Chapter 1 A Strategic Approach To Organizational Behavior
Michael A. Hitt C. Chet Miller Adrienne Colella Slides by R. Dennis Middlemist
Knowledge Objectives 1. 2. 3. 4. 5.
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. Explain the five characteristics of high-involvement management and the importance of this approach to management.
Basic Elements of Strategic Organizational Behavior
Organizational behavior –
Managing organizational behavior –
The actions of individuals and groups in an organizational context. Actions focused on acquiring, developing, and applying the knowledge and skills of people.
Strategic Approach to OB –
An approach that involves organizing and managing the people’s knowledge and skills effectively to implement the organization’s strategy and gain a competitive advantage.
Factors and Outcomes of Strategic Approach Organizational OrganizationalFactors Factors (culture, (culture,work work environments, environments,adaptability adaptability
Organizational OrganizationalSuccess Success
Satisfaction Satisfactionof of Individuals Individualsand and Groups Groups
Productivity Productivityof of Individuals Individualsand and Groups Groups
Individual IndividualFactors Factors(learning (learning ability, ability,personality, personality,values, values, motivation, motivation,stress) stress)
Adapted from: Exhibit 1.1 Factors and Outcomes of a Strategic Approach to Organizational Behavior
Interpersonal InterpersonalFactors Factors (leadership, (leadership,communication, communication, decision-making decision-makingskill, skill,intraintraand andinter-group inter-groupdynamics, dynamics, communication) communication)
Strategic OB Lens Organization Level
Senior Managers
Activities
Required Skills
• Talk with insiders and outsiders about • Vision • Strategy • Other major issues
• Conceptualizing • Communicating • understanding the perspectives of others
• Help middle managers • Define and redefine their roles • Manage conflict
• • • •
• Create and maintain the organization’s culture
• Interpersonal influence
Listening conflict management Negotiating Motivating
Strategic OB Lens Organization Level
Middle
Activities
Required Skills
• Champion’ strategic ideas • Help firm to remain adaptive
• Networking • Communicating • Influencing
• Process data and Managers information for use by other individuals
• Analysis • Communication
• Communicating • Deliver strategic initiatives to lower-level • Motivating managers • Understanding values • Managing stress
Strategic OB Lens Organization Level
Activities
Required Skills
• Coaching firm’s associates (workers)
• • • •
Teaching Listening Understanding personalities Managing stress
• • • •
Negotiating Influencing others Counseling Understanding personalities
• Removing obstacles for associates • Deal with personal Lower-level Managers problems of associates • Design jobs, teams structures and reward systems
• Negotiating • Group dynamics
Foundations of Strategic OB
Behavioral science disciplines – – – – –
Psychology Social psychology Sociology Economics Cultural anthropology
Strategic approach integrates knowledge from all these disciplines Strategic approach focuses on behaviors and processes that help to create competitive advantages and financial success (goal is to improve the outcomes of organizations)
Common Features of Organizations
Network of individuals System Coordinated activities Division of labor Goal orientation Continuity over time, regardless of change in individual membership
Human Capital and Competitive Advantage ď Ź
ď Ź
Human capital: The sum of the skills, knowledge, and general attributes of the people in an organization Competitive advantage: An advantage enjoyed by an organization that can perform some aspect of its work better than competitors or in a way that competitors cannot duplicate such that it offers products/services that are more valuable to customers
Human Capital as Source of Competitive Advantage Competitive Advantage Human Capital Value
Human Capital Imitability
Associates are capable of performing the basic work of the organization
Skills and talents of associates cannot be copied by other organizations
Human Capital Rareness Skills and talents of associates are unique in the industry
Human Capital as Source of Competitive Advantage Are human resources in the firm . . . Valuable
Supported by Difficult to effective imitate management
Competitive implications
Performance
Competitive Disadvantage
Below Normal
No
Competitive Parity
Normal
Yes
No
Temporary Competitive Advantage
Above Normal
Yes
Sustained Competitive Advantage
Above Normal
Rare
No Yes
Yes
Yes
Yes
Exhibit 1.2 Human Capital and Competitive Advantage Source: Adapted from J. Barney and P. Wright, “On Becoming a Strategic Partner,” Human Resource Management 37 (1999): 31–46.
Dimensions of High-Involvement Management Exhibit 1.3 Aspect
Dimensions of High-Involvement Management Description
Selective Hiring
Large pools of applicants are built through advertising, word of mouth, and internal recommendations. Applicants are evaluated rigorously using multiple interviews, tests, and other selection tools. Applicants are selected on the basis of not only skills but also fit with culture and mission.
Extensive Training
New associates and managers are thoroughly trained for job skills through dedicated training exercises as well as on-the-job training. They also participate in structured discussions of culture and mission. Existing associates and managers are expected or required to enhance their skills each year through in-house or outside training and development. Often, existing associates and managers are rotated into different jobs for the purpose of acquiring additional skills.
Exhibit 1.3 Dimensions of High-Involvement Management
Dimensions of High-Involvement Management Exhibit 1.3 Aspect
Dimensions of High-Involvement Management Description
Decision Power
Associates are given authority to make decisions affecting their work and performance. Associates handle only those issues about which they have proper knowledge. Lower-level managers shift from closely supervising work to coaching associates. In addition to having authority to make certain decisions, associates participate in decisions made by lower-level and even middle managers.
Information Sharing Associates are given information concerning a broad variety of operational and strategic issues. Information is provided through bulletin boards, company intranets, meetings, posted performance displays, and newsletters. Incentive Compensation
Associates are compensated partly on the basis of performance. Individual performance, team performance, and business performance all may be considered.
Exhibit 1.3 Dimensions of High-Involvement Management
High-Involvement Managers High-involvement managers:
Identify situations in which responsibility can be delegated Manage through encouragement and commitment rather than fear and threats Respect and value each associate’s skills and knowledge Empower people in ways that are consistent with their uniqueness as individuals. Invest effort in building and maintaining trust
The Strategic Lens
Exhibit 1.4 Managing Organizational Behavior for Competitive Advantage