Chapter 1 A Strategic Approach To Organizational Behavior

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

2. George Zimmer Exploring Behavior in Action Strategic Use of Human Capital George Zimmer effectively uses his human capital. His company has a core set of beliefs: • 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 successfulthan similar businesses? Why do you think other businesses have not been able to imitate their success?

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 OrganizationalBehavior ManagingOrganizationalBehavior Strategic OBApproaches

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. Organizational Factors Organizational Success Productivity of Individuals and Groups Satisfaction of Individuals and Groups Individual Factors Interpersonal Factors Strategic Approach 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 • 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

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 • Design jobs, team structures, and reward systems • Negotiating • Group dynamics

10. Behavioral Science Disciplines Psychology CulturalAnthropology SocialPsychology 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. Steve Jobs 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? ExperiencingStrategic OB

16. Human Capital The sum of the skills, knowledge, and general attributes of the people in an organization

17. Competitive Advantage • Perform some aspect of its work better than competitors • Perform in a way that competitors cannot duplicate

18. Human Capital as Source of Competitive Advantage CompetitiveAdvantage HumanCapitalValue HumanCapitalImitability HumanCapitalRareness

19. 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 Overall Potential Are human resources in the firm . . . Adapted from Exhibit 1-2: Human Capital and Competitive Advantage

20. Skilled Labor Shortage ManagerialAdvice • 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)

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

23. Key Characteristics ProfitSharing Individual Incentive Systems GainSharing Individual Piece Rate Systems Knowledge and Skill-Based Pay • Selective Hiring • Extensive Training • Decision Power • Information Sharing • Incentive Compensation

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? ExperiencingStrategic OB

27. Questions