one another's
wellbeing.
Practice
Janet has recently been hired by Bexace as the operations manager. She quickly
discovers that her staff seem unwilling to make major decisions for themselves and
expect her to monitor their work closely. Which of the following features of
Hofstede’s cultural dimensions is Jane’s department demonstrating?
a) High individualism
b) Low power-distance index
c) High uncertainty avoidance
d) Femininity
Practice
Charcoal Ltd’s employees are skilled and like to be given the space to achieve tasks
according to their knowledge. They have always disliked any interference from the
managers in accomplishment of tasks. According to Hofstede, this means that the
culture is:
a) Masculine
b) High uncertainty avoidance
c) Low power-distance
d) Collective
Informal Organization

• A type of structure in which rules, regulations, specific duties, and

formal hierarchy is not designed; People usually have informal

relation like friends group.

Features of an informal organization

• The speed of communication is faster.

• Employees are more committed.

• Informal organization gets work done quickly and efficiently.

because of level of co-operation between employees.

• It is more flexible as it is not bound by formal rules and regulations.

• There is greater knowledge sharing among employees.

there are other, less attractive effects of an
informal structure as well like:
• Social groupings may act collectively against organizational interests, as
employees may be engaged in interaction rather than performing their tasks
leading to reduced efficiency.
• The grapevine is often inaccurate and can carry morale-damaging for employees
that get to hear inaccurate details about the organization or themselves from
others.
• The informal organization can become too important in fulfilling employees'
needs: individuals can suffer acutely when excluded from cliques(means group of
people or circle) and networks.
• Informal work practices might 'cut corners', violating safety or quality assurance
measures. Informal structures may encourage employees to overlook compliance
with safety rules and other regulations.
Stakeholders Goals & Objectives
• A stakeholder is a person, group, organization or a system that
affects or can be effected by an organization’s actions. Some types
of stakeholders
➢Internal

➢Connected

➢External
Note about internal stakeholders
Internal and connected stakeholders are primary stakeholders & they have a
contractual relationship with organization where as external stakeholders are
secondary stakeholders and they do not have a contractual relation with the
organization.
Internal stakeholders
• Employees
• Managers
• Owner
• Partners
• Directors (executive director)
Note about connected stakeholders
• Connected stakeholder add these two examples in previous diagram
Competitors
Directors (non executive directors NED)
Note about external stakeholders
• Pressure group. A group that tries to influence public policy in the interest of a
particular cause
• Add this example in the previous diagram Trade unions – interested in protecting
their members. Definition of trade union is an organized association of workers in
a trade, group of trades, or profession, formed to protect and further their rights
and interests or A trade union is a group of employees who join together to
maintain and improve their conditions of employment. Most trade unions are
independent of employers but have close working relationships with them.
Practice
Which of the following statements is true about connected stakeholders?
a) Connected stakeholders do not have a financial link with the organization.
b) Connected stakeholders have a financial link with the organization.
c) Connected stakeholders are concerned with the daily operations of a business
d) Pressure groups are an example of connected stakeholders
Mendelow Matrix

• Medlow’s matrix is a method for performing stakeholder mapping.

Practice
For DigiTech, Tom Fire is a billionaire investor who bought millions of the
company’s shares. His holdings amount to close to 10 percent of DigiTech’s stock.
Tom closely follows the operations of the company and actively pushes for reforms.
Which category of stakeholders does Tom Fire belong to?
a) Minimum Effort
b) Keep Informed
c) Keep Satisfied
d) Key Player
Agency theory
• Shareholders are the owners or principals in an organization and are the primary
fund providers while Directors are the agents who are hired by shareholders to
run the company on their behalf.
Practice
Andrea is new to ABC Ltd and doesn’t fully understand the agency theory. Which of
the following is the main objective of the agency theory?
a) Address the nature of relationship and problems between the principal and the
agent
b) Control agency related costs
c) Ensure profit maximization of organizations
d) Control agents
Practice
Which of the below two stakeholder groups are most likely to have similar
objectives?
a) Creditors and shareholders
b) Customers and employees
c) Suppliers and environment activists
d) None of the above