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The first chapter of the book discusses some important points of Organizational Behavior
that would be helpful for the overview of the subject.

 Familiarizing with Organizational Behavior

- Definition: Organizational Behavior is the study of what people think, feel and do in
and around organizations.
- Importance: Organizational Behavior provides knowledge and tools to interact with
others more effectively. It helps on building high-performance teams, motivating
coworkers, handling workplace conflicts and changing employees’ behaviors.

 Perspectives of Organizational Effectiveness

- Most Organizational Behavior theories try to achieve organizational effectiveness
- Organizational effectiveness: Though its meaning varies among organizations as they
have different goals and objectives, organizational effectiveness is closely associated
with organizational success, competitiveness, excellence and health.
- These four perspectives are said to be the best yardstick of organizational
1. Open Systems Perspective: states that organizations depend on the external
environment (where they receive feedback to maintain good fit with that
environment) for resources and the use organizational subsystems (departments)
to transform these resources to outputs.
2. Organizational Learning Perspective: also called knowledge management, states
that effectiveness depends on the organization’s capacity to acquire, share, use
and store valuable knowledge and that ability to acquire and use knowledge
depends on the firm’s absorptive capacity. It views stock of knowledge as a
resource, collectively known as intellectual capital (which includes human,
structural and relationship capital).
3. High Performance Work Practices Perspective: holds that effective organizations
incorporate several workplace practices that leverage the potential of human
capital which includes employee involvement, job autonomy, employee
competence and performance-skill-based rewards.
4. Stakeholders Perspective: states that leaders manage the interests of diverse
stakeholders by relying on their personal and organizational values for guidance
such as ethics and corporate social responsibility (CSR).

 The three major challenges facing organizations

1. Globalization: it is the economic, social and cultural connectivity with people in other
parts of the world.
 Positive effects are: it results to larger markets, lower costs and greater access
to knowledge and innovation.
 Negative effects are: it increases work intensification, reduces job security and
work-life balance in developed countries
2. Increasing workforce diversity: Diversity can be surface-level (observable
demographic and other overt differences in people) or deep-level (psychological
characteristics of employees including their personalities, attitudes and beliefs)
 Positive effects are: it provides broader spectrum of knowledge, helps in
making better decisions on complex problems, has higher financial returns
and improves customer service and creativity.
 Negative effects are: it takes longer to perform effectively, brings numerous
communication problems, it can be the source of conflict that can lead to lack
of information sharing and morale problems and higher turnovers.
3. Emerging employment relationship: Today, work hours are longer and employees
experience more work-related stress and they suffer from family and personal
relations issues. Two of the most employment relationship trends are work-life
balance (degree to which a person minimizes conflict between work and non-work
demands) and virtual work (work performed away from the traditional physical
workplace by using information technology).
 Positive effects are: it attracts job applicants as well as improves the
employee’s work-life balance, productivity and less fuel or transportation
 Negative effects are: social isolation, reduced promotion opportunities, lack of
sufficient space and resources for a home office.

 Anchors of Organizational Behavior Knowledge

- Conceptual anchors which represent the principles where organizational behavior
knowledge are based and refined:
1. Systematic Research Anchor: states that Organization Behavior should study
organizations using systematic research methods and have an evidence-based
management (the practice of making decisions and taking actions on research
2. Multidisciplinary Anchor: states that Organization Behavior should develop from
knowledge in other principles (such as psychology, sociology and economics) not
just from its own isolated research base.
3. Contingency Anchor: states that particular action may have different
consequences in different situations. It selects the strategy that is most appropriate
under specific conditions.
4. Multiple Levels of Analysis Anchor: states that Organization Behavior events
should be understood from three levels of analysis: (1) individual- looks at the
characteristics and behaviors of employees and their thought processes (2) team-
looks at the way people interact such as team dynamics, team decisions,
communication etc. and (3) organization- looks how people structure their
working relationship and how organizations interact with their environment.

Reference: Organizational Behavior book by McShane and Von Glinow