1. Chapter 1 A Strategic Approach To Organizational Behavior
Michael A. Hitt
C. Chet Miller
Adrienne Colella
Slides by Ralph R. Braithwaite

2. Strategic Use of Human Capital
George Zimmer effectively uses his human capital. His company has a core set of beliefs:
George Zimmer
Work should be fulfilling
Workplaces should be fearless and energized
Work and family life should be balanced
Leaders should serve followers
Employees should be treated like customers
People should not be afraid to make mistakes
What are your thoughts about these beliefs?
Why has Men’s Wearhouse been more successful than similar businesses? Why do you think other businesses have not been able to imitate their success?
Exploring Behavior in Action

3. Knowledge Objectives
Define organizational behavior and explain the strategic approach to OB.
Provide a formal definition of organization.
Describe the nature of human capital.
Discuss the conditions under which human capital is a source of competitive advantage for an organization.
Describe positive organizational behavior and explain how it can contribute to associates’ productivity.
Explain the five characteristics of high-involvement management and the importance of this approach to management.

4. Basic Elements of Strategic Organizational Behavior
Managing Organizational Behavior
Organizational behavior – the actions of individuals and groups in an organizational context
Managing organizational behavior – actions focused on acquiring, developing, and applying the knowledge and skills of people
Strategic OB approach – an approach that involves organizing and managing people’s knowledge and skills effectively to implement the organization’s strategy and gain a competitive advantage
Strategic OB Approaches

5. The Strategic Lens
Studying organizational behavior with a strategic lens is important because:
Helps to focus on major issues critical to the direction of the organization.
Helps with managing people at all levels of the organization.
Looks at the various skills needed to effectively manage the organization and its associates.

6. Strategic Approach Organizational Factors
Productivity of Individuals and Groups
Satisfaction of Individuals and Groups
Organizational Success
Individual Factors
Interpersonal Factors
Individual Factors (learning ability, personality, values, motivation, stress)
Interpersonal Factors (leadership, communication, decision-making skill, intra- and inter-group dynamics, communication)
Organizational Factors (culture, work environments, adaptability)
Adapted from Exhibit 1-1: Factors and Outcomes of a Strategic Approach to Organizational Behavior

7. Senior Managers Activities Skills
Discuss – vision, strategy, and other major issues
Conceptualizing
Communicating
Understanding the perspectives of others
Help middle managers define or redefine roles and manage conflict
Listening
Conflict management
Negotiating
Motivating
First set of activities come in on the mouse click but the others come in after the skills. Skills come in automatically after a few seconds.
Create and maintain the organization’s culture
Interpersonal influence

8. Middle Managers Activities Skills
Champion strategic ideas and help firm to remain adaptive
Networking
Communicating
Influencing
Process data and information for use by other individuals
Analyzing
Communicating
Deliver strategic initiatives to lower-level managers
Communicating
Motivating
Understanding values
Managing stress
First set of activities come in on the mouse click but the others come in after the skills. Skills come in automatically after a few seconds.

9. Lower-Level Managers Activities Skills
Coach the organization’s associates
Teaching
Listening
Understanding personalities
Managing stress
Remove obstacles for associates
Deal with personal problems of associates
Negotiating
Influencing others
Counseling
Understanding personalities
First set of activities come in on the mouse click but the others come in after the skills. Skills come in automatically after a few seconds.
Design jobs, team structures, and reward systems
Negotiating
Group dynamics

10. Behavioral Science Disciplines
Psychology
Cultural Anthropology
Social Psychology
Economics
Sociology

11. Foundations of Strategic OB
Strategic approach
Integrates knowledge from all these disciplines
Focuses on behaviors and processes – competitive advantage and financial success

12. Summary of Importance of OB
Complexities and subtleties in leveraging capabilities of people
Avoid allure of seeking simple answers to resolve organizational issues
Integrates important behavioral science knowledge within an organizational setting and emphasizes application

13. An Organization
A collection of individuals forming a coordinated system of specialized activities for the purpose of achieving certain goals over some extended period of time.

14. Common Features of Organizations
Network of individuals
System
Coordinated activities
Division of labor
Goal orientation
Continuity over time

15. Experiencing Strategic OB
Creating Innovation
Do you agree that Apple is the “creative king” as described by Business Week? Why or why not?
What can other companies learn from Apple’s approach?
Steve Jobs
Experiencing Strategic OB

16. Human Capital
The sum of the skills, knowledge, and general attributes of the people in an organization
Human capital: The sum of the skills, knowledge, and general attributes of the people in an organization. Does not depreciate in value as it is used. Need to acquire and hold onto a highly knowledgeable workforce.

17. Competitive Advantage
Perform some aspect of its work better than competitors
Perform in a way that competitors cannot duplicate
Competitive advantage: An advantage enjoyed by an organization that can perform some aspect of its work better than competitors or in a way that competitors cannot duplicate such that it offers products/services that are more valuable to customers.

18. Human Capital as Source of Competitive Advantage
Human Capital Value
Human Capital Imitability
Human Capital Rareness
Human Capital Value – The extent to which associates are capable of producing work that supports an organization’s strategy for competing in the marketplace
Human Capital Rareness – The extent to which the skills and talents of an organization’s people are unique in the industry
Human Capital Imitability – The extent to which the skills and talents of an organization’s people cannot be copied by other organizations

19. Overall Potential Are human resources in the firm . . . Valuable Rare
Difficult to imitate
Competitive implications
Performance No
---
Competitive Disadvantage
Below Normal
Yes
Competitive Parity
Normal
Temporary Competitive Advantage
Above Normal
Sustained Competitive Advantage
Supported by effective management
Adapted from Exhibit 1-2: Human Capital and Competitive Advantage

20. Skilled Labor Shortage
Managerial Advice
Skilled Labor Shortage
Thoughts on the global shortage of qualified managers?
Could Wipro’s approach to training work in other places? Give some examples.

21. Positive Organizational Behavior
Nurtures individuals’ greatest strengths
Helps people develop self-confidence, optimism and resiliency
Assists in the development of self-efficacy
Applies emotional intelligence (EQ)
Positive organizational behavior – focuses on nurturing individual’s greatest strengths and helping people use them to their and the organization’s advantage. Positive OB suggests that people will likely perform best when they have self-confidence, are optimistic (hope), and are resilient.

22. High-Involvement Management
Carefully selecting and training associates
Giving associates decision-making power, information, and compensation
Empowering people to use their unique knowledge and skills to:
work hard to serve the organization’s best interest
take on different tasks and gain skills needed to work in multiple capacities
work using their intellect as well as their hands
High-involvement management – involves carefully selecting and training associates and giving them significant decision-making power, information, and incentive compensation

23. Key Characteristics Selective Hiring Extensive Training Decision Power
Information Sharing
Incentive Compensation
Individual Piece Rate Systems
Individual Incentive Systems
Knowledge and Skill-Based Pay
Profit Sharing
Gain Sharing
Selective Hiring - Large pools of applicants are built through advertising, word of mouth, and internal recommendations. Applicants are evaluated rigorously using multiple interviews, tests, and other selection tools. Applicants are selected on the basis of not only skills but also fit with culture and mission.
Extensive Training - New associates and managers are thoroughly trained for job skills through dedicated training exercises as well as on-the-job training. They also participate in structured discussions of culture and mission. Existing associates and managers are expected or required to enhance their skills each year through in-house or outside training and development. Often, existing associates and managers are rotated into different jobs for the purpose of acquiring additional skills.
Decision Power – Associates are given authority to make decisions affecting their work and performance. Associates handle only those issues about which they have proper knowledge. Lower-level managers shift from closely supervising work to coaching associates. In addition to having authority to make certain decisions, associates participate in decisions made by lower-level and even middle managers.
Information Sharing – Associates are given information concerning a broad variety of operational and strategic issues. Information is provided through bulletin boards, company intranets, meetings, posted performance displays, and newsletters.
Incentive Compensation - Associates are compensated partly on the basis of performance. Individual performance, team performance, and business performance all may be considered.
Piece rate – compensated based on the amount produced or sold
Individual incentive – receive bonuses based on short-term or long-term performance
Knowledge or skill-based pay – paid based on the amount of knowledge or the number of skills associates acquire
Profit sharing – associates earn bonuses based on company profits
Gain sharing – associates share in a portion of savings generated from employee suggestions for improvement

24. Evidence of Effectiveness
Positive effect on performance of steel mini-mills
Flexible production methods in auto plants resulted in higher productivity
Firms that placed a high value on people had higher survival rates (longer than five years) after an IPO

25. Demands on Managers Seek situations for delegating responsibility
Need to trust associates not to abuse authority
Continuously think about human capital and competitive advantage

26. The Power of Human Capital
Any thoughts on Microsoft’s position, “the ideas that lead to better software come from human capital”? Why or why not?
While some believe Microsoft is monopolistic, the company has won awards for their commitment to diversity and flexible work arrangements. Thoughts?
Experiencing Strategic OB

27. Questions