Organizational Behavior
Read this section for an overview of organizational behavior, defined as a systematic study of how individuals and groups act within the organizations where they work. As you read, think about how organizational behavior is related to organizational success. Also, look for the trends in organizational behavior (OB), since we will discuss these trends again in the course.
Understanding Organizational Behavior
Learning Objectives
- Learn about the layout of this book.
- Understand what organizational behavior is.
- Understand why organizational behavior matters.
- Learn about OB Toolboxes in this book.
About This Book
The people make the place.
- Benjamin Schneider, Fellow of the Academy of Management
This
book is all about people, especially people at work. As evidenced in
the opening case, we will share many examples of people making their
workplaces work. People can make work an exciting, fun, and productive
place to be, or they can make it a routine, boring, and ineffective
place where everyone dreads to go. Steve Jobs, cofounder, chairman, and
CEO of Apple Inc. attributes the innovations at Apple, which include the
iPod, MacBook, and iPhone, to people, noting, "Innovation has nothing
to do with how many R&D dollars you have.…It's not about money. It's
about the people you have, how you're led, and how much you get
it". This became a sore point with investors in early 2009 when Jobs took
a medical leave of absence. Many wonder if Apple will be as successful
without him at the helm, and Apple stock plunged upon worries about his
health.
Figure 1.2
![](https://learn.saylor.org/pluginfile.php/3776688/mod_book/chapter/31559/1.2.jpg)
Steve
Jobs is known for developing innovative products by hiring the right
people for the job and fostering a culture of hard work and creativity.
Mary
Kay Ash, founder of Mary Kay Inc., a billion-dollar cosmetics company,
makes a similar point, saying, "People are definitely a company's
greatest asset. It doesn't make any difference whether the product is
cars or cosmetics. A company is only as good as the people it
keeps".
Just
like people, organizations come in many shapes and sizes. We understand
that the career path you will take may include a variety of different
organizations. In addition, we know that each student reading this book
has a unique set of personal and work-related experiences, capabilities,
and career goals. On average, a person working in the United States
will change jobs 10 times in 20 years.U.S. Bureau of Labor Statistics.
(2005). In order
to succeed in this type of career situation, individuals need to be
armed with the tools necessary to be lifelong learners. So, this book
will not be about giving you all the answers to every situation you may
encounter when you start your first job or as you continue up the career
ladder. Instead, this book will give you the vocabulary, framework, and
critical thinking skills necessary for you to diagnose situations, ask
tough questions, evaluate the answers you receive, and act in an
effective and ethical manner regardless of situational characteristics.
Throughout
this book, when we refer to organizations, we will include examples
that may apply to diverse organizations such as publicly held,
for-profit organizations like Google and American Airlines, privately
owned businesses such as S. C. Johnson & Son Inc. (makers of Windex
glass cleaner) and Mars Inc. (makers of Snickers and M&Ms), and
not-for-profit organizations such as the Sierra Club or Mercy Corps, and
nongovernmental organizations (NGOs) such as Doctors Without Borders
and the International Red Cross. We will also refer to both small and
large corporations. You will see examples from Fortune 500 organizations
such as Intel Corporation or Home Depot Inc., as well as small start-up
organizations. Keep in mind that some of the small organizations of
today may become large organizations in the future. For example, in
1998, eBay Inc. had only 29 employees and $47.4 million in income, but
by 2008 they had grown to 11,000 employees and over $7 billion in
revenue. Regardless of the size or type of
organization you may work for, people are the common denominator of how
work is accomplished within organizations.
Together,
we will examine people at work both as individuals and within work
groups and how they impact and are impacted by the organizations where
they work. Before we can understand these three levels of organizational
behavior, we need to agree on a definition of organizational behavior.
What Is Organizational Behavior?
Organizational
behavior (OB) is defined as the systematic study and application of
knowledge about how individuals and groups act within the organizations
where they work. As you will see throughout this book, definitions are
important. They are important because they tell us what something is as
well as what it is not. For example, we will not be addressing childhood
development in this course - that concept is often covered in
psychology - but we might draw on research about twins raised apart to
understand whether job attitudes are affected by genetics.
OB
draws from other disciplines to create a unique field. As you read this
book, you will most likely recognize OB's roots in other disciplines.
For example, when we review topics such as personality and motivation,
we will again review studies from the field of psychology. The topic of
team processes relies heavily on the field of sociology. In the chapter
relating to decision making, you will come across the influence of
economics. When we study power and influence in organizations, we borrow
heavily from political sciences. Even medical science contributes to
the field of organizational behavior, particularly to the study of
stress and its effects on individuals.
Figure 1.3
![](https://learn.saylor.org/pluginfile.php/3776688/mod_book/chapter/31559/1.3.jpg)
OB spans topics related from the individual to the organization.
Those
who study organizational behavior - which now includes you - are
interested in several outcomes such as work attitudes (e.g., job
satisfaction and organizational commitment) as well as job performance
(e.g., customer service and counterproductive work behaviors). A
distinction is made in OB regarding which level of the organization is
being studied at any given time. There are three key levels of analysis
in OB. They are examining the individual, the group, and the
organization. For example, if I want to understand my boss's
personality, I would be examining the individual level of analysis. If
we want to know about how my manager's personality affects my team, I am
examining things at the team level. But, if I want to understand how my
organization's culture affects my boss's behavior, I would be
interested in the organizational level of analysis.
Why Organizational Behavior Matters
OB
matters at three critical levels. It matters because it is all about
things you care about. OB can help you become a more engaged
organizational member. Getting along with others, getting a great job,
lowering your stress level, making more effective decisions, and working
effectively within a team…these are all great things, and OB addresses
them!
It
matters because employers care about OB. A recent survey by the
National Association of Colleges and Employers (NACE) asked employers
which skills are the most important for them when evaluating job
candidates, and OB topics topped the list.
The following were the top five personal qualities/skills:
- Communication skills (verbal and written)
- Honesty/integrity
- Interpersonal skills (relates well to others)
- Motivation/initiative
- Strong work ethic
These are all things we will cover in OB.
Finally,
it matters because organizations care about OB. The best companies in
the world understand that the people make the place. How do we know
this? Well, we know that organizations that value their employees are
more profitable than those that do not.Huselid, M. A. (1995). The impact
of human resource management practices on turnover, productivity, and
corporate financial performance. Research shows that successful organizations have a
number of things in common, such as providing employment security,
engaging in selective hiring, utilizing self-managed teams, being
decentralized, paying well, training employees, reducing status
differences, and sharing information. For example, every Whole Foods store
has an open compensation policy in which salaries (including bonuses)
are listed for all employees. There is also a salary cap that limits the
maximum cash compensation paid to anyone in the organization, such as a
CEO, in a given year to 19 times the companywide annual average salary
of all full-time employees. What this means is that if the average
employee makes $30,000 per year, the highest potential pay for their CEO
would be $570,000, which is a lot of money but pales in comparison to
salaries such as Steve Jobs of Apple at $14.6 million or the highest
paid CEO in 2007, Larry Ellison of Oracle, at $192.9
million. Research shows that organizations
that are considered healthier and more effective have strong OB
characteristics throughout them such as role clarity, information
sharing, and performance feedback. Unfortunately, research shows that
most organizations are unhealthy, with 50% of respondents saying that
their organizations do not engage in effective OB practices.
In
the rest of this chapter, we will build on how you can use this book by
adding tools to your OB Toolbox in each section of the book as well as
assessing your own learning style. In addition, it is important to
understand the research methods used to define OB, so we will also
review those. Finally, you will see what challenges and opportunities
businesses are facing and how OB can help overcome these challenges.
Adding to Your OB Toolbox
Your OB Toolbox
OB Toolboxes appear throughout this book. They indicate a tool that you can try out today to help you develop your OB skills.
Throughout
the book, you will see many OB Toolbox features. Our goal in writing
this book is to create something useful for you to use now and as you
progress through your career. Sometimes we will focus on tools you can
use today. Other times we will focus on things you may want to think
about that may help you later. As you progress, you may discover some OB
tools that are particularly relevant to you while others are not as
appropriate at the moment. That's great - keep those that have value to
you. You can always go back and pick up tools later on if they don't
seem applicable right now.
The
important thing to keep in mind is that the more tools and skills you
have, the higher the quality of your interactions with others will be
and the more valuable you will become to organizations that compete for
top talent. It is
not surprising that, on average, the greater the level of education you
have, the more money you will make. In 2006, those who had a college
degree made 62% more money than those who had a high school degree.U.S.
Bureau of Labor Statistics. Organizations value and pay for skills as
the next figure shows.
Figure 1.4
![](https://learn.saylor.org/pluginfile.php/3776688/mod_book/chapter/31559/1.4.jpg)
Education and training have financial payoffs as illustrated by these unemployment and earnings for workers 25 and older.
Tom
Peters is a management expert who talks about the concept of
individuals thinking of themselves as a brand to be managed. Further, he
recommends that individuals manage themselves like free agents. The following
OB Toolbox includes several ideas for being effective in keeping up
your skill set.
Your OB Toolbox: Skill Survival Kit
- Keep your skills fresh. Consider revolutionizing your portfolio of skills at least every 6 years.
- Master something. Competence in many skills is important, but excelling at something will set you apart.
- Embrace ambiguity. Many people fear the unknown. They like things to be predictable. Unfortunately, the only certainty in life is that things will change. Instead of running from this truth, embrace the situation as a great opportunity.
- Network. The term has been overused to the point of sounding like a cliché, but networking works. This doesn't mean that having 200 connections on MySpace, LinkedIn, or Facebook makes you more effective than someone who has 50, but it does mean that getting to know people is a good thing in ways you can't even imagine now.
-
Appreciate new technology. This doesn't mean you should get and use
every new gadget that comes out on the market, but it does mean you need
to keep up on what the new technologies are and how they may affect you
and the business you are in.
A key step in building your OB skills and filling your toolbox is to learn the language of OB. Once you understand a concept, you are better able to recognize it. Once you recognize these concepts in real-world events and understand that you have choices in how you will react, you can better manage yourself and others. An effective tool you can start today is journaling, which helps you chart your progress as you learn new skills. For more on this, see the OB Toolbox below.
OB Toolbox: Journaling as a Developmental Tool
- What exactly is journaling? Journaling refers to the process of writing out thoughts and emotions on a regular basis.
- Why is journaling a good idea? Journaling is an effective way to record how you are feeling from day to day. It can be a more objective way to view trends in your thoughts and emotions so you are not simply relying on your memory of past events, which can be inaccurate. Simply getting your thoughts and ideas down has been shown to have health benefits as well such as lowering the writer's blood pressure, heart rate, and decreasing stress levels.
- How do I get started? The first step is to get a journal or create a computer file where you can add new entries on a regular basis. Set a goal for how many minutes per day you want to write and stick to it. Experts say at least 10 minutes a day is needed to see benefits, with 20 minutes being ideal. The quality of what you write is also important. Write your thoughts down clearly and specifically while also conveying your emotions in your writing. After you have been writing for at least a week, go back and examine what you have written. Do you see patterns in your interactions with others? Do you see things you like and things you'd like to change about yourself? If so, great! These are the things you can work on and reflect on. Over time, you will also be able to track changes in yourself, which can be motivating as well.
Isn't OB Just Common Sense?
As teachers we have heard this question many times. The answer, as you might have guessed, is no - OB is not just common sense. As we noted earlier, OB is the systematic study and application of knowledge about how individuals and groups act within the organizations where they work. Systematic is an important word in this definition. It is easy to think we understand something if it makes sense, but research on decision making shows that this can easily lead to faulty conclusions because our memories fail us. We tend to notice certain things and ignore others, and the specific manner in which information is framed can affect the choices we make. Therefore, it is important to rule out alternative explanations one by one rather than to assume we know about human behavior just because we are humans! Go ahead and take the following quiz and see how many of the 10 questions you get right. If you miss a few, you will see that OB isn't just common sense. If you get them all right, you are way ahead of the game!
Putting Common Sense to the Test
Please answer the following 10 questions by noting whether you believe the sentence is true or false.
- Brainstorming in a group is more effective than brainstorming alone.
- The first 5 minutes of a negotiation are just a warm-up to the actual negotiation and don't matter much.
- The best way to help someone reach their goals is to tell them to do their best.
- If you pay someone to do a task they routinely enjoy, they'll do it even more often in the future.
- Pay is a major determinant of how hard someone will work.
- If a person fails the first time, they try harder the next time.
- People perform better if goals are easier.
- Most people within organizations make effective decisions.
- Positive people are more likely to withdraw from their jobs when they are dissatisfied.
- Teams with one smart person outperform teams in which everyone is average in intelligence.
You may check your answers with your instructor.
Key Takeaway
This book is about people at work. Organizations come in many shapes and sizes. Organizational behavior is the systematic study and application of knowledge about how individuals and groups act within the organizations where they work. OB matters for your career, and successful companies tend to employ effective OB practices. The OB Toolboxes throughout this book are useful in increasing your OB skills now and in the future.
Exercises
-
Which type of organizations did you have the most experience with?
How did that affect your understanding of the issues in this chapter?
- Which skills do you think are the most important ones for being an effective employee?
- What are the three key levels of analysis for OB?
- Have you ever used journaling before? If so, were your experiences
positive? Do you think you will use journaling as a tool in the future?
- How do you plan on using the OB Toolboxes in this book? Creating a
plan now can help to make you more effective throughout the term.