Chapter 1

A Strategic Approach to Organizational Behavior

Basic Elements of Organizational Behavior

Organizational behavior - the actions of individuals and groups in an organizational context

Managing organizational behavior - focuses on acquiring, developing, and applying the

knowledge and skills of people

Strategic OB approach - people are the foundation of the organizations competitive advantage

- involves organizing and managing people's knowledge and skills eectively to implement the
organizations strategy and gain a competitive advantage

Factors that determine the behavior and ultimate value of people in the organization

1. Individual

ability to learn, self-managing, technical skills, personal characteristics, personal values

2. Interpersonal

quality of leadership, communication, conflicts

3. Organizational

culture and policies

These factors produce

1. Productivity - output of individuals and groups

2. Satisfaction - feelings that individuals and groups have about work/workplace

3. Organizational Success - competitive advantage and financial performance

Importance of Using a Strategic Lens

1. Senior Managers - also called strategic leaders

think and act strategically, and use these skills to motivate people and build trusting
relationships to help implement the organizations strategy

make strategic decisions for the firm

help middle managers define their roles and manage conflict

shapes internal norms and informal practices of the organization

2. Middle Managers

championing strategic ideas with senior managers and helping the firm remain adaptive

implementation of strategies by working with middle and lower-level managers

processes data and information to be used by the whole firm

3. Lower-level Managers

coaching the firms associates

remove obstacles for associates and deal with personal problems

design jobs, team structures, and reward system

4. Associates - workers who carry out the basic tasks

Foundations of a Strategic Approach to Organizational Behavior

How is OB dierent from the disciplines?

1. It integrates knowledge from all of these areas to understand behavior in organizations

2. Focuses on behaviors and processes that help to create competitive advantage and
financial success

Instead of understanding human behavior, it aims to IMPROVE the performance of the

organization

OB is an important field of study

1. There are complexities and subtleties in fully leveraging the capabilities of people. Common
sense wont do

2. Managers must avoid seeking simple answers to resolve organizational issues

3. Integrates important behavioral science knowledge within an organizational setting and

emphasizes application

Definition of an Organization
- Collection of individuals whose members may change over time, forming a coordinated
system of specialized activities for the purpose of achieving specific goals over an extended
period of time

- Network of individuals, system, coordinated activities, division of labor, goal orientation,

continuity over time regardless of change in individual membership

The Role of Human Capital in Creating Competitive Advantage

- An organization has tangible and intangible resources

- Intangible resources - reputation of the organization, trust between managers and

associates, knowledge and skills of associates, organizational culture, brand name, and
relationships with customers and suppliers

Human capital - critical intangible resource

- sum of skills, knowledge, general attributes of the people in an organization

- use knowledge to gain competitive advantage

The Concept of Competitive Advantage

- when an organization can perform some aspect of its work better than competitors can or
when it can perform the work in a way that competitors cannot duplicate

Human Capital as a Source of Competitive Advantage

1. Value - the extent to which individuals are capable of producing work that supports an
organizations strategy for competing in the marketplace

1. Cost leadership strategy - creating low-cost products or services for the customer
while maintaining acceptable or good quality (Kia)

2. Dierentiating products/services through special features or superior quality (Lexus)

2. Rareness - extent to which the skills and talents of an organizations people are unique in
the industry

- Nordstrom (highly educated, heroic service)

3. Imitability - extent to which the skills and talents of an organizations people can be copied
by other organization

- Tacit knowledge - a type of knowledge that people have but cannot articulate. (BMW -
they just know. They have a feel of what is right)

So, CA should be valuable, rare, and dicult to imitate

Sustainable competitive advantage through people not only depends on the skills and talents
of the people, but also how they are treated and deployed.

Positive Organizational Behavior

- nurturing individuals greatest strengths and helping people use them to their and the
organizations advantage

- Emotional Intelligence - people with high EI have self-awareness, possess good social skills,
display empathy, have strong motivation, and regulate their own behavior without the
oversight of others

High-Involvement Management

- senior, middle, and lower-level managers all recognize human capital as the organizations
most important resource

Five characteristics of HIM

1. Selective Hiring - obtaining a large pool of applicants and undergoing rigorous evaluations
(multiple interviews, tests, other tools). Applicants are selected not only through their
technical skills, but also of fit with the company culture and mission

2. Extensive Training - thoroughly train new associates and managers to help them build skills
for their positions (OJT, dedicated training exercises); also participate in structured
discussions of culture and mission

3. Decision Power - associates are given the authority to make decisions aecting their work
and performance. Can also participate in decisions made by lower-level and middle
managers

4. Information Sharing - associates are given information concerning a broad variety of

operational and strategic issues. Promotes collaboration, coordination, and high team
performance

5. Incentive Compensation - associates are compensated partly on the basis of performance.

(Individual performance, team performance, and business performance)