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organizational behavior (OB)
The field of study concerned with the actions (behavior) of people at work.
Although there were a number of people in the late 1800s and early 1900s who recognized the importance of the human factor to an organization's success, four individuals stand out as early advocates of the OB approach.
They are Robert Owen,
Mary Parker Follett, and
The contributions of these individuals were varied and distinct, yet they all had in common a belief that people were the most important asset of the organization and should be managed accordingly. Their ideas provided the foundation for such management practices as employee selection procedures, employee motivation programs, employee work teams, and organization-external environment management techniques. Exhibit 2.5 summarizes the most important ideas of these early advocates.
~ Actual manager who thought
organizations were social
systems that required
~ Believed manager's job was to
communicate and stimulate
employees' high levels of effort
~ First to argue that organizations
were open systems
Mary Parker Follett
The behavioral approach has largely shaped today's contemporary organizations.
From the way that managers design motivating jobs to the way that they work
with employee teams to the way that they open up communication channels, we
can see elements of the behavioral approach.
The behavioral approach also influences decision making, organization structure design, and the types of control tools and techniques used. Much of what the early OB advocates proposed and the conclusions from the Hawthorne Studies provided the foundation for our current theories of motivation, leadership, group behavior and development, and numerous other behavioral topics. We'll address these topics fully in later chapters.
Joy LorschJohn Morse
The use of quantitative techniques to improve decision making.
The quantitative approach involves the use of quantitative techniques to
improve decision making. This approach has also been labeled operations research
or management science.
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Management is no longer constrained by national borders. BMW, a German firm, builds cars in South Carolina. McDonald's, a U.S. firm, sells hamburgers in China.
Toyota, a Japanese firm, makes cars in Kentucky. Australia's leading real estate company, Lend Lease Corporation, built the Blue water shopping complex in Kent, England, and has contracts with Coca-Cola to build all the soft-drink
maker's bottling plants in Southeast Asia. Swiss company ABB Ltd. has constructed power generating plants in Malaysia, South Korea, China, and Indonesia.
The world has definitely become a global village!
Managers in organizations of all sizes and types around the world are faced with the opportunities and challenges of operating in a global marketing
Globalization is such a significant topic that we devote one chapter to it (Chapter 4) and integrate discussion of its impact on the various management functions throughout the text. In fact, you'll see that several of our chapter-opening manager dilemmas, end-of-chapter cases, and chapter examples feature global managers and organizations.
A workforce that's more
heterogeneous in terms of
gender, race, ethnicity, age, and
other characteristics that reflect
One of the major challenges facing managers in the twenty-first century will be coordinating work efforts of diverse organizational members in accomplishing organizational goals. Today's organizations are characterized by workforce diversity--a workforce that's more heterogeneous in terms of gender, race, ethnicity, age, and other characteristics that reflect differences. How diverse is the workforce? A report on work and workers in the twenty-first century, called Workforce 2020, stated that the U.S. labor force would continue its ethnic diversification, although at a fairly slow pace.12 Throughout the early years of the twenty-first century, minorities will account for slightly more than one-half of net new entrants to the U.S. workforce. The fastest growth will be Asian and Hispanic workers. However, this report also stated that a more significant demographic force affecting workforce diversity during the next decade will be the aging of the population. This trend will significantly affect the U.S. workforce in three ways. First, these aging individuals may choose to continue full-time work, work part-time, or retire completely.
Think of the implications for an organization when longtime employees with their vast wealth of knowledge, experience, and skills choose to retire, or imagine workers who refuse to retire and block opportunities for younger and higher-potential employees.
Second, these aging individuals typically begin to receive public entitlements (mainly Social Security and Medicare). Having sufficient tax rates to sustain these programs has serious implications for organizations and younger workers since there will be more individuals demanding entitlements and a smaller base of workers contributing dollars to the program budgets. Finally, the aging population will become a powerful consumer force driving demand for certain types of products and services. Organizations in industries of potentially high market demand (such as entertainment, travel, and other leisure-time pursuits; specialized health care; financial planning, home repair, and other professional services; etc.) will require larger workforces to meet that demand whereas organizations in industries in which market demand faces potential declines (such as singles bars, ski resorts, etc.) may have to make adjustments in their workforces through layoffs and downsizing.
Workforce diversity is an issue facing managers of organizations in Japan,
Australia, Germany, Italy, and other countries. For instance, as the level of immigration increases in Italy, the number of women entering the workforce rises in Japan, and the population ages in Germany, managers are finding they need to effectively manage diversity.
Does the fact that workforce diversity is a current issue facing managers mean
that organizations weren't diverse before? No. They were, but diverse individuals
made up a small percentage of the workforce, and organizations, for the most
part, ignored the issue. Prior to the early 1980s, people took a "melting pot"
approach to differences in organizations. We assumed that people who were "dif-
ferent'' would somehow automatically want to assimilate. But we now recognize
that employees don't set aside their cultural values and lifestyle preferences
when they come to work. The challenge for managers, therefore, is to make their
organizations more accommodating to diverse groups of people by addressing
different lifestyles, family needs, and work styles. The melting pot assumption
has been replaced by the recognition and celebration of differences.13 Smart
managers recognize that diversity can be an asset because it brings a broad range
of viewpoints and problem-solving skills to a company. An organization that
uses all of its human resources will enjoy a powerful competitive advantage.
Many companies such as Levi Strauss, Advantica, Dole Food, Avis Rent A Car,
SBC Communications, Avon Products, and Xerox have strong diversity manage-
ment programs.TM We'll highlight many diversity-related issues and how compa-
nies are responding to those issues throughout this text in our "Managing
Workforce Diversity" boxes.
The process whereby an individual or a group of individuals uses organized
efforts and means to pursue opportunities to create value and grow by fulfilling wants and needs through innovation and uniqueness, no matter what resources are currently controlled.
Practically everywhere you turn these days you'll read or hear about entrepreneurs. If you pick up a current newspaper or general news magazine or log on to
one of the Internet's news sites, chances are you'll find at least one story (and
probably many more) about an entrepreneur or an entrepreneurial business.
Entrepreneurship is a popular topic! But what exactly is it?
Entrepreneurship is the process whereby an individual or a group of individuals uses organized efforts and means to pursue opportunities to create value and
grow by fulfilling wants and needs through innovation and uniqueness, no matter
what resources are currently controlled. It involves the discovery of opportunities
and the resources to exploit them. Three important themes stick out in this definition of entrepreneurship. First is the pursuit of opportunities. Entrepreneurship is
about pursuing environmental trends and changes that no one else has seen or
paid attention to. For example, Jeff Bezos, founder of Amazon. com, was a successful programmer at an investment firm on Wall Street in the mid-1990s. However,
statistics on the explosive growth in the use of the Internet and World Wide Web
(at that time, it was growing about 2,300 percent a month) kept nagging at him.
He decided to quit his job and pursue what he felt were going to be enormous
retailing opportunities on the Internet. And the rest, as they say, is history. Today,
Amazon sells books, music, home improvement products, cameras, cars, furniture,
jewelry, and numerous other items from its popular Web site.
The second important theme in entrepreneurship is innovation. Entrepreneurship involves changing, revolutionizing, transforming, and introducing new
approaches--that is, new products or services or new ways of doing business
e-business (electronic business)
A comprehensive term describing the way an organization does its work by using electronic (Internet-based) linkages with its key
constituencies in order to efficiently and effectively achieve its goals.
Any form of business exchange
or transaction in which the
parties interact electronically.
Types of E-Commerce
Innovation has been called the most precious capability that any organization in today's economy must have and nurture. Without a constant flow of new ideas not only for new products and services, but also for new ways of doing things an organization is doomed to obsolescence or even worse, failure.20 In a survey about what makes an organization valuable, innovation showed up at the top of the list.21
Which companies were cited as the most innovative in this study? Intel, Procter & Gamble, and AOL came out on top. There is absolutely no doubt that innovation is crucial. How do managers encourage innovative thinking among all organizational members? That's an important question and one that all managers at all levels must resolve. We'll cover the topic of managing innovation in Chapter 13.
Another demand facing today's organizations and managers is the need for flexibility. In a context in which customers' needs may change overnight, in which new competitors come and go at breathtaking speed, and in which employees and their skills are shifted as needed from project to project, you can see how flexibility might be valuable. As we discuss organizational strategy, organizational design, and job design (Chapters 8, 10, and 16), we'll examine the role of flexibility.
A quality revolution swept through both the business and public sectors during
the 1980s and 1990s.
The generic term used to describe this revolution was total quality management, or TQM for short. It was inspired by a small group
of quality experts, the most famous being W. Edwards Deming and Joseph M.
Juran. The ideas and techniques espoused by these two men in the 1950s had few
supporters in the United States but were enthusiastically embraced by Japanese
organizations. As Japanese manufacturers began beating out U.S. competitors in
quality comparisons, Western managers soon began taking a more serious look at
TQM. Deming's and Juran's ideas became the basis for today's organizational qual-
ity management programs.
TQM is a philosophy of management driven by continual improvement and
responding to customer needs and expectations. (See Exhibit 2.8.) The term cus-
tomer in TQM has expanded beyond the original definition of the purchaser out
Total quality management (TQM)
A philosophy of management that is driven by customer needs and expectations and focuses on continual improvement in work processes
1. Intense focus on the customer. The customer includes not only outsiders who buy the organization's products or services but also internal customers (such as shipping or accounts payable personnel) who interact with and serve others in the organization.
2. Concern for continual improvement. TQM is a commitment to never being satisfied. "Very good" is
not good enough. Quality can always be improved.
3. Process-focused. TQM focuses on work processes as the quality of goods and services is continually improved.
4. Improvement in the quality of everything the organization does. TQM uses a very broad definition of quality. It relates not only to the final product but also to how the organization handles deliveries, how rapidly it responds to complaints, how politely the phones are answered, and the like.
5. Accurate measurement. TQM uses statistical techniques to measure every critical variable in the
organization's operations. These are compared against standards or benchmarks to identify
problems, trace them to their roots, and eliminate their causes.
6. Empowerment of employees. TQM involves the people on the line in the improvement process.
Teams are widely used in TQM programs as empowerment vehicles for finding and solving problems.
An organization that has developed the capacity to continuously learn, adapt, and change.
Today's managers confront an environment in which change takes place at an
unprecedented rate. Constant innovations in information and computer technologies combined with the globalization of markets have created a chaotic
world. As a result, many of the past management guidelines and principles created for a world that was more stable and predictable no longer apply. Successful
organizations of the twenty-first century must be able to learn and respond
quickly. These organizations will be led by managers who can effectively challenge conventional wisdom, manage the organization's knowledge base, and
make needed changes. In other words, these organizations will need to be learning organizations. A learning organization is one that has developed the
capacity to continuously learn, adapt, and change. Exhibit 2.9 clarifies how a
learning organization is different from a traditional organization.
Part of a manager's responsibility in fostering an environment conducive to
learning is to create learning capabilities throughout the organization from
lowest level to highest level and in all areas. How can managers do this? An
important step is understanding the value of knowledge as an important
resource, just like cash, raw materials, or office equipment. To illustrate the
value of knowledge, think about how you register for college classes. Do you talk
to others who have had a certain professor? Do you listen to their experiences
with this individual and make your decision based on what they have to say
(their knowledge about the situation)? If you do, you're tapping into the value
Cultivating a learning culture in which organizational members
systematically gather knowledge and share it with others in the
organization to achieve better performance.
Traditional Organization Learning Organization
Attitude toward If it's working, If you aren't changing,
change don't change it. it won't be working for Iong.
Attitude toward If it wasn't invented If it was invented or reinvent,
here, reject it. here, reject it.
Who's responsible Traditional areas Everyone in organization
for innovation? such as R and D
Main fear Making mistakes Not learning; not adapting
Competitive advantage Products and service Ability to learn, knowledge
Managers job Control others Enable others
At first, the words workplace and spirituality might seem incongruous. After all, how can an organizational system that's
based on rationality, logic, and "rules" of management (think
of Weber, Fayol, Barnard, and other management theorists
we've introduced in this chapter) ever be consistent with spirituality? Yet, we're seeing a growing interest in spirituality at
work by employees at all levels and in all areas of organizations.24 Companies such as Taco Bell, Pizza Hut, and subsidiaries of Wal-Mart have hired chaplains from all religious
backgrounds to counsel employees on life issues and challenges. The chairman of Aetna International (the insurance
company) has shared with employees the benefits of meditation and talked with them about using spirituality in their
careers. This search for spirituality in the workplace is impact-in~ organizations and the job of managers.
A recognition of an inner life
that nourishes and is nourished
by meaningful work that takes
place in the context of
It's not about organized religious practices. Rather, it's "a recognition of an inner
life that nourishes and is nourished by meaningful work that takes place in the context of community.'2s Employees are :looking for meaning, purpose, and a sense of connectedness
or community from their work and their workplace. Why? Where is this trend coming from?
In part, what we see happening is just a reflection of broader trends in society.
People are searching for a deeper understanding of who they are and why they're
here on Earth. They want more from their lives than just a steady job and a pay-
,check. They want to feel that there is some meaning in their lives and that they're
part of something greater than just themselves. Since those feelings of meaning,
connectedness, and fulfillment aren't coming from family or community structures anymore as people are more mobile and working longer hours, they're looking to the workplace--where they spend a significant portion of their waking
hours to provide these. Another contributing factor to the increase in workplace
spirituality appears to be the change and uncertainty so descriptive of the environment facing today's organizations. Uncertainty makes people anxious. Practicing
spirituality in whatever ways they're comfortable with--provides employees with
a sense of calm, belonging, connection, fulfillment, and meaning.
Thank you for your attention!