UNDERSTANDING AND MANAGING ORGANIZATIONAL

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UNDERSTANDING AND MANAGINGORGANIZATIONAL BEHAVIORDelta PublishingCompany1

Copyright 2006 byDELTA PUBLISHING COMPANYP.O. Box 5332, Los Alamitos, CA 90721-5332All rights reserved. No part of this book may be reproduced in any form orby any means, without permission in writing from the publisher.2

TABLE OF CONTENTSCHAPTER 1An Introduction to Organizational BehaviorCHAPTER 2Managing People and OrganizationsCHAPTER 3MotivationCHAPTER 4Work-Related AttitudesCHAPTER 5Organizational Communication and PowerCHAPTER 6Groups and Teams in OrganizationsCHAPTER 7LeadershipCHAPTER 8Prosocial Behavior, Cooperation Conflict, and StressCHAPTER 9Making Decisions in OrganizationsCHAPTER 10Culture, Creativity, and InnovationCHAPTER 11Designing Effective OrganizationsCHAPTER 12Managing Organizational Change and DevelopmentGLOSSARY3

CHAPTER 1AN INTRODUCTION TO ORGANIZATIONAL BEHAVIORLEARNING OBJECTIVESAfter reading this chapter you will be able to: Define organizational behavior. Trace the historical roots of organizational behavior. Discuss the emergence of contemporary organizational behavior, including itsprecursors, the Hawthorne studies, and the human relations movement. Describe contemporary organizational behavior—its characteristics, concepts, andimportance. Identify and discuss contextual perspectives on organizational behavior.What is an organization? An organization is defined as a collection of people who work togetherto achieve a wide variety of goals. Organizational behavior is defined as the actions and attitudesof people in organizations. The field of organizational behavior (OB) covers the body ofknowledge derived from these actions and attitudes. It can help managers understand thecomplexity within organizations, identify problems, determine the best ways to correct them, andestablish whether the changes would make a significant difference.In this chapter, we begin with a comprehensive definition of organizational behavior anda framework for its study. We then trace the field’s historical roots and its emergence as anindependent field. Next, we discuss contemporary organizational behavior and present anoverview of the rest of this book. Finally, we examine several contextual perspectives thatprovide the general framework from which we can develop a more comprehensive examinationof human behavior at work.The Meaning of Organizational BehaviorOrganizational behavior (OB) is the study of human behavior in organizational settings, howhuman behavior interacts with the organization, and the organization itself. Although we canfocus on any one of these three areas independently, we must remember that all three areultimately connected and necessary for a comprehensive understanding of organizationalbehavior. For example, we can study individual behavior (such as the behavior of a company’sCEO or of one of its employees) without explicitly considering the organization. But becausethe organization influences and is influenced by the individual, we cannot fully understand theindividual’s behavior without knowing something about the organization. Similarly, we canstudy an organization without focusing specifically on each individual within it. But again, weare looking at only one piece of the puzzle. Eventually, we must consider the other pieces tounderstand the whole.1

Exhibit 1 illustrates this view of organizational behavior. It shows the linkages amonghuman behavior in organizational settings, the individual-organization interface, theorganization, and the environment surrounding the organization. Each individual brings to anorganization a unique set of personal characteristics, experiences from other organizations, andpersonal background. Therefore, organizational behavior must look at the unique perspectivethat each individual brings to the work setting. For example, suppose that Texas Instrumentshires a consultant to investigate employee turnover. As a starting point, the consultant mightanalyze the types of people the firm usually hires. The goal of this analysis would be to learn asmuch as possible about the nature of the company’s workforce from the standpoint of theindividual—their expectations, their personal goals, and so forth.EXHIBIT 1THE NATURE OF ORGANIZATIONAL BEHAVIOREnvironmentINDIVIDUALHUMAN BEHAVIORINORGANIZATIONALSETTINGSTHE INDIVIDUALORGANIZATIONINTERFACETHE ORGANIZATIONBut individuals do not work in isolation. They come in contact with other people andwith the organization in a variety of ways. Points of contact include managers, coworkers, theformal policies and procedures of the organization, and various changes implemented by theorganization. Over time, the individual changes as a function of both personal experiences andmaturity and of work experiences with the organization. The organization, in turn, is affected bythe presence and eventual absence of the individual. Clearly, then, the study of organizationalbehavior must consider the ways in which the individual and the organization interact. Thus, theconsultant studying turnover at Texas Instruments might choose to look at the orientationprocedures for newcomers to the organization. The goal of this phase of the study would be tounderstand some of the dynamics of how incoming individuals interact within the broaderorganizational context.An organization, of course, exists before a particular person joins it and continues to existlong after he or she has left. Therefore, the organization itself represents a crucial perspectivefrom which to view organizational behavior. For instance, the consultant studying turnoverwould also need to study the structure and culture of Texas Instruments. An understanding offactors such as the performance evaluation and reward systems, the decision-making and2

communication patterns, and the design of the firm itself can provide additional insight into whysome people decide to stay while others elect to leave.Clearly, the field of organizational behavior can be both exciting and complex. Myriadvariables and concepts impact the interactions described, and together these factors can greatlycomplicate a manager’s ability to understand, appreciate, and manage others in an organization.However, they can also provide unique opportunities to enhance personal and organizationaleffectiveness. The key, of course, is understanding. To provide some groundwork forunderstanding, we look first at the historical roots of organizational behavior.Historical Roots of Organizational BehaviorMany disciplines, such as physics and chemistry, are literally thousands of years old.Management has also been around in one form or another for centuries. For example, thewritings of Aristotle and Plato abound as references and examples of management concepts andpractices. But because serious interest in the study of management did not emerge until the turnof the twentieth century, organizational behavior is only a few decades old.One reason for the relatively late development of management as a scientific field is thatvery few large business organizations existed until around a hundred years ago. Althoughmanagement is just as important to a small organization as it is to a large one, large firmsprovided both a stimulus and a laboratory for management research. Second, many of the initialplayers interested in studying organizations were economists. Economists initially assumed thatmanagement practices are by nature efficient and effective; therefore, they concentrated onhigher levels of analysis such as national economic policy and industrial structures rather than onthe internal structure of companies.Scientific ManagementOne of the first approaches to the study of management, popularized during the early 1900s, wasscientific management. Individuals who helped develop and promote scientific managementincluded Frank and Lillian Gilbreth (whose lives are portrayed in a book and a subsequentmovie, Cheaper by the Dozen), Henry Gantt, and Harrington Emerson. But the personcommonly associated with scientific management is Fredric W. Taylor.Early in his life, Taylor developed an interest in efficiency and productivity. Whileworking as a foreman at Midvale Steel Company in Philadelphia from 1878 to 1890, he noticed aphenomenon, which he named “soldiering”—employees’ working at a pace much slower thantheir capabilities. Because managers had never systematically studied jobs in the plant and, infact, had very little idea on how to gauge worker productivity, they were completely unaware ofthis phenomenon.To counteract the effects of soldiering, Taylor developed several innovative techniques.First, he scientifically studied all the jobs at the Midvale plant and developed a standardizedmethod for performing each one. He also installed a piece-rate pay system in which each workerwas paid for the amount of work he completed during the workday rather than for the time spenton the job. (Taylor believed that money was the only significant motivational factor in the3

workplace.) These two innovations resulted in a marked increase in productivity and serve as thefoundation of scientific management as we know it.After leaving Midvale, Taylor spent several years working as a management consultantfor industrial firms. At Behlehem Steel Company, he developed several efficient techniques forloading and unloading rail cars. At Simonds Rolling Machine Company, he redesigned jobs,introduced rest breaks to combat fatigue, and implemented a piece-rate pay system. In everycase, Taylor claimed his ideas and methods greatly improved worker output. His book,Principles of Scientific Management, published in 1911, was greeted with enthusiasm bypracticing managers and quickly became a standard reference.Scientific management quickly became a mainstay of business practice. It facilitated jobspecialization and mass production, consequently influencing the U.S. business system inprofound ways. Taylor had his critics, though. Laborers opposed scientific managementbecause of its explicit goal of getting more output from workers. Congress investigated Taylor’smethods and ideas because some argued that his incentive system would dehumanize theworkplace and reduce workers to little more than drones. Later theorists recognized thatTaylor’s views on employee motivation were inadequate and narrow. And recently there havebeen allegations that Taylor falsified some of his research findings and paid someone to do hiswriting for him. Nevertheless, scientific management represents an important milestone in thedevelopment of management thought.Classical Organization TheoryDuring the same era, another perspective on management theory and practice was also emerging.Generally referred to as classical organization theory, this perspective is concerned withstructuring organizations effectively. Whereas scientific management studied how individualworkers could be made more efficient, classical organization theory focused on how a largenumber of workers and managers could be most effectively organized into an overall structure.Major contributors to classical organization theory included Henri Fayol, LyndallUrwick, and Max Weber. Weber, the most prominent of the three, proposed a “bureaucratic”form of structure that he believed would work for all organizations. Although today the termbureaucracy conjures up images of paperwork, red tape, and inflexibility, Weber’s model ofbureaucracy embraced logic, rationality, and efficiency. Weber assumed that the bureaucraticstructure would always be the most efficient approach. (Such a blanket prescription representswhat is now called a universal approach.) A bureaucracy is an organizational structure in whichtasks are specialized under a given set of rules and a hierarchy of authority. Division of labor isthe separation of work loads into small segments to be performed by one or more people. In abureaucracy, tasks are assigned through the division of labor. A set of outlined procedures existsfor each job. Because these procedures are invariable, the tasks assigned for each job becomeroutine for the employee. Thus, creativity is low.In a bureaucracy, the standards for evaluating job performance do not need to be updatedbecause required tasks never change. However, this lack of variation leads to an impersonal work4

environment, lacking incentives for extraordinary task performance and ultimately limiting thegrowth potential of individual employees.In contrast to Weber’s views, contemporary organization theorists recognize thatdifferent organizational structures may be appropriate in different situations. As with scientificmanagement, however, classical organization theory played a major role in the development ofmanagement thought, and Weber'’ ideas and the concepts associated with his bureaucraticstructure are still interesting and relevant today.THE EMERGENCE OF ORGANIZATIONAL BEHAVIORThe central themes of both scientific management and classical organization theory arerationality, efficiency, and standardization. The roles of individuals and groups in organizationswere either ignored altogether of given only minimal attention. A few early writers andmanagers, however, recognized the importance of individual and social processes inorganizations.PRECURSORS OF ORGANIZATIONAL BEHAVIORIn the early nineteenth century, Robert Owen, a British industrialist, attempted to improve thecondition of industrial workers. He improved working conditions, raised minimum ages forhiring children, introduced meals for employees, and shortened working hours. In the earlytwentieth century, the noted German psychologist Hugo Munsterberg argued that the field ofpsychology could provide important insights into areas such as motivation and the hiring of newemployees. Another writer in the early 1900s, Mary Parker Follett, believed that managementshould become more democratic in its dealings with employees. An expert in vocationalguidance, Follett argued that organizations should strive harder to accommodate theiremployees’ human needs.The views of Owen, Mansterberg, and Follett, however, were not widely shared bypracticing managers. Not until the 1930s did notable change occur in management’s perceptionof the relationship between the individual and the workplace. At that time, a series of nowclassic research studies led to the emergence of organizational behavior as a field of study.THE HAWTHORNE STUDIESThe Hawthorne studies were conducted between 1927 and 1932 at Western Electric’s Hawthorneplant near Chicago. (General Electric initially sponsored the research but withdrew its supportafter the first study was finished.) Several researchers were involved, the best known beingElton Mayo and Fritz Roethlisberger, Harvard faculty members and consultants, and WilliamDickson, chief of Hawthorne’s Employee Relations Research Department.The first major experiment at Hawthorne studied the effects of different levels of lightingon productivity. The researchers systematically manipulated the lighting in the area in which agroup of women worked. The group’s productivity was measured and compared with that ofanother group (the control group) whose lighting was left unchanged. As lighting was increasedfor the experimental group, productivity went up—but, interestingly, so did the productivity ofthe control group. Even when lighting was subsequently reduced, the productivity of both5

groups continued to increase. Not until the lighting had become almost as dim as moonlight didproductivity start to decline. This led the researchers to conclude that lighting had norelationship to productivity—and at this point General Electric withdrew its sponsorship of theproject!In another major experiment, a piecework incentive system was established for a nineman group that assembled terminal banks for telephone exchanges. Proponents of scientificmanagement expected each man to work as hard as he could to maximize his personal income.But the Hawthorne researchers found instead that the group as a whole established an acceptablelevel of output of its members. Individuals who failed to meet this level were dubbed“chiselers,” and those who exceeded it by too much were branded “rate busters.” A worker whowanted to be accepted by the group could not produce at too high or too low a level. Thus, as aworker approached the accepted level each day, he slowed down to avoid overproducing.After a follow-up interview program with several thousand workers, the Hawthorneresearchers concluded that the human element in the workplace was considerably more importantthat previously believed. The lighting experiment, for example, suggested that productivitymight increase simply because workers were singled out for special treatment and thus perhapsfelt more valued or more pressured to perform well. In the incentive system experiment, beingaccepted as a part of the group evidently meant more to the workers than earning extra money.Several other studies supported the general conclusion that individual and social processes aretoo important to ignore.Like the work of Taylor, the Hawthorne studies have recently been called into question.Critics cite deficiencies in research methods and offer alternative explanations of the findings.Again, however, these studies were a major factor in the advancement of organizational behaviorand are still among its most frequently cited works.HUMAN RELATIONS MOVEMENTThe Hawthorne studies created quite a stir among managers, providing the foundation for anentirely new school of management thought that came to be known as the human relationsmovement. The basic premises underlying the human relations movement are that peoplerespond primarily to their social environment, that motivation depends more on social needs thanon economic needs, and that satisfied employees work harder than unsatisfied employees. Thisperspective represented a fundamental shift away form the philosophy and values of scientificmanagement and classical organization theory.The behavioral theory of management holds that all people (including employees) havecomplex needs, desires, and attitudes. The fulfillment of needs is the goal toward whichemployees are motivated. Effective leadership matches need-fulfillment rewards with desiredbehaviors (tasks) that accomplish organizational goals.The values of the human relationists are perhaps best exemplified by the works ofDouglas McGregor and Abraham Maslow. McGregor is best known for his classic book TheHuman Side of Enterprise, in which he identified two opposing perspectives that he believedtypified managerial views of employees. Some managers, McGregor said, subscribed to what he6

labeled Theory X. Theory X, which takes a pessimistic view of human nature and employeebehavior, is in many ways consistent with the tenets of scientific management. A much moreoptimistic and positive view of employees is found in Theory Y. Theory Y, which is generallyrepresentative of the human relations perspective, was the approach McGregor himselfadvocated. Assumptions of Theory X and Theory Y are summarized in Exhibit 2.EXHIBIT 2THEORY X AND THEORYTheory X AssumptionsTheory Y Assumptions1. People do not like work and try to avoid 1. People do not naturally dislike work;it.work is a natural part of their lives.2. People do not like work, so managers 2. People are internally motivated tohave to control, direct, coerce, and threaten reach objectives to which they areemployees to get them to work toward committed.organizational goals.3. People prefer to be directed, to avoid 3. People are committed to goals to theresponsibility, to want security; they have degree that they receive personal rewardslittle ambition.when they reach their objectives.4. People will seek and acceptresponsibility under favorable conditions.5. People have the capacity to beinnovative in solving organizationalproblems.6. People are bright, but under mostorganizational conditions their potentialare underutilized.In 1943, Abraham Maslow published a pioneering psychological theory applicable toemployee motivation that became well known and widely accepted among mangers. Maslow’stheory assumes that motivation arises from a hierarchical series of needs. As the needs of eachlevel are satisfied, the individual advances to the next level.Although the Hawthorne studies and the human relations movement played major roles indeveloping the foundations for the field of organizational behavior, some of the early theorists’basic premises and assumptions were found to be incorrect. For example, most humanrelationists believed that employee attitudes such as job satisfaction are the major causes ofemployee behaviors such as job performance. However, this is usually not the case at all. Also,many of the human relationists’ views were unnecessarily limited and situation specific. As a7

result, there was still plenty of room for refinement and development in the emerging field ofhuman behavior in organizations.Toward Organizational BehaviorMost scholars would agree that organizational behavior began to emerge as a mature field ofstudy in the late 1950s and early 1960s. That period saw the field’s evolution from the simpleassumptions and behavioral models of the human relationists to the concepts and methodologiesof a scientific discipline. Since that time, organizational behavior as a scientific field of inquiryhas made considerable strides, although there have been occasional steps backward as well.Many of the ideas discussed in this book have emerged over the past two decades. We turn nowto contemporary organizational behavior.CONTEMPORARY ORGANIZATIONAL BEHAVIORContemporary organizational behavior has two fundamental characteristics that warrant specialdiscussion. It also generally accepts a set of concepts to define its domain.CHARACTERISTICS OF THE FIELDResearchers and managers who use concepts and ideas from organizational behavior mustrecognize that it has an interdisciplinary focus and a descriptive nature; that is, it draws from avariety of fields and attempts to describe behavior (as opposed to prescribing how behavior canbe changed in consistent and predictable ways).An Interdisciplinary Focus In many ways, organizational behavior synthesizes several otherfields of study. Psychology, especially organizational psychology, is perhaps the greatestcontributor to the field of organizational behavior. Psychologists study human behavior, whereasorganizational psychologists specifically address the behavior of people in organizationalsettings. Many of the concepts that interest psychologists, such as individual differences andmotivation, are also central to studying of organizational behavior.Sociology also has had a major impact on the field of organizational behavior. Sociologistsstudy social systems such as families, occupational classes, and organizations. Because a majorconcern of organizational behavior is the study of organization structures, the field clearlyoverlaps with areas of sociology that focus on the organization as a social system.Anthropology is concerned with the interactions between people and their environments,especially their cultural environment. Culture is major influence on the structure oforganizations as well as on the behavior of individual people within organizations.Political science also interests organizational behaviorists. We usually think of politicalscience as the study of political systems such as governments. But themes of interest to politicalscientists include how and why people acquire power, political behavior, decision making,conflict, the behavior of interest groups, and coalition formation. These are also major areas ofinterest in organizational behavior.8

Economists study the production, distribution, and consumption of goods and services.Organizational behaviorists share the economist’s interest of topics such as labor marketdynamics, productivity, human resource planning and forecasting, and cost-benefit analysis.Engineering has also influenced the field of organizational behavior. Industrial engineeringin particular has long been concerned with work measurement, productivity measurement, workflow analysis and design, job design, and labor relations. Obviously these areas are also relevantto organizational behavior.Most recently, medicine has influenced organizational behavior in connection with study ofhuman behavior at work, specifically in the area of stress. Increasing research is showing thatcontrolling the causes and consequences of stress in and out of organizational settings isimportant for the well-being of the individual as well as that of the organization.A Descriptive Nature A primary goal of organizational behavior is to describe relationshipsbetween two or more behavioral variables. The theories and concepts of the field, for example,cannot predict with certainty that changing a specific set of workplace variables will improve anindividual employee’s performance by a certain amount. At best, theories can suggest thatcertain general concepts or variables tend to be related to one another in particular settings. Forinstance, research might indicate that in one organization, employee satisfaction and individualperceptions of working conditions correlate positively. Nevertheless, we may not know if betterworking conditions lead to more satisfaction, if more satisfied people see their jobs differentlyfrom unsatisfied people, or if both satisfaction and perceptions of working conditions are actuallyrelated through other variables. Also, the observed relationship between satisfaction andperceptions of working conditions may be considerably stronger, weaker, or nonexistent in othersettings.Organizational behavior is descriptive for several reasons: the immaturity of the field, thecomplexities inherent in studying human behavior, and the lack of valid, reliable, and accepteddefinitions and measures. Whether the field will ever be able to make definitive predictions andprescriptions is still an open question. But the value of studying organizational behaviornonetheless is firmly established. Because behavioral processes pervade most managerialfunctions and roles, and because the work of organizations is done primarily by people, theknowledge and understanding gained from the field can help managers in significant ways.The Importance of Organizational BehaviorAlthough the importance of organizational behavior may be clear, we should still take a fewmoments to emphasize certain points. People are born and educated in organizations, acquiremost of their material possessions from organizations, and die as members of organizations.Many of our activities are regulated by organizations called governments. And most adultsspend the better part of their lives working in organizations. Because organizations influence ourlives so powerfully, we have every reason to be concerned about how and why thoseorganizations function.In our relationships with organizations, we may adopt any one of several roles or identities.For example, we can be consumers, employees, or investors. Because most readers of this book9

are either present of future managers, we adopt a managerial perspective throughout.Organizational behavior can greatly clarify the factors that affect how managers manage. It isthe field’s job to describe the complex human context in which managers work and to define theproblems associated with that realm. The value of organizational behavior is that it isolatesimportant aspects of the manager’s job and offers specific perspectives on the human side ofmanagement: people as organizations, people as resources, and people as people.Contextual Perspectives on Organizational BehaviorSeveral contextual perspectives have increasingly influenced organizational behavior: thesystems approach and contingency perspectives, the interactional view, and the popular-pressperspectives. Many of the concepts and theories we discuss in the chapters that follow reflectthese perspectives; they represent basic points of view that influence much of our contemporarythinking about behavior in organizations.Systems and Contingency PerspectivesThe systems and contingency perspectives take related viewpoints on organizations and howthey function. Each is concerned with interrelationship among organizational elements andbetween organizational and environmental elements.The Systems Perspective The systems perspective, or the theory of systems, was first developedin the physical sciences, but it has been extended to other areas, such as management. A systemis an interrelated set of elements that function as a whole.An organizational system receives four kinds of inputs form its environment: material,human, financial, and informational. The organization then combines and transforms the inputsand returns them to the environment in the form of products or services, profits or losses,employee behaviors, and additional information. Finally, the system receives feedback from theenvironment regarding these outputs.As an example, we can apply systems theory to an oil company. Material input includespipelines, crude oil, and the machinery used to refine petroleum. Financial input includes themoney received form oil and gas sales, stockholder investment, and so forth. Human inputincludes the effort put forth by oil field workers, refinery workers, office staff, and other peopleemployed by the company. Finally, the company receives information input from forecastsabout future oil supplies, geological surveys on potential drilling sites, sales projections, andsimilar analyses.Through complex refining and other processes, these inputs are combined and transformed tocreate products such as gasoline and motor oil. As outputs, these products are sold to theconsuming public. Profits from operations are fed back into the environment through taxes,investments, and dividends; losses, when they occur, hit the environme