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CHAPTER 1

A STRATEGIC APPROACH

TO ORGANIZATIONAL BEHAVIOR

Knowledge Objectives

After studying this chapter, the learner should be able to:

1. Define organizational behaviorand explain the strategic approach to OB.

2. Provide a foral definition of organization.!. Describe the nature of huan capital.

". Discuss the conditions under #hich huan capital is a source of copetitiveadvantage for an organi$ation.

%. &xplain the five characteristics of high'involveent anageent and theiportance of this approach to anageent.

Teaching Point on Knowledge Objectives

(each being strategic.(his eans learners #ill discover ho# to becoe iportant or

even essential in relation to the strategy of any organi$ation )including your course* in

#hich they are a eber. +tress that each learner is creating OB no#ledge to be a

valued source of huan capital. (hese five no#ledge ob-ectives infor students initial

outloo on #hy it is going to be #ell #orth investing tie and attention to this text and

your syste engaging its learning resources. /nlie a course in strategic anageent,

usually taen at the end of a progra of study, strategic organi$ational behavior is

happening in their lives right no#. Being strategic is a higher standard of learning

practice they can see developing in theselves, as they use the resources of the boo and

your instruction. 0igh'involveent anaged organi$ations place the highest preiu for

success upon people interacting and perforing #ith a een sense of shared purpose.

our authors have taen a fir stand. 0igh'involveent anageent is #hat your

learners need to recogni$e as their opportunity to lead and be led ethically and #ell. 0elp

the use OB concepts to discern in any organi$ational setting the degree to #hichpeople

actually atter to those #ith highest responsibility for running the business. (hisguide is

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#ritten OB teacher to OB teacher to encourage high-involvement teaching. (he

suggestions are grounded in the active learning principle that learners #ill create their

o#n OB no#ledge #ith this fine aterial, if they constantly, directly experience its

iportance to their success in your course and beyond.

ot only #ill they discover, #ith this instructional aterial and by your contributions,

that successful copanies today are led by people #ho firly believe that valuing huan

capital is crucial for business, they #ill no# first hand the eaning of being valued as a

source of learning to the class.

Honing a Strategic OB Prospect

Chapter One: A Strategic Approach to Organizational Behavior

To hone is to sharpen; to make more intense or effective; or, to direct one's attention.

Prospect is that which can be seen, something expected; a possibilit. Teach so that

learners will direct their own attention to see and care about the strategic possibilities of

even the everda actions of individuals and groups in an organizational context. (his

opening chapter presents an intriguing proposition for engaging learners in this #ay of

thining #ith OB concepts. 3t is thatstrategic leadershipis not a function of level in the

organi$ation, eaning it is not reserved for those at the top #hich #ould be the

conventional vie#. On page 4, the authors #rite, 53t is a atter of focus and behavior.6

(hey go on to say that strategic leaders thin and act strategically. (hey use sills

grounded in OB principles to otivate people and build trusting relationships. &ach helps

to ipleent the organi$ations strategy, fro 7&O to front line #orer. 0ere is a

teaching extension of this high'involveent anageent proposition. Start o!r

learners on this strategic thin"ing path now. (he transition #ill be fro:strategic

learnerto strategic leader in your class8 to strategic leader as an associate #here they#or8 to strategic leader as anager and on up the levels. &ach of these chapters presents

an OB sub-ect recogni$able in the table of contents in any strong OB textboos. An

iportant difference, ho#ever, can be ade by crafting lessons fro these pages for

honing a learnersstrategicOB prospect.

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Ke Ter#s

organizational behavior (he actions of individuals and groups in an organi$ational

context.

#anaging organizational behavior Actions focused on ac9uiring, developing, andapplying the no#ledge and sills of people.

strategic approach to OB An approach that involves organi$ing and anaging the

peoples no#ledge and sills effectively to ipleent the organi$ations strategy and

gain a copetitive advantage.

associates (he #orers #ho carry out the basic tass.

organization A collection of individuals foring a coordinated syste of speciali$edactivities for the purpose of achieving certain goals over soe extended period of tie.

h!#an capital (he su of the sills, no#ledge, and general attributes of the people inan organi$ation.

co#petitive advantage An advantage en-oyed by an organi$ation that can perfor soeaspect of its #or better than copetitors or in a #ay that copetitors cannot duplicate

such that it offers products that are ore valuable to custoers.

h!#an capital val!e (he extent to #hich individuals are capable of producing #orthat supports an organi$ations strategy for copeting in the aretplace.

h!#an capital rareness (he extent to #hich the sills and talents of an organi$ationspeople are uni9ue in the industry.

h!#an capital i#itabilit (he extent to #hich the sills and talents of an organi$ationspeople can be copied by other organi$ations.

high$involve#ent #anage#ent An approach that involves carefully selecting and

training associates and giving the significant decision'aing po#er, inforation, andincentive copensation.

Teaching Point on Ke Ter#s

+tart learners thining of these ey ters as lenses. (he strategic OB lens in this and

each chapter furnishes the vie# of the #hole organi$ation fro !, feet. ;ithin these

are the lenses #hich bring ever'closer aspects of a living huan business organi$ation

into focus. Assuing ost of your learners are not yet anagers, they are no# or soon

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#ill be, associates. (hey are #oring at 5sea level6 inside the operations that deliver the

strategic outcoes as proised in the ission of the organi$ation that eploys the.

0ere, #here contact #ith custoers and production is greatest is the line of sight #here

students can better see #ith concepts in this chapter, and the other thirteen, ho# things

are really #oring. OB lenses give the uch closer loos at ho# people are anaging

their organi$ational behavior at sea level. (hey can thin of it as 5seelevel,6 using these

OB lenses to better see #hat is going on around the, reflecting upon practice to create

their o#n ne# insights. ichael, and +usan see unable to use these sae ental assets to

prevent probles that handicap the in #oring #ith people?

2. ;hat are soe of the reasons that these three people have reached this critical

stage of their adult lives and careers seeingly blind to the iportance of earning

the trust and utual respect of people #ith #ho they ust cooperate to get the

-ob done?

!. 3f perforing #ith excellence as an individual #orer does not guarantee being aneffective anager, #hat does?

". (here is an iplication in this case that 5proper training6 in anagerial sills liethose in +usans subse9uent developent ' patience, negotiation, and inforal

persuasion ' can ae a anager out of people lie 7harles, >ichael, and +usan.

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Do you agree? Or, perhaps, there is soething in their fundaental nature that

rules the out as anagers?

%. ;hat does the anager #ho has valued you ost, and #ho you ost value,

see to no# about people that your least preferred anager did not?

%&P%'(%)C()* ST'AT%*(C O'*A)(+AT(O)A, B%HA-(O'

Creating 5inancial S!ccess b Avoiding ,ao66s and Hiring 3!ring

%cono#ic 3ownt!rns /pages 78$792

S!ggested 3isc!ssion 4!estions

1. 0uan capital is a proven source of copetitive advantage. 3nvesting in it #iselythrough hiring the right people and fostering their learning and gro#th is the

strategy that #on the business in good ties. ;hy #ould any top anager

believe that -ettisoning talented people, a prie cause of their success, is a reedyfor a business do#nturn?

2. (he age'old practice of laying off #orers ay have ade sense #hen the aintass #ere hand labor @ less deand for shoes, fe#er hands needed to ae

shoes. (oday, ho#ever, ost coercial tass call for brain#or. ;hat sort of

brain#or could be done for a business during a do#nturn that could bring an

upturn faster, as in the case of u 0ori$ons &lectronics or +outh#est Airlines?

!. ;hen people are let go, decision aers are reducing costs, #hich, in turn #idens

the argin of profit. 3s this not prudent financial ste#ardship?

". 50ire ore people, #hen business has fallen off?6

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Bac" to the Knowledge Objectives

!. "a# $hat is organizational behavior% "b# $h is it important for managers and

aspiring managers to stud & using a strategic approach% "c# (an the stud of a

field such as pscholog substitute for a strategic approach to organizational

behavior% $h or wh not%

a. Organi$ational behavior is the action taen by individuals and groups inan organi$ational context. >anagerial actions create that context for

carrying out the strategy.C

b. (he strategic approach to OB involves organi$ing and anaging thepeoples knowledgeto ipleent the organi$ations strategy and gain a

copetitive advantage. >anaging at any level involves fostering

conditions ost favorable to people creating and using the best no#ledge

for achieving perforance ob-ectives. +ince people are the onlsource ofno#ledge )coputers provide inforation*, the ore deeply a anager

understands huan behavior in organi$ations, and the better able she or he#ill be to provide this context for effective #or. (he study of OB is anefficient eans of deepening this critical aspect of anagerial no#ledge.

c. OB integratesno#ledge fro psychology, social psychology, sociology,

cultural anthropology, econoics and other basic disciplines as necessaryto describe and explain behavior in organi$ations. 7ontext and purpose in

psychology is incidental to the larger ai of no#ledge for no#ledge

sae. +trategic OB centers study on eeting perforance deands in a

copetitive environent by the thoughtful application of huan capital.

). "a# $hat makes an organization an organization% "b# $hat are the defining

characteristics%

a. (here are basic #ays that people behave together as ebers that

constitute an organi$ation. (hey interact to for net#ors of relationships,dividing tass into a coordinated syste of speciali$ed activities for the

purpose of achieving certain goals over an extended period of tie.

b. Defining characteristics are net#ors of individuals, systes, coordinatedactivities, division of labor, goal orientation, and continuity over tie,

regardless of changes in individual ebership.

*. $hat is human capital% e specific.

a. 0uan capital is a critical intangible resource. 3t is the su, at any

oent, of sills, no#ledge, and general attributes of people in anorgani$ation. 3t is garnered and constantly rene#ed by each eber

learning #hat it taes to accoplish goals #oring cooperatively #ith

others.

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+. ow does human capital provide the basis for competitive advantage%

a. ;hen the people of an organi$ation can perfor a strategic aspect of the#or better than copetitors or #hen it can perfor the #or in a #ay

that copetitors cannot duplicate, copetitive advantage results. (rue

copetitive advantage is deterined by the:i. value of huan capital ' the extent that people are capable of

producing #or that supports the organi$ations copetitive

strategy8ii. rareness of the sills and talents of the people producing the #or8

and

iii. imitabilitof these sills and talents, eaning the extent to #hich

they can be copied by copeting organi$ations.

%. )a# $hat are the five characteristics of high-involvement management% "b# $hat

evidence exists to support the effectiveness of this approach%

a. Overall, high'involveent anageent is a value shared by all levels of

anagers in an organi$ation that huan capital is the organi$ations ostiportant strategic resource and #ho ae their decisions accordingly.

(he five characteristics are:

i. elective hiring@ the foundational decision of choosing the rightpeople8

ii. xtensive training@ assuring every eber has no#ledge to

perfor standard as #ell as uni9ue and innovative #or processes8

iii. /ecision power@ providing associates #ith the authority to aesoe iportant decisions on their o#n and #ith others that give

the organi$ation its direction8

iv. 0nformation sharing@ seeing that all are properly infored inorder to ae effective decisions8 and

v. 0ncentive compensation@ recogni$ing and re#arding individual

and collective perforance that brings about strategic results.b. esearch studies cited in the chapter copared copanies anaged #ith

recogni$ed high'involveent practices #ith those anaged by

conventional practices, not placing a high value on people. (here #ere

fe#er defects, higher productivity, and greater probability of survival inthe copanies that placed the highest value on developing the people.

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Teaching Point on Knowledge Objectives

(each destination. =earners #ill not have truly arrived at the destination of each of these

no#ledge ob-ectives, unless or until they bring the to life in their lives. (hen,

no#ledge #ill have hit hoe. +tudents ay be able to give bac in #riting ans#ers

uch lie those suggested. (his indicates that they have 5consued6 the inforation in

this chapter. Does this ean they are no# ready to use this as personal #oring

no#ledge? Are they sho#ing early signs of appreciating #hat an associate and

anagers appliedno#ledge eans to the short' and long'ter survival of any business

organi$ation? ;hat they thin about organi$ational behavior shapes #hat they do.

1earning is creation, not consumption. Five the soething to do for #hich theyll

have to create and deonstrate their o#n #oring no#ledge.

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their o#n vie#s on personal andstrategiciplications of behaving #ell or badly in

organi$ations. Discussing or #riting about one, several, or all of these 9uestions #ould

raise a#areness, hopefully, even habits. ;hat #ill be added as additional aterial on

ethics are #ays to ove fro talk to tr. &xercises have been designed for each chapter

for action learning. 3t is ainly in action that learners #ill recogni$e their o#n rules.

A ST'AT%*(C O'*A)(+AT(O)A, B%HA-(O' O%)T

All in a 3as ;or" /pages

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frae#or suari$ed in &xhibit 1.2 in the chapter text to assess the

degree to #hich Anns people are a source of copetitive advantage at

this point in tie

". 0ave the share the ans#ers to these three 9uestions #ith each other before the

follo#ing discussion.

%. %nhancing e>ercise: P!tting on OB *lasses. Five the soe practice in using

the +trategic OB =ens.a. PostHpro-ect &xhibit 1.1

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Do they 9uestion #hy it appears that this copany is not paying talent at

aret rates? Are they issing the three factors: value, rareness, iitability?

). 0s 3nn $ood a high-involvement manager% 0f so, provide evidence. 0f not, how

well do ou think she4ll perform in her new 2ob as head of marketing%

&ncourage the to consider, even debate, both sides of this 9uestion

+he has her >BA and #as a successful perforer as an associate and in her

first assisting role. +he no#s the business fro a broadened and seasoned

perspective. ;hat ight the 7areer +tyle 3nventory reveal about her?

Ann ay be inclined to be a high'involveent anager, but is she #oring in

a syste of high'involveent anaging? As the to apply the five ey

coponents )&xhibit 1.!* to this case to loo for positive or negative signs of

the prevailing or#ich &nterprises #ay of anaging their strategicorgani$ational behavior.

*. 3ssume that 3nn $ood wants her managers and associates to be the foundationfor her department4s competitive advantages. 5se the framework summarized inxhibit !.) to assess the degree to which 3nn4s people are a source of

competitive advantage at this point in time.

(here is roo for disagreeent on #here her tea #ill fall in this analysis.

(hey ay agree that they are valuable, but are their talents rare? Perhaps, for

it appears they are able to leave for Jbetter -obs. Are their talents difficult toiitate? Again, it depends on ho# sophisticated the analyses and productions

the copany needs the to do to eep the copetitive are.

+tudents ay note that consuer products place Anns copanies on the field

of fierce battles for the custoers buying choices. (hus, if her people fail torise to the challenge and give the copany the inforation that it needs to stay

out front, then, they can put or#ich at a copetitive disadvantage.

B?(,3()* @O?' H?A) CAP(TA,

Career Stle (nventor /Pages =9$any, even ost, ay be #oring #hile in school, but soe of

these 9uestions #ould be ore easily ans#ered by people further into their careers lieAnn ;ood of the 5All in a Days ;or6 case.

+tress that this is used in con-unction #ith this chapter to sho# the the relevance

of their o#n personal career aspirations to the central thee of the boo. 0o#

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#ill they becoe valued ebers of organi$ations designed and anaged to

foster their gro#th and advance in their careers?

Five the your caveat that they are liely to apply any sorts of style indicators

as they go for#ard. ;hile they ay agree #ith the descriptors and see a pattern

aong those taen, they should not allo# these external easures to tell the

#ho they really are. or, should they use #hat others reveal to the as theirpriary career orientations to affix a stereotyping label on theselves.

ou have the option of having the do the assessent siply for their o#n

inforation.

%>ercise: 5inding A66inities. 0ere is a #ay to bring this case to life as a class

event.

3f you choose this option, as the to bring the assessent results to the class in

#hich you have budgeted tie for discussing the.

A suggested #ay of bringing soe iplications of career orientation to light is to

stae out four corners of the classroo. Put up a sign that says #here each type

should asseble: !ngle 5ighter ,ions, !ngle 5ighter 5o>es, Co#pan an

or ;o#an, and Strategic *a#es#an or *a#eswo#an.

At 5go6 have the eet in the corner #ith those #ho have the sae assessent

result. Five the tie to tal this over8 probing reasons #hy they thin this is#here they are right no# in their career orientation.

3f there are 9uadrants that had not one or only one person standing, lead an

exaination of #hy this ay be so. Accordingly, if one of the 9uadrants isheavily populated, tal about this.

ou ight #ant to bring the bac to do this 7hapter One +elf'Assessent at the

end of the course to have the see if there is any change in the pattern of their

ans#ers.

T%A %&%'C(S%

c3onalds: A High$(nvolve#ent Organization

Teaching enhance#ent:

eind the students that their charge in this exercise as 5overpaid consultants6 is to tellthe President ho# locally anaged franchises are easuring up to the standards of high'

involveent anageent. 3t ay be iplied that he could be a custoer of soe

training and consultation in this approach, if he or she sees it as a path to beating their

copetitors in the custoer service and satisfaction gaes. Bring up &xhibit 1.! andae sure they have it available during tea deliberations. 0ere are those diensions:

Selective Hiring: =arge pools of applicants are built through advertising, #ord ofouth, and internal recoendations. Applicants are evaluated rigorously using

ultiple intervie#s, tests, and other selection tools. Applicants are selected on the basis

of not only sills but also fit #ith culture and ission

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%>tensive Training:e# associates and anagers are thoroughly trained for -ob sills

through dedicated training exercises as #ell as on'the'-ob training. (hey also participate

in structured discussions of culture and ission. &xisting associates and anagers are

expected or re9uired to enhance their sills each year through in'house or outside

training and developent. Often, existing associates and anagers are rotated intodifferent -obs for the purpose of ac9uiring additional sills.

3ecision Power: Associates are given authority to ae decisions affecting their #orand perforance. Associates handle only those issues about #hich they have proper

no#ledge. =o#er'level anagers shift fro closely supervising #or to coaching

associates. 3n addition to having authority to ae certain decisions, associates

participate in decisions ade by lo#er'level and even iddle anagers.

(n6or#ation Sharing: Associates are given inforation concerning a broad variety of

operational and strategic issues. 3nforation is provided through bulletin boards,

copany intranets, eetings, posted perforance displays, and ne#sletters.

(ncentive Co#pensation: Associates are copensated partly on the basis of

perforance. 3ndividual perforance, tea perforance, and business perforance all

ay be considered.

0ere, again, are the steps in the exercise they #ill have already seen:

1. Asseble into groups of four to five. &ach group #ill act as a separate cDonalds. ;hat did you see and experience? 0o# #as

the food prepared and served? ;hat #as the process? Did the eployees see to be

happy #ith their #or? Did they see to be #ell trained and #ell suited for the #or?

Did the supervisor act as a coach or a superior? our instructor ay as you to visit a

>cDonalds in preparation for this exercise andHor to research the organi$ation via the

3nternet or school library.

!. Assess >cDonalds on each diension of high'involveent anageent.

". Develop recoendations for the president of >cDonalds.

%. easseble as a class. Discuss your groups assessents and recoendations #ith therest of the class, and listen to other groups assessents. Do you still assess >cDonalds

in the sae #ay after hearing fro your colleagues in the class?

. (he instructor #ill present additional points for consideration.

Additional points 6or learner consideration:

;hat do they thin of the device of having consultants investigate the

perforance of a business by looing fro the custoer vantage point?

Did your tea agree fro their o#n experience that >cDonalds is losing ground

to copetitors such as Burger King, ;endys, Dunin Donuts, etc.?

>cDonalds pioneered the #inning food fast )and cheap* strategy bac in the1Gs. (hey have continually updated their stores and food preparationtechnologies. A burger is a burger8 #hat advantage could they gain by focusing

on huan capital as a strategic resource?

;hat is the teas considered opinion of >cDonalds future success in attracting

and developing superior anagers at the franchise level?

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3%,, CAS% C'(T(CA, TH()K()* 4?%ST(O)S

Chapter One Connections

1. Describe ho# Dell uses huan capital as a source of copetitive advantage.

a. uggested 3nswer: After the .co crash, top leadership reali$ed theyneeded to ove fro top'flight, copetitive, andfinanciall driven,

eployees #ith top'flight, copetitivegrowth b learning-driven

eployees. (o attract and retain this talent, they created the 5+oul ofDell6 culture. 3t is succeeding, so no# Dell gro#s huan capital as a

source of copetitive advantage. Dell people are: )1* capable of

producing #or that supports an organi$ations strategy for copeting in

the aretplace )huan capital value*, )2* bring sills and talents of anorgani$ations people are uni9ue in the industry )rareness*, and have sills

and talents for fast, efficient, effective selling direct to the custoer

)iitativeness*.

b. (onnection to this (hapter: Dells results'oriented culture brings inpeople #ho are both responsible and accountable for their o#n and the

copanys perforance. (heir creativity is relied upon in this strategy.Associates are expected to continuously search for better #ays to

anufacture, solve probles, reduce costs, and deliver.

2. 3dentify the aspects of high involveent anageent contained in the 5+oul ofDell6 vision stateent.

a. uggested 3nswer: 5(he +oul of Dell6 culture is aligned to their visiondeclaration that the copany is coitted to providing its custoers 5a

superior experience at a great value.6 At the enduring core of theiranufacturing and selling strategy are direct relationships. (o achieveoperationalexcellence, they staff their front lines of contact #ith

custoers and suppliers #ith highly engaged associates #oring in highly

effective teas to identify opportunities to provide superior experience.(hey stress that they operate #ithout inefficient hierarchy and

bureaucracy.

b. (onnections to this (hapter: 5&ncouraging creative solutions is one

aspect of ho# Dell translates its 5soul6 into business reality though soundpeople policies.6 (hese policies ap directly upon ain eleents of high'

involveent anageent:

i. elective hiring@ (hey are L 1 in their field, so they attract andhire only the best8 9ualified by their gro#th orientation.

ii. xtensive training@ Dell continuously develops all associates and

teas #ith a substantial investent in foral training, on'the'-oblearning, and entoring and coaching.

iii. /ecision power@ Dells top leaders odel a high'touch leadership

style and expect their anagers to be closely involved #ith

responsibility and accountability right do#n to the shop floor.

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iv. 0nformation sharing@ (o#n 0all eetings, follo# up to bio'

annual eployee surveys, one on one eetings #ith each

eployee once a onth, are soe of the #ays Dell is fostering afeeling of shared o#nership that atches their shared

responsibility for the perforance of the copany.

v. 0ncentive compensation@ Dell re#ards on erit. People are-udged on their no#ledge and contributions to tea and

organi$ational perforance. (hey recogni$e and re#ard individual

and collective perforance that brings about strategic results.

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