Module 1 INTRODUCTION TO ORGANIZATIONAL BEHAVIOR Module Introduction Since the period of Industrial Revolution, the study of organizational behavior has been viewed as an essential tool in managing the organizations. This aims to learn how people behave in the workplace and how these behaviors affect the organization. This chapter primarily focuses on the overview of what organizational behavior is and why it is deemed important in determining organizational effectiveness. It shall also examine how the human capital can be a source of competitive advantage of an organization. The introduction to human behavior in organizations shall bring about a better understanding of the course and shall illustrate the roadmap for the topics to be discussed along the study of this course. Topic Outcomes After reading and understanding this module, students will be able to: 1. Define organization and organizational behavior; 2. Describe how organizational behavior determines the effectiveness of an organization. BASIC CONCEPTS OF ORGANIZATIONAL BEHAVIOR Definition of Organization So as to facilitate efficiency and effectiveness in learning the basic concepts of organizational behavior, we begin first with the nature of organization. The term organization is defined as a collection of individuals who work together, having a coordinated system, towards the attainment of a common goal. Organizations can be characterized by the following features : (1) Network of individuals. An organization consists of individuals forming relationships to get things done and problems be solved. (2) System. This feature is related to the first one, whereby everyone in this network of individuals follows a coherent and well-defined structure and processes. (3) Coordinated activities. In order to achieve a common goal, the organization integrates all the various activities. This also facilitates efficiency as regards the use of resources and allows the individuals and groups to perform effectively. (4) Division of Labor. Activities are grouped according to the job family. Thus, for the organization to be able to accomplish these several functions, activities are divided into departments. Each department is often headed by an expert of a given field. (5) Goal Orientation. This serves as the primary reason why an organization exists. There must be a goal or a common purpose. For example, a supermarket is established to achieve a goal of creating profits and at the same time to provide convenience and one stop shop for all the grocery and household goods. (6) Continuity over time, regardless of membership change. An organization affords to operate even if there is a change of its members. Since there is an established system with a solid foundation of its structure and processes, new members may continue to manage and still pursue with the achievement of the organizational goals. Generally, an organization can be considered effective when it is able to achieve its goals. Definition of Organizational Behavior In any organization, managing its resources has always been part of a strategy to attain its goals, be it financial resource, technological resources, and human resources. Perhaps, some organizations consider this as a challenge in today’s fast-paced environment. Human resource is undeniably one of the main resources in the organization. Imagine an organization without its people as members - what then is an organization? Various researches have proven that organizational effectiveness also depends on the effective performance of its employees. Hence, the management takes the challenge in understanding the behavior of individuals and groups in the organization. This undertaking then became a field to study in behavioral sciences in the context of management and organizations. Organizational Behavior can be defined as the study of how people behave and act in an organizational environment. Organizational behavior focuses on how the individuals and groups behave in the workplace and how these behaviors then affect the organization. Understanding their behavior is important in improving organizational effectiveness and at the same time enhancing positive effects to the employees in working in a given organization. For instance, an employee who is not motivated to do his/her job well results in lower productivity; when he/she is not happy working with other members of the organization, employee satisfaction is likewise at stake. On the other hand, one employee who gets rewarded after accomplishing a required report tends to perform better the next time he/she is asked to do jobs related to it. Explaining and predicting behavior within an organization is the bottomline of organizational behavior. During the course of discussion of the entire concepts of human behavior in organization, the readers shall come across several theories. This shall include but not be limited to theories in learning, personality, motivation, and leadership. The Organizational Behavior Model: Individual, Group, and Organization Examining organizational behavior includes three levels, i.e. individual level , group level and organizational level as a whole. Through this, we may identify what causes people to behave individually and collectively. Organizational behavior allows understanding of the actions of people in the workplace. Through the concepts and theories of OB, the management will know what makes and why individuals gets motivated to be part of an organization, why they feel happy or bad in terms of their satisfaction in the work environment, why one performs more productively than the others, why some reach their retirement age in the company, while others leave after quite some time, why there are groups opposing the management, and how organizations do deal and react to changing environment. Basically, organizational behavior helps the management in recognizing and analyzing how the individual and group characteristics, workplace scenarios and the organizations themselves affect how people feel about and make consequent actions in the workplace. Exhibit 1.1 Level of Analysis in Organizational Behavior (George and Jones, 2012) The Individual. When there is a fit between individual needs/values and organization’s expectations, there is a reduced likelihood of frustrations and conflict as a result of their behaviors. Hence, the management must ensure that they are able to integrate the individual and organization. This will then foster a satisfactory work environment while attaining the organizational goals as well. The Group. All organizations are composed of groups. Groups are generally composed of two or more individuals working together and influencing one another as they interact. Informal groups are also formed within the organizations given the nature of people having social needs - feeling of belongingness. In today’s work environment, groups are turned into teams. Teams are groups of individuals who work together, having their respective roles and are performing for a common goal. A group of basketball players becomes a team when a specific and common goal brings them together, e.g. to win a game as one. Each is given a role to perform during the entire game. On the other hand, some assemblies for a show are not considered as teams. They are gathered together as a crowd but they only interact to a very little extent. Goals are not even specific. Group members as time passes by develop relationships between and among them, resulting in influences and rise of group leaders. Recognizing the existence of groups in the organization can help the management in analyzing group pressures that further affect the individual performance. When groups are well-managed, business transactions are smoothly being done, e.g. planning, organizing, and coordinating. The organization. One feature of an organization is the system - there follows the existence of a formal structure. And formal organizations are composed of individuals and groups interacting within the structure. The hierarchy in the structure guides the entire organizations on how the communication and information flow and how its people carry out their activities. In relation to organizational behavior, the management systems, structure pattern and leadership styles affect the behavior of employees. When one member of the organization feels that there is a bottleneck, it could dramatically affect the way an employee performs in the workplace. Very true that individual, interpersonal and organizational factors define the employee value in the workplace. Exhibit 1.2 Factors and Outcomes of a Strategic Approach to Organizational Behavior (Hitt, Miller and Colella, 2012) Figure 2 shows the factors and outcomes of a strategic approach to organizational behavior. Individual factors include one’s personal values and capabilities such as motivation, satisfaction, ability to learn, locus of control and personality, skills and attributes, and so on. For interpersonal factors, quality of leadership, communication, role relationships and decision making in groups and teams are elements affecting how individual capacities are fully utilized in the organization. Lastly, important organizational factors like formal structures, policies and culture are recognized to influence the employee attitudes towards creation of positive outcomes. All these factors result to the outcomes coined as productivity, satisfaction and organizational success. Productivity is defined as the output of individuals and groups. Satisfaction is related to the feelings of individuals and groups towards their work and work environment. Organizational Success refers to the organization’s competitive advantage and financial performance. Value of people is gleaned in employee productivity, satisfaction and organizational success. (Hitt, Miller and Colella, 2012) Another important aspect to consider in organizational behavior is the concept of psychological contract. This is an unwritten and silent contract between the individuals and the management of the organization. This is the implied give-and-take relationship between the two. The psychological contract recognizes the needs and expectations by both parties. It is significant in terms of the extent whereby the two parties have perceived and respected the agreement as fair and just. Some employees do not only leave the organization due to the breach of employment contract, but because there are also instances that there were problems arising regarding the psychological contract, even if it is actually not a written agreement. ORGANIZATION AND ITS HUMAN CAPITAL Organizational behavior can be viewed as a means to create a competitive advantage through its human resources. Knowledge of organizational behavior allows managers to rightfully lead and govern the organization and its people. Equally important, employees who have a working knowledge of organizational behavior help them to value their work and workplace, leading to a positive behavior in the organization for their goal achievement. Competitive Advantage through Human Capital In today’s business landscape where competition is always present, it is important for an organization to identify its competitive advantage. This is to ensure survival in a given industry. Competitive advantage is something unique about the organization and cannot be easily copied by any other competitor. Simply, this is the edge over the others! Often you’ll hear companies claiming that their latest equipment, technological advancement, marketing strategies, reputation, company image and the like are the sources of their competitive advantage. Both tangible and intangible resources can be a source. Hence, we now look at the human resources as a competitive edge. Human capital is simply the sum of an individual’s KSAOs - knowledge, skills, attributes and other general characteristics. Human resources, unlike any other form of assets, do not depreciate. In fact, through experiences and training, they are even becoming more developed. Human capital as a source of organization’s competitive advantage can be determined by its value, rareness, and imitability. This was from the Value-Rareness-Imitability and Organization or VRIO framework of the On Becoming a Strategic Partner: The Role of Human Resources in Gaining Competitive Advantage (Barney and Wright, 1998) Human Capital Value. It is the extent to which individuals are capable of supporting strategy for competing in the marketplace. For instance, a teacher who is not properly trained on pedagogy will not be able to deliver quality education, thus, he/she will not add value to the academe as his/her organization. Human resources can add value to the organization by ensuring that the HR functions and practices are strategic, e.g. lowering the costs and increasing the revenues. Human Capital Rareness. It refers to the extent to which employees’ KSAOs are unique in the industry where their organization belongs. Rare talents are difficult to find, hence, it becomes a source of a competitive advantage. In contrast, those talents of a certain value that can be found in any existing organization may not be considered and edge because it is common to anyone. A company through its HR practices like training can create a homogeneous human resource and exhibit rare characteristics to gain a competitive advantage. Exhibit 1.3 VRIO Framework Adapted from Barney and Wright (1998) by Hitt, Miller, Collela (2012) Shown in Figure 2 is the VRIO Framework. It is the matrix whereby we identify whether the human resources in the organization have value, are rare and are difficult to imitate and are supported by effective management. If the answer to all these criteria is yes, then the organization would reflect a sustained competitive advantage and above normal performance. Trust and Pixie Dust: An HR Exec’s Disney Dream Disney CHRO Jayne Parker reflects on how HR is helping continue to make magic. Source : Retrieved from https://hrexecutive.com/trust-and-pixie-dust-an-hr-execs-disney-dream/ , July 28, 2020. Jayne Parker never intended to have a decades-long tenure working with the Walt Disney Co. In the late 1980s, Parker was building a career as a consultant in organizational development and structural design when a headhunter came calling to recruit her for a “large entertainment company in Central Florida.” A native Floridian, she knew what that meant. Parker joined Disney in 1988, tasked with leading training programs that shared with corporate leaders Disney’s secrets to success for people management and guest services—which ultimately laid the groundwork for the creation of the company’s Disney Institute. Two years later, she was asked to develop a global-leadership program. “Every couple of years,” Parker says, “I was tapped on the shoulder by someone who said, ‘We’d like you to go do this.’ I was having a lot of fun, and I gained so much admiration and respect for the brand—who we are, what we do and how we do it.” Before she knew it, Parker had spent 20 years in the company’s theme parks and resorts unit, holding titles such as director and vice president of organization improvement and head of HR for the division. In 2009, she was given her biggest assignment yet: executive vice president and CHRO for the entire Walt Disney Co. (Disney ranked 33rd on the 2019 Nation’s 100 Largest Employers list.) The internal mobility and deep alignment with the company values that Parker herself experienced are among the priorities Disney has for its entire 200,000-strong employee population, a workforce that has seen tremendous changes in recent years. With a new CEO in the forecast a few years down the line and the company about to complete its largest acquisition to date, the pace of transformation doesn’t appear to be letting up. “This is a place where our HR leaders are getting to do work in the next few years that is truly once-in-a-lifetime,” says Parker. internally. Ongoing Evolutions How Disney’s HR team tackles future change is largely predicated on an internal change that was ushered in just over five years ago. Prior to that time, HR operations were segmented by Disney’s business units—a format that often led to overlap. “We had different talent-acquisition practices [among the business units],” Parker says. “Now, we work from common platforms and, whether you work in the Center of Excellence or in a business segment, you have access to the same information and the same candidates, which has really helped us.” For instance, HR representatives from the theme-park division would be at the same MBA-recruiting event as HR professionals from other Disney units, like Walt Disney Studios and ESPN. “We were competing with ourselves,” she says. “We had to present Disney as one company with many opportunities in order for graduates to understand that they can have a very interesting and varied career path at the Walt Disney Co.” In 2013, Disney launched its Centers of Excellence, covering seven HR focuses, ranging from talent acquisition to diversity. In what became known as the AND Model, each head of HR would maintain his or her position while also taking the helm of a Center of Excellence. Since her background included time as a head of HR for a business unit, Parker says, she had the unique perspective of being able to understand the individualized HR needs of the units. The day-to-day of overseeing the 100,000-plus mostly frontline and largely unionized workers in the theme parks and resorts, for instance, differed drastically from the HR needs of the company’s studio division. However, commonalities also existed, and leadership had to carefully consider both during the centralization. Talent acquisition is one area that has seen significant impacts from the shift. The talent-acquisition center offers recruiting support across all divisions, while a single technology platform was designed to facilitate online applications companywide—demonstrating brand continuity and showing candidates the opportunities for internal mobility, while streamlining processes Being able to continuously evolve has been key—Parker notes there have barely been six months without a change to at least one of the centers. More than five years removed from the centralization, she adds, heads of HR at the business units are more often suggesting things they think can be done commonly, bringing more into the fold of the Centers of Excellence. The collaboration demonstrated through the development of the COE model mirrors that of another recent evolution: a strategic reorganization of the business units announced in March 2018. The new format consolidated direct-to-consumer services, technology and international media operations into a single, worldwide business, into which elements of media networks and studio entertainment also moved. Meanwhile, parks and resorts and consumer-products operations also combined. The concept was conceived by CEO Bob Iger, who worked with the executive team to refine it. When the move was unveiled, Iger said in a press statement that the effort aimed to strategically position “our businesses for the future, creating a more effective global framework to serve consumers worldwide, increase growth and maximize shareholder value.” Shortly after announcing the reorganization, Iger attended a town hall Parker was hosting, answering questions from global HR employees. “[Iger] wanted the whole HR team worldwide to hear from the CEO about his hopes, his dreams and his objectives for the reorganization,” Parker says. “Every single person in the company was in some way impacted by this organizational change so, in order for it to be successful, we felt we needed everyone at Disney to understand why this change was necessary and how it impacted them.” Change management is nothing new for a company that has undergone as many transitions as Disney. However, Bill Capodagli, management consultant and author of The Disney Way: Harnessing the Management Secrets of Disney in Your Company, o bserves there are certain core values that have always driven the organization’s work. In particular, he says, the organization has upheld “the underlying values that Walt instilled in his company decades ago—innovation, quality, storytelling, mutual respect and trust. I tell my clients that, when values are deeply rooted in a company, they rarely change; in fact, the organization changes in order to protect their values.” Investing in Employees That idea is evinced through a highly impactful employee benefit that launched last year. In August, the company announced the creation of Disney Aspire, a groundbreaking education-assistance program open to its 80,000 hourly workers. Employees can access a wide range of degrees and certifications—all cost-free. With a $150 million investment in the program’s first five years, Disney is paying all tuition upfront and reimbursing employees for books and other fees. The educational programs, offered at a vast network of schools in both online and in-class formats, do not need to relate to employees’ current work at Disney. Conceived by HR—and quickly approved by Iger, who proposed doubling its initial budget—Disney Aspire was developed with a long-range focus for employees, Parker says. “In reality, all of those 80,000 people are not always going to work for the Walt Disney Co., so we can have a higher purpose—equipping our employees to be successful and helping them create the futures they want,” she says. Disney partnered with Guild Education to design and operate the program. Guild CEO Rachel Carlson says, compared to some companies the organization works with, which may only have a handful of key job titles, Disney’s hundreds of positions posed a unique but exciting challenge, as they sought to create opportunities to suit a range of interests at all education levels. “That meant we had to work together as a team to think about the diverse needs of that broad employee base,” Carlson says. The depth and breadth of the employee population is among the reasons Disney Aspire is so comprehensive—employees can pursue college and post-grad degrees, GED, vocational training, English-language learning and more. To help students navigate the complexities of returning to school, Guild offers personalized coaching throughout the journey—from selecting a school and program to filing the application all the way through to degree completion. “We believe our coaching model is paramount to the success” of participants, Carlson says. In rolling out the program, Parker fielded many questions from employees who thought the initiative was too good to be true. Once those notions were dispelled, she says, she spent many an evening reviewing reports that contained firsthand reactions from workers about Disney Aspire, which she described as an emotional experience. “I’m so proud of the impact this is having—not necessarily the impact it will have on the company, but it’s the impact this will have on our employees’ lives,” Parker says. Since Disney Aspire launched, more than 23,000 eligible employees have created accounts, expressing interest in taking advantage of the program. The first employee to enroll recently completed a trade certification, and students have applied to and enrolled in the entire span of program offerings. On the college level, there has been strong participation in courses focused on organizational leadership, cybersecurity, business, communications and finance. Carlson says the early indicators are “tremendous.” “We’ve seen unmatched enthusiasm amongst Disney employees for this program,” she says. “We’ll know we’re successful as we start to see graduates earn diplomas and channel their learning into career advancement and increased economic opportunity—at Disney or beyond.” Capodagli says he advises clients that they can’t attain Disney-caliber customer service—it consistently ranks at the top of global lists for corporate reputation—without employee satisfaction. And one of the best ways to achieve that is by providing ongoing learning opportunities. “If you watch a group of 3- or 4-year-olds on the playground, their joy and excitement for discovering new things is contagious,” he says. “In the adult world of work, continuous learning experiences can serve to rekindle the exuberance of youth.” Education is also at the heart of another Disney initiative, CODE: Rosie—which stands for Creating Opportunities for Diverse Engineers and is a reference to World War II icon Rosie the Riveter. Launched in 2016, the program teaches women across the company how to code, with no tech background needed. Participants undergo three months of education and then a year of real-world experience. The company holds the participants’ jobs for them in case they want to return after completing the program, though most decide to funnel into coding jobs at Disney, Parker says. Twelve women participated in the pilot and 20 are enrolled in the second round, which kicked off in April. “People can see a bright future for themselves, and that’s because of their relationship with the Walt Disney Co.,” Parker adds. “That’s what’s made this possible.” Looking Forward The focus on diversity embedded in CODE: Rosie will continue to be at the heart of Disney’s work in the coming years, Parker says. “In order for us be successful, we believe our employees have to reflect the audiences we’re here to serve, and our audiences are very diverse,” she says. To that end, Parker helped the company achieve gender equality in its global workforce and appointed the company’s first chief diversity officer in 2011. The HR centralization, she adds, also has helped the company focus on diversity in its hiring practices, as applicant data are more readily available across the company. Developing diverse leaders from within the ranks has also been a priority, with a range of mentorship and development programs targeting high-potentials for executive leadership. On the leadership front, the company is facing a significant shift as it prepares for the 2021 retirement of Iger, CEO since 2005. Though Parker didn’t share details of a timeline for identifying Iger’s successor, she cites the importance of the company’s leadership-development focus and its culture that encourages talent movement. “One of Disney’s strengths is growing talent and helping people see their career opportunities across divisions,” Parker says. “Employees can make a career that encompasses incredibly different experiences, which is motivating developmentally and is also the greatest form of stability for future succession-planning.” Capodagli predicts a leader with a long-range focus similar to Iger’s would be critical to continuity. “The biggest unknown,” he adds, “is whether or not Bob’s successor will follow in his footsteps as a long-term strategist and values-driven leader.” Another change coming down the pike is Disney’s acquisition of 21st Century Fox. The deal was inked last summer and received EU regulatory approval in the fall, at which time Iger said he was optimistic it will close before June 2019. It’s the largest acquisition yet for Disney, which already has a string of major acquisitions under its belt: Marvel, Lucasfilm and BAMTECH Media, among many others. “We’re a company where the idea of looking to expand opportunities for growth through acquisitions is just part of our DNA,” Parker says. “We have created an expertise in HR of working through what happens pre-announcement of an acquisition, after the announcement and—maybe most important—have developed expertise in the integration work that’s required after the close of these acquisitions.” Parker says such work requires a deep understanding of the business rationale for the acquisition, one that acknowledges it’s not just motivated by intellectual property. “We have to make sure we study the companies we’re acquiring and appreciate what’s made them so successful,” she says. “In doing so, we can understand what they’ve done better than we have, learn from their strengths and apply that to our businesses.” Steering the Disney workforce through to the other side of the acquisition will be among the tasks facing HR in the coming years. Navigating a rapidly shifting marketplace—for instance, Disney is gearing up for the launch of its own streaming service later this year—will also take center stage, Parker says. “How and where consumers and viewers want to be entertained is changing, and that’s an opportunity for us in HR to help our business executives make those shifts, to make sure we’re the best competitor in a changing landscape,” Parker says, noting that, with 30 years at Disney now in the rearview mirror, her experience has shown her that the greatest challenges she faced in her roles have also been the most fulfilling experiences. “I’ve had a chance to do the work I’ve dreamed of doing.” End of Chapter Test Chapter Review. I. Identification. Identify what is being referred to in each of the following statements. __________________1. It refers to the actions of individuals and groups in an organizational context. __________________2. It is the sum of skills, knowledge, and general attributes of people in the organization. __________________3. It is defined as the collection of individuals who work together, having a coordinated system, towards the attainment of a common goal __________________4. These are the outputs of the individuals in the workplace. __________________5. It relates to the feelings that individuals and groups have about their work and the workplace. II. Essay. Briefly discuss the common features of an organization in not more than 8 sentences. Cite some examples. (Items No. 6-15) _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Short Case Study. Organizational Behavior Case: Conceptual Model: Dream or Reality? (Luthans, 2012, p.30) Hank James has been section head for the accounting group at Yake Company for 14 years. His boss, Mary Stein, feels that Hank is about ready to be moved up to the corporate finance staff, but it is company policy to send people like Hank to the University Executive Development Program before such a promotion is made. Hank has enrolled in the program; one of the first parts deals with organizational behavior. Hank felt that after 14 years of managing people, this would be a snap. However, during the discussion on organizational behavior, the professor made some comments that really bothered Hank. The professor said:Most managers know their functional specialty but do a lousy job of managing their people. One of the problems is that just because managers have a lot of experience with people, they think they are experts. The fact is that behavioral scientists are just beginning to understand human behavior. In addition, to effectively manage people, we also have to somehow be able to better predict and control organizational behavior. Some models are now developed and research is accumulating that we hope will help the manager better understand, predict, and manage organi- zational behavior. Hank is upset by the fact that his professor apparently discounts the value of experience in managing people, and he cannot see how a conceptual framework that some professor dreamed up and some esoteric research can help him manage people better. 1. Do you think Hank is justified in his concerns after hearing the professor? What role can experience play in managing people? 2. What is the purpose of conceptual frameworks such as those presented in this chapter? How would you weigh the relative value of studying theories and research findings versus “school-of-hard-knocks” experience for the effective management of people? 3. Using the conceptual framework presented in the chapter, how would you explain to Hank that this could help him better manage people in his organization? References Books Black, S., Gardner, D. 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