Chapter 1 - What is Organizational Behaviour?
May-11-13 3:34 PM
After reading this chapter, you should be able to answer the following questions:
1.1 What is the definition of “organizational behaviour” (OB)?
1.2 What are the two primary outcomes in studies of OB?
1.3 What factors affect the two primary OB outcomes?
1.4 Why might firms that are good at OB tend to be more profitable?
1.5 What is the role of theory in the scientific method?
1.6 How are correlations interpreted?
What is Organizational Behaviour?
Organizational Behaviour: Field of study devoted to understanding,explaining, and ultimately improving the attitudes and behaviours of individuals and
groups in organizations
• OB can be contrasted with two other courses commonly offered in management departments:
1. human resources management
Field of study that focuses on the applications of OB theories and principles in organizations
An OB study might explore the relationship between learning and job performance, whereas a human resources management study might
examine the best ways to structure training programs to promote employee learning
2. strategic management
Field of study devoted to exploring the product choices and industry characteristics that affect an organization's profitability
For example, a strategic management study might examine the relationship between firm diversification (when a firm expands into a new
product segment) and firm profitability.
• The theories and concepts found in OB are actually drawn from a wide variety of disciplines.
• For example, research on job performance and individual characteristics draws primarily from studies in industrial and organizational psychology.
The Role of Management Theory
• A major influence on the way people viewed and thought about OB was the work of Frederick Taylor, the “father” of scientific management
○ Using scientific methods to design optimal and efficient work processes and tasks
• Another important contributor to the classical approach to management was Max Weber, most often associated with the term bureaucracy
○ An organizational form that emphasizes the control and coordination of its members through a strict chain of command, formal rules and
procedures, high specialization, and centralized decision making
○ Rather than focus on specific work processes, Weber looked at the entire organization.
○ For Weber, the bureaucratic form was a technically superior method of organizing, coordinating, and controlling human work activities
• Characteristics of bureaucracy included:
○ (1) the division of labour with a high level of technical specialization;
○ (2) a strict chain of command (authority hierarchy) in which every member reported to someone at a higher level in the organization;
○ (3) a system of formal rules and procedures that ensured consistency, impartiality, and impersonality throughout the organization; and
○ (4) decision making at the top of the organization.
Human Relations Movement
• Field of study that recognizes that the psychological attributesof individual workers and the social forces within work groups have important effects on
• In stark contrast to the classical approaches that stressed the importance of the formal organization and its functioning, the human relations movement
emerged as management scholars began to recognize that the psychological attributes of individual workers (e.g., needs, attitudes) and the social forces
within work groups had important effects on behaviours.
• A famous serious of studies, conducted between 1924 and 1933 at the Western Electric Company's Hawthorne plant, revealed the limitations with the
classic approach to management and organization.
• Today, contemporary management theory recognizes the dependencies between the classical approach and the human relations approach.
• We see this contingency approach reflected in a number of the theories and models of OB in which the consequences of situational characteristics (e.g.,
financial incentives, job design, assigned goals) are thought to depend on characteristics of the individual or vice versa.
• As you will see, OB—in all its forms—is the result of many different kinds of variables coming together.
Textbook Slides Page 1 Individual Outcomes
• The rightmost portion of the model contains the two primary outcomes of interest to organizationalbehaviour researchers (and employees and
managers in organizations):
○ job performance
○ organizational commitment
• Most employees have two primary goals for their working lives: to perform their jobs well and to remain members of an organization that they respect.
• Likewise, most managers have two primary goals for their employees: to maximize their job performance and to retain these employees for a significant
length of time.
• This book starts by covering job performance and organizationalcommitment so that you can better understand the two primary organizational
behaviour goals. (Chapters 2-3)
• Our integrative model also illustrates a number of individual mechanisms that directly affect job performance and organizational commitment. These
include job satisfaction, stress, motivations etc. (Chapters 4-8)
Individual Characteristics and Group Mechanisms
• Of course, if satisfaction, stress, motivation, and so forth are key drivers of job performance and organizational commitment, it becomes important to
understand what factors improve those individual mechanisms.
• In Chapter 9 we focus on several of key individual characteristics, such as personality, cultural values, and ability, and describe how these personal
attributes relate to job performance and organizationalcommitment
• Chapter 10 describes teams, diversity, and communication.
• In this chapter we explore the characteristics of effective teams, such as their norms, member roles, and the way members depend on and relate to one
• We also describe team processes that explain how groups and teams behave, as well as how members communicate and manage diversity.
• In Chapter 11, on power, influence, and negotiation, we first describe how individuals and leaders acquire power, and then we consider how power and
influence are used to negotiate outcomes and resolve the day-to-day conflicts that characterize organizational life.
• In Chapter 12, on leadership styles and behaviour, the discussion shifts how leaders behave and the conditions where different styles are appropriate to
• Finally, our integrative model acknowledges that individuals and groups function within an organizational context.
• Every company, for example, has an organizational structure that dictates how the units within the firm link to (and coordinate with) other units (Chapter
• Sometimes, structures are centralized around a decision-making authority; other times, structures are decentralized,affording each unit some autonomy.
• Chapter 14 looks at organizational culture and change
Does Organizational Behaviour Matter?
• OB has any bearing on its bottom-line profitability.
• After all, if a firm has a good-enough product, won't people buy it regardless of how happy, motivated, or committed its workforce is?
• Perhaps for a time, but effective OB can help keep a product good over the long term.
• This same argument can be made in reverse. If a firm has a bad-enough product, isn't it true that people won't buy it, regardless of how happy,
motivated, or committed its workforce is?
• Again, perhaps for a time, but the effective management of OB can help make a product get better, incrementally, over the long term.
• What we need instead is a logical conceptual argument that captures exactly why OB might affect the bottom line of an organization.
• One such argument is based on the resource-based view of organizations
Textbook Slides Page 2 • One such argument is based on the resource-based view of organizations
○ A model that argues that rare and inimitable resources help firms maintain competitive advantage
○ A firm's resources include not only financial (e.g., revenue, equity) and physical (e.g., buildings, machines, technology) resources, but also resources
related to organizational behaviour, such as the knowledge, decision making, ability, and wisdom of the workforce, as well as the image, culture,
and goodwill of the organization.
○ Good people are also rare—witness the adage “Good people are hard to find.”
○ Ask yourself what percentage of the people you have worked with have been talented, motivated, satisfied, and good team players.
○ In many organizations,cities, or job markets, such employees are the exception rather than the rule.
○ If good people really are rare, then the effective management of OB should prove to be a valuable resource.
• What makes a resource valuable?
• Rare = In short Supply
• Inimitable = Incapable of being imitated or copied
• A new form of technology can help a firm gain an advantage for a short time, but what happens when a competing firm adopts the same technology?
• Many of a firm's resources can be imitated, though it is sometimes expensive.
• Manufacturingpractices can be copied, building layouts can be mimicked, equipment and tools can be approximated.
• Good people, in contrast, are much more difficult to imitate.
• Why are people difficultto imitate?
People create a history—a collective pool of experience, wisdom, and knowledge that benefits the organization. History cannot be bought.
○ Numerous Small Decisions
The concept of numerous small decisions captures the idea that people make many small decisions day in and day out, week in and week out.
Large decision can be copied, small decisions can't
○ Socially Complex Resources
People are the source of socially complex resources, such as culture, teamwork, t