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The Effects of Corporate Culture on Organizational Behavior

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See attached case study.

Question 4: Discuss the relation between what happened at Arthur Andersen and multitask principal-agent theory.

Question 5: Discuss the relation between the 'hard' and 'soft' elements of a firm's corporate culture in the context of this case.

These questions are the only questions I'm having trouble answering; the rest I have already answered. Attached a pdf file of the case study and questions from the text book.

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4. Multi-task principle agent theory proposes that the agent is rewarded for productivity and is allocated risk. However, it takes the principle agent theory a step further, by requiring the agent to take on many different tasks within the organization, or by requiring many tasks that are subdivided within a specific function. The problem at Arthur Anderson begins when the new reward system is based on revenue generated, rather than performance. The 2X performance evaluation system designed by Samek, in 1998, led to a shift not only in focus of profit over quality, but in moving from a principle agent theory to the multi-task principle agent theory. The previous 'walk straight' 'talk straight' philosophy is no longer embraced when agents' worth is based on profits.

When profit becomes the bottom line, agents, in this case accountants at AA, are forced to consider profits above all else and are more likely to believe it is necessary to take risks. When agents serve more than one function, such as they did at Arthur Anderson, as auditors, tax advisers and technology consultants, they are taking on multiple tasks. This leads to risk taking multiplied by the various functions, as auditors are expected to generate profits in each functional area. Basing the agents' worth on productivity, rather than quality of performance, produces inherent risks, as agents compete for top positions, or even to keep their positions at Arthur Anderson.

The trouble at Arthur Anderson began well before Samek developed his new 2X performance evaluation system, however. When the firm decided to offer technology consulting services in the 1950's, a market opportunity was recognized, but little thought was given as ...

Solution Summary

The discuss analyses the various aspects of corporate culture, applied to a specific case. It offers suggestions as to how the various aspects of corporate culture influenced decision making and the ultimate demise of the organization.

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Organizational Behavior

Describe the role of technology, tradition, environment, and culture in organizations. What are some of the effects (outcomes) of each? Exercises

Imagine that you have been asked to work in an unfamiliar industry or field, in an unfamiliar organization, one that you would not normally seek to be a part of. For example, if you would not seek work in an emergency room at the local hospital or in a meat production factory, pick such a field and describe its organization, your coworkers, and the work environment. Answer the following questions:

? What type of organization is it?
? What type of organizational structure does the organization have?
? What role does technology play in the organization?

Remember, this is your opportunity to be creative. Be imaginative. Explore the possibilities. The objective is to exercise your creative thinking muscles while exploring the application of what you have learned in this module.

Professional Development
In your own words, define what is meant by organizational structure.
Describe the structure of your organization or some other organization with which you are familiar.

Issues to Consider
What would happen in your organization if the structure were changed for some reason? Would the employees be able to adapt to the changes easily? What about the management?

Discussion
There are a number of ways organizations can affect society and ways society affects organizations. What are some of these ways? Which, in your view, has the greater impact; society or organizations? Defend your answer.

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