This document provides an overview of organizational behavior and the strategic approach. It defines organizational behavior as the actions of individuals and groups in an organizational context. The strategic approach involves effectively organizing and managing people's knowledge and skills to implement strategy and gain a competitive advantage. Key aspects of the strategic approach include selective hiring, extensive training, decision power for employees, information sharing, and incentive compensation. This high-involvement management can lead to satisfaction, productivity, and organizational success.

1. Michael A. Hitt
C. Chet Miller
Adrienne Colella
Slides by R. Dennis Middlemist
Michael A. Hitt
C. Chet Miller
Adrienne Colella
Chapter 1
A Strategic Approach
To Organizational
Behavior

2. Knowledge Objectives
1. Define organizational behavior and explain the
strategic approach to OB.
2. Provide a formal definition of organization.
3. Describe the nature of human capital.
4. Discuss the conditions under which human capital is a
source of competitive advantage for an organization.
5. Explain the five characteristics of high-involvement
management and the importance of this approach to
management.

3. Basic Elements of Strategic
Organizational Behavior
 Organizational behavior
– The actions of individuals and groups in an organizational
context.
 Managing organizational behavior
– Actions focused on acquiring, developing, and applying the
knowledge and skills of people.
 Strategic approach to OB
– An approach that involves organizing and managing the
people’s knowledge and skills effectively to implement the
organization’s strategy and gain a competitive advantage.

4. Factors and Outcomes of Strategic Approach
Adapted from: Exhibit 1.1 Factors and Outcomes of a Strategic Approach to Organizational Behavior
Organizational Factors
(culture, work
environments, adaptability
Individual Factors (learning
ability, personality, values,
motivation, stress)
Interpersonal Factors
(leadership, communication,
decision-making skill, intra-
and inter-group dynamics,
communication)
Satisfaction of
Individuals and
Groups
Productivity of
Individuals and
Groups
Organizational Success

5. Strategic OB Lens
Senior
Managers
Organization
Level
Activities Required Skills
• Talk with insiders and
outsiders about
• Vision
• Strategy
• Other major issues
• Conceptualizing
• Communicating
• Understanding the
perspectives of others
• Help middle managers
• Define and redefine
their roles
• Manage conflict
• Listening
• Conflict management
• Negotiating
• Motivating
• Create and maintain
the organization’s
culture
• Interpersonal influence

6. Strategic OB Lens
Middle
Managers
Organization
Level
Activities Required Skills
• Champion strategic
ideas
• Help firm to remain
adaptive
• Networking
• Communicating
• Influencing
• Process data and
information for use by
other individuals
• Analyzing
• Communicating
• Deliver strategic
initiatives to lower-
level managers
• Communicating
• Motivating
• Understanding values
• Managing stress

7. Strategic OB Lens
Lower-level
Managers
Organization
Level
Activities Required Skills
• Coaching firm’s
associates (workers)
• Teaching
• Listening
• Understanding personalities
• Managing stress
• Removing obstacles
for associates
• Deal with personal
problems of associates
• Negotiating
• Influencing others
• Counseling
• Understanding personalities
• Design jobs, team
structures, and reward
systems
• Negotiating
• Group dynamics

8. Foundations of Strategic OB
 Behavioral science disciplines
– Psychology
– Social psychology
– Sociology
– Economics
– Cultural anthropology
 Strategic approach integrates knowledge from all these
disciplines
 Strategic approach focuses on behaviors and
processes that help to create competitive advantages
and financial success (goal is to improve the outcomes
of organizations)

9. Common Features of Organizations
 Network of individuals
 System
 Coordinated activities
 Division of labor
 Goal orientation
 Continuity over time, regardless of change in
individual membership

10. Human Capital and Competitive
Advantage
 Human capital: The sum of the skills,
knowledge, and general attributes of the
people in an organization
 Competitive advantage: An advantage enjoyed
by an organization that can perform some
aspect of its work better than competitors or in
a way that competitors cannot duplicate such
that it offers products/services that are more
valuable to customers

11. Human Capital as Source of
Competitive Advantage
Competitive
Advantage
Human Capital
Value
Associates are capable
of performing the
basic work of the
organization
Human Capital
Rareness
Skills and talents of
associates are unique
in the industry
Human Capital
Imitability
Skills and talents of
associates cannot be
copied by other
organizations

12. Human Capital as Source of
Competitive Advantage
Are human resources in the firm . . .
Valuable Rare
Difficult to
imitate
Competitive
implications Performance
No
Competitive
Disadvantage Below Normal
Yes No Competitive Parity Normal
Yes Yes No
Temporary
Competitive
Advantage Above Normal
Yes Yes Yes
Sustained
Competitive
Advantage Above Normal
Supported by
effective
management
Exhibit 1.2 Human Capital and Competitive Advantage
Source: Adapted from J. Barney and P. Wright, “On Becoming a Strategic Partner,” Human Resource Management 37 (1999): 31–46.

13. Dimensions of
High-Involvement Management
Exhibit 1.3 Dimensions of High-Involvement Management
Aspect Description
Selective Hiring Large pools of applicants are built through advertising, word of
mouth, and internal recommendations. Applicants are evaluated
rigorously using multiple interviews, tests, and other selection tools.
Applicants are selected on the basis of not only skills but also fit with
culture and mission.
Extensive Training New associates and managers are thoroughly trained for job skills
through dedicated training exercises as well as on-the-job training.
They also participate in structured discussions of culture and mission.
Existing associates and managers are expected or required to
enhance their skills each year through in-house or outside training
and development. Often, existing associates and managers are
rotated into different jobs for the purpose of acquiring additional skills.
Exhibit 1.3 Dimensions of High-Involvement Management

14. Dimensions of
High-Involvement Management
Exhibit 1.3 Dimensions of High-Involvement Management
Aspect Description
Decision Power Associates are given authority to make decisions affecting their work
and performance. Associates handle only those issues about which
they have proper knowledge. Lower-level managers shift from closely
supervising work to coaching associates. In addition to having
authority to make certain decisions, associates participate in
decisions made by lower-level and even middle managers.
Information Sharing Associates are given information concerning a broad variety of
operational and strategic issues. Information is provided through
bulletin boards, company intranets, meetings, posted performance
displays, and newsletters.
Incentive
Compensation
Associates are compensated partly on the basis of performance.
Individual performance, team performance, and business
performance all may be considered.
Exhibit 1.3 Dimensions of High-Involvement Management

15. High-Involvement Managers
High-involvement managers:
 Identify situations in which responsibility can be
delegated
 Manage through encouragement and commitment
rather than fear and threats
 Respect and value each associate’s skills and
knowledge
 Empower people in ways that are consistent with their
uniqueness as individuals
 Invest effort in building and maintaining trust

16. Managing Organizational Behavior
Exhibit 1.4 Managing Organizational
Behavior for Competitive Advantage