Impact of Organizational Behavior on Organizational Performance

Essay for MPPO

V N Lalith Madhur Mandala 1101021 Section A

Impact of OB on Organizational Performance Lalith Mandala, IIM Trichy

Organizational behavior (OB) is a field of study devoted to understanding, explaining, and ultimately improving the attitudes and behaviors of individuals and groups in organizations. The main objective of OB is the application of this knowledge about how people, individuals, and groups act in organizations, in order to achieve the highest performance and dominant results. To analyze how organization performance is impacted by organizational behavior, we need to look at the aspects of organizational performance. An organization can function effectively, performance. only if the performance of the individuals comprising the organization is good. This essay looks at how OB affects individual performance and then move on to how the concepts of OB can be used to improve organizational performance to achieve organization goals. anizational
Integrative model for Organizational behavior

Source: Tata McGraw Hill

Impact of OB on Organizational Performance Lalith Mandala, IIM Trichy

Elements of Organizational Behavior The organization's base rests on management's philosophy, values, vision and goals. This in turn drives the organizational culture which is composed of the formal organization, informal organization, and the social environment. The final outcomes are performance, individual satisfaction, and personal growth and development. All these elements combine to build the model or framework that the organization operates from. The following is a description of how few of the factors in the above model affect individuals and thereby the organization performance: INDIVIDUAL MECHANISMS: The integrative model also illustrates a number of individual mechanisms that directly affect job performance and organizational commitment. These include job satisfaction, stress etc. The model also includes motivation, which captures the energetic forces that drive employees work effort. Trust, justice, and ethics reflect the degree to which employees feel that their company does business with fairness, honesty, and integrity. The final individual mechanism shown in the model is learning and decision making, which deals with how employees gain job knowledge and how they use that knowledge to make accurate judgments on the job. INDIVIDUAL CHARACTERISTICS: It is important to understand what factors improve the individual mechanisms. Two such factors reflect the characteristics of individual employees. Personality and cultural values reflect the various traits and tendencies that describe how people act, with commonly studied traits including extraversion, conscientiousness, and collectivism. The model also examines ability, which describes the cognitive abilities (verbal, quantitative, etc.), emotional skills (other awareness, emotion regulation, etc.), and physical abilities (strength, endurance, etc.) that employees bring to a job. GROUP MECHANISMS: Typically, employees work in one or more work teams led by a leader. First are the team characteristics that summarize the qualities that teams possess, such as their norms, their roles, and the way members depend on one another. Next is the team processes that summarize how teams behave, including topics like cooperation, conflict, and communication. It is important to know how individuals become leaders in the first place and consider leader power and influence to summarize the process by which individuals attain authority over others. Leader styles and behaviors capture the specific actions that leaders take to influence others at work. ORGANIZATIONAL MECHANISMS: Finally, our integrative model acknowledges that the teams described in the prior section are grouped into larger organizations. Every company has an organizational structure that dictates how the units within the firm link to (and communicate with) other units. Every company also has an organizational culture that captures the way

Impact of OB on Organizational Performance Lalith Mandala, IIM Trichy

things are in the organizationshared knowledge about the rules, norms, and values that shape employee attitudes and behaviors. All of these together describe how OB affects an individuals and the companys performance. People sometimes wonder whether a firms ability to manage OB has any bearing on its bottom-line profitability. After all, if a firm has good products, people will buy it regardless of how happy, motivated, or committed its workforce is. However, effective OB can help keep a product good over the long term. This same argument can be made in reverse: the effective management of OB can help make a product get better, incrementally, over the long term. Models of Organizational behavior: There are four major models or frameworks that organizations operate out of - Autocratic, Custodial, Supportive, and Collegial. Autocratic based on power with a managerial orientation of authority. The employees are oriented towards obedience and dependence on the boss. The performance result is minimal. Custodial the basis of this model is economic resources with a managerial orientation of money. The employee need that is met is security. The performance result is passive cooperation. Supportive the basis of this model is leadership with a managerial orientation of support. The employees in turn are oriented towards job performance and participation. The performance result is awakened drives. Collegial the basis of this model is partnership with a managerial orientation of teamwork. The employee need that is met is self-actualization. The performance result is moderate enthusiasm.

Empirical approach to study effect of OB on performance: Cross-sectional studies demonstrate that organizational behavior and culture are correlated with firm performance. It has been shown that firms with strong cult like cultures, founded by CEOs who focused on building an institution not just making a profit, outperformed comparison companies who did not have these characteristics. Ex: Companies like Toyota. Other studies have shown that organizations with intergroup cooperation, a strong culture, a multiple stakeholder orientation and a reputation for having good leaders had better financial performance than comparison organizations in the same industry. Employee centered organizational climates have been found to be associated with high customer

Impact of OB on Organizational Performance Lalith Mandala, IIM Trichy

satisfaction. Action research studies have shown that interventions to change organization design and behavior result in improved productivity and faster product development. New manufacturing plants which involve and empower employees perform more effectively on a number of dimensions than their traditional more hierarchical counterparts. Pfeffers seven policies: Companies with higher than average economic performance, have been found to adopt a set of mutually reinforcing, high commitment human resource policies and practices. Pfeffer (1998) finds that seven policies characterize these companies: Employment security Selective hiring of new personnel High involvement in self managed teams and decentralized decision making Comparatively high compensation contingent on organizational performance Extensive training Reduced status distinctions and barriers with respect to language, offices, wage differences, and dress. Extensive sharing of financial information throughout the organization Recent trends: Positive Organizational Behavior (POB) Positive Organizational Behavior is defined as the study and application of positively-oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed for performance improvement in todays workplace. Self-efficacy, Hope, Optimism, and Resiliency are four key psychological resource capacities that best meet the inclusion criteria for POB, which enhances managing effectiveness and organizational performance. The four POB psychological capacities: Self-efficacy, defined as the belief that one has the capabilities to execute the courses of actions required to manage prospective situations, represents the best fit with all the criteria of POB among all the four capacities. Self-efficacy belief appears to determine how much effort people will spend on a task and how long they will persist with it. Hope is defined as a positive motivational state that is based on an interactively derived sense of successful (1) agency (goal-directed energy) and (2) pathways (planning to meet goals).

Impact of OB on Organizational Performance Lalith Mandala, IIM Trichy

With the hope to achieve certain goals, employees have the sense of agency or internalized control that creates the determination and motivation (willpower) to accomplish their goals. They would also be able to create and use alternative pathways and contingency plans to achieve their goals and overcome obstacles. Optimism is defined by positive psychologists as a cognitive characteristic in terms of an expectancy of positive outcome and/or a positive causal attribution. However, managers should keep in mind that Optimism is not simply cold cognition, and if we forget the emotional flavor that pervades optimism, we can make little sense of the fact that optimism is both motivated and motivating. Resiliency is defined as the capacity to rebound or bounce back from adversity, conflict, failure, or even positive events, progress, and increased responsibility. Unlike traditional conceptualizations of resiliency as an extraordinary capacity that can only be observed and admired in highly unique individuals,. Resiliency in workplace embraces a proactive dimension that promotes discrepancy creation even in the absence of external threats. People with these four capabilities are more capable of improving their own performance as well as the organizations. Conclusion: The fact that organizational interventions to change organizational design and behavior lead to improved performance supports the view that behavior causes performance. Not only theoretically stated, it has also been analytically inferred that OB has an impact on organizational performance, but also the behavior is impacted by the performance. Hence, by studying and modifying the behavioral aspects of an organization, one can actually improve the performance of that organization. References: http://positivepsychologynews.com/news/timothy-so/200903181667 Organizational Behavior and Development - Michael Beer, Harvard University http://highered.mcgrawhill.com/sites/dl/free/0073530085/535230/Chapter1_What_is_Organizational_Behavior.pdf http://www.nwlink.com/~donclark/leader/leadob.html