Organizational Theory, Design, and Change: Stakeholders, Managers, and Ethics
Organizational Theory, Design, and Change: Stakeholders, Managers, and Ethics
Organizational Theory, Design, and Change: Stakeholders, Managers, and Ethics
Chapter 2
Stakeholders, Managers, and Ethics
2- 1
Learning Objectives
1. Identify the various stakeholder groups and their interests on an organization 2. Understand the choices and problems inherent in distributing the value an organization creates 3. Appreciate who has authority and responsibility at the top of an organization, and distinguish between different levels of management
Copyright 2007 Prentice Hall
2- 2
2- 3
Organizational Stakeholders
Stakeholders: people who have an interest, claim, or stake in an organization Inducements: rewards such as money, power, and organizational status Contributions: the skills, knowledge, and expertise that organizations require of their members during task performance
Copyright 2007 Prentice Hall
2- 4
2- 5
Inside Stakeholders
People who are closest to an organization and have the strongest and most direct claim on organizational resources
Shareholders: the owners of the organization Managers: the employees who are responsible for coordinating organizational resources and ensuring that an organizations goals are successfully met The workforce: all non-managerial employees
Copyright 2007 Prentice Hall
2- 6
Outside Stakeholders
People who do not own the organization, are not employed by it, but do have some interest in it
Customers: an organizations largest outside stakeholder group Suppliers: provide reliable raw materials and component parts to organizations The government
Wants companies to obey the rules of fair competition Wants companies to obey rules and laws concerning the treatment of employees and other social and economic issues
Copyright 2007 Prentice Hall
2- 7
Trade unions: relationships with companies can be one of conflict or cooperation Local communities: their general economic well-being is strongly affected by the success or failure of local businesses The general public
Wants local businesses to do well against overseas competition Wants corporations to act in socially responsible way
Copyright 2007 Prentice Hall
2- 8
For an organization to be viable, the dominant coalition of stakeholders has to control sufficient inducements to obtain the contributions required of other stakeholder groups
Copyright 2007 Prentice Hall
Shareholders: return on their investment Customers: product reliability and product value Employees: compensation, working conditions, career prospects
2- 9
Competing Goals
Organizations exist to satisfy stakeholders goals But which stakeholder groups goal is most important? In the U.S., the shareholders have first claim in the value created by the organization However, managers control organizations and may further their own interests instead of those of shareholders Goals of managers and shareholders may be incompatible
Copyright 2007 Prentice Hall
2-10
Allocating Rewards
Managers must decide how to allocate inducements to provide at least minimal satisfaction of the various stakeholder groups Managers must also determine how to distribute extra rewards Inducements offered to shareholders affect their motivation to contribute to the organization
Copyright 2007 Prentice Hall
2-11
Inside directors: hold offices in a companys formal hierarchy Outside directors: not full-time employees
2-12
Chain of command: the system of hierarchical reporting relationships in an organization Hierarchy: a vertical ordering or organizational roles according to their relative authority
Copyright 2007 Prentice Hall
2-13
2-14
2-15
2-16
2-17
Other Managers
Divisional managers: managers who set policy only for the division they head Functional managers: managers who are responsible for developing the functional skills and capabilities that collectively provide the core competences that give the organization its competitive advantage
Copyright 2007 Prentice Hall
2-18
2-19
2-20
Very difficult to evaluate how well the agent has performed because the agent possesses an information advantage The agent has an incentive to pursue goals and objectives that are different from the principals
2-21
The forms of control which align the interests of principal and agent so that both parties have the incentive to work together to maximize organizational effectiveness
2-23
2-24
2-25
Are higher for organizations with a reputation for illegality Are lower for organizations with a reputation for honest dealings
Copyright 2007 Prentice Hall
2-26
2-27
2-28
2-29
2-30
2-31