Chapter

What is Organizational Behavior?

Slide 1-1 Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

Copyright 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Learning Goals
What is the definition of organizational behavior (OB)? What are the two primary outcomes in studies of OB? What factors affect the two primary OB outcomes? Why might firms that are good at OB tend to be more profitable? What is the role of theory in the scientific method? How are correlations interpreted?
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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?

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The Best of Coworkers, the Worst of Coworkers

Table 1-1

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Organizational Behavior Defined

Organizational behavior (OB) is the field of study devoted to understanding, explaining, and ultimately improving the attitudes and behaviors of individuals and groups in organizations. Human resource management takes the theories and principles studies in OB and explores the nutsand-bolts applications of those principles in organizations. Strategic management focuses on the product choices and industry characteristics that affect an organization's profitability.
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OB Foundations
Theories and concepts in OB are drawn from a wide variety of disciplines
Industrial and organizational psychology
Job performance and individual characteristics

Social psychology
Satisfaction, emotions, and team processes

Sociology
Team characteristics and organizational structure

Economics
Motivation, learning, and decision making
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Integrative Model of Organizational Behavior

Individual Outcomes
Job performance (Chapter 2) Organizational commitment (Chapter 3)

Individual Mechanisms
Job satisfaction (Chapter 4) Stress (Chapter 5) Motivation (Chapter 6) Trust, justice, and ethics (Chapter 7) Learning and decision making (Chapter 8)
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Integrative Model of Organizational Behavior, contd

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)
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Integrative Model of OB

Figure 1-1

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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

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

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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
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What Makes a Resource Valuable?

Figure 1-2

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Research Evidence
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 There is no magic bullet OB practice one thing that, in-and-of itself, can increase profitability
Rule of one-eighth OB on Screen
Office Space

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Survey Questions Designed to Assess High Performance Work Practices

Table 1-2

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Some of the 100 Best Companies to Work For in 2009

Table 1-3

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How Do We Know
Method of Experience People hold firmly to some belief because it is consistent with their own experience and observations. Method of Intuition People hold firmly to some belief because it just stands to reasonit seems obvious or selfevident. Method of Authority People hold firmly to some belief because some respected official, agency, or source has said it is so. Method of Science People accept some belief because scientific studies have tended to replicate that result using a series of samples, settings, and methods.
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Scientific Studies
Theory
A collection of assertionsboth verbal and symbolic that specify how and why variables are related, as well as the conditions in which they should (and should not) be related Tells a story and supplies the familiar who, what, where, when, and why elements found in any newspaper or magazine article

Hypotheses
Written predictions that specify relationships between variables

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The Scientific Method

Figure 1-3

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Scientific Studies, contd

Correlation (r)
Describes the statistical relationship between two variables Can be positive or negative and range from 0 (no statistical relationship) to 1 (a perfect statistical relationship)

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Different Correlation Sizes

Figure 1-4

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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 drivethrough time nine months later versus 62 seconds for the 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 nine months later.
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Establishing Relationships
It turns out that making causal inferences establishing that one variable really does cause another requires establishing three things.
The two variables are correlated. The presumed cause precedes the presumed effect in time. No alternative explanation exists for the correlation.
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Notable Correlations

Table 1-4

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Meta-analysis
The best way to test a theory is to conduct many studies, each of which is as different as possible from the ones that preceded it. Meta-analysis takes 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 are weighted more 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. Form the foundation for evidence-based management a perspective that argues that scientific findings should form the foundation for management education, much as they do for medical education.
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Takeaways
Organizational behavior is a field of study devoted to understanding and explaining the attitudes and behaviors of individuals and groups in organizations. More simply, it focuses on why individuals and groups in organizations act the way they do. The two primary outcomes - job performance and organizational commitment.
A number of factors affect performance and commitment, including individual mechanisms, individual characteristics, group mechanisms, and organizational mechanisms.
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Takeaways, Contd
The effective management of organizational behavior 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.

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Takeaways, Contd
A theory is a collection of assertions, both verbal and symbolic, that specifies how and why variables are related, as well as the conditions in which they should (and should not) be related. Theories about organizational behavior are built from a combination of interviews, observation, research reviews, and reflection. Theories form the beginning point for the scientific method and inspire hypotheses that can be tested with data. 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, and a .10 correlation is considered weak.
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