1. Chapter 1 Introduction to Organizational Behavior

2. Chapter Objectives
Define organizational behavior and explain how and why it determines the effectiveness of an organization
Appreciate why the study of organizational behavior improves a person’s ability to understand and respond to events that take place in a work setting
Differentiate between the three levels at which organizational behavior is examined

3. Chapter Objectives
Appreciate the way changes in an organization’s external environment continually create challenges for organizational behavior
Describe the four main kinds of forces in the environment that post the most opportunities and problems for organizations today

4. IKEA’s Global Approach to OB
IKEA strives to increase employees’ skills and knowledge
IKEA provides employees with rewards that encourage high performance
IKEA encourages employee commitment and cooperation
The opening case describes IKEA’s successful approach to organizational behavior. IKEA is the largest furniture chain in the world. IKEA follows a no-frills approach. Most managers rose through the ranks and there are no executive dining rooms. Everyone dresses casually. Each year, IKEA holds a “breaking the bureaucracy week” during which time executives are required to do store and warehouse work.
IKEA offers opportunities for promotion, training, above-average pay, generous bonus system, and personal well-being for committed employees.

5. What is an Organization?
An organization is a collection of people who work together to achieve individual and organizational goals
Individual goals
Organizational goals
Individual goals are what people are trying to accomplish for themselves such as earning a lot of money, achieving power and prestige, and enjoying work.
Organizational goals are what the organization as a whole is trying to accomplish such as providing innovative products and services to customers, making a profit, and achieving high levels of market share.

6. What is Organizational Behavior?
Organizational behavior (OB): the study of factors that have an impact on how people and groups act, think, feel, and respond to work and organizations, and how organizations respond to their environments
OB is important to study because most people will work for or with someone else at some point and will be affected both positively and negatively by their experiences at work.
OB provides a framework for understanding and appreciating the many forces that affect behavior.
OB helps us understand questions like:
Why are some motivated to join an organization while others are not?
Why do some people feel good or bad about their jobs?
Why do some people stay with an organization for 30 years while others change jobs regularly?

7. Figure 1.1 What is Organizational Behavior?
Insert Figure 1.1 here
Figure 1.1 illustrates how organizational behavior concepts and theories allow people to correctly understand, describe, and analyze the characteristics of individuals, groups, work situations, and the organization itself. 4

8. Figure 1.2 Levels of Analysis
Group Level
Individual
Level
Organizational Level
Organizational behavior can be examined at 3 levels: organizational, group, and individual.
OB is particularly important to managers.

9. Figure 1.3 Components of Organizational Behavior
Figure 1.3 illustrates how the text covers the three levels of organizational behavior. Part I includes chapters 2-9. Part 2 includes chapters Part 3 includes chapters

10. What is Management?
Management is the process of planning, organizing, leading, and controlling an organization’s human, financial, material, and other resources to increase its effectiveness
Managers are in a good position to improve their managerial abilities by understanding organizational behavior.

11. Figure 1.4 Four Functions of Management
Planning
Decide on organizational goals
and allocate and use
resources to
achieve those goals
Organizing
Establish the rules and
reporting relationships that
allow people to
achieve organizational goals
Controlling
Evaluate how well the
organization is achieving goals
and take action to
maintain, improve, and correct
performance
Leading
Encourage and coordinate
individuals and groups
so that they work
toward organizational goals
OB and Planning: The study of OB reveals how decisions are made in organizations and how politics and conflict affect the planning process. It shows how group decision making and biases can affect planning.
OB and Organizing: OB offers guidelines on how to organize employees to make the best use of their skills and capabilities.
OB and Leading: The study of different leadership methods and of how to match leadership style to the characteristics of the organization and all its components is a major concern of OB.
OB and Controlling: The theories and concepts of organizational behavior allow managers to understand and accurately diagnose work situations in order to pinpoint where corrective action may be needed. 7

12. Table 1.1: Mintzberg’s Managerial Roles
Leader
Monitor
Spokesperson
Disturbance handler
Negotiator
Figurehead
Liaison
Disseminator
Entrepreneur
Resource allocator
A role is a set of behaviors or tasks a person is expected to perform because of the position he or she holds in a group or organization. 8

13. Managerial Skills Conceptual Skills Technical Skills Human Skills
A skill is an ability to act in a way that allows a person to perform well in his or her role.
Managers need all three types of skills to perform their organizational functions and roles effectively.
Conceptual Skills refer to the ability to analyze and diagnose a situation and distinguish between cause and effect.
Human Skills refer to the ability to understand, work with, lead, and control the behavior of other people and groups.
Technical Skills refer to job-specific knowledge and techniques. 9

14. Figure 1.5 An Open Systems View of Organizational Behavior
In an open system, an organization takes in resources from its external environment and converts or transforms them into goods and services that are sent back to that environment, where they are bought by customers.
The activities of most organizations can be modeled using the open-systems view.
Consider asking students to apply the open systems model to a company’s processes.
The system is said to be open because the organization draws from and interacts with the external environment to secure resources, transform them, and then sell the products created to customers.

15. Challenges for Organizational Behavior
1: Changing Social/ Cultural Environment
2: Evolving Global Environment
3: Advancing Information Technology
4: Shifting Work/ Employment Relationships

16. Changing Social and Cultural Environment
National culture
Organizational ethics and well-being
Diverse work force
The first challenge is the changing social and cultural environment. Forces in the social and cultural environment are those that are due to changes in the way people live and work – changes in values, attitudes, and beliefs brought about by changes in a nation’s culture and the characteristics of its people.
National culture is the set of values or beliefs that a society considers important and the norms of behavior that are approved or sanctioned in that society. Over time, national cultures change and this affects the values and beliefs of each nation’s members.
Ethics scandals have hit many companies recently including Tyco, Adelphia, Enron, and Arthur Andersen. An organization’s ethics are the values, beliefs, and moral rules its managers and employees should use to analyze or interpret a situation and then decide what is the most appropriate way to behave. Ethical organizational behavior affects the well-being (happiness, health, and prosperity) of a nation, an organization, citizens, and employees. Metabolife International’s use of ephedra in its supplements is used as an example in the text.
Ethics also define an organization’s social responsibility – its obligations toward people or groups outside the organization that are directly affected by its actions.

17. Diversity Challenges Fairness and Justice
Decision-Making and Performance
Flexibility
Diversity is differences resulting from age, gender, race, ethnicity, religion, sexual orientation, and socioeconomic background, and capabilities/ disabilities. The increasing diversity of the work force presents three challenges for organizations and their managers: a fairness and justice challenge, a decision-making and performance challenge, and a flexibility challenge.
A goal to increase diversity can strain an organization’s ability to satisfy the aspirations of at least part of its work force. Actively recruiting and promoting minorities can lead to difficult equity issues.
How can organizations benefit from the attitudes and perspectives of people with diverse backgrounds?
The third diversity challenge is to be sensitive to the needs of different kinds of employees and to try to develop flexible employment approaches that increase their well-being. Examples include new benefits packages customized to needs of different groups of employees (e.g., domestic partner benefits), flextime, job sharing, and mentoring.

18. Figure 1.6 Diversity
Figure 1.6 illustrates the characteristics used to define the bases of diversity.

19. Evolving Global Environment
Understanding Global Differences
Improve Organization’s Behaviors and Procedures in Response to Those Differences
The challenge of responding to social and cultural forces increases as organizations expand their operations globally.
Global organizations like GM, Toyota, Kokia, PepsiCo, and Sony produce or sell their products in countries throughout the world.
Global organizations must appreciate the differences between countries and benefit from the knowledge to improve an organization’s behaviors and procedures.
People in different countries have different values, beliefs, and attitudes.
Global organizations must find ways to design processes to fit each culture while maintaining fairness and flexibility.
Global learning is the process of acquiring and learning the skills, knowledge, and organizational behaviors and procedures from global situations. More companies are rotating their employees to overseas operations so they can learn firsthand the problems and opportunities that lie abroad. Expatriate employees are employees who live and work for companies located abroad.

20. Advancing Information Technology
Knowledge
Information Technology
Organizational Learning
Intranets
Creativity
Innovation
Information is a set of data, facts, numbers, and words that has been organized in such a way as to provide its users with knowledge.
Knowledge is what a person perceives, recognizes, identifies, or discovers from analyzing data and information.
IT consists of the many different kinds of computer and communications hardware and software and the skills designers, programmers, managers, and technicians bring to it. IT is used to acquire, define, input, arrange, organize, manipulate, store, and transmit facts, data, and information to create knowledge and promote organizational learning.
Organizational learning occurs when members can manage information and knowledge to achieve a better fit between the organization and its environment.
Intranets are networks of IT inside an organization that links its members.
Creativity is the generation of novel and useful ideas.
Innovation is an organization’s ability to make new or improved goods and services or improvements in the way they are produced.

21. Shifting Work/ Employment Relationships
Downsizing
Empowerment and Self-Managed Teams
Contingent Workers
Outsourcing
Downsizing is the process by which organizations lay off managers and workers to reduce costs
Empowerment is the process of giving employees throughout an organization the authority to make important decisions and be responsible for their outcomes.
Self-managed team are work groups who have been empowered and given the responsibility for leading themselves and ensuring that they accomplish their goals.
Contingent workers are people who are employed for temporary periods by an organization and who receive no benefits such as health insurance or pensions.
Outsourcing is the process of employing people and groups outside the organization to perform specific jobs or types of work activities that used to be performed by the organization itself. This is accomplished sometimes by freelancers – independent individuals who contract with an organization to perform specific tasks.

22. Appendix 1A: A Short History of Organizational Behavior
F.W. Taylor and Scientific Management
Mary Parker Follett
Hawthorne Studies
Theory X and Y
The systematic study of OB began in the closing decades of the nineteenth century after the industrial revolution.

23. F.W. Taylor and Scientific Management
Scientific management: the systematic study of relationships between people and tasks for the purpose of redesigning the work process to increase efficiency
The amount of and effort each employee expends to produce a unit of output can be reduced by increasing specialization and the division of labor
Frederick Taylor ( ) is best known for defining the techniques of scientific management. Taylor was a manufacturing manager who eventually became a consultant and taught other managers how to apply the principles of scientific management.

24. Four Principles of Scientific Management
1. Study the way employees perform their tasks, gather informal job knowledge that employees possess, and experiment with ways of improving the way tasks are performed
2. Codify the new methods of performing tasks into written rules and standard operating procedures
To discover the most efficient method of performing specific tasks, Taylor studied and measured the ways different employees went about performing their tasks. He used time and motion studies. Once he understood the existing method of performing a task, he would experiment with ways to increase specialization.
He advocated that once the best method was found for performing a particular task, it should be recorded so that it could be taught to all employees performing the same task.

25. Four Principles of Scientific Management_2
3. Carefully select employees so that they possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures
4. Establish an acceptable level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level
Employees who could not be trained to the level required were transferred to a job where they were able to reach the minimum required level of proficiency.
Taylor advocated that employees should benefit from any gains in performance. They should be paid a bonus and receive some percentage of the performance gains achieved through the more efficient work process.

26. Mary Parker Follett Management must consider the human side
Employees should be involved in job analysis
Person with the knowledge should be in control of the work process regardless of position
Cross-functioning teams used to accomplish projects
Mary Parker Follett ( ) was concerned that Taylor was ignoring the human side of the organization. Her approach was very radical for the time.

27. The Hawthorne Studies
Hawthorne Works of the Western Electric Company;
Initiated as an attempt to investigate how characteristics of the work setting affect employee fatigue and performance (i.e., lighting)
Found that productivity increased regardless of whether illumination was raised or lowered
The Hawthorne Studies refers to a series of studies conducted from 1924 to 1932 at the Hawthorne Works of the Western Electric Company. The study was initiated to investigate how the level of lighting would affect employee fatigue and performance. The researchers conducted an experiment in which they systematically measured employee productivity at various levels of illumination. However, no matter whether the lighting was raised or lowered, productivity increased. The researchers were puzzled and invited Elton Mayo to assist them.
Mayo proposed the use of the relay assembly test to investigate other aspects of the work context on job performance. Eventually, they found that the employees were responding to the increased attention from the researchers.
The Hawthorne Effect suggested that the attitude of employees toward their managers affects the employees’ performance.

28. The Hawthorne Studies_2
Factors influencing behavior:
Attention from researchers
Manager’s leadership approach
Work group norms
The “Hawthorne Effect”
Elton Mayo and F.J. Roethlisberger found that employees adopted norms of output to protect their jobs. Those who performed above the norms were called ratebusters and those who performed below the norms were called chisellers. Workgroup members discipline both in order to create a fair pace of work.

29. Douglas McGregor: Theory X and Theory Y
Average employee is lazy, dislikes work, and will try to do as little as possible
Manager’s task is to supervise closely and control employees through reward and punishment
Theory Y
Employees will do what is good for the organization when committed
Manager’s task is create a work setting that encourages commitment to organizational goals and provides opportunities for employees to be exercise initiative
Several studies after World War II revealed how assumptions about employees’ attitudes and behavior affect managers’ behaviors. Douglas McGregor proposed that two different sets of assumptions about work attitudes and behaviors dominate the way managers think and affect how they behave in organizations.