UNIT 1 THE ORGANIZATION & ORGANIZATIONAL THEORIES

Unit Structure

1.0 Overview
1.1 Learning Objectives
1.2 The Organisation
1.3 Organisational Theory
1.4 The Classical Approach
1.4.1 The Scientific Management Approach
1.4.2 The Bureaucratic Approach
1.4.3 The Administrative Theory
1.5 The Neoclassical Approach
1.6 Modern Organisational Theories
1.6.1 The Systems Approach
1.6.2 The Socio-Technical Approach
1.6.3 Contingency/Situational Approach
1.7 Organisations as Systems
1.8 Activities

1.0 OVERVIEW
In this era of cut-throat competition, it is the law of ‘survival of the fittest’ that applies. It is no
longer enough to invest in new technology and implement efficient and effective processes. This
can be easily copied and replicated and many businesses can adopt best practices with adequate
training and resources. The question is who is the best when it comes to mobilizing the firm’s
energy, capitalising on individual talent and gearing up to meet challenges and not only adapt or
react positively to change, but to lead change.

1.1 LEARNING OBJECTIVES

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Upon completion of this Unit, you should be able to
1. Appreciate the existence of the organization as a medium of systematic procedures and
control;
2. Demonstrate understanding of the aims of organization theory;
3. Assess the various schools of thoughts revolving around the concept of organization
theory

1.2 THE ORGANISATION

The American Heritage Dictionary (2000) defines the organization as ‘a structure through which
individuals cooperate systematically to conduct business’. According to Flower (1995), one of the
purpose of an organization is to anticipate the future and to help the parts which are interrelated to
each other, to be able to cope with the changes in the environment.

The Industrial Revolution geared towards increased interest in the study of the organization in the
80’s, whereby a shift was observed from the independent craftsman to a grouping of employees in
a setting specifically designed to ease mass production.
Adam Smith (1995) studied the practices of an established pin factory and concluded that dividing
labor based on a specialization in task amplified productivity. The findings sprang forward the
concept of division of labour which formed a conceptual basis for a powerful administrative
approach to enhance productivity and optimize profits whilst reducing cost.

1.3 ORGANISATIONAL THEORY

Organizational theory basically revolves around the scrutiny of organizations to identify patterns
and structures for how they resolve issues, optimise efficiency and productivity, as well as meeting
shareholder expectations. These are then used to generate theories on how organisations can be
best managed and be successful.

Organizational theory then uses these patterns to formulate normative theories for how
organizations function best. Therefore, one can study Organizational Theory in order to learn the

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best ways to run an organization or identify organizations that are managed in such a way that they
are likely to be successful.

In the pages which follow, we shall explore the multitude of organisational theories which exist
and grasp the essence behind each one.

1.4 CLASSICAL APPROACH

The classical school of thought has its roots embedded since the twentieth century. These
contributions, also called theoretical schools, sprang forward from the build-up of the industrial
society and industrial groups with the need to formulate theories for the management of many
people around industrial tasks.

The theoretical contributions are mostly about the ways and means to manage organisations more
efficiently and can regroup together scientific management, administrative management, and
bureaucratic management.

Although the various perspectives differ, they share the common beliefs that employees have only
economical and physical needs and advocate high specialisation of labour, centralized decision
making, and profit maximization.

1.4.1 THE SCIENTIFIC MANAGEMENT APPROACH

The proponent of the Scientific Management Approach is Mr Frederick W.Taylor. The latter
believed that it was possible to prescribe the processes that resulted in maximum output with a
minimum of energy and resources. The work process was studied in a scientific way and employee
productivity was analysed. Experiments, also referred to as "time and motion" studies were carried
out to determine optimal performance levels whereby he calculated the time needed for the various
elements of a task and he tried to devise the "best" way to complete that task. Taylor found out
that some employees worked more efficiently than others and these were the type of workers
managers should hire. According to Taylor, making people work as hard as they could was not as
efficient as optimizing the way the work was done. He suggested that by optimizing and
simplifying jobs, productivity would increase. Taylor was the leading promoter of the idea that
managers should design and control the work process in a scientific way so as to ensure that the
optimum efficiency levels are achieved. He advocated multiple layers of management to supervise
the work process and rigorous control over employees. In a single sentence, Taylor’s focus on

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planning of work to achieve greater levels of efficiency, standardization, specialization and
simplification.

Based on his experiments, Taylor devised “The Principles of Scientific Management”, which can
be outlined as follows:
1. Use a scientific method to examine work and determine the most efficient way to perform
specific tasks instead the ancient "rule of thumb” method.
2. Develop a scientific way of recruiting employees and then providing them with adequate
training for them to work at optimum efficiency.
3. There should be cooperation among employees and managers and the latter should monitor
the performance of employees and make sure that they are working in line with the most
efficient ways advocated.
4. Managers should devote their time in planning and training while allowing the employees
to perform their jobs efficiently.

Some of the criticism levied on scientific management are:

1. Exploitation of Workers
Too much focus on productivity and profitability put undue pressures on employees to work
faster like robots, neglecting the human element and thereby resulting in exploitation.

2. Problem of Unity of Command

Employees had to report to several superiors, instead of one only. This was not in line with the
principle of unity of command and could create confusion and chaos in the organisation.

3. Problem of Separation of Planning from Doing

According to Taylor, planning ought to be distinct from doing. However, when engaged in
doing, those who plan can have more realistic views and plan better.

4. Individualistic Approach
Taylor neglected the significance of team work and focused merely on individual performance.

5. Wrong Assumptions
Taylor believed that workers were motivated only by financial incentives, overlooking social
and personal needs.

6. Narrow Application

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Taylor's scientific management theory applied only for factories where the performance can be
measured quantitatively and could not be applied to the service sector where performance could
be measured on a quantitative basis only.

1.4.2 THE BUREAUCRATIC APPROACH

Max Weber, referred to as the ‘father of sociology, took a broader approach to organisations-
including the social and historical perspective. He understood that society was being driven by the
passage of rational ideas into culture which, in turn, transformed society into an increasingly
bureaucratic entity. His ideas on bureaucracy stemmed from society during the Industrial
Revolution.

According to Weber (1947), bureaucracy is “a specific administrative structure, which is based on

a legal and rule-oriented authority”. It is characterized by hierarchical organization, action taken
on the basis of and recorded in written rules, and bureaucratic officials requiring expert training.

Weber assigned the following characteristics to bureaucracy:

 An administrative hierarchy;
 An established distribution of work between employees of the organisation;
 A rule oriented system describing how the work needs to be done;
 Hiring employees based on technical qualifications

The organization is based on the principles of:

 structure;
 specialization;
 predictability and stability;
 rationality; and
 democracy.

Weber also believed that acting in a goal-rational way-taking into consideration goals, means and
side-effects was the ideal approach. He also had different perceptions of authority as follows:
1. Traditional Authority - this is where authority has been created legitimately through history
and authority is based on dependent subordinates.
2. Rule-Oriented Authority – this is based on normative rules for hierarchy and career.
3. Charismatic Authority –basically relates to ‘personal authority’.

Weber was of the opinion that the individual employee could not escape the organisation which
he referred to as an ‘iron cage’ whereby employees were controlled by an ‘impersonal power
relationship’; fearing that they were constantly being watched, thus leading them to work
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effectively. This is along the lines of what Foucault termed as ‘panopticon’.
For Foucault (1977), power is exercised on the individual so that control is rendered perfect.
According to him, employees have to be made observable so that maximum control can be gained
on them and on their work. This can be demonstrated through the technology of spaces and gazes-
where space is being used to govern the conduct of ‘free’ individuals. This means the individual
is constantly being seen with the arrangement of the physical layout of the office. In this way,
employees are under surveillance all the time and the organization can be likened to a ‘panopticon’
or prison cell.

1.4.3 THE ADMINISTRATIVE THEORY

Henri Fayol devised another approach within the rational perspective, which inverts the focus of
scientific management as instead of the technical processes, it is the administrative processes
which were rationalised.
Fayol conducted several investigations, out of which he devised a linear division of the common
operations into operational functions. He was of the opinion that in a developed industrial
organization, there were six fundamental business functions which were:
i. Technical
ii. Commercial
iii. Financial
iv. Accountancy
v. Protective
vi. Administrative

Fayol stipulated that the administrative function was the most important function which comprised
of:
1. Forecasting;
2. Planning;
3. Organizing;
4. Commanding
5. Coordinating.
6. Controlling.

He further established the 14 principles of management as listed hereunder:

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(Source: Adopted from Henri Fayol, General and Industrial Management, Constance Stars,
London: Isaac Pitman &Sons, 1949)

1.5 THE NEO-CLASSICAL APPROACH

In comparison to the previous approaches, this approach acknowledges the significance of the
individual and human relations. The focus of neoclassical theorists laid in trying to find the best
way to motivate, structure, and support employees within the organization.
Drawing from the Hawthorne experiments, it was concluded that social and human relationships
had more substantial influence on productivity than changes in working conditions. It was
gathered that productivity increased when employees receive personal attention and this
increases their morale. It was proposed that work should be structured in such a way that
employees could discuss about tasks and share information and knowledge with one another. In
this way, their needs for socialization would be fulfilled and they would be more productive.

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The neoclassical approach embraces the human relations movement and the behavioral
movement.

1.5.1 THE HUMAN RELATIONS MOVEMENT

The human relations movement emerged from the work of sociologists and social physiologists
who studied how people related and interacted within a group.
This movement was a direct result of Elton Mayo and Fritz J. Roethlisberger's Hawthorne studies,
aimed at assessing the productivity levels of employees based on different working conditions
such as lighting levels, rest periods, and the length of a work day. It was found that productivity
did not increase as a function of the aforementioned factors but rather, due to a boost in the morale
of employees due to feeling valued for being selected to participate in the study and being given
attention. When placed in new settings to work, it was seen that employees started developing
strong interpersonal relationships with each other and with their supervisors as they were trying to
work together.
It was also observed that financial rewards were much less conducive to worker motivation and
productivity than fulfilling their social and human relations needs.

1.5.2 THE BEHAVIOURAL MOVEMENT

This movement sprang forward with psychologists studying the individual behaviour of employees
and the nature of work itself.
This school of thought was largely based on the work of Abraham Maslow, Douglas
McGregor, Frederick Herzberg, and David McClelland.
The common aim was to coming up with ways to motivate employees based on their personal
needs. It was claimed that personal growth and development, a sense of accomplishment and
achievement all had significant impact on the motivation levels and performance of employees.

1.6 MODERN ORGANISATIONAL THEORIES

Modern organisational theories revolve around the concept that the organization is a system which
needs to constantly adapt to changes in its environment. According to Hicks and Gullet (1975),

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the organisation may defined as a designed and structured process in which individuals interact for
objectives. Von Bertalanffy (1951) proposed a component of general systems theory as a basic
foundation of modern theory.
As different researchers contributed to the development of the contemporary approach, the modern
view of the organisation is a multidisciplinary one which stresses the dynamic nature of
communication and the significance of converging the interests of the individual and the
organization.

A few characteristics of the organization from a modern standpoint are as follows:

 a systems viewpoint,
 a dynamic process of interaction,
 multilevelled and multidimensional,
 multimotivated,
 probabilistic,
 multidisciplinary,
 descriptive,
 multivariable, and
 adaptive

The contemporary approach to the firm can be broadly classified into the systems approach, the
socio-technical theory, and the contingency or situational approach.

1.6.1 THE SYSTEMS APPROACH

This approach views the firm as a system made up of interrelated and mutually dependent sub-
systems each with its own specific function and interrelated responsibilities. Systems theory
focuses on the arrangement of and relations between the parts or elements which connect
everything as a whole. Hence it also oversees the structure of the organization and how same must
be adapted to the changing environment and the employees.

It is believed that the organisation consists of the following:

(i) Components

Basic parts of the organisation system which are interdependent are: the individual, the formal and
informal organization, patterns of behaviour and the physical environment in which individuals
work.

(ii) Linking processes

The various components of the firm need to operate in an organised and correlated way and this is
highly dependent on the linking processes consisting of communication, balance and decision

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making. Balance in this context is taken to mean the equilibrium between diverse parts of the
system to maintain a harmoniously structured relationship with one another.

(iii) Goals

The goals of an organization can be regrouped into growth, stability and interaction.

1.6.2 THE SOCIO-TECHNICAL APPROACH

This approach rests upon the principle that each organization consists of the people, the technical
system and the environment (Pasmore,1988). The social system consisting of people uses the
technical system comprising of tools, techniques and knowledge to produce goods or services
valued by consumers or users, who in turn form part of the organization's external environment. It
therefore logically follows that for the organisation to thrive, there must necessarily be an
equilibrium among the social system, the technical system and the environment.

1.6.3 THE CONTINGENCY APPROACH

Nothing is certain and one should always make room for unforeseen events and possibilities. The
contingency approach advocates that there is no one best way to manage a company. According
to Hellriegel and Slocum (1973), the proposal set forward by the contingency approach is that
different environments necessitate different organizational relationships for optimum
effectiveness, taking into consideration several social, legal, political, technical and economic
factors.

1.6.4 THE LEARNING ORGANIZATION

One of the most recent lenses through which organisations are being viewed is that of the learning
organisation. Peter Senge (1990) defines the latter as an organization that is continually expanding
its capacity to create its future.
A learning organization must incorporate the following:
1) personal mastery,
2) mental models,
3) team learning,

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4) a shared vision, and
5) systems thinking.

An extreme adoption of the organizational phenomena is not correct. The characteristics and
significance of each type of approach to organisational theory have been seen and each have their
‘raison d’etre’.

1.7 ACTIVITIES

Activity 1.
Compare and contrast the Classical School of Thought with the Neo-Classical approach.

Activity 2.
Discuss the relevance of the Contingency Approach for organisations.

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UNIT 2 NATIONAL CULTURE
Unit Structure

2.0 Overview
2.1 Learning Objectives
2.2 Culture
2.3 Organisational Culture
2.3.1 Definition
2.3.2 Elements of Organisational Culture
2.4 Classification/Models for Organisational Culture
2.5 Benefits of having a Strong Organisational Culture
2.6 National Culture
2.6.1 Dimensions of National Culture
2.6.2 Communication across cultures
2.6.3 Future of National Culture
2.7 Activities

2.0 OVERVIEW

The notion of culture seems to be very complex, with different interpretations being given by
different researchers over the years. Raymond Williams in his book ‘Key Words’ (1983) classified
culture as being ‘one of the two or three most complicated words in English language'.

In its broadest sense, culture can be representative of the whole way of life of a specific group of
people. It can incorporate symbolic values and beliefs, intellectual and artistic achievements,
traditions and rituals as well as the dominant patterns of living which eventually provide a sense
of direction to the day-to-day life of people in society. The culture of an individual strongly
influences his behaviour.

In the sections which follow, we shall explore the notion of culture as researched over the years
and narrow down to organizational culture and ultimately national culture.

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2.1 LEARNING OBJECTIVES

Upon completion of this Unit, you should be able to demonstrate understanding of and appreciate
the usefulness of:
1. The concept of ‘Culture’;
2. Organisational Culture and the various models;
3. National Culture and its dimensions;

2.2 THE NOTION OF CULTURE

Prominent researchers from diverse fields have come up with different interpretations of culture,
which will be discussed briefly.
According to Edward B.Taylor (1871), culture relates to learnt human behaviour patterns which
are very prone to constant change and that exists both objectively and subjectively. Objective when
it relates to material culture and subjective in the sense that it is in the minds of people and their
interpretation of things. It therefore follows that culture can be both shared and acquired.
Parsons (1951) claimed that culture is integral of society as a whole and embraces the language of
a society, symbols such as flags, and beliefs about right and wrong, as well as things such as the
art and literature of a society. He further stated that human societies cannot exist without culture
since culture is like the glue that binds people together to work towards shared objectives while
understanding and communicating with each other.
Bales (1955) stipulated that culture can be transmitted in the family. This is where primary
socialization has a crucial role to play and parents very often are the role models.

According to Marx, culture is shaped by the capitalist system. It is seen as a mere instrument used
to indoctrinate and dominate the working class.

Ritzer (2004) illustrated the notion of culture by making use of an integrationist model comprising
of the following:

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The model illustrates how cultural norms influence people's behaviour which in turn is affected by
and affects the macro-level culture.

2.3 ORGANISATIONAL CULTURE

Edgar Schein observed the prevailing culture in a group and defined it as a configuration of basic
assumptions which members of a group learnt while attempting to find solutions to issues of
external adaptation and internal integration. This was then deemed as the right way to tackle
problems and was thus propagated to all new members integrating the group.

The main challenges facing any group are adapting effectively to the external environment in the
quest for survival and incorporating new members so that all be considered as one effective group.
Hence along the way to finding the means to meet these challenges, members of a group engage
in a sort of collective learning which generates shared assumptions and beliefs that come to be
termed as ‘culture’.

The subsequent subsections will cover a brief summary of the various definitions of organisational
culture in past literature by eminent researchers, followed by a review of the elements which
constitute organisational culture and a classification.

2.3.1 DEFINITION

The most famous definition of organisational culture is that of Bower’s (1966) stating that is ‘the
way we do things around here’.

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According to Trice and Beyer (1984), corporate culture relates to a system consisting of publicly
and collectively accepted meanings by a particular group at a specified time. Goldsmith and
Clutterbuck (1985) also state that the corporate culture continuously evolves from reflecting the
basic values of the founder to the modern values. For Morgan (1986), culture is "an active living
phenomenon through which people jointly create and recreate the worlds in which they live" and
corporate culture consists of shared meaning and understanding. According to Handy (1993),
organizations are as different and varied as the nations and societies of the world and thus, all will
have diverse values and beliefs systems reflected in different cultures. For Hofstede (1994),
organizational culture reflects the psychological assets of a firm which can even be used as a good
predictor of future performance.

LEVELS OF CULTURE

Edgar Schein’s (1985) model of organizational culture segregates the observable and unobservable
elements of culture and consists of the following three domains:

1. Artifacts

These relate to the aspects at the surface which are easily detected.

2. Espoused Values

The espoused values are the conscious strategies, goals and philosophies.

3. Basic assumptions and Values

The underlying assumptions and values make up the quintessence of culture. Although
these are not easily observable, they allow to delve deeper into the nature of human beings,
relationships and reality.

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Levels of Cultures and Their Interactions (adapted from
Schein, 1980, p. 4)

Hatch (1993) augmented Schein’s (1985) model by adding a fourth domain and uncovering the
processes connecting each element of the organizational culture construct. According to Hatch,
observable behaviour arises from underlying assumptions either through manifestation into values
and realization into artefacts or through interpretation into symbols and through symbolization into
artefacts. This is illustrated hereunder:

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Source: ‘Organizational culture model’ by Schein (1985) and Hatch (1993)

2.3.2 ELEMENTS MAKING UP ORGANISATIONAL CULTURE

Organisational culture usually comprises of the following elements:
 Values.
Values reflect what is of importance to the organisation and are generally the guiding principles
of behavior for members. They englobe the goals, views, and philosophies of an organization
and can be both stated and unstated. Firms having strong cultures have well-defined values by
which the organisation is even characterised and differentiated and which are imbibed by all
employees across.
 Norms
Norms basically relate to the accepted sets of behaviour in a firm and reflect the values and
beliefs held by members. Norms may be observed in the dress code of employees and the way
they communicate as well as by the prevailing leadership styles and work environment.

 Customs and Rituals

These relate to activities and celebrations which make employees feel they are part of a large
community, which important and of which it is worth being a part of. Examples are get-
togethers, retreats, events. All these foster the sense of belonging to the organization and
encourages team spirit.

 Stories and Myths:

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 These relate to the organizational history about events, people and achievements that convey
what is valued in the firm and embody the corporate culture

 Heroes

Heroes in the organization are those who imbibe the corporate values and endeavour to achieve
its vision, becoming role models.

2.4 CLASSIFICATION OF ORGANISATIONAL CULTURE

Over the years, various attempts have been made for classification of organizational culture and
the majority have been expressed along the four dimensions hereunder:

1. Power-oriented
The focus is on competitiveness and responsiveness to personality.
2. People-oriented
The focus is on the idea of consensus.
3. Task-oriented
The focus is on the idea of competency.
4. Role-oriented
The focus is on bureaucracy and legitimacy.

2.4.1 DEAL AND KENNEDY’S MODEL

Deal and Kennedy devised a model having two key dimensions, namely the ‘risk’ attached to the
company’s activities and the speed of ‘feedback’ to employees - different combinations of which
give the following types of culture:

1. ‘Tough guy culture’

This is reflected in risk-lovers who have a good sense of entrepreneurship.

2. ‘Work hard, play hard’

Here very often, the work requires lots of action but can be fun and there is prompt
feedback.

3. ‘Bet-your-company’

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 This is applicable to industries having high risk and requiring substantial technical
expertise.

4. Process culture

This is mostly applicable to bureaucracies which are suitable to public bodies and civil
service which are characterised as ‘low risk and low feedback’ firms.

Individuals differ in their personalities and aptitudes and hence have different affinities to
the types of culture. A person in the wrong cultural style may lose self-esteem and self-
confidence. It is thus important to take ‘cultural fit’ into consideration in human resource
practices like recruitment and selection. Deal and Kennedy even go as far to say that a
culture shock can be one of the main reasons why employees may ‘fail’ when they change
jobs.

2.4.2 CHARLES HANDY

Handy (1985) developed another way of looking at organizational culture and describes the
following:

 Power Culture

This is illustrated as a spider’s web where power is concentrated at the center from which
control is exerted. It is characterized by few rules and procedures and a competitive
environment.

Source: Handy (1999)

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 Role Culture

Power derives from the person's position. The organization usually has a well-defined
structure where superiors have clearly delegated authority.

The employees in the firm can be likened to columns and beams supporting a building.
It is characteristic of strong functional or specialised areas coordinated by a narrow band of
senior management at the top and a high degree of formalisation and standardization.

 Task Culture

Power is associated with expertise and teams are formed to solve particular problems. The
focus is on getting the job done by bringing together the right people and required resources
together.

This type of culture can be represented by a net whereby some strands are thicker and
stronger than others and where a larger portion of power is located at the knots.

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  Person Culture

The expertise of the employees is deemed to be more valuable than the organization. This
is commonly reflected in professional partnerships whereby each partner brings a specific
expertise and clientele to the firm, for instance lawyers, doctors, consultants.

Apart from the four cultures described by Handy, another type of culture is growing in popularity
nowadays is the Academic Culture. Companies with academic cultures look like research lab.
However, their focus is on technology rather than on products or markets. This is most prevalent
where high levels of technological risk are involved and scientific breakthroughs need to be made
to get a product to market. An example is finding the cure for a disease.

2.4.3 DENISON ORGANIZATIONAL CULTURE MODEL

This model provides a guide for organizational change through ‘The Organizational Culture
Model’and the ‘Leadership Development Model’. Both models describe the characteristics of
high-performance business culture and leadership and measure four essential traits of all
organizations, namely:

i. Adaptability;
ii. Mission;
iii. Consistency;
iv. Involvement

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2.5 NATIONAL CULTURE

One of the most influential researchers on national culture remains Hofstede who conducted
comprehensive studies on the influence of culture on values at work at IBM in more than 70
countries from 1967 to 1973.
It was stipulated that the values differentiating national cultures from each other could be
categorized into four dimensions, as described hereunder:
Power Distance
This relates to the extent to which the less powerful members of organizations and institutions
such as the family, expect and accept that power is unequally distributed. While a high score
implies that society expects that some people will have more power than others, a low score
indicated that all individuals should have equal rights.

Uncertainty Avoidance
This reflects the degree to which society accepts uncertainty and risk.
Uncertainty avoiding cultures try to minimize the likelihood of individuals being faced with
unstructured situations which are novel, different from the normal and unusual by enacting
strict laws and rules. On the philosophical and religious level, it is believed that there can be
only one absolute truth.
On the other hand, uncertainty accepting cultures are more tolerant of opinions different from
the norm with few rules and on the philosophical and religious level, they are relativists.

Individualism
Individualism relates to the extent to which individuals are expected to stand up for
themselves or as members of the organization to act predominantly. In individualist societies,
the bonds between individuals are quite loose and each person is expected to look after
himself/herself and their immediate family. In contrast, in collectivist societies, it is found
that since birth, individuals are tied in cohesive groups and where extended families are very
common.

Masculinity

This relates to the distribution of emotional roles between the genders in society. It was found
that women’s values tended to differ less among societies than men's values. The latter ranged
from assertiveness and competitiveness on one side- deemed to be different from women’s

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 values and on the other side, being modest and caring and therefore comparable to women's
values.

Other dimensions
The fifth dimension: Long-Term Orientation
In 1991, research conducted by Michael Harris Bond, led to the augmentation of the model by
a fifth dimension, based on Confucian thinking, called Long-Term Orientation (LTO) and was
applied to 23 countries. Societies having long- term orientation generate practical virtues which
focus on future rewards, with emphasis on persistence, savings and adaptation to changing
circumstances. On the opposite side, short-term oriented societies nurture virtues which are
connected to the past and present such as national pride, respect for tradition and meeting social
obligations.

The sixth dimension: Indulgence versus Restraint

Indulgence is with respect to a society which is accepts gratification of human drives

associated with enjoying life and having fun while restraint is where the society discourages
same and regulates it with strict social norms.

2.6 COMMUNICATION ACROSS CULTURES

In this era of modernization where the world is viewed as a ‘global village’, the challenge for
transnational communication has never been greater. Besides, with the national workforce
becoming more and more diverse ethnically, intercultural communication is growing in
significance.

Intercultural communication can be defined as a form of communication aiming to share

information effectively across different cultures and social groups. It focuses not only on language
but also on social attributes, thought patterns, and the cultures of different groups of people. It is a
common belief that culture is a powerful determinant of how individuals encode messages, the
medium they choose for transmitting them and the way messages are interpreted. To enhance the
effectiveness of intercultural messages, emphasis needs to be laid upon the specific areas of
communication such as the non-verbal, oral and written messages.

Other determining factors are as follows:

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High-Context vs. Low-Context

In low-context cultures, the message being communicated needs to be clear and explicit. This
usually applies to Germanic and English-speaking countries.

High-context cultures generally leave much of the message unspecified and allow for
understanding by nonverbal cues and wide interpretation ‘in between the lines’. Research shows
that this is the case for Latin American, African, Arab, Asian, American-Indian, Mediterranean,
and Central European countries.

Sequential vs. Synchronic

This view relates to the perception of time and has a significant influence on how organizations
approach deadlines and engage into strategic planning. While in sequential cultures, time is viewed
as a linear commodity to ‘spend, save or waste’, in synchronic cultures the flow of time is viewed
as a cycle relating the past, present and future. The former can be applied to South America,
Southern Europe and Asia, and the latter to the North American, English, German and Swedish
people.

Affective vs. Neutral

Individuals in affective cultures overtly display their feelings while those in neutral cultures
carefully control the emotion they display. This is the current practice in Japan, Indonesia, United
Kingdom, Norway and the Netherlands. Countries which are believed to accept individuals
expressing what they feel are Italy, France and U.S.A.

It should be noted that that there is no one best way to communicate across cultures and nations.
It will be improper to prize one type and condemn another. The key lies in developing an
understanding of and appreciation of the existing cultural differences across nations and then
attempt to adopt the necessary practices as well as develop the practical skills for improving
intercultural communication.
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2.7 THE FUTURE OF NATIONAL CULTURE

Despite the technological breakthroughs and growing interest in cross-border trade and
investment, there is no sign of a prevailing ‘global village culture’. Repeated measurements of
culture show that countries tend to display cultural divergence rather than cultural convergence.

Even if the geographic distances between countries are large, economic crises in only one of them
can lead to massive impacts on the entire economy of countries on the opposite side of the world.

Whether countries collaborate to resolve issues such as poverty, pandemics and climate issues,
cultural differences will persist. The forthcoming chapters will shed more light on the debate.

2.8 ACTIVITIES

Activity 1
Identify an organization of your choice. Illustrate how the Denison Organisational Culture Model
may be used.

Activity 2

‘One of the recurring objections about the notion of national culture is that there may be significant
cultural diversity within some countries and similarities across national borders, hence
compromising the concept of national culture’. How far do you agree with this statement?

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UNIT 3 ORGANISATIONS
Unit Structure

3.0 Overview
3.1 Learning Objectives
3.2 Organisation structures
3.2.1 Simple Structure
3.2.2 Functional Structure
3.2.3 Divisional Structure
3.2.4 Matrix Structure
3.2.5 Team Structure
3.3 Emerging Structures
3.4 The Organisation in a Global Context
3.4.1 Stages of International Involvement
3.4.2 Global Strategies
3.4.3 International Organisation Models
3.5 Diversity in a Cross-Cultural Context
3.5.1 Challenges in Managing Diversity
3.5.2 Strategies to Manage Diversity
3.6 Global Leadership
3.7 Activities

3.0 OVERVIEW

With the world turning into a ‘global village’, are things as bright as they seem?

While firms are being faced with pressure for global integration and standardization on one hand,
on the other hand, with the influx of employees from diverse cultural backgrounds and differing
tastes and preferences, there is pressure for local responsiveness and differentiation. This is often
referred to as the ‘global versus local’ dilemma.

26
According to Bellin & Pham (2007), as new markets emerge in developing countries and
international expansion grows, firms are more and more concerned about its effects on their
organizational culture- which forms their identity and has a significant role to play in their success.

The organization setting will be studied and the changes in a global environment, the role of global
leadership in a cross-cultural context will also be explored.

3.1 LEARNING OBJECTIVES

Upon completion of this Unit, you should be able to:

1. Demonstrate understanding of the challenges faced by the organization in a global
environment;
2. Appreciate the cultural impacts on the firm;
3. Discuss the ways in which the organization structure changes in an international
environment;
4. Evaluate how global managers can manage the firm successfully;
5. Assess the attributes required for effective global leadership

3.2 ORGANISATIONAL STRUCTURE

Various organizations have different organization structures- which reflect the character of the
firm and depict the values the organization believes it. The diverse and complex nature of the
global business environment has led to the emergence of new and amended organizational
structures, each with specific attributes to adapt to the needs of the new business environment. It
goes without saying that culture and structure are often intertwined.

The main types of organisational structures are discussed hereunder:

3.2.1 The Simple Structure

This form applies mostly to small companies or organisations in their early, entrepreneurial stages.
The characteristics of this structure are: flat hierarchy, few rules, low work specialization and

27
authority is usually centralized in one person. Moreover, the personality and values of the
founder/owner is highly reflected in this structure.

3.2.2 The Functional Structure

Here, people are grouped together based on similarity in skills/ expertise.

3.2.3 The Divisional Structure

In this structure, individuals are put in formal groups according to similarity of purpose.
For instance, grouping can be by:
 similarity of product/service- referred to as ‘product division’or;
 common customers- referred to as ‘customer division’ or;
 by geographical region - referred to as ‘geographic division’.

3.2.4 The Matrix Structure

28
This type of structure regroups together functional and divisional chains of command in a grid
resulting in the emergence of two command structures, namely vertical and horizontal.
For instance, teams are formed according to the functions they belong and product they are
involved in. This can be illustrated hereunder:

Under this structure, each employee reports to a department manager as well as to a project or
product manager. The benefits of such a structure are that it improves both formal and informal
communication and cooperation among departments as for efficient running of operations, project
managers need to coordinate their actions with those of department managers.
However, since one individual has to report to multiple managers, there may be power struggles
among them or role ambiguity whereby instructions are not clear or there is goal divergence. There
is also a high probability of interpersonal conflicts among employees. This type of structure
necessitates good leadership skills.

3.2.5 The Team-Based Structure

As the name implies, the aim of this structure is to improve horizontal relations by grouping
together individuals having complementary skills collaborating together to achieve common
organisational objectives.

29
3.3 EMERGING STRUCTURES

In the light of global competition and growing expectations of customers for prompt and
unmatched service, coupled with increasing use of technology, new structures are emerging.
Flatter organizations using joint ventures and strategic alliances which offer high levels of
flexibility and innovation are being favoured. As employees are spread both geographically and
organizationally in these models, businesses are eliminating superfluous processes and
concentrating on their core, value-added activities.

The Network Structure

In this structure, the firm undertakes its core activities and outsources other secondary activities to
external independent firms virtually and all operate together as one whole. This is also referred to
as ‘hollow corporation’ or ‘boundaryless organisation’

30
Virtual Organisations
Grenier and Meters (1995) expound that these alliances are virtual since the products/services are
not produced from a single firm but rather from an amalgam of entities including suppliers,
competitors and customers.
Toyota is one example of such a structure whereby it has been able to achieve efficiency and
quality in its operations by managing relationships with a multitude of suppliers across the world.

Davidow and Malone (1992) claim that virtual organisations are the sine-qua-non of the new
century bringing in innovative and efficient techniques such as computer-aided design, flexible
manufacturing, organizational streamlining, just-in-time supply and reusable engineering.

In this type of organization interfaces keep changing and team members are linked with each other
through interactive communication technologies, working across space, time, and organizational
boundaries to meet common objectives.

Some characteristics of the Virtual Organisation can be regrouped hereunder:

 This structure is driven by particular market opportunities, world-class excellence,

information networks, core competencies, interdependent relationships and permeable
boundaries
 The partners share the expenses, the risks and the rewards in pursuit of a global market.
 Such type of organizations emerge from specific market opportunities and once the
opportunity has been exploited, new alliances may be formed.
 When partners come together in the virtual firm, each brings their expertise/ core
competence creating synergies to reach unparalleled potentials.
 Sophisticated computer technologies are the norm where there is common use of
intranet systems, desktop videoconferencing and collaborative software which ease the
flow of information across.
As new organizational structures flourish, it is pre-requisite to have strong leadership skills to look
after virtual operations, to manage virtual teams and to sustain the network of virtual relationships.
The characteristics of effective global leaders shall be explored in following sections.

31
3.4 THE ORGANISATION IN A GLOBAL CONTEXT

There can be various ways of expanding growth in a global environment and the notion of
‘internationalisation’ involves several phases, as discussed hereunder:

3.4.1 STAGES ON INTERNATIONAL INVOLVMENT

 Stage 1
At this stage, the market of the organisation is exclusively domestic. Strategic business
decisions take into consideration only regional and national markets.

 Stage 2
Here the organisation expands its market to include foreign countries but retains its
production facilities within domestic borders. Strategies are centered around the demands
of international customers.

 Stage 3
At this stage, the organisation physically move some of its operations out of the home
country. International branches and subsidiaries are under the scrutiny of corporate
headquarters and a high majority of the top managers are expatriates.

 Stage 4
The organisation becomes a full-fledged multinational corporation here. At this level, some
decision-making is decentralised.

 Stage 5
This is the highest level of internationalisation whereby operations are highly decentralised
and organisations have do not have high degrees of allegiance to their native country. These
firms are generally referred to as transnationals.

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3.4.2 GLOBAL STRATEGIES

The multinational firm operating in a global environment faces various kinds of pressures, which
in one way or another influences its business strategy.

According to Barlett and Ghoshal (1989), the organisation facing local and global pressures may
adopt the following strategies:

 The multi-domestic strategy;

This strategy is suitable for organisations facing low pressure for global integration but
high pressure for local responsiveness. There is high need to customise products based on
local preferences, thereby creating value across all major markets.

The appropriate organisational structure helps to ensure that the selected strategy is
implemented successfully. Hence, the organisational structure to be adopted by businesses
pursing a multi-domestic strategy is a global area division structure.

 The global strategy

The global strategy involves standardising product offerings and market strategy across the
different markets.
Organisations generally devise product divisions that that worldwide responsibility for a
specific product.

 The transnational strategy

This strategy advocates that organisations have to be globally integrated and locally
responsive simultaneously.
The structure which is in most favour of this strategy is the matrix structure.

33
As firms internationalize, they need to find a global perspective to provide a competitive edge. The
solution advocated by scholars is to: “Think Global, Act Local”. However, this is easier said than
done.

3.5 DIVERSITY IN A CROSS-CULTURAL CONTEXT

The presence of diversity among employees may create misunderstandings which have a negative
impact on productivity and teamwork. Moreover, it may create overt or subtle discrimination by
those groups who do not fit into the dominant group.
To survive and prosper in an increasingly heterogeneous society, organisations must capitalize on
employee diversity as a source of competitive advantage. For instance, Avon products highly
capitalises on diversity to build competitive advantage using feedback from employees to adapt to
women’s changing needs quickly and effectively.
All those activities and processes formulated and developed to try integrate employees of various
backgrounds into the workforce and capitalizing on their diversity is referred to as ‘management
of diversity’. Previously, diversity was believed to lead to distorted communication, increasing the
possibility of conflict and thereby reducing efficiency at work. However, today firms recognize
that effective management of diversity can stimulate creativity, enhance problem-solving
capabilities and helps to achieve more system flexibility.
Rosabeth Kanter ( ) states that innovative organisations use diversity to “create a marketplace of
ideas, recognizing that a multiplicity of points of views need to be brought to work on a problem”

Research conducted from Hofstede in 1980 established that it was not rational to adopt a universal
managerial approach to meet the needs of individuals and groups. He advocated that the
contingency approach was the most suitable for such circumstances.

3.5.1 CHALLENGES IN MANAGING DIVERSITY

One of the hidden rules in American culture is not to comment on the differences as differences
imply a deficiency (Edwards, 1991). This has led to a growing opposing school of thought for
‘difference as better’. However, prejudice may always be there, especially in cases on minority
groups. Research conducted by Rutgers University Law School on Equal Employment

34
Opportunity1 showed that 40% of large employers discriminate racially while 30% display a bias
against women.

Another debate is the ‘difference is divisive versus better’. The question is to which extent a
universal concept of management involving standardised management practices can be replaced
by the concept of cultural relativity of management. The latter calls for adapting practices to the
employees’ different values, beliefs, attitudes and behaviour patterns. Supporters of universalism
claim that moulding management practices to a diverse workforce will lead to a permanent culture
clash where perceived inequalities can bring about intense conflict. On the other hand, the
proponents of relativity contend that not adapting management practices to involve the diversity
of employees will result in the employee feeling alienated and demotivated, impeding on
productivity.

It is a fact that a long-established corporate culture can be very resistant to change and it can take
a long time before incorporating diversity. Moreover, where there is resilience and a lack of respect
and trust among various groups, situations may be rife for conflicts. This implies that the more
organisations become diverse, the more it may become difficult to work as effective teams and the
greater the risks of interpersonal friction instead of co-operation.

There is a common saying in French that states “Qui se ressemble, s’assemble”. It will not be
uncommon to observe that in organisations workers tend to associate themselves with those who
in some way or the other share similar characteristics and experiences. This often leads to
segmented communication channels which can give rise to the following problems:
 If the employees remain confined in their own groups, the firm cannot benefit fully from
the standpoints and perceptions of the diverse workforce.
 It can become increasingly difficult to establish common grounds across the different
groups
 Minority groups can miss on opportunities or be unintentionally penalised if they are not
part of the mainstream communication networks.

In the majority of developed and developing countries, equal employment opportunity has been
imposed by governments. In various instances, this has had led organisations to understand that
they have to compromise their standards to comply with equal employment opportunity laws
leading to frustration among managers and employees. Furthermore, a forced diversity is often
viewed as favouring political agendas instead of performance and competence.

1
Study results reported in McDonough (1999, April 26), ‘A fair workplace? Not Everywhere’, Business Week,6.

35
It is also very important not to fall into the trap of ‘cultural determinism’ which leads one to believe
that from an individual’s group membership, his/her motivation, values, interests and behaviour
patterns can be inferred. This steals employees of their individuality and causes a divisive mindset.
Each employee deserves to be treated as an individual who has a unique set of experiences,
motivation, interests and capabilities.

3.5.2 STRATEGIES TO MANAGE DIVERSITY

Businesses who have been able to tap in their workforce’s diversity as a way to reap competitive
advantage and succeed tend to have the following strategies:
 Commitment from top management to valuing diversity;
 Diversity training programs
 Employee support groups
 Diversity audits
 Communication standards
 Apprenticeship;
 Activities/ Events celebrating diversity
 Policy of holding management responsible for management of diversity efforts

3.6 GLOBAL LEADERSHIP

According to Rymer (2008) past research confirm leadership's significant role in steering
organisational culture and organisational change. Alongside, studies have proved that
organisational culture is equally pivotal in shaping leadership styles and that leadership and
organisational culture are interwoven (Schein, 1992; Denison, 1996; Ogbanna & Harris, 2002;
Roberts, Ashkanasy, & Kennedy, 2003; Pors, 2008).
Managing global operations across disparate cultures and markets can be both a challenge and an
opportunity for businesses. Global markets are becoming increasingly more interlinked and
competitive and there is a growing need for leaders across the world to break out of the culturally
bound concept of managing people. While there is an attempt to standardize and optimize global
business processes, it is of utmost importance for leaders to better leverage their global assets and
talent pool.

The realm of global leaders is expanding and expectations are beyond limits.
But, what does ‘global leadership’ entail?

36
While for some, a global leader needs to have a global mandate such as the Pope, the others believe
that a global leader needs to have a global impact such as Bill Gates. The greater majority of people
consider that a global leader needs to exemplify some key universal traits such as clarity of
purpose, strong vision, appreciating cultural diversity courage of one’s convictions as well as
moral integrity. Davies (2007) proposed that the following sustainable leadership factors need to
be developed and deployed against outdated management: outcomes not only outputs, balancing
short and long term objectives, passion, personal humility, compassion, strategic timing and
strategic abandonment, amongst others. Other researchers believe that the most important
prerequisite for effective global leadership is a not a new set of skills or experience, but instead, a
new perspective called a global mindset.

A global leadership mindset involves trying to find a balance amongst three overall contradictions:

1. Global formalization versus local flexibility

This relates to formal approaches which gives customers the perception of the firm being
united and knowing what to expect from the global brand. However, the packaging of the
same products may be modified to adapt to local tastes and preferences.

2. Global standardization versus local customization

Here again the question is about whether to conform to global norms or adapt to local needs
and preferences. In cases where there are local regulatory controls, some food and drug
specifications may vary accordingly, while never endangering consumers.

3. Global dictate versus local delegation

On one hand there is the requirement for uniformity in the way of doing business and on the
other hand, local customs may dictate the conduct of business.

McDonalds is one such firm who has been successful at managing these polarities on a global
stage. It allows each country to adopt their own business practices, while catering to local tastes
(Gumbel, 2008)

In a nutshell, a global leadership mindset relates to the ability to take a global rather than a country-
specific view of business and people and be able to apply this perspective to a country, taking into
account its culture.

37
According to the ‘Thought Leadership Summit on Digital Strategies’ held in October 2004, it was
observed that it is undeniable that funding, metrics and technology hold key roles in effective
global operations, the ‘soft side’ issues: the human, intangible aspects of building global
collaboration are a make-or-break issue which necessitates explicit focus. It was further affirmed
that senior management must get the grounds of foundation right from the planning, the vision and
formulation of strategy to shared and consistent language as well as the development of a global
corporate identity.
During the summit, Ron Ricci, Vice-President of Corporate Positioning for Cisco Systems, Inc.
shared that whatever Cisco undertakes, verily begins with an awareness of the its long term vision
and goals which are also explicitly communicated to employees.

The global era has also led to a heightened need for a coaching culture in businesses whereby
managers and leaders adopt different leadership styles. This has emerged due to the fast pace at
which it is difficult to be up-to-date with technological details and where they find themselves
supervising employees about whose jobs they know too little about to be able to advise on the
technical aspects of the role. It is true that in general, firms have been slow at developing capacity
among their leaders but they are picking up now as there is demand for leaders to deliver results
through others and the use of coaching techniques is suitable to assist leaders in this respect. An
amalgam of training courses are increasingly being provided to leaders to develop coaching skills
and help them make the shift from a leadership style which is directive to a non-directive approach.

The best global leaders are those who can strike the right balance between extremes. They respect
the differences that exist while at the same time appreciating that there can be commonalities
across borders.

3.7 ACTIVITIES

Activity 1:
Describe three of the organisational structures which are largely prevalent today, exploring their
strengths and weaknesses.

Activity 2:
Many people believe that the best way to manage is to treat all employees equally regardless of
their cultural characteristics. How far to you agree on this?

38
UNIT 4 GLOBALIZATION & ETHICS

Unit Structure

4.0 Overview
4.1 Learning Objectives
4.2 Globalisation
4.2.1 Phases of Globalisation
4.2.2 Impact of Globalisation on Organisations
4.2.3 Cultural Globalisation
4.3 Ethics
4.3.1 Ethical Contexts
4.3.2 Leadership and Ethics
4.3.3 Ethics of Globalisation & Globalisation of Ethics
4.3.4 Factors affecting Ethical Behaviour
4.3.5 How to improve ethical behaviour
4.4 Activities

4.0 OVERVIEW

It cannot be denied that globalisation has a significant influence on the environment, on culture,
on political systems, on economic development and on human physical well-being in societies
around the world undoubtedly bringing changes to all countries it reaches. The rampant use of
technology including internet, fax machines, satellites, and television have shaped the perceptions
and dreams of citizens, leading to a spread of values, norms, and culture.

However certain questions remain unanswered; as to whether local cultures inevitably fall victim
to this global "consumer" culture? Will consumer values overwhelm peoples' sense of community
and social solidarity? Is globalisation a threat to traditional and local cultures?

39
4.1 LEARNING OBJECTIVES

By the end of this Unit, you should be able to:

1. Assess the impact of globalisation worldwide;

2. Demonstrate understanding phenomenon of ‘cultural globalisation’;
3. Appreciate the significance of ethics;
4. Evaluate the impact of globalization on ethics;
5. Consider ways on how to improve ethical behaviour at the workplace

4.2 Globalisation

Globalisation can be defined as a course of interaction and integration among different nations
including individuals as well companies. This process is further driven by international trade and
investment through the harmonisation of rules thereby creating structures to support and facilitate
interdependent and creating a global market place. This phenomenon has an impact on various
spheres namely the economic development, the environment, the political systems as well as
culture. Globalisation entails harmonizing different cultures and beliefs with the aim of producing
a seamless global system of culture and economic values.

Globalisation can be described as a phenomenon which has progressed partly due to the trend for
increasing international trade across national boundaries and this reflects the growth of inter-
dependencies between national markets and industries on a worldwide scale. This growing
interdependence between national economies has resulted in a trend towards global markets, global
production and global competition.

However, it can be argued that globalisation is deeply controversial. On one hand, proponents of
globalisation argue that it gives the opportunity to poor countries and their populace to progress
economically and improve their standard of living; while on the other hand, opponents of
globalisation claim that the conception of such an unconstrained international free market has
favoured multinational corporations to the detriment of local cultures, local enterprises, and
common people.

40
4.2.1 DRIVERS OF GLOBALISATION
Globalisation has been a long on-going process but it has been significantly enhanced since the
19th century, resulting in the amalgamation of the production of goods, services, ideas, culture,
communication, etc.

The drivers of globalisation can be broadly categorised into:

i. Market Drivers

These define how customer behavior distribution patterns evolve outlining the extent to
which customer needs converge around the world, global procurement, etc. Global
distribution channels are emerging to meet the increasingly converging needs of a global
customer base which are also changing the roles of global branding and marketing for
global success.

ii. Cost Drivers

The cost drivers provide opportunities for global scale or scope economic and help to
identify sourcing efficiencies reflecting differentials in costs between countries or regions,
and exploiting technology advantages. While the new economies of scale and scope are
shaping global strategies, new entrants will face more competitive barriers.

iii. Competition Drivers

These are defined by the actions of competitors-for instance the degree to which the
competitors globalise their strategies and corporate capabilities thereby making
geographical markets become interdependent.

iv. Government drivers

Government drivers include favorable trade policies, good regulatory regime and shared
product and technology standards.

41
 (Source: adapted from Total Global Strategy II, 2nd ed., Pearson Education)

4.2.2 IMPACT OF GLOBALISATION ON ORGANISATIONS

Businesses are constantly exposed to the global forces of demand, supply, international market
competition, their relevance to global issues concerns and demographic changes. Being able to
adapt to changes is the panacea for survival. The organisations which cannot adapt are doomed to
failure while others convert global opportunities into strategies adding to their strength and
competitive advantage, allowing them to deal with the threats from the changing environment
more effectively.

Globalisation can be a force for good: the globalisation of ideas about democracy and of civil
society led individuals to change the way they think, while global political movements helped in
solving world problems with the formation of world institutions such as WTO, UN, the World
Bank, OECD and IMF. It has helped numerous individuals to reach standards of living beyond
what they thought imaginable. The globalisation of the economy allowed countries to pursue new
markets for their exports and engage in foreign investment. There has been an emergence of
worldwide markets at the industrial level with many new businesses based on internet trading.
Global production, global competition and global brands such as McDonald’s, Coca-Cola and
Toyota are renowned worldwide and not to the ‘richer’ parts of the world.

Other positive effects of globalisation include:

 Spread of massive production and financial markets and wider access to a range of
international products to international products;
 On the political forefront there is the development of a world government which regulates
the relationships among nations and assures the rights arising from social and economic
globalization;

42
  Expansion of cross-cultural contacts, international cultural exchange and spreading of
multiculturalism;
 Internal restructuring of firms, aligning their business processes to improve customer
service, focused strategic changes to the management control systems and enhanced
technological positioning to attain competitive advantage.
 A rise in cross-border mergers and acquisitions
 A shift towards greater flexible working and the growth of the flexible firm.
However, for millions of people globalisation has not worked. Their situations has worsened as
they have seen their jobs destroyed and their lives become more insecure. The forces are beyond
their control and they are left feeling increasingly powerless as they watch their democracies being
undermined, their cultures eroded.

Despite the evolving global communities and benefits, the general effects of the global economy
are not good for the world poor as their socio-economic rights are not being met when they could
easily be met if the rules of the system were different (Pogge, 2003).

The adverse ways in which globalization can threaten a country’s national sovereignty and
capacity for independent action are as follows:

 The large size and growing scales of operation of multinationals allows them to have
significant influence over policy making of governments;
 Some firms may find it hard to cope with and understand the complexity of the diverse
international laws and standards;
 Increasing governance and ethical issues are coming to the fore.

The following sections will explore some of the prominent impacts of globalisation.

4.2.3 CULTURAL GLOBALISATION

The end of cultural diversity and the triumph of a uni-polar culture serving the needs of
transnational corporations can be argued to be one of the consequences of globalisation leading to
the extinction of traditional cultures.

It can therefore be deduced that culture is another domain charged with complex controversies
linked with globalisation. The conflicting views about how globalisation affects cultures can be
classified in two main groups, namely cultural homogenization and cultural diversification.

The positive standpoint of cultural globalisation is that cultural diversity emphasises on more
liberal cultural exchanges with wider choices and enrichment of learning from different traditions.
The choice to people worldwide is now unlimited in terms of goods produced internationally
unrestricted by geographical location, coupled with local offerings.

43
Conversely, the opponents of cultural globalization claim that there is a growing depletion of
cultural diversity through processes referred to as "Disneyfication" or "McDonaldization". Some
go as far as stating that rather than globalization, we are witnessing the "Americanization" of the
world. With the pop culture witnessed today, it seems that globalization is eventually causing a
sort of ‘cultural genocide’ on the world whereby the bigger and more dominant cultures are
becoming even powerful to the detriment of many others. Critics are rife with the sense of an
anonymous cultural imperialism2 with considerable evidence showing complex links with social
and political dynamics within and between national borders.

The highly contentious dynamics of cultural globalization revolve around the following:

1) the influence of extractive industries on the socio-economic, cultural exclusion and dislocation
of native people and their traditional knowledge;

2) international trading of cultural goods and knowledge; and

3) the impact of expatriates and immigration on national culture.

4.3 WHAT ARE ETHICS &WHERE IT COMES FROM?

Ethics is a part of philosophy that studies morals and values and the concept of right and wrong.
In ancient times, Aristotle stated that character was the most effective means of persuasion, which
he referred to as “ethos”(Lane Cooper, 1960). During times, the emperor Justinian was the first to
include ethics into the legal system and to form schools to educate lawyers concerning ethics,
morality and law. Napoleon stipulated that all citizens should be treated fairly and equally
irrespective of circumstances of birth or social stature. Undeniably, every civilization has
recognized the need for creating laws and codes to guide human relationship and behaviour
(Metcalfe, 2003).

Ethics is an integral part of the organization’s culture. Since different firms have different
organization cultures, designing an ethical organization involves analyzing all facets of the firm’s
culture and aligning them to support ethical behavior while discouraging unethical behavior.

When both the formal and informal systems of the business are aligned, this helps to create an
ethical culture.

2
Cultural imperialism is defined as the cultural aspects of imperialism-which relates to the creation and maintenance
of unequal relationships between civilizations favoring the more powerful civilization.

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4.3.1 ETHICAL CONTEXTS

The different ethical contexts are briefly outlined as follows:

•Situational ethics

This implies that there is no absolute rule for what is right. It depends on the particular context.
What is deemed to be right in one situation may be wrong in another.

•Cultural relativism

Whatever is believed to be right for a culture is naturally ethical for that culture.

•Professional ethics

Most professions have their own specific codes of ethics, which all members of those professions
are expected to follow, for instance, lawyers and doctors. The latter are believed to be ethical in
their practice if they follow the codes of their respective professions.

•Value-based ethics

This is based on the underlying assumption that each individual has a set of values he/she lives by
and the person is behaving ethically if his behaviour matches his values.

•Rule-based ethics

One is considered to be behaving ethically if he follows the rules of the firm, of his peer group,
culture, religion, etc.

4.3.2 LEADERSHIP & ETHICS

Leadership is a vital component of creating an ethical culture.

•Ethical leadership models ethical behavior to the organization and the community.

It is a fact that in most instances leaders are considered as role models and when the leader and the
firm are renowned for ethical behavior, they can provide a model for other organizations and the
community, as well.

•Ethical leadership builds trust.

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People will trust a leader when they know he will do the right things and/or take the right decisions.
Ethical leadership also brings respect and credibility to the firm.

•Ethical leadership enhances collaboration

• Ethical leadership involves taking decisions without ever compromising on the vision and
mission of the firm.

Whether the leadership position is formal or informal, Ethical Leadership should be practiced at
all times by anyone in a leadership position. In situations where choices are hard to make and
decisions difficult to be taken, these are the times when ethical leadership is most important, as the
stakes are high.

4.3.3 THE ETHICS OF GLOBALISATION & GLOBALISATION OF ETHICS

The ethics of globalisation, similarly to the ethics of anything involves the ethical examination of
globalisation and its various aspects as well as the application of ethical values to these issues.

On the other hand, the globalisation of ethics assumes that ethics is itself the subject matter of
globalisation, rather than the other way round. In the same way that the globalisation of production
is about changes in the global economy and the globalisation of governance is about emerging new
forms of governance, the globalisation of ethics relates to the ways globalisation influences ethics.

Ethics has come to include global ethics. Apart from issues in personal morality and lifestyle as
well as social and political philosophy matters, ethics also revolves around concerns such as world
poverty, foreign intervention, immigration, international trade rules, debt relief for poor countries,
global environmental problems etc.

There are countless debates about the ethical basis of trade, investment and debt relief, the
normative standing of international bodies that deliver assistance or support development like the
World Bank and the International Monetary Fund, etc.

Another question remains what norms should determine the social, political and economic
relations in a society which most suitably provides the ends of development in the form of well-
being as well as what norms are at the back of the international framework within which countries
pursue their development? The ethical assumptions underlying the international framework are as
vital to poverty relief as are any other ethical determinants.

When multinationals from developing or developed countries move to less developed ones, there
may be less developed legal frameworks which can be loopholes for efficient functioning and
transparency. Moreover, many multinational companies are allegedly offering very poor rates of
pay and some are making employees work in deplorable conditions. Some firms have even been

46
accused of practising child labour, depriving children of their right to education. All these require
urgent attention and remedial actions.

4.3.4 FACTORS INFLUENCING EMPLOYEE ETHICS

1. Stages of Moral Development .

Past studies state that there are three levels of moral development whereby each level consists of
two stages.

a) The first level, referred to as ‘preconventional’ relates to an individual’s choice of right or

wrong based on personal consequences.

b) There is then the ‘conventional’ stage where moral values rest upon meeting others’
expectations and sustaining expected standards.

c) Lastly there is the ‘principled level’ whereby the employee makes conscious efforts to express
moral principles withstanding the authority of the groups to which he/she belongs.

Studies on the stages of moral development show that the higher the stage an employee reaches,
the higher the probability of he or she behaving ethically.

2. Individual Characteristics
When an individual joins a firm to work, he already has values embedded inside; consisting of
convictions about right and wrong. The strength of the individual’s convictions is measured by the
‘ego strength’. Those who score high on ego strength tend to be those who act on what they believe
is right and stand against impulses to act unethically.

Another personality attribute which influences ethical behaviour is the ‘locus of control’.
Individuals having an internal locus of control believe they can control their destiny and take
personal responsibility for the consequences of their behaviour as compared to those having an
external locus of control, who believe that what happens to them is due to luck or chance.

3. Structural variables
Ethical behaviour is strongly influenced by structural variables such as formal rules and
regulations, job descriptions, written codes of ethics, performance management and reward
management systems.

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4. Strength of the organizational culture
A strong corporate culture has substantial influence on managers and employees for ethical
behaviour.

5. Issue intensity
The intensity of an issue has a significant influence on ethical decisions and is determined by the
following characteristics:

Magnitude of harm, consensus of wrong, probability of harm, immediacy of consequences,

proximity to victim and concentration of effect.

4.3.5 HOW TO IMPROVE ETHICAL BEHAVIOUR

The following recommendations are believed to cultivate ethical behaviour among members:

1) During the recruitment and selection process, employers should seek to know more about the
individual’s level of moral development, personal values, ego strength, and locus of control.

2) A code of ethics must be formulated for the organisation expressing clearly the firm’s primary
values and the ethical rules it expects its employees to follow.

3) Top Management sets the cultural tone for firms and they should exemplify their commitment
to ethical behaviour.

4) It is very important to set ‘SMART’3 goals and establish priorities and ensure that these are
communicated to the employees.

5) Performance management systems may include the dimension of employees upholding ethical
standards. This may motivate the employees to exhibit ethical behaviour at all times.

6) Training may also be given to help solve ethical problems. Simulations of ethical situations and
how to solve issues may be made.

7) Independent social audits may be carried out to assess management practices and decisions in
line with the company’s code of ethics and to deter unethical behaviour.

3
SMART: Specific, Measurable, Achievable, Realistic and Time-bound

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8) Managers should strive to inculcate a fear-free work environment so that employees with ethical
dilemmas can take the right decisions without fear of reprisal.

4.4 ACTIVITIES

Activity 1.

Multinationals having subsidiaries in parts of the world where business norms and practices differ
need to adopt the same values to thrive, even if this means adopting practices deemed unethical.
Discuss.

Activity 2.

What should global leaders do to create, support and promote a culture of ethical behaviour within
organisations.

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UNIT 5 MANAGING GLOBAL OPERATIONS
Unit Structure

5.0 Overview
5.1 Learning Objectives
5.2 Approaches for managing international Subsidiaries
5.2.1 Ethnocentric Approach
5.2.2 Polycentric Approach
5.2.3 Geocentric Approach
5.2.4 Regiocentric Approach
5.3. Determining mix of expatriates
5.3.1 Factors affecting the need for expatriates
5.3.2 Benefits and Limitations of employing expatriates
5.4 Expatriates- A Portable Life
5.4.1 Culture Shock
5.4.2 Reverse Culture Shock
5.4.3 Career Path
5.4.4 Cross-Cultural Training
5.5 Effective Performance
5.5.1 Recruitment and Selection
5.5.2 Training
5.5.3 Career Development
5.5.4 Coaching
5.5.5 Effective Communication
5.6 Activities

5.0 OVERVIEW

Staffing is a vital issue for all firms and especially more so for multinationals (Harzing, 2001).

50
Multinational firms have the option of transferring their employees between the different countries.
When employees are reshuffled from their home country to work in another country, they are
referred to as ‘expatriates’ and the latter are expected to improve the performance of the particular
subsidiaries they are assigned to. They are expected to develop, share and transfer best practices
as well as improve communication between subsidiary and main. Expatriates also help to foster
the parent corporate culture in subsidiaries. It is commonly believed that expatriated from
corporate headquarters moving to subsidiaries serves as a very powerful means of control.

5.1 LEARNING OBJECTIVES

At the end of this Unit, you should be able to:

6. Appreciate the various approaches to manage international subsidiaries;
7. Assess the factors influencing the recruitment of expatriates;
8. Consider the potential benefits and limitations of employing expatriates;
9. Demonstrate understanding of the challenges faced by expatriates;
10. Evaluate how expatriates can be successfully managed for effective performance

5.2 APPROACHES FOR MANAGING INTERNATIONAL SUBSIDIARIES

The main approaches to manage international operations are as follows:

5.2.1 ETHNOCENTRIC APPROACH

Under this approach, key positions such as senior management are posts are given to individuals
from the parent country. It is the most commonly used approach although in theory, it is prescribed
to organisations having a global strategy focused on centralised decision-making.

5.2.2 POLYCENTRIC APPROACH

Here multinational corporations recruit and are managed by residents from the host country
mostly. It is most prevalent in organisations pursuing a multi-domestic strategy and whereby each
subsidiary has relatively high autonomy in decision-making.

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5.2.3 GEOCENTRIC APPROACH
Under the geocentric approach, organisations look for the best employees, irrespective of
nationality. They give emphasis to diversity and recruit employees and managers from parent
country, host country and even third-country nationals. Transnational corporations tend to adopt
this approach.

5.2.4 REGIOCENTRIC APPROACH

This policy favours diversity but only within a specific region.

5.3 DETERMINING THE MIX OF HOST-COUNTRY AND EXPATRIATE EMPLOYEES

Irrespective of the form of internationalisation, the strategic decision involves who will be
responsible for managing the unit. It is often said that the success of the foreign venture depends
largely on the person in charge.

The following factors have a significant influence in determining the mix of host country and
expatriate employees:
5.3.1 FACTORS AFFECTING THE NEED FOR EXPATRIATES
 Local Talent

When there is not sufficient local talent in the host country, the number of expatriates
recruited is higher.

 Vision

If the firms have a corporate-wide global vision, they will tend to make subsidiaries form
part of an international network with a shared corporate identity whereby expatriates are
used to link the firm’s international subsidiaries.

 Interdependency of domestic and international operations

In a large number of cases, the manufacturing process requires that all the departments of
a firm-both domestic and international collaborate closely with each other, especially if the
end product of one particular business unit is required as an important input by the another
business unit. This requires expatriate managers working closely together to link the
production process together.

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  Political Stability

The greater the risk of government intervening in or imposing restrictions on the business
in host countries and the higher the probability of political turmoil, the more firms will tend
to rely on expatriates for senior management posts. When the local unit is being run by
expatriates, the business is less susceptible to political scrutiny.

 Cultural Differences
The larger the cultural divergence between the parent country and the host country, the
more imperative it is to recruit expatriates who can serve to bridge the gap and overcome
the barriers of different languages, customs, way of doing things, etc.

5.3.2 BENEFITS AND LIMITATIONS OF EMPLOYING EXPATRIATES

Some of the benefits of using expatriates to staff multinational corporations can be listed as
follows:
 Allows a wider global perspective;
 Because of cultural similarity with the home country, the proper transfer of business
practices is ensured;
 There can be tighter control and better coordination;
 Expatriates can share their international experience with resident employees;
 The value and skills know-how that expatriates possess may not be developed yet in local
employees.

The limitations are as follows:

 Local employees and managers may be demotivated or feel disadvantaged;
 There may be high transfer costs;
 The employment terms and conditions of expatriates may be subject to local government
restrictions;
 The expatriates may face adaptability problems;
 The subsidiary may have a larger influence from foreign country( parent country)

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5.4 EXPATRIATES- A PORTABLE LIFE

According to research in the field, it is estimated that around 20-40% of expatriates fail in their
assignments and this may be attributed to the following factors:

5.4.1 CULTURE SHOCK

While for some expatriates, adaptation may take some time, for others, it requires much more
effort, patience and time while some others may not be able to live in and work in an altogether
different cultural setting. The inability to adapt to a new cultural environment is referred to as
‘culture shock’ and is a big challenge faced by expatriates as well as a major reason for failure of
international assignments.

5.4.2 REVERSE CULTURE SHOCK

Very often expatriates do not realise how much they have changed by working and living in a
different culture for prolonged periods of time. Unconsciously, they may have internalised the
foreign country’s norms and customs and when they eventually return to their parent country, they
can experience a ‘reverse culture shock’ which can even lead to disciplinary problems at work and
feeling alienated.

5.4.3 CAREER PATH

Although the start of an international journey can be promising, with time, many expatriates may
feel that their career path is blurred and had they been in their home countries, they would have
easily climbed up the corporate ladder.

5.4.4 CROSS-CULTURAL TRAINING

A lack of cross-cultural training prior to being flown overseas can also be a significant cause
leading to failure of expatriates.

5.4.5 RESPECT AND STATUS

Expatriates very often feel the other employees do not value their experience and skills and may
feel disrespected and frustrated.

These failures can be very expensive for businesses, Apart from financial losses, it may also
involve a lot of intangible costs such as interruptions in business, lost opportunities and adversely
affect the company’s goodwill. Moreover, the expatriates and their families may face a lot of
adversity with the loss of their jobs and with high chances of career reputation being tarnished, it

54
may be very difficult to find another job soon, resulting in decreased morale, lowered self-esteem
and possible personal strife.

5.5 EFFECTIVE PERFORMANCE IN THE GLOBAL MARKETPLACE

Effectively meeting the multinational challenge does not involve simply transferring practices that
are based on the home country’s social and cultural standards to the host country but it requires
appropriately moulding these practices to the cultural environment of the host country.
The impact of too much inconsistency between a nation’s culture and the firm’s practices may lead
to non-compliance at best and even acts of open hostility at worst.
Successful international ventures require effective management by global managers and leaders
and the performance of employees, including expatriates is a key part with its own challenges as
follows:

5.5.1 RECRUITMENT AND SELECTION

Errors in recruiting and selecting employees for international assignments can prove to be a slow
poison to the business. Some ways of ensuring that the right employees are chosen for the jobs are:

 The firm can emphasise cultural sensitivity as a selection criteria. One of the means to
achieving this is by conducting personal interviews with the candidate and written tests
which measure social adjustment and adaptability.
 It is also recommended that managers who have international exposure be on the board for
recruitment and selection.
 Explore the possibility of recruiting foreign-born employees who can serve as ‘expatriates’
at a future date.

5.5.2 TRAINING
Training expatriates once they are in their new jobs is a must. Cross cultural training including an
insight into the host country’s social norms and values, business practices and customs, as well as
imparting of skills
The following approaches to cross-cultural training exist as follows:

 Information-Giving Approach

This approach is intended for expatriates whose assignments last for a short time such as
one week and provides only vital briefing and in some cases short language training.

55
  The Affective Approach

In this approach, the focus is on the development of the psychological and managerial skills
for expatriates working in the host country for more than one month but less than one year.

 The Impression Approach

This approach is suited for the expat managers who will be working in the host country for
a relatively longer period of around one to three years with higher responsibilities. The
need to be given field experiences and extended language training.

According to Littrell et al, there are also other approaches in cross-cultural training to raise
intercultural awareness. One is ‘Attribution Training’ whereby expatriates seek to interpret
behaviour from the stance of residents of the host country. On the other hand, ‘Culture awareness
training’ makes use of cultural sensitivity training groups also referred to as ‘T-groups’ to explore
the culture of origin of expatriates so that they can grasp their values and inherent biases first to
be able to better understand the dynamics of intercultural communication. Another method is
‘Interaction Training’ which involves on-the-job training whereby the expatriates can learn from
other experienced and established expatriates. ‘Didactic training’ is another type of training which
provides the expatriates with practical information and facts on cultural differences, conditions of
living. There is also a training which makes use of simulations, role plays and visits to the host
country called ‘Experiential training’.

5.5.3 CAREER DEVELOPMENT & COMPENSATION

It is important that the remuneration of the expatriates be either greater or atleast equivalent to
what they would be getting in their home country. An explicit incentive for accepting an
international assignment is recommended. Examples include bonuses or lump-sum payments after
successful completion of the international assignment.
An effective reward management system can also increase the chances of success of international
assignments. It is also important that the career path of the expatriate be well defined and that
reassurance be the foreign assignment can be a strong help in climbing the corporate ladder.

5.5.4 COACHING
Expatriates working in foreign countries for relatively long periods of time, at one point of the
other may be demotivated and/or suffer from alienation. In such cases, regular counselling and
coaching by effective leaders may have a significant influence on them. Very often, by mere talk
and some uplifting and guidance, the workers can get back their lost sense of motivation and get
back on track.

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5.5.5 EFFECTIVE COMMUNICATION

Effective communication is believed to be one of the most critical factors influencing learning and
performance of expatriates. Managers need to be able to convey information such as expectations
held, goals and objectives, performance targets in a way which the expatriates can easily
understand. Although there is no one best way for communicating with expatriates, certain
mediums work better for different types of messages. It is therefore important for managers to
know which communications tool to use strategically to optimise its potential.

5.6 ACTIVITIES

Activity 1.
Consider the growing population of Chinese expatriates working in Mauritius. Evaluate the
challenges they may be experiencing with respect to the two nations’ different cultural contexts.

Activity 2.
Discuss the ways in which global managers can gain the commitment of expatriates for optimum
productivity.

Activity 3.
The corporate restructuring mantra is echoing around the world and where mergers & acquisitions
and foreign ventures have proved to be successful, firms are aiming to recreate same magic. What
are the potential pitfalls to avoid in so doing and what are best ways to ensure that employees do
not face sharp culture shocks?

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UNIT 6

Unit Structure
6.0 Overview

6.1 Learning Objectives

6.2 Aesthetics & Organisations

6.3 The Capitalist System and Marxism

6.3.1 Alienation

6.3.2 Objectification of Employees

6.3.3 Flexibility- At what cost?

6.3.4 Culture- A new form of control?

6.3.5 Freedom

6.4 Activities

6.0 OVERVIEW

The recurring formula used in the annual reports of most organizations nowadays is that “people
are our greatest asset”. However, the underlying truth of this cliché is that people are the assets
on which competitive advantage is built. This is why firms worldwide have been focusing on
the efficient organization and management of this asset through organizational development
systems and management practices designed to link organisational strategy to human resource
policies englobing recruitment and selecting, training, performance management, rewarding the
employee based on commitment to organizational objectives, imbibing the corporate culture,
quality, flexibility, competence and cost-effectiveness.

However, the prized practices are also subject to a lot of criticism and inherent contradictions:
individualism versus cooperation, commitment versus flexibility, and a strong culture versus
adaptability. There is also a dissonance between commitment to the organisation-which is
promulgated by the rhetoric of culture and rewards of promotion, and commitment to the task
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 which in turn enforced by individual appraisal and reward (Legge, 1995). One ponders how the
employee is expected to exhibit team-spirit if the performance appraisal is on individual
achievements, how can numerically flexible4 workers be committed to their tasks and to the
company? Are functionally flexible5 employees capable of delivering quality goods, given that
quality is strongly associated with specialisation while functional flexibility with polyvalence?
Moreover, there seems to be a contradiction between notions of corporate culture; which is
something stable and rigid for long periods of time, and flexibility, which requires constant
adaptation to change.

The ways organizational structures are being designed or amended to ‘be more competitive’
requiring employees to constantly adapt themselves, it seems that employees are seen as a
malleable resource being corporately moulded to portray the organizational aesthetics. This will
be explored through Organisational Aesthetics in the following section.

To be able to understand management and the way in which organisations operate, it is of prime
importance to firstly analyse the society in which one is working- which is that of capitalism. In
the capitalist system where the focus is on profit maximisation, is the ‘human’ lost in this
entanglement?

Karl Marx’s(1818-1883) and Michel Foucault’s perspectives(1977) are also crucial to assess
whether, in the ‘age of the smart machine’, the individual is still given importance and if his
feelings, values, his self is respected or is he merely viewed as an economic man and reduced to
a commodity for the extraction of surplus value.

6.1 LEARNING OBJECTIVES

Upon completion of this Unit, you should be able to:

 Critically appraise the organisation and practices around it;

4
Numerical Flexibility has to do with hiring temporary agency workers and employing people on fixed-term contract
to meet demand at lower costs.
5
Functional flexibility allows employees move across the various functions in an organization through training and
allows employees to make use of their skills& competencies.

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  Demonstrate understanding of the notion of ‘Organisational Aesthetics’;
 Appreciate the contributions of Marxism and Foucauldian perspectives on organisations
and the underlying practices;
 Evaluate the inherent contradictions in key management practices

6.2 ORGANISATIONAL AESTHETICS

As Strati (1996: 209-210) states:

"Aesthetics do not coincide with the category of beautiful alone - one may also analyse the
ugliness, the grotesque or the kitsch ..."

In the same line, Organizational aesthetics here is not merely about the beauty of organisations’
physical layout, architecture or furnishings. It has gained increased interest over the years as an
aspect of organizational culture contributing to processes of control through the construction and
regulation of bureaucratic and professional identities within the organization (Berg and Kreiner
1990, Alvesson and Berg 1992). Organizational aesthetics is often viewed as a ‘sensory map’
through which people can intuitively sense what the organization is all about, its main values and
beliefs. Most of the researchers in the field view aesthetics as an efficient mechanism for shaping
the emotions, attitudes, and behaviour of individuals using a given space (Baldry, 1999).

Various researchers have found by studying organisational aesthetics; office décor and
organizational space that architectural decisions with respect to workplace layout, colours, zoning,
and shapes have a high influence on employees’ conceptualisations of their roles in the company
and how they imbibe the corporate values and associate with them, thereby clearly affecting
individual identity (Linstead 2000, Elsbach 2004).

Past studies also revealed that media messages passed on through aesthetic means become
‘memes’ through which people conceptualise and experience their world. They are core units of
cultural transmission with clear condensed images fuelling visual, verbal, musical and even
behavioural associations. In this way, employees create self-images and work orientations which

60
are in line with managerial objectives, allowing firms to not only control their behaviour, but also
their emotions, thoughts, and aspirations (Rose 1989, Kunda 1992).

The Aesthetics of Organization pulls together key contributions from postmodern thinkers,
through which meaning and order can be gauged in companies.

6.3 THE CAPITALIST SYSTEM AND MARXISM

Marx (1930) claims that in a capitalist society where the purpose of productive activity is not
determined by the workers, the latter have no autonomy and no control over decisions, not even
on issues concerning the use of tools and machinery (Lukes, 1994). Employees have only their
labour power- which they are forced to sell to employers due to not having control over the
instruments of production. For Marx( 1880:122), “the exclusion of workers from key decision-
making processes is viewed as the outcome of a struggle in which capitalists have appropriated
control of the labour process from workers in order that the material and symbolic advantages
(e.g. unearned income, status) accruing to the capitalist can be secured and reproduced”.

The exchange of goods reduces man to a commodity. For Marx (1969), the aim of capitalism is
profit-maximisation and to reach these ends, any means seem justifiable for the capitalist. In this
way, they try to exploit labour in a double way- firstly, by organizing and controlling the labour
process in such a way that labour is put to its most productive use, that is, maximum output is
obtained from them. Employees are also exploited by not being given the full credit for their
efforts. They are only given a small share of what they produce so as to survive and be able to
work again while the excess is seized by the capitalist. This is how the capitalists make profits and
the competition between them, makes each organization endeavour to exploit employees in this
double way.

By such tight control on the labour process, and forcing each employee to give more than his
abilities, “each worker is reduced to a crippled monstrosity” (Thomas, 2003). The capitalist has
recourse to use of machines to cheapen labour, narrow specialization of jobs, deskilling, and

61
robbing employees of their dignity by exposing them to downgrading and dehumanizing
conditions (Thomas, 2003). The employer-employee relationship in a capitalist society is therefore
an antagonistic one; reflecting class conflict in society and the deep-rooted social and political
frictions.

6.3.1 ALIENATION

According to Marx (1930), alienation is implanted in the realms of capitalism and employees
cannot therefore escape it. By selling their labour power, they also surrender their rights to control
their own labour to the capitalist. By so doing, the labour process becomes a degrading and
dehumanising activity, as stated by Marx:

“…all the means for developing production are transformed into means of domination over and
exploitation of the producer; that they mutilate the worker into a fragment of a human being,
degrade him to a mere appurtenance, make his work such a torment that its essential meaning is
destroyed.” (Marx, 1930:230, quoted in Fox, 1974:224)

In this system, the worker is separated; ‘alienated’ from the production process and from its
products. Hochschild (1983) states that during this process, workers also become alienated from
their true selves. Blauner (1964), identifies 4 main dimensions of alienation, which are:
powerlessness, meaninglessness, isolation and self-estrangement .6

6.3.2 OBJECTIFICATION OF EMPLOYEES

As Rachel (1978) outlines, treating people as they deserve is one way of treating them as
autonomous beings, responsible for their own conduct. Individuals whose work is undignified in
some way often distance themselves from the task. Making respect for others obligatory (for
instance, the customer is always right, even when abusive) rather than conditional devalues it
completely and is hardly dignified or dignifying. Dignity and respect are vital elements

6
For additional information on Alienation, please read: Blauner R (1964) ‘Alienation and Freedom’, Chicago:
University of Chicago Press

62
constituting the well-being of individuals and employees who do not get respect may be more
concerned about it than their pay. Hoodson(2002) states that “managerial behaviour supportive of
workers’ dignity not only encourages meaning and satisfaction at work but also reduces both
horizontal and vertical conflict”.

In the capitalist system, employees inexorably lose control over their work and are rendered
“objects” in the hands of the capitalist. They work, not because they find fulfilment in it, but only
to satisfy their needs. This again can be seen as a collusive game of the capitalist, using
‘technologies of consumption’- which is the triggering of superficial needs by the capitalist to make
individuals consume more, i.e., making consumption become a real economic enslavement. In
this way, employees can never become autonomous, self-actualized human beings in any
significant sense, but only in the way the capitalist wants them to be realized.

According to Rose (1990), consumption technologies establish “not only a public habitat of images
for identification, but also a plurality of pedagogies for living a life that is both pleasurable and
respectable.”

‘Technologies of responsibilisation’ aim at making good citizens, who encapsulate the values
prided by the corporation (Rose, 1990). Today, management also uses such collusive games so to
play with employees’ feelings and perceptions; making them believe that they are cared for by
using discursive practices7 such as empowerment, participative decision-making practices. In
return, the workers feel indebted to the company and give their utmost best to satisfy their
employers. In this way, the capitalist tries to gain the commitment of its employees and ensure
high productivity levels.

‘Technologies of the self’ can be regarded as a means through which human beings are made to
become ‘subjects’- of others through control and dependency, and subject to their own ‘identities’
through consciousness or knowledge of ‘self’. Both suggest a form of power (Foucault, 2000).
However the question remains whose identity and whose self..

7
Discursive practice- discourses which are said to be applied in practice, but which do not however become a
reality.

63
According to Rose (1991), there has been a ‘shaping of the private self’ from the ways knowledge
and discourses are constructed so as to rebuild the identities of individuals to conform to what the
capitalist wants. By doing all this, one is being forced to ask: what happens to the human in all
this? The self is no longer one’s true self, but a ‘manufactured self’! By identifying and
differentiating each individual one the basis of knowledge, they become ‘objectified’. Townley
(1994) describes objectification as ‘the process of dividing individuals not only from others, but
also within themselves.’ Thus, personality has become ‘inscribable’ and ‘quantifiable’ and the
basis for management to control more closely the labour process. Thus Foucault (1991) states that:
“He who is subjected to a field of visibility, and who knows it, assumes responsibility for the
constraints of power . . . he becomes the principle of his own subjection.”

In this way, ‘technologies of the self’ make individuals rework on their own body, thinking, norms
and values and govern themselves through introspection, foresight, calculation, judgments and
ethical norms so as to fit into the identity the capitalist has already prescribed. Human beings are
reduced to numerical equivalents, the subjective become objectified and quantifiable and their true
selves are eroded.

Through ‘technologies of responsibilisation’ and ‘technologies of the self’, individuals start being
self-regulated, autonomous beings under the reign of the Capitalist. This is in line with Foucault’s
concept of ‘governmentality’. The Capitalist only aims at extracting surplus value from employees
without realizing that they are human beings with emotions which are constantly being
manipulated and damaged. The individual is therefore reduced to a mere commodity.

Employees’ dignity at work is threatened since dignity is about self-command and autonomy,
which is dependent on how one is treated by others. Treating others as objects undermines their
dignity. Those who undergo emotional labour often face such erosion of their dignity. Instances of
such are searching an employee’s bag to ensure he/ she has not stolen anything or putting cameras
to watch over them, thus intruding their privacy. In many organizations, employees are being
converted into docile bodies where their emotions are patronized.

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 6.3.3 FLEXIBILITY – AT WHAT COST?

Temporary employment has become an appealing alternative for organisations today. This can be
seen as an opportunity for the jobless and fresh university leavers to develop their skills and acquire
experience. However, one should not also forgo the implication that it may simply be a cost-cutting
strategy whereby employing temporary workers, all the ‘surplus’ jobs at done a relatively cheaper
cost. In striving to reduce costs by adopting numerical flexibility, organisations seem to be
compromising with employee commitment and high quality output. It can thus be seen that
numerical flexibility may be just a veil-behind which is the hideous reality of labour
intensification, exploitation, downsizing and job insecurity for the employees, at the benefit of the
capitalist.

With the growth of IT systems, senior managers now have access to information previously not possible
for them to obtain, thus making a number of layers in the management hierarchy no longer a prerequisite.
This leads to delayering whereby a smaller number of managers have control over a larger number of
subordinates. The advent of vertical disaggregation has led to a decrease in the workforce and an increase
in the workload of existing employees, that is, a decrease in labour cost and labour intensification for the
remaining staff. In the craze for business process re-engineering as a means to increase efficiency,
profitable businesses are forsaken and capable employees are being dismissed. All this adversely affects
the morale of employees as they feel threatened and insecure; living with the constant fear of losing their
jobs.

We cannot stop ourselves from reflecting over what Richard Sennett(2000) has said:

“The time of flexibility is the time of a new power. Flexibility begets disorder but not freedom from restraint.
Those who exercise power within this complicated modern regime are free, but, it is an amoral freedom.”

To remain competitive, companies are constantly trying to reduce their costs and very often, they
tend to shoot at labour as labour rate is regarded as the most malleable and financially viable of all
costs. It is in this context that Karen Legge(1995) stated how a ‘degraded’ employment
relationship is masked by the language of “flexibility”. Sennett (1998) even went as far as saying
that “the qualities of good work are not the qualities of good character” and associates flexibility
with the corrosion of character.

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6.3.4 CULTURE- A NEW FORM OF CONTROL?

Culture relates to a set of beliefs and expectations which produce norms that powerfully shape the
behaviour of individuals.

According to Durkheim, before people were emotionally attached to religion and politics. Divine
law was binding, but today, all these ties have weakened and people need to attach themselves to
something larger than the ‘self’. Wilmott (1993) asserts that employees have turned into 'willing
slaves who negate their own interests because they believe the organization will take care of them’.

The reality is that the capitalist has been inventing and re-inventing new ways to ‘govern the souls’
of individuals. Willmott (1993) is of the opinion that the aim of corporate culturalism is to ‘win
the minds and hearts of employees – to manage what they think and feel’. Thompson and McHugh
(1990:241) declare that by making employees internalize the core corporate values, the latter ‘are
encouraged to perceive their performance and utility to the enterprise as their responsibility’. In
this way, the emotions of the employees are being “captured and damaged in the velvet cage of
corporate culturism”.

Organisational Citizenship refers to the notion of the company as a big family together. Team-
bonding activities, company anthem, company uniforms are some of the artefacts used to make
the employees feel they are part of the ‘family’. The mission statement is used to win the
confidence of employees. Ceremonies, parties and outings are organized by companies to make
employees feel they are being cared for. However, all these are mere collusive games employed
by the capitalist to secure commitment of employees. For instance, by making the employees
believe they are part of a ‘big family’, latter devote themselves entirely to the firm, believing that
the latter will provide them with ‘an identity, a place, a personality and a job they can be proud
of’. By making the relationship they have with the company the only social bond, organizations
absorb the employees’ energy and ‘mobilizes their whole person, thus storing up the danger for
them of a total loss of self-worth if they were one day no longer to deserve the confidence of the
firm and their colleagues’ (Gorz &Turner, 1999)

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6.3.5 ARE PEOPLE FREE?

In this era where people proclaim they are ‘free’, one is being forced to ask what is freedom? One
can say it relates to freedom of thought, or freedom of expression or freedom of action, but a close
scrutiny would clearly demonstrate that it is a freedom bounded by the capitalist.

In this fierce fight for survival, most individuals feel the urge to conform to the expectations of the
capitalist, so as not to lose grounds in front of their competitors, as they are ‘dependable but
disposable’. In so doing, they alienate themselves from their true selves.

Through practices which serve to render the individual more observable, thus controllable, such
as testing, selection, appraisals, the ‘human self’ gets eroded, re-constructed and manufactured.
Whyte(1956) claims that appraisal tests can assess some parts of an individual, but not the integral
whole person. The self is of ‘multiple and ambiguous nature’ (Kondo, 1990) and trying to measure
and judge the individual would be akin to playing God.

Foucault’s concept of power-knowledge demonstrates how HRM practices such as recruitment,

appraisal, performance management are used as ‘disciplinary practices’ to create knowledge and
power, thereby allowing managers to legitimate their roles while imprisoning the employees in
‘conceptual and geographical space’ to control closely the labour process. Jean Jacques Rousseau
rightly said that: “ Man is born free but everywhere he is in chains”

If employees are ever given autonomy, they have a price to pay for it: uncertainty, fragmentation,
work intensification and alienation. Modern organizations are talking about flexitime; whereby
employees are said to have complete freedom over how and when they do their work. However, it
has been seen how superiors are anxious to have control over the worker, be it through the use of
IT, intranet, extranet and telephone. It can therefore be said that freedom has inspired the invention
of a variety of new technologies for governing the individual.

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For instance, as explained before, the technology of consumption was used to shape identities and
locate individuals within a certain form of life. Technology of gazes and spaces; also referred to
as the ‘panopticon’ allows employees in a company to be constantly under surveillance.
Bramming (2003) thus claims that the individual is left no room for humanity by this ‘totalising
and maddening story of rational and functional management, making examination depersonalised,
as the individual is taken out of the equation’.

In this way, the various technologies devised by the capitalist make us talk and walk in the way
they want, according to their imposed ideology and norms, thus restraining our freedom and
governing our souls. As Collinson (2003) points out: “Organisations not only produce products
and services, but, in an important way, also produce people”.

6.4 ACTIVITIES

Activity 1

Organisations have proved to be successful due to the efficient and effective management practices
which have secured optimum commitment from employees and resulted in high productivity
levels. Discuss.

Activity 2

‘Flexibility is the new buzz in business and organisations capable of demonstrating how ‘flexible’
they are provide an indication of how successful they are’. How far do you agree with this
statement?

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