Length: 6 Pages Maximum
Choose a real organisational case illustrating questionable organisational and management practices that have been critiqued in the public spaces. Examples include companies, such as BP, BHP, CommonWealth Bank, Toyota, WorldCom, VW; government agencies such as the Wheat Board, Wollongong Council; non-profits, e.g. Health Union, FIFA, Essendon Football Club.
You are welcome to choose a case from your home country as long as it represents questionable organisational/management practices and has been under public scrutiny.
Agency Theory
Institutional theory
Bureaucracy
Control
Stakeholder Theory
Power and Politics
Ethical & moral dimensions of Organisation Theories
Approaches on employee co-ownership and commons
Organisational culture
Stewardship
You must illustrate your deepening personal and critical awareness of management and organisational practices and how theoretical lenses in the literature can illuminate these practices
21937Assignment 1 writing guide
This guide has been written to help you prepare for Assignment 1 (professional report) in the subject 21937 Managing, Leading and
Stewardship
. The guide includes some tasks which may help to actively develop your understanding about the assignment. You can find suggested answers to these tasks in the Appendix at the end of the guide.
When tackling any academic assignment, the ‘writing process’ diagram below may be useful to keep you on track. You can try to follow it step by step, although there is flexibility and you should try to reflect on the best way that you work yourself.
The writing process
Find out more by accessing the UTS Business School Writing Guide here:
https://www.uts.edu.au/sites/default/files/2018-07/UTS-Business-School-Writing-Guide
STEP1: Find out what the marker wants
Step 1 involves finding out about the instructions and the assessment criteria for the assignment. First, make sure you fully understand the instructions in the box below. If you are unsure about anything, ask your tutor for clarification.
Assignment 1 (professional report) instructions
Worth: 35%
Length:
6
pages maximum
Submission: Electronic submission via TurnitIn (UTS Online).
Choose a real organisational case illustrating questionable organisational and management practices that have been critiqued in the public spaces. Examples include companies, such as BP, BHP, CommonWealth Bank, Toyota, WorldCom, VW; government agencies such as the Wheat Board, Wollongong Council; non-profits, e.g. Health Union, FIFA, Essendon Football Club.
You are welcome to choose a case from your home country as long as it represents questionable organisational/management practices and has been under public scrutiny.
TASK 1: Review the extra information in the Assignment 1 folder on UTSOnline about the content of your professional report, and then answer the following questions:
1. After I have chosen the organisational case illustrating questionable organisational and management practices, what do I need to analyse about that case?
2. How many Organisational Theory lenses do I need to use in my analysis?
3. Which Organisational Theory lenses am I planning to use in my analysis? Why?
4. After the analysis, how many recommendations do I need to include?
5. How many Organisational Theory lenses do I need to use to develop and support my recommendations?
6. Which Organisational Theory lens(es) am I planning to use to develop and support my recommendations? And why?
7. What other instructions are given about the recommendations?
It is also important to understand how you will be assessed. Look at the marking criteria table below, which includes descriptions of what an excellent and a poor assignment often include. Highlight any words that help you understand more about what to do in this assignment, and ask your tutor if anything is unclear.
Marking Criteria
Weighting
An excellent assignment
A poor assignment
Written expression, including sentence structure, paragraphing, grammar and layout.
Accuracy of information/data relevant to the topic. Awareness of the strengths and weaknesses of different reference materials as a basis for argument.
Analysis of the situation + Critical analysis of competing ideas and assessment of implications.
12
Argument/analysis demonstrating insight, originality and critical reflection to a high standard. Full set of logically derived implications.
Argument/analysis is not always directly relevant or persuasive – lack of critical analysis – i.e. absence of identifying and questioning assumptions. Proper implications not drawn out.
Conclusion
s and recommendations
Ability to construct plausible and coherent conclusion and recommendations.
6
Well argued and constructed conclusions that are clearly drawn from the analysis. The argument is logical and coherent.
Conclusions not comprehensive and do not fully flow from the analysis. Inconsistencies and/or lack of coherence.
TOTAL MARKS
35
STEP 2: Collect and read information
In Assignment 1, you need to use theories as lenses to critically analyse and to better understand a real organisation of your choice and its questionable practices. Therefore, it is crucial that you do enough reading to understand these theories before you start writing your assignment.
TASK 2: Here are some questions to help you think about the resources you will need to access and read. Discuss the questions with another MLS student and note down your answers.
1. In Assignment 1, should I refer to any of the MLS required and recommended texts (books and journal articles)? If so, how do I know which ones to use?
2. Should I refer to any resources that I’ve found myself? If so, what kind of resources and where do I find them?
3. Where can I go at UTS for help with finding resources?
4. Should I support my description of the case study issue with any references to sources? If so, what kind of sources?
5. What are the most effective ways for me to collect information together as I read?
(NB – the answer depends on your personal learning style – it is important that you become aware of the effective methods for your own learning)
STEP 3: Generate your own ideas
As you read and make notes, try to think critically. Critical thinking means not just accepting what you read or hear, but instead:
· actively questioning new information in relation to your previous assumptions or knowledge
· understanding different perspectives on a topic
· trying to see the whole picture, not just certain parts
· assessing and evaluating information
· using theory to gain a better understanding of a situation (in this case, the organisation and its practices)
· comparing and contrasting theories, and testing them against your previous knowledge (and your knowledge of the organisation)
[Also see: https://www.uts.edu.au/sites/default/files/2018-07/UTS-Business-School-Writing-Guide , pp.11-15)
If you look back at the marking criteria table on p.2, you will see that some key aspects of the criteria are specifically about developing your own ideas, including:
· Awareness of the strengths and weaknesses of different reference materials as a basis for argument.
· Argument/analysis demonstrating insight, originality and critical reflection to a high standard.
Also note that a “lack of critical analysis – i.e. absence of identifying and questioning assumptions” can lead to a poor assignment.
As you read, think about the following questions:
How does this theoretical lens help me to analyse the case study issue?
Are the arguments made in this text different from what I previously knew / read / believed? How?
What is the theoretical lens used in this text?
(It might not be clear)
You might also like to record your reflections in a table or another form that suits your learning style.
Here is an example:
|
Author, date and title of text |
What is the theoretical perspective/lens? |
What is the main point or argument that this text makes? |
How is this point/argument different from what I previously knew/ read/ believed? |
|
Example: Hernandez, 2008, Promoting stewardship behaviour in organizations: A leadership model |
Example:
Stewardship |
||
|
[Continue by adding rows] |
STEP 4: Create an outline or plan
Next, think about how you will structure your Assignment 1 professional report. It is a good idea to make a plan, outline or ‘skeleton’ of what your final assignment will look like to help you – this could be in a list, a table, a spider diagram or another visual form.
TASK 3: How do you think Assignment 1 should be structured, based on the information you have accessed on UTSOnline? Make a list or plan of the different sections that should be included, and a possible order for those sections.
You can use the overall report framework on the next page if you like.
Report framework
|
Main report sections |
What sub-sections should be included? |
What key points do I want to make? |
|||||||
|
Title |
N/A |
||||||||
|
Executive summary |
|||||||||
|
Introduction |
|||||||||
|
Body |
|||||||||
|
Conclusion |
|||||||||
|
References |
STEP 5: Draft your assignment
At this stage, you will be writing the different sections of your assignment. Looking at some examples might help you think about how to get started, so you will find samples below. The samples are from various different reports; they are NOT previous student reports from MLS.
TASK 4: As you read through the example paragraphs on the next couple of pages, look at the comments about aspects of writing, shown in the right-hand column. Then try to use some of these useful strategies or phrases in your own writing.
|
Section of an assignment |
Example paragraphs |
Comments about aspects of writing |
|||
|
Introduction |
[Question: Contrast Elliot Jacques’ theory of requisite organisation to traditional models of decision-making and organisational design, drawing on an organisational case.] In this report, I will contrast traditional organisation designs to those based on Jacques’ theory of requisite organisation, drawing upon the notion of decision-making. Traditional models of organisational design (e.g. Porter 1980) hold that design is primarily contingent upon strategic factors and the external competitive environment. In section one, I will explore the implications of this premise for the control of decision-making throughout the organisational structure, drawing upon Archer (1980) and Dean and Sharfman (1993). In contrast, Elliot Jacques’ (1990) theory of requisite organisation proposes that organisational design should instead be structured around the developing capabilities of organisational members. I will explore these factors and their consequences in section two, drawing upon the exemplar of Glacier Metals, an organisation which has implemented both of these models. This exemplar shows, as I will conclude, that Jacques’ theory provides exciting, if largely untested, opportunities for developing organisational structures which work for people, rather than people that work for structures. |
The words that are underlined clearly explain what the writer will do in the report The words in bold introduce the key theories that will be discussed, supported by key references The words within the box introduce the case study example that will be discussed in the report |
|
Description of a chosen organisation |
Virgin Australia Airlines (Virgin), formerly Virgin Blue Airlines, is a publicly owned company that was founded in 2000 by Richard Branson and former Virgin Blue Airlines CEO Brett Godfrey. Having started with merely two aircrafts operating on a single route Virgin now holds the position of second largest airline in Australia, behind Qantas. [details omitted] Virgin originally operated as a low-cost carrier, however, in later years altered its business model to become a (self-described) ‘New World Carrier’. This new business model offers consumers choice: whilst still offering their ‘no frills’ option, Virgin now provide their passengers the option to pay more and receive the full array of services as offered by other airlines such as Qantas. Since 2010 the organisation under John Borghetti, former Qantas Executive General Manger, has seen their new business model achieve strong growth. |
The words that are underlined are verbs in past tenses, used to recount the history of the company The words in bold are verbs in present tenses, used to describe what the company is doing/does now |
|
Definition of theories and justification for choice |
Miles’ (2012) contingency theory suggests that ‘there is no one best organisational structure; rather, the appropriate organisational structure depends on the contingencies facing the organisation’ (Miles 2012, p.45). Miles goes further to challenge traditional theories that advocate … [details omitted]. Contingency theory is one that is particularly relevant to Virgin, which has adapted its business structure in an attempt to … [details omitted]… |
The words that are underlined are a direct quote used to define a theory (note the reference with page number) |
|
Description of how theories reveal insights into the organisation/ its practices |
The lens of contingency theory helps in understanding management and overall organisation structure, and highlights the importance of organisations thoroughly understanding both the local and global environments in which they operate. Virgin has recently had to deal with concerns regarding its number one competitor, Qantas, pushing for …. |
The words that are underlined introduce the insights that the selected theoretical lens reveals |
|
A critique of the limitation of theory |
Both contingency theory and dynamic capability theory face several limitations in illuminating key organisation issues. Both theories place strong emphasis on an organisations ability to be …. One large limitation is that since these theories are contingent upon change and unforseen circumstances, there is …. |
The words in bold introduce critiques of two theories together |
|
Discussing recommend-ations or strategies |
Employment downsizing may not necessarily generate the benefits sought by management. Managers must be very cautious in implementing a strategy that can impose such traumatic costs on employees, both on those who leave as well as on those who stay. Management needs to be sure about the sources of future savings and carefully weigh those against all of the costs, including the increased costs associated with subsequent employment expansions when economic conditions improve (Cascio 2005, p. 41). |
The words that are underlined are modal verbs, which are used to express caution or possibility (rather than certainty) about the recommendations |
| Conclusion |
Contingency theory helps to understand how internal and external factors drive change …. In addition, the lens of institutional theory provides a more accurate understanding of the organization and the tensions existing within and between its divisions. Theory can shed light on …. By creating effective practices to be able to scan, respond and transform organisational strategies dependent on environment and market, an organisation will be far more likely to remain competitive. |
The words within the box draw conclusions about how the theories have been useful in the case study The words in bold concisely summarise the key recommendations or strategies discussed in the report |
Other important things to focus on when drafting your assignment:
A. Paragraph structure
B. Referencing
A. Paragraph structure
In order to develop clear and persuasive arguments, it is important that many of your ‘body’ paragraphs (within the main part of the report):
· are supported by sources
· are structured in a logical sequential manner, starting with a topic sentence followed by supporting sentences and finishing with a concluding sentence that reinforces the writer’s argument
· have a mix of your own views and voice and a view supported by expert literature derived from multiple sources
Here is an example:
|
Promoting dialogue in teams induces two major benefits at the organisational level: problem solving and innovation. First, dialogue helps find a better way to reach a goal; sharing knowledge and clarifying everyone’s role within the team helps solve eventual problems (Schein 1993, Isaacs 1993, Frigotto & Rossi 2012). As employees’ engagement arises, organisations face lower turnover and a significant improvement in customers’ loyalty (Tourish & Hargie 2009, D’Aprix 2011). Second, dialogue promotes innovation by mutual learning (Johnston et al. 2007). Dialogue becomes a creative interaction where participants are open-minded and ready to deconstruct their previous ideas. By empowering their employees through dialogue (Raelin 2012), organisations face a clear enhancement in performance. |
The first sentence (underlined) is a topic sentence. It introduces the paragraph topic and main argument (that promoting dialogue creates two main benefits). The second sentence (in bold) addresses the first benefit, clearly signposted by ‘first’, and supported with references. The linking word ‘Second’(sentence within a box) introduces the second benefit, which is also supported by evidence. The concluding sentence (in bold) repeats the arguments and offers a conclusion: dialogue can enhance performance. |
B. Referencing
Every source you read and then refer to in the report must be referenced in Harvard-UTS style. For more information on these styles see:
·
https://www.lib.uts.edu.au/help/referencing/harvard-uts-referencing-guide
OR
·
https://www.lib.uts.edu.au/sites/default/files/attachments/page/InteractiveHarvardUTSGuide
You will need to include:
· in-text references within your report whenever you refer to an idea from a resources you have read (see examples in the paragraph above)
· a final reference list, with all of the resources you have referred to, in alphabetical order
NB – The reference list includes EVERYTHING cited in the body of the report. It does NOT include other texts or sources you studied but did not refer to in the report.
STEP 6: Revise your writing
Revising your writing means carefully checking the content and overall structure, and then making revisions as necessary. It is useful to go back to the marking criteria at this stage, to double check that you are addressing all of the criteria that relate to content.
The table below lists questions (in the right-hand column) that you can ask yourself, or ask a peer to help you answer, in relation to your draft assignment. If the answer to any question is ‘no’ then you should make revisions before submitting your assignment.
|
Questions to revise your writing |
|
|
Substantive content Accuracy of information/data relevant to the topic. Awareness of the strengths and weaknesses of different reference materials as a basis for argument. |
· Have I clearly introduced and defined the different theories used in my analysis? · Have I shown my understanding of the development of theories over time? · Have I described the strengths and limitations of the theories used? |
|
· Do I use the selected theories to clearly analyse the case study issues? · Have I analysed the issues critically, using different perspectives, questioning and evaluations? · Do my key arguments come through clearly and persuasively? · Are the implications that I discuss logical, given the analysis? |
|
|
· Are the recommendations clearly connected to and resulting from the analysis? · Have I used one Organisational Theory lens to support my recommendations? · Are the recommendations realistic, high-level and not ‘quick-fix’ solutions? · Do the conclusions bring together the key arguments clearly? |
STEP 7: Edit your writing
Editing your writing means carefully checking the grammar, sentence structure, vocabulary, formatting and referencing.
The table below lists questions (in the right-hand column) that you can ask yourself, or ask a peer to help you answer, in relation to your draft assignment. If the answer to any question is ‘no’ then you should make edits before submitting your assignment.
|
Questions to edit your writing |
|
· Have I checked my grammar for a high level of accuracy?
· Are my sentences well structured, with a range of sentence lengths? · Have I used a high level of academic and professional vocabulary? · Have I followed the guidelines for formatting and layout on UTSOnline? · Have I used Harvard UTS referencing correctly, both in-text and in my reference list? |
You’re almost there….
21937 Managing, Leading and Stewardship, Assignment 1 writing guide
… make sure to celebrate and reward yourself at the end!
6
Developed in collaboration with Emily Edwards & Joseph Yeo,
Academic Language and Learning group, IML (and adapted from a previous version)
Appendix 1: Suggested answers to tasks 1-3
TASK 1: Review the extra information in the Assignment 1 folder on UTSOnline about the content of your professional report, and then answer the following questions:
1. After I have chosen the organisational case illustrating questionable organisational and management practices, what do I need to analyse about that case?
· the reasons for these questionable organisational and management practices, including the judgements made by leaders/managers of these organisations
2. How many Organisational Theory lenses do I need to use in my analysis?
· TWO different organisational theory lenses
3. Which Organisational Theory lenses am I planning to use in my analysis? Why?
· [answer depends on your case and own selection of theory lenses, but it is very important that you can clearly justify your choices]
4. After the analysis, how many recommendations do I need to include?
· 2-3 high-level recommendations
5. How many Organisational Theory lenses do I need to use to develop and support my recommendations?
· one organisational theory lens
6. Which Organisational Theory lens(es) am I planning to use to develop and support my recommendations? And why?
· [answer depends on your case and own selection of the theory lens, but it is very important that you can clearly justify your choice]
7. What other instructions are given about the recommendations?
· they need to be written in a persuasive way, and they should be realistic, not simplistic or ‘quick-fix’ solutions
TASK 2: Here are some questions to help you think about the resources you will need to access and read. Discuss the questions with another MLS student and note down your answers.
1. In Assignment 1, should I refer to any of the MLS required and recommended texts (books and journal articles)? If so, how do I know which ones to use?
· Yes, you should. Access some of the books that are listed in the subject outline under ‘required texts’. You can find them as electronic versions or hard copy versions at the UTS Library. Also refer to some of the journal articles suggested in the weekly resources on UTSOnline that are relevant to the theories you choose.
2. Should I refer to any resources that I’ve found myself? If so, what kind of resources and where do I find them?
· Yes, you should. Conduct your own research to find journal articles that relate to the theories you are using: see
http://www.lib.uts.edu.au/research/literature-searching
3. Where can I go at UTS for help with finding resources?
· The UTS Library, either in person or via online chat:
https://www.lib.uts.edu.au/help/ask-librarian/online-chat
4. Should I support my description of the case study issue with any references to sources? If so, what kind of sources?
· Ideally, yes. Find one or more references to support the description of your case study issue – these are likely to be company websites and/or online newspaper articles (e.g. New York Times, The Guardian, The Sydney Morning Herald etc.), rather than journal articles. However, it might also be possible to find journal articles if the case was widely analysed.
5. What are the most effective ways for me to collect information together as I read?
· The answer depends on your personal learning style, but here are a few ideas: use note-taking software (e.g. Onenote, Evernote) or a table in Word or Excel to record notes; use a reading matrix (explained under ‘STEP 3’ of this guide); use a visual form of collecting ideas such as a spider diagram or argument-mapping tool
TASK 3: How do you think Assignment 1 should be structured, based on the information you have accessed on UTSOnline? Make a list or plan of the different sections that should be included, and a possible order for those sections.
Report framework
|
The introduction is only one section, but it should contain these things: · Introduce the name of the chosen organisation and the case (very briefly) · Introduce the theories that will be used in the analysis · Provide a clear outline of what will be contained in the body |
|
There are several sub-sections in the body, such as: · Brief description of the chosen organisation · Definitions of the theories used and why they have been chosen as lenses to analyse the organisational case · Analysis, using the theories to provide insights into the organisation and its practices · Critiques of the limitations of the theories · Possible differences in perspectives associated with those theories · Recommendations |
21937Managing, Leading, Stewardship
Making Sense of Managing, Organising, and
Organisation Theories
Slides prepared to support students‘ self-
directed learning of Organisation Theories
Dr Natalia Nikolova and Dr Walter Jarvis
“Theory, you say? Theory often gets a bum rap amon
g
managers because it’s associated with the word “theoretical,”
which connotes “impractical.“ But it shouldn’t. A theory
is a statement predicting which actions will lead to
what results and why. Every action that managers take,
and every plan they formulate, is based on some theory
in the back of their minds that makes them expect the
actions they contemplate will lead to the results they
envision.”
2
Christensen and Raynor (2003)
Why do you need to study Organisation
Theories?
3
Overview
Organisation Theories reviewed:
1.
Transaction Cost Economics and Agency Theory
2. Scientific Management and Bureaucracy
3.
Institutional Theory
4. Organisational Learning
5. Organisational Culture
6. Power and Politics
4
Organisation Theory as a Lens for solving
Organisational Issues
Organisational
Issue
Single
consideration fo
r
solving the orga-
nisational
issue
‘Lens‘ of organisation theory
Source: Crane; Matten (2007): 119
5
Multiple Organisation Theories for solving
Organisational Issues
Organisational
Issue
Source: Crane; Matten (2007): 11
9
Theory A induced
solution
Theory B induced
solution
Theory C induced
solution
‘Lenses‘ of
Organisation Theory
A
B
C
Potentially
Contradictory
Results
6
“Without contradictions, without criticism, there would be no
rational motive for changing our theories: there would be no
intellectual progress.”
Popper’s (1965, p. 266, translation)
Why do we then need multiple organisation theories?
Because:
Major difference between organisation theorists and
economists in how they view organisations
Economists emphasise a world of
autonomous actors interrelated through
market transactions
Organisational theorists see first
a world of organisations and
second market transactions
Source: Idea adapted from Simon, H. A. (1991) Organizations and markets, Journal of Economic Perspectives, 5(2), pp. 25-44. 7
Organisations as an Area of Study
Emergence of Organisation Theory
Early Precursors
– Studies on prisons (Clemmer, 1940)
– Party structures (Gosnell, 1937)
– Factories and labor unions (Whyte, 1946)
Founding Phase
– Administrative and scientific theorists (Taylor, 1911, Fayol, 1949, Gulick
und Urwick, 1937)
– Human relations (Mayo, 1945)
– Weber’s (1946) analysis of bureaucracy
– Simon on administrative behavior (1950) and March and Simon (1958)
8
9
Management & Organisation Studies as an Embedded
Knowledge Field
Management & Organisations Studies
Business Policy, Organisational Behavior, International Managment,
Human Resource Management, Entrepreneurship, etc.
Root
Disciplines
Philosophy Mathematics
Marketing Accounting Finance Operations
Factual
Baseline
Disciplines
Economics Sociology Political Science Culturology Psychology
Sister
Disciplines
What is an Organisation?
A simple working definition:
Organisations are groups whose members coordinate their
behavior in order to accomplish shared goals or to put out a
product/service.
Examples Qualities
Organisations Companies, schools,
families and voluntary
associations
Roles, rules, goals,
recurring behaviors, clear
boundaries
Not Organisations Random collections of
persons, isolated
individuals
No roles, rules, goals,
pattern of recurrence, or
boundary
Ambiguous Cases Street gangs, friendship
groups, social movements
Less clear roles, rules, and
goals, porous boundaries
and fluid participants
Source: Daniel A. McFarland Organizational Analysis
But…
There are many diverse organisations:
“There is no such thing as a ‘good organization’ in any
absolute sense. Always it is relative; and an organization
that is good in one context or under one criterion may be
bad under another” (Ashby, 1968)
11
12
Transaction Cost Economics and
Agency Theory
Origin and Fundamental Concepts
13
What are the phenomena of interest?
How are human agents described?
How is a firm described?
Why do firms exist?
What determines their size and extent?
Key questions within TCE are …
Transaction Cost Economics – Introduction
“A transaction occurs when a good or service is
transferred across a technological separable
interface. One stage of activity terminates and
another begins.“ (Williamson 1985, p. 1)
14
Transaction Cost Economics – Introduction
Transaction Costs imply the following categories:
1. Search and information costs (ex ante/ provision of information about product, price, and
potential transaction partner)
2. Negotiation and contracting costs (ex ante/ agreement of interests and establishment of
contract conditions)
3. Monitoring costs (ex post/ monitoring the adherence to contract agreements)
4. Conflict and enforcement costs (ex post/ conflicts about interpretation and fulfillment of
agreements as well as sanctions, arbitration process, and court)
5. Adaptation costs (ex post/ unforeseen changes in circumstances necessitate an adaptation
of contracts)
15
Transaction Cost Economics – Introduction
16
Costs of buying a
newspaper in your home
country
Costs of hiring a new
MBA to a career position
Costs of locating and
buying a part for an
antique clock
Costs related to transactions vary enormously, compare the following…
Transaction Cost Economics – Assumptions
17
Discription of Human Actor
bounded rationality self-interestedness
Attributes of contract and
organisation
incompleteness of contracts opportunism
Williamson (1985)
risk neutrality
Simon (1985)
Transaction Cost Economics – Assumptions
18
Discription of the Firm
New Answers to Old Questions
Existence of the Firm?
Boundaries of the Firm?
Coase (1937), Williamson (1975, 1985)
Williamson (1985)
Firm as governance structure
Transaction Cost Economics – Implications
“The object is to work out the efficiency logic for
managing transactions by alternative modes of
governance – principally spot markets, various long-
term contracts (hybrids), and hierarchies.“
19
(Williamson, 2005, p.1)
Agency Theory
Jensen & Meckling (1976)
Drawing from the theory of agency, property rights, and finance, the authors
established a theory of the ownership structure of the firm.
In this sense, most organisations are “legal fictions which serve as a nexus for
a set of contracting relationships among individuals.”(p. 310).
Many organisations are based on a separation of ownership and control.
20
Strengths and Limits of TCE/Agency Theory
Strengths
TCE contributes to an important extension of the prevailing organisational research
perspective mainly by addressing such fundamental questions as why are there
firms? with only a limited analytical focus.
TCE complements organisation theory with an (micro-)economic explanation of
different institutional forms by comparing the efficacy regarding alternative
arrangements and providing a transaction cost economizing result.
21
Strengths and Limits of TCE/Agency Theory
Limits
The focal point of criticism is the concept of opportunism lying at the core of Williamson’s TCE;
some authors urge a more complex motivational model, which takes into account that
opportunistic behavior is influenced by various factors such as control mechanisms and prior
conditioning (for example, Ghoshal & Moran (1996) describe the narrow assumption of
opportunism as a self-fulfilling prophecy, as hierarchical control within firms, which is
supposed to defuse opportunism, at the end may be self-defeating).
While regarding the firm as the organisational form of last resort, TCE ignores the existence of
efficient, energetic, and innovative organisations encouraging creativity, leadership as well as
initiative not by mere hierarchical control and fiat, but rather by social control promoting
trust, commitment, and a context of identification.
TCE disregards relevant factors of influence when explaining the existence of alternative
governance structures, e.g. aspects of power relations between transaction partners, the
influence of production costs and transaction related cost advantages, interdependencies
between transactions, and environmental conditions (including social, historical, political, and
legal aspects).
22
23
Bureaucracy and Scientific Management
Checklist Used to Evaluate the Performance of
Counter Staff of a Fast-Food Restaurant 1/4
Greeting the customer Yes No
There is a smile.
It is a sincere greeting.
There is eye contact.
Other:
Taking the order Yes No
The counter person is thoroughly familiar with the
menu ticket. (No hunting for items.)
The customer has to give the order only once.
Small orders (four items or less) are memorized
rather than written down.
There is suggestive selling.
Other:
Morgan, G. (1986): Images of Organization p.21, London: Sage Publications 24
Checklist Used to Evaluate the Performance of
Counter Staff of a Fast-Food Restaurant 2/4
Assembling the order Yes No
The order is assembled in the proper sequence.
Grill slips are handed in first.
Drinks are poured in the proper sequence.
Proper amount of ice.
Cups slanted and finger used to activate.
Drinks are filled to the proper level.
Drinks are capped.
Clean cups.
Holding times are observed on coffee.
Cups are filled to the proper level on coffee.
Other:
Morgan, G. (1986): Images of Organization ,London: Sage Publications, p.21. 25
Presenting the order Yes No
It is properly packaged.
The bag is double folded.
Plastic trays are used if eating inside.
A tray liner is used.
The food is handled in a proper manner.
Other:
Asking for & receiving payment Yes No
The amount of the order is stated clearly and loud
enough to hear.
The denomination received is clearly stated.
The change is counted out loud.
Change is counted efficiently.
Large bills are laid on the till until the change is given.
Other:
Morgan, G. (1986): Images of Organization ,London: Sage Publications, p.21.
26
Checklist Used to Evaluate the Performance of
Counter Staff of a Fast-Food Restaurant 3/4
Checklist Used to Evaluate the Performance of
Counter Staff of a Fast-Food Restaurant 4/4
Thanking the customer & asking for repeat business Yes No
There is always a thank you.
The thank you is sincere.
There is eye contact.
Return business was asked for.
Other:
Source: Morgan, G. (1986): Images of Organization ,London: Sage Publications, p.21.
27
Taylor‘s Scientific Management 1/2
“No great man can … hope to compete with a number of
ordinary men who have been properly organized so as to
efficiently cooperate. In the past the man has been first, in
the future the system must be first.”
Taylor (1947: 7)
28
Taylor‘s Scientific Management 2/2
1. Principle: Shift all responsibility for the organisation of work from
the worker to the manager
2. Principle: Use scientific methods to determine the most efficient
way of doing work
3. Principle: Select the best person to perform the job
4. Principle: Train the worker to do the work efficiently
5. Principle: Monitor worker performance
Modern Version of Taylorism: Benchmarking
29
Principles of classical management theory –
Henri Fayol (1919) 1/2
Unity of command: an employee should receive orders from only one superior.
Scalar chain: the line of authority from superior to subordinate, which runs from top to bottom
of the organization; this chain, which results from the unity-of-command principle, should be
used as a channel for communication and decision making.
Span of control: the number of people reporting to one superior must not be so large that it
creates problems of communication and coordination.
Staff and line: staff personnel can provide valuable advisory services, but must be careful not to
violate line authority.
Initiative: to be encouraged at all levels of the
organisation.
Division of work: management should aim to achieve a degree of specialisation designed to
achieve the goal of the organisation in an efficient manner.
Authority and responsibility: attention should be paid to the right to give orders and to exact
obedience; an appropriate balance between authority and responsibility should be achieved. It is
meaningless to make someone responsible for work if they are not given appropriate authority to
execute that responsibility.
Source: Morgen, G. (1986): Images of Organization, London: Sage Publications, p.26.
30
Principles of classical management theory –
Henri Fayol (1919) 2/2
Centralisation (of authority): always present in some degree, this must vary to
optimise the use of faculties of personnel.
Discipline: obedience, application, energy, behavior, and outward marks of respect in
accordance with agreed rules and customs.
Subordination of individual interest to general interest: through firmness, example,
fair agreements, and constant supervision.
Equity: based on kindness and justice, to encourage personnel in their duties; and fair
remuneration which encourages morale yet does not lead to overpayment.
Stability of tenure of personnel: to facilitate the development of abilities.
Esprit de corps: to facilitate harmony as a basis of strength.
Source: Morgen, G. (1986): Images of Organization, London: Sage Publications, p.26.
31
Max Weber‘s Theory of Bureaucracy
32
A bureaucracy
should have a:
Clearly specified
System of task and
role relationships
Clearly specified
hierarchy of
authority
System of written rules
and standards
operation procedures
that specify how
employees should
behave
Selection and
evaluation system
that rewards
employees fairly
and equitably
Source: Meyer et al. (2007) Contemporary Management, McGraw-Hill: London, p. 40.
Bureaucracy – Conditions
Simple and stable environments
Rationalised tasks: Repetitive and standardised tasks
Mature, large and old organisations
Has the volume of operating work needed for repetition and
standardisation
old enough to settle on the standards the organisation wishes to use
33
Mass Production Firms as Bureaucracies
Strategic Apex
Purchasing Fabricating
M
an
u
fa
ct
u
ri
n
g
Assembling Selling
Source: Mintzberg (1979): 327
34
Organigram of a large Steel Company
Board of Directors
Chairman of the Board
Vice-President
Secretary & General
Counsel
Facilities Planning,
Eng. and R & D
Division
Operations Division Marketing Division Financial Division Personnel Division
President and
Chief Executive
Officer
Executive Vice
President
Environmental Control
Transportation
Raw Material
Industrial Engeneering
Metallurgical & Quality Control
Production Planning
Plant Protection
Works A
Primary Production
Shapes Production
Flat Rolled
Operating Services
Works B
Wire, Wire Products and Screws
Heavy Bolts
Tubular Works
Facilites Planning
Research & Development
Engeneering – Primary Works
Finishing & Tubular Works
Electrical Engeneering
Technical Services
Organisation Developmanet
Public Development
Personnel Services
Salary and Benefits
Medical
Industrial Relations
Taxiation
Data processig
Internal Audit
Accounting
Financial Analysis & Control
Systems
Office Services
Treasury
Corporate Insurance
Pension Fund Investment
Credit
Procurement
Product Salles
Market Development
Overseas Sales
Commercial Planning &
Research
Source: Mintzberg (1979): 328 35
General
Manager
Credit
Manager
Personal
Manager
Maintenanc
e
Supervisor
Resident
Manager
Director of
Marketing
and Sales
Food and
Beverage
Manager
Director
of Sales
Executive
Assistant
Manager
Executive
Maitre
D´Hotel
Purchasing
Agent
Banquet
Manager
Assistant
Manager
Reception
Front
Office
Manager
Beverage
Supervisor
Head
Housekeepe
r
Night
Manager
Garage
Manager
Executive
Chief
Chief
Engineer
A Hotel as a White Collar Bureaucracy
Assistant
Accountant
Chief
Accountant
Source: Mintzberg (1979): 330
36
37
Maxim
Stability und calculability
Basic regulatory frame
Welfare state
Market regulation
Enterprises:
Economies of Scale
Mass production
Bureaucratic organisation
Arm’s length market relations
Fordism as an example
Bureaucracy – Summary
38
Prime Coordinating Mechanism:
Main Design Parameters:
Contingency Factors:
Standardisation of work processes
Behaviour formalisation; job specialisation;
usually functional grouping; large
operating-unit size; centralisation; action
planning
Old, large; regulating; non-automated
technical system; simple, stable
environment; external control; not
fashionable
Bureaucracy/Scientific Management – Issues
Human problems in the operating areas
Coordination problems in the administrative areas
Adaption problems in the strategic areas
39
Strenghts and Limitations of Bureaucracy
Strengths
A mechanistic approach to organisations works well under these
conditions:
• when there is a straightforward task to perform;
• when the environment is stable enough to ensure that the
products produced will be appropriate ones;
• when one wishes to produce exactly the same product time and
again;
• when precision is at a premium; and
• when the human “machine” parts are compliant and behave as
they have been designed to do.
40
Strenghts and Limitations of Bureaucracy
Limitations
– An approach to “organizations without people” (Bennis, 1959, p. 263)
– Can create organisational forms that have great difficulty in adapting
to changing circumstances;
– can result in mindless and unquestioning bureaucracy;
– can have unanticipated and undesirable consequences as the interests
of those working in the organisation take precedence over the goals
the organisation was designed to achieve; and
– can have dehumanising effects upon employees, especially those at
the lower levels of the organisational hierarchy.
41
42
Institutional Theory
43
Main Thesis
“… the formal structures of many organizations in
postindustrial society dramatically reflect the myths of their
institutional environments instead of the demands of their
work activities.“
Meyer/Rowan (1977), p. 341
Source: Meyer JW, Rowan B. 1977. Institutionalized Organizations: Formal Structure as Myth and Ceremony.
American Journal of Sociology 83(2): 343.
44
Origins of Institutional Theory:
Meyer & Rowan (1977)
M&R (1): organisations use strategies, structures and practices that are socially
expected of them
social approval (Legitimacy) rather than efficiency
Increases likelihood that external constituents will assist the organisation
Managers do not choose whether to conform, they conform because
alternatives are not recognised (taken for granted: myths)
M&R (2): contradictions between institutionalised expectations and organisational
efficiency leads to decoupling
Organisations adapt structures and practices that are aligned with institutional
prescriptions but which are deliberately distanced from how work is actually
done
„Ceremonial“ conformity
45
Institutionalist Explanation of Organisational Survival
Meyer & Rowan (1977)
Development of
institutionalised
rationality myths
Conformity of organisations
with institutionalised myths
Legitimacy
and resources
Survival
Efficiency of
organisations
46
Mechanisms of Isomorphism
DiMaggio & Powell (1983)
1. Coercive mechanisms
Result of actions by agencies (e.g. state, regulatory bodies, funding agencies)
upon whom collectivities of organizations are dependent, but also pressures
by other organisations
2. Mimetic mechanisms
Under uncertain and ambiguous conditions managers copy organisations
perceived to be more successful and legitimate.
3. Normative mechanisms
Professionalisation: standardisation of education; organisational norms
among professional managers and their staff; setting of normative rules
about professional behavior
Source: Adapted from DiMaggio, P. J., & Powell, W. W. 1983. The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality
in Organizational Fields. American Sociological Review, 48(2): 147-160.
47
Institutional Entrepreneurship and Institutional
Strategies
Strategy Effect
Co-option Neutralizing institutional constraints
Lobbyism Dismantling/creating of institutional
constraints
Membership Creating of institutional constraints
Standardisation Creating of institutional constraints
Influence Influencing societal value systems
48
Strengths and Limitations of Institutional Theory
Strengths
– Organisations compete for “social as well as economic fitness” (DiMaggio and Powell
1983, 150), as their survival and success not only depend on the technical efficiency, but
also the perceived social appropriateness of their ideas, products, structures and
practices.
– Legitimacy becomes a critical resource that organisations must extract from their
institutional environment.
– Institutional Theory offers important constructs for explaining why firms and
organisations become and behave more alike.
Limitations
– Institutional Theory became seen as a theory of convergence, similarity and inertia,
unable to conceptualise change.
– Institutions are mostly conceptualised as constraints rather than products of human
action.
49
Organisational Learning and Heterarachy
Organisational learning
It focuses on adaptation and learning from experience.
Organisations learn by encoding past inferences into
organisational structures, culture, people, and technologies
that guide behavior. It encodes successful practices into rules,
beliefs-culture, participant’s memories and their tasks.
50 Source: Daniel A. McFarland Organizational Analysis
51
Charles Darwin:
“It is not the strongest of the species that
survives, nor the most intelligent, but the
most responsive to change”
Why do organisations need to learn?
How do we understand learning?
Learning as a quantitative increase in knowledge. Learning
is acquiring information or ‘knowing a lot’.
Learning as memorising. Learning is storing information
that can be reproduced.
Learning as acquiring facts, skills, and methods that can be
retained and used as necessary.
Learning as making sense or abstracting meaning. Learning
involves relating parts of the subject matter to each
other and to the real world.
Learning as interpreting and understanding reality in a
different way. Learning involves comprehending the
world by reinterpreting knowledge.
52 Source: Ramsden, P. (1992) Learning to Teach in Higher Education, London: Routledge, p. 26.
Learning as
acquiring
knowledge
Learning as
sensemaking
Topics of Organisational Learning
Exploration & Exploitation (James G. March)
Exploration – searching, variation, risk-taking,
experimenting, play, flexibility, and innovating
(generating new practices).
Exploitation – refining, choice, production, efficiency,
selection, implementation, and execution (eliminating
inferior forms).
53
Features of Learning Organisations
54
TRANSFORMATIONAL
LEADERSHIP
DISPERSED
STRATEGIES
INTEGRATING
MECHANISM
KNOWLEDGE
WORKERS
HORIZONTAL
STRUCTURES
EGALITARIAN
CULTURE
LEARNING
ORGANIZATION
ENVIRONMENT
The Heterarchy
Space agency
Avant-garde film company
Factory manufacturing complex
prototypes
Integrated petro-chemicals company
Think-tank consulting firm
Creative advertising agency
Different, yet sharing a number of basic structural characteristics
55
Focus on innovation instead of standardisation
Capable of sophisticated innovation
Problem-solving structure
Fuse experts from different disciplines into smoothly
functioning ad hoc project teams
Most complex structure
Flexible structure of the organisation: rather like a “tent” than a
“palace”
The Heterarchy – Structure (1)
56
Highly organic, little formalisation of behavior
High horizontal job specialisation based on formal training
Specialists from different disciplines are grouped in functional units (formally),
but are deployed in small, market-based project teams for their work
Liaison devices to encourage mutual adjustment as the key coordinating
mechanism within and between teams
Selective decentralisation to and within teams
Non-bureaucratic structure: innovation cannot be achieved by standardisation
Least reverence to the classical principles of management, esp. unit of
command
Information and decision processes flow flexibly and informally to promote
innovation
Override the chain of authority, if necessary
The Heterarchy – Structure (2)
57
Hire and give power to experts; but no reliance on the standardised skills of
these experts to achieve coordination
Professionals must amalgamate their efforts
Multi-disciplinary teams formed around the project of innovation
Mutual adjustment as major coordination device
Liaison positions; matrix structure
Teams are established as task forces
Managers abound: functional, integrating, project managers
Small sized work units (narrow “spans of control”)
Liaison and negotiation rather than supervision
The Heterarachy – Structure (3)
58
Complex and dynamic environment
• Organic and decentralised structure
Disparate forces in the environment
• Different work constellations to deal with different aspects of its
environment
Very frequent product change (e.g. “unit producer”)
Youth of the organisation
• Heterarchies tend to bureaucratize as they age
The Heterarchy – Conditions
59
Human Reactions to Ambiguity
Low tolerance for ambiguity?
Hetearchy is the only structure for those who believe in more
democracy with less bureaucracy
Authority relationships are obscure
Conflict and aggressiveness are necessary elements in the adhocracy
Problems of Efficiency
Heterarchy is not competent in doing ordinary things
Root of its inefficiency is its high cost of communication
Unbalanced workloads
Heterarchy – Conflicts and Problems
60
Strengths and Limitations of the Organistional
Learning lens
Strengths
– The image gives clear guidelines for creating learning organisations
that are able to innovate and evolve.
– We gain a new theory of management based on principles of self-
organisation.
Limitations
– There may be a conflict between the requirements of organisational
learning and the realities of power and control.
– Learning for the sake of learning can become just another ideology.
61
62
Organisational Culture
63
Why Did Management Studies Turn Its Attention to
the Organisational Culture Phenomenon?
Methodological critique of the status quo
– The orientation of traditional management studies towards formal
structures and quantitative analysis was criticised.
Empirical relevance
– Success of Japanese firms with culturally conscious management styles
Management fashion
– The concept of corporate culture was popularised through management
bestsellers (Peters/Waterman, 1982; Deal/Kennedy, 1982; Pascale/Athos,
1981)
Defining Organisational Culture
Organisational culture is …
the shared rules governing cognitive and affective aspects of
membership in an organisation, and the means whereby they
are shaped and expressed.
64 Source: Daniel A. McFarland Organizational Analysis
Defining Organisational Culture
What are traces of organisational culture?
Shared meanings, assumptions, norms and values governing
work behavior
Symbolic, textual, and narrative structures in which they are
encoded
The structural causes and consequences of cultural forms and
their relation to organisational effectiveness
65 Source: Daniel A. McFarland Organizational Analysis
66
Schein’s Cultural Model
visible, but often not
decipherable (needs interpretation)
invisible,
mostly unconscious
Source: Adapted from Schein, EH. 1984. Coming to a New Awareness of Organizational Culture. Sloan Management
Review 25(2): 4.
Artifacts & Symbols
Language, Rituals, Clothes,
Manners
Values
Maxims, Norms, Guidelines,
Taboos
Basic assumptions
about: Relationship to
environment, nature of reality,
time and space, etc.
67
Organisational Cultures
Clan Heterarchy
Hierarchy Market
Flexibility and Discretion
Stability and Control
In
te
rn
al
F
o
cu
s
an
d
In
te
gr
at
io
n
Extern
al Fo
cu
s an
d
D
ifferen
tatio
n
Source: Adopted from Cameron, Kim S.; Quinn Robert E. “Diagnosing and Changing Organizational Culture.
Based on the Competing Vales Framework”, Reading, Mass. et al., 1999, p, 32.
Strength and Limitations of the Organisational
Culture Lens
Strenghth
– Draws attention to the symbolic significance of organisational elements
– It points to another means of creating organised activity: by influencing
the language, norms, ceremonies, etc. that communicate the key
ideologies, values, and beliefs guiding action
– Management of change as a process of changing organisational culture
Limitations
– The dark side of cultural management: developing the art of
management into a process of ideological control – corporate newspeak
– Danger of a mechanistic attitude that underlies many perspectives
advocating the management of culture.
68
69
Power and Politics
Foundations of the Power and Politics Lens
Roots are in political science
– the study of power relations within and across organisations
– Political scientists study the struggle for, and maintenance of, political,
economic, and cultural power
Important contributors to a power perspective in organisation
studies:
– March (1962) The business firm as a political coalition
– Pfeffer (1981) Power in organizations
– Mintzberg (1983) Power in an around organizations
– Foucault (1980) Power/knowledge
– Clegg et al. (2006) Power and organizations
70
“… we assume that a business firm is a political coalition and
that the executive in the firm is a political broker. The
composition of the firm is not given; it is negotiated. The goals
of the firm are not given; they are bargained. “
James March, 1962
71
Unit of Analysis and Power
What is power?
– “A has power over B to the extent that he can get B to do something B
would not otherwise do” (Dahl, 1957, pp. 202-203)
– Power is “the chance that one actor within a social relationship will be
in a position to carry out his own will despite resistance” (Weber,
1947, p. 152)
What is a political system?
– A political system is a stable pattern of human relations that integrates
to a significant part power, domination, or authority (Dahl, 1973)
Power and Social Perception
– Unlike physical forces, social forces pass through people’s heads: that
is, their effects depend upon the way they are perceived
72
Organisational Politics – Definitional Elements
73
Situational
Characteristics
• Conflict
• Uncertainty
Means
• Influence
• Power Tactics
• Informal Behavior
• Concealing Motives
Outcomes
• Self Serving
• Against the Organization
• Resource Distribution
• Power Attainment
Organisation Group Individuum
Source: Drory, Amos; Romm, Tsilia (1990) The Definition of Organizational Politics: A Review, Human Relations ,43, p. 1135.
Strengths and Limitations of the Power and Politics Lens
Strengths
– Demonstrates the political nature of organisational life
– Helps to explore the myth of organisational rationality
– Helps to overcome the image that organisations are functionally
integrated systems
– It recognises the tension between private and organisational interest as an
incentive to engage politically
– Makes us aware of the sociopolitical role organisations play in society
Limitations
– When we understand organisations as political arenas we are more likely
to behave politically in relation to what we see
– The political image may overstate the power and the importance of the
individual and underplay the system dynamics that determine what
becomes political and how politics occurs
74
Running head: ORGANIZATIONAL THEORIES 1
ORGANIZATIONAL THEORIES 2
Lingyun Feng（13681794）
Organizational Theories
Organizations are expected to adhere to several set rules that govern how they operate or relate with one another. Markets provide different rules and regulations depending on the type of organization under question and the industry of operation. It is, therefore, prudent that companies follow or adhere to as certain way of doing things to avoid conflict with the regulators and consumers. Although organizations try as much as possible to stay within the limits of the law, there are others which are tempted to break laws. Sorensen and Miller (2017) state that high competition in some sectors may tempt companies to overlook regulations that seem to limit their ability to compete effectively. Ignoring such laws can have adverse effects on different players such as the stakeholders, consumers, and the company itself. Organizational theories provide different ways that organizations can be studied and explained. Through organization theories, researchers can understand how companies operate and some of the reasons that cause such companies to overlook the laws that are supposed to guide them. WorldCom is one of the companies that is responsible for the shocking and widespread fraud that have been witnessed in wWall sStreet. This paper discusses the questionable organizational and management practices that led to the WorldCom scandal as well as how accountable they were for their actions. Comment by Joshua Dymock: Make sure you proofread your assignment carefully before you submit it, as this will help you find and correct small mistakes such as this.
A good way to proofread is to read the assignment out loud, as this slows down your reading and makes it more likely that you will see mistakes. Comment by Joshua Dymock: This section is quite long for an introduction. I would consider trying to condense this to 2 or 3 sentences. Comment by Joshua Dymock: This is a good statement of the purpose of your paper. It would be good to add another sentence which outlines your “thesis”, which means your position (or evidence-based opinion) on the topic. In this case, your thesis might outline what you consider to be the main causes of these questionable organizational practices.
It’s also common to use your introduction to outline the structure of your assignment.
Eg. The paper will begin by examining……….It will then discuss XXX and YYY. Finally, some recommendations will be given regarding………..
Sorensen and Miller (2017) assert that the WorldCom scandal was the largest and most shocking scandals that had ever been witnessed before 2001. The company, which was the largest telecommunication company in the world at the time, tried to inflate earnings on its financial statements by almost $4billion (Gür, 2018). The manipulation of its financial data not only affected the company but millions of shareholders who had invested a large portion of their money in the company because of its positive performances. The company was also a core dividend paying stock, meaning that many retirees held the stocks in their portfolios. The ripple effects of the manipulation of financial data means that people like the retirees lost their hard earned money. WorldCom leaders knowingly carried out fraudulent accounting. () states that the Chief Financial Officer (CFO) for the company at that time, Scott Sullivan, deliberately applied the accrual method wrongly. Comment by Joshua Dymock: Again, careful proofreading would help you spot small mistakes such as this one, where you have used a plural form to describe something that you previously described as an individual event.
It is important to first understand the accrual method in accounting before understanding how the WorldCom scandal was executed. When companies acquire assets, accounting rules dictate that the cost of the expenses should be allocated over the period in which they will benefit the company (Gür, 2018). The accrual method is, therefore, the matching of revenues with the cost incurred to generate the revenue over a certain period. For example, if a company acquires a machine for $7500 and it earns annual profits of $10,000 it is supposed to spread the cost of the machine over the years it is supposed to benefit from the machine. For example, if the machine is expected to last for five years, and it improves productivity by twice the normal rate, its entire cost of acquisition should not be accounted in only one year. Accounting the costs in one year will mean that the company will only take $2500 profits in a year. When an investor looks at the financial information, they will wonder why the profits have fallen so much. Instead, accounting principles require the company to spread the cost of acquiring the machine over the five year period in which it is set to benefit the company. Therefore, the company will incur annual costs of $1500 for the five years, meaning that its earnings will be $8500 every year. Such financial entries allow investors to get an accurate picture of how a company is doing and its economic reality. Comment by Joshua Dymock: This is a good topic sentence that helps guide the reader through the structure of your paper. Comment by Joshua Dymock: Is this your example or did this come from another source? If it came from another source, you need to include a citation. Comment by Joshua Dymock: Is all of this information your own, or has it come from another source?
Instead of adhering to accounting practices, the Chief Financial Officer for WorldCom, he took out the company’s operating expenses and spread them across property accounts (Gür, 2018). Property accounts are one of the major types of a capital expense account. The strategy allowed the company to report smaller expenses over a long period instead of entering them immediately in their financial statements. In 2001, the company had already inflated revenues by almost $4 billion as a result of accounting malpractices (Sorensen & Miller, 2017). Even though the method was sustainable at the start, it came to a time when it was not sustainable and the company was forced to file for bankruptcy in July 22, 2002. Filling for bankruptcy led to increased scrutiny of its financial statements since it is not normal for a company that is posting positive performances to suddenly file for bankruptcy (Sorensen & Miller, 2017). The bankruptcy also led to investigations of the company’s executives, especially its CEO Bernard Ebbers and Scott Sullivan, who was the CFO. The investigations found Ebbers guilty of nine counts of security fraud and he was handed a 25 year jail sentence (Sorensen & Miller, 2017). Sullivan, on the other hand, was found guilty of seven counts of security fraud and was sentenced to five years after taking a guilty plea. Since many people had been affected by the scandal and others like the Enron Scandal, the government came up with the Sarbanes-Oxley Act (SOX) aimed at increasing confidence in the financial markets and the financial statements released by public companies. Comment by Joshua Dymock: Are you confident that this has been adequately paraphrased (i.e. written in your own words)?
Reasons for the Questionable Organizational and Management Practices
Organizational Ethics
One of the reasons that contributed to the scandal was fear of accountability on the part of the company’s management. Mcleod, Payne, and Evert (2016) state that the company had already started posting negative results before the commencement if the scandal. The management did not want to scare away investors and resorted to poor financial practices to portray an image of a positively performing company (Batten, Lončarski, & Szilagyi, 2018). The ethical and moral dimension theories can clearly explain why WorldCom’s top leaders knowingly allowed such a scandal to continue. Organizational ethics refer to the standards and principles by which companies operate (Reference). Organizational ethics are demonstrated through acts of compassion, honor, integrity and responsibility. Business ethics helps companies to fairly treat all its stakeholders and avoid any practices that may negatively affect them (Reference). Comment by Joshua Dymock: Again, this is an excellent topic sentence that makes clear to the reader the purpose and content of this paragraph. Comment by Joshua Dymock: When given a definition of a key term, it’s best to use a quotation to show the reader where the definition came from.
Financial and business ethics is one of the major aspects of organizational theory that influence the operation and performance of organizations. Batten et al. (2018) state that business leaders have the moral obligation to run clean and transparent operations when it comes to finances, investments and the expansion of companies. Since ethics deals with human behavior and what is morally right or wrong,. Eethical norms cover different areas such as accountability, honesty, integrity, fairness and justice. Financial ethics, therefore, requires business leaders and managers to be honest, transparent and trustworthy when executing different financial procedures (Mcleod et al., 2016). For example, finance officers are required to make accurate entries in their financial statements so as to give investors a clear picture of a company’s performance. From the analysis of the WorldCom case, it is evident that its leaders deliberately manipulated financial information. The company’s CFO collaborated with other leaders like the CEO to misrepresent expenses thus portraying a picture of a company on a positive trajectory. It is evident that there was a lack of financial and business ethics in WorldCom. The fact that its leaders could knowingly engage in financial malpractices indicates a lack of an ethical code of conduct in the company. Even though there was an ethical code of conduct, there is high probability that it was enacted for formality purposes and was not followed.
The leaders of WorldCom were unethical because they engaged in financial malpractices without thinking about how their actions would affect other people. As a result of their actions, the company was declared bankrupt and eventually collapsed. Most of the investors that had trusted the company with their life savings also lost their money, further affecting them.
Batten et al. (2018) state that adherence to organizational ethics would have prevented leaders from committing the fraud. Organizational ethics would have helped the leaders to be honest and transparent in their reporting of financial information. The CFO and the CEO would, therefore, have released the correct financial information even if the company was not performing as expected. The release of the correct financial information would have prevented many of the effects of the scandal. For example, the company’s leadership together with the stakeholders would have come up with strategies to turn around the company’s performance. Additionally, the adherence to business and financial ethics would have prompted the company’s leaders to report accurate financial information soon as possible.
Organizational Culture
Having a culture that is based on widely shared and strongly held beliefs that are supported by structure and strategy is one of the components of organizational success. Strong organizational culture presents many different benefits to companies. For example, a strong organizational culture helps employees to know what is expected of them by the top management. A strong organizational culture also helps employees know that the response expected of them is a proper one and that they will be rewarded for adhering to the values of their organizations. Comment by Joshua Dymock: What evidence do you have for this claim? It would be good to include a citation here to support your claim. Comment by Joshua Dymock: Again, what evidence do you have to support this claim?
Companies must, therefore, ensure that they come up with a string culture that provides a strategic competitive advantage and adheres to the widely held beliefs and values about what is expected. A strong organizational culture has many benefits like fewer conflicts, efficient decision making, enhanced trust and improved company image. Company leaders are important in the shaping of organizational culture. Company leaders who do not fit in their organization’s culture are more likely to fail in their work or destroy a company’s reputation (Camelia, Ioana-Valentina-Alexandra, & Larisa-Andreea, 2019). Therefore, before hiring executives, companies must ensure that they hire qualified leaders with the skills and experience required to fit in the company culture. Comment by Joshua Dymock: Do you mean “strong culture”? Comment by Joshua Dymock: Are these all your own ideas, or has this information come from other sources? If it has come from other sources, you MUST include appropriate citations.
Camelia et al. (2019) state that every organization must have its unique culture. Organizational culture is derived from basic assumptions about human nature, the relationship of the organization to its environment, the right emotions, and effectiveness. When it comes to human nature, organizations need to investigate the nature and behavior of people. Organizations must ascertain whether people are inherently good or bad, proactive or reactive and mutable or immutable. These considerations help in the creation of beliefs on how employees, suppliers and customers are required to interact and how they should be managed (). Organizations should also investigate how they interact with their environment to effectively define their business and their constituencies. Comment by Joshua Dymock: This seems highly problematic. How can a company investigate whether a person is inherently good or bad?
From the analysis, it is therefore evident how important organizational culture is. There are several benefits that come with a string organizational culture. A strong organizational culture gives employees a sense of direction since they know what is expected of them. Employees that work in a company with a strong organizational culture do not need to be constantly managed because they know that it is their responsibility to adhere to organizational values (Setyaningrum, 2017). Such employees also strive to adhere to organizational values because it means recognition and possible rewarding. Having employees that know what is expected leads to improved productivity and efficiency of services, leading to improved company performance. From the analysis of the case study, it is evident that WorldCom did not have a strong organizational culture because employees diverted from their company’s values and rules and regulations governing their industry. The CFO together with the CEO deliberately flouted accounting principles in an attempt to hide their inefficiencies when it comes to the management of a company as large as WorldCom (Setyaningrum, 2017). The lack of a strong organizational culture made it possible for the company’s leadership to execute the fraud without anyone noticing and reporting to the relevant authorities. The results were the bankruptcy of the company and its eventual collapse. Comment by Joshua Dymock: Make sure you proofread carefully!
Camelia et al. (2019) state that a strong organizational culture is important because it leads to increased motivation among employees. Well defined values are essential when it comes to making employees enjoy their work and helping them find their purpose and fulfill their professional goals. A strong organizational culture gives employees a sense of purpose and motivates them to execute their functions to the best of their abilities. A study carried out by () established that organizations with a sting culture experience 41% les case of absenteeism and a 17% increase in productivity. The WorldCom case study reveals that there was low morale within the company (Camelia et al., 2019). The fact that the company’s leadership had to resort to fraud to post positive performances demonstrates that productivity was at an all time low and was probably caused by the lack of motivation. The company’s employees may have lacked role models to look up to thus losing the sense of purpose. Comment by Joshua Dymock: It’s a bit hard to know what this paragraph is adding to your overall argument, beyond what you’ve already said about organizational culture? It’s starting to sound a bit repetitive. What is the purpose of this paragraph?
In summation, it is evident that the WorldCom scandal would have been avoided through the application of business ethics and the right organizational culture. The WorldCom scandal was the largest and most shocking scandals that had ever been witnessed before 2001. The company, which was the largest telecommunication company in the world at the time tried to inflate earnings on its financial statements by almost $4billion. The manipulation of its financial data not only affected the company but millions of shareholders who had invested a large portion of their money in the company because of its positive performances. The application of financial and business ethics would have prevented the scandal from happening. Through financial and business ethics, WorldCom’s leaders would have seen that it is unethical to manipulate the company’s financial statements. The application of a strong organizational value would also have increased morale and productivity among employees, hence getting rid of the need to manipulate financial information. Comment by Joshua Dymock: Since you’ve used headings in other parts of your paper, it would be good to have the heading “Conclusion” here. Comment by Joshua Dymock: This is an extremely strong claim. We can’t be certain that this would have ensured avoiding the scandal. Usually in academic writing we soften our claims because we can rarely be certain that something is definitely true.
In this case you could say: “may have been avoided” Comment by Joshua Dymock: As above, this is a very strong claim.
References
Batten, J. A., Lončarski, I., & Szilagyi, P. G. (2018). When kamay met hill: Organisational ethics in practice: JBE. Journal of Business Ethics, 147(4), 779-792. doi:http://dx.doi.org/10.1007/s10551-017-3435-4
Camelia, G., Ioana-Valentina-Alexandra, M., & Larisa-Andreea, N. (2019). Organizational culture: a case study of the impact of ethical organizational culture on the efficiency of accor hotels. Romanian Economic and Business Review, 14(2), 86-96.
Gür, E. (2018). Accounting professional ethics. Adam akademi Sosyal Bilimler Dergisi = Adam Academy Journal of Social Science, 8(2), 371-407. doi:http://dx.doi.org/10.31679/adamakademi.443323
Mcleod, M. S., Payne, G. T., & Evert, R. E. (2016). Organizational ethics research: A systematic review of methods and analytical techniques: JBE. Journal of Business Ethics, 134(3), 429-443. doi:http://dx.doi.org/10.1007/s10551-014-2436-9
Setyaningrum, R. P. (2017). Relationship between servant leadership in organizational culture, organizational commitment, organizational citizenship behaviour and customer satisfaction. European Research Studies, 20(3), 554-569.
Sorensen, D. P., & Miller, S. E. (2017). Financial accounting scandals and the reform of corporate governance in the United States and in Italy. Corporate Governance, 17(1), 77-88. doi:http://dx.doi.org/10.1108/CG-05-2016-0125
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