Key Factors in Organizational Performance Chapter Four Key Factors in Organizational Performance

Learning Objectives Identify factors in the external and internal environment of an organization that influence organizational outcomes Describe the outcomes that can be used to measure organizational performance Explain the significance of management philosophy for human resources management Describe the relationship among motivation, performance, and satisfaction

Learning Objectives (cont’d) Identify the role of human resources management in the development of effective work groups Define organizational culture and indicate how it can be assessed Define organizational climate and explain the role of human resources management in measuring it Describe a System 1 organization and a System 4T organization Contrast mechanistic and organic systems

A model of organizational performance

Organizational Outcomes Effectiveness: the extent to which organizational goals are achieved Efficiency: the ratio of outputs to inputs, or benefits to costs Development: the extent to which individual employees, groups of workers and the total organization are developing in their capacity to meet future opportunities and challenges Participant satisfaction: the emotional response of employees to aspect of work or to work itself

The Role of HRM Human resources management must be concerned not only with individual performance but also with the performance of people in groups and among groups. Both the quality of these relationships and how they are influenced by HRM affect the importance of the organization as a whole

Internal Environment Technological and Physical Resources Financial Resources

Structure All the arrangements in an organization through which the activities and behavior of employees are directed toward desired goals.

Management Systems Job design Organizational hierarchy Layout and physical arrangements Work rules and regulations All these mechanisms for organizing the work place affect employee interactions and the level of cooperation or conflict among individuals and groups

Management philosophy: definitions Set of ideas and beliefs held by executives about how people should be managed Value: Something prized or esteemed Ethics: A system of moral principles pertaining to the standards of a particular group, profession, or culture

Theory X People need to be controlled, coerced, and threatened with punishment to get them to work toward organizational goals. Performance appraisal is a top down process, in which the superior relays a judgment of the subordinate’s performance Traditional wage scales are consistent with theory X

Theory Y People exercise self-direction in working toward goals to which they are committed. Under the right circumstances, they will seek and accept responsibility Performance appraisal is more of a give and take development process Participative incentive systems reflect Theory Y

Leadership A process of influencing the behavior of others in the direction of a goal or set of goals Requires an appropriate blend of production-centered behavior and employee-centered behavior Leadership involves in developing a vision, motivating and inspiring people Effective leaders attend to both managing and leading

…..leadership behaviour It can be viewed on a continuum from maximum use of managerial authorithy to joint manager- subordinate decision making Requires a sharing of responsability between the formal leader and all group members in carrying out effective task and maintenance behaviours

Empowerment The enhanced autonomy, creativity, and productivity of subordinates achieved through training, delegation, involvement, and support -individual level (as a psychological support process) -group level (as a leadership process) -organization level (as a structural process, empowered teams)

…..Consequences/1 These conclusions about leadership have implications for several areas of HRM: Staffing: selections and promotions practices need to take into account traits and behaviours required for successful leadership in a particular setting Training and development: supervisors, managers and team members should acquire a range of leadership and team skills to enhance group interaction and decision making

Consequences/2 General design of personnel system: performance appraisal, incentive systems and other programs may consciously reflect team leadership, partecipation by subordinates, or a direct, controlling approach Interaction with other managers: the HR staff should exercise effective leadership in planning and managing HR systems and interact effectively with top management and supervisors at all levels

Motivation The desire and willingness of a person to expend effort to reach a particular goal or outcome Individual motivation results from the interplay of forces in the organizational environment with individual personality traits, skills and attitudes. Theories of motivation have special application to HRM because enhancing motivation can lead to improve performance and greater organizational success

Theories of Motivation Maslow’s need hierarchy theory Alderfer’s ERG theory McClelland’s achievement, affiliation and power theory Herzberg’s motivation-hygiene theory Skinner’s reinforcement theory Expectancy theory Equity theory Engagement theory

Figure 4.3(a) One-on-one leadership pattern

Figure 4.3(b) Team leadership pattern

JOB SATISFATION Can be defined as a person’s emotional responce to aspect of work (such as pay, supervision and benefits) or the work itself Whether job satisfaction is high or low depends on a number of factors: how well a person’s wants and needs are met through work, working conditions themselves, how a person define himself or herself through work, individual personality trait…

Consequences of Dissatisfaction Defensive Behavior Sabotage Absenteeism Turnover Satisfaction levels can be assessed through climate surveys which can indicate when remedial action may be appropriate

WORK GROUP HRM is concerned not only with employees as individual workers but also with employees as members WORK GROUP: is a number of persons who have some degree of interdependence in carrying out tasks related to organizational goals

……Then FORMAL GROUPS: are groups established by the management hierarchy, such as work group, special commitees and task force INFORMAL GROUPS: (shadow groups) are groups that form spontaneously as a result of proximity or similarity of work or mutual interest

Organizational Culture The fabric of values, beliefs, assumptions, myths, norms, goals, and visions that are widely shared in the organization.

Organizational Climate The measurable, collective perceptions of organization members about those aspects of their working life that affect their motivation and behavior–in particular, the culture of the organization, the prevailing leadership style, the degree of structure, and the personnel policies and practices.

Mechanistic Systems A high degree of task differentiation and specialization, precise delineation of responsibilities and methods to be used Extensive reliance on management Top people tend to control communications Emphasis on vertical interactions A one-on-one leadership style

Organic Systems Continuous reassessment of tasks and assignments through interactions with others Authority, control and communication stems more from expertise and commitment to total task than from reliance on management hierarchy Communication is open and extensive Encourage of a diagonal communication style Team leadership style

Systems 1-4T System 1: Organization, control, goal setting and decision making concentrated at the top System 4: Most participative and highly group-process oriented System 4T: “Total model”--high performance standards expected by leaders and shared by everyone in the organization

Key Terms Effectiveness Efficiency Development Participant satisfaction Structure Management philosophy Values Ethics Theory X and theory Y Leadership Production-centered behavior Employee centered behavior Empowerment Motivation

Key Terms (cont’d) Job satisfaction Sabotage Absenteeism Turnover Work group Team Group task behaviors Group maintenance behaviors Organizational culture Organizational climate Mechanistic systems Organic systems Systems 1-4T