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Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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The Internal Environment: Culture and Diversity
Topic 2
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Copyright Notice
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Learning Objectives
Discover the nature of the organisation’s internal environment
Identify the components of the internal environment and their impact on organisations
Examine the term ‘culture’ and the roots of organisational culture from the discipline of anthropology
Discuss the importance and determinants of an organisation’s culture and how the culture can be managed
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Learning Objectives (cont.)
Discuss the nature of workforce diversity
Describe the major determinants of diversity in organisations
Describe diversity and its impact in different contexts
Discuss individual and organisational strategies and approaches to diversity management
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The Organisation’s Internal Environment
An organisation’s internal environment consists of conditions and forces within the organisation
Its major components include
owners
board of directors and governance structure
employees and organised labour
organisation’s culture
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The Organisation and its Environment
Davidson, Simons, Woods & Griffin 2009 p70
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Organisational Culture
Culture
The set of values that helps an organisation’s stakeholders understand what it stands for, how it does things and what it considers important
Culture defies objective measurement or observation
Culture plays a major role in shaping the behaviour of managers
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What is ‘Culture’?
An anthropological perspective
Frames of reference: history, language, values, beliefs and interpretations of experience
Reflected in: customs, folklore, artefacts, rites, rituals, celebrations, legends, myths and heroic sagas
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Primary Characteristics of Culture
Innovation and risk taking
Attention to detail
Outcome orientation
People orientation
Team orientation
Aggressiveness
Stability
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Importance of Culture
Links to organisational identity, reputation and aspirations
Cultures are rarely uniform across an organisation
Culture can shape overall effectiveness and long- term success
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Determinants of Culture
Beliefs and values of the organisation’s founder/s
Societal norms of the organisation’s host country
Problems of external adaptation
Problems of internal integration
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Two National Cultures
American symbols the stars and stripes flag
the bald eagle
baseball
apple pie
American rites and rituals Fourth of July picnics
Super Bowl parties
90 minute commutes on the Los Angeles freeways
American heroes ???
Australian symbols Footy
Gallipoli
Meat pies
Vegemite
Australian rites and rituals Australia Day barbecues
Surfing
Remembrance Day marches
‘going bush’
Australian heroes ???
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Managing Organisational Culture
Managing culture is essential but difficult. Steps involved include
First understand the determinants of culture
Decide if the culture needs to be maintained or changed
If the culture is to be maintained reinforce it with symbols, ceremonies, reward and modelling
If it is to be changed be clear about how. External change agents may help
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Contemporary Issues in Managing Change
Changing organisational cultures
Cultures are naturally resistant to change
Conditions that facilitate cultural change
The occurrence of a dramatic crisis
Leadership changing hands
A young, flexible, and small organisation
A weak organisational culture
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How can Cultural Change be Accomplished?
Conduct a cultural analysis to identify cultural elements needing change
Make it clear to employees that the organisation’s survival is legitimately threatened if change is not forthcoming
Appoint new leadership with a new vision
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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How can Cultural Change be Accomplished? (cont.)
Initiate a reorganisation
Introduce new stories and rituals to convey the new vision
Change the selection and socialisation processes and the evaluation and reward systems to support the new values
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Towards the Multicultural Organisation
Organisations can be classified according to the way in which they respond to diversity
The exclusionary organisation
The club organisation
The compliance organisation
The affirmative action organisation
The redefining organisation
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Towards the Multicultural Organisation (cont.)
The multicultural organisation
is characterised by pluralism
achieves full structural integration
achieves full integration of informal network
is characterised by an absence of prejudice and discrimination
exhibits no gap in organisational identification based on identity differences
has low levels of intergroup conflict
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Towards the Multicultural Organisation (cont.)
The multicultural organisation
supports efforts to expand the notion of multiculturalism
reflects the contribution and interests of diverse cultural groups throughout all of its activities.
has achieved high levels of diversity
can fully capitalise on the advantages of the diversity
has few diversity-related problems
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Globalisation has a tendency to create a more culturally cosmopolitan labour force
Why is this good?
How can it be negative?
Globalisation
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Globalisation (cont.)
Globalisation was initially conceptualised as the worldwide process of economic and industrial restructuring
Today globalisation is also understood to include the process of continual change through the opening up of markets
Managers now have to deal with diversity on a global scale
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Managing Diversity
Multiculturalism is not new to Australia
Prior to 1788 the continent was inhabited by more than 200 Indigenous groups
First Fleet, Gold Rush
Post-World War II immigration boom
International events
Today, new social policies and management practices have emerged to foster cohesive links among all Australians
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The Nature of Diversity
Definitions of diversity vary
Diversity is best conceptualised as a continuum
Broadly defined diversity is when members of a group or organisation differ from one another along one or more important dimensions such as age, race, sex or ethnicity
‘Diversity’ can also apply to people from the same culture
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Dimensions of Workforce Diversity
Davidson, Simon, Woods & Griffin 209 p 78
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Two Dimensions of Diversity
1. Primary
Differences that are impossible or extremely hard to change (age, ethnicity, gender, race, sexual orientation, physical and mental abilities)
2. Secondary
More fluid. Individuals have more control. Can change more easily (communication style, first language, education, family status, religion, income, work experience). Some secondary dimensions are very difficult to change
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Equity in Diversity
Workplaces provide vastly different experiences for individuals in terms of access, participation, opportunities and outcomes
Equity is based on the assumption that all persons have the right to fair treatment, irrespective of gender, race, socioeconomic background, impairment and so on
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Current Practice
Diversity increasingly seen as being a competitive tool
Organisations worldwide become more diverse: gender
race
ethnicity
age
national origin
other characteristics
Heterogeneous workforce
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Changing Demographics in the Labour Market
A range of factors are changing the demographics of the contemporary labour market in Australia
These factors include
changing gender roles
the strengthening profile of indigenous people, ethnicity issues
the growing participation of people with disabilities
Australia’s ageing population
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The Causes and Impacts of Increasing Diversity
Increasing diversity among employees in
Australian organisations reflects social change
Factors that have contributed to the increase in
diversity are
changing demographics in the labour market, changes
in the legislative framework, the globalisation of
markets and the recognition of value in a diverse
workforce
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The Causes and Impacts of Increasing Diversity (cont.)
Davidson, Simon, Woods & Griffin 2009 p 79
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Opportunities and Challenges of a Diverse Workforce
Diversity provides both opportunities and challenges for organisations
Diversity can be
a force for social change
a source of competitive advantage
a force for organisational change
a source of conflict
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Greater ability to attract and retain employees
Lower absenteeism rates
Cost savings because of improved attraction, retention and absenteeism rates
A force for organisational change
A force for social change
Opportunities
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Increase creativity and innovation and, therefore, productivity
Recognition of expanding niche markets and international markets
Improved decision making by providing different perspectives on problems
Alternative strengths of employees
Recruitment from a wider talent pool
Opportunities (cont.)
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Inherent fear of change
Stereotyping
Language and custom difficulties
Physical characteristics
Potential for conflict
Challenges
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Diversity in Teams
Some Advantages Some Disadvantages
Multiple perspectives Ambiguity
Greater openness Complexity
Multiple interpretations Confusion
Increased creativity Miscommunication
Increased flexibility Difficulty in consensus
Increased problem solving Difficulty in agreeing
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Organisational Approaches to Equity and Diversity Management
Approaches to equity and diversity management
include
Traditional approaches
Legislative approaches
Anti-discrimination approach
Affirmative action approach
Non-legislative approaches
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Legislative Changes
Australia’s legal obligations regarding diversity arise from ratified treaties made with the United Nations, International Labour Organisation
Both federal government and the state governments have anti-discrimination legislation
This legislation encourages change in relation to access, status, power and rewards for people in the workplace
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Productive diversity
Involves using people’s different skills and abilities to achieve the best possible productivity or economic outcome
Reasons for using difference include
the mutual benefit to both the organisation and its employees
the organisation’s competitive advantage in the marketplace
Non-Legislative Approaches to Diversity
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Valuing diversity
Mutual accommodation and adaptation to achieve best management practice and social justice
Cross-cultural education, including information sharing, mentoring
Networking recommended as a means of assisting individual and group change
Non-Legislative Approaches to Diversity (Cont.)
Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia
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Managing Diversity in Organisations
Individual strategies for dealing with diversity include
Understanding the nature and meaning of diversity
Empathising with others
Overcoming prejudice
Communicating openly
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Managing Diversity in Organisations (cont.)
Organisations play a fundamental role in managing diversity through
Culture
Organisational policies
Organisational practices
Communication
Training
Organisational culture is the most appropriate context within which diversity can be addressed