1 What is Organizational Behavior? McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Learning Goals What is the definition of “organizational behavior” (OB)? What are the two primary outcomes in studies of OB? What factors affect the two primary OB outcomes? Why might firms that are good at OB tend to be more profitable? What is the role of theory in the scientific method? How are correlations interpreted?

The Best of Coworkers, the Worst of Coworkers Table 1-1

Organizational Behavior Defined Organizational behavior (OB) is the field of study devoted to understanding, explaining, and ultimately improving the attitudes and behaviors of individuals and groups in organizations. Human resource management takes the theories and principles studies in OB and explores the “nuts-and-bolts” applications of those principles in organizations. Strategic management focuses on the product choices and industry characteristics that affect an organization's profitability.

OB Foundations Theories and concepts in OB are drawn from a wide variety of disciplines Industrial and organizational psychology Job performance and individual characteristics Social psychology Satisfaction, emotions, and team processes Sociology Team characteristics and organizational structure Economics Motivation, learning, and decision making

Integrative Model of Organizational Behavior Individual Outcomes Job performance (Chapter 2) Organizational commitment (Chapter 3) Individual Mechanisms Job satisfaction (Chapter 4) Stress (Chapter 5) Motivation (Chapter 6) Trust, justice, and ethics (Chapter 7) Learning and decision making (Chapter 8)

Integrative Model of Organizational Behavior, cont’d Individual Characteristics Personality and cultural values (Chapter 9) Ability (Chapter 10) Group Mechanisms Teams: characteristics and diversity (Chapter 11) Teams: processes and communication (Chapter 12) Leadership: power and negotiation (Chapter 13) Leadership: styles and behaviors (Chapter 14) Organizational Mechanisms Organizational structure (Chapter 15) Organizational culture (Chapter 16)

Integrative Model of OB Figure 1-1

Does Organizational Behavior Matter? Resource-based view Financial resources (revenue, equity) Physical resources (buildings, machines, technology) Knowledge, decision-making, culture, ability, wisdom Image, culture, goodwill

Discussion Question Is it really the people that make some companies more profitable than others?

What Makes a Resource Valuable? Rare Resources, people Inimitable History A collective pool of experience, wisdom, and knowledge that benefits the organization Numerous small decisions People make many small decisions day-in and day-out, week-in and week-out Socially complex resources Culture, teamwork, trust, reputation

What Makes a Resource Valuable? Figure 1-2

Research Evidence OB practices were associated with better firm performance Firms that valued OB had a 19% higher survival rate than firms that did not value OB Good people comprise a valuable resource for companies There is no “magic bullet” OB practice – one thing that, in-and-of itself, can increase profitability Rule of one-eighth OB on Screen Office Space

Survey Questions Designed to Assess High Performance Work Practices Table 1-2

Some of the “100 Best Companies to Work For” in 2009 Table 1-3

How Do We Know Method of Experience – People hold firmly to some belief because it is consistent with their own experience and observations. Method of Intuition – People hold firmly to some belief because it “just stands to reason”—it seems obvious or self-evident. Method of Authority – People hold firmly to some belief because some respected official, agency, or source has said it is so. Method of Science – People accept some belief because scientific studies have tended to replicate that result using a series of samples, settings, and methods.

Scientific Studies Theory Hypotheses A collection of assertions—both verbal and symbolic—that specify how and why variables are related, as well as the conditions in which they should (and should not) be related Tells a story and supplies the familiar who, what, where, when, and why elements found in any newspaper or magazine article Hypotheses Written predictions that specify relationships between variables

The Scientific Method Figure 1-3

Scientific Studies, cont’d Correlation (r) Describes the statistical relationship between two variables Can be positive or negative and range from 0 (no statistical relationship) to ± 1 (a perfect statistical relationship)

Different Correlation Sizes Figure 1-4

Meta-analysis The best way to test a theory is to conduct many studies, each of which is as different as possible from the ones that preceded it. Meta-analysis takes all of the correlations found in studies of a particular relationship and calculates a weighted average (such that correlations based on studies with large samples are weighted more than correlations based on studies with small samples). .50 correlation is considered “strong,” a .30 correlation is considered “moderate,” and a .10 correlation is considered “weak.” Form the foundation for evidence-based management — a perspective that argues that scientific findings should form the foundation for management education, much as they do for medical education.