Introduction to Organizational Behavior

1. Introduction to the Field
of Organizational
Behavior
FROM: ORGANIZATIONAL BEHAVIOR: EMERGING KNOWLEDGE,
GLOBAL REALITY
HHUMBEHV
PRESENTED BY: M.ALDANA, SHTM FACULTY

2. Organizational Behavior

3. Organizational Behavior (OB)
• Is the study of what people think, feel, and do in and around the
organization.
• It looks at employee behavior, decisions, perceptions, and emotional
responses.
• It examines how individuals and teams in organizations relate to each
other and to their counterparts in other organizations.
• OB studies these topics at multiple levels: the individual, team
(including interpersonal), and organization.

4. Organizations
• Are groups of people who work
interdependently toward some purpose.
• Organizations have existed for as long as
people have worked together.
• Massive temples dating back to 3500BC were
constructed through organized actions of
multitudes of people
• Crafts people and merchants in ancient Rome
formed guilds, complete with elected managers.

5. Organizations
• Throughout history, these and other organizations have consisted of
people who communicate, coordinate, and collaborate with each
other to achieve common objectives.
• One key feature of organizations is that they are collective entities –
they consist of human beings and these people interact with each other
in an organized way.
• A second feature of organizations is that their members have a
collective sense of purpose.

6. History of OB
• OB emerged as a distinct field around the early 1940s, but
organizations have been studied by experts in other fields for many
centuries.
• Greek philosopher Plato wrote about the essence of leadership
• Chinese philosopherConfucius extolled the virtues of ethics and leadership
• In 1776, Adam Smith discuss the benefits of job specialization and division of
labor.
• MaxWeber, German sociologist, wrote about rational organizations, work ethic,
and charismatic leadership
• Industrial engineer Frederick Winslow proposed systematic ways to organize
work processes and motivate employees through goal setting and rewards

7. History of OB
• From the 1920s to the 1940s, Elton Mayo, Fritz Roethlisberger, and
their Harvard University colleagues developed the “human relations”
school of management, which emphasized the study of employee
attitudes and informal group dynamics in the workplace.
• Political philosopher Mary Parker Follett advocated new ways of
thinking about several OB topics, including constructive conflict,
team dynamics, organizational democracy, power and leadership.
• In the late 1930s Chester Barnard wrote about organizational
communication, coordination, leadership and authority,
organizations as open systems, and team dynamics.

8. Why Study OB?
• As students, you may not see the importance of OB yet, because you
have not yet begun your careers.
• But OB can make sense of and predict the world in which we live. We
can use OB theories to question our personal beliefs and assumptions
and to adopt more accurate models of workplace behavior.
• Knowledge in OB can even help us to make sense of what goes on in
the world, not just inside organizations.

9. Why Study OB?
• OB knowledge helps us get things done in organizations.
• Everyone in business government, and not-for-profit firms works
with other people, and OB provides knowledge and tools to interact
with others more effectively.
• Building a high-performance team, motivating coworkers, handling
workplace conflicts, influencing your boss, and changing employee
behavior are some of the knowledge and skills offered in OB.

10. OB and the Bottom Line
• OB knowledge is just as important for the organization’s financial
health.
• Numerous studies have reported that these and other OB practices
tend to improve the organization’s survival and success.
• “The best companies are the ones that see their human resources as a
competitive advantage – employee attitudes, work/life balance,
performance-based rewards, leadership, employee training and
development, etc. are important positive screens for selecting
companies with the best long term stock appreciation.”

11. Perspectives of Organizational
Effectiveness

12. Organizational Effectiveness
• Organizational effectiveness is considered the “ultimate dependent
variable” in organizational behavior.
• Organizational effectiveness is the outcome that most OB theories are
ultimately trying to achieve.

13. Goal Attainment Perspective
• Was popular for many years. No longer used.
• It states that companies are effective when they
achieve their stated organizational objectives.
• Ex. Qantas would be an effective organization if it
meets of exceeds its annual sales and profit targets.
• Any leadership team can set goals that are easy
to achieve, yet would put the organization out
of business.

14. Open Systems Perspective
• Is one of the earliest and well-
entrenched ways of thinking about
organizations.
• The open system perspective
views organizations as complex
organisms that “live” within an
external environment.

15. Open Systems Perspective
• As open systems, organizations
depend on the external
environment for resources,
including raw materials, job
applicants, financial resources,
information and equipment.
• The external environment also
consists of rules and expectations,
such as laws and cultural norms,
that place demands on how
organizations should operate.

16. Open Systems Perspective
• Some environmental resources
(e.g. Raw materials) are
transformed into outputs that are
exported to the external
environment, whereas other
resources (job applicants,
equipment) become subsystems in
the transformation process.

17. Open Systems Perspective
• Inside the organization are
numerous subsystems, such as
departments, teams, informal
groups, work processes,
technological configurations, and
other elements.
• An organization’s subsystems are
organized interdependently so
they interact with each other to
transform inputs into various
outputs. Russian Matryoshka Doll

18. Open System Perspective
• Organization-Environment Fit
• According to the open system perspective,
organizations are effective when they
maintain a good fit with their external
environment.
• A good fit exists when the organization puts
resources where they are most useful to
adapt to and align with the needs of the
external environment.

19. Open System Perspective
• Organization-Environment Fit
• Successful organizations also maintain a good fit by anticipating change in the
environment and fluidly reconfiguring their subsystems to become more consistent with
that environment
• Companies also maintain a fit by actively managing their external environment.

20. Open System Perspective
• Organization-Environment Fit
• The last fit strategy is to move into different environments if the current environment is
too challenging.

21. Open System Perspective
• Internal Subsystems Effectiveness
• The open systems perspective not only considers external environment fit, but also
defines effectiveness by how well the company operates internally, that is, how well it
transforms inputs into outputs.
• The most common indicator of internal transformation process is organizational
efficiency (also called productivity), which is the ratio of input to outcomes.
• Companies that produce more goods or services with less labor, materials and energy are
more efficient.

22. Open System Perspective
• Internal Subsystems Effectiveness
• Successful organizations require more than efficient transformation processes, however.
• They also need to have more adaptive and innovative transformation processes.
• Adaptivity makes the organization’s transformation process more responsive to
changing conditions and customer needs.
• Innovation enables the company to design work processes that are superior to what
competitors can offer.

23. Organizational Learning Perspective
• The open systems perspective has traditionally focused on physical
resources that enter the organization and are processed into physical
goods (outputs).This was representative of the industrial economy
but not the “new economy” where the most valued input is
knowledge.
• The organizational learning perspective (knowledge management)
views knowledge as the main driver of competitive advantage.
• Specifically, organizational learning is founded on the idea that
organizational effectiveness depends on the organization’s capacity to
acquire, share, use, and store valuable knowledge.

24. Organizational Learning Perspective
• The organizational learning perspective views knowledge as a
resource, and this stock of knowledge exists in three forms,
collectively known as intellectual capital.

25. Intellectual Capital
• The most commonly-mentioned form of intellectual capital is human
capital – the knowledge, skills, and abilities that employees carry around in
their heads.
• Human capital has been described as valuable, rare, difficult to imitate, and
non-substitutable.
• It is valuable because employees help the organization discover opportunities and to
minimize threats in the external environment
• It is rare and difficult to imitate, meaning that talented people are difficult to find and
the cannot be cloned
• It is non-substitutable because it cannot be easily replaced with technology.
• Because of this, human capital is a competitive advantage as well as a huge
risk for most organizations. When key people leave, they take with them
some of the most valuable knowledge that makes the company effective.

26. Intellectual Capital
• Some intellectual capital remains even if every employee did leave
the organization.
• Structural capital (organizational capital) includes the knowledge
captured and retained in an organization’s systems and structures such
as the documentation of work procedures and the physical layout of the
production line.
• Structural capital also includes the organization’s finished products
because knowledge can be extracted by taking them apart to
discover how they work and are constructed.

27. Intellectual Capital
• The third form of intellectual capital is relationship capital – it is the
value derived from an organization’s relationship with customers,
suppliers, and others who provide added mutual value for the
organization.
• It includes the organization’s goodwill, brand image, and combination
of relationships that organizational members have with people outside
the organization.

28. Organizational Learning Processes
• Organizations nurture their intellectual capital through four
organizational learning processes: knowledge acquisition,
knowledge sharing, knowledge use, and knowledge storage.

29. Organizational Learning Process
• Knowledge acquisition – includes extracting information and ideas
from the external environment as well as through insight.
• One of the fastest and most powerful ways to acquire knowledge is to hire
individuals or acquire entire companies (grafting).
• Knowledge also enters the organization when employees learn from external
sources, such as when a supplier mentions that a competitor is changing its
packaging or design.
• The third knowledge acquisition strategy is experimentation – knowledge is
received through insight as a result of research and other creative processes.

30. Organizational Learning Process
• Knowledge sharing – involves distributing knowledge to other across
the organization.
• Examples: computer intranets, through observation, experience, training,
practice or thru informal means such as talking while eating at the canteen, etc.

31. Organizational Learning Process
• Knowledge use - knowledge becomes a competitive advantage
when it is applied in ways that add value to the organization and its
stakeholders.
• Learning organizations should encourage experimentation and open
communications and its leaders recognize mistakes are part of that knowledge as
a process.

32. Organizational Learning Process
• Knowledge storage - includes any means by which knowledge is
held for later retrieval.
• It is the process that creates organizational memory.
• Human memory plays a critical role here, as do many forms of
documentation and database systems that exists in organizations

33. Organizational Memory and Unlearning
• Corporate leaders need to recognize that they are keepers of an
organizational memory
• It includes knowledge that employees possess as well as knowledge
embedded in the organization’s systems and structures. It includes
documents, objects, and anything else that provides meaningful
information about how the organization should operate.

34. How do organizations retain intellectual
capital?
• One way is keeping knowledgeable employees.
• Second is to systematically transfer knowledge to other employees.
• Third is to transfer knowledge into structural capital.

35. Assignment
• Define Globalization. What are the advantages and disadvantages of
globalization to organizations?
• Define Workforce Diversity. What are the advantages and
disadvantages of workforce diversity to organizations?
• Define:
• Work/life Balance
• VirtualWork

36. High-Performance Work Practices (HPWP)
Perspective
• HPWP perspective is founded on the belief that human capital – the
knowledge skills, and abilities employees carry around in their heads – is
an important source of competitive advantage for organizations.
• The distinctive feature of the HPWP is that it tries to identify a
specific bundle of systems and structures that generate the most
value from this human capital.

37. High-Performance Work Practices (HPWP)
Perspective
• HPWP has four most recognized studies: employee involvement, job
autonomy, competency development, and rewards for performance and
competency development.
• Each of these four practices individually improves organizational
performance, but studies suggests that they have a stronger effect
when bundled together.

38. High-Performance Work Practices (HPWP)
Perspective
• The first two factors – involving employees in decision making and
giving them more autonomy over their work activities – tend to
strengthen employee motivation as well as improve decision making,
organizational responsiveness and commitment to change.
• The third factor, employee competence development refers to
recruiting, selecting, and training people so employees acquire the
most relevant skills, knowledge, values, and other personal
characteristics.
• The fourth HPWP involves linking performance and skill development
to various forms of financial and nonfinancial rewards valued by
employees.

39. Stakeholder Perspective
• The first three organizational perspectives pay attention to processes
and resources, yet they only minimally recognize the importance of
relations with stakeholders.
• Stakeholders include anyone with a stake in the company –
employees, stockholders, suppliers, labor unions, government,
communities, consumer and environmental interest groups, and so on.
• In other words, organizations are more effective when they consider
the needs and expectations of any individual, group or other entity
that affects, or is affected by, the organization’s objectives and
actions.

40. Stakeholder Perspective
• The stakeholder perspective personalizes the open systems
perspective; it identifies specific people and social entities in the
external environment as well as within the organization.
• It recognizes that stakeholder relationships are dynamic; they can be
negotiated and managed, not just taken as a fixed condition.
• Understanding, managing, and satisfying the interests of stakeholders
is more challenging than it sounds because stakeholders have
conflicting interests and organizations don’t have the resources to
satisfy every stakeholder to the fullest.

41. Stakeholder Perspective
• On strength of the stakeholder perspective is that it incorporates
values, ethics, and corporate social responsibility into the organizational
effectiveness equation.

42. Values
• The stakeholder perspective states that to
manage the interest of diverse stakeholders,
leaders ultimately need to rely on their personal
and organizational values for guidance.
• Values are relatively stable, evaluative beliefs
that guide our preferences for outcomes or
courses of action in a variety of situations. Values
help us know what is right or wrong, or good or
bad, in the world.
• Although values exists within individuals, groups
of people often hold similar values, so we tend to
ascribe these shared values to the team.

43. Ethics
• By linking values to organizational effectiveness,
the stakeholder perspective also incorporates
ethics and corporate social responsibility into the
organizational perspective equation.
• Ethics refers to the study of moral principles or
values that determine whether actions are right
or wrong and outcomes are good or bad.
• We rely on our ethical values to determine “the
right thing to do.”
• Ethical behavior is driven by the moral principles
we use to make decisions.

44. Corporate Social Responsibility (CSR)
• CSR consists of organizational activities
intended to benefit society and the
environment beyond the firm’s immediate
financial interests or legal obligations.
• It is the view that companies have a contract
with society in which they must serve
stakeholders beyond shareholders and
customers.
• As part of CSR, many companies have
adopted the “triple bottom-line” philosophy;
they try to support or “earn positive returns”
in the economic, social, and environmental
spheres of sustainability.

45. Contemporary Challenges for
Organizations

46. Challenges
• As discussed previously, organizations are deeply affected by the
external environment.
• They need to anticipate and adjust to environment changes to
maintain a good organization-environment fit.
• The external environment is continuously changing.

47. Globalization
• Globalization refers to economic, social,
cultural connectivity with people in other
parts of the world.
• Organizations globalize when they
actively participate in other countries and
cultures.
• Although businesses have traded goods
for centuries, the degree of globalization
today is unprecedented because of
information technology and
transportation systems allow a much more
intense level of connectivity and
interdependence around the planet.

48. Globalization
• Globalization offers numerous benefits to organizations in terms of
larger markets, lower costs, and greater access to knowledge and
innovation.
• At the same time, it is responsible for increasing work intensification,
as well as reducing job security and work/life balance.

49. Increasing Workforce Diversity
• Surface-level diversity – the observable
demographic or physiological differences in
people such as their race, ethnicity, age, and
physical disabilities.
• Deep-level diversity – differences in the
psychological characteristics of employees,
including personalities, beliefs, values, and
attitudes.

50. Increasing Workforce Diversity
• Diversity presents both opportunities and challenges in
organizations.
• Advantages
• It provides diverse knowledge.
• Teams with some forms of diversity make better decisions on complex problems
• According to studies, higher financial returns in the short run.

51. Increasing Workforce Diversity
• Disadvantages
• Teams take longer to perform effectively
• Brings numerous communication problems
• Source of conflict - Reduce information sharing, can lower morale, and increase
turnover

52. Emerging Employee Relationships
• Work/life balance occurs when people
are able to minimize conflict between
their work and nonwork demands

53. Emerging Employee Relationships
• Virtual work is where employees use
information technology to perform their jobs
away from the traditional physical workplace.
• Telecommuting or teleworking – working at home
rather then commuting to the office.
• It has its advantages – attracts job applicants,
improves work/life balance, and productivity; and it
also has environmental benefits.
• But it also has challenges – family relations may suffer
if employees lack space or resources for a home
office, employees may feel social isolation, and
reduced promotion opportunities.

54. Anchors of Organizational
Behavior Knowledge

55. Systematic Research Anchor
• OB knowledge should be based on systematic research.
• Systematic research is the foundation of evidence-based
management which involves making decisions and taking actions
based on research evidence.

56. Multidisciplinary Anchor
• OB is anchored on the idea that the field should welcome theories
and knowledge in other disciplines – sociology, communication,
marketing, information systems, etc.

57. Contingency Anchor
• No single solution is best all of the time.
• OB experts recommend that we understand and diagnose the
situation and select the strategy most appropriate under those
conditions.

58. Multiple Levels of Analysis Anchor
• OB has three levels of analysis – individual, teams, and organization.
• OB should be studied on each level not just at one of these levels.