Organisational decision Making Stakeholder Analysis &Culture

Stakeholders - who are they?  A stakeholder is anyone who has an expectation regarding the behaviour or performance of an organisation.

Stakeholder Analysis  Strategic management is effective only when resources match stakholders needs and expectations and change to fit into a tubulent environment.

Stakeholder Analysis Who are typical stakeholders?  Financial stakeholders e.g. shareholders; investors; bankers; creditors etc..  Employees  Customers/Distributors  Suppliers  Local/national political representatives

Stakeholder Analysis Stakeholders & their expectations Expectations Primary Secondary OwnersProfit Added shareholder value EmployeesPay Working conditions CustomersQuality Price CreditorsCreditworthiness Payment on time Suppliers Payment Long-term relationship Community Safety & security Contribution to comm. GovernmentCompliance Improved competitiveness

Stakeholder Analysis  Stakeholder analysis represents the political context within which organisations function.  For any given strategic objective to be achieved the expectations of the stakeholders must be met - especially those stakeholders with substantial power and interest in the organisation.

Stakeholder Analysis A word on culture:  The culture that exists in an organisation - sometimes referred to as - “the way we do things around here”- is in some way a reflection of the historical relationship that has been established between the various stakeholders.

Stakeholder Analysis The Power/Interest Matrix  This assesses the cultural fit: whether the political/cultural situation is likely to undermine the adoption of a particular strategy

Stakeholder Analysis LEVEL OF INTEREST LEVEL OF INTEREST LOWHIGH POWER LOW HIGH Minimal Effort Keep Informed Keep Satisfied Key Players

Stakeholder Analysis Sources of Power: within organisations  Hierarchy: formal power  Influence: informal power  Control of strategic resources  Possession of knowledge  Control of the environment  Involvement in strategic implementation.

Stakeholder Analysis Indicators of Power: within organisations  Status  Claim on resources  Representation  Symbols

Stakeholder Analysis The Mission Statement:  Embodies the interests and expectations of major stakeholder. Should act to link the internal resources of the organisation and its competences to the external environment.  Ideally it balances conflicting expectations, but often reflects the expectations of the most powerful group. E.g. Abbey National; Kwik Fit.

Culture What is “culture” as applied to organisations?  The “feel” of an organisation.  The “way the organisation operates”  What is it like from an employees point of view, or a customer, or supplier?  What are the “values” of the organisation?  These are all vague, but absolutely critical to the organisations success.

Culture – Charles Handy The “culture” of an organisation develops from:  Its history.  Its size.  The technology it uses.  Its goals and objectives.  The environment in which it operates.

Culture – Charles Handy Four types of culture.  Power culture – central power source – particularly relevant for small owner managed firms. Sometimes likened to a spiders web all sources of power and decision-making focused on the individual at the centre.  Spider’s web What are the advantages and disadvantages of this type of culture?

Culture – Charles Handy Role culture – the temple metaphor.  Organisations are structured along functional lines with clearly established lines of communication between the different functions coordinated by senior management. Senior Management Lines of communication between the functional areas

Role Culture Under what circumstances is a role culture beneficial?  When the external environment is highly stable - the market does not change and competitor behaviour is predictable.  When the internal environment is also stable - the tasks undertaken are easily defined and the desired outcomes predictable.  Employees are expected to do no more and no less than that expected of them.

Role Culture What are the disadvantages of role culture?  Little innovation.  Inflexible.  Not a “learning organisation”. How relevant is this to retail banks, give examples?

Task Culture  Organisations that are task/project oriented are described as having a “task culture”  Employees work in multi-disciplinary teams to complete a specified task. The “matrix” structure The thicker lines represent the sources of power, usually based on key areas of expertise relevant to the task.

Task Culture Characteristics of a task culture organisation.  Power is often based on expertise rather than formal position.  Team work and performance is extremely important.  Organisations tend to be flexible.  Centralised control from the top can be problematic.  The organisation will tend to emphasise the importance of its “people” rather than its “systems”.

Task Culture What are the strengths and weaknesses of a task culture based organisation?  Strengths - flexible, responsive, adaptable - a learning organisation suitable for an unstable external environment.  Weaknesses - lack of central co-ordination, wasteful, difficult to manage and control, danger of “mavericks” “loose canons”. In what ways is this relevant to retail banking?

Person Culture  Rare in business - the organisation structure is largely irrelevant - each individual within the organisation has their own personal objectives and targets. This normally applies to a social group rather than business group. The “galaxy” diagram Members exist as individuals within a loose organisational setting.

Organisational Culture The “cultural web” (Johnson & Scholes 1991) - organisation culture can be understood and defined through a web of inter-related formal and informal structures and relationship that exist internally and externally to the organisation.  The combination of these defines the “cultural paradigm”of the organisation. This can be understood in terms of:  What the organisation “feels like”.

Cultural Web StoriesSymbols Power structures Organisation structure Controls Rituals & routines Paradigm Johnson & Scholes (1991)

Cultural Web What would the cultural web of retail banks have looked like in the 1980s?  Stories - senior managers getting “chopped” or promoted for great failures or successes - the “heroes” and “villains”  Symbols - remote HO, executive dining facilities, size of silver coffee tray and office according to status, branch layout separating staff and customers.

Cultural Web  Power structures - formal: regional directors, managers, assistant managers etc. informal: a long serving “Mafia”, “the old-boy network”.  Organisational structure - hierarchical, one-on-one reporting, autocratic, strict job grading.  Controls - heavy, standardised manual procedures, branch inspectors.  Rituals & routines - follow the procedures, do not step out of line, grading & promotion rituals, mortgage relief.