Organizational Behavior, 8e Schermerhorn, Hunt, and Osborn Prepared by Michael K. McCuddy Valparaiso University John Wiley & Sons, Inc.

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Chapter 2 The High Performance Organization Study questions. What is the high performance context of organizational behavior? What is a high performance organization? What are the management challenges of high performance organizations? How do high performance organizations operate? Organizational Behavior: Chapter 2

What is the high performance context of organizational behavior? OB and changing customer expectations Total Quality Management (TQM). Meeting customer needs. Doing tasks right the first time. Continuous improvement. Is this necessary? If so, can it be done better? Organizational Behavior: Chapter 2

What is the high performance context of organizational behavior? OB and changing customer expectations — cont. Upside-down pyramid view of organizations. Customers and clients at the top of organization. Workers directly affect customers and clients. Team leaders and middle managers directly support the workers. Top managers clarify the mission and objectives, set strategies, and make adequate resources available. Organizational Behavior: Chapter 2

What is the high performance context of organizational behavior? OB and the changing workforce. Increasing workforce diversity in: United States. Canada. European Union. Generation X (or Gold-Collar workers). Poor educational preparation of some high school graduates. Organizational Behavior: Chapter 2

What is the high performance context of organizational behavior? Generation X workers. Desire empowerment. These desires are strongest for knowledge workers. Have a high level of skills and abilities for functioning well in challenging jobs and work settings. Organizational Behavior: Chapter 2

What is the high performance context of organizational behavior? Ill-prepared high school graduates. Enter the workforce with significant skill deficiencies. Need for remedial training. High cost to organizations. Individuals can suffer long-term career disadvantages. Organizational Behavior: Chapter 2

What is the high performance context of organizational behavior? OB and changing organizations. Changes in the way people work. Stresses of downsizing and restructuring. Impact of information technology. New meanings in employer-employee relationships. Organizational Behavior: Chapter 2

What is the high performance context of organizational behavior? OB and changing organizations — cont. Process reengineering. Rethinks and radically redesigns business processes to stimulate innovation and change and improve performance. Electronic commerce. Transaction of business through the Internet. E-corporations. Organizational Behavior: Chapter 2

What is the high performance context of organizational behavior? OB and changing organizations — cont. Free agent economy. Shamrock organizations. Relatively small core group of permanent, full-time employees with critical skills. Outside operators contracting to core group to perform essential daily activities. Part-timers hired by core group on an as-needed basis. Organizational Behavior: Chapter 2

What is a high performance organization? High performance organizations (HPOs). HPOs intentionally designed to: Bring out the best in people. Produce organizational capability that delivers sustainable organizational results. HPOs place people first. Organizational Behavior: Chapter 2

What is a high performance organization? Emphasis on intellectual capital. Intellectual capital is the foundation for HPOs. To utilize intellectual capital, HPOs often organize work-flow around key business processes and use work teams within these processes. Organizational Behavior: Chapter 2

What is a high performance organization? Key components utilized in HPOs. Employee involvement. Self-directing work teams. Integrated production technologies. Organizational learning. Total quality management. Organizational Behavior: Chapter 2

What is a high performance organization? Employee involvement. The amount of decision making delegated to workers at all levels. Employment involvement can be visualized on a continuum. No involvement or parallel involvement. Moderate involvement or participative management. High involvement or employee empowerment. Organizational Behavior: Chapter 2

What is a high performance organization? Self-directing work teams. Empowered to make decisions about planning, doing, and evaluating their work. Sometimes called self-managing or self-leading work teams. Important in HPOs due to: Need to tap employees’ expertise and knowledge. Need for employees to manage themselves. Organizational Behavior: Chapter 2

What is a high performance organization? Integrated production technologies. Focus on providing flexibility in manufacturing and services and involves job design and information technology. Key components: Just-in-time systems. Use of computers. Organizational Behavior: Chapter 2

What is a high performance organization? Organizational learning. A way for organizations to adapt to their settings and to gather information to anticipate future changes. HPOs are designed for organizational learning. Organizational Behavior: Chapter 2

What is a high performance organization? Total quality management (TQM). A total commitment to: High-quality results. Continuous improvement. Meeting customer needs. TQM is a a tightly integrated part of HPOs. Encourages all workers to do their own quality planning and checking. Organizational Behavior: Chapter 2

What are the management challenges of high performance organizations? Challenges of environmental linkages. HPOs are open systems influenced by a rapidly moving external environment. Open systems components. Inputs: worksite problems and opportunities, and vision, mission, and strategy. Transformation processes: five HPO components. Outputs: individual, group, and organizational effectiveness, and contributions. Organizational Behavior: Chapter 2

What are the management challenges of high performance organizations? Challenges of internal integration. Challenge of integrating five HPO components. Top-down and bottom-up decision making in HPOs. HPO islands. Organizational Behavior: Chapter 2

What are the management challenges of high performance organizations? Challenges for middle manager roles. Helping implement HPO components. HPO changes may alter middle managers’ jobs. Dealing with employee resistance to self-managing teams. Resolving tensions among HPO components. Organizational Behavior: Chapter 2

What are the management challenges of high performance organizations? Challenges for high level leadership. Deciding how far to go in becoming a HPO. Internationalizing United States business practices. Organizational Behavior: Chapter 2

What are the management challenges of high performance organizations? Challenges of greenfield sites versus redesigns. Greenfield sites start from scratch at a new site. Redesigns start as more traditional organizations and change toward HPOs. Greenfield sites result in better financial performance for organizations. Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. HPO component: employee involvement. Flat and lean hierarchy. Heavy team emphasis throughout organization. Paper work minimized. Rapid decision making emphasized. People were empowered to do “whatever it takes” to get the job done. Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. HPO component: self-directing work teams. Longer term service teams. Ad hoc teams for given projects or duties. Culture promotes cooperative activities. Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. HPO component: integrated production technologies. Integrated use of information technology in distribution, order entry, crew pairings, dispatching of flights, revenue management, schedule planning, and parts replacement. Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. HPO component: organizational learning. Deeply rooted in Southwest’s culture. Letters and newsletters about company business. Managers encourage workers to spend time at jobs other than their own. Southwest’s “University for People.” Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. HPO component: total quality management. “Southwest Spirit” focusing on a strong work ethic, a strong desire for quality work, going beyond the call of duty, helping others, and doing the “right” thing. TQM qualities are reinforced by empowerment, learning, and communications devices. Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. Other HPO considerations: vision/direction setting package. “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” Strategic elements in direction setting. Core values. Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. Other HPO considerations: the people. Attitude reflecting “Southwest Spirit” is a key hiring requirement. Attitude more important than other hiring qualifications. Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. Other HPO considerations: compensation. Flight attendants paid by the trip. Incentives for employee performance. Pilots’ salaries are comparable to other airlines but they fly 40% more hours. Profit sharing and pension plans. Usual airline fringe benefits. Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. Other HPO considerations: dealing with the environment. Southwest flourishes in a deregulated environment. Southwest’s HPO attributes serve it well in dealing with a highly competitive environment. Organizational Behavior: Chapter 2

How do high performance organizations operate? Southwest Airlines as an HPO. Other HPO considerations: outcomes. Highly satisfied employees. Strong commitment to the company. Low turnover. Strong performance on various productivity measures. Active in contributing to the communities in which it operates. Organizational Behavior: Chapter 2