An organization’s culture has a major impact on the kind of work managers perform. Managers take key decisions related to planning, organizing, leading, and controlling. All these decisions are largely affected by culture.
Table of Content
Managerial Decisions Affected by Culture
Let us have a look at how culture affects managerial decisions:
Planning
Planning is the most crucial managerial function that is affected by the culture to a great extent. For example, if the existing culture of an organization focuses on individual performance, the goals and objectives of the organization should be defined as per the skills and abilities of individuals.
Organising
In the planning process, the time frame for the accomplishment of organizational goals and objectives is defined. To achieve goals in that frame, tasks are organized in a manner so that they fit into the corporate culture of the organization.
Leading
The culture of the organization affects the leadership style that managers follow to drive employees toward organizational goals and objectives. For example, if an organization’s culture is authoritative, strict controls are imposed on employees to fulfill organizational goals.
Controlling
Controlling is the final managerial function. After the plan is executed, managers evaluate whether the executed plan has delivered the desired performance. In case there are deviations, improvement measures are taken. However, if the organization has a rigid culture and it does not embrace innovation, improvement measures cannot be taken appropriately.
Steps in Building Relationships With External Stakeholders
A stakeholder is an individual who has an interest in an organization. Stakeholders can be internal (employees, owners, etc.) or external (customers, suppliers, creditors, shareholders, competitors, community, trade unions, government, etc.).
Stakeholders are affected by the actions of an organization to a large extent and vice versa. Till now, you have studied the importance of internal stakeholders in developing organizational culture. However, having good relationships with internal stakeholders is not sufficient for an organization. It is of utmost importance for an organization to maintain long-term relationships with external stakeholders in order to develop a strong corporate culture.
An organization can maintain strong relationships with external stakeholders by encouraging them to participate in organizational decision-making. This leads to innovation, trust among stakeholders, greater organizational flexibility, and predictability of environmental changes. An organization takes the following steps in order to maintain strong relationships with external stakeholders:
- Identifying Organisational Stakeholders
- Identifying the Interests/concerns of the Stakeholders
- Determining an Approach to Manage Relationships With External Stakeholders
Identifying Organisational Stakeholders
In this step, the organization needs to find out the external stakeholders who are affected by organizational decision-making largely. Moreover, those stakeholders need to be identified who can potentially influence the decisions of the organization.
Identifying the Interests/concerns of the Stakeholders
The second step involves determining the preferences of the stakeholders identified. Some stakeholders may be interested in product quality, while some prefer the financial stability and good infrastructure of the organization.
Determining an Approach to Manage Relationships With External Stakeholders
As discussed earlier, maintaining good relationships with external stakeholders is of high importance for the organization. For this, managers adopt various approaches.
However, the selection of a particular approach depends on two factors, namely, uncertainty in the environment and the criticality of external stakeholders. Table 3.1 shows various approaches to managing relationships with external stakeholders:
| Environmental Uncertainty | Stakeholder Importance | |
| Critically Important | Important But Not Critical | |
| High uncertainty | Cell 1 Stakeholder partnerships | Cell 2 Boundary spanning |
| Low uncertainty | Cell 3 Stakeholder management | Cell 4 Scanning and monitoring the environment |
Cell 1 represents a situation where maintaining stakeholder relationships is critically important and environmental uncertainty is high. In such a scenario, managers make certain arrangements between the organization and the stakeholders to achieve common goals. The aim of developing such relationships is to become interdependent
Cell 2 represents a situation where maintaining relationships with stakeholders is important but not critical. In this cell, environmental uncertainty is high. In such a scenario, managers adopt the boundary-spanning approach to stakeholder relationship management.
Under this approach, the organization has certain members known as boundary spanners. These members interact with various stakeholders and extract information from them related to their preferences, interests, concerns, etc.
Cell 3 represents a situation where maintaining stakeholder relationships is critically important and environmental uncertainty is low. In such a scenario, managers use the stakeholder management approach, wherein managers use Customer Relationship Management (CRM) and Supplier Relationship Management (SRM) efforts.
Cell 4 represents a situation where maintaining relationships with stakeholders is important but not critical. In this cell, the environmental uncertainty is low. In such a scenario, managers need to continuously monitor stakeholders and their concerns.
They need to observe if these concerns are changing. No specific actions need to be taken. decision decreases. ty increases, the effectiveness of the manager in cell 4 represents the highest level of environment.
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