1. A Strategic Approach To Organizational Behavior
Chapter 1
A Strategic Approach To Organizational Behavior
Michael A. Hitt
C. Chet Miller
Adrienne Colella

2. 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.
Explain the five characteristics of high-involvement management and the importance of this approach to management.

3. Basic Elements of Strategic 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 approach to OB
An approach that involves organizing and managing the people’s knowledge and skills effectively to implement the organization’s strategy and gain a competitive advantage.

4. Factors and Outcomes of Strategic Approach
Organizational Factors (culture, work environments, adaptability
Organizational Success
Satisfaction of Individuals and Groups
Productivity of Individuals and Groups
Individual Factors (learning ability, personality, values, motivation, stress)
Interpersonal Factors (leadership, communication, decision-making skill, intra- and inter-group dynamics, communication)
Adapted from: Exhibit 1.1 Factors and Outcomes of a Strategic Approach to Organizational Behavior

5. Strategic OB Lens Organization Level Activities Required Skills
Senior Managers
Talk with insiders and outsiders about
Vision
Strategy
Other major issues
Conceptualizing
Communicating
Understanding the perspectives of others
Help middle managers
Define and redefine their roles
Manage conflict
Listening
Conflict management
Negotiating
Motivating
Create and maintain the organization’s culture
Interpersonal influence

6. Strategic OB Lens Organization Level Activities Required Skills
Middle Managers
Champion strategic ideas
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

7. Strategic OB Lens Organization Level Activities Required Skills
Lower-level Managers
Coaching firm’s associates (workers)
Teaching
Listening
Understanding personalities
Managing stress
Removing obstacles for associates
Deal with personal problems of associates
Negotiating
Influencing others
Counseling
Understanding personalities
Design jobs, team structures, and reward systems
Negotiating
Group dynamics

8. Foundations of Strategic OB
Behavioral science disciplines
Psychology
Social psychology
Sociology
Economics
Cultural anthropology
Strategic approach integrates knowledge from all these disciplines
Strategic approach focuses on behaviors and processes that help to create competitive advantages and financial success (goal is to improve the outcomes of organizations)

9. Common Features of Organizations
Network of individuals
System
Coordinated activities
Division of labor
Goal orientation
Continuity over time, regardless of change in individual membership

10. Human Capital and Competitive Advantage
Human capital: The sum of the skills, knowledge, and general attributes of the people in an organization
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

11. Human Capital as Source of Competitive Advantage
Human Capital Value
Human Capital Imitability
Associates are capable of performing the basic work of the organization
Skills and talents of associates cannot be copied by other organizations
Human Capital Rareness
Skills and talents of associates are unique in the industry

12. Human Capital as Source of Competitive Advantage
Are human resources in the firm . . .
Valuable
Rare
Difficult to imitate
Supported by effective management
Competitive implications
Performance No
Competitive Disadvantage
Below Normal
Yes No
Competitive Parity
Normal
Yes
Yes No
Temporary Competitive Advantage
Above Normal
Yes
Yes
Yes
Sustained Competitive Advantage
Above Normal
Exhibit 1.2 Human Capital and Competitive Advantage
Source: Adapted from J. Barney and P. Wright, “On Becoming a Strategic Partner,” Human Resource Management 37 (1999): 31–46.

13. Dimensions of High-Involvement Management
Exhibit 1.3
Dimensions of High-Involvement Management
Aspect Description
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.
Exhibit 1.3 Dimensions of High-Involvement Management

14. Dimensions of High-Involvement Management
Exhibit 1.3
Dimensions of High-Involvement Management
Aspect Description
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.
Exhibit 1.3 Dimensions of High-Involvement Management

15. High-Involvement Managers
Identify situations in which responsibility can be delegated
Manage through encouragement and commitment rather than fear and threats
Respect and value each associate’s skills and knowledge
Empower people in ways that are consistent with their uniqueness as individuals
Invest effort in building and maintaining trust

16. Managing Organizational Behavior
Exhibit 1.4 Managing Organizational Behavior for Competitive Advantage