EXECUTIVE DIPLOMA IN HUMAN

RESOURCE MANAGEMENT

ASSIGNMENT

MODULE : 1 – Principle & Practice of Management

SUBMITTED BY : EDHRM 27-02

(Matrix Number Only)
CLASS : EDHRM 27

LECTURER : Prof. Dr. Abdul Jumaat Mahajar

SUBMISSION DATE : 20 December 2009

MARK 1
:_____________________________
Assignment Question :

The Organization Environment and culture :

How it affect the worker’s productivity

CONTENT

Introduction
Research
What is Organizational Culture
The Organizational Environment Relationship
Internal Environment – Organizational Culture
Why do Organization Culture matters?
How does Organization Culture affects
Employee’s productivity
Environment & Culture – Types of Culture
Conclusion
List of References : Acknowledgement

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 Introduction
An organizations’ success will depend on the people, as the people is the

life to any organization. Many factors influenced an organization, and the main

factors influencing the people within the organization would be the environment

and the culture.

Each element within each factor will affect on the productivity of the workers that

will reflect on the organization’s including the organization’s image, market

share, profit, etc.

In this report, we will discuss on how an organization’s environment and culture

will affect the employee’s productivity.

We will zoom in to the factors that influence and contribute on the success of an

organization.

What is Organizational Environment

An organizational environment consist of 2 environment – internal and external .

The external organizational environment include all elements existing outside

the boundary of the organization that have the potential to affect the

organization, as follows:

• Competitors

• Resources

• Technology

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 • Economic Conditions

The External Organizational Environment consist of 3 layers namely; General

environment, Task Environment and Internal Environment

GENERAL ENVIRONMENT

This environment is the layer of the external environment that affects the

organization indirectly. It includes social, economic, legal/political, international,

natural and technological factors that influence all organizations about equally.

These events do not directly change day-to-day operations, but it do affect all

organizations eventually

Socio-cultural Dimension

This dimension represents the demographic characteristics norms, customs,

and values of the population within the organizational operate.

Important socio-cultural characteristic includes geographical distribution and

population density, age and education levels.

Today’s demographic profiles are the foundation of tomorrow’s workforce and

consumer.

Economic Dimension

Represents the general economic health of the country or region in which the

organization operates. Consumer purchasing power, the unemployment rate,

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and interest rates are part of an organization’s economic environment. It has

become exceedingly complex and creates enormous uncertainty for managers

as the organizations today are operating in global environment

Legal-Political Dimension

Legal Political dimension includes government regulations at the local, state and

federal levels, as well as political activities designed to influence company

behavior Pressure groups i.e. interest group that works within the legal political

framework to influence companies to behave in socially responsible ways has to

be recognized

International Dimension

Referring to the portion of the external environment that represents events

originating in foreign countries and opportunities for companies in other

countries.

The international environment provides new competitors, customers, and

suppliers and shapes social, technological and economic trends. The global

environment represents a complex, ever changing and uneven playing field

compared with the domestic environment. Organization, which focuses only

about the domestic environment, must learn new rules to remain competitive

and economic factors not only in their home countries but in other countries as

well,

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Natural Dimension

The natural dimension includes all elements that occur naturally on earth,

including plants, animals, rock, and natural resources such as air, water and

climate Organizations have become increasingly sensitive to the earth’s

diminishing natural resources as in response to pressure group from

environmental advocates., and as a result, the natural dimension of the external

environment is growing to its importance.

The natural dimension is different from other sectors of the general environment

because it has no voice of its own. Organization need to meet needs in the

natural environment may come from other sectors, such as government

regulation, consumer concerns, bad press in the media, competitor’s action or

even employees.

For example, environmental groups advocate various action and policy goals

that include reduction and clean up of manmade pollution, development of

renewable energy resources and sustainable use of scarce resources such as

water, land and air.

More recently, there has been a strong concern about climate change such as

global warming caused by greenhouse gases, most notably carbon dioxide.

Technological Dimension

This dimension includes scientific and technological advancements in the

industry and society .This dimension creates massive changes for organization

in all industries in the recent year. For example, 20 years ago, many

organizations does not use desktop computers, but now, it is a necessity and
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computer networks, internet access, handheld devices, videoconferencing

capabilities , cell phones and laptops are the minimum tools for doing business.

More systems are being network to be able to perform virtual transactions, and

organization are moving towards automated and computerized system in many

areas within the organization be it in Human Resource, Finance & Accounts,

Sales & Marketing and Operations.

Task Environment

Task environment includes those sectors that have direct working

relationship with the organization, among them customers, competitors,

suppliers and the labor market that directly influenced its basic operations and

performance. It includes competitors, suppliers, customers and labor market.

Customers

People and organizations in the environment that acquire goods or services

from the organization are customers.

As recipients of organizations output, customers are important because they

determine the organization’s success. Patients are the customer of hospital,

students the customer of schools, and traveler the customers of airlines.

Competitors

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The other organizations in the same industry or type of business that provides

goods or services to the same set of customers are referred a s competitor.

Suppliers

Suppliers provide the raw materials in the organization uses to produce its

output. A

Many companies are using fewer suppliers and trying to build good relationships

with them so that they will receive high quality parts and materials at lower

prices. The relationship between manufacturers and suppliers has traditionally

been an adversarial one, but managers are finding that cooperation is the key to

saving money, maintaining quality and speeding products to market.

Labor Market

Labor market represents people in the environment who can be hiring to work

for the organization. Ever organization needs a supply of trained, qualified

personnel, Unions, employee associations and the availability of certain classes

of employees can influence the organization’s labor market. Labor market forces

affecting organizations right now with

1) The growing need for computer literate knowledge workers

2) The necessity for continuous investment in human resource through

recruitment, education and training to meet the competitive demands of

the borderless work

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 3) The effects of international trading blocs , automation outsourcing and

shifting facility locations on labor dislocation, creating unused labor pools

in some areas and labor shortages in others

Changes in these various sectors of the general and task environments can

create tremendous challenges, especially for organizations operating in

complex, rapidly changing industries.

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The Organization – Environment Relationships

The reason why organization care so much about factors in the external

environment is that the environmental creates uncertainty for organizations

managers and they must respond by designing the organization to adapt to the

environment

Environmental Uncertainty

Organizations must manage environmental uncertainty to be effective.

Uncertainty means that managers to not have sufficient information about

environmental factors to understand and predict environmental needs and

changes.

Internal environment

This refers to environment that includes elements within the organization’s

boundaries. It is composed of current employees, management and corporate

culture, which define employee behavior in the internal environment and how

well the organization will adapt to the external environment.

Adapting to the environment

IF an organization faces increased uncertainty towards competition, customers,

suppliers or government regulations, managers in an organization can use

several strategies to adapt to these changes, including boundary-spanning

roles, inter-organizational partnership and mergers or joint ventures.

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Boundary-Spanning Roles

Boundary-spanning roles and departments link and coordinate the organization

with key elements in the external environment.

Boundary spanners serve two purposes for the organization:

• Detect and process information about changes in the environment, and

they represent the organization’s interest to the environment. Employees

in engineering or research and development scan for new technological

developments, innovations and raw materials, People in departments

such as marketing and purchasing span the boundary to work with

customers and suppliers ,both face to face and through market research.

Some organizations are staying in touch with customers through the

internet, such as monitoring websites, communicating with customers on

company web sites and contracting with market research firms that

monitor the rapidly changing marketplace trends.

• Competitive intelligence. It refers to activities that to get as much

information as possible about one’s rivals. Competitive intelligence

specialists use web sites, commercial database, financial reports, market

activity, news clippings, trade publications, personal contacts and

numerous other sources to scan an organization’s environment and spot

potential threats or opportunities.

Boundary spanning is an increasingly important task in organizations because

environmental shifts can happen so quickly in today’s world. Managers need

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good information about their competitors, customers and other elements of the

environment to make good decisions. The most successful companies involve

everyone in boundary spanning activities.

Inter-organizational partnership

This strategy has gained is popularity over time. This is to reduce boundaries

and increase collaboration with other organizations. Companies are joining

together to become more effective and to share scarce and limited resources.

The partnership is based on trust and the ability of partners to work out win-win

solutions to conflicts so that everyone profits from the relationship. This is to

reduce costs and add value to both sides, rather than trying to get all the

benefits from each own company.

This new model is characterized by a high level of information sharing, including

e-business links for automatic ordering, payments and other transactions.

Mergers and Ventures

A merger occurs when two or more organization combined to become one.

Joint Ventures

Joint Ventures involve a strategic alliance or program by two or more

organizations. This typically occurs when a project is too complex, expensive or

uncertain for one firm to handle alone.

Joint ventures are on the rise as companies strive to keep pace with rapid

technological change and compete in the global economy.

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INTERNAL ENVIRONMENT- ORGANIZATION CULTURE

Henry Mintzberg said “Culture is the soul of the organization — the beliefs

and values, and how they are manifested. I think of the structure as the

skeleton, and as the flesh and blood. And culture is the soul that holds the

thing together and gives it life force.”

Organizational culture is describes a system of shared assumptions, values, and

beliefs that helps individuals understand which behaviors appropriate or

inappropriate within an organization. Cultures can be a source of competitive

advantage for organizations. Strong organizational cultures can be an

organizing as well as a controlling mechanism for organizations. Culture is

largely invisible to individuals.

Organizational culture is a young but fast-growing area within management.

Organizational culture is passed to new employees through the socialization

process, influences behavior at work, and operates at different levels.

It is shaped by four components: the founders’ values, the industry and business

environment, the national culture, and the senior leaders’ vision and behavior.

It influences organizational structure and the practices, policies, and procedures

implemented in pursuit of organizational goals, which in turn affect a variety of

group and social processes.

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Organizational culture consists of three layers – observable artifacts, values and

basic assumptions.

Artifacts – visible and observable; acronyms, manner of dress, awards, myths

and stories,tangible aspects of organizational culture.

The artifacts reflecting such values might be an executive “open door” policy, an

office layout that includes open spaces and gathering areas equipped with pool

tables, and frequent company picnics.

Values are shared principles, standards, and goal, enduring belief in a mode or

conduct or end-state. Normally it is expressed in the form of Stories, Rituals

Material Symbols or Language.

Basic Assumptions is unobservable; represent the core of organizational

culture. It reflect beliefs about human nature and reality. They become, taken for

granted over time and are highly resistant to change.

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These values have a strong influence on employee behavior as well as

organizational performance. In fact, the term organizational culture were made

popular in the 1980s when Peters and Waterman’s best-selling book In Search

of Excellence made the argument that company success could be attributed to

an organizational culture that was decisive, customer-oriented, empowering, and

people-oriented. From then onwards, organizational culture has become the

subject of numerous research studies, books, and articles

Even though it affects all employee behaviors, thinking, and behavioral patterns,

individuals tend to become more aware of their organization’s culture when they

have the opportunity to compare it to other organizations. It is relating to the

second of the three facets that compose the P-O-L-C function of organizing.

The organizing function involves creating and implementing organizational

design decisions. The culture of the organization is closely link to organizational

design. For instance, a culture that empowers employees to make decisions

could prove extremely resistant to a centralized organizational design,

hampering the manager’s ability to enact such a design. However, a culture that

supports the organizational structure (and vice versa) can be very powerful.

Why Does Organizational Culture Matter?

Culture, or shared values within the organization, may be related to

increased performance.

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An organization’s culture may be one of its strongest assets or its biggest

liability. In fact, it has been argued that organizations that have a rare and hard-

to-imitate culture enjoy a competitive advantage. In a survey conducted by the

management-consulting firm Bain & Company in 2007, worldwide business

leaders identified corporate culture to be as important as corporate strategy for

business success.

This comes as no surprise to leaders of successful businesses, who are quick to

attribute their company’s success to their organization’s culture.

Researchers found a relationship between organizational cultures and company

performance, along with respect to success indicators such as revenues, sales

volume, market share, and stock prices. At the same time, it is important to have

a culture that fits with the demands of the company’s environment. To the extent

that shared values are proper for the company in question, company

performance may benefit from culture.

For example, if a company is in the high-tech industry, having a culture that

encourages innovativeness and adaptability will support its performance.

However, if a company in the same industry has a culture characterized by

stability, a high respect for tradition, and a strong preference for upholding rules

and procedures, the company may suffer because of its culture. In other words,

just as having the “right” culture may be a competitive advantage for an

organization, having the “wrong” culture may lead to performance difficulties,

may be responsible for organizational failure, and may act as a barrier

preventing the company from changing and taking risks.

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In addition to having implications for organizational performance, organizational

culture is an effective control mechanism dictating employee behavior.

Culture is a more powerful way of controlling and managing employee behaviors

than organizational rules and regulations. For example, when a company is

trying to improve the quality of its customer service, rules may not be helpful,

particularly when the problems customers present are unique. Instead, creating

a culture of customer service may achieve better results by encouraging

employees to think like customers, knowing that the company priorities in this

case are clear: Keeping the customer happy is preferable to other concerns,

such as saving the cost of a refund. Therefore, the ability to understand and

influence organizational culture is an important item for managers

Understanding the organization’s culture may start from observing its artifacts:

its physical environment, employee interactions, company policies, reward

systems, and other observable characteristics. When you are interviewing for a

position, observing the physical environment, how people dress, where they

relax, and how they talk to others is definitely a good start to understanding the

company’s culture. However, simply looking at these tangible aspects is unlikely

to give a full picture of the organization, since an important chunk of what makes

up culture exists below one’s degree of awareness. The values and, deeper, the

assumptions that shape the organization’s culture can be uncovered by

observing how employees interact and the choices they make, as well as by

inquiring about their beliefs and perceptions regarding what is right and

appropriate behavior.
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How Organizational Culture affects Employee’s productivity

Many of us spend more time with those we work with than we do our families.

For us to be content and fulfilled people, that time must be valuable for more

than monetary form. We want to be engaged in our work. We yearn for work that

is enjoyable, meaningful and engaging. When we are engaged, we feel safer on

the job, more productive and more willing and able to delight Customers.

It is for these basic reasons that organizational culture matters. It is the right

thing for an organization to do - to think about the work environment, working

relationships and "how we do things here."

Focusing on building a sustainable organization, an organizational culture is one

way of showing that people are the organization's most valuable asset.

There are of course many other bottom line business reasons to focus on and

build organizational culture. Here are seven of those reasons.

A strong culture is a talent-attractor.

An organizational culture is part of the package that prospective employees look

at when assessing the organization. Gone are the days of selecting the person

an organization want from a large eager pool. The talent market is tighter and

those looking for a new organization are more selective than ever. The best

people want more than a salary and good benefits. They want an environment

they can enjoy and succeed in.

A strong culture is talent-retainer.

How likely are people to stay if they have other options and do not love where

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they are? Your organizational culture is a key component of a person's desire to

stay.

A strong culture engages people.

People want to be engaged in their work. According to a Gallup survey, at least

22 million American workers are extremely negative or "actively disengaged" -

this loss of productivity is estimated to be worth between $250-$300 Billion

annually. Your culture can engage people. Engagement creates greater

productivity, which can affect profitability.

A strong culture creates energy and momentum.

Build a culture that is vibrant and allows people to be valued and express

themselves and you will create a very real energy. That positive energy will

permeate the organization and create a new momentum for success. Energy is

contagious and will build on itself, reinforcing the culture and the attractiveness

of the organization.

A strong culture changes the view of "work."

Most people have a negative connotation of the word work. Work equals

drudgery, 9-5, "the salt mine." When you create a culture that is attractive,

people's view of "going to work" will change. Would you rather see work as

drudgery or a joy? Which do you think your employees would prefer? Which will

lead to the best results?

A strong culture creates greater synergy.

A strong culture brings people together. When people have the opportunity to

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(and are expected to) communicate and get to know each other better, they will

find new connections. These connections will lead to new ideas and greater

productivity - in other words, you will be creating synergy. Literally, 1 + 1 + right

culture = more than 10. How is that for leverage?

A strong culture makes everyone more successful.

Any one of the other six reasons should be reason enough to focus on

organizational culture. But the bottom line is that an investment of time, talent

and focus on organizational culture will give you all of the above benefits.

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Environment and Culture

A big influence on internal corporate culture is the external environment.

Cultures can vary widely across organizations; however, organizations within the

same industries often reveal similar cultural characteristics because they are

operating in similar environment The internal culture should embody what it

takes to succeed in the environment. F the external environment requires

extraordinary customer service, the culture should encourage good service, if it

calls for careful technical decisions making, and cultural values should reinforce

managerial decision-making.

Adaptive Culture

A study found that a strong corporate culture alone did not ensure business

success unless the culture encouraged healthy adaptation to the external

environment.

Adaptive corporate cultures have different values and behavior from unadaptive

corporate cultures.

For example, in adaptive cultures, managers are concerned about customers

and those internal people and processes that bring about useful change.

IN the unadaptive corporate cultures, managers are concerned about

themselves, and their values tend to discourage risk taking and change.

A strong culture alone is not enough, because and unhealthy culture may

encourage the organization to move resolutely in wrong direction. Healthy

cultures healp companies adapt to the environment.

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Types of culture

Considering what cultural values are important for organization, external

environment and company’s strategy and goals must be considered.

The right fit between culture, strategy and the environment is associated with

four categories or types of culture.

These categories are based on two dimension

• The extent to which the external environment requires flexibility or

stability

• The extent which a company’s strategic focus is internal or external.

The four categories associated with these differences are adaptability,

achievement, involvement and consistency.

Needs of the Environment

Flexibility Stability

External Adaptability Achievement

Culture Culture
Stragetic Focus

Involvement Consistency
Culture Culture
Internal 22
Adaptability Cultures

Emerges in an environment that requires fast response and high risk-decision

making

Managers encourage values that support the company’s ability to rapidly detect,

interpret, and translate signals from the environment into new behavior

responses.

Employee have autonomy to make decisions and act freely to meet new needs

and responsiveness to customers is highly valued. Managers also actively

create change by encouraging and rewarding creativity, experimentation and

risk taking.

Achievement Culture

Suited to organization concerned with servicing specific customers in the

external environment but without the intense need for flexibility and rapid

change. This result-oriented culture values competitiveness, aggressiveness ,

personal initiative and willingness to work long and hard to achieve results. An

emphasis on winning and achieving specific ambitious goals is the flue that

holds the organization together. People who can survive in this culture are those

whose focused competitive, and driven to win.

The Involvement Culture

Emphasizes an internal focus on the involvement and participation of employees

to adapt rapidly to changing needs from the environmental.

This culture places high value on meeting the needs of employee and the
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organization may be characterized by a caring, family like atmosphere.

Manager emphasize values such as cooperation, consideration of both

employees and customers and avoiding status differences.

Consistency Culture

Used as an internal focus and a consistency orientation for a stable

environment. Following the rules and being thrifty are valued, and the culture

supports and reward in methodical, rational, orderly way of doing things.

Each of these four categories of culture can be successful. Most

organizations usually have values that fall into more than one category. The

relative emphasis on various cultural values depends on the needs of

environment and organization’s focus.

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CONCLUSION

The external environment and internal environment plays a major role in shaping

the task environment that is clearly defining the type of culture the organization

is adopting.

How an organization conduct the business, the way the business processes

were handled and the way internally the people within an organization

communicate and work together within a shared value and culture will affect the

productivity of the employees.

Each aspect of organizational culture can be seen as an important

environmental condition affecting the system and its subsystem. Increased

competition, globalization, mergers, acquisitions, alliances, and various

workforce departments have created a greater need for organizational culture.

Thus, it has become an important pattern for the organization's development.

Culture focuses attention on the human side of organizational life, and finds

significance and learning in even its most ordinary aspects. It clarifies the

importance of creating appropriate systems of shared meaning to help people to

shape the people’s behavior to work together toward desired outcomes.

Organizational culture is possibly the most critical factor determining an

organization's capacity, effectiveness, and longevity. It also contributes

significantly to the organization's brand image and brand promise.It also creates

energy and momentum. The energy will permeate the organization and create a

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new momentum for success. In this competitive and globalized corporate

scenario, there is huge need of organizational development strategy at various

workforce departments, as this can improve the company's culture.

Culture enables people to see the goal alignment and motivates them to higher

levels of performance, as shared values make people feel good about the

organization and commit their capability and potential sincerely for the company.

Such strong culture acts like intrinsic motivator. Empowerment, decisiveness,

learning attitude, and team working are some of the attributes of strong

organizational culture. Culture at this level is the real driver for superior

performance and a definite source of competitive advantage that is very difficult

for competitors to emulate.

For example , Toyota’s lean production system is as much of tools, systems and

processes as it is of the culture of the people there. Many companies have tried

to copy the famed production system but none could do it with the same

effectiveness. The reason – companies could copy the management systems in

place but not the underlying cultural strength rooted deep in the business

philosophy of the company – understanding customer value, identifying value

stream, one piece flow, pull system and striving for excellence.

Culture and performance have mutually reciprocating relationship. If strong

culture helps building high performance company, the past performance and

successes shape influence peoples’ behavior which with time become part of

the culture.

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LIST OF REFERENCES
Organizational Culture
http://managementhelp.org/org_thry/culture/culture.htm

Organizational Culture: Corporate Culture in Organizations

http://humanresources.about.com/od/organizationalculture/Organizational_Cultu
re_Corporate_Culture_in_Organizations.htm

It’s a choice—organizational culture by design or by default

http://www.culturestrategyfit.com/

Organizational Culture
http://www.themanager.org/HR/Matching_People_with_Organizational_Culture.
pdf

ORganizational Culture
http://cims.ncsu.edu/downloads/Research/71_WDWK_culture.pdf

Environmental Factors affecting Firms ability to compete - a retail perspective -

James Neblett
http://www.iamot.org/conference/index.php/ocs/4/paper/viewFile/1094/474

Employee Motivation , the organizational Environment and productivity

http://www.accel-team.com/_pdf/atPDF_02_extract.pdf

Organizational Linkages Understanding the Productivity Paradox

http://books.nap.edu/openbook.php?record_id=2135&page=54

Understanding Organizational Culture

Principles of Management
by Mason Carpenter, Talya Bauer, Berrin Erdogan
http://www.flatworldknowledge.com/pub/1.0/principles-management/29076

Organizational Culture and its Importance

Posted on April 1, 2006 by Linda Devis
http://www.articleclick.com/Article/Organizational-Culture-and-its-
Importance/375

Organizational Culture
www.busi.mun.ca/jaya/2301/OB9F03.ppt

Organizational Culture
www.angelfire.com/ak6/organizational_behav/lecture10.pdf

Patterns of organizational culture analysis

http://ebooks.unibuc.ro/StiinteEDU/adulteducation/22.htm
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Organizational culture and performance
http://www.alagse.com/hr/hr7.php

Richard L.Daft (2008) New Era of Management (9th Edition),Vanderbilt

University, South-Western Cengage Learning

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