Introduction to Management and Organisational Behaviour

Introduction

This content presents a general discussion of management in organizations today and provides some background on organizational behavior. You will have an opportunity to express your understanding of critical managerial challenges within organizations today, and will also be provided with a case that illustrates some of these challenges. This content covers a diverse body of literature to provide you with some conceptual models and practical tools that will enhance your understanding of behaviors in the workplace, and hopefully help you make successful progress as an effective member of your organization. So let’s jump into this discussion with a debate about the most important asset in organizations today: People! Upon completion of this, you will be able to:

 

· have a good understanding of managerial challenges and changes faced by managers

 

· define organizational behavior as a field of study

 

· Explain and critique why an understanding of behavior in organizations is critical for members in all types of workplaces.

 

Terminology

Diversity: Individual differences resulting from social demographic characteristics such as age, gender, race, ethnicity, religion, and so on.

 

Management: The process of planning, organizing, leading, and controlling others in an organization to increase its effectiveness.

 

Organization: A collection of people who work together and coordinate their actions to achieve individual and organizational goals.

 

Organisational Often referred to as OB, it focuses on the

Behavior: behavior of people in organizations, and how their behavior (both as individuals and groups). affects performance in these organizations. It also examines the effects of structure on these members and groups and the organization as a whole.

 

Organizational Effectiveness:

The ability of an organization to achieve its goals.

 

Organization Structure:

The formal system of task and reporting relationships controls, coordinates, and motivates employees so that they cooperate and work together to achieve an organization’s goal.

 

Social Responsibility:

An organization’s obligations towards people or groups are directly affected by its actions.

People versus profits

After reading the two scenarios below, take some time to think about what your position is on this issue, and write a brief rationale for that position. It will be interesting to see throughout this content, whether that position changes.

 

Scenario 1: “IT IS CRITICAL THAT PEOPLE BE PUT FIRST”

 

Intel does it. So do Microsoft, Motorola, W.L. Gore & Associates, Southwest Airlines, Hewlett-Packard, Lincoln Electric and Starbucks. What is it? These companies pursue “people-first” strategies. There is an increasing amount of evidence that successful organizations put people first. Why? Astute managers have come to learn that their organization’s employees are its only true competitive advantage. Competitors can match most organizations’ products, processes, locations, distribution channels, and the like. What’s far more difficult to copy is a workforce made up of highly knowledgeable and motivated people. The characteristic that differentiates successful companies from their less successful counterparts is the quality of the people they can get and keep.

 

What kinds of practice differentiate people-first organizations? We can list at least four:

 

1. they value cultural diversity, actively seeking a diverse workforce based on age, gender, and race;

 

2. they are family-friendly, helping employees balance work and personal responsibilities through programs like flexible work schedules and on-site child-care facilities;

 

3. they invest in employee training, spending heavily to make sure employee skill levels are kept current (This not only ensures that employees can handle the latest technologies and processes for the organization but that employees will be marketable to other employers.);

 

4. they empower their employees; pushing authority and responsibility down to the lowest levels.

 

Organizations that put people first have a more dedicated and committed workforce. This, in turn, 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.

 

Scenario 2: “IT IS CRITICAL THAT PROFITS BE PUT FIRST”

 

Putting “people first” is easy to say. And it’s currently politically correct. What manager, in his or her right mind, is going to admit publicly that employees take a back seat to cost-cutting or profitability? It’s important, however, not to confuse talk with action. Putting people first is not necessarily consistent with long-term competitiveness. Managers must recognize this fact and increasingly act on it. Today’s organizations more typically pursue a “labor-cost minimization” strategy rather than a people-first strategy. When you look beyond what managers say, you find most businesses place profits before people. To stay competitive in a global economy, they look for cost-cutting measures. They re-engineered processes and cut the size of their permanent workforce. And they substitute temporary workers for full-time permanent staff.

 

Organizations with problems typically look to staffing cuts as a first response. And organizations without problems regularly review their staffing needs to identify redundancies and overstaffing. Their goal is to keep themselves “lean and mean”. In today’s competitive environment, few organizations have the luxury to be able to provide workers with implied “permanent employment” or to offer anything more than minimal job security. For almost all organizations, employees are a variable cost. Staff levels are kept to a minimum and employees are continually added or deleted as needed.

 

Interestingly, the labour-cost-minimisation strategy appears to be spreading worldwide. It began in Canada and the United States in the early 1990s. Now it has become the model for companies in countries such as Japan, South Korea, and Thailand – places that historically protected their employees in good times and bad. Many firms in these countries have abandoned their permanent-employment, people-first policies. Why? Because such policies are inconsistent with aggressive, low-cost global competition.

Source: Robbins & Langton (2001)

The above debate is ongoing in most organizations, where management must make decisions between efficiencies and effectiveness. Indeed, a bottom-line focus must be balanced with the need to create an environment for employees that facilitates an acceptable bottom line! Commentators often distinguish between these two terms as ‘doing things right’ and ‘doing the right thing’. Many of these issues will be addressed throughout this module.

A changing workplace

Several critical changes and challenges present themselves to diverse organizations today.

Activity

Before reading further, take some time to think about what you perceive to be some of the key evolutionary changes (either within or external to organizations) that present some of the critical challenges faced by managers today. Let’s compare today’s work environment with that of ten years ago. Prepare a list of six to eight items, and include a rationale for your choices.

 

When your list is complete:

 

There are numerous items that you might have identified from your own work experience and your knowledge of organizational issues. Let’s review some of the possibilities.

 

Globalization

Certainly, the emergence of a ‘borderless’ world has had a tremendous impact on the way organizations behave. They are no longer insulated from foreign competition, and this has forced organizations to examine cost efficiencies, structure, job design, human capital, and many other sources of effectiveness and competitiveness.

 

Technology

We have seen tremendous technological advances in the last decade, and this has had a significant impact on the way organizations behave. The Internet has enabled small, start-up companies to become global organizations (even from people’s homes). We have access to much more information, and we can access it much more quickly. This has several effects on organizational behavior: it has given organizations access to larger, more diverse markets; it enables organizations to market their products and services electronically (non-profit organizations for example can solicit contributions from their members without print and mailing expenses); it has helped many organizations reduce costs. But, it has intensified competition for many organizations; it has enabled consumers to become more sophisticated and therefore more demanding; it often requires significant capital investments (and the risk of obsolescence is high); and it can be a great source of stress for employees who must continually adapt to new technologies.

Mergers and acquisitions

Recent years have been a time of mergers and acquisitions for many organizations, seeking to increase market share and profitability. However, the complexity of these integrations has had a tremendous impact on employees in newly merged organizations; they often have great difficulty adjusting to potentially conflicted cultures. This has contributed to many failed mergers and acquisitions.

 

Workplace diversity

The workforce in today’s new economy is much more diverse, as a result of changing demographics. This necessitates a better understanding of needs and values in the workforce, and careful planning to provide a work environment that is welcoming and comfortable for all employees.

 

Organizational structure

In response to increased competition, many organizations have focused on cost efficiencies and increased effectiveness. Management has argued that the members must ‘get closer to the customer’ and focus almost exclusively on ‘value-added’ services to distinguish themselves from the competition. To accomplish these goals, organizations have become leaner and meaner, and ultimately much flatter. In some organizations, middle management has been reduced substantially compared with what it was ten years ago, and organizations design jobs around self-directed teams, who make decisions with greater autonomy now than in the past when only management was sanctioned to make strategic decisions.

 

Work-life balance

There was a time when managers (who were mostly men) would not consider turning down a promotion. But today, many people do just that, because they place a much greater priority on personal time – time for themselves, travel time, and time for their families. Organizations have responded in several ways: allowing flexible work hours, providing daycare to allow parents to be close to their children, encouraging at-home offices, and providing for extended vacations and paid sabbaticals. Employee loyalty is critical in establishing a productive and dedicated workforce, and if these needs are ignored, organizations risk losing these employees.

 

The rate of change

Some managers have identified the pace of change in today’s environment as their number one management challenge. Historically, change appeared to be the exception, while stability in organizations was the norm. We could plan change and progress using historical performance as our guide. That is no longer possible and, in fact, potentially dangerous. Our ability to rely on a sense of permanence has been eroded, and this necessitates flexibility, an astute understanding of our markets and customers, and a tolerance for ambiguity moving forward. Globalization and technological advances have provided organizations with a guarantee that change is ubiquitous and cannot be ignored.

Increased competition

Competition has intensified for many organizations over the last decade, primarily as a result of the issues discussed above. Globalization and technology have eased entry into some industries by some organizations, and organizations must compete within a much larger arena. This has resulted in some radical changes, some of which include strategic, structural, and operational.

 

Increased ethical and social responsibility

Consumers have access to more information than ever, and some would argue that they are more knowledgeable in general about the values and behavior of the organizations in which they invest. Increased competition has provided consumers with more choices in terms of purchasing products or services. As such, many organizations face an increased need to behave ethically and demonstrate appropriate social behavior. Unfortunately, not all organizations feel compelled to behave in ethical or moral ways. However, they risk being exposed for their negligence by a whistleblower from within the organization who wishes to expose wrongdoing.

 

Evolution in the role of the workforce

In the foregoing exercise, you might have come up with several other changes and challenges that organizations must manage today. Certainly, much of what is discussed above implies that organizations must be prepared to create a work environment that fosters commitment from employees, expertise, creativity, and innovation. Organizations strive for this to design, produce, market, and deliver a product or service that meets their consumers’ needs and expectations – all while being socially responsible and profitable! This is a tall order. It has been argued by many strategists that product or service differentiation is no longer a source of competitive advantage; the differentiation must exist in the workforce. Much value has been placed on people in recent years – why? Because it is possible that the ‘people’ are an organization’s core competency. Business concepts and ideas, and the ability to identify and seize opportunities, are all dependent on people who are passionate about a shared vision and set of values.

 

Organizational behavior defined

The field of organizational behavior is very large and is an area of study that merits our attention as members of organizations for many reasons. Organizational behavior (often referred to as OB) focuses on the behavior of people in organizations, and how their behavior (both as individuals and groups) affects performance in these organizations. It also examines the effects of structure on these members and groups and the organization as a whole. It is the objective of this discipline to  help members of organizations better understand themselves and those with whom they interact. Specifically, we study organizational behavior to become effective participants and managers in the workplace. An enhanced understanding of several topics will help us realize this objective.

 

Some of these topics include individual perceptions, sources of motivation and individual needs, job satisfaction, group behavior, diversity in the workplace, conflict management, leadership, politics and power, organizational change, and negotiation.

 

Those who study OB might want to understand how personalities such as extraversion and agreeableness influence the way they behave in the organization and know how to motivate employees for high performance using OB theories and concepts of goal-setting, feedback, conflict management, team leadership, and communication for improving work performance. Managers in any organizational setting use communication, leadership decision-making, and conflict management in addition to motivation to influence employees and their work behavior. Besides these managerial (OB) processes, this field of study enlarges one’s scope on how to use socio-technical systems such as physical and virtual teams, grouping organizations based on products or services.

 

Organizational behavior has been a distinct body of literature since the 1940s. Its roots are in anthropology, industrial and social psychology, and sociology. The application of organizational behavior has expanded over the last six decades and is an area of study upon which we rely to help us understand socio-emotional behavior in several complex environments: for-profit and not-for-profit organizations; public administration; education; health care management, and international development. Many of you who have been employed by one or more of these organizations might recognize that often, really effective managers seem to be the exception rather than the rule. It has been argued that this is often a result of poor interpersonal skills. Managers and other employees today face much uncertainty in the workplace, if for no other reason than because of ubiquitous changes in an increasingly complex environment.

 

We know that finance, marketing, information technology, economics, and accounting, are all disciplines that are important in organizations. And the success of these organizations is dependent upon skills across these disciplines. Yet we must consider that underlying and influencing all of these perspectives are the attitudes and behaviors of individuals in the organization. And much of an organization’s success is dependent on the effective management of its employees.

The key success of an organization lies in its human resources. Successful organizations depend on human resources to work hard, think creatively, and perform excellently. What is required is rewarding, encouraging, and nurturing the human resources in a timely and meaningful manner. How employees behave is the key to achieving effectiveness. Because people behave in many predictable and unpredictable ways in which each person has a unique behavioral pattern, the task of managers would be to observe, respond to, and cope with the multitude of behavior patterns employees display.

 

The rest of the content will cover managerial and behavioral issues in the workplace, beginning with a micro level of analysis (the individual), moving on to group behavior, and then a more macro focus on the organizations, and organizational communities.

Content Summary

Management is the process of planning, organizing, leading, and controlling an organization (which may include human, financial, material, and other resources) to increase its effectiveness. Leaders or managers alike who are knowledgeable about OB are in a good position to improve their ability to perform the management function in their organization. Changes in the environment constantly challenge organizations and their owners’, managers’, and employees’ abilities to adapt and change work behaviors and procedures to increase the effectiveness with which they operate. Several critical changes and challenges present themselves to diverse organizations in the current business world, such as changing pressures or forces in the:

 

· social and cultural context

· global and technological advances

· mergers and acquisitions

· workplace diversity

· work-life balance

· rate of change

· increased competition.

 

These factors pose many challenges for management in organizations, and organizations must respond effectively to those challenges if they are to survive or prosper.

Case study

Please read the case study below, and then prepare your answers to the questions that follow.

Ernst and Young is putting its managers under the microscope with a confidential employee poll.

 

The professional services firm is hoping to cull candid information from its workers to help its managers become more effective and help curb turnover.

 

“People leave managers. They don’t leave organizations,” says Keith Bowman, the company’s director of human resources.

 

“For the last five years, people have had an incredible number of work opportunities. They are more likely to look for other jobs and leave. The role of the manager is fundamental to keeping people from leaving.”

 

Starting next month, Ernst and Young employees will be asked about their managers: “How well does the individual foster a positive work environment and help our people grow?”

 

Staff can respond electronically to one of several pre-selected ratings, from not well to extremely well. All responses are anonymous.

 

This approach comes at a time when the working world is under siege by an employee retention crisis – one that observers say will only get more severe in the years to come as an impending labor shortage of almost one million workers is expected across all industries in Canada.

 

As a result, organizations are desperate to understand how to keep top talent from job-hunting.

 

Their desperation is well-founded; given that one in three workers will resign from their job in the next two years, according to a new survey by the Hay Group.

 

Ineffective managers are a major factor in the increasing rates of departure, says the research company, which interviewed more than one million employees in 330 organizations around the world.

 

“Poor managers have a huge impact on employee turnover. Management’s inability to adapt to the times will continue to contribute dramatically to sustaining high levels of turnover,” says Ron Grey, managing director of The Hay Group, Canada.

 

“We have seen significant problems with senior managers who have not recognized the changing relationship with workers and continue to operate using historical methods,” he says.

“As the workplace becomes more team-based and virtual, the role of managers must also change,” Mr. Bowman says.

 

“If you have the right people, you do not need to manage them. More work is team-based. More work is done from home. Managers should look for results and output, not whether their people are in the office at 9:00 a.m.

 

The Hay Group survey found the main reason workers left was that they felt their skills weren’t being used. The second most cited reason was the inability of top managers to be effective leaders.

For instance, only 30-40 percent of workers surveyed said they felt their bosses were eager to help advance their careers.

 

“Managers were also criticized for tolerating workers who underperform – creating a key source of dissatisfaction among their peers,” Mr. Grey says. More than half of the employees surveyed said their employers routinely accept poor performers who shirk responsibility. Many top workers respond by leaving.

 

“To add insult to injury,” Mr. Grey says, “managers often don’t understand why so many people are eager to leave and change jobs.”

 

“Managers have a degree of blind loyalty that makes it difficult for them to understand the views of other employees,” Mr. Grey says.

 

Workplace consultants urge managers to become better communicators, treat employees as individuals, and help foster career development. KPMG’s chief human resources officer, Lauren Burns, says many of the firm’s employees leave because they are “cherry-picked” by their clients, not because of bad management. The company has started re-recruiting former employees who may want to return.

 

“Still,” Mr. Burns says, “old-style management techniques that rely on close supervision, hierarchy, and paternalistic methods are the most common reasons organizations are given for high turnover. People feel trapped. They are unhappy with the working relationship they have with their managers and want to get out.”

 

Case Study Questions

1. In your opinion, what makes employees at Ernst and Young perceive managers as ineffective? Elaborate and give incidences of some of the managerial behavior that drives employees out of Ernst and Young.

 

2. Is there something that you believe managers can do to ensure that employees will remain with the organization?