Assignment 1 5105

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Chapter 1

Effective Managers Understand Organizational Behavior

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Carolyn Fitzpatrick (CF) - In this deck, the objectives have been removed and lecture notes added.

Introduction

Imagine working where…

Workers are excited about their jobs

Managers listen carefully to worker’s comments

The atmosphere is vibrant

Is this the ideal work setting?

It must be achieved if a firm, entrepreneur, or institution is to survive the coming years

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©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.

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Review the Zappos example at the beginning of the chapter.

The Jack Welsh quote shared in the text may also be helpful.

“The talents of our people are greatly underestimated, and their skills are underutilized. Our biggest task is to fundamentally redesign our relationship with our employees. The objective is to build a place where people have the freedom to be creative, where they feel a sense of accomplishment—a place that brings out the best in everybody.”

Environmental Forces Reshaping Management

Technology

Speed of Change

Psychological Contract

Human Resources

Globalism

Cultural Diversity

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Managers must be agile and flexible to help their firms develop and sustain an advantage in an increasingly competitive globalized world. They will need to harness the powers of information technology and human capital to be successful.

The competitive forces facing managers are led by technological changes and increasing globalization. These driving forces are characterized by greater knowledge and the use of information, the liberalization of developing economies (e.g., Brazil, Russia, India, and China), and new economic alliances and rules.

The Origins of Management

Before 1900, management…

Was based on trial and error

Had little or no theory

Did not share ideas and practices

A new industrial era

Began around the time of the U.S. Civil War

First management publications emerged

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The formal and modern study of management started around 1900. However, the management process probably first began in the family organization, later expanded to the tribe and community, and finally pervaded the formalized political units such as those found in early Babylonia (5000 B.C.). The Egyptians, Chinese, Greeks, and Romans were all noted in history for major managerial feats such as the building of the pyramids, organizing governments, planning military maneuvers, operating trading companies that traversed the world, and controlling a geographically dispersed empire. However, management as a process was based on trial and error in order to accomplish specific goals, with little or no theory and virtually no sharing of ideas and practices. This lack of sharing slowed the influence of management practices throughout the world.

This trial and error approach to management continued during the Industrial Revolution in England that lasted between 1700 and 1785. As a nation, England changed dramatically from a rural society to the workshop of the world. It was the first nation to successfully make the transition from a rural-agrarian society to an industrial-commercial society. Management of the workshops of England was characterized by an emphasis on efficiency, strict controls, and rigid rules and procedures.

A new industrial era began in the United States around the time of the Civil War. There was a dramatic expansion of mechanical industries such as the railroad. In addition, large industrial manufacturing complexes employed hundreds of thousands of workers and grew in importance. Attempts to better plan, organize, lead, and control the work of employees in these complexes led managers to discuss and write about their ideas and managerial problems in engineering journals.

The Origins of Management

Frederic Taylor’s Scientific Management

One best way

Some regard Taylor as the “father” of modern Management

Henri Fayol’s Functions of Management

Presented what is considered the first comprehensive statement of a general theory of management

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In 1886, an engineer named Frederick W. Taylor presented a paper titled “The Engineer as an Economist” at a national meeting of engineers. This paper and others prepared by Taylor expressed his philosophy of scientific management.

Henri Fayol, a French industrialist, presented what is considered the first comprehensive statement of a general theory of management. First published in France in 1916, Fayol’s Administration Industrielle et Générale was largely ignored in the United States until it was translated into English in 1949.

Why Study Organizational Behavior?

Studying OB can help us understand…

Why employees behave as they do

Why one individual or group is more productive than another

Why managers continually seek ways to design jobs and delegate authority

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Understanding the behavior of people in organizations—productivity, teamwork, work-life balance, job stress, and career progression—are top concerns of all managers and leaders. People make the difference.

Based on the fact that organizational behavior (OB) has evolved from multiple disciplines, we will use the following definition of OB throughout this book:

Drawing on psychology, sociology, political science, and cultural anthropology, OB is the study of the impact that individuals, groups, and organizational structure and processes have on behavior within organizations.

Why Study Organizational Behavior?

What is OB?

A way of thinking

Multidisciplinary

A humanistic orientation

Performance-oriented

Based on recognized disciplines

Has an applications orientation

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This multidisciplinary view of organizational behavior illustrates a number of points. First, OB is a way of thinking. Behavior is viewed as operating at individual, group, and organizational levels. This approach suggests that when studying OB, we must identify clearly the level of analysis being used—individual, group, and/or organizational. Second, OB is multidisciplinary. This means that it utilizes principles, models, theories, and methods from other disciplines. The study of OB is not a discipline or a generally accepted science with an established theoretical foundation. It is a field that only now is beginning to grow and develop in stature and impact.

Third, there is a distinctly humanistic orientation within organizational behavior. People and their attitudes, perceptions, learning capacities, feelings, and goals are of major importance to the organization. Fourth, the field of OB is performance-oriented Why is performance low or high? How can efficiency and effectiveness be enhanced? Can training increase on-the-job performance? Practicing managers face these important issues. Fifth, the scientific method is used to study OB variables and relationships. As the scientific method has been used in conducting research on organizational behavior, a set of principles and guidelines on what constitutes good research has emerged. Finally, the field is application oriented. It is concerned with providing useful answers to questions that arise in the context of managing organizations.

EXHIBIT 1.1 CONTRIBUTIONS TO THE STUDY OF OB

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Changes occurring within and outside of institutions present major challenges to leaders, managers, and administrators in organizations. Terms such as social responsibility, cultural diversity, ethics, global competitiveness, social networking, and reengineering are used freely by experts and non-experts. Each of these concepts reinforces the fact that leaders are being asked to perform effectively in a changing world.

Another challenge that leaders face is the increased emphasis that consumers are placing on value. The trend among consumers is to consider the total value of a product or service. Today, more than ever, customers expect organizations to be responsive to their needs, to provide prompt service and delivery, and to produce top quality goods or services at the best price possible. Along with an increasingly diverse workforce and demanding customers, leaders must contend with changes in both domestic and global markets and competition. The global market expects easy access to high-quality products and services at a competitive price. Leaders are being asked to establish and manage effective employee teams, departments, or organizations that can respond and compete globally.

Leaders and Organizational Behavior

Internal and External Challenges

Changing makeup & diversity of workforce

Demanding customers

Changes in markets and competition

Using and managing information technology

Everything is in motion and churning

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Changes occurring within and outside of institutions present major challenges to leaders, managers, and administrators in organizations.

Managers supervise an increasingly diverse workplace.

Customers expect organizations to be responsive to their needs and to produce top quality goods or services at the best price possible.

Leaders must contend with changes in markets and competition.

Finally, information technology is constantly evolving.

The Hawthorne Studies

Trade unions rebelled against Taylor’s scientific management principles

Mary Parker Follet promoted participatory decision making and decentralization

Industry wanted evidence that focusing on people produces higher productivity

Harvard University conducted studies

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Trade unions rebelled against Taylor’s scientific management principles

Mary Parker Follet promoted participatory decision making and decentralization

Industry wanted evidence that focusing on people produces higher productivity

Harvard University conducted studies

From 1900 to 1930, Taylor’s concept of scientific management dominated thought about management. His approach focused on maximizing worker output. However,

Taylor’s emphasis on output and efficiency didn’t address employees’ needs, leading some trade unions to resist implementation of scientific management principles. Mary Parker Follett was opposed to Taylor’s lack of specific attention to human needs and relationships in the workplace. She was one of the first management theorists to promote participatory decision making and decentralization. Her view emphasized individual and group needs. The human element was the focus of Follett’s view about how to manage. However, she failed to produce empirical evidence to support her views. Industry leaders wanted concrete evidence that focusing on human resources would result in higher productivity. The Hawthorne studies, though flawed, provoked many managers and academics to focus on employees’ needs, attitudes, and behaviors.

The Hawthorne Studies

Studies examined the effect of illumination on worker output, rest pauses, shorter days, incentives, management

Workers produced more merely by being observed and studied

Social pressures and group norms could increase or restrict output

Some contend fear of job loss was a factor

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Trade unions rebelled against Taylor’s scientific management principles

Mary Parker Follet promoted participatory decision making and decentralization

Industry wanted evidence that focusing on people produces higher productivity

Harvard University conducted studies

The Harvard researchers learned that economic rewards did not totally explain worker behavior. Workers were observant, complied with norms, and respected the informal social structure of their group. The researchers also learned that social pressures could restrict output. Interviews conducted years after the Hawthorne studies with a small number of actual study participants and a reanalysis of data raised doubts about a number of the original conclusions. The conclusion that supportive managers helped boost productivity is considered incorrect by critics. Instead, the fear of job loss during the Great Depression and managerial discipline, not the practices of supportive managers, are considered responsible for the higher rate of productivity in the relay assembly test room experiments. Despite the criticism, the Hawthorne studies are still considered the major impetus behind the emphasis on understanding and dealing with human resources.

EXHIBIT 1.2 The Basic Elements of a System

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In systems theory, the organizations are seen as one element of a number of elements that act interdependently. The flow of inputs and outputs is the basic starting point in describing the organization. In the simplest terms, the organization takes resources (inputs) from the larger system (environment), processes these resources, and returns them in changed form (output). Exhibit 1.2 displays the fundamental elements of the organization as a system.

Systems Theory

Used to integrate organizational effectiveness and time

Effectiveness criteria must reflect…

The entire input-process-output cycle

Interrelationships between the organization and its outside environment

The stage of the organization’s life

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Systems theory suggests that an organization is a managed system that changes inputs into outputs. It enables managers to describe the behavior of organizations both internally and externally. Internally, you can see how and why people within organizations perform their individual and group tasks. Externally, you can relate the transactions of organizations with other organizations and institutions. All organizations acquire resources from the outside environment of which they are a part and, in turn, provide goods and services demanded by the larger environment. Managers must deal simultaneously with the internal and external aspects of organizational behavior. This essentially complex process can be simplified, for analytical purposes, by employing the basic concepts of systems theory.

Ways to Improve Effectiveness

Provide opportunities for training, development, and continuous learning.

Share information often with employees.

Encourage cooperation across teams, departments, and the organization.

Link compensation to performance.

Avoid layoffs.

Role model positive behaviors and attitudes.

Respect differences across employees.

Listen to employees’ and other stakeholders’ concerns and ideas.

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The concept of organizational effectiveness presented in this book relies on systems theory. Two main conclusions suggested by systems theory are: (1) effectiveness criteria must reflect the entire input-process-output cycle, not simply output, and (2) effectiveness criteria must reflect the interrelationships between the organization and its outside environment.

Quality- An Organizational Imperative

Deming and Juran early quality “prophets”

Quality is defined as meeting customer’s expectations

Many firms make quality their top priority

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J. M. Juran and W. Edwards Deming, in 1950, were prophets without recognition in their own country, the United States. These two Americans were pioneers in quality and emphasized the importance of quality long before it was popular to do so. Deming is the most recognized guru of statistical quality control (SQC). He is the namesake of Japan’s most prestigious quality award, the Deming Prize, created in 1951.

Juran is best known for his concept of total quality control (TQC). This is the application of quality principles to all company programs, including satisfying internal customers. In 1954 Juran first described his method in Japan. He became an important inspiration to the Japanese because he applied quality to everyone from the top of the firm to the clerical staff.

Time-Based Criteria

Quality

Productivity

Efficiency

Satisfaction

Adaptiveness

Development

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Productivity reflects the relationship between inputs and output.

Efficiency is defined as the ratio of outputs to inputs. Among the measures of efficiency are rate of return on capital or assets, unit cost, scrap and waste, downtime, occupancy rates, and cost per patient, per student, or per client. Satisfaction and morale are similar terms referring to the extent to which the organization meets the needs of employees. We use the term satisfaction to refer to this criterion. Adaptiveness is the extent to which the organization can and does respond to internal and external changes. Development measures the ability of the organization to increase its capacity to deal with environmental demands. An organization must invest in itself to increase its chances of survival in the long run.

Environmental Forces Reshaping Management Practice

Organizations

Exist in societies and are created by societies

Environmental forces in these societies

Customer/client needs

Legal/political constraints

Economic/technological changes

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A number of forces are reshaping the nature of managing within organizations. Organizations that have recognized these forces are working to channel their managerial

talents to accomplish goals by using their knowledge about each of six major forces.

The first force at work is the power of human resources. The way managers and employees work, think, and behave exerts a major influence on the overall effectiveness and success of an organization. Over the next several years as baby boomers (those born between 1946 and 1964) retire, organizations of all types will be facing a shrinking pool of skilled job candidates and a shortage of technically skilled workers. Some of the key human resource challenges will be in the areas of recruiting skilled talent, training and developing employees, transferring knowledge from senior to junior employees through mentoring, and retaining high performing employees as job opportunities become more prevalent.

Globalism Must be Understood and Leveraged

Globalism- The interdependency of transportation, distribution, communication, and economic networks across international borders.

Diversity- Refers to those attributes that make people different from one another.

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To compete effectively in the 21st century, globalism must be understood and leveraged. Globalism is characterized by networks that interconnect countries, institutions, and people. Of the largest 25 global corporations in terms of market value in 2012, 9 are from the United States, 6 from China, 2 from the U.K., 2 from France, and one each from the Netherlands, Russia, Japan, German, Spain, and Brazil. As a result of global integration, the growth rate of world trade has increased faster than that of world gross domestic product. That is, the trading of goods and services among nations has been increasing faster than the actual world production of goods. To survive the fast-paced changes in the global world, firms must make not only capital investments but also investments in people. How well a firm recruits, selects, retains, and motivates a skilled workforce will have a major impact on its ability to compete in the more globally interdependent world.

Exhibit 1.3 The Six Forces Reshaping Management Practice

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As illustrated in Exhibit 1.3, the six forces reshaping management practice—the power of human resources, globalism, diversity, the speed of change, a new worker–employer psychological contract, and technology—offer challenges to managers. Resisting the reality of these forces will likely lead to unnecessary conflict, reduced managerial and non-managerial performance, and lost opportunities. In managerial terms, failing to cope and deal with these forces will likely result in job dissatisfaction, poor morale, reduced commitment, lower work quality, burnout, poor judgment, and a host of unhealthy consequences.

The Speed of Change

Rapid change is found in many areas of business, including technology, demographics, globalism, and new products and services.

Psychological contract- An unwritten agreement between an employee and the organization that specifies what each expects to give to and receive from the other.

Technology- Actions, physical and mental, that an individual performs upon some object, person, or problem to change it in some way.

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Elements of change include almost instantaneous communication and computation. Technology is facilitating online connectivity through such social networking sites as Facebook, Twitter, and LinkedIn that has resulted in the shrinking of space and distance. Intangible value of all kinds, such as services or products that “go viral” and reach millions of potential users, is growing at a rapid speed. The modern manager is going to have to be adaptable to such rapid change.

The worker–employer psychological contract is another force that is changing. The most admired employers believe that openness, integrity, providing opportunities, and supporting the growth and development of their employees are top priorities. They believe this is an unwritten contract they have with their people. Employees believe that employers must be honest, open, and fair and also be willing to give employees a larger say in their jobs. Employees also want organizations to pay more attention to their family commitments and their physical and mental health.

EXHIBIT 1.4 Framework for Studying Organizational Behavior

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Exhibit 1.4 illustrates the flow of chapters in this book and presents a perspective on how to frame the study of organizational behavior and management within organizations. The book is divided into five parts: the field of organizational behavior; understanding and managing individual behavior; group behavior and interpersonal influence; organizational processes; and organizational design, change, and innovation.

Understanding and Managing Individual Behavior

Individual performance is the foundation of organization performance. Understanding individual behavior is critical for effective management.

Individual Differences

Individual Motivation

Rewards

Misbehavior

Stress

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Because organizational performance depends on individual performance, managers must have more than a passing knowledge of the determinants of individual performance.

Motivation and ability to work interact to determine performance. Motivation theory attempts to explain and predict how the behavior of individuals is aroused, started, sustained, and stopped.

Management can use rewards (or punishment) to increase performance by present employees. Management also can use rewards to attract skilled employees to join the organization.

Many companies’ and managers’ reputations have been damaged through misbehavior. Such damaging behaviors and actions need to be prevented whenever possible.

Stress is an important result of the interaction between the job and the individual.

Stress in this context is a state of imbalance within an individual that often manifests itself in such symptoms as insomnia, excessive perspiration, nervousness, and irritability. Whether stress is positive or negative depends on the individual’s tolerance level.

Group Behavior and Interpersonal Influence

Interpersonal influence and group behavior are powerful forces that affect organizational performance

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Interpersonal influence and group behavior are also powerful forces affecting organizational performance.

Groups form because of managerial action, and also because of individual efforts.

Managers create work groups to carry out assigned jobs and tasks. Such groups, created by managerial decisions, are termed formal groups.

Groups also form as a consequence of employees’ actions. Such groups, termed informal groups, develop around common interests and friendships.

Group Behavior and Interpersonal Influence

Leadership

Group behavior

Intergroup behavior and conflict

Organizational power and politics.

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Power is the ability to get someone to do something you want to be done or to make things happen in the way you want them to happen. Managers derive power from both organizational and individual sources.

Organizational Processes

When behavioral processes in an organization don’t function well, problems can arise

Communication Process

Decision-making

Leadership Process

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Certain behavioral processes give life to an organization. When these processes do not function well, problems can arise.

The communication process links the people within the organization. Information integrates the activities of the organization with the demands of the environment.

The quality of decision making in an organization depends on selecting proper goals and identifying means for achieving them. With good integration of behavioral and structural factors, management can increase the probability that high-quality decisions will be made.

Leaders exist within all organizations. They may be found in formal groups, but they also may be found in informal groups. Leaders may be managers or nonmanagers. The importance of effective leadership for obtaining individual, group, and organizational performance is so critical that it has stimulated a great deal of effort to determine the causes of such leadership.

Organizational Structure

Managers must understand

The formal pattern of activities and interrelationships

Among the various subunits of the organization

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To work effectively in organizations, managers must have a clear understanding of the organizational structure. Viewing an organization chart on a piece of paper or framed on a wall, one sees only a configuration of positions, job duties, and lines of authority among the parts of an organization. However, organizational structures can be far more complex.

Organizational Change and Innovation

Effectiveness might be improved by changing the total organization

Be prepared to deal with employee reactions when changes occur

Reactions can range from mild to extreme

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Receiving feedback from employees about their jobs, feelings, attitudes, preferences, and impressions is invaluable. The feedback can be used to make specific modifications in financial packages, social and interpersonal opportunities, skill development, and job characteristics. Feedback from trusted sources can result in noticeable changes and

Assignment 1 5105

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