MBA7000 People & Organizations: Assessment on Analysis of Diverse Aspects of Organization Answer
MBA7000 People & Organizations
This report aims at analyzing the diverse features and activities of organizations in line with the given scenarios. By using the Hofstede model of culture, the researcher has discussed organizational structure, culture and behavior. It has been found that both flatter and divisional organizational structures play a significant role in achieving corporate goals and objectives. The stages of change management have been analyzed using Kurt Lewin’s 3-factor change model. A significant outcome of the research is that the best-fit HR approach is more practical than best-practice HR approach. Bundling of HR practices and policies has been found to have significant effects on organizational effectiveness.
The purpose of this report is to develop an analysis of diverse aspects of an organization and its wide range of activities. Section 1 of the research discusses the organization structure, behaviour and culture relating to a UK based private firm employing around 5,000 people, whereas section 2 sheds light on the change management process using academic theories of change. Diverse models of HRM and HR policies and practices have been discussed in section 3. The final section of the report aims at analyzing sustainable decision making and ethical leadership approaches.
Section 1: Organisation Structure, Culture and Behaviour
1. Hofstede’s model of culture
Dr Greet Hofstede coined Hofstede model of culture that has been the popular and commonly used model to understand the differences between cultures. Hofsted model of culture has six dimensions, including Individualism versus Collectivism (IDV), Power Distance Index (PDI), Uncertainty Avoidance Index (UAI), Masculinity versus Femininity (MAS), Long Term Orientation versus Short Term Normative Orientation (LTO), and Indulgence versus Restraint (IND).
Figure 1: Hofstede cultural dimensions
(Source: Hofstede Insights. 2019)
Power Distance Index (PDI): It denotes to the dissimilarity that subsists in society. A High PDI score indicates that societal people have low power and they agree to an unequal sharing of power. A low score in PDI refers to the equal allocation of power among people in society. In countries with a high-PDI score, including Malaysia (100), managerial data and reports are sent to the higher authority only. Moreover, they prefer closed-door meetings.
Individualism versus Collectivism (IDV): It indicates the strengths of interpersonal connection among people in a society. Where a high score in IDV index indicates a weak tie among people, a low IDV score denotes strong group unity. For example, countries of Central America, Guatemala and Panama possess a low IDV score.
Masculinity versus Femininity (MAS): It refers to whether a society values the roles of males and females. A high MAS score denotes that men are expected to be assertive and provider in a society. Countries with low MAS score always believe in the equal role of men and women in the workplace. For example, the MAS score of Japan is high, with a score of 95. Sweden possesses a low MAS score, indicating that skills are more important in an organization than gender.
Uncertainty Avoidance Index (UAI): This refers to anxiety that people feel in society during uncertain events. While countries with high UAI score make efforts to keep away from uncertain situations, people of low UAI-scoring nation value diversity and enjoy novel events. Greece scores the highest in UAI index with 100, whereas Singapore scores the lowest with 8.
Long Term Orientation versus Short Term Normative Orientation (LTO): It indicates how much people value long-term as compared to short-term. Countries with a high LTO score prioritize their tradition, whereas low LTO-scoring countries, including US and UK, are not much concerned about their tradition, due to which creative expression and original ideas are frequently generated there.
Indulgence versus Restraint (IND): This is a new dimension discovered and described by Michael Minkov. Countries with a low IND score does not encourage gratification, whereas high IND scoring countries allow people to enjoy their lives and do not implement regulations on people’s social activities and behaviour. Russia scores low in this dimension, indicating the restriction on people’s indulgence.
Wates is one of the largest privately-held construction, development and property service companies in the United Kingdom (Wates 2019). The company employs around 5,000 people. Six dimensions of Hofstede cultural model have been applied on Wates. The company operates throughout the UK. Six dimensions of the Hofstede cultural model relating to the UK have been demonstrated in the figure provided below:
Figure 2: UK Hofstede cultural dimensions
(Source: Hofstede Insights 2019)
A low score in PDI indicates the Wates use flat organizational hierarchies, where managers and staff are measured as equals. The organization needs to focus on delegating tasks among people. It is important for the management of Wates to engross maximum staff in the decision-making process to attain better outcomes. Teamwork is the most effective way of increasing productivity for Wates in the UK competitive construction sector. A high individualism score (89) indicates that people working in companies operating throughout the UK expect rewards for the hard efforts they put in the workplace to attain individual and corporate objectives. Alongside acknowledging employees’ accomplishments, Wates needs to encourage people to express their individual ideas that can facilitate companies to achieve organizational goals and objectives. Britain is a Masculine culture, scoring 66 in MAS index. Roles of men and women are well defined and separated in Wates. It is significant for the management of Wates to be concerned about the fact that individuals may look forward to the alienation of roles of female and male.
A low UAI-scoring country, including the UK, follows informal business attitudes. Wates believes in long term strategies than short-term approaches to dealing issues. In order to achieve sustainable business outcomes, Wates needs to avoid imposing unnecessary structures or rules on people. The management needs to develop strategies to overcome any differences if exists in the organizational structure. With an intermediate score in LTO (51), an overriding preference in British culture cannot be determined. People working in Wates show their high creativity into their respective field of work. However, the organization can make changes in the work system when applicable. A high score of 69 in IND index classifies British culture as indulgent. Employees possess a positive attitude toward dealing with uncertain issues. It is important for organizational management to allow their employees to have leisure time so that the work pressure can never be felt overburdened.
2. Compare and contrast two organizational structures
Marks & Spencer and Tesco are multinational British retailers. Tesco uses a hierarchical organizational structure that separates positions and obligations into diverse sections, which ensures effective work execution. Tesco’s organizational structure was developed by 5 committees. The divisional structure is provided below:
Figure 3: Tesco’s corporate Governance structure
(Source: Tesco.com. 2019)
Tesco’s store level divisional chart contributes to the effective execution of diverse functions in business. The divisional chart is demonstrated below:
Figure 4: Tesco’s organizational structure at the store level
(Source: Tesco.com. 2019)
Marks & Spencer, on the other hand, follows a flat organizational structure that allows management to facilitate employees to make direct contact with the higher management of the organization. The flatter structure of Marks & Spencer is shown below:
Figure 5: Marks & Spencer organizational structure
(Source: Marks & Spencer. 2019)
Unlike the flatter structure of Marks & Spencer, Tesco’s divisional hierarchy is composed of multiple layers. One of the major benefits Tesco derives from their divisional structure is that it facilitates the company to operate the business across large demographic areas. On the other hand, Marks & Spencer’s flatter structure allows the management to make direct contact with the employees, which results in expanding managers’ knowledge domain in changing needs and demands of customers.
Monitoring activities of multiple work location become effortless for Tesco’s management since the organization follows a multilayered divisional structure. The financial performance of Tesco has also been significantly improved due to the divisional structure. On the other hand, the flatter structure has enabled Marks & Spencer to reduce the levels of management between different functional departments. Consequently, decision-making and problem-solving attitude of the particular organization have improved to a great extent. In case of any uncertain risks, the flatter structure functions in a better way to overcome issues than that of divisional structure. Tesco’s divisional structure allows in closely supervising multiple business activities being executed across different divisions. Subsequently, it makes a significant contribution to employees’ performance enhancement. Unlike the flatter structure, the divisional structure also allows Tesco in monitoring the global operations closely. Therefore, it can be assessed that both flatter and divisional chart plays a significant role in organizational goals achievement.
Impacts of divisional structure on behaviours of Tesco’s leaders, managers and employees
Leaders and managers of Tesco provide direction to the employees to achieve individual and organizational objectives. Employees working in division structure are less likely to be given autonomy to share their ideas to the higher authority, due to which they are often found to become demoralized, resulting in low productivity. However, the leaders and managers facilitate team members to understand individual objectives and goals so that the execution of work can be carried out flawlessly. A major disadvantage of the divisional structure is that it does not allow employees to participate in the process of decision-making. Leaders of Tesco follow the autocratic style of leadership to control their teams’ productivity. Managers of Tesco have to resolve issues in each department, because of which they often encounter huge work pressure. However, the divisional structure of Tesco certainly provides adequate autonomy to the employees of different functional units to accomplish their allocated projects individually without heavily dependent on the top management. Consequently, it increases employees’ workability to a great extent.
Impacts of divisional structure on behaviours of Marks & Spencer’s leaders, managers and employees
As discussed earlier, the flat structure is all about reducing unnecessary levels of management. A significant advantage of flattery structure is that it enables employees to participate in the process of decision-making. Besides participating in the decision-making process, employees of Marks & Spencer can share their ideas with higher authority. Moreover, the communication between employees and managers of Marks & Spencer are less likely to be affected due to the lack of existence of multiple layers in the structure. One of the main issues surrounding the flattery structure of Marks & Spencer is that managers often become out of control to take the input of every employee. Consequently, the managerial behaviours, as well as communication with employees, are often affected, leading to a lack of productivity in the workplace. Sometimes, roles and responsibilities of employees working in the flat structure are not defined, due to which employees are often overburdened with additional work pressure, which turns out to be an increase in employee turnover. One of the key benefits of the flat structure is that it boosts up employees’ morale to a great extent, due to which the employee retention rate of the organization increases radically. Due to the utilization of flat hierarchy, the management of Marks & Spencer has been successfully able to manage high employee engagement at the workplace. In a flat structure, the chances of conflicts between leaders and employees are very low.
Section 2: Theories of Change and Change Management
1. Drivers of change in organisations
Organizational change is mostly driven by both internal and externally business environmental forces. Some key external forces of organizational change include economic, political, socio-cultural, legal, technological, and ecological (Clegg, and de Matos 2017). On the other hand, internal forces that influence organizational change management process include management change, organizational restructuring, intrapreneurship, resource constraint, and profitability issues.
External drivers of organizational change
Political: The unstable political situation could be a major factor influencing organizations to bring changes in the existing process. Changes in British political scenario could create several challenges for Wates in diverse forms, such as changes in policies and regulations.
Economic: Economic uncertainties often create difficulties for the organization to maintain profitable outcomes. Several economic factors, including unemployment rate, inflation rate, GDP growth rate, act as major driving forces behind the organizational change (Hornstein 2015).
Technological forces: Organizations bring changes into their existing technologies for increasing the productivity and profitability. However, the major concern surrounding this change driver is that the cost of advanced and emerging technology is very high, due to which medium to large scale companies, including Wates encounter challenges to replace existing technology with the new one.
Legal: Different legal factors that influence organizational change include tax structure, consumer protection act, data privacy act, trade laws, competition laws (Alvesson and Sveningsson 2015). Any changes in the legal framework also become a key driver for organizational change.
Socio-cultural: Organizations often bring changes into their existing practices related to product development and designing due to consumers’ changing needs and demands. Wates designs products and services in line with the changing market needs.
Internal drivers of organizational change
Organizational restructuring: Organizations may require bringing changes in order to adopt the new product line and new strategic business units (Al-Haddad and Kotnour 2015). It is significant for the organization to offer adequate training to the employees to execute their changed roles and responsibilities effectively.
Management change: The changes in higher management could bring alteration to the existing means of conducting business practices. It is imperative for Wates to determine the risks involved in hiring new managers at a higher level of the organizational hierarchy.
Issues with the productivity: If organizational productivity reduces to a great extent, the higher management may bring changes into the business in the form of downsizing the workforce or reducing supply chain costs.
2. Academic change model
Kurt Lewin suggested a three-step change management model in order to initiate change in organizations. As shown below, three steps of change are unfreezing, change or moving and refreeze.
Figure 6: Kurt Lewin’s 3-factor change model
(Source: Doppelt 2017)
It creates the need for change in the organization. Organizational management develops believe among people that change is required to achieve profitable outcomes both at the individual and corporate level (Cameron and Green 2015). In this stage, employees are motivated and ready to accept the replacement of the old system with the new one. After analyzing the present situation and discussing the issues surrounding the existing system, employees recognize the need for change. However, employees can resist the idea of change in this stage. Organizations need to focus on developing strategies to eliminate change resistance among people. First, the management needs to build trust as well as confidence among employees. Besides this, improving communication and enhancing motivation are two key strategies that can be applied to eliminate change confrontation. Employees are required to be involved in the process of decision-making to share their perception of the proposed change.
Change or moving:
When employees are ready to accept the change, organizational management starts implementing change into the existing system. Once the change is initiated, new information is accumulated, a variety of new concepts are built up, and members are provided with adequate training to implement the concepts effectively (Emmrich et al. 2015). During the implementation of change, new beliefs and attitudes are developed and the old values are replaced with new ideas. Once change in introduced in the old system, employees start fiddling with their behaviours as per the changed norms. According to Hayes (2014), driving people to change individual attitude and behaviour may bring either positive or negative outcomes. The positive impact of change could be resulted in high involvement of people in the newly implemented system, whereas the negative outcome of change could be reduced employee engagement since people may not recognize the proposed transform. It is vital to delegate responsibilities to subordinates. Throughout the implementation of change, the organizational management should maintain open and frequent communication with employees to consider their feedback and suggestions related to the proposed change.
Despite the fact that change is desirable, people may resist change due to several reasons, including lack of skills and competencies to perform well in the changed system. Sometimes, people tend to relapse to their old behaviour after working in a changed environment for a period (Appelbaum et al. 2012). Refreezing stage of change attempts to make a permanent change until there is any requirement for the reintroduction of alteration. In order to refreeze the change, organizational managers need to encourage the subordinates to accept change as a permanent feature by providing them rewards for conducting work in the changed environment. Managers need to focus on fulfilling the needs of people in the changed environment. The reasons why people resist the change need to be understood so that the strategies can be developed to overcome such situation.
Impacts of change on different levels of the organization
Organizational change creates impacts on employees, leaders, and management styles. One of the significant impacts of change on the employees is that the proposed change may create mental stress for employees (Millar, Hind and Magala 2012). Newly implement system may require specific skills and competencies which employees have to develop to fit in the changed environment. If the change is well accepted by the employees, then the workforce feels motivated due to the positive outcomes of change as proposed by the management at the very initial stage. Lack of employees’ skills development is a key reason why employee turnover in the organization increases after initiating the change (Hayes 2014). For managing change, employees focus on their self-development process and high teamwork ability. The knowledge gap among people could create difficulties for the employees to accept change at the initial phase of bringing alteration to the existing system.
A significant alteration in the leadership style can be identified after the change is implemented in the organization (Emmrich et al. 2015). Leaders avoid autocratic leadership since it creates a communication gap between them and employees. By using a participative leadership style, leaders can easily determine peopl’s needs in the organization. After the change is implemented, leaders become concerned for providing appropriate development and training sessions to staff to build up their competencies and skills as per the requirement of the new system. Many organizations focus on continuously develop their leadership programs in order to overcome issues caused by various internal and external drivers.
The organizational change also creates impacts on team culture. In most cases, organizations adopting change focus on replacing power culture with the task culture. With the adoption of task culture, teams work collaboratively in the changed environment towards attaining shared goals and objectives effectively (Appelbaum et al. 2012). If an organization brings change to the existing product portfolio, it needs to focus on adopting a task culture that emphasizes teamwork to a great extent.
As argued by Cameron and Green (2015), organizational change can also create an impact on shareholders. If the proposed change does not produce profitable outcomes, then shareholders’ disengagement from the business is highly expected. Hence, the ideas and suggestions of shareholders regarding the change need to be considered by the management. The change implemented in the organization also influences the performance and functions of the management. Organizational management needs to be prepared with the developed strategies to overcome any resisting forces that may be created at the staff level. Changes in the flat structure are easier than that of divisional or matrix structure since flattery structure allows managers to maintain direct communication with employees regarding any issues in the changed business environment.
Section 3: Models of HRM and bundles of HR Policies and Practices
1. Best-fit and best-practice models of HRM
The best practice approach is implemented in the organization with the assumption that the particular means of strategic HRM can effectively handle any situation. One of the main reasons why organizations adapt the best practice approach is that it enhances organizational performance regardless of any uncertainties (Bratton and Gold 2017). Some of the significant ‘best practices’ are providing security to employee, promoting teams with self-managing ability, selective hiring, high compensation for employee performance, sharing knowledge and understanding, reduction of status differentials, and training to manage a aggravated workforce. The best practice approach supports the idea of selecting candidates carefully so that they can make an adequate contribution to the work system (Nankervis et al. 2016). Training has been identified as a key means of enhancing employees’ workability in the ‘best practice’ model. The HR managers following best practice approach must design job to ensure pledge, suppleness and inspiration. Moreover, employees should be given autonomy to employ their knowledge and skills throughout the work practice. A significant characteristic of the best-practice method is that it allows the organization to maintain a two-way communication channel, where every employee, leader and manager is informed about the ongoing changes in the work system.
The best-fit approach, on the contrary, does not support the idea of universal HRM practices that can produce effective outcomes regardless of the organizational contexts and situations. The best-fit approach determines that strategies of the HRM must be matching with the circumstances and context of the business. ‘Best fit’ can be aligned between HR strategies and organization’s business. Three models that support the best-fit approach include lifecycle, strategic development, and competitive strategy gaining.
The lifecycle best-fit model
The lifecycle model is based on a theory that discusses four stages of organizational development, including start-up, maturity, growth, and decline. The lifecycle theory follows the approaches product lifecycle theory pursues. The particular model supports the idea that an organization’s development stages have a significant relationship with the effectiveness of the HRM (Wilton 2016). Multiple programs, practices and process of human resource management need to change in line with organizational growth and development. As the organization become complex over a period of time, HRM develops strategies through multiple stages.
Another significant method to best fit is the proposal that organizational will be more efficient if they implement a policy of strategic pattern. This particular approach facilitates organizations to be consistent in producing effective outcomes in any contexts without being influenced by any strategic or structural factors. Four types of organizations that follow this strategic configuration include prospectors, defenders, analyzers, and reactors (Analoui 2017).
Competitive strategies and Best fit
Three key strategies that focus on gaining competitive advantages in the business include innovation, quality, and cost leadership. It is significant for the organization to match the role of staff with the preferred competitive strategy. For example, people with a high degree of creative behaviour should be guided with an innovative competitive strategy. The quality strategy is employed if people possess repetitive and predictable behaviours.
From the analysis conducted above, the model of best fit seems to be more pragmatic than the model of best practice. As pointed out by Taylor, Doherty and McGraw (2015), the best is more significant than best practice when it comes to gain the competitive advantage of the business operating in a constantly changing marketplace. Cameron and Green (2015) have argued that there should be enough space for making strategic decisions. There might be a risk of corresponding HR practices with the strategy. ‘best practice’ model does not fit into the organization, which is operating in the competitive marketplace. The particular approach does not resolve the issues created by several contextual factors. As discussed by, it is impossible for the ‘best-practice’ approach to deal with issues including volatile economic circumstances, political unrest, technological changes, and socio-cultural demands.
On the contrary, the best-fit model has also some limitations that often create challenges for the organization to produce effective outcomes. Delery and Roumpi (2017) have discussed that the best-fit method is constrained by the impossibility of modelling multiple contingent variables. Moreover, a contingency model of HRM does not demonstrate the interconnection between contingent variables. Another major limitation of the best-fit model is that the alterations in one dependent variable have an effect on another. Bailey et al. (2018) have confirmed that the best-fit model tends to be stagnant and it does function effectively if variables change frequently. The best-fit model also abandons the fact that power of institution plays a significant role in shaping HRM.
Both the best-fit and best-practice technique connects the relationship between performance and HRM. Considering the previous research studies and analyses, it can be assessed that both approaches work well at different organizational contexts. Best practice approach is more effective in achieving better employee commitment, and a highly engaged workforce (Wright and Ulrich 2017). Some significant outcomes of the best-practice approach include employee development, career progression, teamwork and a well-structured recruitment system. On the other hand, the best-fit model determines that HR policies should be developed in line with organizational strategies. One major perspective of best-fit approach is that organizational recompense system must support the business strategies, whereas ‘best practice’ technique considers a package of HR policies, including compensation system (Wood 2016). It can be assessed that the best-fit and best-practice model are effective in different organizational contexts. However, best-fit is more practical than a best-practice approach, when it comes to carrying out business practices in the competitive marketplace.
2. Bundle of HR policies and practices
According to the analysis conducted by Bailey et al. (2018), bundles of policies of HR and possess a superior level of recital in the organization. As defined by (Delery and Roumpi 2017), ‘bundling’ is the development as well as the execution of diverse HR practices together so that they are interrelated and capable of maintaining organizational activities effectively. Bundling also facilitates organizations to attain a high level of fit with its competitive strategy. The purpose of bundling is to attain high work performance through consistency, which exists during the expansion of mutually reinforcing set of HR practices and policies that focus on contributing to the attainment of organizational strategies (Delery and Roumpi 2017). Bundling of HR practices and policies must be conducted in line with the legal framework implemented by the organization and the government. It is important for the organization to consider multiple factors when bundling HR policies and practices, such as organizational needs, impacts of the internal and external environment. Bundling can be executed in different ways. For instance, competency frameworks can be developed that are employed in development centres and assessment.
Competency frameworks are developed in order to accomplish a number of functions, including specifying recruitment standards, evaluating employees’ learning and development needs, and identifying the standards of performance and behaviour expected from employees (Noe et al. 2017). The competency frameworks could also be employed in the performance management process, wherein competencies are utilized as key criteria for the assessment of learning and development requirements. It is also purposed to review the behaviour of employees. The evaluation of the job could be reliant on the competency levels. The introduction of competency-based pay systems is another significant HR practice considered in the process of bundling. As analyzed by Taylor, Doherty and McGraw (2015), the grade structures can delineate career leaders with respect to competency requirements, providing the basis for learning and development programmes. They can characterize the career paths and compensate for development opportunities. One of the major limitations of bundling is that there is no specific rule for identifying the best bundle.
According to Brewster, Mayrhofer and Morley (2016), HR policies and practices need to be bundled in relating to the organizational goals and objectives. The HRM of the organization needs to ensure that the diverse functions need to be designed in line with the legislation. The HR practices related to employee wage, pay distribution, employment opportunities, and training and development opportunities, need to the conducted and designed as per the regulation developed and implemented by the government. For example, the organization must consider the Equality Act 2010 that says every employee should be given equivalent opportunities regardless of their race, colour, gender and geographical location (Collings, Wood and Szamosi 2018). When it comes to design pay rates for employees, the HRM must follow the National Minimum Wage Act 1998. Therefore, it can be assessed that the process of bundling HR practices and policies must be in line with both organizational policies and national laws.
Bundling of HR practices and high-performance work practices (HPWP)
As discussed by Brewster (2017), high-performance work practices (HPWP) are based on designing as well as implementing a set of internally consistent practices and policies linked to human resource management that focuses on attaining organizational objectives. One of the major HR practices is to provide incentives to employees for their achievement and contribution to the organization. With the employment of such a strategy, the retention, acquisition and development of high-quality employees can be conducted effortlessly. It also facilitates HR to promote organizational effectiveness. As argued by Marler and Parry (2016), high-performance HRM strategies provide autonomy to the employees to react to the changing environment. A number of research studies based on strategic HRM have discussed how best-fit approaches are more dynamic compared to best-practices in order to maintain a high-performance work environment for employees. Although best-practice approaches related to staff involvement, superior compensation, and staff development are universally successful, the real design of HR practices and policies largely depends on various contextual factors.
Some of the major components of HPWP include employment security, high salary, staff ownership, employee empowerment, contribution, information, data and understanding sharing, training and skill development, and adequate opportunities for career development (Wright and Ulrich 2017). When bundling HR practices and policies, it is significant to include these components of HPWP so that employees can be motivated towards delivering a high level of performance, leading to the attainment of organizational goals and objectives. Each component needs to be analyzed before including it in the HRM practices. For example, when HR practices related to recruitment and selection are designed, it is significant for the HR manager to consider whether to depend on the internal or external labour market. Training and development play a key role in influencing employees’ performance level to a great level. Bundling HR policies for the assessment of employees’ skills development needs is important to enable the workforce in achieving target objectives and goals.
Performance appraisal is another significant area that plays a significant role in motivating employees towards delivering their best-possible performance in the organization. Two key purposes of performance appraisals include employees’ performance appraisals and assessment of employees’ training needs (Marler & Parry 2016). Effective performance appraisal can facilitate organizations in developing a competitive advantage by enhancing employees’ job performance. The HR policies and practices are also designed to enhance employee participation that focuses on mutual cooperation and trust among organizational members. One of the major factors that influence employees’ performance level to a great extent is employee relations (Delery and Roumpi 2017). The HR policies and practices are designed to execute multiple organizational functions, out of which employee relationship management is one of the most significant areas that directly contribute to the output of staff as well as the firm.
Therefore, it can be assessed that the utilization of bundles of HRM practices possesses a significant impact on labour productivity and the quality of product and services. Employee satisfaction rate is also reliant on how an organization bundle its HR policies and practices in line with the regulatory frameworks. Organizations that prioritize a set internally consistent practices and policies tend to have better support from the human capital in terms of high involvement in the work system. As found by Taylor, Doherty and McGraw (2015), high-bundling organizations possess superior organizational performance compared to low HR policies bundling organizations.
Section 4: Ethical Leadership and Sustainable Decision Making
1. Ethical decision-making (EDM) process and its application on an SME
Ethical decision-making (EDM) process
Four basic stages of ethical decision-making (EDM) include a collection of facts and information, delineation of the ethical issues, assessment of the affected parties and analysis of the consequences (Bagdasarov et al. 2016). The first step is to gather facts from multiple sources. The management should not jump to any conclusions without facts. The second stage is to define ethical issues in a detailed way. After identifying the ethical issues, the management must focus on how these issues create adverse impacts on the stakeholders. The final step of the ethical decision-making is to identify the consequences for affected parties and develop a solution to overcome such issues.
Issues surrounding EDM process
There are some impediments to the application of the EDM process. Organizations often encounter difficulties in gathering significant facts from different sources since uncertainties are often found around ethical issues. Some facts surrounding ethical issues are not obtainable. Secondly, organizational management can be confused in identifying one major ethical issue among a number of ethical problems (Schwartz 2016). It is significant to determine all key stakeholders who have been affected by any ethical issues. Organizations often face challenges in identifying their major primary and secondary stakeholders who are majorly affected by ethical issues. Lack of consideration of identifying the consequences of ethical issues is another area that creates obstacles for the management to devise ethically correct decisions.
Application of EDM process on an SME
Southern Business Technologies Ltd is a UK based telecom company employing around 75 people. Before introducing the EDM process in Southern Business Technologies, it is imperative to share adequate information about the particular process with employees and management of the organization. Organizational management must focus on clarifying what assumption they are making. Employees can facilitate the management to gather as many facts as possible (Johnson and Connelly 2016). There might be multiple ethical issues. Leaders and managers need to focus on one major issue at a time. Both primary and secondary stakeholders can be affected by ethical issues (Ameer and Halinen 2019). Therefore, the primary stakeholders of the business, including employees, should be given autonomy to share their experience about facing ethical challenges with the higher management of the organization. The management of Southern Business Technologies also needs to focus on stakeholders who are affected by ethical problems. After identifying the affected parties, it is important for the company to analyze the magnitude of the consequences, based on which the decisions need to be developed (Cervantes et al. 2016). Considering relevant cognitive barriers or biases during the assessment of the consequences is another significant area that management needs to focus on to overcome ethical issues in an effective way.
2. Organizational sustainability
As discussed by Carayannis, Sindakis and Walter (2015), organizational sustainability can be defined as an organizational ability to sustain its performance level in the competitive business environment. There are multiple complex dimensions of organizational sustainability, including strategic sustainability, product sustainability, financial and personnel sustainability. Tata and Prasad (2015) have argued that organizational sustainability is often misunderstood to denote majorly financial sustainability. The financial aspect is one of many dimensions of organizational sustainability. According to Lopes et al. (2017), ‘sustainability’ can be analyzed as the means of reducing organizations risks that can increase the capability of the business to survive and flourish in the market in future. Sustainability also facilitates organizations to mitigate any risks or harm surrounding the people of functions of organizations.
Leaders and managers can utilize diverse soft skills in their businesses to embed sustainability. These leadership skills include motivating, negotiating and influencing. There are three key motives of implementing sustainability strategies in organizations including ecological, economic and legal motives (Rodríguez, Svensson and Eriksson 2018). By motivating major stakeholders of the business, including employees and suppliers, leaders can increase organizational productivity, leading to attaining economic motives of embedding sustainability in the business. Lack of employee motivation is the key factor affecting employee productivity and employee engagement, contributing to the reduced profitability of the business. Negotiation is another significant leadership skill that plays a major role in embedding sustainability in existing business practices. Organizational leaders and managers can improve their relationship with the suppliers through their negotiation skill. An organization maintaining a good relationship with suppliers and investors can be expected to sustain its performance in the competitive market in future (Islam, Hossain and Mia 2018). Leaders are often required to negotiate with employees to fulfil their needs and demands and maintain a motivated workforce that can deliver a high level of performance, contributing to the financial sustainability of the business. Influencing skill of leaders also plays a significant role in implementing sustainability in the organization. A leader with good influencing skills can easily persuade the performance of primary stakeholders, including employees, suppliers, and higher management. Therefore, it can be assessed that diverse leadership skills and competencies have a connection with the way organizations manage their sustainability practices.
Based on the analysis conducted throughout this assessment, it can be assessed that organizational leaders and managers play significant roles in managing diverse functions, including change management, bundling of HR policies and practices, and ethical decision-making. This particular research has developed a detailed analysis of organizational structure, culture and behaviour. By using Kurt Lewin’s 3-factor change model, the researcher has analyzed stages of implementing changes in organizations. Stages of the ethical decision-making process and issues surrounding the particular process have also been discussed in this research.