Environment plays an important role in organizational effectiveness and performance, and it has a lot to do with determining the success or failure of a company. Leaders should always work on aligning their organization with the environment, both internal and external.
A company’s internal environment is integrated by those elements that lie within the organization, like employees themselves, but especially a strong organizational culture and core values.
Some of these elements can affect the entire organization, but some of them can affect only managers or employees.
It’s no surprise that a manager’s leadership style has a heavy influence on employees and their adopted behaviors in the workplace. Traditional and older managers tend to just give orders and instructions to employees and measure strictly their outcomes; while contemporary managers empower their direct reports and encourage them to shape their decisions and work style while measuring not only their outcomes and results, but also their emotional wellbeing. The power of changing leadership style is completely under the control of managers.
The internal environment of a company is composed of its owners, chairmen, managers, employees, physical environment, and culture.
The external environment of an organization is integrated by general and task environment layers. The general environment is composed of broader and more intangible elements of the organization that affects its activities. It has five dimensions: economical, technological, sociocultural, political-legal, and international. The effects of these dimensions over the organization are broader and occur more gradually.
There’s another environment that has a more immediate impact on the organization: the Task environment, which consists of other dimensions of the organization’s surroundings: competitors, customers, suppliers, regulators, and strategic partners.