This document provides an overview of an introductory chapter on organizational behavior. It defines organizational behavior as the field studying how individuals, groups, and structure influence behavior in organizations. The chapter outlines the major topics in organizational behavior including motivation, leadership, communication and discusses how OB draws from other social sciences like psychology, sociology, and anthropology. It notes that while general principles can help understand behavior, there are few absolutes given human complexity, and theories must account for situational factors. Managers face challenges in applying OB concepts given trends like globalization.

1. CHAPTER 1 – WHAT IS ORGANIZATIONAL BEHAVIOR?
LEARNING OBJECTIVES
After studying this chapter, students should be able to:
1. Define organizational behavior (OB)
2. Describe what managers do
3. Explain the value of the systematic study of OB
4. List the major challenges and opportunities for managers to use OB concepts
5. Identify the contributions made by major behavioral science disciplines to OB
6. Describe why managers require a knowledge of OB
7. Explain the need for a contingency approach to the study of OB
8. Identify the three levels of analysis in this book’s OB model
TEXT OUTLINE
I. Introduction
A. Story
1. Jason Hershberger
a) Undergraduate degrees in computer science and geology from the University of Southern
California.
b) MS in computer science from USC in 1996 at the age of 23.
c) Working for Torrey Science Corporation in San Diego, California.
2. His job includes designing software, scheduling projects, organizing teams, delegating assignments,
providing guidance to team members, and monitoring team results.
a) College course work did very little regarding the people factor.
b) Learned, through experience that the primary reason most projects succeed or misfire is due to
the people factor.
3. Lawrence Weinbach, former chief executive of Arthur Andersen & Co.
a) “Pure technical knowledge is only going to get you to a point. Beyond that, interpersonal skills
become critical.”
4. Until the late 1980s, business school curricula focused on the technical aspects of management.
a) Course work in human behavior and people skills received minimal attention.
5. This is changed over the past decade.
B. Importance of Developing Managers’ Interpersonal Skills
1. Companies with reputations as a good place to work—such as Hewlett-Packard, Lincoln Electric,
Southwest Airlines, and Starbucks—have a big advantage.
2. A recent national study of the U.S. workforce
a) Wages and fringe benefits aren’t the reason people like their jobs or stay with an employer.
b) Far more important is the quality of the employees’ jobs and the supportiveness of their work
environments.
3. Center for Creative Leadership
a) About 40 percent of new management hires fail within their first 18 months.
b) Why—failure to build good relationships with peers and subordinates—82% of the time.
4. Technical skills are necessary, but insufficient, for succeeding in management. There is also a need
for good people skills.
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2. II. What Managers Do
A. Definition
1. Managers get things done through other people.
a) They make decisions, allocate resources, and direct the activities of others to attain goals.
2. Managers do their work in an organization.
a) A consciously coordinated social unit, composed of two or more people, that functions on a
relatively continuous basis to achieve a common goal or set of goals.
B. Management Functions
1. French industrialist Henri Fayol wrote that all managers perform five management functions: plan,
organize, command, coordinate, and control. Today, it is condensed to four: planning, organizing,
leading, and controlling.
2. Planning
a) Defining an organization’s goals, establishing an overall strategy for achieving those goals, and
developing a comprehensive hierarchy of plans to integrate and coordinate activities.
3. Organizing
a) Includes the determination of what tasks are to be done, who is to do them, how the tasks are to
be grouped, who reports to whom, and where decisions are to be made.
4. Leading
a) Motivating employees, directing the activities of others, selecting the most effective
communication channels, or resolving conflicts among members.
5. Controlling
a) Monitoring the organization’s performance
b) Actual performance must be compared with the previously set goals.
c) Any significant deviations are corrected.
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C. Management Roles
1. In the late 1960s, a graduate student at MIT, Henry Mintzberg, undertook a careful study of five
executives to determine what these managers did on their jobs.
2. He concluded that managers perform ten different, highly interrelated roles or sets of behaviors
attributable to their jobs.
a) See Exhibit 1-1.
b) The ten roles can be grouped as being primarily concerned with interpersonal relationships, the
transfer of information, and decision making.
3. Interpersonal roles
a) Figurehead role—duties that are ceremonial and symbolic in nature
b) Leadership role—hire, train, motivate, and discipline employees
c) Liaison role—contact outsiders who provide the manager with information. These may be
individuals or groups inside or outside the organization.
4. Information roles
a) Monitor role—collect information from organizations and institutions outside their own
b) Disseminator role—a conduit to transmit information to organizational members
c) Spokesperson role—represent the organization to outsiders
5. Decisional roles
a) Entrepreneur role—managers initiate and oversee new projects that will improve their
organization’s performance.
b) Disturbance handlers—take corrective action in response to unforeseen problems.
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3. c) Resource allocators—are responsible for allocating human, physical, and monetary resources.
d) Negotiator role—discuss issues and bargain with other units to gain advantages for their own
unit.
D. Management Skills
1. Robert Katz has identified three essential management skills: technical, human, and conceptual.
2. Technical skills
a) The ability to apply specialized knowledge or expertise. All jobs require some specialized
expertise, and many people develop their technical skills on the job.
3. Human skills
a) The ability to work with, understand, and motivate other people, both individually and in groups,
describes human skills. Many people are technically proficient but interpersonally incompetent.
4. Conceptual skills
a) The mental ability to analyze and diagnose complex situations. Decision making, for instance,
requires managers to spot problems, identify alternatives that can correct them, evaluate those
alternatives, and select the best one.
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E. Effective vs. Successful Managerial Activities
1. Fred Luthans and his associates asked: Do managers who move up most quickly in an organization do
the same activities and with the same emphasis as managers who do the best job?
a) Luthans and his associates studied more than 450 managers.
2. They found that managers engage in four managerial activities.
a) Traditional management—Decision making, planning, and controlling
b) Communication—Exchanging routine information and processing paperwork
c) Human resource management—Motivating, disciplining, managing conflict, staffing, and training
d) Networking—Socializing, politicking, and interacting with outsiders
3. The “average” manager:
a) 32% traditional management activities
b) 29% communicating
c) 20% in human resource management activities
d) 19% networking
e) See Exhibit 1-2.
4. Successful managers
a) Networking made the largest relative contribution to success.
b) Human resource management activities made the least relative contribution.
5. Effective managers
a) Communication made the largest relative contribution.
b) Networking the least
6. Successful managers don’t give the same emphasis to each of those activities as do effective
managers.
a) Their emphases are almost the opposite.
b) This finding challenges the historical assumption that promotions are based on performance,
vividly illustrating the importance that social and political skills play in getting ahead in
organizations.
F. A Review of the Manager’s Job
1. One common thread runs through the functions, roles, skills, and activities approaches to
management: managers need to develop their people skills if they’re going to be effective and
successful.
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III. Enter Organizational Behavior
A. Organizational Behavior
1. OB is a field of study that investigates the impact that individuals, groups, and structure have on
behavior within organizations for the purpose of applying such knowledge toward improving an
organization’s effectiveness.
2. Organizational behavior is a field of study.
a) It studies three determinants of behavior in organizations: individuals, groups, and structure.
b) In addition, OB applies the knowledge gained about individuals, groups, and the effect of
structure on behavior in order to make organizations work more effectively.
3. OB is concerned with the study of what people do in an organization and how that behavior affects
the performance of the organization.
4. There is increasing agreement as to the components of OB; there is still considerable debate as to the
relative importance of each: motivation, leader behavior and power, interpersonal communication,
group structure and processes, learning, attitude development and perception, change processes,
conflict, work design, and work stress.
IV. Replacing Intuition with Systematic Study
A. Introduction
1. Each of us is a student of behavior.
a) Unfortunately, your casual or commonsense approach to reading others can often lead to
erroneous predictions.
b) However, you can improve your predictive ability by replacing your intuitive opinions with a
more systematic approach.
2. The systematic approach used in this book will uncover important facts and relationships and will
provide a base from which more accurate predictions of behavior can be made.
a) Behavior generally is predictable if we know how the person perceived the situation and what is
important to him or her.
b) While people’s behavior may not appear to be rational to an outsider, there is reason to believe it
usually is intended to be rational and they see it as rational.
3. There are certain fundamental consistencies underlying the behavior of all individuals that can be
identified and then modified to reflect individual differences.
a) These fundamental consistencies allow predictability.
b) There are rules (written and unwritten) in almost every setting.
(1) Therefore, it can be argued that it’s possible to predict behavior.
(2) Behavior is generally predictable, and the systematic study of behavior is a means to making
reasonably accurate predictions.
c) When we use the phrase systematic study, we mean looking at relationships, attempting to
attribute causes and effects, and basing our conclusions on scientific evidence—that is, on data
gathered under controlled conditions and measured and interpreted in a reasonably rigorous
manner.
(1) See Appendix B for a basic review of research methods used in organizational behavior.
4. Systematic study replaces intuition, or those “gut feelings” about “why I do what I do” and “what
makes others tick.”
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MYTH OR SCIENCE? - Preconceived Notions vs. Substantive Evidence
SUMMARY
Assume you signed up to take an introductory college course in calculus. Asked on the first day: “Why is the sign
of the second derivative negative when the first derivative is set equal to zero, if the function is concave from
below?” You reply, “How am I supposed to know? That’s why I’m taking this course.”
Now, you’re in an introductory course in organizational behavior. Your instructor asks you: “Why aren’t
employees as motivated at work today as they were 30 years ago?” Reluctantly, you’d begin writing. You’d have
no problem coming up with an explanation to this motivation question.
You enter an OB course with many preconceived notions that you accept as facts. OB not only introduces you to a
comprehensive set of concepts and theories, but it also has to deal with many commonly accepted “facts” about
human behavior and organizations that you’ve acquired over the years. But these “facts” aren’t necessarily true.
The field of OB is built on decades of research. This research provides a body of substantive evidence that is able
to replace preconceived notions. The boxes entitled “Myth or Science?” call attention to some of the more popular
of these notions or myths about organizational behavior.
Teaching notes:
1. Place students in groups of 3–5. Have them brainstorm a list of at least 3 popular “facts” or myths that they’ve
heard about colleges, college students, and faculty. Example—college students are rebels; college “boys” (or
girls) don’t want to get their hands dirty on the job; those who can do, those who can’t teach; etc. Record
ideas on the board. Go round-robin; take one idea at time from each group in turn until groups contribute all
their ideas. Now have students brainstorm what objective data exists or could be collected to counter each of
these myths. Collect the information the same way, posting it on the board. Close with a discussion of the
importance of these misperception to students and faculty and why the parallel misperceptions about
organizational behavior are important.
V. Contributing Disciplines to the OB Field
A. Introduction
1. Organizational behavior is an applied behavioral science that is built upon contributions from a
number of behavioral disciplines.
2. The predominant areas are psychology, sociology, social psychology, anthropology, and political
science.
a) Exhibit 1-3 overviews the major contributions to the study of organizational behavior.
B. Psychology
1. Psychology is the science that seeks to measure, explain, and sometimes change the behavior of
humans and other animals.
2. Early industrial/organizational psychologists concerned themselves with problems of fatigue,
boredom, and other factors relevant to working conditions that could impede efficient work
performance.
3. More recently, their contributions have been expanded to include learning, perception, personality,
emotions, training, leadership effectiveness, needs and motivational forces, job satisfaction, decision-
making processes, performance appraisals, attitude measurement, employee selection techniques,
work design, and job stress.
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6. C. Sociology
1. Sociologists study the social system in which individuals fill their roles; that is, sociology studies
people in relation to their fellow human beings.
2. Their greatest contribution to OB is through their study of group behavior in organizations,
particularly formal and complex organizations.
D. Social Psychology
1. Social psychology blends the concepts of psychology and sociology.
2. It focuses on the influence of people on one another.
a) Major area—how to implement it and how to reduce barriers to its acceptance.
E. Anthropology
1. Anthropology is the study of societies to learn about human beings and their activities.
2. Anthropologists work on cultures and environments; for instance, they have helped us understand
differences in fundamental values, attitudes, and behavior among people in different countries and
within different organizations.
F. Political Science
1. Frequently overlooked
2. Political science studies the behavior of individuals and groups within a political environment.
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VI. There Are Few Absolutes in OB
A. Introduction
1. There are few, if any, simple and universal principles that explain organizational behavior.
2. Human beings are complex. Because they are not alike, our ability to make simple, accurate, and
sweeping generalizations is limited.
a) That doesn’t mean, of course, that we can’t offer reasonably accurate explanations of human
behavior or make valid predictions.
3. It does mean, however, that OB concepts must reflect situational, or contingency, conditions.
a) Contingency variables—situational factors are variables that moderate the relationship between
the independent and dependent variables.
b) Using general concepts and then altering their application to the particular situation developed the
science of OB.
4. Organizational behavior theories mirror the subject matter with which they deal.
VII. Challenges and Opportunities for OB
A. Introduction
1. Understanding organizational behavior has never been more important for managers.
2. There are many challenges and opportunities today for managers to use OB concepts.
B. Responding to Globalization
1. Organizations are no longer constrained by national borders.
2. Globalization affects a manager’s people skills in at least two ways.
a) First, if you’re a manager, you’re increasingly likely to find yourself in a foreign assignment.
b) Second, even in your own country, you’re going to find yourself working with bosses, peers, and
other employees who were born and raised in different cultures.
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C. Managing Workforce Diversity
1. One of the most important and broad-based challenges currently facing organizations is adapting to
people who are different.
2. Globalization focuses on differences between people from different countries; workforce diversity
addresses differences among people within given countries.
3. Workforce diversity means that organizations are becoming more heterogeneous in terms of gender,
race, and ethnicity.
a) The term encompasses anyone who varies from the norm.
b) It’s an issue in Canada, Australia, South Africa, Japan, and Europe as well as the United States.
c) European Union cooperative trade arrangement has increased workforce diversity in
organizations that operate in countries such as Germany, Portugal, Italy, and France.
4. A melting-pot approach assumed people who were different would automatically assimilate.
a) Employees don’t set aside their cultural values and lifestyle preferences when they come to work.
b) The melting pot assumption is replaced by one that recognizes and values differences.
c) Members of diverse groups were a small percentage of the workforce and were, for the most part,
ignored by large organizations.
5. Now
a) 46% of the U.S. labor force are women.
b) Minorities and immigrants make up 23%.
c) Example of Hewlett-Packard
6. Workforce diversity has important implications for management practice.
a) Shift to recognizing differences and responding to those differences
b) Providing diversity training and revamping benefit programs—more “family-friendly”
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CONSIDER THE WEB
Direct students to www.shrm.org, the web site for the Society for Human Resource Management. Have them look
for the Diversity Initiative on the left-side menu of options. Clicking on it will take them to information on a study
jointly commissioned by SHRM and Fortune magazine.
D. Improving Quality and Productivity
1. Example of William French needing to cut costs and improve quality and productivity
a) Using self-directed work teams, streamlining processes, and implementing continuous
improvement programs, this Alcatel plant is now a model of manufacturing efficiency.
2. More and more managers are confronting the challenges that William French is facing.
a) Implementing programs that require extensive employee involvement
3. Exhibit 1-4.
a) Total quality management (TQM) is a philosophy of management that is driven by the constant
attainment of customer satisfaction through the continuous improvement of all organizational
processes.
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8. 4. Reengineering
a) “How would we do things around here if we were starting over from scratch?”
b) Illustration of reengineering—a manufacturer of roller skates
5. To improve productivity and quality, managers must include employees.
E. Improving People Skills
1. People skills are essential to managerial effectiveness.
2. OB provides the concepts and theories that allow managers to predict employee behavior in given
situations.
F. Empowering People
1. Nowadays, managers are being called coaches, advisers, sponsors, or facilitators.
a) In many organizations, employees are now called associates.
b) There’s a blurring between the roles of managers and workers.
2. Decision making is being pushed down to the operating level, where workers are being given the
freedom to make choices about schedules and procedures and to solve work-related problems.
3. Managers are empowering employees.
a) They are putting employees in charge of what they do.
(1) Managers are having to learn how to give up control.
(2) Employees are having to learn how to take responsibility for their work and make appropriate
decisions.
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G. Coping with “Temporariness”
1. Managers have always been concerned with change.
2. What’s different nowadays is the length of time between changes.
a) Today, change is an ongoing activity for most managers. The concept of continuous
improvement, for instance, implies constant change.
3. In the past, managing could be characterized by long periods of stability, interrupted occasionally by
short periods of change.
a) Today, long periods of ongoing change are interrupted occasionally by short periods of stability!
4. Permanent temporariness
a) The actual jobs that workers perform are in a permanent state of flux, so workers need to
continually update their knowledge and skills to perform new job requirements.
b) Example, production employees at companies such as Caterpillar, Chrysler, and Reynolds Metals
c) Work groups are also increasingly in a state of flux.
(1) Predictability has been replaced by temporary work groups, teams that include members from
different departments and whose members change all the time, and the increased use of
employee rotation to fill constantly changing work assignments.
d) Organizations themselves are in a state of flux.
(1) Reorganize their various divisions, sell off poor-performing businesses, downsize operations,
subcontract noncritical services and operations to other organizations, and replace permanent
employees with temporaries.
5. Today’s managers and employees must learn to cope with temporariness.
a) The study of OB can provide important insights into helping you better understand a work world
of continual change.
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9. OB IN THE NEWS – Matsushita’s New “Temp” Workers
SUMMARY
While Japanese companies have long offered their employees lifetime jobs, there are signs that is changing. Japan
prides itself on its lifetime employment practices. However, this system is making it increasingly difficult for
Japanese companies to be flexible and respond to changes in global markets.
Matsushita, is leading the way in creating new options for its white-collar employees. Seeking increased
flexibility, and recognizing younger workers’ needs, Matsushita now offers new employees three options. The
traditional reward package designed for the careerist includes a large lump sum retirement at age of 60, along with
bonuses twice a year—paid on seniority, and participation in housing loans and other company-sponsored
investment benefits. Two new options are called Plan A and Plan B.
Plan A is for employees with special skills who don’t expect to stay for long. It includes a higher base salary, the
opportunity to take advances on the pension, and bonuses tied to performance rather than seniority. The
employees manage their own pension funds. Plan B is designed for those who want more flexibility than the
traditional plan but less than Plan A. Most new Matsushita recruits are opting for the traditional system. Only 8%
of the 814 new employees hired in the spring of 1998 selected Plan A. But 31% chose Plan B.
Teaching Notes: Ask students to individually write down the top 3–5 things they are looking for in their first
career job. Ask students to share their lists, one item at a time; record their desires on the board. Now ask them to
think about and brainstorm as a class what their parents looked for in their careers. Tip: Students should think
about what their parents tell them to look for in their first job. As they brainstorm as a class, create a second list
on the board. Look at the two lists, and ask the students where they see similarities and differences. Check “ ”
those items that are similar. “X” those that are different. Lead a discussion as to why the two lists are different.
What has changed; what is different between the students and their parents’ career expectations?
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H. Stimulating Innovation and Change
1. W. T. Grant, Woolworth, Gimbel’s, and Eastern Airlines are all giants that went bust!
2. Sears, Boeing, and Digital Equipment implemented huge cost-cutting programs and eliminated
thousands of jobs to avoid going bust!
3. Today’s successful organizations must foster innovation and master the art of change, or they’ll
become candidates for extinction.
4. Victory will go to organizations that maintain their flexibility, continually improve their quality, and
beat their competition to the marketplace with a constant stream of innovative products and services.
a) Domino’s
b) Amazon.com
c) Fox Television
5. An organization’s employees can be the impetus for innovation and change, or they can be a major
stumbling block.
I. Improving Ethical Behavior
1. In an organizational world characterized by cutbacks, expectations of increasing worker productivity,
and tough competition, many employees feel pressured to engage in questionable practices.
2. Members of organizations are increasingly finding themselves facing ethical dilemmas.
3. Examples
a) Blowing the whistle
b) Following orders with which they don’t personally agree
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10. c) Giving an inflated performance evaluation to an employee whom they like, knowing that such an
evaluation could save that employee’s job
d) Playing politics in the organization if it will help their career advancement
4. Good ethical behavior has never been clearly defined.
a) The line differentiating right from wrong has become even more blurred.
b) Employees see people all around them engaging in unethical practices.
c) They hear excuses such as “everyone does it,” “you have to seize every advantage nowadays,” or
“I never thought I’d get caught.”
5. Managers are writing and distributing codes of ethics, offering seminars, workshops, etc., to improve
ethical behaviors, providing in-house advisers who can be contacted for assistance in dealing with
ethical issues.
6. They are creating protection mechanisms for employees who reveal internal unethical practices.
7. Managers need to create an ethically healthy climate.
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VIII. Coming Attractions: Developing an OB Model
A. An Overview
1. A model is an abstraction of reality, a simplified representation of some real-world phenomenon.
a) Exhibit 1-6—the OB model
2. There are three levels of analysis in OB.
a) The three basic levels are analogous to building blocks; each level is constructed upon the
previous level.
b) Group concepts grow out of the foundation laid in the individual section; we overlay structural
constraints on the individual and group in order to arrive at organizational behavior.
B. The Dependent Variables
1. Dependent variables are the key factors that you want to explain or predict and that are affected by
some other factor.
a) Primary dependent variables in OB
(1) Productivity, absenteeism, turnover, and job satisfaction. More recently, a fifth variable—
organizational citizenship—has been added to this list.
2. Productivity
a) It is achieving goals by transferring inputs to outputs at the lowest cost.
b) It implies a concern for both effectiveness and efficiency.
c) Hospital example
(1) Effective when it successfully meets the needs of its clientele. It is efficient when it can do so
at a low cost.
d) Business firm example
(1) Effective when it attains its sales or market share goals, but its productivity also depends on
achieving those goals efficiently.
(2) Popular measures: ROI, profit per dollar of sales, and output per hour of labor.
e) Also productivity from the perspective of the individual employee
f) Example—long-distance truckers
(a) Both Mike and Al were effective—they accomplished their goal—but Al was more
efficient than Mike because his rig consumed less gas, and, therefore, he achieved his
goal at a lower cost.
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11. 3. Absenteeism
a) Absenteeism is the failure to report to work.
b) Estimated annual cost—over $40 billion for U.S. organizations; $12 billion for Canadian firms;
more than 60 billion Deutschmarks (U.S. $35.5 billion) each year in Germany
c) A one-day absence by a clerical worker can cost a U.S. employer up to $100 in reduced
efficiency and increased supervisory workload.
d) The work flow is disrupted, and often important decisions must be delayed.
e) All absences aren’t bad. For instance, illness, fatigue, or excess stress can decrease an employee’s
productivity—it may well be better to not report to work rather than perform poorly.
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4. Turnover
a) Turnover is the voluntary and involuntary permanent withdrawal from an organization.
b) A high turnover rate results in increased recruiting, selection, and training costs.
(1) Costs estimated at about $15,000 per employee.
c) All organizations have some turnover and the “right” people leaving—the marginal employees—
positive creating opportunity for promotions, and adding new/fresh ideas.
d) But turnover often involves the loss of people the organization doesn’t want to lose.
5. Organizational citizenship
a) Organizational citizenship is discretionary behavior that is not part of an employee’s formal job
requirements, but that nevertheless promotes the effective functioning of the organization.
b) Successful organizations need employees who will perform beyond expectations.
c) Especially important in today’s dynamic workplace, because of teams and the need for flexibility
d) Organizations need employees who will do those things that aren’t in any job description.
6. Job satisfaction
a) The difference between the amount of rewards workers receive and the amount they believe they
should receive
b) Unlike the previous three variables, job satisfaction represents an attitude rather than a behavior.
c) It became a primary dependent variable for two reasons:
(1) demonstrated relationship to performance factors.
(2) the value preferences held by many OB researchers.
7. Managers have believed for years that satisfied employees are more productive.
a) Much evidence questions that assumed causal relationship.
b) However, it can be argued that advanced societies should be concerned with the quality of life.
c) Ethically, organizations have a responsibility to provide employees with jobs that are challenging
and intrinsically rewarding.
C. The Independent Variables
1. Organizational behavior can best be understood when viewed essentially as a set of increasingly
complex building blocks.
a) The base, or first level, of our model lies in understanding individual behavior.
2. Individual-level variables
a) When individuals enter an organization, they are a bit like used cars. Each is different.
b) This metaphor indicates that people enter organizations with certain characteristics that will
influence their behavior at work.
(1) The more obvious of these are personal or biographical characteristics such as age, gender,
and marital status; personality characteristics; an inherent emotional framework; values and
attitudes; and basic ability levels.
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12. (2) There is little management can do to alter them. Yet they have a very real impact on
employee behavior.
(3) Discussed in chapters 2 and 4
c) There are four other individual-level variables that have been shown to affect employee behavior:
perception, individual decision-making, learning, and motivation.
(1) Discussed in chapters 2, 5, 6, and 7.
3. Group-level variables
a) The behavior of people in groups is more than the sum total of all the individuals acting in their
own way.
(1) Chapter 8 lays the foundation for an understanding of the dynamics of group behavior.
(2) Chapter 9 translates our understanding of groups to the design of effective work teams.
(3) Chapters 10 through 13 demonstrate how communication patterns, leadership styles, power
and politics, intergroup relations, and levels of conflict affect group behavior.
4. Organization systems-level variables
a) Organizational behavior reaches its highest level of sophistication when we add formal structure.
b) The design of the formal organization, work processes, and jobs; the organization’s human
resource policies and practices and the internal culture all have an impact.
(1) These are discussed in detail in Chapters 14 through 17.
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D. Toward a Contingency OB Model
1. The final model is shown in Exhibit 1-7.
a) Four key dependent variables and a large number of independent variables, organized by level of
analysis, that research indicates have varying effects on the former
2. The model does not explicitly identify the vast number of contingency variables because of the
tremendous complexity that would be involved in such a diagram.
a) Rather, throughout this text, we shall introduce important contingency variables that will improve
the explanatory linkage between the independent and dependent variables in our OB model.
3. The concepts of change and stress are included in Exhibit 1-7, acknowledging the dynamics of
behavior and the fact that work stress is an individual, group, and organizational issue.
4. Exhibit 1-7 includes linkages between the three levels of analysis.
Teaching Notes ___________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
CONSIDER THE WEB
Have students do an Internet search on the topic of Organizational Behavior. Ask them to identify 2–3 graduate
programs in the discipline and print out the home page and the descriptions of these programs and bring them to
class. Discuss as a class general areas of study, the types of courses required in graduate work in organizational
behavior. Note with students that different schools have programs in different departments and disciplines,
showing the diversity of these programs. If students need some ideas here are a couple of programs to prime the
pump.
• Harvard—http://www-hugsas.harvard.edu/webfiles/admis/socsci/orgbeh.htm
• Official web site of the Organizational Behavior Division of the Academy of Management—
http://www.buec.udel.edu/OBWeb/
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13. SUMMARY AND IMPLICATIONS FOR MANAGERS
Managers need to develop their interpersonal, or people, skills if they are going to be effective in their jobs.
Organizational behavior (OB) is a field of study that investigates the impact that individuals, groups, and structure
have on behavior within an organization. Then it applies that knowledge to make organizations work more
effectively. Specifically, OB focuses on how to improve productivity, reduce absenteeism and turnover, and
increase employee citizenship and job satisfaction.
We all hold generalizations about the behavior of people. Some of our generalizations may provide valid insights
into human behavior, but many are erroneous. Organizational behavior uses systematic study to improve
predictions of behavior that would be made from intuition alone. But, because people are different, we need to
look at OB in a contingency framework, using situational variables to moderate cause-effect relationships.
Organizational behavior offers both challenges and opportunities for managers. It recognizes differences and
helps managers to see the value of workforce diversity and practices that may need to be changed when managing
in different countries. It can help improve quality and employee productivity by showing managers how to
empower their people as well as how to design and implement change programs. It offers specific insights to
improve a manager’s people skills. In times of rapid and ongoing change—what most managers face today—OB
can help managers cope in a world of temporariness and learn ways to stimulate innovation. Finally, OB can offer
managers guidance in creating an ethically healthy work climate.
QUESTIONS FOR REVIEW
1. How are OB concepts addressed in management functions, roles, and skills?
Answer – One common thread runs through the functions, roles, and skills of managers: the need to develop
people skills if they’re going to be effective and successful. Managers get things done through other people.
Managers do their work in an organization.
 Management functions involve managing the organization—planning and controlling and managing
people within the organization—organizing and leading.
 Management roles (see Exhibit 1-1) are the “parts” managers play within an organization and involve
their interaction with people.
 Management skills, as identified by Robert Katz, boil down to three essential management skills:
technical, human, and conceptual. These use OB to manage processes and people and to problem solve.
2. Define organizational behavior. Relate it to management.
Answer – Organizational behavior (abbreviated OB) is a field of study that investigates the impact that
individuals, groups, and structure have on behavior within organizations for the purpose of applying such
knowledge toward improving an organization’s effectiveness. As managers accomplish their work through
others, OB provides the tools for guiding the productivity of others, predicting human behavior at work and
the perspectives needed to manage individuals from diverse backgrounds.
3. What is an organization? Is the family unit an organization? Explain.
Answer – An organization is a consciously coordinated social unit, composed of two or more people, that
functions on a relatively continuous basis to achieve a common goal or set of goals. The family is a type of
organization because it has all the characteristics of an organization. The one variation is that the “goals” of a
family may not be explicit, and therefore students might argue that it is not an organization per se.
4. Identify and contrast the three general management roles.
Answer – In the late 1960s, Henry Mintzberg discovered three general management roles that had sub-roles.
See Exhibit 1-1. The ten roles can be grouped as being primarily concerned with interpersonal relationships,
the transfer of information, and decision making.
• Interpersonal roles are ceremonial and symbolic.
a) Figurehead role—duties are ceremonial and symbolic in nature.
b) Leadership role—hire, train, motivate, and discipline employees.
c) Liaison role—contact outsiders who provide the manager with information. These may be individuals
or groups inside or outside the organization.
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14. • Information roles involve the collection and dissemination of information.
a) Monitor role—collect information from organizations and institutions outside their own.
b) Disseminator role—a conduit to transmit information to organizational members.
c) Spokesperson role—represent the organization to outsiders.
• Decisional roles focus on making choices.
a) Entrepreneur role—managers initiate and oversee new projects that will improve their organization’s
performance.
b) Disturbance handlers—take corrective action in response to unforeseen problems.
c) Resource allocators—are responsible for allocating human, physical, and monetary resources.
d) Negotiator role—discuss issues and bargain with other units to gain advantages for their own unit.
5. What is TQM? How is it related to OB?
Answer – Implementing programs such as total quality management require extensive employee
involvement. See Exhibit 1-4. Total quality management (TQM) is a philosophy of management that is driven
by the constant attainment of customer satisfaction through the continuous improvement of all organizational
processes. It utilizes OB concepts in the involvement of employees, managing their ideas and work, and
lessening the stress of change on the organization.
6. What is reengineering? How is it related to OB?
Answer – Reengineering involves starting over. “How would we do things around here if we were starting
over from scratch?” OB is helpful in redesigning the human systems involved in this kind of structural
change. It also helps manage the stress of change and reduces unnecessary turnover of key individuals.
7. “Behavior is generally predictable, so there is no need to formally study OB.” Why is that statement wrong?
Answer – Such a casual or commonsense approach to reading others can often lead to erroneous predictions.
OB improves managers’ predictive ability by replacing intuitive opinions with a more systematic approach.
Behavior generally is predictable if we know how the person perceived the situation and what is important to
him or her. While people’s behavior may not appear to be rational to an outsider, there is reason to believe it
usually is intended to be rational and it is seen as rational by them. There are certain fundamental
consistencies underlying the behavior of all individuals that can be identified and then modified to reflect
individual differences. These fundamental consistencies allow predictability. When we use the phrase
systematic study, we mean looking at relationships, attempting to attribute causes and effects, and basing our
conclusions on scientific evidence—that is, on data gathered under controlled conditions and measured and
interpreted in a reasonably rigorous manner.
8. What are the three levels of analysis in our OB model? Are they related? If so, how?
Answer – Individual, group, organization. The three basic levels are analogous to building blocks; each level
is constructed upon the previous level. Group concepts grow out of the foundation laid in the individual
section; we overlay structural constraints on the individual and group in order to arrive at organizational
behavior.
9. If job satisfaction is not a behavior, why is it considered an important dependent variable?
Answer – Job satisfaction is the difference between the amount of rewards workers receive and the amount
they believe they should receive. Unlike the other dependent variables, job satisfaction represents an attitude
rather than a behavior. It became a primary dependent variable for two reasons: 1) demonstrated relationship
to performance factors and 2) the value preferences held by many OB researchers. Managers have believed
for years that satisfied employees are more productive. Much evidence questions that assumed causal
relationship. However, it can be argued that advanced societies should be concerned with the quality of life.
Ethically, organizations have a responsibility to provide employees with jobs that are challenging and
intrinsically rewarding.
10. What are effectiveness and efficiency, and how are they related to organizational behavior?
Answer – An organization is productive if it achieves its goals (effective) and does so by transferring inputs
to outputs at the lowest cost (efficiency). As such, productivity implies a concern for both effectiveness and
efficiency. Hospital example—effective when it successfully meets the needs of its clientele. It is efficient
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15. when it can do so at a low cost. Business firm example—effective when it attains its sales or market share
goals, but its productivity also depends on achieving those goals efficiently. Achieving productivity through
effectiveness and efficiency involves all three levels of an organization, the individual, the group, and the
organizational system. OB provides the tools, insights, and ability to predict outcomes needed to balance
these two elements.
QUESTIONS FOR CRITICAL THINKING
1. Contrast the research comparing effective managers with successful managers. What are the implications
from the research for practicing managers?
Answer – Successful managers—Networking made the largest relative contribution to success. Human
resource management activities made the least relative contribution. Effective managers—Communication
made the largest relative contribution; networking the least. Successful managers don’t give the same
emphasis to each of those activities as do effective managers. Their emphases are almost the opposite. This
finding challenges the historical assumption that promotions are based on performance, vividly illustrating the
importance that social and political skills play in getting ahead in organizations. One common thread runs
through the functions, roles, skills, and activities approaches to management: managers need to develop their
people skills if they’re going to be effective and successful.
2. “The best way to view OB is through a contingency approach.” Build an argument to support that statement.
Answer –The final model of the author’s, which is a contingency approach, is shown in Exhibit 1-7. There
are four key dependent variables and a large number of independent variables, organized by level of analysis,
that research indicates have varying effects on the former. The model does not explicitly identify the vast
number of contingency variables because of the tremendous complexity that would be involved in such a
diagram. The concepts of change and stress are included in Exhibit 1-7, acknowledging the dynamics of
behavior and the fact that work stress is an individual, group, and organizational issue. Exhibit 1-7 includes
linkages between the three levels of analysis.
3. Why do you think the subject of OB might be criticized as being “only common sense,” when one would
rarely hear such a criticism of a course in physics or statistics?
Answer – Each of us is a student of behavior by nature. Unfortunately, our casual or commonsense approach
to reading others can often lead to erroneous predictions. However, we can improve our predictive ability by
replacing our intuitive opinions with a more systematic approach. The systematic approach used in this book
will uncover important facts and relationships and will provide a base from which more accurate predictions
of behavior can be made. Behavior generally is predictable if we know how the person perceived the situation
and what is important to him or her. While people’s behavior may not appear to be rational to an outsider,
there is reason to believe it usually is intended to be rational and it is seen as rational by them. Systematic
study replaces intuition, or those “gut feelings” about “why I do what I do” and “what makes others tick.”
4. Millions of workers have lost their jobs due to downsizing. At the same time, many organizations are
complaining that they can’t find qualified people to fill vacancies. How do you explain this apparent
contradiction?
Answer – The nature of the jobs is the key issue. Low-skill jobs are being replaced; high-skill, conceptual,
and technical jobs are increasing. Employees need new or updated skill sets.
5. On a 1 to 10 scale measuring the sophistication of a scientific discipline in predicting phenomena,
mathematical physics would probably be a 10. Where do you think OB would fall on the scale? Why?
Answer – Students’ answer will vary, but the key point is that OB is moving up the scale and is somewhere
about a 5. It retains the complexity and unpredictability of being a human science but is using objective and
empirical tools in the study of such behaviors to improve the applicability and predictability of its findings.
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16. POINT-COUNTERPOINT – Successful Organizations Put People First
Point
SUMMARY
Microsoft, Motorola, W.L. Gores & Associates, Southwest Airlines, Ben & Jerry’s Homemade, Hewlett-Packard,
Lincoln Electric, and Starbucks pursue “people-first” strategies.
Evidence suggests that successful organizations put people first. Employees are a company’s only true
competitive advantage. Competitors can match most organization’s products, processes, locations, distribution
channels, and the like.
What practices differentiate people-first organizations? 1) Cultural diversity. 2) Family-friendly. 3) Investing in
employee training. 4) Empowering their employees. In turn, this converts into higher employee productivity and
satisfaction. These employees are willing to put forth the extra effort to do whatever is necessary to see that their
jobs are done properly and completely. People-first strategies also lead to organizations being able to recruit
smarter, more conscientious, and more loyal employees.
CounterPoint
Putting “people first” is easy to say. Putting people first is not necessarily consistent with long-term
competitiveness. Organizations are more typically pursuing a “labor-cost minimization” strategy rather than a
people-first strategy. As a result, most business firms place profits over people. 1) Cost-cutting measures. 2)
Reengineering processes. 3) Substituting temporary workers for full-time permanent staff.
Organizations with problems typically look to staffing cuts as a first response. Few organizations have the luxury
to be able to provide workers with anything more than minimal job security. Employees are a variable cost.
The labor-cost-minimization strategy appears to be spreading worldwide. It began in the United States, spread to
Japan, South Korea, and Thailand—places that historically protected their employees in good times and bad—
because people-first policies are inconsistent with aggressive, low-cost, global competition.
Teaching Notes
Choose two teams of 3–5 students. [The rest of the class will act as a jury.] Have them prepare, outside of class,
one side of the issue to debate in class. Create a controlled debate giving each side up to 8 minutes to make its
case, 3 minutes to cross-examine the other side, then 5 minutes in class to prepare a 3–5 minute rebuttal, and then
a final 1-minute summation/closing argument. Have the remainder of the class vote on who made the stronger
case. Close with a discussion of the issue leading the students to understand this is not an either/or situation, but
the best response incorporates elements of both positions.
Time required
Opening statement Pro 8 minutes Con 8 minutes
Cross-exam Pro 3 minutes Con 3 minutes
Prep. for rebuttal simultaneous both sides 5 minutes
Rebuttal Con 3–5 minutes Pro 3–5 minutes (note change of order)
Closing Con 1 minute Pro 1 minute
Total time 35–40 minutes
TEAM EXERCISE – Workforce Diversity
Purpose – To learn about the different needs of a diverse workforce.
Time required – Approximately 50 minutes.
Participants and roles – Divide the class into six groups of approximately equal size. Each group is assigned one
of the following roles. (The members of each group are to assume the character consistent with their assigned
role.)
 Nancy is 28 years old. She is a divorced mother of three children, ages 3, 5, and 7. She is the department
head. She earns $37,000 a year on her job and receives another $3,600 a year in child support from her ex-
husband.
 Ethel is a 72-year-old widow. She works twenty-five hours a week to supplement her $8,000 annual pension.
Including her hourly wage of $7.50, she earns $17,750 a year.
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17.  John is a 34-year-old black male born in Trinidad who is now a U.S. resident. He is married and the father of
two small children. John attends college at night and is within a year of earning his bachelor’s degree. His
salary is $24,000 a year. His wife is an attorney and earns approximately $44,000 a year.
 Lu is a 26-year-old physically impaired male Asian American. He is single and has a master’s degree in
education. Lu is paralyzed and confined to a wheelchair as a result of an auto accident. He earns $29,000 a
year.
 Maria is a single 22-year-old Hispanic. Born and raised in Mexico, she came to the United States only three
months ago. Maria’s English needs considerable improvement. She earns $18,000 a year.
 Mike is a 16-year-old white male high school sophomore who works fifteen hours a week after school and
during vacations. He earns $6.75 an hour, or approximately $5,200 a year.
Background
Our six participants work for a company that has recently installed a flexible benefits program. Instead of the
traditional “one benefit package fits all,” the company is allocating an additional 25% of each employee’s annual
pay to be used for discretionary benefits. Those benefits and their annual cost are listed below.
 Supplementary health care for employee
Plan A (No deductible and pays 90%) = $3,000
Plan B ($200 deductible and pays 80%) = $2,000
Plan C ($1,000 deductible and pays 70%) = $500
 Supplementary health care for dependents (same deductibles and percentages as above):
Plan A = $2,000
Plan B = $1,500
Plan C = $500
 Supplementary dental plan = $500
 Life insurance:
Plan A ($25,000 coverage) = $500
Plan B ($50,000 coverage) = $1,000
Plan C ($100,000 coverage) = $2,000
Plan D ($250,000 coverage) = $3,000
 Mental health plan = $500
 Prepaid legal assistance = $300
 Vacation = 2% of annual pay for each week, up to 6 weeks a year
 Pension at retirement equal to approximately 50% of final annual earnings = $1,500
 Four-day workweek during the three summer months (available only to full-time employees) = 4% of annual
pay.
 Day-care services (after company contribution) = $2,000 for all of an employee’s children, regardless of
number.
 Company-provided transportation to and from work = $750
 College tuition reimbursement = $1,000
 Language class tuition reimbursement = $500
The Task
1. Each group has 15 minutes (consider increasing this to 25 minutes) to develop a flexible benefits package that
consumes 25% (and no more!) of their character’s pay.
2. After completing step 1, each group appoints a spokesperson who describes to the entire class the benefits
package they have arrived at for their character.
3. The entire class then discusses the results. How did the needs, concerns, and problems of each participant
influence the group’s decision? What do the results suggest for trying to motivate a diverse workforce?
Teaching notes
1. With these types of exercises, students will press for the “right answer.”
2. Emphasize that how they reached their decisions and awareness of other’s perspectives is key here, much
more so than the final decision.
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18. 3. The allocation of resources may take several forms and be correct. Students should look at how well the needs
were met by their decision.
• What needs were identified?
• How did each element of the benefit plan meet the identified need?
• How diverse were the needs, and why were they so diverse?
4. Consider having students research this benefit web site in order to make more informed decisions—
http://www.benefitslink.com/
[Special thanks to Professor Penny Wright (San Diego State University) for her suggestions during the development of this
exercise.]
MODEL RESPONSES FOR INTERNET SEARCH EXERCISES
1. Find five organizations that purport to promote diversity through family-friendly policies. What are their
policies? How do these policies attract and keep people?
Answer – With the tight labor market, many employers are turning to family-friendly policies to provide a
competitive advantage in hiring employees. Therefore, there is no shortage of web sites detailing firms and
their policies. Five sites that include such articles are:
http://www.inc.com/incmagazine/archives/16990601.html
http://www.workforceonline.com/archive/article/000/06/74.xci (Note: Workforce Online requires you to fill
out a free registration.)
http://www.inc.com/301/ideas/0283.html
http://www.inc.com/incmagazine/archives/07930561.html
http://www.smartbiz.com/sbs/arts/ctm5.htm
2. Find an organization that directly addresses the cost of absenteeism or turnover on its Internet site. What, if
anything, is that organization doing to reduce those costs? What did your search tell you in terms of the
importance or unimportance of these costs to organizations?
Answer – Direct students to http://www.shrm.org/hrlinks/ which is the link page for the Society for Human
Resource Management. Also, consider directing students to the following sites. A brief description of the
report on the site follows the URL.
A number of companies are attempting to reduce the cost of absenteeism through the use of Workforce Health
programs.
• http://www.jointventure.org/initiatives/health/96direct/effect.html
An article detailing Starbucks’ efforts at reducing employee turnover.
• http://www.workforceonline.com/archive/article/000/05/21.xci .
Absenteeism and turnover—Most organizations’ approach to absenteeism results in spotty, temporary
improvements at best and are harmful at worst. Some employees have learned how to play the system so they
are always just on this side of termination.
• http://www.healthyworkplace.com/
HealthyWorkplace.com—Satisfied, healthy stimulated people are creative, productive, and motivated
employees. Recognizing the needs of employees to strike a balance between work and home life has emerged
as the critical ingredient in modern business.
• http://eafinc.org/jobsrvy.htm
Job Absence & Turnover Survey—[Site-specific to Florida employers.] How does your company’s job
turnover and absenteeism record compare with the industry average? As an EAF member you will receive, at
no extra cost, an annual survey showing industry trends and averages on job absence.
CASE EXERCISE – Thanks for 24 Years of Service. Now Here’s the Door!
SUMMARY
Russ McDonald graduated from the University of Michigan with his MBA in 1971. He chose General Motors for
several reasons. Russ began his career at GM as a cost analyst at the company’s Fisher Body division in Detroit.
From there he proceeded through a long sequence of increased job responsibilities. In 20 years he rose to assistant
vice president of finance in the corporate treasury department. His salary was $134,000 a year, and, in a good
year, he could expect a bonus of anywhere from $10,000 to $25,000.
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19. GM’s slow response to change resulted in a serious erosion in the company’s market position, a drop from 1:2
new cars sold in the United States being a GM product to 1:4. GM closed inefficient plants, reorganized divisions,
introduced new production technologies, and made huge cuts in its staff. Russ McDonald’s job was eliminated
less than a year short of his 25th anniversary with GM. He was offered early retirement. He took the company’s
offer rather than be pushed out later with a less attractive severance package. He was 49 years old with 24 years
of experience; he could find another job.
Out of work for nearly 30 months, he responded to dozens of employment ads, sent out more than 200 resumes,
talked with several executive recruiting firms, and spent more than $7,000 on employment counseling. No luck.
His experience wasn’t relevant to today’s workplace; small companies wanted flexible people; corporate types
like Russ were seen as “mentally rigid.” Even if there was a job he would have to take at least a 50 percent cut in
pay, and employers figured Russ would be demotivated and likely to “jump ship” at the first opportunity.
Questions
1. How valid do you think the comments are that Russ is hearing?
Answer – Students’ answers will vary with their age and experience. The issue is the validity of the
comments. The issue is dealing with the perceptions. Basically, Russ needs to translate his experience into
transferable job skills and sell himself as an adaptive person. Most of what he’s hearing is probably
stereotypical, but he can’t reeducate the job market; he has to reinvent himself.
2. If you were a small business executive in need of someone with extensive financial experience, would
you consider Russ? Explain your position.
Answer – Again students’ answers will vary. Pro—great extensive experience, new ideas from a different
industry, and a high performance track record. Con—the need to adjust to a new company culture, possibility
of leaving due to pay issues, not knowing the specific business. Discuss with students how they could address
the cons either as a business owner or as Russ. Business owner—assign a mentor to help cultural adjustment,
offer pay incentives tied to company growth and profitability that could help make up for the pay cut. Russ—
shift his own attitude and realize the world has changed, work for a temp agency to get experience in smaller
companies, study the company’s industry and bring a series of new ideas with him to the interview that
related specifically to a small company in that industry.
3. What suggestions might you make to Russ to help him find suitable employment?
Answer – See comments under #2. Russ’ biggest challenge is changing his own mindset and then
demonstrating that to potential employers. Focus on transferable, skills not specific job experience.
19