Organisational Behaviour
Module 1 The Basics of Organisational Behaviour
and its Relation to Management 1/1
1.1 Why Managers Need to Understand Organisational Behaviour and its Theories 1/2
1.2 Values: The Building Blocks of Individual Differences 1/10
1.3 The Study of Personality and Employees’ Personal Traits 1/12
1.4 The Crucial Role of Job Satisfaction 1/20
1.5 Developments in the Study of Employee Work Attitudes 1/28
Module 2 Stress and Well-Being at Work 2/1
2.1 Introduction to Stress and Well-Being at Work 2/2
2.2 Understanding Job Stress and its Components 2/3
2.3 A Model of Causes and Consequences of Stress 2/4
2.4 Individual Approaches to Managing Stress 2/11
2.5 Organisational Programmes of Wellness and Job Stress Management 2/13
2.6 Downsizing: A New Form of Permanent Job Insecurity? 2/16
2.7 A Semi-Last Word on Downsizing 2/19
Module 3 Contemporary Theories of Motivation 3/1
3.1 Introduction 3/2
3.2 Content Theories of Motivation 3/4
3.3 Process Theories of Motivation 3/11
3.4 Cultural Differences in Motivation 3/20
Module 4 Organisational Control and Reward Systems 4/1
4.1 Why Organisations Need to Assess Employees’ Performance 4/2
4.2 Goal-Setting and Management by Objectives (MBO) 4/10
4.3 Rewards and Reward Systems 4/14
4.4 Components of Executive Compensation 4/19
4.5 A Comparison of Company Pay Practices 4/25
4.6 Individual and Group-Based Reward Systems 4/29
Module 5 Job Design and Employee Reactions to Work 5/1
5.1 Understanding Job Design 5/2
5.2 Making Use of Job Design for Individual Employees 5/9
5.3 The Team Approach to Job Design 5/13
Module 6 Understanding Work Group Dynamics and Group-Based Problem Solving 6/1
6.1 Describing Work Groups and their Characteristics 6/2
6.2 Work Group Composition, Cohesiveness and Norms 6/6
6.3 Significant Aspects of Work Group Structure 6/12
6.4 From Statics to Dynamics: Work Group Development and Decision- Making 6/15
6.5 Practical Guidelines for Managing Groups 6/21
6.6 Decision-Making in Teams: Deciding on the Extent of Participation 6/26
6.7 Work Groups in Competition and Conflict 6/28
Module 7 The Influence Processes in Organisations:
Power, Politics, Leadership and Entrepreneurship 7/1
7.1 An Example of Power 7/2
7.2 Uses and Abuses of Power: Playing Politics 7/10
7.3 Leadership: A Conundrum of Theory 7/14
7.4 The New Age of Entrepreneurs 7/26
Module 8 Organisational Design and New Forms of Service-Driven Organisations 8/1
8.1 Making Sense of Organisational Anatomy 8/3
8.2 Organisational Structure: Understanding the Basics 8/13
8.3 Understanding the Responsive Organisation 8/27
8.4 Drivers of Growth in Customer Service 8/35
8.5 How Good Service Retains Customers 8/36
8.6 Organising Principles of Service Quality 8/40
8.7 Creating a Service-Driven Organisation 8/44
Module 9 Managing Transitions: Organisational Culture and Change 9/1
9.1 Organisational Culture: Its Meaning and Relationship to Successful Strategy 9/2
9.2 Organisational Life-Cycle Theory 9/11
9.3 Organisational Change 9/13
9.4 Methods of Change in Organisation Development 9/23
1 - The Basics of Organisational Behaviour and its Relation to Management
1.1 Why Managers Need to Understand Organisational Behaviour and its Theories1/2
1.1.1
Distinguishing between Organisational Behaviour and Management 1/3
Management, The more recent (enlightened) view, focus more on the role of coaching, integrating, advocating, performance and
allocating resources.
Organisational Behaviour is concerned with describing organisational phenomena while management is a professional discipline
which stresses the importance of applied problem-solving skills.
What role dose the management play on organisational problem-solving?
A manager’s job consists of
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3.
A technical component concerned with efficient use of resources (fist line supervision)
A conceptual component concerned with the development of new systems (middle managers)
A human component concerned with employee well-being (Top manager)
Management and technical problem-solving: Organisations mistakenly promote managers on the basis of their technical expertise only.
If the manager demonstrates conceptual skill as well, their promotion prospects and performance potential are both greatly enhanced.
1.1.2 New Perspectives on the Manager’s Job 1/5
Researcher identified seven basic features of manager’s job:
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6.
7.
Managing individual performance
Instructing subordinates
Representing one’s staff
Managing group performance
Planning and allocating resources
Coordinating independent groups
Monitoring business environment
(supervising)
lower-level supervisors
(teaching and tanning)
lower-level supervisors
(representing and advocating)
middle managers
(facilitating)
middle managers
(decision-making)
middle managers
(collaboration)
senior executives
(scanning)
senior executives
The number of challenges in the manager’s job will increase because:
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3.
Work-force is changing: diversity, values, beliefs , racial features
Customer expectations are changing: customer support high-quality , the age of Total Quality Management (TQM)
Organizations are changing: Eroding, trade barriers, down-size , re-engineer, strategic alliance compete globally , vertical
integrate ; these creates a new elements in manager’s job such as stress creativity, resourcefulness, inspiration and collaborative
problem solving.
Principle duties
Training and development
Reward bases
Influence base
Communication pattern
Decision-taking style
Approach to org. change
Past challenges
Give order and control subordinates’ behaviours
Reduce the costs by hiring skilled workers
Seniority, rank and effort
Hierarchical position
From top to bottom
Superior centred and authoritarian
Resist change
Future challenges
Encourage development
Training , development and cross-training
Merit-based
Technical, interpersonal and experience
Diffusion-based
Team-based
Embrace change
Why do managers care about OB?
Mangers can rely on OB to aid in solving “human problems” in the work setting for these reasons:
1.
2.
3.
Behavioural theories help solve problems in the work setting.
Understand new developments in OB
Evaluate proposed solutions of behavioural problems in the organisation
1.1.3 Making Sense of Human Behaviour in Organisations 1/8
Lewin postulated that Human Behaviour = function (Person, Environment)
The SOBC sequence
S
Stimulus Situation
O
Organism
B
Behaviour and Action
S: All sensation activates the employee behaviour i.e. light, sound, job demand, supervisor or co-worker.
O: characteristics of the person i.e. personality, needs, attitude, values and intention
B: person’s behavioural response i.e. action, emotional responses and concepts
C: Consequences and outcomes i.e. recognition and need satisfaction.
C
Consequences or Outcomes
1.1.4 Defining Employee Needs and Organisational Productivity 1/9
The two most pressing issues governing organisational success or failure is the difference between the employee needs and the firm’s
need for productivity for instance:
Employee needs: job satisfaction, challenge, adequate pay, fringe benefit and safe working condition
Organisational productivity: best service with less expenditure
The best the balance between employee needs and productivity
Work-force: Versatile manager must understand the organisation’s work-force drives sustainable competitive advantages and can
made the employees’ work more meaningful and challenging i.e. show respect to employees, creates work-force loyalty.
Within Organisation: Two ways for improving organisational productivity (Management typically do both)
1. Acquire new technology to produce more efficiently i.e.IT, automate
2.
Satisfy employee needs to improve employee productivity i.e. increase motivation, tanning, development and use selfdirected teams.
1.2 Values: The Building Blocks of Individual Differences 1/10
The employee’s values form the basis for ethical business practices. (Value-based linkage)
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2.
1.2.1
Instrumental values: are the means to achieve goals by using acceptable behaviours to achieve an end state.
Ambition, Competence, Intelligence, Self-control, Responsibility
Terminal values: are the goals to be achieved or the appropriateness of desire end state.
Achievement, Family safety, Equity, Freedom, Happiness, Prosperity
Implications of Values in Global Organisations 1/11
Global firms train their managers to recognise and respect the cultural-based value difference. “values and cultural” seminars
emphasise that
1. Be open-minded / don’t prejudge
2. Try to fit into their ethical constraints (legitimately)
3. Avoid rationalising questionable actions
4. Refuse to do business where unethical or illegal
5. Openness and honesty
Theory X: is the authoritarian manager style i.e. believed employees are avoiding responsibility, lazy, lack self-control.
Theory Y: use rewards, incentives, encouraging, democratic
1.3 The Study of Personality and Employees’ Personal Traits 1/12
1.3.1 What Is the Difference between Kendrick and Deiter? 1/13
Locus of control: is defined as an individual’s believe that the one’s actions influence the outcomes one experiences in life
Note: negative or positive outcomes is not in the definition and it is neutral relative to the type outcomes
Internalisers (Internal Locus of Control) = Internals, Externalisers (External Locus of Control) = Externals
1.3.2 How Is Locus of Control Related to Work Behaviour? 1/13
Characteristic of Internalisers and Externalisers
Internalisers believe that
Pay rise based on hard work
Achievement
Excellent Performance skilled-based
Entrepreneurial behaviour and taking business risk
Externalisers believe that
Performance is luck-based
Externalisers: react poorly if performance-oriented pressure, emotional, lower tolerance for job-induced frustrated
Internalisers more trusting, dismiss job failure more easily.
Prefer leader who allow participation; will work harder if told performance-oriented rewards.
More attracted to work with opportunity for personal achievement, perform better if believe skill-based
More comfortable with change than Externalisers
Frustrated if cannot acquire new skills or not rewarded for acquiring new skills
Problems of external locus of control (A1/1)
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Not promotion oriented
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Less compelled to argue their points
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Blame themselves more quickly for failure
Managers can influence locus of control by changing, spreading or encouraging: (A1/1)
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Performance-reward base
Skilled-based compensation (reward for acquire new skills)
Participation for sustaining employee development
Competency and stimulating
Merit-based rewards (earned for high performance)
A firm’s pay system should reinforce performance-rewards, pay rise and promotion
Amount of participation in decision-making
1.3.3 Extroversion and Introversion 1/15
Extroversion is defined as the need to obtain as much social stimulation i.e. enjoys crowed, adventure, sports.
Introversion is defined as avoidance of external stimulation in favour of internally oriented i.e. reduce the amount of social
interaction.
1.3.4 How Can Organisations Use Information about Introversion and Extroversion? 1/16
The organisational implications of introverted and extroverted behaviours are not as clear as locus of control but researchers found:
Introverts: have longer tenure and fewer unexcused absences. Perform better without distractions
Introverts performance drop off: when confronted with meaningless work may undermine productivity of others
1.3.5 The Machiavellian Personality 1/16
“End justifies the means”
High Machs – interpersonally cool, amoral, manipulating, and highly rational
1.3.6 Can High Machs Have a Negative Influence on the Organisation? 1/16
Mach-V scoring
More Machiavellian manipulation at top than bottom of organisation.
More aggressive when environment is vague than when structured
1.3.7 Socially Acquired Needs 1/17
Social needs are learned through personal contact with key individuals in one’s social environment, three socially acquired needs exist
and they are:
1. Need of Achievement , defined by the following qualities
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Taking moderate risks to pursue goals
Needing feedback
Finding tasks to be intrinsically rewarding (irrespective of rewards)
Work is success not failure
Being task-absorbed until job completion
Employee, if he couldn’t satisfy the need of achievement or his job is boring, he will lower performance and leave the job.
Manager’s techniques, should apply motivational concept, screen job applicant, promotion, design challenging jobs and reward creativity.
2.
Need of Affiliation trigger by these behaviours
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Reacting positively, enhance belongingness, social involvement and enhance group moral
Emphasis moral and cohesion of the group
Emphasise importance of social rewards, recognition, praise and public acclaim
Solving or confronting interpersonal conflict
Reacting positively to social rewards
Manager’s techniques encourages, arbitrator between work groups, evaluate social demand , involved in community affairs, use forms of
social rewards, emphasise social harmony for the team.
3.
Need of Power
The need of power has two sides Personalised need of Power and Socialised need of Power
1.
Personalised need for power, individuals tries to dominate, shorten in their career. Firms view these malefactors as
unproductive because:
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Personal concerns override responsibilities
Tense work relations
High stress (drugs, alcohol)
Erode work climate
2.
Socialised need for power, it is the positive side because individuals with this power need
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Achieve personal goals by raising self-esteem of others
Demonstrate confidence for subordinates
Employee, Risk- can degenerate to personalised need for power if frustrated.
Manager’s techniques, select employee with social need of power, made social power position visible, assign highly skilled social power
manager to low performance team, not block the career path of social power manager.
1.4 The Crucial Role of Job Satisfaction 1/20
1.4.1 The Meaning of Job Satisfaction 1/20
The facets of job satisfaction are:
1. Work itself
2. Work Pay
3. Fellow workers
4. Supervision
5. Promotions
1.4.2 Determinants and Consequences of Job Satisfaction 1/21
Years in career:
The early-career dip is a consequence of the realisation by employee that the job will not meet all of the personal need.
Expectations:
Employee dissatisfaction comes from pre-work expectation until working full time, and leads to turnover, leave the job
Organisation attack the “satisfaction dip” by using realistic job preview, to enhance job satisfaction and reduce the cost of recruiting,
hiring and tanning.
Supervision:
Supervision can support subordinate job-satisfaction by adopting the following:
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Support employee’s self-esteem enhance job involvement
Participation in decision enhance employee’s self-confident
Job Clarity:
The extent to which employee understand contribute to job satisfaction, prompt feed back to employee, managers adopt that do
themselves favour by increasing trust with subordinates.
Incentives:
Extrinsic and Intrinsic rewards are related to job satisfaction
An extrinsic reward, that organisation provides based on employee performance and effort i.e. pay rise, promotion, supervisor
praise and recognition.
An intrinsic rewards, That employee experience internally i.e. feelings of competence, pride, excel when the employee evaluate his
own performance
The bond between rewards and job satisfaction is governed by a process of social comparison (social judgement)
My Rise
My effort and Performance
Compared to
Co-worker rise
Co-worker effort and performance
If the result seems fair the employee feel satisfied, if not employee select “comparison other” if perceive inequity then employee try to
restore his balance by
(1) Reduce his performance (2) change “comparison other” (3) increase the effort and hope more reward (4) leaving the job
Key consequences of dissatisfaction:
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Happy worker more healthy
Turnover
Absenteeism (Unexcused absences)
1.4.3 Job Satisfaction and Performance 1/25
Performance + Rewards => Perceived equity => Job satisfaction
1.4.4 How Organisations Can Measure Job Satisfaction 1/26
Methods to measure satisfaction
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Observation of behaviour
Interviews
Questionnaires more dependable (challenges: interpretation + candour)
Questionnaire such as Job Descriptive Index (JDI), Minnesota questionnaire
Problems of questionnaires, fear of losing job
1.5 Developments in the Study of Employee Work Attitudes 1/28
Three important work attitudes: Job Satisfaction; Organisational Commitment and Job Involvement
1.5.1 Organisational Commitment and its Consequences for Employees and the Organisation 1/28
Organisational Commitment is defined as the strength of employee identification with organisation, it has 3 components
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Acceptance of goals and values
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Willingness to exert effort on behalf of organisation
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Desire to maintain membership
Job satisfaction fluctuates and narrow concept; Organisational Commitment develops slowly and consistently and required wider
concept.
Organisational commitment correlates inversely with turnover; impacted by regular downsizing.
1.5.2 Job Involvement and its Consequences 1/30
Job involvement is defined as the degree to which employee identify with their job participate actively in it and consider it to be a key
determinant with their self-worth.
Job involvement less at risk in downsizing than organisational commitment
How managers raise Organisational Commitment and Job Involvement
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Demonstrate that they care about their employees’ welfare.
Create opportunities for employees to achieve personal goals
Modify Job do employee can experience more intrinsic rewards
Find ways to reward and interact with employee regularly
Set goals with employee
2 - Stress and Well-Being at Work
2.1 Introduction to Stress and Well-Being at Work 2/2
In the survey the employers reported that those stressed-out employees:
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More physical and mental health insurance claims
Less productive
More outburst
More turnover and absenteeism, substance abuse
Employee “burned out” by work overload, they often experience stress or tension-induces anger (intermittent explosive disorder) on the job,
other factors that amplifies the chronic work overload
Amplifiers of stress are:
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Unfair managers
Abrasive co-workers
Excessive responsibilities
Technology-based interruptions (emails)
2.1.1 Job Stress Goes Global 2/2
Karoshi – Japanese call sudden death of a heart attack or stroke on the job
2.2 Understanding Job Stress and its Components 2/3
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Stressors: are objects or events in our social or physical environments that make a demand
Stress Response: is a mental and physical reaction
Perceptual Mechanism: including our terminal and instrumental values causes us to interrupt the stressor in negative or positive
fashion
 Negative reaction: if you believe that you can control the stressful situation and reaction with anger and frustration
 Positive reaction: response from superior (work stressor) as an exciting challenge that can lead to more responsibility, then you
are experiencing eustress (challenge stress)
Distress: dysfunctional result of stress – employee unsuccessful at adapting or removing stressor
Eustress: positive physical and psychological reaction to a stressor (absence of any stress is also bad)
General Adaptation Syndrome: the process that governs the human being adjustment to stressors in their environments by Hans Selye (Selye
Model)
 Alarm: instantaneous reaction (heart rate, muscle tension, blood sugar level …) by wear down the immunity system to allowing
hormones like adrenaline to raise the blood pressure. And over time make us fat!
 Resistance: attempt to cope and adapt to stressor (e.g. practice for a keynote). Or decline mode and over time , exhibit blood pressure,
eating disorder (obesity or anorexia)
 Exhaustion: after chronic exposure to stressor ( i.e. military tasks, emergency rescue )
Preparing people to be rational (emergency situation) means alarm reaction must be suppressed by practice (rehearsal and emergency
simulation)
2.3 A Model of Causes and Consequences of Stress 2/4
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Three causes of stress: environmental, organisational and individual
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Three consequences: physiological, psychological and behavioural. Along with individual difference.
2.3.1 Environmental Factors that Can Induce Stress 2/4
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Economic uncertainly (e.g. insecurity, unemployment, downsizing, reducing pay level)
Political uncertainty (e.g. unstable countries)
Technological uncertainty (e.g. obtain skills for sophisticated technology)
2.3.2 Organisational Factors that Create Stress 2/6
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Task demands are potential stressors embedded in your job (i.e. Difficult schedule, being isolated, overworked, reporting to multiple
manager, little feedback) or also repository of stress such as noise, vibration.
Role demands consists of behaviour that are required to exhibit on the job (role overload, role ambiguity)
Interpersonal demands (lack of cooperation, trust, support)
Organisational structure (extensive rules, high centralisation, low levels of employee participation)
Organisational leadership management focus on short-run viewpoint, higher output with fewer resources, expendable human capital
Organisational lifecycle establishment, growth, maturity, decline
2.3.3 Personal Lifestyle Factors that Can Aggravate Stress 2/8
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Family problems i.e. divorce, ageing parents
Financial problems i.e. credit card pay off
2.3.4 Individual Differences 2/8
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Perception more important than reality it governs our reaction to the stressor
Job experience reduces stress once acquired
Internal locus of control reduces stress i.e. Internalisers they are reasonable and perceive less job stress than Externalisers
Type A behaviour (fast paced, obsessed with numbers and performance) vs. Type B (more relaxed) not indicative Aggression,
hostility, anger contribute to stress
2.3.5 Consequences of Stress 2/10
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Physiological are changes in our body’s metabolism, heat rate, breathing, blood pressure. If exhibit chronic exposure: back trouble,
migraines, insomnia, heart disease, diabetes, hypertension, possibly cancer
Psychological i.e. low performance, decline in self esteem, resentment of supervision, anxiety, nervousness. If chronic exposure :
Burnout
Behavioural i.e. low performance, absenteeism, altered eating habits, smoking, substance abuse
2.4 Individual Approaches to Managing Stress 2/11
Personal strategies to manage or control job stress
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2.
3.
4.
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Exercise i.e. walking, weight control
Relaxation
Diet i.e. attempt good eating habits
Opening up with others and resolve conflicts
Professional help i.e. delegation tasks, control your anxiety, self-training
2.5 Organisational Programmes of Wellness and Job Stress Management 2/13
The following are the managerial skills are identified by the roundtable participant:
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Reward performance, not face-time
Live by your values and encourage others to live by theirs
Build respect based on trust and respect
Two Types of strategies (A1/4): Problem-focused and Emotion-focused
Problem-focused:
 Time management
 Mentoring
 Clarifying work expectations
 E.g.: Job redesign, flexitime, day-care
Emotion-focused
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Exercise
Meditation
Social support
Counselling
2.5.1 Corporate Wellness Plans Go after the Not-So-Well Employees 2/14
Often expensive programs do not deliver results. Not leveraged by many employees.
Innovative programs try to target high-risk employees or give financial incentives to participate (criticism: potential discrimination against
unhealthy employees)
2.6 Downsizing: A New Form of Permanent Job Insecurity? 2/16
Some ways to make the downsizing human and less damaging to the employee:
2.6.1 Domestic Competition 2/16
2.6.2 Merger Mania 2/16
2.6.3 Government Spending and Labour Market Involvement 2/17
2.6.4 Small Is Beautiful 2/17
2.6.5 Restless Shareholders 2/18
2.7
A Semi-Last Word on Downsizing 2/19
Differentiate between job security and employment security.
3 - Contemporary Theories of Motivation
3.1 Introduction 3/2
3.1.1 What Stimulates Human Behaviour? 3/2
Human Behaviour rests on needs and motives.
Need is an experiences state of deficiency that pushes behaviour (e.g. need for summer holiday)
Motive pulls human behaviour towards a goal that is predictable (e.g. high performance to obtain pay rise)
Behaviour is thus pulled along by your performance motivates (e.g. increase work output, no absenteeism, no lateness, higher quality)
Work Motivation is referred to 3 components:
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Direction, reflect the employee action that thinks will result in task performance.
Level of effort , show how hard the employee will work ( physical , intellectual energy expended)
Extent of persistence , the employee ‘s tenacity to overcome obstacles to achieve the desired result
3.1.2 Is there a Distinction between Motivation and Performance? 3/3
Performance implies evaluation after it occurs and required some sort of measurement system.
Motivation is one of several psychological state that influence performance
Other factors affect performance, the one’s:
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Ability
Need of achievement
Personality
Difficulty of task
Resources available
Working conditions
Work attitudes (e.g. organisational commitment, job involvement)
Low motivation doesn’t necessarily cause low performance, Managers can influence performance with:
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Training and development
Better equipment
Participation in decision-making
3.1.3 Are there Different Types of Motivation Theory? ¾
Motivation theories are two types:
Content theories: specifies those human needs which activate behaviour aimed at need reduction. What specific needs cause motivation?
Process theories: explain how behaviour is stimulated, directed, sustained or stopped. How does motivation occur?
3.2 Content Theories of Motivation 3/4
3.2.1 A Question of Needs: Maslow’s Hierarchy ¾
5) Self-actualisation, it is the desire to fulfil oneself by making maximum use of talent and experience.
4) Esteem, general feeling of self worth
 External component: recognition, prestige, appreciation from others
 Internal component: challenge, autonomy, self-reliance
3) Belongingness (friendship, altruism, group acceptance, emotional support)
2) Safety
1) Physiological
To round out understanding of Maslow’s theory you must consider that:
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2.
3.
4.
For lower needs, satisfied needs cease to motivate behaviour at that level
Unsatisfied employee needs at all levels lead to undesirable outcome at work
People have a need to growth, consequently, promotion lead to more satisfaction
Higher-order needs are never fully satisfied
3.2.2 Applying the Need Hierarchy 3/6
1. Early career, are characterised by security concern and learning organisational values
2. After 5 years, employee’s concern establishment a professional identity
3. Later, pursue for more increase autonomy, choice the project, increase authority and responsibility
4. At career plateau, senior become a mentor, sponsor for younger employee, or start his own business, entrepreneurship and reinforce
self-determination.
Criticism: researchers found as managers advance in their career, low-order (safety/security) decrease while high-order (esteem, selfactualisation) increase
In Summary, strong evidence supports the view that unless physiological needs are satisfied, the higher-order needs not usually activated.
3.2.3 Herzberg’s Two-Factor Theory of Motivation 3/7
The level of job motivation/job satisfaction depends on the availability of hygiene and motivators.
Hygiene factors such as (pay, status, peers, supervision, and working condition and job benefits) sometimes called (maintenance factors)
Hygiene is necessary but not sufficient for job satisfaction and motivation.
The diagram shows that absence of hygiene factors leads to job dissatisfaction, but when present, hygiene factors do not necessarily provide job
satisfaction.
Hygienes are elements of job context. They are contextual because they emphasis what is outside (around) the employee and his work.
Absence of Hygienes correlate with turnover, absenteeism, low performance, job withdrawal, burnout … in extreme cases physical illness
Note: any reduction in the hygiene factors (i.e. bonuses) must be fully explained to the employee and managers must share in the losses of
Hygienes.
Motivators are embedded in the employee-job interaction and job-centred characteristics, also called (intrinsic job factors or content factors)
No Motivators lead to apathy and job withdrawal (i.e. job boring, unchallenging)
On the other hand, Hygienes can be considered a source of extrinsic motivation (if we consider it a part of the job context or firm’s rewards)
Benefit of Herzberg’s at work: expanded organisation perspective in job design, work structure, clarified motivation-satisfaction matrix by
framing the difference between Hygienes and Motivators
3.2.4 Comparing Maslow’s and Herzberg’s Models 3/10
Maslow and Herzberg is different yet related
Herzberg concerned with job and organisational sources of job motivation and satisfaction
Maslow focused on generalised human needs which occurred in life situation
Herzberg Model is a specific application of Maslow’s hierarchy to work.
Herzberg criticism:
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Testing based on subjective reflection
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Oversimplifies job satisfaction
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Underemphasises motivational and performance consequences
3.3 Process Theories of Motivation 3/11
3.3.1 Equity Theory: Social Comparisons in the Work Setting 3/11
Equity theory is developed to understanding how employee reacts to incentives and outcomes in the context of performance-job satisfaction
relationship
If the employee seeks to remove the felt inequity and return to a state of balance, to restore equity:
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Reduce performance ( negative)
Increase performance (positive inequity)
Exit circumstance (leave job or request job transfer)
Change comparison
Mentally distort comparison (rationalise)
Attempt to influence inputs/outcomes of others ( request other to reduce the effort)
Negative inequity stronger motivator than positive inequity
3.3.2 New Research Light on Equity Theory Applications 3/12
Researchers proposed that individual difference (personality) enters the process of social comparison.
Three types of equity preferences:
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Benevolent employee who are comfort with equity ratio and willingly to volunteer to cover of colleagues
Equity sensitive prefers the outcome and the way it distributed.
Entitled comfortable with equity ratio exceeds their comparison others (slackers)
Successful managers should think about:
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Anticipate employee equity judgements
Avoid unnecessary secrecy about pay policies and procedures
3.3.3 Understanding the Basics of Expectancy Theory 3/13
Behaviour is always purposeful and goal directed and it could only be understood in terms of probabilities that behaviour will lead to desired
outcomes valued by the individual
(Example Tristan had a motivation problem; Andre pointed out the connection between successful completions and creates a new division which
required a new manger position which is valued personal goal for Tristan)
Components of Expectancy Theory
Valence is defined as the personal attractive of different outcomes. The valence is highly idiosyncratic and value-laden.
 Positive Valence ( i.e. promotion)
 Negative Valence avoidance of undesirable outcomes ( i.e. being censured publically by boss)
Outcomes in Expectancy Theory
Has two classes of outcome, the second level of outcome occurs after the first level of outcomes and are the direct result of achieving.
 First-Level outcomes: the result of expanding effort in some direct way (i.e. job performance, coming early, working at home)
 Second-level : after first-level outcomes (i.e. getting promotion, being transferred, recognition, pay rise, attending tanning)
Probability in Expectancy Theory
Instrumentally is the personal believe that the first-level outcomes lead to the second-level outcomes (performance-reward connection)
 Positive Instrumentally: employee believes that the second- level outcomes will occur after first-level so increase his performance.
 Negative Instrumentally: employee believes that the second- level outcomes will NOT occur after first-level.
Managers must evaluate and direct the instrumentally (i.e. let employees have a clear pathway). Positively valance when distribute rewards
equitably for performance-based, then employee experience rising instrumental.
The principal called line of sight, is pathway from excellent performance to valued rewards become clearer, reliable, understood.
Expectancy is the employee’s subjective believe that a given level of effort will lead to first-level outcome on the job.
Ability of the employee is an important component of the model, because the ability must be sufficient to achieve and sustain a given level of
performance.
Work Environment its elements include both hygienes and motivators (i.e. nature of supervision Andre, reward and performance appraisal line
of sight)
Note: Performance is the product of motivation and ability
3.3.4 Applying Expectancy Theory 3/16
3.3.5 Extending Expectancy Theory to the Individual and the Organisation 3/16
Individual Factors + Organisational Factors -> Effort -> Performance -> Outcomes
Individual Factors:

Self efficacy

Need for achievement

Locus of control (internal locus of control increases instrumentality)

Self-esteem (influences expectancy)
Organisational Factors (strengthen / weaken instrumentality)

Role ambiguity

Role conflict

Performance appraisal system

Reward system

Job design system
3.4 Cultural Differences in Motivation 3/20
Cultural difference affect levels of employee motivation, these differences apply to 1) social acquired needs 2) Maslow’s hierarchy 3)
Herzberg’s two-factor theory 4) expectancy theory
Americans rate self-actualisation high
Greeks/Japanese rate security higher
Sweden/Norway belongingness high
New Zealand classifies supervision and peer relations as motivators. US as hygienes.
3.4.1 Principles of Behaviour Modification (BMod) 3/20
BMod places the environment front and centre in motivation and it de-emphasises the role of the individual.
Human needs and mental decisions are ignored in this form of motivation theory because BMod focuses exclusively on behaviours can be
observed.
BMod is a function of its consequences (cognitive motivation theory)
BMod states that external or environmental consequences determine behaviour
The Main Principle of BMod are the four contingencies of reinforcement
1)
2)
3)
4)
Positive Reinforcement, a pleasant outcome is obtained (positive strength)
Negative Reinforcement, an unpleasant consequence is avoided (when happen, successfully avoided a potential aggravating)
(Negative strength)
Extinction, pleasant consequence is removed or a neutral consequence occurs (i.e. you are ignored by meeting chairman) (weaken
behaviour)
Punishment, occurs when unpleasant consequence are presented (weaken behaviour)
5)
Positive Reinforcement, Behaviour is strengthen by the occurrence of pleasant consequence (i.e. a manger give a subordinate a difficult
assignment- excellent performance- manger happy - bonus)
Negative Reinforcement, behaviour is strengthened by removal of unpleasant consequence (i.e. an employee comes to work on time to avoid
reprimands). Used in most organisational employment policies as a preventive measure various forbidden behaviours and organisational
sanctions in the employee handbook, the result is the suppression of bad behaviours and negatively reinforced employee toes the line.
Extinction, Behaviour is weakened if a positive consequances dosent follows (i.e. employee engaged in distracting conversation – fellows
respond by ignoring him - eventually his immature behaviour cease)
Punishment, Behaviour are weakened if an unpleasant consequence occurs (i.e. employee caught playing hearts – Public reprimand )
Behaviour Shaping and Employee, Managers use shaping when they help employee to learn a new skills when achieved manger use praise and
recognition
Note: Praise in the work setting is a powerful tool, but don’t over-use
3.4.2 Making Sense of Schedules of Reinforcement 3/23
Fixed vs. variable interval
Fixed vs. variable ratio
Fixed ratio – e.g. commission system; number of units produced
Variable ratio – e.g. reward after resolving variable number of customer inquiries
Variable ratio produces extremely resistant behaviours
Stretching ratio / interval should keep employees from taking rewards for granted. Should not be used to reduce rewards
3.4.3 Behaviour Modification in Perspective 3/25
Advantage:
BMod is focuses on observable employee behaviour which can be measured and used to improved motivation and performance. It is more
subjective than other approaches.
No manipulation occurs by employee, improve employee instrumentalist
Criticism:
“Undemocratic”, undermines individual choice, make organisation more manipulative, make the employee dull, and oversimplifies work
behaviour
Works best for routine tasks with some degree of employee determination
Participation in design mitigates “manipulative” aspect
3.4.4 Understanding the Role of Punishment in Management Practices 3/27
Punishment is necessary but implies failure on the part of manager. Opponents prefer extinction and evasion.
How can punishment be used effectively?
1.
2.
3.
4.
5.
6.
Prevent undesirable behaviour from becoming bad employee habits
Punishment must be intense and immediate
Punishment must be equitable across people and infractions (i.e. senior shouldn’t be exempted)
Punishment must have information values
After corrective action it has been taken, the employee’s value to the organisation must be reaffirmed (concentrate on improvement
rather than the emotional aspects
Punishment should not be followed by non-contingency rewards (i.e. shouldn’t invite the employee to lunch to alleviate his guilt about
reprimanding)
3.4.5 Setting up a Behaviour Modification Programme 3/31
1.
2.
3.
4.
5.
6.
7.
8.
Conduct job analysis
Define Performance Behaviours
Conduct baseline
Select powerful reinforcers
Use continuous reinforcement
Practise behavioural shaping
Stretch ration/interval to achieve sustained level
Review and evaluate programme
Prerequisites:
1.
2.
3.
4.
5.
6.
7.
Trust must exist between employees and supervisors
Good workplace hygiene
Employee-controlled pace
Employee ability must be assured
Performance measurable and recordable
Regular feedback to employees
Supervisors must be trained and committed to B Mod
A1/5 --- Comparing B Mod and Expectancy theory:
Similarities:
Process theories of motivated behaviour
Importance of behaviour and its consequences
Emphasize rewards
Differences:
Expectancy theory is a cognitive process theory; B Mod “deterministic”, focuses on role of environment
Instrumentality is a cognitive component that is not reflected in B Mod.
4 - Organisational Control and Reward Systems
4.1 Why Organisations Need to Assess Employees’ Performance 4/2
Performance Appraisal (PA) system is supposed to generate valid quantitative information about the quality and quality of employees’ work.
Organisations use the PA date to make objective decision about promotions, pay rise, training and to ensure that employee:
1. Understand job requirements
2. Contribute to company goals
3. Comparing employees’ performance to the company standard performance
4. Improve employee motivation
5. Evaluate employees’ performance fairly and objectively determines the pay rise, bonuses. Called (merit-based pay)
Employee-manager opportunities to discuss:
Service quality, motivation tool and effective appraisal, setting company goals, job satisfaction, organisational commitment and job involvement
4.1.1 Performance Appraisal Issues and Practices 4/3
PA process of assessment must be fair, timely and accurate. Management try to ensure actual performance and measured performance are
substantially equal.
Good PA system tries to improve the congruence between measured and actual performance. Low congruence cause performance measurement
problems (deficiency, unreliability and invalidity)
1.
Deficiency, occurs when meaningful performance is ignored because the evaluation system fails to capture it. (i.e. PA system tracks
time and frequency and while it fails to capture quality of the service or customer satisfaction)
2.
Unreliability: reliability is the consistency and stability of PA result under the same evaluator and similar circumstances. Reasons of
unreliability come from perception problems, untrained evaluator, unskilled evaluator and poor documentation.


3.
Consistency, two or more way of gathering performance data producing results which agree
Stability, the property of dependability of results over time (same score at various evaluations for fixed characteristic)
Invalidity: is the meaningfulness of the measuring component in a PA system.
What kind of errors do mangers make in their PA work?
Common threaten to the reliability of PA system. By mangers who are 1) improperly trained 2) Sceptical about PA 3)not objective and un-fair
minded.
4.1.2 Overcoming Reliability Errors in Performance Appraisal 4/5
To overcome the noted problems in table 4.2 follow the following methods:




Use multiple criteria (i.e. several performance dimensions, focus on core job behaviour)
Emphasises behaviour rather than traits (i.e. traits such as loyalty, friendless have little bearing on job performance)
Use several ratters (ratter errors normally distribute, use average of scores and use 360 degree performance appraisal – self-appraisal ,
peers , leader apprises team and vice versa)
Train the ratters (problems like halo and leniency can be virtually eliminated)
4.1.3 Developing Performance Measures with Job Analysis 4/6
Job analysis focuses on the content of what the employee do in work as a basis for extracting dependable performance measures
Job analysis most difficult task is to isolate the core tasks to determine the key performance behaviour
4.1.4 Performance Appraisal (PA) Methods 4/7
The common methods of appraisal used in firms are:
1.
Absolute Standards this method judges each employee against fixed and inflexible set of performance criteria. (Yes/No)

2.
Graphical Scales Rating System, the most popular system, it isolates several aspects of personality and behaviours (content validity)
– Excellent, Good, Average, below average, Poor

3.
Disadvantage: high bias, all or nothing, personality-based not job behaviour
Disadvantage: Strictness, leniency or similarity and it doesn’t eliminate the validity problem
Behaviour Anchored Rating Scale (BARS) this system provides concrete example of behaviours for different level of performance.
For Example, each numerical level of performance is anchored by behaviour (behaviour anchor) – it is spring from BMod


Advantage: emphasise how the work is performed, provide observable behaviours related to performance dimension, higher
quality than other systems, reduce emotion and employee’s need to self-defence.
Disadvantage:
 Take time and effort to be developed
 Required behaviour to be observable
 Not work with creative and intellectual jobs such as scientists, lawyers and physician
4.2 Goal-Setting and Management by Objectives (MBO) 4/10
Goals are defined as those end states which reduce the intensity of needs and motives
Researchers propose that clearly specified, difficult goals result in greater performance improvement than easy goals stated in general terms.
Goal setting system:
1. Increase work motivation
2. Reduce the stress of conflict
3. Improve the accuracy and validity of PA system
Goal-Setting theory elements:
1.
2.
3.
4.
5.
Specify expected results, identify rewards
Set goals
 Mutually determined
 Employer-centred
 “Do your best”
Goal attributes should be SMART
 Specific
 Measurable
 Achievable
 Resource-based
 Time-specific
Accept/commit to goals
Formal/informal feedback
4.2.1 How Does Goal-Setting Work from the Employee’s Perspective? 4/11
Example for goal-setting:
1.
2.
3.
4.
5.
6.
Economisation drive to reduce 10% of cost next year, and defined 8% bonus if achieved
Organise employee task force and office plan
Come up with sub-goals and incentive plan
The task force applies the SMART principle
Employee commitment and acceptance because the goals are “smart”
The organisation incorporate well-timed formal and informal feed back
Management by objective (MBO) is simply an organisational application of goal-setting theory.
Effective MBO assumes:
1.
2.
3.
4.
Employees perform better when they know what is expected
Employees prefer self-determination
Employees can be motivated with well-timed formal and informal feedback
Employees prefer intrinsic and extrinsic rewards that are consistent with performance (equality)
Seven steps in MBO cycle:
1
Analyse people, jobs methods, requirement
2
Plan goals strategy
3
Define Employee jobs (content, authority, responsibility)
4
Articulate goals difficulty, clarity, ..
5
Reach mutual agreement on goals, metrics, time frame
6
Make informal review of achievements, probable rewards
7
Formal review
4.2.2 Observing Caution in the Use of MBO Systems 4/13
Firm’s MBO can be sustained by the “best practice” noted below:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Managerial support
Relationship with routine managerial activities
Emphasis personal development goals
Effective training of MBO
Tailor MBO to departmental needs
Avoid overemphasis of number of goals (simple is better)
Benefits should far exceed cost of programme
Equal emphasis on discussion and evaluation
Flexibility, constant revision
4.3 Rewards and Reward Systems 4/14

The reward system itself channels and guides employees’ expectancies and instrumentalities (clear and cloud line of sight), the
perceived equity in the social comparison leads to job satisfaction.

Distinction between rewards and perception of rewards, the expectancy theory of motivation makes it clear that if the employee
perceives a week connection between performances and rewards (unfair, inequity), then the rewards will not act as a motivator.
4.3.1 Classifying Rewards in the Work Setting 4/14
Intrinsic rewards: are defined as those rewards which employee associate with performing task or the job itself (content of work) for example

Personal responsibility for meaningful work

Doing work lead to Personal development and competence

Inclusion in channel of important information

Occupations diverse skills and activities (i.e. design engineer , architect)
Extrinsic rewards: are given to the employee by the organisation (context) it can beak down into



Direct compensation: Salary, bonuses, overtime pay, share options, pensions (retirement fund)
Indirect compensation: Perquisites, personal services, low-interest loans
Non-financial: Parking spaces, office furnishing, impressive titles
Intrinsic and Extrinsic rewards impotency?




A few researchers (Herzberg) ignored human nature by proposing that intrinsic rewards are more important than extrinsic rewards and
influence motivation and performance.
Other researchers found strong correlation between intrinsic rewards and personal growth on job
Firms have much more control over extrinsic rewards. Intrinsic rewards are more “local and ephemeral”
Distinction since different origins and effects. Also the basis of further classification (above)
4.3.2 Distributing Rewards in Organisations 4/16
Firms that fail to distribute meaningful rewards fairly are putting their business model at risk. Firms try to avoid these threats by using accepted
correlates of performance to develop guidelines for direct compensation, are discussed below:
1)
2)
3)
4)
Performance: top vote-getter such (pay-for-performance) called (merit-based) , must be fair
Effort: to minimise turnover and hiring cost, frequently for mangers on the hope to be performance, it is poor practice
Seniority: based on length of service or tenure, seniority-pay game erodes equity, it is not good
Equality: similar positions receive the same pay and pay rise, break the connection between pay an performance, all hope pay rise
with inflation
How do the firms determine the value of jobs?
Before the firm design an effective reward system. It has to classify and group the job by function and value
Job Classification: ranks jobs against each other based on compensatable factors i.e. determines job grades, starting salaries, pay ranges
 Skill requirements (includes education, certifications)
 Mental requirements
 Physical requirements
 Responsibility
 Working conditions
Pay systems should consider procedural and distributive justice (4/39)
 Procedural justice: practices are fair and subject to review
 Distributive justice: pay outcomes judged as fair and reasonable
4.3.3 Employees’ Perceptions of Pay Rises 4/18
Employee rank reasons for pay rise as follow:



Hourly employees : cost-of-living adjustments, bargained contracts
Salaried employees : salary surveys
Top executives : profitability, company productivity, market share
4.4 Components of Executive Compensation 4/19




Base salary
Benefits
Long-term incentives
Annual bonus
4.4.1 What Are the Current Trends in Executive Compensation? 4/21





Trend 1: Link to market value of firms (shareholder)
Trend 2: Expanding slice of net income.
Trend 3: Pay gaps between US and UK narrowing
Trend 4: more emphasis on the firm’s net income
Trend 5: Preventing ISO ( Individual Stock Option)plans for diluting stock value
4.4.2 How are Compensation Plans Changing for Non-executive Employees? 4/23
Reduction of merit increases and greater reliance on Pay-for-performance (bonuses)
Reliance on part-time employees and temporary workers (avoid payment of benefits)
4.5 A Comparison of Company Pay Practices 4/25
1.
2.
3.
4.
Cafeteria-style fringe benefits
Lump-sum payments (flexible payment schedule: weekly, monthly, and yearly; in advance…)
Skill-based compensation i.e. pay more when learning new skills, leads to versatile and more cross-trained work-force
Accumulating Time-off time off as reward, improve quality of life i.e. aging parents, increase loyalty and commitment
5.
6.
All-salaried team no time clocks for creative works
Open Salary information managers can tackle “secrecy problems ” by publishing
 Ranges for pay rises
 Number of pay grades
 Meaning of performance levels
 Policies on bonuses and fringe benefits
4.5.1 Making Intelligent Choices about Company Pay Plans 4/27
Employer like skill-based compensation, following pay recommendations can help companies to improve pay plans
1. Tie incentives closely to performance ( so employee have line of sight)
2. Customise the reward and benefit to meet employee’s personal needs
3. Align the rewards system with the firm’s methods and structures
4. The pay system should match the firm’s culture
5. Monitored for fairness and consistency with industry remuneration levels
4.6 Individual and Group-Based Reward Systems 4/29
The challenge for managers is to sustain the collaboration and teamwork without losing individual creativity i.e.
1) Cost-Saving Plans (Scanlon, Rucker)
2) Profit-Sharing Plans
4.6.1 Cost-Savings Plans 4/30
The first cost-saving, group-based reward system was Scanlon Plan (1937). His plan targets to reduce labour cost in relation to historical
average or base line. Scanlon plan are called Gainsharing Plan
Example for Scanlon Plan
1234-
Historically the labour cost have been 50% of the output value
Last month , the output values was 2 million £ and the labour costs were 900 000 £
The labour cost saving is 100 000 £comparing to the historical average, manger put it in “incentive fund”
The saving ( 100 000) to be divided 30% reserve, 25% for the company and 45% as a bonus for the team
Scanlon Plan mechanism: interlocking committees, production committees propose improving ideas, screening committees to approve.
Important points should be considered by mangers before applying Scanlon plan:
123456-
Work best when there is a dependable history of labour costs
Depends on labour-management trust
Top management must be committed to productivity enhancement and training
Easiest to establish in production units 30-500 employees
Seasonal demand makes establishment more difficult
If reduction of costs leads to expansion of output then market must absorb it
4.6.2 Strengthening Competitive Advantage by Using Team-based Rewards 4/31
Self-directed teams SDT used when delayering, downsizing instead of middle managers
SDT can help firms with:
 Improved customer service
 Employee empowerment
 TQM
 Skill-building / cross-training
 Work-force diversity
A well-designed team-based reward system can strengthen competitive advantage in several ways:
1.
2.
3.
4.
5.
6.
Attraction and retention of top talent
Motivation and performance
Skill development (tie rewards to cross training)
Organisational culture (tie rewards to keep company values)
Reinforcement and definition of structure
Cost (incentives must reflect company successes; incentives can account for 50% of COGS)
4.6.3 The Rucker Plan: an Incentive System that Works in the Self-Directed Team Environment 4/32
Baseline:
SVP – sales value of production
COM – cost of materials
COL – cost of labour
VA = SVP - COM
LCVA (Labour Contribution to VA) = COL / VA
EPI (Economic Productivity Index) = 1 / LCVA = VA / COL
Calculation
EVP (Expected value of productions) = EPI x COL (of bonus period)
Principal advantage of Rucker over Scanlon is no need for screening committee. Rucker more decentralised. Rucker plan less rigid than Scanlon
plan; focuses on profit rather than just production; more flexible since lower level of hierarchical control.
Rucker Plan creates excellent line-of-sight
4.6.4 Design and Timing Issues for the Installation of a Rucker Plan in a Delayered Firm Using Self-directed Teams 4/35
Delayering reduces numerous hygiene factors
More responsibilities
Lower pay
Less job security
Longer hours / chronic overload / job stress
Extremely unfavourable for Rucker plan!
Conditions
Firm profitable / no wage freezes
Stable management
Teams completed training in TQM, process control, team building
Company not positioned for spinoff
No outsourcing planned
Using service-driven, market-based measures of customer satisfaction
Ideal condition is Greenfield or start-up.
4.6.5 Profit-Sharing Plans 4/37
When sales are strong and costs are stable then profit sharing is popular. Less so when profits falls
It is still based on the principle crafted in 1934:



Overall company profit
Supervision merit ratings
Cost Saving suggestion
Dependency on strong organisational culture, constant maintenance and high commitment from both managers and employees.
5 - Job Design and Employee Reactions to Work
5.1 Understanding Job Design 5/2
Job design is the inclusion (linking) of specific task behaviours in a given job. And also covers work techniques, procedures and participation.
Quality of Work Life WQL designs extent to which employees are able to satisfy personal needs through work (i.e. balance employee life)
QWL emphasis increasing because of:
 Union demands
 Government demands
 Work-force diversity (employee expectations)
 Management understanding of QWL and impact on productivity
5.1.1 How Jobs Were Designed before QWL 5/2
Traditionally managers use the principles of scientific management SM



Determine workers’ productivity coming from two sources (time and emotion)
Analysed by number, complexity, cycle time
Re-assembling into “one best way” to minimise waste in time and cost
– break down work into tasks (time, emotion) and analyse number and time to complete.
MS Tools:
 Time and motion studies
 Differential piece-rate pay systems
 Scientific hiring of workers (employee physical and mental traits)
MS Effect:
 Limited social interaction ( speed is important)
 Low skill requirements (simplified job design, low training)
 Work Standard (i.e. production rates, number of unites)
 Job activity repetition
 Task specialisation ( few steps and then move)
 Low employee creativity
 Pre-specified tools and methods
MS Disadvantages:
 Modern-day production method but creates a lot of problems
 Efficiency for routine tasks but causes worker alienation
 Neglects higher-order needs
 Jon dissatisfaction declines, absenteeism
5.1.2 Is Scientific Management Declining as a Job Design Philosophy? 5/4



Declining as efficiency gives way to customer satisfaction in importance.
Shift from simplicity of scientific management to complexity of self-directed teams.
Job Design now must balance between employees’ higher-order needs
5.1.3 Horizontal Increases: The Roles of Job Enlargement, Job Rotation and Cross-Training 5/4
1.
2.
3.
Job enlargement increase the number of work activities in a job (decrease over specialisation)
Job rotation exposes workers to a variety specialised jobs over time
Cross-training variation of job enlargement where employees are trained in different specialised work activities (improves flexibility
and versatility)
5.1.4 Job Design and Herzberg’s Two-Factor Theory 5/4
Two-factor theory of job motivation aka job enrichment.
Job enrichment is a philosophy that the job must contains hygienes and motivation factors
Absence of motivators (challenge, responsibility, pride …) do not necessarily mean dissatisfaction if hygienes are present
Absence of hygienes (salary, security, working conditions…) leads to dissatisfaction.
Herzberg’s theory stands in direct contrast to principles of MS. And MS ignores Maslow’s higher-order needs
Job range is number of tasks an employee performs
Job depth is amount of employee authority to select various job procedures
Herzberg’s principle in job design:
1. Give employees as much control as possible
2. Hold them accountable
3. Teach new skills and procedures
4. Let them set work pace, within limits
Herzberg’s Criticism:




Methodological: critical incident method (responses indicate factors of satisfaction/dissatisfaction) distorted since respondents blame
where dissatisfied, take credit where satisfied.
Psychological the theory of motivation over-simplistic
Believed only certain workers prefer enriched jobs.
Also believed that management should decide on the enrichment without participation.
5.1.5 The Psychology of Employee–Job Interactions 5/6


Employees’ psychological reactions to work are important.
The psychological content of the job determines job employees’ emotional and intellectual reactions of it.
The components of job content
Six job content factors exist and called core job dimensions (i.e. skill variety, task identity ...)
Six job content factors feed into experience of meaning and responsibility which contribute to motivation, performance etc.
1.
2.
3.
4.
5.
6.
Skill variety : number of different skills required
Task identity: job completes task from beginning to end
Task significance :substantial and lasting influence
Autonomy : freedom and discretion
Feedback:
Social opportunities:
Critical Psychological States
Is the best through “having the job that matters to me, my family and my firm”
Critical Psychological States are the employee reactions to the job content factors (i.e. skill variety, task identity...)
Growth Need Strength (GNS) has moderate influence on the relation between the employee’s job and his experienced work outcomes.
Employee growth need strength composed of: (5/23)
1. Achievement
2. Interest in work
3. Challenge
4. Desire for independence
5. Personal control over work
5.2 Making Use of Job Design for Individual Employees 5/9
Job characteristics model superior to Herzberg because more valid description of psychological interaction. Also pinpoints job content factors
which may need to chance. And shows how job design can improve motivation, satisfaction, etc.
5.2.1 Job Design Principles 5/9
1.
Horizontal job loading (expansion of job’s range)
 Job enlargement have more sustainable benefit, expand core work activity, give job from begging to end, new skill acquired
 Job rotation rotate from one task to another ( for individuals not for team-based work)
 Cross-training essential activity in team-based work system,
Disadvantages: doesn't deeply affect higher-order needs, beneficial temporary, may appear more work for the same pay
2.
Vertical job loading (increasing job depth) changes in component of work, results in more control, autonomy, challenge, direct
responsibility over work outcome
Vertical job loading principals (that deepen the employees’ critical psychological states):
1.
2.
3.
4.
5.
6.
3.
Provide direct feedback on performance to employee i.e. formal performance review
Give the chance to learn new skills
Let employee schedule their work
Let employee customise his approach to his work
Let employee control over job resources
Use MBO emphasise the result instead of method
Other approaches:
But not widely used




Four-day work week
Job-sharing two employee fill one job
Telecommuting or home based
Flextime
5.2.2 Assessing Managers’ Interests in Job Design 5/11
Managers should keep an eye for improved job design methods, better dependability of job design programmes, increase interest.
1.
2.
3.
4.
Work design alters relationship between people and job
JD targets performance behaviour to lead to improvement
JD improves positive changes i.e. initiative employee
JD Help organisations better satisfy employee needs
Problems that can occur in JD programmes:
1.
2.
3.
4.
Global competition Technology renders it necessary (profitability even with dissatisfaction)
Shelving programmes due to declining profit , programme Start-up and maintenance costs
Ingot employee preference
Managerial and union resistance
5.3 The Team Approach to Job Design 5/13
Socio-technical systems theory STS
 Social element: social and interpersonal aspects of task group behaviour
 Technical element: operational, technical mechanical processes used
Scientific management vs. behavioural sciences
Tavistock institute reached to: Interdependence of technical and social work systems, JD must account their interplay
Building block in such designs is autonomous work group:
1.
2.
3.
4.
Group is assigned a whole task
Each worker in group is cross-trained
The groups selects work method
Compensation is two-tiered , team bonuses and individual merit-based
5.3.1 How Managers Design Self-Directed Teams 5/14
Profit-making firms have transformed the autonomous work group concept into self-directed teams (SDTs)
Self-directed teams are a formal groups made up of members who are jointly responsible for team leadership and goal accomplishment.
Advantages of SDTs:
1.
2.
3.
4.
High-performance norms
Minimising group conflict
Satisfying personal relations
Integrating technical work system
To achieve the above outcomes the management should do:
1.
2.
3.
4.
5.
Relative small (8-20 members)
Team-centred interventions (training & development) are confined to work skill areas or cross-training
Develop two-tiered pay system: tem bonuses and individual merit-based
Role of supervisor: horizontal integrator with other work teams (not vertical liaison)
Team has authority to plan, organize and control over work, and responsible for quality and performance.
5.3.2 Companies which Have Used the Self-Managed Work Team Concept 5/15
Also called:
1. Self-managed teams
2. Semi-autonomous work groups
3. Empowered teams
4. Cross-functional teams
Responsibilities for SDTs include (like middle managers):





Training and development
Quality control
Performance evaluation
Personnel interviews
Work scheduling
SDTs member’s assignments:
 Evaluate peer performance
 Cross-train each other ( on-the-job tanning)
 Schedule work and assignment
 Divide work assignments
 Monitor team performance
 Apply TQM principles
5.3.3 Merging Self-Directed Team and Empowerment Concepts 5/17
The basic responsibilities for controlling migrate from middle managers to self-directed team.
Preconditions for worker empowerments:
Team-based work systems are the only logical choice for organisations that adapt lean production systems and re-engineering designs

Psychological involvement in participative activities

Employees motivated to act autonomously
 Autonomy and initiatives are building blocks for empowerment but motives may undermine team design

Capacity to see relevance of participation
5.3.4 Employee Empowerment Spreads Participative Decision-Making in the Organisation 5/19
Individual participation is a core element of JD. Employee’s standpoint, participation has three facts:
1.
2.
3.
Psychological involvement work absorbed, physically stimulated
Motivation to contribute engagement encourages, integration of social needs
Acceptance of authority delegation
6 - Understanding Work Group Dynamics and Group-Based ProblemSolving
6.1 Describing Work Groups and their Characteristics 6/2
Due to de-regulation, global competitiveness, technological advances and search for cost reduction drives employer to search for:


Potential competitive advantage everywhere including organisational structure i.e. SDT
Dynamic organisational structures able to adapt to rapid change
6.1.1 Types of Groups in Organisations 6/3
Work group is two or more employees:



Interact with each other
Share common interests or goals
Brought together for meaningful organisational activity
Formal group is two or more employees assigned by employer and know that:



Interact to accomplish corporate goals
Share responsibilities
Brought together for meaningful organisational activity
Work groups can be dividing to:


Task group : work together on series of related activities (e.g. SDT assemble car)
Command group : exercise ongoing decision making authority (e.g. board of directors)
Informal groups come together voluntarily for a common purpose, for social contact or mutual support (not necessarily work related).
Managers not always encourage because it sometimes against firm’s values, counterproductive or revolutionary
Project teams, general characteristic to be excellent based:
1.
2.
3.
4.
5.
6.
Life span should be short (e.g. less than four months)
Membership voluntary and retain their positions in functional unites
Assembled quickly without formal selection process
Strong links to upper management / swift follow-up
No support staff assigned
Communication and project documentation informal
6.1.2 Why Individuals Are Attracted to and Join Groups 6/5
Factors causing group formation
6.2 Work Group Composition, Cohesiveness and Norms 6/6
Homogeneous: group have member similar qualities (i.e. in the above table)
Heterogeneity: different given characteristic
 Creates more conflict
 Increases problem-solving capacity , because they are more versatile and creative
6.2.1 Cohesiveness: The Social Adhesive in Work Groups 6/7
Cohesiveness is an outcome of group composition and consists:
1.
2.
3.
Attraction to the group
High morale exhibited
Strong coordination
Comparison of highly cohesive groups to incohesive groups:
Managers can raise the cohesiveness by:








Match tasks to characteristics of members
Small groups more cohesive
Time constraints
Clarity of goals and activities
Formalise the role
Positive feedback timing
Creating perception of common enemy
Two-tiered reward system for individual task performance and for cohesiveness-driven team performance
Relation between Cohesiveness and Performance:
Three conditions influence performance
1.
2.
3.
The level of work group cohesiveness
Performance goals
Degree of agreement between group and organisational goals
6.2.2 What Managers Need to Know about Work Group Norms 6/9
Each group have norms for controlling member’s behaviour
Norms are the group expectation for member concerning their 1) level of effort 2) agreement and support group’s goals
Common properties of group’s norms:
1.
2.
3.
4.
5.
Norms regular the process of influence process
Norms apply to member behaviour not thoughts
Norms governs member’s level of effort and group goals
Norms develop over time and are resistant to change
High-status members may deviate from norms more than others
Managerial principles:



Create desire to remain in group
Show how members contributions help achieve group goals
Show link between group goals and personal accomplishment
6.2.3 Groupthink: When Work Groups Expect too much Conformity 6/11
Group think syndrome if the member (prefer any decision) as long as the group remains unified and conflict-free , can lead to failure
The indicators of group think witch managers should recognise:
1.
2.
3.
4.
5.
6.
7.
8.
The illusion of invulnerability
Collective rationalisation
Mindguards
Belief in inherent morality of group
Negative stereotyping of group
Direct pressure applied to dissenters
Self-censorship
Illusion of unanimity
Suggestions to managers to reduced the impact of group thinking
1.
2.
3.
4.
5.
Assign the role of critical evaluator to members on rotating basis
Influential members should not pre-specify solutions (separate idea generation form idea evaluation)
The leader direct sub-groups to arrive at spate decision before the general decision
Outside experts give guidance to the group
A second chance meeting
6.3 Significant Aspects of Work Group Structure 6/12
Elements of group structure:
Positional status i.e. member’s rank, authority,
Personal status i.e. esteem accorded, personal work schedule
Group size and
1. Participation, bigger groups decreases participation
2. Conflict, bigger groups Increase conflict
3. Performance
 Potential performance increase (slightly) logarithmically with size
 Process losses increase (slightly) exponentially
 Actual performance increases but mean actual performance decreases
Potential Performance is defined as that the level of performance which could be achieved with the ideal combination of members’ skills ,
abilities and pervious work experience.
Process Losses are any obstacle to achieved potential performance, i.e. group thinking, interpersonal conflicts or disagreements about method or
goals.
Actual Performance = Potential Performance – Process Losses
Mean Actual Performance per member decreases as group’s size increases because of coordination difficulties
Mean Average Performance per member decreases as group size increases because of social loafers (free boarders)
Guide lines for the management of working group size:




Middle-sized groups (5 to 11) often make more accurate decisions
Very small groups (2 to 3) can make members anxious
Small groups (2 to 5) achieve more consensus
Large groups (11to 20) generate more ideas but mean actual performance per member decreases
6.3.1 Guidelines for the Management of Work Group Size 6/15
6.4 From Statics to Dynamics: Work Group Development and Decision-Making 6/15
Stages of group development
1.
2.
3.
4.
Forming
 Identify behaviours most important
 Assess skills and experiences
 Discuss goals
 Assess degree of commitment and involvement
Storming
 Interpersonal conflict emerge (come out)
 Disagreement creates basis of trust
Norming
 Strengthened commitment
 Harmony and agreement
 Solidarity (external threat)
Performing (Stage 4)
 Actual performance close to potential performance
First two stages focus on composition, roles, developing norms and consolidating the leadership position
Latter two stages must prevent groupthink and maintain norms. Must devote some energy to stability and socialisation of new members while
maintaining task focus.
6.4.1 Understanding Stages of Work Group Development 6/16
6.4.2 Work Group Risk-Taking and Creativity 6/18
Groups are no more risk oriented than individuals, groups accepts risk or cautions based on:
 constituent members



expectation of organization risk
Leader’s risk orientation
Group history in tolerating deviance from group norms
Low group creativity (6/19 table 6.6)
Factors which contribute to low-group creativity:
1. Un clear aim, no goal or core focus
2. Idea generation not separated from evaluation
3. Personality dominance
4. Conclusions individual based rather than group based
5. No access to higher managers
6. Group criticism of failures
6.4.3 Brainstorming, Nominal and Delphi Decision-Making in Groups 6/18
1.
Brainstorming





2.
3.
The first choice for groups, fundamental principle is separation ideas generation from idea evaluation, the steps of typical
brainstorming procedures are:
Assemble the work group and assign leader
Explain the focus of session
Set time limit
Select recording method
Nominal Group technique (NGT)




All group members silently write one idea
Each idea discussed in order
Members vote on ideas (1 to n)
Further refinement through additional iterations possible



Idea generation separated from idea evaluation
Balanced participation
Systematic convergence

“ritualistic” and non-creative if overused
Delphi Technique (Rand corporation)




All members offer comments anonymously
Data aggregated and sent to all members
Members can provide anonymous comments on comments
Multiple iterations possible



Good for remote attendees
Eliminate effects of dominant personalities and perceived member status
Costly and timely but tends to result in best decisions
6.5 Practical Guidelines for Managing Groups 6/21
Managers must shift their emphasis to get effective group decision-making into
1.
2.
Task activities i.e. define work method, planning or product quality
Maintenance Activities i.e. to sustain member satisfaction, well-being
Generally managers improve group creativity with: (A1/14)
1.
2.
3.
4.
5.
Carefully define task/problem
Develop norm to separate idea generation from evaluation
Monitor process losses / avoid group think
Make merit-based rewards available
Distribute group-based rewards based on group success
6.5.1 Managing Intergroup Behaviour and Performance 6/23
Interaction requirements:



Interdependence (to execute tasks)
Information flow
Integration requirements
Pathways to effective intergroup relations:





Rules and procedures
Member exchange
Linking role
Task forces
Decoupling (reduce interaction)
6.5.2 Laggards in Groups: Spotting and Correcting Social Loafing 6/25
Theoretical explanations:
 Equity of effort
 Loss of personal responsibility (nobody will miss me)
 Reward decoupled from effort
 Coordination complexity (larger groups)
Practical suggestions:
1.
2.
3.
4.
5.
Highlight interesting aspects to increase involvement
Assure members that contributions are identifiable
Push for no-tolerance of inadequate effort
Advise of future performance evaluations
Make rewards dependent on individual performance
Process loses can be minimised (6/33) by:





Careful definition of group task
Separation of idea generation and idea evaluation
Avoidance of groupthink
Making group rewards contingent on group performance
Making group rewards contingent on contributions
6.6 Decision-Making in Teams: Deciding on the Extent of Participation 6/26
Vroom-Yetton-Jago normative decision model: (Directed graph)


AI – Manager alone
AII – Manager using information from group


CI – Manager explains problem to subordinates 1:1. Makes his own decision
CII – Manager explains problem to subordinates in group. Makes his own decision

GII – manager explains problem to subordinates in group. Makes group decision.
Factors affecting decision (Problem attributes):
 QR
Quality requirement (of decision)
 CR
Commitment requirement (of subordinates)
 LI
Leader’s extent of information
 ST
Problem Structure
 CP
Commitment Probability
 GC
Goal Congruence
 CO
Subordinate Conflict
 SI
Subordinate Information
6.7 Work Groups in Competition and Conflict 6/28
6.7.1 Two Organisational Views on Conflict in Groups 6/29


6.7.2
1.
Traditional view : suppresses conflict, defines boundaries, resolved by escalating to appropriate hierarchical level
Contemporary view : channel conflict to achieved organisational goals and competitive advantages
Managing Conflict within and between Groups 6/29
Avoiding:


2.
Accommodating


3.
Using power or pressure when emergency conditions
When vital action ( crisis condition) or if unpopular action (downsizing or off-shoring of job)
Compromising:



5.
Say (yes), when you fear losing a friend , fear transferring if you disagree too much, when decision maker is wrong
Employee development by letting “learn from mistakes”
Forcing:


4.
Seeks to suppress conflict, convince group that disagreement is disloyalty
Adopted when issue is trivial or Cost of disruption outweighs benefits of resolution
When find a common ground that is acceptable to the dispute parties, Parties have equal power and commitment
When the goal are important
Under time pressure
Collaboration – solve a problem permanently through mutual commitment to solution



Needs both parties are integrated to solve a problem permanently
Time consuming but leads to permanent solution
Effectively works when rational (unemotional) people share facts
7 - Organisations: Power, Politics, Leadership and Entrepreneurship
7.1 An Example of Power 7/2
7.1.1 The Meaning of Power, Authority and Influence 7/3



Power : ability to alert the behaviours of others
Authority : right to order others to do something
Influence: process of affecting the thoughts, feelings and behaviour of others.
Zone of indifference – range in which employees perceive influence attempts to be legitimate
7.1.2 Sources of Power 7/4
1.
2.
3.
4.
5.
Reward :the capacity to providing positive outcomes and preventing negative outcomes
Coercive : Threat or punishment
Legitimate : due to position in organisation chain of command
Referent : power-holder is well-liked and admired, based on interpersonal attraction; attaches to person, not position
Expert : possession of specialised expertise which is valued
7.1.3 Using Power Ethically 7/5
Manager is responsible for using the five sources of interpersonal power, coercive power must be used consistently and privately, manger shoul
consider the following before using the power



Produce good outcome for all stakeholders
Respect the rights of all stakeholders
Treat all stakeholders equitably
7.1.4 How Employees Obtain Power 7/6
1.
2.
3.
4.
5.
6.
7.
8.
9.
Employee build and image of success: project competence and organisational commitment
Creating obligation in others by doing them favours: they will be in a position to help you later
Identify with powerful people in the firm: find a mentor
Giving excellent performance: meet firm’s performance expectation, tackle difficult problems
Moving into a position that controlling access to information: increase independency
Maintain a network of respected colleague: sustain reliable work relationships
Be a job recogniser: job enlargement, expand your skill set
If the firm value risk taking: tackle problems and technical problem solving
Become a recognised knowledge worker: make it long-term goal, boundary spanner, acquire specialised expertise i.e. marketing or
crisis management, speak the language used in other unites in the firm
10. By Manipulating roles or sticking close to company policies: i.e. staff lawyer or internal auditor become powerful because they
have the job of revising and controlling procedures
11. Gaining power to manoeuvre financial resources: increase job access to control financial resources
12. Managing upward: manage your boss, carefully telling your boss by your accomplishments, maintain good relation with him
7.1.5 How Subunits Obtain Power 7/8
Work Unites power differences include:
1.
2.
3.
4.
Number of employees
Size of budgets
Quality of facilities
Impact on decisions
Conditions contributing to the power of work unite:
1.
2.
3.
4.
Scarcity: variations of subunit power are magnified by scarcity of resources
Uncertainty (Risk) : boundary spanners help reduce uncertainty (greatest power during period of uncertainty)
Centrality : being on the critical path of work flow
Absence of substitutes: if only one unite performing a service , centrality increased
7.2 Uses and Abuses of Power: Playing Politics 7/10
Politics: is the management of influence to obtain ends not sanctioned by the organisation or to obtain sanctioned ends through non-suctioned
(illegal) means.
Key point is legitimate outcome and legitimate methods
Organisational power refers to the management of influence to obtain ends not sanctioned by the organisation or to obtain sanctioned ends
through non-sanctioned means. (7/31)
7.2.1 How Managers Play Politics 7/11




Whistle-blowing
Live versus staff conflict
Sponsorship and coalition-building
Insurgency / resisting authority --- often by “following the letter of the law”
7.2.2 Looking Upward: Managing the Boss 7/12
Strength your work relationship with your boss by:
1.
2.
3.
Understand your boss and his decision-making context
Perform honest self-appraisal (own strengths, comfort level with authority, need for achievement)
Professionalise your relationship with boss basing it on:
 Needs and styles of both
 Well-understood expectations
 Documented performance
 Selective use of boss’s time/resources
7.3 Leadership: A Conundrum of Theory 7/14
Leadership – power of one individual to guide actions of another
7.3.1 Are Leaders Different from Managers? 7/14
Different but can be same person
Manager: responsible for performance/productivity of subordinates/subunit
Leader: resist the status quo and propose changes
Study of leadership broader than study of management.
7.3.2 Understanding the Roles of the Manager 7/14
Roles:
1.
2.
3.
Interpersonal: leader encourage, liaison
Informational: monitor, advocate
Decisional: creator, crisis control, negotiator and resources distributor
Effects of self-directed teams:

Roles of figurehead, leader, spokesperson vanish (disappear)

More focus on:
 Disseminating information
 Allocating resources
 Intervening in disturbances
7.3.3 Coming to Grips with the Problem of Leadership 7/16
Three approaches to leadership:
1.
2.
3.
Trait approach
Behavioural approach
Situational approach
7.3.4 Research on Leadership Traits 7/16







Physicality
Social pedigree
Mental characteristics
Personality
Work orientation
Social skills/abilities
Logical thinking, persistence, empowerment, self-control
Traits more closely related to who is promoted than who is an effective leader
7.3.5 The Behavioural School of Leadership 7/17
Two fundamental leader behaviours:
1.
2.
Initiating structure
 Work procedures
 Planning, assigning tasks
 Clarifying work roles
 Supervising subordinates
 Asking for results
Consideration
 Approachability
 Supportiveness
 Maintenance of high morale
 Concern for group welfare
 Collaborative work atmosphere
In periods of ambiguity, time pressure, threat: initiating structure important
With high task clarity, initiating structure detrimental; consideration more important
Three leadership styles:
1.
2.
3.
Autocratic
Democratic
Laissez-faire
Unclear whether behavioural approach is cause or effect of leadership
7.3.6 Situational Leadership Theories 7/19
More complicated but also more promising (since more inclusive) than trait and behavioural theories
7.3.7 Fiedler’s Contingency Theory 7/19
The leadership behaviour interacts with the favourableness of the situation to influence group performance
LPC – rating by leader personal ordination towards his least-preferred co-worker
High LPC leaders – relationship oriented
Low LPC leaders – task oriented
Three constructs define situational favourableness
1. Leader-member relations
2.
3.
Task structure (clarity)
Position power (legitimate authority of leader)
Task oriented leader (Low LPC) most effective when situation highly favourable or highly unfavourable
Relations-oriented leader more effective for mid-range favourableness
Leader’s orientation cannot be easily changed. Therefore organisation must match leader to situation.
Fiedler argues against training. – however, leaders can attempt to improve the situation by:
1. Tinkering with relations
 Supervise troublemakers
 Transfer members
 Obtain additional rewards for morale
 Listen to concerns
2. Modify task structure
 Give creative challenges
 Standardise assignments
 Divide work into smaller units
3. Modify position power
 Discipline
 Personally filter all information/decisions
 Delegate authority
7.3.8 House’s Path-Goal Theory 7/22
PG theory assumes that the leader’s main job is to clarify the path from subordinates’ effort performance to the reward that they value
Clear pathways from:
Effort to performance
Performance to rewards
The PG theory has four choices:
1.
2.
3.
4.
Directive behaviours
Supportive behaviours
Participative behaviours
Achievement-oriented behaviours
Leader must match behaviour to interplay of subordinate characteristics and environmental factors
Leadership more necessary where there is poor co-ordination, conflict, task ambiguity,…
7.3.9 Leader Reward and Punishment Behaviour: OB Mod Revisited 7/24
Leader is manager of contingencies and reinforcement.
Performance contingent reward behaviour (very positive)
Contingent punishment behaviour (mixed)
Non-contingent reward behaviour
Non-contingent punishment behaviour (very negative)
Implication: Use of rewards and punishers magnified by equity comparisons (will affect tendency to interpret as non-contingent)
Recommendations:
Use financial and significant non-financial rewards on measurable and well-understood standards
Use recognition and acknowledgement for exemplary individuals/groups
Create as much variety in rewards as possible
Avoid use of punishment (except for legal… ). Administer in private
Avoid delays
Avoid personal biases
-
7.4 The New Age of Entrepreneurs 7/26
Entrepreneurs are special types of leaders who create wealth by assuming risk (7/32)
Entrepreneurship is a discipline which can be learnt. Characterised more by hard work than romanticism
Myths:
-
Doers not thinkers --- requires careful planning
Born, not made – skills can be taught and learned
All you need is money --- commitment more important than instant capital
Luck --- hard work and urgency more instrumental
Entrepreneurial profile ---- no checklist to simplify traits of entrepreneur
7.4.1 How Entrepreneurs Differ from Small Business Owners and Administrators 7/26
Dissatisfaction with status quo and ability to recognise an opportunity, exploit it and make a business grow.
Entrepreneur and small business owner start the same way.
Entrepreneur not confined to individuals who start businesses (some times called intrapreneur)
7.4.2 Encouraging Entrepreneurial Behaviour In-House 7/27
7.4.3 How Organisations Encourage Entrepreneurial Employees and Innovation 7/29
Idea champion – employee who generates the idea and retains responsibility for developing the idea
Sponsor – nurtures the concept and applies organisational resources to development of idea
Godfather / orchestrator – handles all political obstacles surrounding the commercialisation
Greenhouses – horizontal co-ordination mechanisms to protect innovation teams from outside interferences
Guidelines:
-
Do not attempt to profile qualities and hire/promote based on those
Create policy defining amount of time employees can devote to new ideas
Encourage sharing of innovative ideas; create innovation review teams
Give innovative employees a stake in their idea
Decentralise product and service development
Act quickly on new product ideas
Allow innovation groups to develop own norms
Let leadership in innovation teams develop based on expert and referent power. Minimise legitimate and coercive power.
8 - Organisational Design and New Forms of Service-Driven
Organisations
8.1 Making Sense of Organisational Anatomy 8/3
8.1.1 Understanding Organisational Design 8/3
Two basic tasks:
Dividing work
Ensuring work gets done (co-ordination and control)
Mechanistic organisations
High division of labour (specialisation)
Low delegation of authority
Departments with great uniformity of work activities
Narrow spans of control
Organic organisations
Less job specialisation
Greater delegation
Low uniformity among employees in work units
Wide spans of control
Employees in organic organisations expect
Few rules and procedures
Face-to-face or informal coordination
To be empowered to create own work plans and schedules
8.1.2 Aspects of Organisational Design 8/4
Division of labour (specialisation)
Specifying the type of work performed
Specifying the work process or methods being used
Primary source of increasing marginal productivity (output per employee increases with more employees)
o Employees develop expertise through repetition
Delegation of authority
How much authority to give a subordinate?
o Authority: legitimate right to give direct orders to teams or individuals
Delegation is way for subs to acquire management skills and therefore intrinsic motivator
Benefits
o Development of competitive work climate
o Increased employee creativity
o Lowered cost through smaller staff
o Employee participation in decision making
o More rapid employee development
Principles:
o No responsibility without equivalent authority
o Delegate to lowest org level possible

When employees are involved and held responsible -> costs decrease, quality rises
o Manage by exception
o Ensure employee understanding of task is complete
o Supervisors cannot escape responsibility (the buck stops here…)
Delegation is basic principle of low-cost producer strategy (Walmart…)
Departmentalisation – logical grouping of work activities to create divisions, branches, units, sections …
Functional design
Efficiency through “common language”
Minimises duplication of effort
Training simplified
Facilitates tight control
But:
Overspecialisation
Coordination can weaken
Departmental rather than corporate culture
Overburdened CEO
Defocus on customers, products or markets
Territorial design
Tailors work units to regional customer
Excellent training and career development for managers
-
Highly responsive to customer needs
But:
Danger of duplication
Requires general managers capable of handling several functions
Product-divisional design
Adaptability and flexibility in meeting customer needs
Deep understanding of product and markets
Friendly competition between GBUs maximises profits
Easy performance measures
Shifts some burden from corporate to divisional execs
But:
Product divisions can duplicate effort
Difficult to find heads of divisions
Product division collaboration difficulties due to sharing resources and transfer prices
Matrix design
-
-
Blends emphasis on market changes with technical expertise
Managers with technical knowledge who can communicate with marketing, personnel etc
Self-contained departments with strong focus
But:
Confusing design (who is boss?)
Requires excellent planning
Project managers must have broad skills
o Coordination with functional managers
o Disturbance handlers
o Eliminate employee job uncertainty
o Effective advocates upward
o Translate project features into languages of marketing, R&D, accounting, finance …
High overhead costs
Span of control
Factors:
Required contact
Degree of specialisation
Ability (of manager) to communicate
8.2 Organisational Structure: Understanding the Basics 8/13
Two basic components:
Centralisation
Co-ordination
Centralisation is the retention of decision-making authority by top management
Coordination – set of mechanisms to link the actions of organisational subunits to achieve a pattern of consistent outcomes
Help organisations process information which can overwhelm vertical hierarchy
Organisational control – set of mechanisms to keep action and outcomes within predetermined limits
Can be obtained by standardising production processes or pre-specifying outcomes
8.2.1 Centralisation and Decentralisation 8/13
Centralisation usually triggers formalisation and standardisation. Results in adding layers (larger administrative ratio) to firm.
Centralisation is the retention of decision-making authority by top management
Formalisation – extent to which work is controlled by written documentation
Standardisation is degree of behaviour variation allowed
Administrative ratio – number of managers/administrators vs number of employees engaged in production.
Trend toward decentralisation (shareholder demands, global competition, sophisticated buyers)
Technological advances facilitate highly delayered structures
Outsource – ultimate end-point of decentralisation
Decentralisation goes against managerial instinct to reduce risk and uncertainty
Advantages of decentralisation:
Aligns with rapid change and fast growth
High task focus
Concurrent multiple tasks co-ordinated across functional departments
Disadvantages
Difficult to allocate pooled resources
Coordination problems
-
Jurisdictional disputes
8.2.2 Interorganisational Designs 8/15
Conglomerates – holding company acquiring other companies. Strategic principle of diversification. Targets are:
Undervalued
Financially distressed
Likely to grow
Japanese conglomerates – Keiretsu
Benefits:
Internal markets for products and services
Spread of risk in cyclical industries
Lowered transaction costs (if financial subsidiary)
Employees and managers have more job and career options
Strategic alliance – joint venture for specific purpose.
Form of interorganisational design that falls short of merger or full partnership.
Joint product development, research, production …
Outsourcing is example
Benefit is to lower entry barriers by gaining economy of scale
Problems:
o High coordination requirements
o Deciding what to share and what to keep
o Cultural, linguistic barriers
o Suspicion, mistrust
o Overdependence on another company
8.2.3 Organisational Design and Employee Needs 8/18
Formalisation often promotes job dissatisfaction
Wide span of control – confusion about work expectations
Narrow span of control – frustration of experience employees who seek more autonomy
8.2.4 Co-ordination and Control 8/19
Coordination – set of mechanisms to link the actions of organisational subunits to achieve a pattern of consistent outcomes
Critical determinant for amount of coordination is amount of information to be processed during task execution
Turbulent (changeable, complex) environments require more coordination
Stable environments require fewer methods of coordination
o More centralised, greater standardisation, formalisation
Major task of coordination mechanism is to reduce task uncertainty
Technology (e.g. email)
Information processing in vertical and horizontal dimensions
Reduce number of exceptions to be resolved by managers
8.2.5 Vertical Co-ordination Mechanisms 8/20
Tools:
-
Use teams and task forces
Use direct supervision (falling out of favour)
Standardisation of work processes (difficult with self-directed teams)
Standardisation of outputs
Performance appraisals
Management information system
o Provide early warning signals
o Decision making information (e.g. financial ratios)
o Programmed decision making
o Automating routine clerical functions
o Most benefit from MIS in:

Inventory management, accounts payable, purchasing, production control, project control
Collateral organisation – parallel coexisting arrangement of task forces which supplements the formal organisational hierarchy. More effective
at solving knowledge problems which are ill-defined.
8.2.6 Horizontal Co-ordination Mechanisms 8/22
Methods:
-
-
Direct contact
o Function of interdepartmental work experienced of managers
o Direct contact and lateral relations decay over time
Liaison roles
Cross-functional teams
-
Permanent teams to manager recurrent workflow problems
8.2.7 Control in the Organisation 8/24
Organisational control – set of mechanisms to keep action and outcomes within predetermined limits
Process control – standardisation of task performance, focus on methods of doing work
Can reduce the marginal costs of productions and increase economic efficiency.
However, formalisation may not be popular with employees, particularly if control designers don’t understand work
Externally-based processes have become inefficient and counter-productive.
o Shift to internal process control (TQM)
More suitable in stable environments
External process controls limit flexibility in turbulent environments
o Knowledgeable repeat buyers (making frequent comparisons)
o Shorter product life-cycles
o Product innovation
o Production process improvements
o Global competition
o Deregulation
o Return-hungry investors
Problems of external process controls
o Lack of patience, confusing documentation, vague expectations, panic, escalating standards
Results control – focus on objective settings. Used to gain output control.
Identify specific measurable goals
Monitor progress
Grant rewards based on accomplishments
Coordination characteristics
o Knowledge of what is expected
o Knowledge of results
o Function of superior (work-oriented feedback)
Problems of MBO
o Employee tunnel vision
o Paper chase when MBO is linked to external process controls
o Punish or reward mentality of superiors
o Collaborative aspects of system are lost when there are too many goals
8.3 Understanding the Responsive Organisation 8/27
Responsive firms are customer-oriented and delayered with focus on revenue growth.
-
Simplify and delayer
Reassign supporting staff employees
Widen spans of control
Empower the work-force
Create team-based work system
8.3.1 Experiments with the Boundaryless Organisation 8/30
Boundaryless organisation – traditional vertical and horizontal boundaries are permeable and flexible using:
Self-directed teams
Technology – (sophisticated communications)
Responsiveness to customers
Outsourcing and strategic alliances
Authority boundary – distinction between leaders and followers
Ideally firm should move away from culture which issues orders. Difficult to implement in practise
Task boundary – deciding who does which task. (… not in my job description) … ideally employee should take a wider view. But difficult to
implement. Flexibility of task boundary depends on managerial view of costs:
Accounting view – expenditures in training, research are seen as annual costs subject to minimisation. Short-term view which
does not promote flexible task boundary
Value-added perspective – all costs above are investments in future earnings. Focus on maximising future earnings.
Political boundary - often between departments (turf battles) --- create a culture that emphasises best interest of work teams, firm.
Identify boundary – employees’ shared experiences and beliefs which they insist set them apart. “us versus them”. Undermines cross-functional
team work. Socialise new members to identify with company and its goals.
Boundaryless means emphasise adaptability and responsiveness instead of command hierarchy and centralised decision making.
Not organised around functions of business. Instead focus on:
New product development
Sales and warranty fulfilment
-
Product quality
Customer service
8.4 Drivers of Growth in Customer Service 8/35
-
Differentiating services is easier/faster than differentiating products
Customers demand better quality
Service improvements strengthen brand loyalty
o Erect market segment and industry entry barriers
Bad service quickly drives off customers and lowers profits
8.5 How Good Service Retains Customers 8/36
8.5.1 Managing Services Differs from Producing Products 8/37
-
Service isn’t produced until it is demanded; consumed immediately and cannot be restored
Provided by employees not under direct supervision
Provided when/where customer desires
Labour intensive
Intangible. Characteristics difficult to measure
Often produced in the presence of customer who may participate in the delivery
Moments of truth – occurs in service delivery when customer encounters any aspect of the firm and forms an option about the quality of its
services and products. – accumulate and form durable opinion
Factors to achieve competitive advantage:
Well-conceived strategy for service
o E.g. guiding concept for all front-line employees to discover customers real priorities
Customer-oriented front-line people
Customer-friendly systems
8.5.2 Excellent Service Goes Beyond Manufacturing Efficiency 8/38
Standardisation of service outputs fails as competitive strategy when customer coproduces service episode. (“we want to do it our way”)
Applying the manufacturing paradigm fails because cost containment rather than customers’ needs are at the centre of programme.
Goods services continuum: Pure goods – bundled goods/services – pure services
Inverse relationship between production efficiency and sales opportunities. (due to complexity of customer-server interactions)
8.6 Organising Principles of Service Quality 8/40
-
-
Classify the firm’s services on client –customer service spectrum --- range of services and extent of service customisation
Organise to improve service – subordinate all control processed to improve service. Employee empowerment. Traditional
organisation control system emphasises manufacturing efficiencies using top-down decision-making. Reemphasise market share.
Less focus on bottom line. Instead invest for
o Service training
o Delayering
o Redesign of MIS to measure customer satisfaction
o Enhanced incentive systems to spur sales to repeat customers
Employee empowerment to make on-the-spot decisions to meet customer requests for service.
Abandon manufacturing assumptions in service quality delivery.
o Tracking loss and keeping of customers
o Performance of employees in delivering service
Firms following service quality strategy have advantage of choosing new employees from growing higher-quality applicant pool.
8.7 Creating a Service-Driven Organisation 8/44
Steps
-
-
Conduct service audit (customers rate firm in comparison to rivals)
o Maximum service-delivery time
o How long should it take to perform service
o How man employees should be involved
o Do parts sourced from competitors affect your satisfaction with our service
o What components of service are desirable / unnecessary
Develop company-wide service strategy
Conduct wall-to-wall employee training
o Link between training, employee morale and customer satisfaction
Implement service improvement programme
-
o Expand discretion of front-line employees
Make the service improvements planned
9 - Managing Transitions: Organisational Culture and Change
9.1 Organisational Culture: Its Meaning and Relationship to Successful Strategy 9/2
9.1.1 What Is Organisational Culture? 9/2
Organisational culture – beliefs and values understood by employees
Transmitted by:
Training
Performance appraisal
Orientation programmes
-
Becomes way of life --- taken for granted
Fairly stable, resistant to change
Internal aspect: product quality, cost effectiveness, minimised production errors
External aspect: customer service, timely distribution, price competitiveness, social responsibility
Can be measured, evaluated, perfected
Can develop randomly or be managed
9.1.2 Multiple Cultures in Organisations 9/3
Reflected in the professional orientations and skills of groups of employees
9.1.3 Understanding Contributors to Organisational Culture 9/3
Strong culture provides basis for integration and methods for managing conflicts
However:
-
Mission, goals, strategy may change
Strong cultures may not mix well during M&A
Some strong cultures threaten organisational goals because they legitimise infighting, secrecy…
Culture depends strongly on the role of CEO or founder and the close management socialisation process.
Socialisation:
-
Realistic job previews
Debasement and indoctrination
Intensive on-the-job training
Reward and promotion system
Top managers as personal role models for culture
Reinforce culture with stories about organisation and founder
Mentors develop younger employees
9.1.4 Developing High-Performance Organisational Cultures 9/8
Company culture should:
Support sources of financial strength
Fit the company’s strategic goals
Help the company adapt competencies to market
H – History – enliven, maintain company’s history
O – Oneness – create shared expectations about meaning of core business values
M – Membership – raise the level of information sharing
E – Exchange – improve coordination among employees, vendors, distributors and customers
Key principles: Management trust of the workforce. Improving the quality of the employee relationship
9.2 Organisational Life-Cycle Theory 9/11
As organisations age they become formalised, complex and differentiated. Decreases opportunity for entrepreneurship.
Indicators of decline:
Excess personnel and job classifications
Tolerance of incompetence
Cumbersome procedures
Form over substance
Reluctance to tolerate conflict
Excessive centralisation
Resistance to change
Few clear goals
Decreased innovation
9.3 Organisational Change 9/13
9.3.1 Why Do Organisations Have to Change? 9/14
Environmental uncertainty == environmental change plus environmental complexity
Mechanisms to address environmental/external change:
Change goals and strategies
Technology
Change organisational structure
Mechanisms to address internal change:
Job design - Provide more opportunity to satisfy needs of employees: variety, feedback, significance, social interaction
People - Employee empowerment, employee training
Control systems – reward and performance appraisal systems
Conditions of change
Dissatisfaction with status quo
Vision of future
Well-managed process
9.3.2 The Planned Change Process 9/15
Basic stages:
Unfreezing (constructive destruction), recognition and diagnosis
Changing – selection of new action plan
Refreezing – institutionalise and diffuse
9.3.3 Diagnosis 9/17
-
May be reactive or proactive (e.g. 360 degree performance appraisal system)
Use multi-level approach
Steering committee should guide
9.3.4 Resistance 9/18
Employees fear personal and organisational cost of change will exceed benefits
Preference of status quo over:
Economic uncertainty
Loss of personal power
Increased conflict
Changes in work relationships
Asymmetrical --- those who resist are usually better organised than those who advocate change … “Burden of proof”
Reduce by involving those affected. Not all programmes need be participative
o Time is crucial
o Management has all information necessary
o Outcomes have little effect on employees
o Employee acceptance not crucial
o Skill development not a significant focus
9.3.5 Carry-Over to the Work Setting 9/19
Where change programmes are conducted off site (e.g. university-based training)
Successful transfer depends on:
Elements in change process correspond to features of work environment
Perceived to be immediately useful
Behaviours supported by others
More likely to affect interpersonal and group-based change processes than system-wide (9/33)
9.3.6 Evaluation 9/20
Programme should spell out in advance the areas of improvement to be quantitatively measured
Evaluation is necessary not only of the effects of the planned changer but also the effectiveness of the implementation process.
9.3.7 Institutionalisation 9/21
Easier if:
-
Formal evaluation of programme is concluded
Programme is multi-level
Completed quickly
-
Involves constituencies outside the organisation
Promised rewards are provided
Meets any employee expectations generated (promotion opportunities)
New members are exposed to programme
Key idea champions remain with the firm
Organisation’s environment remains stable
9.3.8 Diffusion 9/22
Institutionalisation of the change throughout the firm
Supported by:
Support and commitment from top management
Similarity in Work methods between focal group and other units
Rewards for successful management of change program
Labour supports programme
9.4 Methods of Change in Organisation Development 9/23
Organisational development is a system-wide application of behavioural science knowledge to the planned development and reinforcement of
organisational strategies, structure and processes for improving an organisation’s effectiveness.
Is a science, art and set of methods for changing how organisations function.
Assumptions:
-
Employees are growth seeking
Employees can assume delegated authority
Open communication is desirable
Organisation can benefit from improved trust and cooperation
9.4.1 Examples of Change Methods in OD 9/24
Three types of methods:
Interpersonal and group change (original)
Systemwide process change
Grid OD
Large-scale change programmes often include methods from all three
9.4.2 Interpersonal and Group Change Methods 9/24
T-Groups / sensitivity groups
Encounter groups rare in industry but common in society (AA, Weightwatchers…)
Facilitator / change agent
Begin unstructured
o Small talk begins and ceases
o Frustration sets in… group tries to establish a leader
o Frustration because task is ambiguous
o Hostility toward facilitator
o Facilitator leverages frustration to focus on origins of hostility
o Encourages process of member feedback
Cause anxiety for some members
Facilitators believe anxiety necessary for change and learning
Four conditions for industry
o Must be structured
o Tied to ongoing OD intervention
o Confined to beginning of intervention
o Organisational culture must support T-groups (conflict confrontation, employee empowerment, information sharing)
Team building developed to address carry-over in T-groups.
Task oriented --- solve real organisational problems
Steps
o Team-building workshop
o Data collection
o Data confrontation
o Action planning
o Team building
o Intergroup team-building
9.4.3 System-wide Process Change 9/26
Based on survey-feedback. Collect data, summarise data, feedback to employees, groups diagnose problems, develop action plans.
Steps:
-
Top management creates steering committee to assist change agent who develops survey and interview procedure
Survey pilot tested
-
Change agent analyses data
Results fed back following cascading procedure: Steering committee, top management, division heads, departments, self-directed
teams…
Heads of work units and employees construct action plans
Change agent /steering committee use action plans to itemise list of change priorities
Steering committee and change agent work with units to install action plans
Programme evaluation
Can design own survey or use pre-packaged survey (may miss key issues)
Biggest flaw in survey feedback is mechanical application of each step.
9.4.4 Grid Organisation Development 9/28
Comprehensive, long-term effort directed at changing the entire organisation
Success only if there is simultaneous concern for:
High performance
Maintenance of psychologically healthy work environment
Called pre-packaged because it follows a diagnostic procedure
Six steps:
-
-
Problems:
-
Remove communication barriers
o Grid seminar – encourages unfreezing by having participants diagnose their own managerial styles
o Intragroup development – teams attend seminars to improve decision-making processes; analysis of group decision
making capabilities and obstacles
o Intergroup development – structured activities to break down communication barriers. Focus intergroup cooperation
Foster better planning and goal-setting
o Development of ideal strategic model – represents financial goals, structural design and employee satisfaction
o Attainment of model – develop plan for closing the gap to ideal model
o Stabilisation and process critique – results evaluated with quantitative data
Prepackaged nature does not suit all firms
Key events can cause management to suspend grid work - incompletion
Many phases and changes make it difficult to trace favourable outcomes to specific elements
.4.5 Does OD Work? 9/29
Success of plan depends on matching method (above) and depth of intervention.
Depth of intervention --- how personal and behaviour focused (rather than impersonal and organisation focused)
Multi-method approaches have more success than single-method approaches. No one method successful in all instances.
Successful intervention might be:
-
All employees participated in goal-setting, decision-making and job redesign
Employees empowered through self-directed teams
Company is delayered
Effective use of OD requires:
-
Accurate diagnosis of problems
Creating dissatisfaction with status quo
Selecting proper combination of OD techniques
Evaluation outcomes of programme
Questions:
P 4/33: Why does AVP subtract COL but VA not?
Key Themes
Stress impact
Locus of Control
Mach-V
Socially acquired needs (Achievement, Affiliation, Power)
Job Satisfaction and Performance
Stress Factors
Stress Consequences
Managing/Reducing stress
Downsizing
Content Theories of Motivation (Maslow, Herzberg)
Process Theories of Motivation (Equity theory, Expectancy Theory)
Behaviour Modification (Conditioning, Schedule/ratio of reinforcement)
Appraisal issues (deficiency, reliability, validity_
Appraisal methods (Absolute, graphic scales, BARS)
Goal setting (SMART)
MBO (participative, informal followed by formal feedback
Rewards (intrinsic, extrinsic, non-financial); Procedural and distributive justice; performance based
Executive compensation (trends)
Alternative company pay practices
Group-based rewards (Scanlon, Rucker, Lincoln electric)
Scientific Management
Horizontal increases (Enlargement, Rotation, Cross-training)
Job Range / Job Depth
Herzberg’s Two-factor theory (simplistic, critical incident method, selective enrichment)
Job characteristics model (skill variety, task identity, task significance, autonomy, feedback, social opportunities)
Growth need strength
Socio-technical systems theory
Self-directed teams / Empowerment
Likert System 1 (authoritarian) – Likert System 4 (participative)
Group attraction, composition, cohesiveness, norms
Groupthink
Group development: Forming, Storming, Norming, Performing
Brainstorming, NGT (Nominal Group Technique), Delphi Technique
Vroom-Yetton-Jago (complexity, quality, subordinate conflict/capabilities/commitment, leader info)
Managing conflict (avoiding, accommodating, forcing, compromising, collaborating)
Power sources (reward, coercive, legitimate, referent, expert)
Upward management
Manager Roles: interpersonal, informational , decisional
Leadership traits (inconclusive)
Leadership behaviours (Initiating structure, consideration)
Situational leadership (Fiedler: High-LPC: RO, Low-LPC: TO)
House’s Path-Goal Theory (Line-of-sight)
OB-Mod
Entrepreneurial behaviour
Mechanistic vs. Organic organisations
Division of labour (specialisation)
Delegation of Authority
Departmentalisation
Centralisation
Coordination (vertical, horizontal)
Organisational control (Process, Results)
Boundaryless organisation (authority, task, political, identity)
Service quality (empowerment-responsiveness)
Organisational culture (training, performance appraisal, orientation)
High-performance OC (History, Oneness, Membership, Exchange)
Organisational Life-cycle
Organisational change (job-design/QWL, empowerment, control/reward systems)
Organisational development change (interpersonal/group, system-wide, Grid OD/pre-packaged)