management of relationship

8/12/2019 Management of Relationship

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TOPIC 6MANAGEMENT OF

RELATIONSHIPS


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Lecture outline: Concepts of power, bureaucracy,

authority, responsibility, leadership and

delegation. Organisational culture

Management of conflict

Issues of business ethics and corporategovernance


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Concept of Power Power is a complex and dynamic concept and

difficult to define easily. At a broad level, power can be interpreted in

terms of control or influence over the behaviour ofother people with or without their consent.

Power can also be interpreted in terms of theextent of the influence which can actually beexercised over other people.

The most important aspect of power is probably

dependency, Example: a person can have power over you only if he or

she controls something you desire


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Concept of Power

Power is an inherent feature of workorganisations and is often the underlying reality

behind the decision-making process.

It is central to the framework of order and

system of command through the operation ofbureaucratic structures and the implementation

of rules, policies and procedures.

Lack of power and influence, and office politics,are among the main sources of managerial

stress within organisation.


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Concept of Power Management control is the predominant

means by which activities of staff are

guided towards the achievement of

organisational goals. The exercise of power is that which comes

from a position of formal authority within the

management structure of the organisationand which legitimises control over

subordinate staff.


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Authority Is the right to take action or make decisions that

the manager would otherwise have done.

Is the power to hold people accountable for theiractions and to influence directly what they do andhow they do it.

Authority legitimises the exercise of power withinthe structure and rules of the organisation.

Enables the subordinate to issue valid instructionsfor others to follow.

E.g: Shareholders have ultimate authority over theuse of a companys resources. Legally, they ownthe company and exercise control through theirrepresentatives, board of directors.


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Responsibility

An obligation by the subordinate to performcertain duties or make certain decisions andhaving to accept possible reprimand fromthe manager for unsatisfactory

performance. Responsibility cannot be delegated.

Delegating authority can increase the

managers responsibility since there isadditional responsibility for thesubordinates task.


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Delegation

Is the process of entrusting authority andresponsibility to others throughout the

various levels of the organisations.

Delegation can be upwards or laterally ordownwards.

Downsizing and de-layering limit the

opportunities for delegation.


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Bureaucracy

Max Weber designed a hierarchy so that iteffectively allocates decision-makingauthority and control over resources

Bureaucracy:a form of organizational

structure in which people can be heldaccountable for their actions because theyare required to act in accordance with rulesand standard operating procedures

Founded on a formal, clearly defined andhierarchical structure.

Red tape and rigidity


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Bureaucracy Principle one:a bureaucracy is founded on

the concept of rational-legal authority

Rational-legal authority:the authority a

person possesses because of his or her

position in an organization

Hierarchy should be based on the needs of the

task, not on personal needs Peoples attitudes and beliefs play no part in

how the bureaucracy operates


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Bureaucracy cont.) Principle two:Organizational roles are

held on the basis of technical

competence, not because of social status,

kinship, or heredity Principles one and two establish the

organizational role as the basic

component of organization structure


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Bureaucracy Principle three:A roles task responsibility

and decision-making authority and itsrelationship to other roles in the organizationshould be clearly specified Role conflict:when two or more people have

different views of what another person shoulddo, and as a result, make conflicting demands onthat person

Role ambiguity:the uncertainty that occurs for aperson whose tasks or authority are not clearlydefined


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Bureaucracy Principle four:the organization of roles in

a bureaucracy is such that each lower

office in the hierarchy is under the control

and supervision of a higher office Organizations should be arranged

hierarchically so that people can recognize

the chain of command


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Bureaucracy

Principle five:rules, standard operatingprocedures, and norms should be used to

control the behavior and the relationships

among roles in an organization

Rules and SOPs are written instructions that

specify a series of actions intended to achieve

a given end

Norms are unwritten Rules, SOPs, and norms clarify peoples

expectations and prevent misunderstanding


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Bureaucracy Principle six:administrative acts,

decisions, and rules should be formulated

and put in writing

Bureaucratic structure provides an organizationwith memory

Organizational history cannot be altered


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Advantages of Bureaucracy It lays out the ground rules for designing an

organizational hierarchy that efficiently controlsinteractions between organizational members

Each persons role in the organization is clearly

spelled out and they can be held accountable Written rules regarding the reward and

punishment of employees reduce the costs ofenforcement and evaluating employee

performance It separates the position from the person

It provides people with the opportunity to developtheir skills and pass them on their successors


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The Problems of Bureaucracy Managers fail to properly control the

development of the organizational hierarchy

Organizational members come to rely too

much on rules and standard operatingprocedures (SOPs) to make decisions

Such overreliance makes them

unresponsive to the needs of customers andother stakeholders


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Leadership It is difficult to generalise about the meaning of

leadership.

But, we can say leadership is a relationship through whichone person influences the behaviour or actions of otherpeople.

The changing nature of work organisations i.e. flatterstructure, recognition of the efficient use of humanresources have combined to place growing importance onleadership.

The nature of management is moving away from theemphasis on getting results by the close control of theworkforce and towards an environment of coaching,

support and empowerment. Good leadership involves the effective process of

delegation and empowerment.


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Leadership

Leadership style: The authoritarian (or autocratic) style

The democratic style

A laissez-faire (genuine) style


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Organisation Culture Organisational culture is a general concept that is

difficult to define or explain precisely.

Definition:

How things are done around here.

The collection of traditions, values, policies, beliefs and

attitudes that constitute a pervasive context for

everything we do and think in an organisation.

Organisational culture has three elementsshared value; a set norms of behaviour; and

symbols and symbolic activities.


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Organisation Culture Cartwright views culture as a system of

management authority.

When accepted by employees, cultural values

increase the power and authority of managementin three ways. Employees

identify themselves with their organisation and accept its

rules when it is the right thing to do;

internalise the organisations values when they believethey are right; and

are motivated to achieve the organisations objectives.


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Organisation Culture

Schein suggests a view of organisationalculture based on distinguishing three levels

of culture:

Level 1Artefacts

It is the most visible levelthe constructed physical

and social environment.

Includes physical space and layout, the

technological output, writtens and spoken language

and the overt behaviour of group members.


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Organisation Culture Level 2Expoused values

Cultural learning reflects someones original values.

Solutions about how to deal with a new task, issue

or problem are based on convictions of reality.

If the solution works, the value can transform intobelief. Values and beliefs become part of the

conceptual process by which group members justify

actions and behaviour.


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Organisation Culture

Level 3Basic underlying assumptions When a solution to a problem works repeatedly it comes to be

taken for granted.

Basic assumptions are unconsciously held learned responses.

They are implicit assumptions that actually guide behaviour

and determine how group members perceive, think and feelabout things.

Schein suggests that the basic assumptions are

treated as the essencewhat culture really is

and values and behaviours are treated asobserved manifestations of culture essence.


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Figure Where an OrganizationsCulture Comes From


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The cultural web of an organisationSource: Johnson, G., Scholes, K. and Whittington, R. Exploring Corporate Strategy, seventh edition, Financial Times Prentice Hall (2005), p. 202. Reproduced with permission from

Pearson Education Ltd.


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The importance of culture

Culture and organisation control: Culture as the largest organisational control system thatdictates how crazy or idiosyncratic people can be.

Companies have both overt and covert culture thatinfluences both business and organisation behaviour.

The covert set can be quite dysfunctional and costly. Culturetheassumptions, beliefs, values and norms that drive the way we dothings here is the largest and most controlling of the systemsbecause it affects not only overt organisational behaviour but alsothe shadow-side behaviour.... Culture lays down norms for thesocial system. In one institution you had to be an engineer to riseto the top. There was no published rule, of course, it was just the

way things here. In one bank you could never be made an officer ifyou were polyester clothes. Culture tell us what kind of politics areallowed and just how members of an organisation are allowed to

play the political game.


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The importance of culture Culture influences the behaviour of all

individuals and groups within the

organisation:

Culture impacts most aspects of organisationallife, such as how decisions are made, who

makes them, how rewards are distributed, who

is promoted, how people are treated, how the

organisations responds to its environment,and so on.


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Culture and organisational performance: Culture is clearly an important ingredient of effective

organisational performance.

In order to aid long-term performance, there are

three main criteria needed to develop a suitableculture: it must be strategically relevant;

it needs to be strong in order that people care about

what is important; and the culture must have an intrinsic ability to adapt to

changing circumstances.


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In order that leaders can develop, manage andchange their culture for better performance, theycan use three managerial tools: Recruitment and selectionhire people who fit the

companys culture even if this may involve overlooking

some technical skills for a better cultural fit. Social tools and trainingdevelop practices that

enable new people to understand the values, abilities,expected behaviour and social knowledge in order toparticipate fully as an employee and to create strong

bonds among members. Reward systemculture is an organisations informal

reward system but it needs to be intricately connectedto formal rewards. E.g. include staff meetings wherethe seating arrangement is in accordance with level ofsales.


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National culture

Culture helps to account for variations amongorganisations and managers, both nationally andinternationally.

National differences and cultural reasons raise

concerns about the transferability of organisationalstructures, systems and processes and questionthe logic of universal best practice.

Hofstede categorise four main dimensions of

national culture: power distance; individualism vscollectivism; uncertainty avoidance; andmasculinity vs femininity.


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National culture and MCS Power distance (PD)

High PD culturesare characterised by a high regard forformally constituted hierarchies and an acceptance thatauthority and responsibility for leadership and decision-making are vested at the upper-levels.

Individualism (IDV) In highlyIDV societies, people are motivated by

individual responsibility and autonomy

In low IDV cultures, there is a collectivist rather thanself-orientation.

Individuals in low PD, high IDV cultures will seekand respond more favourably to opportunities forparticipation in performance-setting decisions thanindividuals in high PD, low IDV,


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National culture and MCS Uncertainty avoidance (UA)

In high UA culturesplace greater emphasis oncontrol through written rules, standardised operatingprocedures and formalised planning.

Masculinity (MS) MS is relevant to the set of performance indicators

used in evaluation (long term vs short term).

In high MS societiesgreater focus on meeting shortterm performance target, and less focus on the

development and well-being of organisationalmembers.

In low MSpreferred multiple performance measuresand less financially oriented indicators.


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What is Organizational Conflict? The clash that occurs when the goal-

directed behavior of one group blocks or

thwarts the goals of another

Although conflict is often perceived as

something negative, research suggeststhat some conflict can actually improve

organizational effectiveness

Can overcome inertia and lead to learningand change


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Figure: Cooperation and CompetitionAmong Organizational Stakeholders


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What is Organizational Conflict?cont.) Beyond a certain point, conflict becomes a

cause for organizational decline

Conflict leads to inability to reach consensus

and indecision Too much time spent on bargaining rather than

acting swiftly to resolve problems

On balance, organizations should be open toconflict and recognize its value


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Causes of Conflict Interdependence

Difference in goals and priorities

Bureaucratic factors

Incompatible performance criteria

Competition for scarce resources


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Figure : Relationship Between Conflictand Organizational Effectiveness


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Managing Conflict:Resolution Strategies Organizational conflict can escalate

rapidly and sour an organizations culture

Managing conflict is an important priority

Organizations must balance the need tohave some good conflict without letting it

escalate into bad conflict

Choice of conflict-resolution methoddepends on the source of the problem


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Managing Conflict:Acting at the Level of Structure Because task interdependence and

differences in goals produce conflict, alter

the level of differentiation and integration to

change relationships

Increase the number of integrating roles

Assign top managers to solve conflict

Rethink the hierarchy/reporting chain to

make sure there is no loss of control


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ManagingConflict: Acting atthe Level of Individuals Establish a procedural system that allows

parties to air their grievances

Important for conflict between management and

unions Use a third-party negotiator

Exchange/rotate/terminate individuals

CEOs can also use their power to resolve

conflicts and motivate units to cooperate


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Organisational Ethics

The moral values, beliefs, and rules thatestablish the appropriate way for

organizational stakeholders to deal with one

another and with the environment Derived from the personality and beliefs of the

founder and top management


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Figure : Factors Influencing theDevelopment of Organizational Ethics


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Corporate Governance CG) A CG system can be thought of as the

processes and structures used to direct a

corporation's business.

A key objective of a CG system should bethe enhancement of shareholder value.

Once implemented, an effective CG system

can help to ensure an appropriate divisionof power among shareholders, the board of

directors, and management.


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Corporate Governance CG) Professional bodies i.e MIA, CIMA develop new

CG guideline in order to restore investorconfidence.

E.g CMA Canada introduce "A BalancedScorecard for a Board of Directors,"to thepractice of corporate governance. The BSC uses a mix of financial and non-financial

performance indicators that address a company'sinternal processes, shareholder-value creation,

quality, organizational learning and communityrelations to strengthen internal and externalaccountability.


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Conclusion Managing relationship in organisation is important

in order to obtain strategic congruence.

A strategy must match the structure, systems,

people and culture of the organisation.

In addition, each organisational component needs

to fit with the others.

If an inconsistency exists, it is likely that

implementation of the strategy will be affected.


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End of topic 6

management of relationship

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