Chapter 1 What is Organizational Behavior? McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Slide 1-2 Learning Goals  What is the definition of “organizational behavior”?  What are the two primary outcomes in studies of organizational behavior? What factors affect those two primary outcomes?  Do firms that are good at organizational behavior tend to be more profitable? Why might that be, and is there any research evidence to support this tendency?  What is theory, and what is its role in the scientific method?  What does a “correlation” represent, and what are “big”, “moderate”, and “small” correlations? What is a meta- analysis?

Slide 1-3 Discussion Question  Think of the worst coworker you've ever had. What did that person do that was so bad?  Think of the best coworker you've ever had. What did that person do that was so good?

Slide 1-4 The Best of Coworkers, the Worst of Coworkers Table 1-1

Slide 1-5 Basic Elements of Organizational Behavior  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.

Slide 1-6 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

Slide 1-7 Integrative Model of Organizational Behavior  Individual Outcomes  Job performance  Organizational commitment  Individual Mechanisms  Job satisfaction  Stress  Motivation  Trust, justice, and ethics  Learning and decision making

Slide 1-8  Individual Characteristics  Personality and cultural values  Ability  Group Mechanisms  Team characteristics  Team processes  Leader power and influence  Leader styles and behaviors  Organizational Mechanisms  Organizational structure  Organizational culture Integrative Model of Organizational Behavior, cont’d

Slide 1-9 Integrative Model of OB Figure 1-1

Slide 1-10 Does Organizational Behavior Matter?  Resource-based view  Financial resources (revenue, equity)  Physical resources (buildings, machines)  Knowledge, decision-making, culture

Slide 1-11 Discussion Question  Is it really the people that make some companies more profitable than others?

Slide 1-12  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 What Makes a Resource Valuable?

Slide 1-13 What Makes a Resource Valuable? Figure 1-2

Slide 1-14 Research Evidence  OB practices were associated with better firm performance  Firms who valued OB had a 19% higher survival rate than firms who 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

Slide 1-15 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.

Slide 1-16 Scientific Studies  Theory  a collection of assertions—both verbal and symbolic—that specifies how and why variables are related, as well as the conditions under which they should (and should not) be related  tells a story—supplying the familiar who, what, where, when, and why elements found in any newspaper or magazine article  Hypotheses  written predictions that specify relationships between variables

Slide 1-17 The Scientific Method Figure 1-3

Slide 1-18  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) Scientific Studies, cont’d

Slide 1-19 Different Correlation Sizes Figure 1-4

Slide 1-20 Different Correlation Sizes Figure 1-4

Slide 1-21 Different Correlation Sizes Figure 1-4

Slide 1-22 Social Recognition & Job Performance  How often does social recognition lead to higher job performance?  Burger King study  Correlation between social recognition and job performance was.28  Restaurants that received training in social recognition averaged 44 seconds of drive- through time nine months later versus 62 seconds for the control group locations.  Correlation between social recognition and retention rates was.20  Restaurants that received training in social recognition had a 16 percent better retention rate than the control group locations nine months later.

Slide 1-23 Notable Correlations Table 1-4

Slide 1-24 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.”

Slide 1-25 Takeaways  Organizational behavior is a field of study devoted to understanding and explaining the attitudes and behaviors of individuals and groups in organizations. It focuses on why individuals and groups in organizations act the way they do.  The two primary outcomes - job performance and organizational commitment.  A number of factors affect performance and commitment, including individual mechanisms, individual characteristics, group mechanisms, and organizational mechanisms.

Slide 1-26 Takeaways, Cont’d  The effective management of organizational behavior can help a company become more profitable because good people are a valuable resource.  Rare  Hard to imitate  History that cannot be bought or copied,  Make numerous small decisions that cannot be observed by competitors  Create socially complex resources such as culture, teamwork, trust, and reputation.  Good OB policies have been linked to employee productivity, firm profitability, and even firm survival.

Slide 1-27 Takeaways, Cont’d  A theory is a collection of assertions, both verbal and symbolic, that specifies how and why variables are related, as well as the conditions in which they should (and should not) be related.  A correlation is a statistic that expresses the strength of a relationship between two variables (ranging from 0 to 1).  A meta-analysis summarizes the results of several research studies. It takes the correlations from those research studies and calculates a weighted average to give more weight to studies with larger samples.