Organizational
Behavior, 8e
Schermerhorn, Hunt, and
Osborn
Prepared by
Michael K. McCuddy
Valparaiso University
John Wiley & Sons, Inc.
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Organizational Behavior: Chapter 2
2
Chapter 2
The High Performance Organization
 Study questions.
– What is the high performance context of
organizational behavior?
– What is a high performance organization?
– What are the management challenges of high
performance organizations?
– How do high performance organizations
operate?
Organizational Behavior: Chapter 2
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What is the high performance context
of organizational behavior?
 OB and changing customer expectations
– Total Quality Management (TQM).
• Meeting customer needs.
• Doing tasks right the first time.
– Continuous improvement.
• Is this necessary?
• If so, can it be done better?
Organizational Behavior: Chapter 2
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What is the high performance context
of organizational behavior?
 OB and changing customer expectations —
cont.
– Upside-down pyramid view of organizations.
• Customers and clients at the top of organization.
• Workers directly affect customers and clients.
• Team leaders and middle managers directly support
the workers.
• Top managers clarify the mission and objectives,
set strategies, and make adequate resources
available.
Organizational Behavior: Chapter 2
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What is the high performance context
of organizational behavior?
 OB and the changing workforce.
– Increasing workforce diversity in:
• United States.
• Canada.
• European Union.
– Generation X (or Gold-Collar workers).
– Poor educational preparation of some high
school graduates.
Organizational Behavior: Chapter 2
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What is the high performance context
of organizational behavior?
 Generation X workers.
– Desire empowerment.
– These desires are strongest for knowledge
workers.
– Have a high level of skills and abilities for
functioning well in challenging jobs and work
settings.
Organizational Behavior: Chapter 2
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What is the high performance context
of organizational behavior?
 Ill-prepared high school graduates.
– Enter the workforce with significant skill
deficiencies.
– Need for remedial training.
• High cost to organizations.
• Individuals can suffer long-term career
disadvantages.
Organizational Behavior: Chapter 2
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What is the high performance context
of organizational behavior?
 OB and changing organizations.
– Changes in the way people work.
• Stresses of downsizing and restructuring.
• Impact of information technology.
• New meanings in employer-employee
relationships.
Organizational Behavior: Chapter 2
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What is the high performance context
of organizational behavior?
 OB and changing organizations — cont.
– Process reengineering.
• Rethinks and radically redesigns business
processes to stimulate innovation and change and
improve performance.
– Electronic commerce.
• Transaction of business through the Internet.
• E-corporations.
Organizational Behavior: Chapter 2
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What is the high performance context
of organizational behavior?
 OB and changing organizations — cont.
– Free agent economy.
– Shamrock organizations.
• Relatively small core group of permanent, full-time
employees with critical skills.
• Outside operators contracting to core group to
perform essential daily activities.
• Part-timers hired by core group on an as-needed
basis.
Organizational Behavior: Chapter 2
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What is a high performance
organization?
 High performance organizations (HPOs).
– HPOs intentionally designed to:
• Bring out the best in people.
• Produce organizational capability that delivers
sustainable organizational results.
– HPOs place people first.
Organizational Behavior: Chapter 2
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What is a high performance
organization?
 Emphasis on intellectual capital.
– Intellectual capital is the foundation for HPOs.
– To utilize intellectual capital, HPOs often
organize work-flow around key business
processes and use work teams within these
processes.
Organizational Behavior: Chapter 2
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What is a high performance
organization?
 Key components utilized in HPOs.
– Employee involvement.
– Self-directing work teams.
– Integrated production technologies.
– Organizational learning.
– Total quality management.
Organizational Behavior: Chapter 2
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What is a high performance
organization?
 Employee involvement.
– The amount of decision making delegated to
workers at all levels.
– Employment involvement can be visualized on
a continuum.
• No involvement or parallel involvement.
• Moderate involvement or participative
management.
• High involvement or employee empowerment.
Organizational Behavior: Chapter 2
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What is a high performance
organization?
 Self-directing work teams.
– Empowered to make decisions about planning,
doing, and evaluating their work.
– Sometimes called self-managing or selfleading work teams.
– Important in HPOs due to:
• Need to tap employees’ expertise and knowledge.
• Need for employees to manage themselves.
Organizational Behavior: Chapter 2
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What is a high performance
organization?
 Integrated production technologies.
– Focus on providing flexibility in
manufacturing and services and involves job
design and information technology.
– Key components:
• Just-in-time systems.
• Use of computers.
Organizational Behavior: Chapter 2
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What is a high performance
organization?
 Organizational learning.
– A way for organizations to adapt to their
settings and to gather information to anticipate
future changes.
– HPOs are designed for organizational learning.
Organizational Behavior: Chapter 2
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What is a high performance
organization?
 Total quality management (TQM).
– A total commitment to:
• High-quality results.
• Continuous improvement.
• Meeting customer needs.
– TQM is a a tightly integrated part of HPOs.
• Encourages all workers to do their own quality
planning and checking.
Organizational Behavior: Chapter 2
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What are the management challenges of
high performance organizations?
 Challenges of environmental linkages.
– HPOs are open systems influenced by a
rapidly moving external environment.
– Open systems components.
• Inputs: worksite problems and opportunities, and
vision, mission, and strategy.
• Transformation processes: five HPO components.
• Outputs: individual, group, and organizational
effectiveness, and contributions.
Organizational Behavior: Chapter 2
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What are the management challenges of
high performance organizations?
 Challenges of internal integration.
– Challenge of integrating five HPO
components.
– Top-down and bottom-up decision making in
HPOs.
– HPO islands.
Organizational Behavior: Chapter 2
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What are the management challenges of
high performance organizations?
 Challenges for middle manager roles.
– Helping implement HPO components.
– HPO changes may alter middle managers’
jobs.
– Dealing with employee resistance to selfmanaging teams.
– Resolving tensions among HPO components.
Organizational Behavior: Chapter 2
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What are the management challenges of
high performance organizations?
 Challenges for high level leadership.
– Deciding how far to go in becoming a HPO.
– Internationalizing United States business
practices.
Organizational Behavior: Chapter 2
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What are the management challenges of
high performance organizations?
 Challenges of greenfield sites versus
redesigns.
– Greenfield sites start from scratch at a new
site.
– Redesigns start as more traditional
organizations and change toward HPOs.
– Greenfield sites result in better financial
performance for organizations.
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– HPO component: employee involvement.
• Flat and lean hierarchy.
• Heavy team emphasis throughout organization.
• Paper work minimized.
• Rapid decision making emphasized.
• People were empowered to do “whatever it takes”
to get the job done.
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– HPO component: self-directing work teams.
• Longer term service teams.
• Ad hoc teams for given projects or duties.
• Culture promotes cooperative activities.
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– HPO component: integrated production
technologies.
• Integrated use of information technology in
distribution, order entry, crew pairings, dispatching
of flights, revenue management, schedule planning,
and parts replacement.
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– HPO component: organizational learning.
• Deeply rooted in Southwest’s culture.
• Letters and newsletters about company business.
• Managers encourage workers to spend time at jobs
other than their own.
• Southwest’s “University for People.”
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– HPO component: total quality management.
• “Southwest Spirit” focusing on a strong work
ethic, a strong desire for quality work, going
beyond the call of duty, helping others, and doing
the “right” thing.
• TQM qualities are reinforced by empowerment,
learning, and communications devices.
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– Other HPO considerations: vision/direction
setting package.
• “The mission of Southwest Airlines is dedication to
the highest quality of Customer Service delivered
with a sense of warmth, friendliness, individual
pride, and Company Spirit.”
• Strategic elements in direction setting.
• Core values.
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– Other HPO considerations: the people.
• Attitude reflecting “Southwest Spirit” is a key
hiring requirement.
• Attitude more important than other hiring
qualifications.
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– Other HPO considerations: compensation.
• Flight attendants paid by the trip.
• Incentives for employee performance.
• Pilots’ salaries are comparable to other airlines but
they fly 40% more hours.
• Profit sharing and pension plans.
• Usual airline fringe benefits.
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– Other HPO considerations: dealing with the
environment.
• Southwest flourishes in a deregulated environment.
• Southwest’s HPO attributes serve it well in dealing
with a highly competitive environment.
Organizational Behavior: Chapter 2
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How do high performance
organizations operate?
 Southwest Airlines as an HPO.
– Other HPO considerations: outcomes.
• Highly satisfied employees.
• Strong commitment to the company.
• Low turnover.
• Strong performance on various productivity
measures.
• Active in contributing to the communities in which
it operates.
Organizational Behavior: Chapter 2
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