Om-ch14-8th-ed

Slide 14.1

Chapter Fourteen Organisational Strategy, Ethics and Responsibilities

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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The importance of strategy ‘(Strategy is)..The direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stake-holder expectations.’ Johnson et al.

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Explicit strategy • Corporate strategy serves to describe an organisation’s sense of purpose, and plans and actions for its implementation. • An explicit strategy for the business organisation is necessary for the following reasons: – The need for people to co-operate – To adapt to changing environmental conditions

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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People and strategy • The people dimension of strategy is concerned with: – People as a resource – People and behaviour – Organising people

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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The concept of synergy Positive synergy • Positive synergy results when the whole is greater than the sum of its component parts

Negative synergy • Negative synergy results when the whole is less valuable than its component parts

• 2+2=5

• 2+2=3

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Organisational goals • The goals of an organisation are the reason for its existence. • A goal is a future expectation, some desired future state. • The goals of an organisation determine the nature of its inputs and outputs, the series of activities through which outputs are achieved and interactions with its external environment. • The extent to which an organisation achieves its goals is a measure of its performance. Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Effective goals To be effective, goals need to: • • • •

Be understandable Contain a time element Be carefully drawn Be subject to alignment

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Formal and informal goals Formal goals

Informal goals

• Formal goals are officially stated • They encompass the reasons and purpose of the organisation

• Informal goals are individual, and based on both perception and personal motivation • They may be inferred from the actual decisions made and actions taken within the organisation

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Compatibility of goals

Figure 14.1

Compatibility of goals within an organisation Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Ideologies and principles Brech related the ideology of an organisation to: • Its ethical foundation – Basic principles governing external and internal relations

• Its organisational or operational foundation – The structure, operation and conduct of activities

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Mission statements Mission or Vision? • Mission statements set out the purpose and general direction for the organisation. • Vision provides the overall frame of reference within which mission statements are written and goals selected. Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Objectives and policy • Organisational goals are generally translated into objectives and policy: – Objectives set out more specifically the goals of the organisation, the aims to be achieved and the desired end-results. – Policy is developed within the framework of objectives and provides the basis for decisionmaking and the chosen course of action.

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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A systems view of goals and objectives

Figure 14.2

A systems view of organisational goals and objectives Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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The profit objective • Three inextricably linked objectives exist for business organisations: – To survive – To maintain growth and development – To make a profit

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Eight key areas for setting objectives: Drucker • • • •

Market standing Innovation Productivity Physical and financial resources

• Profitability • Manager performance and development • Worker performance and attitude • Public responsibility

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

Slide 14.16

The balanced scorecard • Combines qualitative and quantitative indicators of performance which… • Recognise the expectations of various stakeholders and… • Relate performance to a choice of strategy • As a basis for evaluating organisational effectiveness

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Strategy, opportunities and risks: Drucker • Strategy should be based on the priority of maximising opportunities. • Risks should be viewed as limitations on actions. • Selecting the right opportunities requires: – A focus on maximising opportunities rather than on minimising risks. – Scrutinising the characteristics of major opportunities collectively rather than in isolation. – Understanding opportunities and risks in terms of the appropriateness of their fit to the business. – Striking a balance between immediate and easy opportunities for improvement. Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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E-business strategies • Kermally asserts that e-business strategy is important because: – information can be shared more quickly and easily. – it facilitates human interaction. – it enables organisational resources and capabilities to be stretched strategically. – it provides global reach in marketing. – it allows consumers to shop 24 hours a day from any location. – it promotes economic growth. Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Corporate social responsibilities ‘(CSR refers to)…The comprehensive approach organisations take to meet or exceed the expectations of stakeholders beyond such measures as revenue, profit and legal obligations. It covers community investment, human rights and employee relations, environmental practices and ethical conduct.’ The All Party Parliamentary Group on Management

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Organisational stakeholders • Stakeholders can be considered under six main headings: – Employees – Providers of finance – Consumers – Community and environment – Government – Other organisations and groups

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Values and ethics • Ethics is: – To do with good and bad, or right and wrong – It seeks to understand what makes some things good and others bad – In ways that can be generalised to other cases – Business ethics is an example of applied ethics – It seeks to explore the implications of general ethics for the conduct of business Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Ethics and corporate social responsibility Shareholder-centred view

Stakeholder view

• Directors act as agents of the owners • There is a duty to maximise owner wealth • Other tests of ethical behaviour include common decency and distributive justice

• A wide range of stakeholder groups have an interest in the business • These groups should be taken into account by a business • Shareholders are just one such group • A business may be accountable to stakeholders Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Business ethics Ethical questions in business relate to: • Behaviour towards customers, suppliers, distributors, and competitors • The way employees are treated • The treatment of other stakeholder groups • The effect on the natural environment • Conduct in international operations

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

Slide 14.24

No single view of right or wrong • Deontological ethics: – emphasises duties, things that must be done or refrained from, irrespective of the results. – Goodness or badness is evident in the action itself.

• Consequentialist ethics: – The goodness or badness of an act is evident only in the results. – A ‘bad’ act can have ‘good’ results. – The means can be justified by the end result. Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Ethics – further approaches • Virtue ethics – based on an analysis of desirable human qualities that lie between undesirable extremes.

• Ethical relativism – holds that goodness and badness are largely or entirely determined by the prevailing values of the day.

• Emotivism – statements about ethics are essentially statements about the speaker’s attitudes. Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Codes of ethics • Codes of Conduct – Designed to cover the behaviour of members of the organisation when acting on its behalf.

• Codes of Ethics – Statements of ideals which relate to organisational values.

Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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Related legislation • Human Rights Act 1998 – Liberties enshrined in the European Convention on Human Rights.

• Public Interest Disclosure Act 1998 – The ‘Whistleblower’s Act’ provides some protection to those who expose organisational wrongdoing by their employer.

• Local Government Act 2000 – Requires local authorities to promote high standards of behaviour in public services.

• The Freedom of Information Act 2000 – Offers public access to information held by public authorities: the ‘right to know’. Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007

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An integrated approach • Descriptive approach – draws attention to the values and beliefs of people from different cultures.

• Normative approach – identifies sets of values and beliefs as a basis for making ethical decisions.

• Analytical approach – attempts to explore the relationship between the normative values and beliefs and other value systems or ideologies. Mullins, Management and Organisational Behaviour, 8th Edition, © Laurie J. Mullins 2007