1 MOB- Unit III Syllabus:Foundations of Planning- Types of plans Approaches to Planning Planning in Dynamic Environment; Organizational designs and

and structures traditional and contemporary culture. Note (Definition- features- process - Approaches to planning- principles of planning.- Planning in Dynamic Environment(planning in a changing scenario). - V.S.P. RAO- 112 to 120 organisational designsorganisational culture and ethical behviour- factors shaping organisational culture and crating an ethical

PlANNING
TYPES OF PLANS:Depending on their use, management plans may be classified into five broad categories. TYPES OF PLANS

Hierarchical Plans Strategic plans Administrative plans Operating plan

Frequency-ofUse Plans

Standing plans Objectives Strategies Policies Procedures Rules

Single use plans Programmes Budgets Schedules Projects Methods

Time-Frame Plans Long range plans Medium plans Short plans

Organisational scope Plans Business/divisional -level plans. Unit-/functionallevel plans

Contingency Plans

HIERARCHICAL PLANS : The organization can be viewed as a three-layer cake, with its three levels of organisational needs. Each of the three levels institutional, administrative, and technical core is associated with a particular type of plan. The three types of hierarchical plans are strategic, administrative and operating (technical core). The three hierarchical plans are interdependent, as they support the fulfillment of the three organisational needs. 1. Strategic plans(Institutional) These plans are also called institutional plans. These plans define the organisations long-term vision; Articulate the organisations mission and value statement; define what business the organization is in or hopes to be in; Articulate how the organization will integrate itself into its general and task environment. Address the orgnaisaitons institutional level needs

2 They specify the organisaitons reason for being, its strategic objectives and its operational stratigies. Action statements that specify how the organisations strategic goals are to be achieved. Strategic plan have several defining characterstics: They are long-term and position an organisational within its task environment. They are pervasive and cover many organisational activities. Thery integrate, guide, and control activities for the immediate, an the long term. They establish boundaries for managerial decision making. 2. Administrative Plans:- These plans Specify the allocaton of organisational resources to internal units of the organization; Address the integration of the institutional level of the organisaiton ( for example: vision formulation) with the technical core (vision implementation) as well as integrating all the operation plans. Address the integration of the diverse units of the organization. 3. Operating plans(Technical core): These plans cover the day-to-day operations of the organization. Provide direction and action statements for activities in the organisations technical core. FREQUENCY-OF- USE PLANS: Another category of plans is frequency of use plans. Some plans are used repeatedly. Others are used for a single purpose. 1. Standing plans ( Multi-use Plans):fdfd a. Objectives Definition: Objectives may be defined as the ends, purposes or aims which an organization wants to achieve over varying periods of time. According to Allen: Objectives are goals established to guide the efforts of the company and each of its components. Objectives are the aims or purposes for which an organization is set up and operated. Objectives indicates the destination of an organization. The planning process begins with the setting up of objectives. The terms, Objectives , mission, goal , target, standard, quota, deadline, etc are used interchangeably in management literature. Mission :- it indicates the end which is to be achieved over the whole life of an organisation or at least over a long period. Goal: Goals are collective ends towards which organizations direct their energies and activities. Targets: A target is a plan stated in concrete measurable terms. It is a specific and quantitative objective. Standard: A standard is a norm or criteria against which performance can be compared and evaluated. Standard indicate anticipated or desired results. Quota: A quota is a form of target stated in quantitative terms.

3 Deadline: Time limits are known as deadline. b. Strategies: Definition: Strategy is the complex plan for bringing the organization from a given posture to a desired position in future period of time. It is essentially a response to external environmental forces. It is broad plan of action for the deployment of resources in pursuit of defined objectives. It is an interpretative plan formulated by top management to give meaning and shape to other plans. A strategy provides answers to the following questions: What business are we in? What should be our business? Who are our customers? What do they buy and why? Why should society accept us? c. Policies Definition: Policies are general statements of understandings, which guide or channel thinking in decision-making of subordinates. A policy is a broad statement formulated to provide guidance in decision-making at lower-levels of management. It defines the area of limits within decisions can be made. It does not provide a detailed answer to particular problems. It provides freedom for judgement. Example : a policy that promotions will be based on merit only. Policies are routes to the realization of objectives. Policies provide broad paths for reaching objectives. It may be written, verbal or implied statement. Broad in scope and flexible. It is a standing plan that guides people for a long-period. Policies are both restrictive and permissive. d. Procedures Definition: a procedure is a series of related tasks that make up the chronological sequence and the established way of performing the work to be accomplished. Used in all functional areas of business. Exist at all levels. (throughout the organization). Derived from policies. For moat policies, there is an accompanying procedure to show how the policy should be carried out. Procedures are laid down for purchase of raw materials, processing of orders, selection of employees, redressal of grievances.

4 e. Rules Rules are prescribed guides for conduct or action. They specify what should be done or not done in give situations. A rule is a rigid and definite plan leaving no scope for discretion or deviation. Rules are established authoritatively and enforced rigorously. Rules also perform the function of communication the obligation of employees. They facilitate discipline and uniformity of action in the organisaion. 2. Single Use plans:a. Programmes:- A progamme is a comprehensive plan designed to implement the policies and accomplish the objectives. It is a combination of goals, policies, task assignments, resource flows, etc. b. Budgets:- A budget is a plan which states expected results of a given future period in numerical terms. It is a plan or blueprint designed to achieve a specific goal. It may be expressed in time, money or other units. c. Schedules:- A schedule is a time table of work. It specifies the date when a task is to begin and the time needed to complete each task. The starting and completion date for each part of programme are specified in the time schedule. d. Projects:- A project is a complex scheme for the investment of resources which can be analysed and evaluated as an independent unit. e. Methods: Methods are formalized and standardized ways of accomplishing repetitive and routine jobs. They are designed to keep operations running on planned and desired lines, to prevent confusion, and adhocism and to ensure economy and efficiency. TIME-FRAME PLANS: These plans differ in the distance into the future projected. Long-range plans (strategic plan) : More than five years. ( it is prepared for a period of 5, 10 or 15 years or more). It takes into account the forecasted changes in the environment over the ling-term. It results in long-term commitment of resources. It involves a great deal of uncertainty because the period involved is several years. It takes a macro view of the organization. These are less specific than shorter-range plans. These are less formal, less detailed, and more flexible than short-range plans in order to accommodate such uncertainty. Long-range plans also tend to be more directional in nature. Medium-range / Intermediate / Tactical plans: one to five years. It is more detailed and specific than long-range strategic planning. These plans are designed to implement strategic plans by coordinating the work of different departments. Coordinative in nature. A tactical plan is drawn up for short-term moves and manoeuvres within the broader and more stable strategic plans.

5 Example : to meet a sudden in demand, shortage of power etc. These plans are less detail than operational plans. Short-range plans (operational plan): Several hours to a year. They are specific and detailed. These plans are prepared on the basis of strategic and tactical plans. Main purpose of these plans is to maximize efficiency in day to day operations and to ensure uniformity of action. In the absence of these plans, the broad picture set by strategic plans would remain a blank outline. It regulates the daily routine of the organization. Typical examples: Repairs and maintenance plan, Purchase plan , product plan. ORGANISATIONAL SCOPE PLANS: Plans vary in scope. Some plans focus on an entire organisaiton. Example: the president of the university of Minnesota advance a plan to make the university one of the tp five educational institutions in the united states. This strategic plan focuses on the entire institution. Other plans are narrower in scope and concentrate on subset of organisational activities or operating units such as the food services unit of the university. 1. Business / divisional-level / plans: These plans focus on one of the organisations business (or divisions) and its competitive position. 2. Unit- / functional level plans: These plans focus on the day-to-day operations of lower-level organization units. Example : Marketing, Human resources, Accounting and Operations plan (production). 3. Tactical plans : division-level or unit - level plans designed to help an orgnasation accomplish its strategic plans. CONTINGENCY PLANS: Contingency pans are created to deal with what might happen if these assumptions turn out to be wrong. Contingency planning is thus the development of alternative courses of action to be implemented if events disrupt a planned course of action. A contingency plan allows management to act immediately if an unplanned occurrence, such as a Strike, Boycott, Natural disaster, Terrorist threats, Major economic shift, Render existing plans inoperable or inappropriate. Example: Airlines develop contingency plan to deal with terrorism and air tragedies. Most contingency plan are never implemented, but when needed, they are of crucial importance. ORGANISATION DESIGNS AND STRUCTURES TRADITIONAL AND CONTEMPORARY ORGANSATIONAL DESIGNS: Definition of organization structure:Organisational structure refers to the differentiation and integration of activities and authority, roles and relationships in the organization. Characteristic / Nature / Features of organization structure:

6 Common purpose Division of labour Authority structure People Communication Coordination Environment Rules and regulations. Need and Significance of Organisation structure: Facilitates administration Facilitates growth and diversification Stimulates creativity Encourages use of human beings Permits optimum use of technological improvements It encourages organisational efficiency Optimum utilization of organizational resources. Principles of Organisaiton structure: Unity of objective Span of control Scalar (chain) principle Functional definition Specialization / division of work Exception principle Unity of command Balance Efficiency Flexibility Continuity Coordination and leadership Parity of authority and responsibility. TRADITIONAL AND CONTEMPORARY ORGANSATIONAL DESIGNS:Types of Traditional Oranisational Designs:THE SIMPLE STRUCTURAL DESIGNS. Features: Manager and owner are one and the same. It is a flat organisaiton. It has only two or three vertical levels. Decision-making is centralized. Low degree of departmentalization. Wide span of control

7 Little formalization. Authority centralized in a single person. Figure:-

Advantages: Very simple to understand and operate. It is inexpensive to maintain. Very fast and flexible. Disadvantages It becomes inadequate as an organization grows. Low formalisaition and high centralization tends to create information overload at the top. Decision making is very slow, as a single executive makes all the decisions. It is very risky as everything depends on one person. If that one person is no longer there, everything collapses. Suitability: Small organizations. Example: Retail store LINE ORANISATION STRUCTURE: -(Military or Scalar) Def: it is the oldest type in which the authority flows from top level to bottom level Features: line of authority are vertical flowing form top to the bottom. All persons at the same level are independent of each other. There are no staff specialists. The authority and responsibility of each position is clearly specified. Unity of command The command is through is through a straight and unbroken line. Figure:-

8 Advantages: Simplicity Prompt decision Effective discipline Orderly communication Unified control Economical Fixed responsibility Executive development Coordination Disadvantages: Lack of specialization Overloading Autocratic approach Low morale Instability Rigidity Suitability: Where continuous processes are employed Where automatic machines are used Where the work is largely of routine nature and the methods of operation are simple Where the business is carried on a small scale and few subordinate are employed. Where it is not difficult for a manger to handle labour problems FUNCTINAL ORANISATION STRUCTURE: Def: It is the structuring of organization on the basis of particular functions or specific activities Features: The whole task of the enterprise is divided into specialized functions. Each function is performed by a specialist. Specialist operate with considerable independence. Functional authority relationship among various departments. Limited span of management and tall structure Emphasizes on sub goals. Advantages: Specialization Reduction of workload Better control Easier staffing Higher efficiency Scope for expansion. Disadvantages:

9 Double command. Complexity Delay in decision making Problem of succession Lack of coordination Expensive Suitability: Suitable for large and medium sized concerns. It should be applied at higher levels. It works better if the organization has one major product or similar product lines. Where business activities become more and more complex Where organization requires more formalized and systematic approach to major activities. Figure:-

DIVISIONAL ORGANIZATIONAL DESIGNS. It is similar to dividing an organisation into several smaller organizations but it is not quite the same, since each smaller organization is not completely independent.

Features: It is also called profit decetralisation. It is divided into several fairly autonomous units.

10 Each unit is relatively self-contained. Each unit is headed by a manager. Each unit is not a separate legal entity. It is still part of the organisation. Each unit is directly accountable to the organization. Issues in divisional structure design: 1. basis of divisionalisation. a. Product divisionalisation. b. Territorial divisionalisation c. Strategic business divisionalisation. 2. Number of divisions. 3. Provisions of corporate staff activities. 4. relationship between corporate and divisional management. Advantages: Emphasis on end results like profits, product, customer ect. Performance measurement is easier. Higher level of managerial motivation. No problem in managerial succession. Each product or customer is able to get specialized sevice. Disadvantages: It is quite costly because all the facilities have to be arranged for each division. Lack of emphasis of functional specialization. Lack of managerial personnel when a new division is opened. Control system is a major problem of divisionalisation. Suitability: While growth through expansion of same line of business forces a small organization to organize on functional basis, growth geographic and product diversification necessitates the adoption of divisional structure. LINE AND STAFF ORGANIZATIONAL DESIGNS. Def:- line and staff organization is a combination of line and functional structures, under it, line authority flows in a vertical line and staff specialists are attached to line positions to advise them on important matters. Features: Line executives involves in implementation of functions. Specialists do not have power of command over subordinates. Staff people are purely of advisory nature. Line executives need advice, information and help of staff specialists. Advantages: Expert advice. Reduced workload to line mangers. Quality decisions. Training of personnel Flexibility.

11 Disadvantages: line & staff conflicts. Confusion. Ineffective and irresponsible staff. Expensive. Suitability: It is very suitable for large organisatons. It is not useful for small organisaitons. It provides ample scope for specialization without violating the unity of command. TYPES OF CONTEMPORARY ORANISATIONAL DESIGNS: PROJECT ORGANISATIONAL DESIGNS. Def :- A project is a unique and complex cluster of activities designed around a distinct mission and a specific time frame Features: Each project is organized as a semiautonomous project division. Project manager is responsible for the successful completion of the project. The activities of project team members are coordinated by a project manager. A project team consists of specialists in different fields. Advantages: It facilitates concentrated attention. It allows maximum use of specialized knowledge and skills. It provides greater flexibility It provides better coordination of organisational resources. Units of command is maintained. Provides greater control and fixation of individual respondents. Disadvantages:Lack of awareness of project problems, personal prejudices. Lack of clear communication lines. Lack of performance standards for various professionals. Lack of clearly defined responsibility. Project manager job is very difficult. Greater uncertainty. Structure:-

12 Suitable situations: The project offers a unique or unfamiliar challenge. The project has definite goals and well-defined specifications. Completion of the project is critical to the organization. A project is complex with interdependent tasks. Limited time. MATRIX ORGANISATIONAL DESIGNS. Features: It is hybrid grid structure. It represents a compromise between functional and product structures. Overlapping of command, control and behaviour patterns. More flexible and technical oriented. Employee has two bosses. Advantages: It is more flexible than the traditional functional organization. Effectively focuses attention & resources on single project. It stresses authority of knowledge rather than status. Provides motivation to personnel engaged in project. High technical standards can be maintained. Decision-making can be delegated to lower levels. More efficient utilization of resources. Disadvantages: It violates the principle of unity of command. Organisational relationships become very complex. Greater confusion among personnel. Coordination is very difficult. Dysfunctional conflict may arise b/w functional managers and project mangers. Administrative costs are high. Absence of spirit of understanding & accommodation.

13

Suitability: Manufacturing activities i.e. chemicals, electronic, industrial products and pharmaceuticals etc. In service sectors as banking, brokerage, insurance, construction, retailing. Non-profit organisations: Govt agencies, hospitals, universities. Professional activities: accounting, advertising, consulting and law. NETWORKING ORGANISATIONAL DESIGNS.

In the network design, the firm concentrates on where it can add the greatest value in the chain and it outsources to upstream an / or down stream partner who can do better job. It enables the firm to achieve both efficiency and flexibility. It provides the benefit of both mechanistic and organic structures. The principal firm sub-contracts many of its functions to other organisations and coordinates their activities. The services are outsourced to separate firms that are connected electronically to central office. Sub-contractors flow in and out of the network depending upon its changing requirements. The hub organization maintains control over work processed by various sub-contractors. It can take different shapes. Decentralized structure. Facilitates decentralization of authority. COMMITTEE ORGANISATIONAL DESIGNS. Def:- A committee is a group of persons formed to discuss and deliberate on problems and to recommend or decide solutions. Features:It may be authorized to deal with all or specific activities. Scope of its activities is limited. A committee may be constituted at any level of organisation. Its members may be drawn from various departments. Committee have authority to go into details of the problem. Advantages: Pooling of knowledge and judgement. Effective coordination.

14 Motivation through participation. Management development. Effective communication. Consolidation of authority. Representation of diverse interest groups. Avoiding action. Check against misuse of power. Disadvantages: Expensive Slow decisions Compromise decisions Divided responsibility Misuse of committees. Purpose: To coordinate the activities of different departments. To review the performance of certain units. To facilitate communication and cooperation among diverse groups. Consultation of various persons in the organization. To give participation and representation to different groups. Making committees effective: Right size. Careful selection of members. Clear terms of reference. Capable chairman. FREE -FORM ORGANISATIONAL DESIGN: Def : it is a rapidly changing, adaptive, temporary system organized around problems to be solved by groups of relative strangers with diverse professional skills. Closely related to project and matrix organisational designs. These are also called as naturalistic , organic, adhocratic form of organisation. It is based on the premise that the organisation is an open system and the basic task of a manager is to facilitate change in the organisation. Requires greater flexibility and adaptability. Reduce the emphasis on position, departments an other formal units and on the organisational hierarchy. Traditional man-boss relationship disappears. These are suitable for those industries which have to work in highly dynamic environments. Such organisations characterized by high flexibility and ever-changing character. Required to put more pressure on information processing Quick decisions independent status to the various units. LINE AND STAFF RELATIONSHIP Definition of line:

15 Line:- line functions are those which have direct responsibility for accomplishing the objectives of the organisation (lines are operating departments). Definition of staff: Staff:- staff functions help the line functions in attaining these objectives. (staff are auxiliary or service departments) Line relationship: line authority exists between superior and his subordinates Features : Chain of command relationship exists between each superior and subordinates. Channel of communication between members of the organisation. It carries ultimate responsibility for the work assigned. Advantages: Simplicity Fixed responsibility Quick decisions Develops managers Flexibility Economical Disadvantages: Lack of specialization Scarce talent Arbitrary actions Difficult to coordinate. Staff relationship: the relationship between a staff man and the line manager Features: Only gathers facts. Pure advisory relationship. Studies problems and offer suggestions Prepare plans for the use and help of line managers. Provides advice, assistance and information. Advantages: Specialization Clarity In-depth skills development Suitability ease the burden of top managers Reduces waste and duplication. Disadvantages: Promotes conflicts in the organisation Affects morale Lack of respect

16 Delayed decisions Irresponsible Lack of accountability Lack of coordination Line people steal the credit Distinction between line authority and staff authority

Line Authority 1. Right to decide and to command 2. Relatively unlimited and general 3. Doing function 4. Provides channel of communication 5. Bears final responsibility for results 6. Exercises control 7. Making operating decisions. 8. Creating supsup relationship 9. Possessed by generalists. 10. Flows downward 11. Contributes to achieve organizational objectives . Line- staff conflict: Line complaints against staff personnel: Staff oversteps its authority Staff does not give sound advice. Staff steals credit Staff has a complex Staff experts fail to see the whole picture objectivity. Staff complaints against line managers: line executives do not provide sufficient authority. Line managers often resist new idea.

Staff authority 1. Right to provide advice, assistance and information 2. Relatively restricted to a particular command 3. Thinking function 4. No channel of communication 5. Does not bear final responsibility 6. Investigates and reports 7. Provides ideas for decision 8. Extension of line and supports line 9. Possessed by specialists 10. Flows in any direction 11. Assists line.

Line managers do not make a proper use of the service of staff specialists. Weaknesses in the organisation structure lead to line and staff conflicts Lack of well defined authority. Temperamental differences. Steps to improve line-staff relationships or Achieving cooperation between line-staff. Clarify relationships Educate line Compulsory staff advice Inform staff

17 Sell advice Encourage line Overcome resistance Completed staff work Orientation Constitute committees. Position rotation Linking pin concept developed (overlapping groups are formed who serve as linking pins between land staff). ORGANIZATIONAL CULTURE I. Definition Organization culture as the philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes and norms that knit an organization together and are shared by its employees. --- Killmann

Organization culture can be defined as the set of key values, assumptions, understandings and norms that is shared by members of an organization and taught to new members as correct. II. Characteristics of organization culture 1. have. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Risk Tolerance: The degree to which employees are encouraged to be aggressive, innovative, Direction: The degree to which the organization creates clear objectives and performance Integration: The degree to which units within the organization are encouraged to operate in a Management Support: The degree to which managers provide clear communication, assistance Control: The number of rules and regulations, and the amount of direct supervision that is used Identity: The degree to which members identify with the organization as a whole rather than Reward System: The degree to which reward allocation are based on employee performance Conflict Tolerance: The degree to which employees are encouraged to air conflicts and Communication Patterns: The degree to which organizational communications are restricted to People Orientation: The degree to which management decisions take into consideration the and risk-taking. expectations. coordinated manner. and support to their subordinates. to oversee and control employee behaviour. with their particular work group or professional expertise. criteria in contrast to seniority, favouritism and so on. criticisms openly. the formal hierarchy of authority. effect of outcomes on people with in the organization. III. Significance or Importance: Individual Initiative: The degree of responsibility, freedom, and independence that individual

18 1. Bonding: Organization Culture creates a strong sense of bonding between the organization and its employees. (Willingness to perform work, good interpersonal relationship). 2. Sense of identity: Employees identify with the organization based on the culture. Such identification makes them * * committed to the success of the enterprise, and willing to sacrifice their individual interests for the sake of organization

Ex. Employees of Tata, Infosys and Wipro etc. express pride in their organization. 3. Attitude development: Employees joining an organization have different various backgrounds, interests, education, attitudes etc. Once they join the organization employees develop a positive work attitude towards organization, if the culture has a positive attitude towards its employees. IV. Factors shaping organizational culture / Drivers of organization culture / culture Artifacts. (essay question) An organization exists only because of the people who are a part of it, and those people both shape and interpret the character and culture of the organization. Once a healthy culture is established, leaders use a variety of techniques to maintain a strong culture that provides both internal integration and external adaptation. An organizations culture is often a reflection of the values advocated by a founder or top leader. Organization culture manifests through : Rituals, organizational Rites and Ceremonies, Stories, Structures & Symbols, Semantics Fablesand tales Specialised language, Statement of principles Careful Selection & Socialization of new employees to keep culture strong, instill the cultural values in the organization through their day-to-day actions (daily action). All theses exhibits together constitute the culture artifacts. Rituals: Rituals are everyday organizational practices that are repeated routinely. They help dramatize the organizations culture. They also help achieve desired behaviour from employees and build commonality of culture. Examples: Dress code of organizational members How visitors are greeted How fellow employees are greeted

19 How often senior executives visit subordinates How much time employees take for lunch etc. Rites and Ceremonies: A Ceremony is a planned activity that makes up a special event and is generally conducted for the benefit of an audience. Ceremonies are more formal artifacts than rituals. Leaders can schedule ceremonies to provide dramatic examples of what the company values. These occasions provide opportunities to reward and recognise employees whose behaviour is congruent with the values of the company. Ceremonies reinforce specific values. It creates a bond among employees by allowing them to share an important event , anoint and celebrate employees who symbolize important achievements. Examples: celebrating launch of a new contract , Publicly rewarding employees . Presenting jewelry, furs, luxury cars etc to high-achieving sales consultants. ( Mary Kay Cosmetics, one of the most effective companies in the world in using ceremonies) Stories / Fables and tales: Many stories are a way to teach values to children. Example, the famous panchatantra tales inculcate moral values. Similarly , a number of stories of the success and failure of an organisation usually exist. These stories relate to number of organisational practices such as recruitment, selection, criteria for training, transfers, promotions, firing, quality management, grant of leave, festival advances, facilities, status and are a basis for both old and new employees to understand what kind of behaviour is acceptable or unacceptable in the organisation. Stories about the CEO Stories about how the company deals with employee who have to relocate. Stories about how the company deals with crisis situation. Structures & Symbols, Symbols denote the culture of the organisation. They also indicate the status attached to various positions. Sometimes the size, shape, location, age of building and structure of the organisation also indicate the culture. Example: tall buildings often symbolize bureaucracy and a narrow span of management for the organisation. Even internal arrangements reflects the culture. The way cabins are organize, tables and desks are provided., the dress code etc, reflect the culture adopted in the organisation. Example : traditional structure in a class room(line of benches) Round table indicates the more discussions in the classroom. Semantics: In an organisation a number of terms that reflect the work environment are developed over a period of time.

20 Such terms may relate to the physical facilitates, machines, superiors, suppliers, customers, and procedures of recognizing other employees and products. Terms such as value oriented organisations, organisation. Example 1: HMT labeled time keepers of the nation Example 2: Hindustan lever super value stores Example 3: HR personnel use the term no issue denote no problem. Specialised language: The language of the workplace speaks highly about the organisations culture. Many organisations and units within organisations use language as a way to identify members of a culture or subculture. By learning this language, members attest to their acceptance of the culture and in so doing, help preserve it. Organisations, overtime, often develop unique terms to describe equipments, officers, key perosonnel, suppliers, customers, or products that relate to its business. New employees are frequently overwhelmed with acronyms and jargon that, after six months on the job, have become fully part of their language. Direct Statement of principles : Some organisations have explicitly written principles for all to see. Some other companies make explicit the moral aspects of their culture by publishing codes of ethicsspecific statements of a companys ethical values. Statement of the type enables the newly hired employees to understand the culture of their organisation. Selection & Socialization Selection and socialization of new employees helps in maintaining cultural values. Hires the kind of people with the right values and attitudes to fit its culture. Example Commerce Bank- hired the people who are having the sense of humor, outgoing personality, enthusiasm etc. Daily action Ceremonies , slogans , symbols are useless if leaders do not signal and support important cultural values, through their daily actions. Employees watches the leader attitudes, behaviours, reactions in crisis , frugality, fairness in their daily actions. Leaders are responsible for instilling new employee values. CREATING AN ETHICAL CULTURE: Definition of Ethics: Ethic is the code of moral principles and values that governs the behaviour of a person/group with respect to what is right/wrong. Steps of creating an ethical culture: Each individuals moral compass is shaped by countless experiences over a lifetime family, culture, friends, education and religion many organizations have established a code of conduct to guide their employees regarding their ethical responsibilities. high ended company etc signify the culture of the

21 An employee who departs from this guidance may have the burden of justifying such a departure in a disciplinary or legal proceeding. Having an ethical culture is an important component to running an effective business today. Top nine steps that have the most effective and direct impact on establishing an ethical culture. The nine step are as follows. 1. Tone at the top 2. Develop an ethics policy 3. Establish an enforceable code of conduct 4. Initial and ongoing training 5. Communicate policies and procedures (Regular communications) 6. Implement controls (Anonymous reporting hotline) 7. Enforcement/Action 8. Establish penalties and rewards (Rewarding employees that live the culture) 9. Enforce policies consistently. 1. Tone at the top: Whenever professional ethics is discussed, the tone at the top of an organization is usually part of that discussion. This concept entails a comprehensive program that goes beyond setting a good example and doing the right thing; it requires an organizations management to act on the principles embodied in its formal ethics policy. 2. Develop an ethics policy Developing a strong, detailed ethics policy is a good beginning, but only thata beginning. Contradictions between the values reflected in a written policy and managements actions are glaringly apparent to an organizations employees. 3. Establish an enforceable code of conduct A code of conduct, often referred to as a code of ethics, is the foundation of any ethics program. The code of conduct should not be designed as a reaction to past missteps. An ethical culture is built upon the proactive efforts of the organization. The development of the code of conduct should be led by those at the top of the company, and should also include employees in the process. While ultimately, the tone of the program and the ability to enforce it will be determined by the actions and examples of the executives, when employees have a hand in the codes development, they become owners as well. Leaders see their constituents as not just followers, but rather as stakeholders striving to achieve that same common purpose, vision, and values. These follower and stakeholder constituents have their own individuality and autonomy, which must be respected to maintain a moral community. Ethical leaders embody the purpose, vision, and values of the organization and of the constituents, within an understanding of ethical ideals.

22 They connect the goals of the organization with that of the internal employees and external stakeholders. The code must include guidelines for appropriate behavior in everything from marketing practices and finance policies, to the treatment of co-workers. Equally important are enforceable and clear consequences for inappropriate behavior. The code should also extend beyond internal behavior to external relationships with partners, customers and contractors. An ethical culture does not end at the entrance of the company, and all employees must buy into the program in order to build a successful culture. 4. Initial and ongoing training There is a phrase that has been used many times when it comes to training: The day we stop learning is the day we die. One of the most important aspects of developing an ethical culture is the ongoing training that companies can provide to executives and employees. The purpose of training is to help employees know what is expected of them and to help them understand that a strong ethical culture can protect the companys reputation and actually enhance profits. Employees need to know that their ethical or unethical choices will have a direct impact on the success or failure of the company. Ethical leaders embody the purpose, vision, and values of the organization and of the constituents, within an understanding of ethical ideals. They connect the goals of the organization with that of the internal employees and external stakeholders. Training begins once a person is hired and should continue throughout the life of the employee. Each training session should focus on a single concept to ensure that the message is understood. Examples of training may include confidentiality, protection and proper use of company assets, discrimination and harassment, use of email and Internet, and gifting policies. Training should be ongoing. The concept of tell them, tell them again, and then tell them what you told them, is extremely relevant when it comes to building a culture and will help to continually remind employees of important principles. Training should also be tailored to specific positions in the company and employees roles. Training should be available in multiple formats to ensure that it is available to everyone. i.e Live workshops, on-line resources, or printed materials should be available to train all of those responsible for the success of the organization. 5. Communicate policies and procedures (Regular communications) Although establishing an ethics policy within an organization is necessary to define clear accountabilities and responsibilities, how the policy is communicated throughout the organization is equally important. Common (official) methods of communicating policies include a combination of management meetings, training sessions, e-mail messages, employee orientation, and the organizations general manual.

23 Although not generally thought of as a method of communication, the expectations of a companys culture are most effectively communicated through the actions of its management. 6. Implement controls (Anonymous reporting hotline) Developing and implementing controls to detect violations of established policies is another integral step in the ethics compliance process. Because many ethics policies reflect legal and regulatory requirements, violating these laws and regulations can create significant liability for the organization, its directors, officers, and other employees. One of the best detection methods for unethical or illegal conduct is through tips from employees, vendors, or anonymous sources. Proactive procedures should be established to encourage open lines of communication for reporting violations, such as an anonymous (whistleblower) hotline. Retaliation of any kind against an employee who reports a violation or assists in an investigation of such violation should be prohibited. 7. 8. Enforcement/Action Establish penalties and rewards (Rewarding employees that live the culture) An effective disciplinary process is essential to engender a culture of compliance. Procedures to ensure fairness and due process should be established and well communicated. In addition, appropriate penalties to fit the crime, as well as rewards for positive reinforcement of ethical behavior, should be unambiguous. 9. Enforce policies consistently. The enforcement of an organizations disciplinary process will determine the extent to which its policies are followed. If employees are not convinced that corrective action will be taken upon detection of a violation of company policy, future compliance is less likely. Ethics Violations Are Not Victimless Crimes The purpose of an ethics policy is to support a culture of openness, trust, and integrity in a companys management and business practices. Unless employees, managers, and directors understand that a violation of ethical standards is not a victimless crime, they are more likely to expose the company to significant business risk. When an organization breaches its ethical standards, someonecustomers, investors, or employees always gets hurt.

24