Introduction to the Field of Organizational Behavior

Introduction tothe Field ofOrganizational BehaviorMcGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter 11-#1Practicing OB at BrasilataBrasilata has become one of Brazils most innovative and productive companies by applying organizational behavior knowledge, including employee involvement, creativity, motivation, leadership, teamwork, and organizational culture.

1-#Brasilata has become one of Brazils most innovative andproductive companies by applying organizational behaviorknowledge, including employee involvement, creativity,motivation, leadership, teamwork, and organizational culture2Organizational Behavior and OrganizationsOrganizational behaviorThe study of what people think, feel, and do in and around organizationsOrganizationsGroups of people who work interdependently toward some purposeCollective entitiesCollective sense of purpose

1-#3Organizational behavior (OB) -- study of what people think,feel, and do in and around organizationsOrganizations -- groups of people who work interdependentlytoward some purpose Collective entities people interact with each other in anorganized way Organizations have a collective sense of purpose -- e.g.brewing premium pilsner or processing mailSatisfy the need to understand and predictHelps us to test personal theoriesInfluence behavior get things doneOB improves an organizations financial healthOB is for everyoneWhy Study OB?1-#1-#4Satisfy the need to understand and predict Helps us figure out why organizational events happenHelps us to test personal theories Helps to question and rebuild personal theoriesInfluence behavior Helps people to get things doneprovides knowledge and toolsfor working with and through othersOB knowledge improves an organizations financial health Effective application of OB practices contributes to theorganizations bottom line Steam Whistle Brewing Co. has flourished because it leverageshuman capitalOrganizational Behavior is for everyone Application of OB knowledge benefits everyone no matter whatprofession they are in, or what position they hold in anorganization.Organizational EffectivenessThe ultimate dependent variable in OBOld approach -- achievement of stated goalsProblem with goal attainmentCould set easy goalsCompany might achieve wrong goals

1-#5Organizational effectiveness is considered the ultimatedependent variable in OB OB theories and practices ultimately try to improve theorganizations effectiveness.Old and now discredited definition of organizationaleffectiveness Goal attainment Leadership could set easy goals Goals might aim the organization in the wrong directionFour Perspectives of Organizational EffectivenessStakeholder PerspectiveHigh-Performance WP PerspectiveOrganizational Learning PerspectiveOpen Systems PerspectiveNOTE: Need to consider all four perspectives when assessing a companys effectiveness1-#1-#Composite of four perspectives Open systems: they have a good fit with their externalenvironment Organizational learning: they are learning organizations High-performance work practices: have efficient and adaptiveinternal subsystems Stakeholder: they satisfy the needs of key stakeholdersNOTE: Need to consider all four perspectives when assessinga companys effectiveness6Organizations are complex systems that live within (and depend upon) the external environmentEffective organizationsMaintain a close fit with changing conditionsTransform inputs to outputs efficiently and flexiblyFoundation for the other three organizational effectiveness perspectivesOpen Systems Perspective1-#1-#7Organizations are complex systems that live within (anddepend upon) the external environmentEffective organizations Maintain a close fit with those changing conditions Transform inputs to outputs efficiently and flexiblyOpen systems perspective is the foundation on which theother three effectiveness perspectives are built

Products/servicesShareholder dividendsCommunity supportWaste/pollutionTechnological subsystemMarketing /Sales subsystemProduction subsystemCulturalsubsystemsubsystemsubsystemPurchasing subsystemEngineering subsystemAccounting subsystemsubsystemSocialization subsystemsubsystemRaw materialsHuman resourcesInformationFinancesEquipment

FeedbackFeedbacksubsystemsubsystemsubsystemManagerial subsystemTransforming inputs to outputsOpen Systems PerspectiveExternal Environment1-#1-#External environment organizations depend on the externalenvironment for resources e.g. raw materials, job applicants,financial resources, etc. Affect the environment through their outputs Place demands on how the organization should operate e.g.lawsInternal subsystems transform outputs into inputs e.g.departments, teams, work processes, etc.Organization Environment Fit organizations are effectivewhen they maintain a good fit with their externalenvironment Anticipating change in the environment and fluidly configuringsubsystems to adapt Actively managing their external environment Move into different environmentsInternal Subsystems Effectiveness defines effectiveness onhow well the organization transforms inputs to outputs Organizational efficiency (productivity) Coordination is vital in the relationship among internalsubsystems8An organizations capacity to acquire, share, use, and store valuable knowledgeNeed to consider both stock and flow of knowledgeStock: intellectual capitalFlow: org learning processesof acquisition, sharing, use, and storageOrganizational Learning Perspective

1-#1-#9An organizations effectiveness depends on capacity toacquire, share, use, and store valuable knowledgeNeed to consider both stock and flow of knowledge Stock of knowledge: intellectual capital Flow: org learning processes of acquisition, sharing, and useChapter 1: Introduction to the Field of Organizational BehaviorIntellectual CapitalRelationship CapitalValue derived from satisfied customers, reliable suppliers, etc.StructuralCapitalKnowledge captured in systems and structuresHumanCapitalKnowledge that people possess and generate1-#1-#10Human capital Knowledge, skills, and abilities that employees carry around intheir headsStructural capital Knowledge captured and retained in an organizations systemsand structures e.g. documentation, finished productsRelationship capital Value derived from an organizations relationships withcustomers, suppliers, and others who provide added mutualvalue for the organizationEmployee knowledge, skills, and abilitiesCompetitive advantage because:Helps discover opportunities and minimize threats in the external environmentRare and difficult to imitateNonsubstitutable: Not easily replaced by technologyThe Human Capital Advantage1-#1-#11Employee knowledge, skills, and abilitiesCompetitive advantage because: Helps discover opportunities and minimize threats in theexternal environment Rare and difficult to imitate Nonsubstitutable: Not easily replaced by technologyOrganizational Learning ProcessesKnowledge AcquisitionKnowledge SharingKnowledgeUseKnowledge StorageLearningScanningGraftingExperimentingCommunicationTrainingInfo systemsObservationAwarenessSensemakingAutonomyEmpowermentHuman memoryDocumentationPractices/habitsDatabases1-#1-#12Knowledge acquisition Extracting information and ideas from the external environmentas well as through insight e.g. hiring people, acquiringcompanies, when employees learn from external sources,experimentationKnowledge sharing Distributing knowledge to others across the organization e.g.structured and informal communication, various forms oflearning, intranetsKnowledge use Applying knowledge in ways that add value Requires awareness that knowledge is available, autonomy toapply knowledge, and a culture that supports learningThe storage and preservation of intellectual capitalRetain intellectual capital by:Keeping knowledgeable employeesTransferring knowledge to othersTransferring human capital tostructural capitalSuccessful companies also unlearnOrganizational Memory

1-#1-#13The storage and preservation of intellectual capitalRetain intellectual capital by:1. Keeping knowledgeable employees2. Systematically transferring knowledge to other employees3. Transferring human capital to structural capitalOrganizational unlearning successful companies also unlearn Unlearn routines and patterns of behavior Removes knowledge that no longer adds valueHigh-Performance Practices at American ExpressAmerican Express encourages employees to go off script, meaning that they are empowered to customize their conversations rather than rely on memorized statements. This autonomy is one of several high performance work practices.

1-#1-#American Express encourages employees to go off script,meaning that they are empowered to customize theirconversations rather than rely on memorized statements. Thisautonomy is one of several high performance work practices.14Workplace practices that leverage the potential of human capitalFour HPWPs (likely others)Employee involvementJob autonomy Employee competence (training, selection)Performance-based rewardsNeed to bundle them work best togetherHigh-Performance Work Practices1-#1-#15Effective organizations incorporate several workplace practicesthat leverage the potential of human capitalFour HPWPs recognized in most studies:1. Employee involvement2. Job autonomy Both of these strengthen employee motivation, improvedecision making, organizational responsiveness, andcommitment to change together often take the form of selfdirectedteams3. Employee competence Recruit and select people with relevant skills, knowledge,values and other personal characteristics Invest in employee training and development4. Performance/skill-based rewards Link performance and skill development to financial and nonfinancialrewards valued by employeesNote: Organizations excel by introducing a bundle of systems andstructures that leverage the potential of their workforceHPWP Limitations Provides an incomplete picture of organizational effectiveness Gaps are mostly filled by the stakeholder perspectiveCorporate Social Responsibility at MTN Group in AfricaAt MTN Group, Africas largest mobile (cell) phone company, employees help the community and environment through the companys award-winning 21 Days of Yello Care program. This photo shows MTN employees in Uganda planting trees during a Yello Care event.

1-#At MTN Group, Africas largest mobile (cell) phone company,employees help the community and environment through thecompanys award-winning 21 Days of Yello Care program.This photo shows MTN employees in Uganda planting treesduring a Yello Care event16Stakeholder PerspectiveStakeholders: entities who affect or are affected by the firms objectives and actionsPersonalizes the open systems perspectiveChallenges with stakeholder perspective:Stakeholders have conflicting interestsFirms have limited resources to satisfy all stakeholder needs

1-#17Stakeholders: any entity who affects or is affected by theorganizations objectives and actions e.g. employees,shareholders, suppliers, unions, government, etc.Personalizes the open-systems perspective Identifies specific people and social entities in the environment Stakeholder relations are dynamic i.e. can be managedChallenges with stakeholder perspective: Stakeholders have conflicting interests Firms have limited resources to satisfy stakeholdersValues and ethics prioritize stakeholder interestsValuesStable, evaluative beliefs, guide preferences for outcomes or courses of action in various situationsEthicsMoral principles/values, determine whether actions are right/wrong and outcomes are good or badStakeholders: Values and Ethics1-#1-#18We rely on values and ethics to prioritize stakeholder interestsValues Relatively stable, evaluative beliefs that guide our preferencesfor outcomes or courses of action in various situations Shared values similar values held by groups of peopleEthics Study of moral principles/values, determine whether actionsare right/wrong and outcomes are good or bad Rely on ethical values to determine the right thing to doStakeholders and CSRStakeholder perspective includes corporate social responsibility (CSR)Benefit society and environment beyond the firms immediate financial interests or legal obligationsOrganizations contract with societyTriple bottom lineEconomy, society, environment

1-#19Stakeholder perspective includes corporate social responsibility(CSR) Benefit society and the environment beyond the firmsimmediate financial interests or legal obligations Organizations contract with societyserve stakeholdersbeyond shareholders and customersTriple-bottom-line philosophy Economic survive and be profitable Society maintain or improve conditions Environment becoming greenerEconomic, social, and cultural connectivity with people in other parts of the worldImproved communication and transportation systems have increased globalizationEffects of globalization on organizationsCost efficiencies, innovation, knowledgeIncreasing diversityIncreasing competitive pressures, intensificationGlobalization1-#1-#20Economic, social, and cultural connectivity with people inother parts of the world Actively participate in other countries and cultures Increased globalization due to improved informationtechnology and transportation systemsEffects of Globalization on Organizations Benefits larger markets, lower costs, greater access toknowledge and innovation Effects on teamwork, diversity, cultural values, leadership, etc. Increases competitive pressures, work intensification andrequires additional knowledge and skills e.g. global mindsetIncreasing Workforce DiversitySurface-level vs deep-level diversityImplicationsBetter knowledge, decisions, representation, financial returnsManage challenges of diversity (e.g. teams, conflict)Ethical imperative of diversity

1-#21Surface-level diversity Observable demographic or physiological differences in people(e.g. race, ethnicity, gender, age, physical capabilities) Increasing surface-level diversity in many countriesDeep-level diversity Differences in the psychological characteristics of employees(e.g. personalities, beliefs, values, and attitudes) Example: Differences across age cohorts (e.g. Gen-X, Gen-Y)Consequences of diversity opportunities and challenges Diverse knowledge, make better decisions on complexproblems, higher financial returns Challenges of diversity (e.g. team development, conflict) Surface-level diversity is a moral and legal imperativeWork/life balance Minimizing conflict between work and nonwork demands number one indicator of career successVirtual workUsing information technology to perform ones job away from the traditional physical workplaceTelecommuting issues of social isolation, emphasis on face time, employee self-leadershipEmerging Employment Relationships1-#1-#22Work-life balance Degree to which a person minimizes conflict between work andnonwork demandsVirtual Work Use of information technology to perform ones job away fromthe traditional physical workplace Telecommuting (teleworking) working at home rather thancommuting to the office improves work-life balance andreduces stress Telecommuting issues include social isolation, reducedpromotion opportunities, emphasis on face time Telecommuting better suited to people who are self-motivated,organized, work effectively with technology and fulfill socialneeds elsewhere Virtual work more successful when employees are evaluated bytheir performance outcomes rather than face timeSystematic research anchorOB knowledge is built on systematic researchEvidence-based management decisions and actions based on research evidence rather than fads, hype, and untested assumptionsMultidisciplinary anchorMany OB concepts adopted from other disciplinesOB develops its own theories, but scans other fieldsOrganizational Behavior Anchors1-#1-#23Multidisciplinary anchor Many OB concepts adopted from other disciplines e.g.psychology (individual and interpersonal behavior); sociology(team dynamics, organizational power); communications;marketing; information systems, etc. OB develops its own theories, but also scans other fieldsSystematic research anchor OB knowledge should be based on systematic researchinvolving forming research questions, collecting data, andtesting hypotheses Produces evidence-based management making decisions andtaking actions on research evidence i.e. researchers rely onscientific method (rather than accepting fads and otherknowledge that lacks sufficient evidence)

Contingency anchorA particular action may have different consequences in different situationsNeed to diagnose the situation and select best strategy under those conditionsMultiple levels of analysis anchorIndividual, team, organizational level of analysisOB topics usually relevant at all three levels of analysis

Organizational Behavior Anchors (cont)1-#1-#24Contingency anchor A particular action may have different consequences indifferent situations no single solution is best all the time Need to understand and diagnose the situation and select thestrategy most appropriate under those conditionsMultiple levels of analysis anchor Individual includes characteristics and behaviors as well asthought processes e.g. motivation, perception, and values Team (including interpersonal) looks at the way peopleinteract e.g. team dynamics, decisions, power Organizational how people structure their workingrelationships and how organizations interact with theirenvironment OB topics usually relevant at all three levels of analysisIntroduction tothe Field ofOrganizational BehaviorChapter 11-#25