1 Organizational Behavior in the 1990S

1 ORGANIZATIONAL BEHAVIOR IN CHANGING TIMES

CHAPTER SCAN

This introductory chapter provides an overview of the environment of organizations for these changing times. It begins by providing an overview of behavior in organizations and the interdisciplinary origins of that behavior. Next, the organizational context is described and the six focus organizations (Ford, Gateway, Southwest Airlines, Starbucks, Harpo Entertainment, and the American Red Cross) are presented. Current concerns regarding changes and challenges are presented next followed by a discussion of how people learn about organizational behavior.

LEARNING OBJECTIVES

After reading this chapter, you should be able to do the following:

1. Define organizational behavior. 2. Identify six interdisciplinary contributions to the study of organizational behavior. 3. Identify the important system components of an organization. 4. Describe the formal and informal elements of an organization. 5. Understand the diversity of organizations in the economy, as exemplified in the six focus organizations. 6. Recognize the challenge of change for organizational behavior. 7. Demonstrate the value of objective knowledge and skill development in the study of organizational behavior.

1 2 Chapter 1: Organizational Behavior in Changing Times

KEY TERMS

The following key terms are introduced in Chapter 1: organizational behavior change challenge psychology sociology engineering anthropology management medicine task people structure formal organization informal organization Hawthorne studies total quality management objective knowledge skill development

THE CHAPTER SUMMARIZED

I. THINKING AHEAD: Change, Challenge, and Gateway

II. HUMAN BEHAVIOR IN ORGANIZATIONS

Chapter one emphasizes dynamics of organizations. The coverage of diversity issues, international organization orientations, and quality movements represent some of the current focuses and concerns of organizations. A special orientation of this text deals with approaches to learning and application of the skills necessary to become successful organizational members. Chapter 1: Organizational Behavior in Changing Times 3

A. Understanding Human Behavior

Most of the theories and models of human behavior are categorized as either internal perspectives or external perspectives. Internal perspectives view behavior in terms of thoughts, feelings, past experiences, and needs of the individual. External perspectives explain behavior in terms of external events, consequences of behavior, and the environmental forces. Example: "the instructor gave me a C" (external perspective), or in contrast, "I earned an A" (internal perspective).

"The work of the future will be creation...people will judge you not by how long you work or how many routine units you turn out, but rather by how much you increase the joy of the world." Isaac Asimov

B. Interdisciplinary Influences

Because of the complexity of organizations, several fields and disciplines of study have influenced the field of organizational behavior. Significant influences are from psychology, sociology, engineering, anthropology, management, and medicine. Definitions of the disciplines and contributions to organizational behavior are:

Psychology - the science of human behavior - Contributions in motivation, teamwork, power, leadership, and human resource planning. Sociology- the science of society - Contributions in group dynamics, roles, norms, and standards of behavior. Engineering - applied science of energy and matter - Aids in understanding the design of work. Conditions of the environment can aid or impede productivity in the workplace. Anthropology - science of human learned behavior - Patterns of culture and how they are communicated in organizations. Management - The discipline devoted to overseeing activities and supervising people in organizations. Medicine - applied science of healing or treatment of diseases - Embraces concerns for the physical and psychological health of individuals in organizations.

III. THE ORGANIZATIONAL CONTEXT

To accurately understand organizational behavior, an understanding of human behavior and an understanding of the organizational context is necessary. The organizational context is the setting in which behavior occurs. 4 Chapter 1: Organizational Behavior in Changing Times

A. Organizations as Systems

Organizations are systems of interacting components including people, tasks, technology, and structure. These combinations of components are not limited to business structures, but include religious organizations, military organizations, and even family structures. Leavitt sets out a basic framework for understanding organizations, a framework that emphasizes four major internal components, task, people, technology, and structure. These components, along with the organization's inputs, outputs, and key elements, make up the organizational system. Every organization has a task that includes its mission, purpose, or goal for existing. The people in the organization are the human resources of the organization.

B. The Formal and Informal Organization

Organizations are combinations of formal and informal components. The formal organization includes the legitimate and official portions of organizations, such as policies, titles of organizational members, reporting lines, and performance appraisals. Informal organization perspectives include people's feelings, thoughts, and attitudes about their work and how these factors affect their behavior and performance.

C. Six Focus Companies

You might want to consider having six teams of students examine each company in further detail for class presentations. This is a good way to point out to the students the advantages, disadvantages, and difficulties connected with groups and teamwork. The analysis of the group behavior could coincide with Chapter 8.

1. Ford Motor Company

· World’s second largest industrial corporation · 365,000 people and $168 billion in sales · Motto is “Quality is Job One”

2. Gateway

· Topped the Inc. 500 list of fastest-growing private companies in 1991 · Four manufacturing plants in the U.S., Ireland, and Malaysia · Leading American seller of personal computers by mail

3. Southwest Airlines · Air transportation to 52 cities · Seventh largest airline based on number of passengers carried in 1997 · Single class rates with an informal organizational culture Chapter 1: Organizational Behavior in Changing Times 5

4. Starbucks Corporation

· Leading roaster, retailer, and brand of specialty coffee in North America · Billion dollar a year business · Successful transition from entrepreneurship to professional management

5. Harpo Entertainment Group

· Privately held television and film production business · 175 employees and $150 million in annual revenues · Produces the Oprah Winfrey Show

6. American Red Cross

· Not-for-profit organization chartered by congress to provide relief services · 29,850 paid staff and nearly $2 million annual budget · Majority of work accomplished by 1.4 million volunteers

IV. THE CHALLENGE OF CHANGE

Competition has increased dramatically since World War II creating performance and cost pressures that impact peoples’ work behavior. However, the outcomes of these competitive pressures are not inevitably negative. The key is finding a balance between too much change that results in chaos, and too little change that results in stagnation.

A. International Competition in Business

The globalization of U.S. corporations is a response to the increasing pressure of international competition. However, as will be evident in following chapters, the failures in international competition have less to do with understanding the markets and economies of other countries than they do with understanding the diversity of their cultures. The study of organizational behavior provides a window of understanding to help manage this diverse work force.

B. Customer Focused for High Quality

The term quality has become a hot topic in organizations when discussing what will make the organization more competitive. Total quality is defined as continuous improvement so that the customers' needs are met and their expectations exceeded.

C. Behavior and Quality at Work 6 Chapter 1: Organizational Behavior in Changing Times Much of the quality literature is connected with engineering and just-in-time management techniques. However, many studies have verified that total quality

improvement is only successful when employees have the skills and authority to respond to customer needs. Consequently, this has direct effects on the behavior of employees. The U.S. has recognized the value of quality and the Department of Commerce sponsors the annual Malcolm Baldrige National Quality Award.

D. Managing Organizational Behavior in Changing Times

Four reasons are given for the challenging environment of organizational behavior: (1) increasing globalization of organizations' operating territory, (2) increasing diversity of organizational work forces, (3) continuing technological innovation and need for accompanying skill enhancement, and (4) continuing demand for higher levels of moral and ethical behavior at work.

V. LEARNING ABOUT ORGANIZATIONAL BEHAVIOR

Because organizational behavior is a combination of abstract ideas and science, it takes a multidimensional approach to learning. It necessitates a mastery of objective knowledge, which results from research and scholarly activity. In addition it requires skill development to incorporate the knowledge into applications for individuals. Finally, it requires the integration of objective knowledge and skill development to apply them both appropriately in specific organizational settings.

A. Objective Knowledge

Objective knowledge is the cognitive mastery of theories, conceptual models, and research findings developed through basic and applied research. The objective knowledge in each chapter is reflected in the notes used to support the text material.

B. Skill Development

Skill development is the practice of what is known to be successful in the workplace. The AACSB, the accrediting body for business schools, is endorsing the concept that skills can be taught, and that practice improves one's ability as a manager. According to the Department of Labor, skills essential for workplace success include resource management skills, information management skills, personal interaction skills, and systems behavior and performance skills. Focusing on skills may be a new experience for many students, therefore, it is helpful to review the basic assumptions that underlie skill development, which include the following:

(1) Each student must accept responsibility for his or her own behavior, learning, and actions, (2) Each student must actively participate in the individual or group structured learning activity, and Chapter 1: Organizational Behavior in Changing Times 7 (3) Each student must be open to new information, new skills, new ideas, and experimentation.

VI. PLAN FOR THE BOOK

A. Application of Knowledge and Skills

The advantage for students with experiential learning is the opportunity to practice new approaches of interaction and skills in the safe environment of the classroom, as opposed to in the work situation. A direct correlation can be found between active participant involvement in learning and skills-oriented learning outcomes. The traditional approach to learning (passive learning, such as listening to lectures) leads to knowledge-oriented learning outcomes. This is not sufficient for the needs of today's work force.

Objective knowledge enables us to rely on results about organizations that have been validated. Skill development is the application of what we have learned by integrating the objective knowledge in specific situations where applicable. Knowing the correct application to a problem setting is not the same as being able to apply the skills necessary to solve the problem.

B. Managerial Implications: Foundations for the Future

VII. LOOKING BACK: Gateway…….in the 21st century

CHAPTER SUMMARY

· Organizational behavior is individual behavior and group dynamics in organizations. · The disciplines of psychology, sociology, engineering, anthropology, management, and medicine have contributed to the discipline of organizational behavior. · Organizations are systems composed of people, structure, and technology committed to a task. · Organizations have formal and informal elements within them. · Manufacturing organizations, service organizations, privately owned companies, and nonprofit organizations all contribute to our national well-being. · The changes and challenges facing managers are driven by international competition and customer demands. · Learning about organizational behavior requires a mastery of objective knowledge and specific skill development. 8 Chapter 1: Organizational Behavior in Changing Times

REVIEW QUESTIONS: SUGGESTED ANSWERS

1. Define organizational behavior. What is the focus of organizational behavior?

Organizational behavior is the study of individual and group dynamics in organizational settings. Organizational behavior research and theories are developed for applications in non-profit as well as for-profit organizations.

2. Identify six disciplines relevant to the development of organizational behavior. How does each contribute?

Psychology - Contributions in motivation, teamwork, power, leadership, and human resource planning. Sociology - Contributions in group dynamics, roles, norms, and standards of behavior. Engineering - Aids in understanding the design of work. Conditions of the environment can aid or impede productivity in the workplace. Anthropology - Studies patterns of culture and how they are communicated in organizations. Management - Devoted to overseeing activities and supervising people in organizations. Medicine - Embraces concerns for physical and psychological health of individuals in organizations.

3. What is an organization? What are its four system components? Give an example of each.

An organization is a system of people and technology designed to accomplish a goal. The four components that make up the systems framework are: tasks (e.g., mission/purpose), people (e.g., employees), technology (e.g., tools and knowledge), and structure (e.g., work design, organizational structure).

4. Briefly discuss the elements of the formal and informal organization. Give examples of each?

Formal elements of an organization include those that are officially recognized an dhave legitimacy such as job descriptor and policy manuals. Informal elements are unofficial aspects of the organization such as value and group norms.

5. Discuss the six focus organizations used in this book.

Ford - A leading U.S. auto manufacturer. World's second largest industrial corporation. Gateway - Leading American seller of personal computers by mail. Topped the Inc. 500 list of fastest-growing companies in 1991. Southwest Airlines - Seventh largest airline providing air transportation to 52 cities. Single class rates with an informal organizational culture. Chapter 1: Organizational Behavior in Changing Times 9 Starbucks - Leading roaster, retailer, and brand of specialty coffee in North America

Harpo Entertainment - Privately held television and film production business. Owned by Oprah Winfrey. Produces the Oprah Winfrey Show. American Red Cross - Not-for-profit organization chartered by congress to provide relief services. 29,850 paid staff and 1.4 million volunteers.

6. Describe how competition and total quality are affecting organizational behavior. Why is managing organizational behavior in changing times challenging?

Because competition has increased dramatically since World War II, organizations must meet these challenges with an increase in quality. The emphasis on quality is more than reducing error rates in production; to reach new goals there is a corresponding ripple effect on motivation, leadership, followership, and other aspects of performance in organizations. One of the major aspects of the quality awards is the emphasis on service provided by the organizations involved in the competition.

DISCUSSION AND COMMUNICATION QUESTIONS: SUGGESTED ANSWERS

1. How do the formal aspects of your work environment affect you? What informal aspects of your work environment are important?

Students without work experience may prefer to examine the university for formal and informal environment factors. The formal aspects of the university environment could include the university bulletin, specific requirements for graduation, and enrollment procedures.

Informal aspects of the university environment could include the power that the student association has on campus, the norms of dress, and relationships between students and faculty.

2. What is the biggest competitive challenge or change facing the businesses in your industry today? Will that change in the next five years?

Students without work experience may wish to consider the university setting to consider competitive challenges. This list may have items like tuition, work versus advanced education, job opportunities, or the status of similar universities.

Students with work experience may cite the need to change careers and this is why they have returned to complete their undergraduate degrees. This exemplifies the competitiveness of all environments and how rapidly individuals must change to meet this challenge. Many students returning to school may have considerable experience in a field that is "downsizing." 10 Chapter 1: Organizational Behavior in Changing Times All businesses face issues regarding increased competition, locally and internationally. Most organizations are dealing with potential ramifications of NAFTA agreements, and the changes in the concepts of loyalty and long-term commitments.

As we continue to solidify the change from an agrarian society to an information society, the next five years will see the work force continue to vary and have more jobs and careers than in any previous generation.

3. What will the next chief executive of your company be like?

Students may prefer to discuss the university president or dean of the college if they do not have work experience.

One of the discussions that could follow might correlate with current terminology that has become popular, such as visionary leaders, empowered work forces, and team work. Most organizational members view the next leader as being attentive to the motivational, leadership, cultural issues that are components of the field of organizational behavior. Few individuals will list leaders as needing greater technical skills.

4. Discuss two ways people learn about organizational behavior.

The examples are through research studies leading to theories and through skills development. Research skills provide a framework for organizations that have been analyzed, and the skills approach allows individuals to develop the techniques that are necessary for the frameworks to be effective.

It may be important to point out that taking only one approach exclusively is only half of a solution to a problem solving technique.

5. Which of the focus companies is your own company most like? Do you work for one of these focus companies? Which company would you most like to work for?

Few students will have work experience with the focus companies. Students that have experience, if they are still employed, may have a tendency to exaggerate their understanding of the company, and are probably very positive.

Students with work experience will probably identify early in the textbook overview of the companies the type of service or product that is provided.

Students may show their inclination for large or small organizations in their answers regarding the company for which they would prefer working. Additionally, they may show an inclination for the major they have selected and what they foresee the company doing with this functional area in their future. Chapter 1: Organizational Behavior in Changing Times 11 6. Prepare a memo about an organizational change occurring where you work, or in the college or university. Write a 100-word description of the change and, using Figure 1.1, identify how it is affecting the people, structure, task, and/or technology of the organization.

This is a good opportunity for students to practice writing in a concise, to the point, style. Be sure that students consider different aspects of people, structure, task, and technology as they develop the memo.

7. Develop an oral presentation about the changes and challenges facing your college or university based upon an interview with a faculty member or administrator. Be prepared to describe the changes and challenges, as well as whether they are good or bad.

Use this as an opportunity to work on oral presentation skills as well as to learn more about changes and challenges facing organizations. Encourage students to give each other feedback on the presentation itself as well as the content of the presentation. Compare and contrast the views of faculty and administrators. Discuss why similarities and differences exist in each group’s view of changes and challenges.

8. Prepare a brief description of a service, manufacturing company, entrepreneurial venture, or nonprofit organization of your choice. Go to the library and read about the organization from several sources, then use these multiple sources to write your description.

Discuss in class similarities and differences the students found between different service, manufacturing, entrepreneurial, or nonprofit organizations.

ETHICS QUESTIONS: SUGGESTED ANSWERS

1. Suppose two people at work have a personal, informal relationship unrelated to the formal organization. Further assume their relationship could affect people in the formal organization. As an aware employee, should you tell the people who are unaware of it and may be affected by the relationship?

The most direct, positive approach would be to discuss the situation with the two individuals involved. Most individuals are aware of the potential ramifications of a relationship at work. Many organizations have policies about dating co-workers, or even dating professionals from competing organizations. Ask students if they believe this is an invasion of privacy. What do they perceive as the differences between dating peers, superiors, or subordinates in the organization?

2. Which disciplines are important in understanding moral and ethical rules for organizations and management? 12 Chapter 1: Organizational Behavior in Changing Times Many disciplines have contributed to the understanding of ethical issues. Specifically, philosophy has provided the basic premises on ethical stands. Psychology, sociology, and anthropology bring a societal view of what is accepted within a culture. Religion provides a framework for morals within a value or belief system.

3. Suppose you would be able to beat the competition if you presented a prospective customer with negative information about the competition's quality program. Should you provide the information? Further assume that the information relates to safety. Would that make a difference in whether you told the customer?

The primary message in this question is for the students to begin developing their value perspectives on what is "fair" competition. To keep the discussion moving, it may be beneficial for students to tie their opinions to an example. Students will rapidly fall into pro or con categories that might be helpful to list on the board. This is also a good opening project for students to debate their views. They might benefit by having a devil's advocate join their group to argue the opposing position.

4. What are the most sensitive ethical issues in your business or organization today?

This will vary sometimes depending on the degree of work experience available in the class. It is interesting to divide the class into problems they see as "real experience problems" versus those that are picked up in the popular press.

A good approach to discussing issues can be generated by mentioning films such as The Firm, Trading Places, Glengary GlenRose, and Wall Street. Some of the issues that might be listed are: computer espionage, industrial spying, theft, and environmental concerns.

EXPERIENTIAL EXERCISES

1.1 What’s Changing at Work?

This exercise enlightens students about the changes occurring in organizations. Encourage teams to question each other about the legitimacy of the changes identified. A debate could be set up to generate discussion about whether specific changes are good or bad. Students should consider both the good and the bad impacts of a particular change.

1.2 My Absolute Worst Job

Purpose: To become acquainted with fellow classmates. Group size: Any number of groups of two.

Occasionally a student will reveal proprietary information about a company. It might be wise to preface the discussion by suggesting that students describe the type of job, rather than mentioning the name of the company. Chapter 1: Organizational Behavior in Changing Times 13 There are many humorous and bonding examples that have come from this exercise. You might want to tell the students that there have been a variety of answers. Two of the more extreme were:

(1) Digging cemetery plots in August in St. Louis. (No explanation was needed why this was not a "good" job.)

(2) On the committee for a state's inaugural ball, where the governor did not show up until 2:00 a.m.

These are good examples to illustrate that stress is related to behavior and organizational factors, not just the type of job that an individual fulfills.

Another issue that is pertinent to discuss during the de-briefing of this exercise is elitism.

Students need to be reminded that although they may not want to work at McDonald's all of their career, there are certainly some individuals who plan on making the organization their career.

We need to understand why other people may find what we think of as a "worst job," their ideal job.

Students may see some positions as "inherently worst jobs." Be sure to clarify that some individuals may take positions to fulfill financial obligations, and find their personal fulfillment through other means. This does not necessarily mean that they are not productive, valuable organizational members because they do not wish to "self-actualize" at work.

Recall that not all students will have work experience. It has been my experience that a large number of international students have little work experience because they go directly from secondary schools to college. You may need to make some allowances for these students so they do not feel like they are "in the wrong class because they are inexperienced." They could contribute by mentioning a job they would least like to do and why they would not want to have this position.

ALTERNATIVE EXPERIENTIAL EXERCISE

This exercise will give you an opportunity to discuss the elements of a quality learning environment. The basic question your group will need to answer first is whether good education provides a service or produces a product.

Creating a Quality Learning Environment

The exercise will give you the opportunity to discuss the elements of a quality learning environment. The basic question your group will need to answer first is whether good education 14 Chapter 1: Organizational Behavior in Changing Times provides a serves or produces a product. Once you have made that decision, you will be able to address the questions in Step 2 of the exercise.

Step 1. The class will form into groups of approximately six members. Each group elects a spokesperson and answers the following question: Does education provide a service or produce a product? The spokesperson should be prepared to explain the group’s answer to this basic question during the cross-team exchange.

Step 2. Each group is to generate answers to the following questions. The group should spend approximately five minutes on each question and make sure that each person has made a contribution to the group’s response. The spokesperson for each group should be ready to share the group’s collective responses to those three questions.

a. What are the important characteristics of a high-quality learning environment? Members should focus on the physical, social, and psychological characteristics of the environment, as well as on behaviors of the students and instructor. b. What format results in the best learning? For example, should lectures, debates, discussion, role-playing, and group activities be included? If so, in what proportions? c. What problems or obstacles have you encountered previously to a high-quality learning environment? These may be related to the subject matter, evaluation processes, work load expectations, or other aspects of the classroom environment.

Step 3. Each group will share the results of its answers to the questions in Steps 1 and 2. Cross- team questions and discussion will follow.

Step 4. Your instructor may allow for a few minutes at the end of the class period to answer questions about his or her thoughts about the course or professional background and experience. Be prepared to ask questions at this time.

EXTRA EXPERIENTIAL EXERCISES

The following alternative exercises to supplement the material in the textbook can be obtained from:

Marcic, Dorothy and Seltzer, Joe. Organizational Behavior: Experiences and Cases, 5th Ed. South Western College Publishing Company, 1998.

Assumptions About People and Organizations. p. 1-4. Time: 25-50 minutes Purpose: To develop an awareness about organizational behavior issues.

A Socialization Exercise: Learning the Ropes in an Experiential Course. p. 7-10. Time: 55 minutes or more. Purpose: To explore student expectations about experiential learning. Chapter 1: Organizational Behavior in Changing Times 15