Organizational Behavior – Securing Competitive Advantage

By John A. Wagner and John R. Hollenbeck

Chapter One – Organizational Behavior and Competitive Advantage

Organizational Behavior (OB) is a field of study aimed at predicting, explaining, understanding,
and changing human behavior as it occurs in organizations. Understanding this definition of
organizational behavior are three important considerations:
1. Organizational behavior focuses on observable behaviors. However, it also deals with
internal actions, such as thinking, perceiving, and deciding, that accompany visible
actions.
2. Organizational behavior studies the behavior of people both as individuals and as
members of larger social units.
3. Organizational behavior also analyzes the “behavior” of these larger social units – groups
and organizations – per se.

Micro organizational behavior is concerned mainly with the behaviors of individuals working
alone. Three sub-fields of psychology were the principal contributors to the beginnings of micro
organizational behavior. Experimental psychology provided theories of learning, motiviation,
perception and stress. Clinical psychology furnished models of personality and human
development. Industrial psychology offered theories of employee selection, workplace attitudes,
and performance assessment.
Meso organizational behavior is a middle ground, bridging the other two sub fields of
organizational behavior. It focuses primarily on understanding the behaviors of people working
together in teams and groups. It grew out of research in the fields of communication, social
psychology, and interactionist sociology, which provided theories on such topics as socialization,
leadership, and group dynamics.
Macro organizational behavior focuses on understanding the behaviors of entire organizations.
The origins can be traced to four principal disciplines. Sociology provided theories of structure,
social status, and institutional relations. Political science offered theories of power, conflict,
bargaining and control. Anthropology contributed theories of symbolism, cultural influence and
comparative analysis. And economics furnished theories of competition and efficiency.

1890-1940: The Scientific Management Perspective

Frederick W. Taylor’s Principles of Scientific Management
1. Assign all responsibility for the organization of work to managers rather than workers
2. Use scientific methods to determine the one best way of performing each task
3. Select the person most suited to each job to perform that job
4. Train the worker to perform the job correctly
5. Monitor work performance to ensure that specified work procedures are followed
 correctly and that appropriate results are achieved
6. Provide further support by planning work assignments and eliminating work interruptions
Frank and Lillian Gilbreth – invented motion study, a procedure in which jobs are reduced to
their most basic movements.
Henry Gantt – developed a task and bonus wage plan that paid workers a bonus if the completed
their work in an assigned amount of time.

1900-1950: The Administrative Principles Perspective

Henri Fayol’s 14 Principles of Management

• Division of work – A firm’s work should be divided into specialized, simplified tasks.
Matching task demands with workforce skills and abilities will improve productivity. The
management of work should be separated from its performance.
• Authority – Authority is the right to give orders and the responsibility to accept the
consequences of using authority. No one should possess one without the other.
• Discipline – Discipline is performing a task with obedience and dedication. It can be
expected only when a firm’s managers and subordinates agree on the specified tasks that
subordinates will perform.
• Unity of command – Each subordinate should receive orders from only one hierarchical
superior.
• Unity of direction – Each group of activities directed toward the same objective should
have only one manager and only one plan.
• Individual versus general interests – The interests of individuals and those of the whole
organization must be treated with equal respect. Neither can be allowed to supersede the
other.
• Remuneration of personnel – The pay received by employees must be fair and
satisfactory to both them and the firm. Pay should be in proportion to personal
performance, but employees’ general welfare must not be threatened by unfair incentive
payment schemes.
• Centralization – Centralization is the retention of authority by managers. It should be
used when managers desire greater control. Decentralization should be used, however, if
subordinates’ opinions, counsel, and experience are needed.
• Scalar chain – The scalar chain is a hierarchical string extending from the uppermost
manager to the lowest subordinate. The line of authority follows this chain and is the
proper route for organizational communications.
• Order – Order, or “everything in its place,” should be instilled whenever possible because
it reduces wasted materials and efforts. Jobs should be designed and staffed with order in
mind.
• Equity – Equity means enforcing established rules with a sense of fair play, kindliness,
and justice. Equity should be guaranteed by management, because it increases members’
 loyalty, devotion, and satisfaction.
• Stability of tenure – Properly selected employees should be given the time needed to
learn and adjust to their jobs. The absence of such stability undermines organizational
performance.
• Initiative – Members should be allowed the opportunity to think for themselves because
this improves the distribution of information and adds to the organization’s pool of talent.
• Esprit de corps – Managers should harmonize the interests of members by resisting the
urge to split up successful teams. They should rely on face-to-face communication to
detect and correct misunderstandings immediately.

Max Weber’s Model of Bureaucracy

Features of bureaucratic organizations:
• Selection and promotion – Expertise is the primary criterion. Friendship criteria or other
favoritism is explicitly rejected.
• Hierarchy of authority – Superiors have the authority to direct subordinates’ actions.
They are responsible for ensuring that these actions are in the bureaucracy’s best
interests.
• Rules and regulations – Unchanging regulations provides the bureaucracy’s members
with consistent, impartial guidance.
• Division of labor – Work is divided into tasks that can be performed by the bureaucracy’s
members in an efficient, productive manner.
• Written documentation – Records provide consistency and a basis for evaluation of
bureaucratic procedures.
• Separate ownership – Members cannot gain unfair or undeserved advantage through
ownership.

1930-1970: The Human Relations Perspective

The Hawthorne Studies – Among the earliest attempts to use scientific techniques to examine
human behavior at work. Additional experiments led researchers to conclude that social factors –
in particular, workers’ desires to satisfy needs for companionship and support at work –
explained the results observed across all the Hawthorne studies.
Douglas McGregor – Theory X
Assumptions Role of Management
Theory X Theory X
1. The average human being has an 1. Managers are responsible for
inherent dislike of work and will avoid organizing the elements of productive
it if possible. enterprise – money, materials,
2. Because they dislike work, most people equipment, people – solely in the
must be coerced, controlled, directed, interest of economic efficiency.
or threatened with punishment before 2. The manager’s function is to motivate
 they will put forth the effort toward
achievement of organizational
objectives.
3. The average human being prefers to be
directed, wishes to avoid responsibility,
has relatively little ambition, and wants
security above all.
Theory Y
1. Expending physical and mental effort at
work is as natural as play and rest. The
average human being does not
inherently dislike work.
2. External control and the threat of
punishment are not the only means to
direct effort toward organizational
objectives. People will exercise self-
direction and self-control in the service
of objectives to which then feel
committed.
3. Commitment to objectives is a function
of the rewards associated with their
achievement. The most significant
rewards – the satisfaction of ego and
self-actualization needs – can be direct
products of effort directed toward
organizational objectives.
4. Avoidance of responsibility, lack of
ambition, and emphasis on security are
not inherent human characteristics.
Under proper conditions, the average
human being learns not only to accept
but to seek responsibility.
5. Imagination, ingenuity, creativity, and
the ability to use these qualities to solve
organizational problems are widely
distributed among people.
1960-Present: The Open Systems Perspective
Katz and Kahn – In the open systems perspective, every organization is a system – a unified
workers, direct their efforts, control
their actions, and modify their behavior
to fit the organization’s needs.
3. Without such active intervention by
managers, people would be passive
about or even resistant to organizational
needs; workers must be persuaded,
rewarded, and punished for the good of
the organization.
Theory Y
1. Managers are responsible for
organizing the elements of productive
enterprise – money, materials,
equipment, people – in the interest of
economic ends.
2. Because people are motivated to
perform, have potential for
development, can assume
responsibility, and are willing to work
toward organizational goals, managers
are responsible for enabling people to
recognize and develop these basic
capacities.
3. The essential task of management is to
arrange organizational conditions are
methods of operation so that working
toward organizational objectives is also
the best way for people to achieve their
own personal goals.
structure of interrelated subsystems – and it is open, or subject to the influence of the
surrounding environment. Organizations whose subsystems can cope with the surrounding
environment can continue to do business, whereas organizations whose subsystems cannot cope
do not survive. Organizations continue to survive and grow only as long as they import more
material and energy from the environment than they expend in producing the outputs exported
back to the environment.
Chapter Two – Managing Diversity and Individual Differences
Individuals differ in three primary aspects of physical ability, muscular strength, endurance, and
movement quality.
General cognitive ability is another characteristic in which individuals differ and one that has
important implications for a much wider variety of jobs. Four specific facets of cognitive ability
are verbal ability, quantitative ability, reasoning ability, and spatial skills.
Personality characteristics such as extroversion, agreeableness, emotional adjustment,
conscientiousness, and inquisitiveness often translate into job performance differences.

Chapter Three – Perception, Decision Making and Creativity

The processes of perception:
1. Environment
2. Attention – most information is filtered so that some enters and some does not
3. Organization – further simplify and organize the incoming sensory data. One method is
“chunking” several pieces into a single piece.
a. Schemas are cognitive structures that group discrete bits of nonnumeric perceptual
information in an organized fashion.
b. Scripts are schemas that involves sequences of actions.
c. Prototypes are schemas that enable us to chunk information about people’s
characteristics. (A stereotype is a widely held generalization about a group of
people.)
4. Recall – Availability bias is the tendency of people to judge that likelihood that
something will happen by the ease with which they can call examples to mind.
Ways to reduce perceptual problems:
• Increase the frequency of observations, or the observer’s exposure to the observation
• Take care in how and when we observe – random sampling
• Get observations from different people and different perspectives
• Because observers have a tendency to ignore information that is inconsistent with current
beliefs - seek information that is inconsistent with, or that contradicts, current beliefs
• Ensure the accuracy of prototypes and scripts – be aware of those that are held
• Increase observer’s exposure to different social groups in an effort to help the observers
develop more accurate prototypes.
The decision is now ‘framed’

The Rational Decision-Making Model

Holds the assumption of economic rationality, or the notion that people attempt to maximize
their individual economic outcomes. Choice is determined through a process of utility
maximization in which the alternative with the highest expected worth is chosen as the preferred
alternative.
5. Evaluating Outcomes – loss aversion bias states that people have a slight preference for
sure outcomes over risky ones.
6. Evaluating Probabilities – base rate bias states that people tend to ignore the
background information and feel that they are dealing with something unique.
7. Choosing and Rejecting Alternatives – escalation of commitment is a process in which
people invest more and more heavily in an apparent losing course of action in order to
justify their earlier decisions. Bounded discretion refers to the fact that the list of
alternatives that any decision-maker generates is restricted by social, legal, and moral
norms.

The Administrative Decision-Making Model

Provides a better picture of what effective managers actually do (versus what they should do)
when strict rationality is impossible. Satisficing means settling for the first alternative that seems
to meet some minimum level of acceptability.

Reducing Decision-Making Errors

• Provide decision makers with decision aids that will force them to ask all the right
questions, get all the information, and then process this information in all the right ways.

The Creative Decision-Making Process

1. Preparation – creative people immerse themselves in existing solutions to the problem.
2. Incubation – a period during which then seem not to expend any effort on the problem.
3. Insight – a flash of inspiration.
4. Solution Verification – solution is tested more rigorously to determine its usefulness.

Chapter Four – Motivation & High Performance Work Systems

Expectancy Theory (Vroom)

Expectancy theory is a broad theory of motivation that attempts to explain the determinants of
workplace attitudes and behaviors. It defines motivation in terms of desire and effort, whereby
the achievement of desired outcomes results from the interaction of valences, instrumentalities
and expectancies. Desire comes about only when both valence and instrumentality are high, and
effort comes about only when all three are high. The major concepts underlie expectancy theory:
• Valence – a measure of attraction a given outcome holds for an individual or the
satisfaction the person anticipates receiving from a particular outcome. Valence can be
positive, negative or zero.
• Instrumentality – a person’s belief about the relationship between performing an action
and experiencing an outcome (performance-outcome expectation).
• Expectancy – beliefs regarding the link between making an effort and actually
performing well.
Valence Theories
Maslow’s need theory proposed the existence of five distinct types of needs: physiological,
safety, love, esteem and self-actualization. Prepotency means that needs residing higher in the
hierarchy can influence motivation only if needs that are lower are already largely satisfied.
Murray’s theory of manifest needs defines needs are recurrent concerns for particular goals or
end states. Each need is made up of two components. The first deals with the object toward
which the need is directed. The second describes the intensity or strength of the need for that
particular object.
McClelland developed nAch where people can be characterized as either high or low in need for
achievement (nAch). Those who are high in nAch prefer situations in which they have the
opportunity to take personal responsibility. They also prefer to receive personal credit for the
consequences of their actions and clear and unambiguous feedback about personal performance.
Such people also prefer tasks of intermediate difficulty for which the probability of success is
close to 50-50 – to tasks that are too easy or too difficult. Situations that have a future orientation
or permit the development of novel or innovative solutions are attractive to achievement-oriented
people.

Instrumentality: Learning Theories

Operant Learning theory proposes that a person engages in a specific behavior because that
behavior has been reinforced by a specific outcome (positive reinforcement). Extinction is a
second form of reinforcement where a response is weakened because it is no longer paired with
some positive reinforcer. In negative reinforcement the likelihood that a person will engage in a
particular behavior is increased because the behavior is followed by the removal of something
the person dislikes. In punishment, the likelihood of a given behavior is decreased because it is
followed by something that the person dislikes. Shaping consists of rewarding successive
approximations to a desired behavior so that “getting close counts”.
Social learning theory (Bandura) is a theory of observational learning that holds that most
people learn behaviors by observing others and then modeling the behaviors they perceive to be
effective.

Step 1: Desire to Perform (a combination of valence and instrumentality)

Expectancy: Self-Efficacy Theory

Self-efficacy refers to the judgments people make about their ability to execute courses of action
required to deal with prospective situations. People high in self-efficacy feel they can master, or
have mastered, some specific task. Sources can be past accomplishments, observation of others,
verbal persuasion, and logical verification.

Step 2: Effort (a function of desire to perform and expectancy)

Goal-Setting Theory – performance is enhanced by goals that are both specific and difficult, only
when there is high goal commitment. Public goals show higher levels of commitment. There is
also a relationship between the need for achievement (nAch) and goal commitment.
Step 3: Performance
Performance is high when a person (1) puts forth significant effort, (2) directs this effort toward
the right outcomes, and (3) has the ability to execute the behaviors necessary for bringing about
those outcomes.
The complexity of the motivational process can be seen in high-performance work systems and
the many issues that need to be considered when one attempts to “pay for performance”.
Chapter Five – Satisfaction and Stress in the Workplace
Job satisfaction is “a pleasurable feeling that results from the perception that one’s job fulfills or
allows for the fulfillment of one’s important job values”.
Stress is an unpleasant emotional state that results when people are uncertain of their capacity to
resolve a particular challenge to an important value.
General adaptation syndrome explains the relationship between stress and physical-
physiological symptoms. It occurs in three stages:
• Alarm – identification of the threat
• Resistance – becomes resilient to the pressures, all symptoms disappear
• Exhaustion – can no longer adapt to the continuing stress (burnout).
Organizational costs of dissatisfaction and stress:
• Higher health care costs
• Absenteeism and turnover
• Low organizational commitment – the degree to which people identify with the
organizational that employs them
• Workplace violence

Sources of Dissatisfaction and Stress

Physical and social environment
Personal dispositions – negative affectivity describes the dispositional dimension of subjective
distress that includes unpleasant mood states as anger, contempt, disgust, guilt, fear, and
nervousness.

Organizational Tasks
• Task complexity shows a positive relationship between task complexity and satisfaction
• Physical strain
• Task meaningfulness – it is important for the worker to believe that the work has value

Organizational Roles
Role ambiguity is uncertainty, or lack of clarity, surrounding expectations about the person’s
role in the organization. It is an indication that the person in the role does not have enough
information about what is expected. It can also stem from a lack of information about the
rewards for performing well and the punishments for failing.
Role conflict is the recognition of incompatible or contradictory demands that face a person who
occupies a role.
Role scope refers to the absolute number of expectations that exist for the person occupying a
role.
Eliminating and Coping with Dissatisfaction and Stress
1. Identifying Symptoms of Dissatisfaction and Stress
2. Changing the Source of Dissatisfaction and Stress
3. Managing Symptoms of Dissatisfaction and Stress (biofeedback, job rotation)

Chapter Six – Efficiency, Empowerment and Quality in Work Design

Division of labor enables organized groups of people to accomplish tasks that would be beyond
their physical or mental capacities as individuals.
Theories and methods of work design show the formal process of dividing an organization’s total
stock of work into tasks and jobs its members can perform.

The Efficiency Perspective

The efficiency perspective on work design is thus concerned with creating jobs that conserve
time, human energy, raw materials, and other productive resources. It is the heart of industrial
engineering.
Methods engineering (originated in Frederick Taylor’s work on scientific management) attempts
to improve the methods used to perform work. It incorporates two related endeavors – process
engineering and human factors engineering.
Process engineering studies the sequence of tasks required to produce a particular product or
service and examines the way these tasks fit together into an integrated job. It also analyzes tasks
to see which should be performed by human beings and which by machines, and tries to
determine how workers can perform their jobs most efficiently.
Experts in human factors engineering (ergonomics) design machines and work environments so
that they match human capacities and limitations (physical user-machine interface, cognitive
user-machine interface, workplace design, physical environment).
Work measurement is an area of industrial engineering concerned with measuring the amount of
work accomplished and developing standards for performing work of an acceptable quantity and
quality. It include micromotion analysis, memomotion analysis and time study procedures.
The downside to the efficiency perspective is that workers performing oversimplified, routine
jobs often become bored, resentful, and dissatisfied. Performance quantity and quality are likely
to suffer as a consequence.

The Empowerment Perspective (Lillian Gilbreth)

The empowerment perspective suggests that fitting the characteristics of jobs to the needs and
interests of the people who perform them provides the opportunity for personal growth,
development and satisfaction at work.

Horizontal Enlargement
Horizontal job enlargement increases job range, or the number of tasks a jobholder performs,
reducing the repetitive nature of the job and thus eliminate worker boredom.
Job extension is an approach where several jobs are combined to form a single new job.
Job rotation involves workers rotating among several jobs in a structured, predefined manner.
Rotation of this sort creates horizontal enlargement without combining or otherwise redesigning
a firm’s jobs.

Vertical Enrichment
Increasing job depth is increasing the amount of discretion a jobholder has in choosing job
activities and outcomes. This approach is called vertical job enrichment (based on work by
Frederick Herzberg).
Herzberg’s Motivator and Hygiene Factors (Two-Factor Theory)
Motivator Factors (affect satisfaction):
1. Achievement
2. Recognition
3. Work itself
4. Responsibility
5. Advancement
6. Growth
Herzberg Hygiene Factors
1. Company policy and administration
2. Supervision
3. Relationship with supervisor
4. Work conditions
5. Salary
6. Relationship with peers
7. Personal life
8. Relationship with subordinates
9. Security
(Because of questions about its validity, Herzberg’s two-factor theory is not considered to be a
useful guide for managerial actions.)

Comprehensive Enrichment (Richard Hackman & Greg Oldham)

Comprehensive enrichment programs combine both horizontal and vertical improvements are
usually quite successful in stimulating motivation and satisfaction.
Core Job Characteristics
1. Skill variety – the degree to which a jobholder must carry out a variety of different
activities and use a number of different personal skills in performing the job.
2. Task identity – the degree to which performing a job results in the completion of a whole
and identifiable piece of work and a visible outcome that can be recognized as the result
of personal performance.
3. Task significance – the degree to which a job has a significant impact on the lives of
other people, whether those people are coworkers in the same firm or other individuals in
the surrounding environment.
4. Autonomy – the degree to which the jobholder has the freedom, independence, and
 discretion necessary to schedule work and to decide what procedures to use in carrying it
out.
5. Feedback – the degree to which performing the activities required by the job provides the
worker with direct and clear information about the effectiveness of the worker’s
performance.
These five core job characteristics, in turn, influence the extent to which employees experience
three critical psychological states, or personal internal reactions to their jobs.
1. Experienced meaningfulness of work – refers to the degree to which a worker experiences
a job as having an outcome that is useful and valuable to the worker; the company, and
people in the surrounding environment.
2. Experienced responsibility for work outcomes – concerns the degree to which workers
feel personally accountable and responsible for the results of their jobs.
3. Knowledge of results – reflects the degree to which workers maintain an awareness of the
effectiveness of their work.
If workers experience all three states at once, four kinds of work and personal outcomes are
likely to result:
1. High internal work motivation – workers tend to view their jobs as interesting,
challenging, and important and may be motivated to perform simply because they are so
stimulating, challenging and enjoyable.
2. High-quality work performance
3. High satisfaction with work
4. Lower absenteeism and turnover

Sociotechnical Enrichment
Sociotechnical enrichment encourages job designs that balance social and technological factors.
In other words, employees should work in groups that allow them to talk with each other about
their work as they do it.
Contemporary designs normally create semiautonomous groups.

The Quality Perspective