What is Organizational Behavior?

1. What is Organizational Behavior? 1

2. Learning Goals • Definition of “organizational behavior” (OB) • Primary outcomes in studies of OB • Factors that affect the two primary OB outcomes • Why firms that are good at OB tend to be more profitable • Role of theory in the scientific method • Interpretation of correlations

3. Discussion Questions • 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?

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

5. Organizational Behavior Defined • Organizational behavior (OB) – the field of study devoted to understanding, explaining, and improving the attitudes and behaviors of individuals and groups in organizations. • Human resource management takes the theories and principles studied in OB and explores the application of those principles in organizations. • Strategic management focuses on the product choices and industry characteristics that affect an organization's profitability.

6. OB Foundations • OB theories and concepts are drawn from a wide variety of disciplines • Industrial/organizational psychology • Social psychology • Sociology • Anthropology • Economics

7. Integrative Model of Organizational Behavior • Individual Outcomes • Job performance (Chapter 2) • Organizational commitment (Chapter 3) • Individual Mechanisms • Job satisfaction (Chapter 4) • Motivation (Chapter 6) • Trust, justice, and ethics (Chapter 7) • Learning and decision making (Chapter 8)

8. Integrative Model of Organizational Behavior, cont’d • Individual Characteristics • Personality and cultural values (Chapter 9) • Ability (Chapter 10) • Group Mechanisms • Teams: characteristics and diversity (Chapter 11) • Teams: processes and communication (Chapter 12) • Leadership: power and negotiation (Chapter 13) • Leadership: styles and behaviors (Chapter 14) • Organizational Mechanisms • Organizational structure (Chapter 15) • Organizational culture (Chapter 16)

9. Figure 1-1 Integrative Model of OB

10. Does Organizational Behavior Matter? • Resource-based view • Financial resources (revenue, equity) • Physical resources (buildings, machines, technology) • Knowledge, decision-making, culture, ability, wisdom • Image, culture, goodwill

11. Discussion Question • Is it really the people that make some companies more profitable than others?

12. What Makes a Resource Valuable? • 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, reputation

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

14. Research Evidence • Good OB practices were associated with better firm performance • Firms that valued OB had a 19% higher survival rate than firms that did not value OB • Good people comprise a valuable resource for companies • No “magic bullet” OB practice – no one thing that, in-and-of itself, can increase profitability

15. Table 1-3 Some of the “100 Best Companies to Work For” in 2009

16. 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 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.

17. Establishing Relationships • Making causal inferences— requires establishing three things • The two variables are correlated • The presumed cause precedes the presumed effect in time • No plausible alternative explanation exists

18. Meta-analysis • The best way to test a theory is to conduct many studies, each of which is as different as possible from those that preceded it. • Meta-analysistakes 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 have more weight 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.” • Forms the foundation for evidence-based management

19. Takeaways • OB – devoted to understanding and explaining the attitudes and behaviors of individuals and groups in organizations. • Focuses on why individuals and groups in organizations act the way they do. • Primary outcomes - job performance and organizational commitment • Factors affecting these include: • Individual mechanisms • Individual characteristics • Group mechanisms • Organizational mechanisms.

20. Takeaways, cont’d • Effective management of OB 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.

21. Takeaways, cont’d • A theory is • A collection of assertions, verbal and symbolic • Specifies how and why variables are related • Specifies conditions in which these variables should (and should not) be related • Theories about organizational behavior • Built from a combination of interviews, observation, research reviews, and reflection • Form the beginning point for the scientific method • Inspire hypotheses that can be tested with data

22. Takeaways, cont’d • A correlation is a statistic that expresses the strength of a relationship between two variables (ranging from 0 to ± 1) • In OB research… • A.50 correlation is considered “strong” • A.30 correlation is considered “moderate” • A.10 correlation is considered “weak”