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What is OB?

Organizational Behavior (OB) is the domain of study that focuses on organizational structures and protocols, and their effect on individual, team, and organizational performance. OB views organizations from multiple perspectives: The relationship between individual behavior and those of groups and teams. The relationship between organizational structure and firm's performance. The effect of culture on organizational performance. A fundamental principle of organizational theory is the process of value creation. As a part of understanding value creation, OB focuses on the elements of value creation such as: Decision making Leadership Motivation Employee engagement Organizational learning Two Perspectives of OB OB can be studied from two perspectives - internal and external. The internal perspective suggests that employees' behavior is primarily influenced by their personal assumptions, feelings, thoughts, interactions, experiences, and perceptions. A manager embracing the internal perspective would try to solve all issues by having an honest dialogue with all the impacted employees in any situation. The external perspective suggests that environmental factors that include the economic, social, cultural, regulatory, political, and competitive forces impact employees' behavior and job performance. A manager embracing the external perspective would calibrate her actions based on her perception of the externalities' impact on employees. As an example, when a competitor introduces a new type of benefit, a manager holding the external perspective may try to replicate or improve upon the said benefit as a retention strategy. OB - An Interdisciplinary Domain It should be obvious from the preceding outline that OB is not a monolithic domain or discipline of study. OB draws from many disciplines to understand and explain individual and group behavior. OB draws from psychology while explaining why we behave the way we do. OB draws from anthropology while understanding the evolution of behavior over time. OB draws from sociology while exploring how households, families, and society interact and lead to discernable patterns of behavior and tradition. OB draws from engineering while examining measurement techniques and productivity. OB draws from statistics to understand trends and relationships between variables. OB draws from medicine to recognize the importance of wellness and health.

What is Communication?

Process through which we exchange information with others. Objectives may be to inform, inspire, motivate or influence behavior. Typically, managers communicate with others 75-80% of the time. Communication occurs between internal (colleagues, direct reports, supervisors) stakeholders as well as external stakeholders (customers, suppliers, business associates, shareholders, regulators, society). 8 Major Elements Sender (source) Idea, concept, or information Encoding Channel Decoding Receiver (source) Feedback Noise (internal and external) Communication Process Sender is the person who intends to convey an idea, concept, question, or information to others. Idea is the content. The idea may be subjective (opinion, view, feeling) or objective (data, facts, evidence). An idea or concept is intangible and can even be abstract. The process of converting it into something tangible - through words, symbols, images, and graphs - is called encoding. Channel - medium through which message is transmitted. Can be human (voice, gestures, and body language) or mechanical (phone, email, video, discussion board, chat). Receiver - person who receives the message. Has the responsibility of understanding the context and content of message. Decoding - process of converting a human (voice, gesture) or mechanical signal into a meaningful message. For example, what does a gesture mean? What is the purpose of the message? What am I required to do? Feedback - process of ensuring that what the sender wanted to convey and what the receiver has understood are the same. Noise - anything that has the potential to distort the message. Can be internal - function of one's values, feelings, language barriers, emotions, time of day, experience, and world view. Or external - technical issues, environmental influences, clarity of text or image, and semantics.

Individual Behavior

Imagine you wish to buy a house. You look around and find one that suits you. The current owner and you negotiate the terms and enter into an agreement or contract. The owner offers to sell you the house for a consideration and lists all that you will receive in return - the title to the property, any furniture and fixtures, tools, and other things that make a house. A time period is also set. The relationship between an organization and an individual is also a form of contract. The terms are listed out in the employment offer letter. There is a vital difference. With a property, an exchange takes place and once the exchange is complete, the current owner and you may not have any further contact. Individual - Organization Relationship Sure, there are similarities. The "at will" clause of employment means that the employer can ask you to leave at any time. Similarly, you may have the option to leave whenever you wish, with or without a notice. The real difference is in what is not stated explicitly. The relationship between an organization and an individual may be called a psychological contract. You bring to bear your education, experience, skills, effort, time, loyalty, and any unique qualities you may have and promise to work towards the well-being of the organization. In return, the organization provides you a salary, and other benefits such as health insurance, contribution to a retirement plan, bonuses for exceptional performance, a safe and secure work environment, social status, and opportunities for professional development. The psychological contract continues as long as both the organization and the individual perceive the contract to be fair. Managing psychological contracts is a major challenge in organizations. The high attrition rate across industries and sectors denotes that all is not well. MARS Model of Individual Behavior The MARS model tries to explain individual behavior based on four attributes - Motivation, Abilities, Role Perception, and Situational Factors. These four factors affect individual performance. Values, personality, perceptions, emotions, attitudes and stress feed into motivation and ability. Motivation - what drives the direction (towards goals), intensity (effort expended), and persistence (not giving up till the desired results are achieved) of our behavior. Ability - natural and acquired competencies required to complete a given task efficiently and effectively. Aptitude - a natural ability to learn and to perform a task. Acquired Competencies - abilities and values acquired through education, training, and experience. Individual-job fit - the extent to which an individual's competencies match a job's requirements. Role Perceptions - the extent to which an individual is clear about the goal to be achieved, process of achieving the goal, priority of the goal, time line, and one's specific contribution in a team environment. Situational Factors - the environment factors that may have an effect on performance - facilities available, resources provided, reasonableness of time, weather, and other factors which may be beyond an individual's control. Motivation, Ability, and Role Perceptions are reflections of our values (what we believe in), personality (upbringing, purpose in life), perceptions (how we see the world), emotions (calm, angry, cooperative, confrontational), attitudes (do we love what we do?), and stress (positive or negative).

persoa;ity

Personality is the relatively stable set of thoughts, emotions, and behavior that distinguish one person from another. Comprised of one's inner state (thoughts and values), external state (observed behavior), and some variability due to situational factors. The "Big Five" Personality Traits TraitCharacteristicsConscientiousnessDependable, organized, punctual, and achievement-orientedAgreeablenessTolerant, kind, warm, sensitive, and trustingEmotional StabilityIrritable, temperamental, and moodyOpennessIntellectual, curious, creative, and open to contrasting ideasExtroversionTalkative, sociable, and outgoing Five Factor Personality and OB Conscientiousness and Emotional Stability - motivational components; perhaps the strongest predictors of performance. Extroversion - ideally a team should have a mix of extroverts and introverts. Empirically, one in three persons is an introvert. Extroversion is required in certain functions such as sales and customer service. Agreeableness - essential in a team environment. Openness - indicator of creativity and adaptive capacity to change. Myers - Briggs Type Indicator (MBTI) An introspective self-report questionnaire designed to indicate psychological preferences on how we perceive the world and make decisions. The preferences are on a continuum and relate to four dimensions: Extroversion and Introversion - connotation is similar to that of five-factors. Sensing and Intuition - extent to which we consciously collect information through our senses as opposed to subjective, inspirational, and intuitive actions. Thinking versus Feeling - the extent to which we use logic and reasoning as opposed to emotions and personal values. Judging versus Perceiving - how we view the world around us - whether through a prism of order and structure as opposed to a prism of spontaneity and adaptation. Cautionary Note on Personality Types Personality is too complex a concept to be amenable to exact measurement. No combination of types can be considered as being superior to any other. Personality tests are voluntary. No one can be forced to take one. The result of any test is confidential between the individual and the administrator. Tests should not be used to "label" anyone or for selection. All tests are subject to varying degrees of criticism. A detailed discussion of the criticisms is beyond the scope of this leveling course. What is Self-Concept? Baumeister has defined self-concept as "the individual's belief about himself or herself, including the person's attributes and who and what the self is." Also referred to as self-construction, self-identity, self-perspective, or self-structure. The three dimensions of self-concept are: Complexity - an individual can have multiple self-concepts. Clarity - extent to which self-concept is stable and clear over time. Consistency - similarity in values across multiple selves. Four "Selves" of Self-Concept Scholars have identified four components or "selves" of Self-Concept: Self-enhancement: Promoting and protecting our positive self-view (competent, lucky, attractive, ethical, valued). Self-verification: Affirming and maintaining our existing self-concept (stabilizes our self-concept, prefers feedback consistent with self-concept). Self-evaluation: Evaluating ourselves through self-esteem (like and respect oneself), self-efficacy (belief in one's ability), and locus of control (extent to which we believe we can influence events and outcomes). Social self: Defining ourselves by our group membership. Schwartz's Values Model Openness to Change - motivation to explore innovative ways. Conservation - motivation to preserve the status-quo. Self-enhancement - motivated primarily by self-interest. Self-transcendence - motivated to promote well-being of others and nature. Schwartz' values model is a pie with four quadrants. In the quadrant entitled openness to change includes self-direction and stimulation. Self-direction includes creativity and freedom. Stimulation includes an exciting life. The second quadrant is self-transcendence. Within self-transcendence is universalism including social justice and equality and benevolence which includes helpfulness. The 3rd quadrant is conservation. Within conservation are conformity, tradition and security. Conformity includes obedience, tradition includes humility and devoutness and security is about social order. The 4th quadrant is self-enhancement. Self-enhancement includes power and achievement. Power is about authority and wealth, while achievement is about success and ambition. Between the openness to change quadrant and the self-enhancement quadrant is Hedonism, or pleasure. Relationship Between Values & Behavior Values - our perspective about an appropriateness of a course of action. For example, a person valuing honesty will strive to be honest. Similarly, a person valuing transparency will strive to be transparent in all actions. Values affect our behavior towards others. Therefore, the work environment should strive to encourage positive values and discourage negative influences that may affect behavior. All individuals have a personal moral compass, determined by their values, that defines how they treat others and conduct themselves. People who lack a strong moral or ethical compass can harm an organization. It is in the best interests of organizations to define what is acceptable and what is not through training, feedback, codes of conduct, and values and ethics statements. In other words, organizations should emphasize the means as much as they emphasize the ends. Culture shapes values which in turn shapes behavior. Aligning individual values and organizational values is a critical factor for success. Leaders can set the right example by walking the talk and practicing the precept. Managers should stop looking at business (and indeed life itself) as a zero sum game where one can only win at someone else's expense. Instead, every effort should be made to look at win-win scenarios. Ethics and Firm Performance Ethics and morals are closely related. Ethics deals with notions of right and wrong. Studies show that ethical organizations perform better than others on all critical dimensions - profitability, growth, customer satisfaction, employee satisfaction and retention, reputation, and long-term value. Basic principles of ethics include: Utilitarianism - whether a course of action leads to the greatest good for the largest number of people. Individual rights - fundamental entitlements that are an integral part of a civilized society. Distributive Justice - people who are similar should receive similar benefits. What are the major influences on ethical conduct? Moral intensity - the degree to which an issue demands ethical principles. For examples, bribery and kickbacks should never be considered while conducting a business transaction. One cannot say the same for having coffee with a client. Ethical sensitivity - the ability to recognize the ethical importance of an issue. For example, can lying be acceptable in any situation? Situational factors - the extent to which environmental factors affect ethical behavior. It may be better not to do business in certain countries if it is apparent that one cannot be ethical in that country. Emotional Intelligence In recent years, emotional intelligence (EQ - Emotional Quotient) has received significant attention in our efforts to understand personality. Five attributes are used while exploring EQ: Self-awareness - Foundation for the other attributes. Refers to an individual's capacity for being aware of how she or he is feeling. The more self-aware a person is, the more effectively the person can guide behavior. Managing emotions - the ability to balance anxiety, frustration, stress, and anger so that they do not overwhelm us. Motivating oneself - being optimistic and persistent even in the face of setbacks. Empathy - the ability to understand others' feelings without being explicitly told. Social skill - ability to get along with others; to contribute to the overall good of the team or group. Other Personality Traits Locus of control - internal or external. Internal locus of control - "I'm in charge of and responsible for my actions." External locus of control - "External factors beyond my control define my actions." Self-efficacy - a person's belief about her or his ability to perform a task. Authoritarianism - the belief that power and status differences are appropriate in hierarchical social systems such as organizations. Machiavellianism - behavior aimed at gaining power and controlling the behavior of others. Self-esteem - extent to which a person believes that she or he is a worthwhile individual. Risk propensity - extent to which one is willing to take chances and make risky decisions. Attitudes Attitudes are our dispositions (beliefs and feelings) towards ideas, situations, or other people. Attitudes are important because they impact our behavior. Attitudes are formed in a number of ways. Our childhood experiences and upbringing reflect some of our attitudes. Education and experience influence our attitudes. The society in which we live shapes our attitudes. Attitude structure: Affect - our feelings towards something. Example: What comes to your mind when you hear words like "love," "war," or "globalization"? Cognition - the knowledge we have about something. It is important to note that cognition is our perception of reality and truth, and perceptions can vary from reality and truth. Intention - is what guides our behavior. Example: If we are serious about learning, it should not matter whether classes are held in the morning or evening. Cognitive dissonance - the anxiety that occurs within us when two sets of perceptions or cognitions contradict each other. Example: Is globalization good or bad? Attitudes can change over time. Work Related Attitudes Job Satisfaction: The degree to which people find fulfillment in work. Job satisfaction is an outcome of: Individual factors such as one's needs and aspirations. Group factors such as relationship with colleagues and team members. Organizational factors such as compensation, benefits, and policies. Satisfied employees tend to be more productive, regular to work, and stay longer with an organization. Organizational Commitment: The degree to which an individual aligns with organizational objectives and feels a sense of affiliation to the organization. A highly committed person is likely to: Have a sense of pride belonging to the organization. Overlook minor distractions or inconveniences. Stay longer with the organization. Perception: How we become aware of and interpret the environment around us. Perception is often more important than reality. Selective perception - process of screening out anything that we feel uncomfortable with or that which does not align with our beliefs and feelings. Stereotyping - process of categorizing or bracketing people on the basis of a single attribute. Typical stereotyping can be found in race, color, and gender. Perception and Attribution: Attribution theory states that we observe behavior and then attribute causes to it. When we observe a behavior, we tend to evaluate it along three dimensions: Consensus - the degree to which other people behave the same way in the given situation. Consistency - the degree to which the same person behaves in the same way at different times. Distinctiveness - the degree to which the same person behaves in the same way in different situations. Our interpretation can lead to the behavior being attributed to internal or external causes. Workplace Behavior Workplace behavior is a pattern of actions exhibited by members of an organization that directly impacts organizational effectiveness. Performance behaviors - the set of work-related behaviors that the organization expects of its employees; can be seen as components of psychological contract. Dysfunctional behaviors - the set of work-related behaviors that harms the organization and its effectiveness:Absenteeism - employees not showing up for work.Turnover or attrition - employees leaving their jobs. Lethargy, theft, sabotage, sexual harassment and violence - can be very costly. Organizational citizenship - the degree to which an individual makes a positive contribution to an organization.

Elements of Organizational Culture

Like many other management concepts, organizational culture does not have a universally accepted definition. A belief system shared by an organization's members (Spender). A set of shared, enduring beliefs communicated through a variety of symbolic media, creating meaning in people's work lives (Kouzes et al). A pattern of basic assumptions that the group learned as it solved problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems (Ed Schein). Artifacts Symbols of culture (physical and social). Types of Artifacts: Personal enactment - how the leader behaves towards others. Ceremonies and rites - how occurrences of joy and sadness are observed. Stories - about the leader, about crisis management, about decision making. Rituals - meetings, get-togethers, social gathering, interactions. Symbols - logos, flags, corporate slogan. Values Espoused values - what members say they value. Enacted values - how members actually behave. Assumptions Deeply held beliefs that shape behavior and guide members how to think about and perceive things and issues. Organizational Culture and Outcomes Antecedents - founder's values, senior leaders' behavior, macro and business environment, and national or regional culture - define: Organizational Culture - assumptions, values, and artifacts - shape: Organizational Structure - hierarchies, reporting systems, organizational design, and reward systems - result in: Individual and Group Processes - group dynamics, decision making, socialization, training, coaching, and mentoring, communication, influence, and leadership - determine: Collective attitudes and behavior - motivation, work attitudes, job satisfaction - lead to: Outcomes - organizational goals, individual goals, efficiency and effectiveness, superior or mediocre performance, innovation or stagnation, stress, fatigue, and frustration, or wellness, exhilaration, and happiness. Constructive Culture Self-actualizing - values self-development, creativity, and innovation. Achievement oriented - clearly defined "stretch" goals and time-lines. Humanistic - employee oriented, participative, supportive, empowering, trust based. Affiliative - emphasis on positive interpersonal relations, focus on work group satisfaction. Passive Defensive Culture Approval oriented - avoidance of conflict, behavior directed towards winning others' approval. Conventional - bureaucratic, rules and procedures, conservative. Dependent - centralized decision making, non-participative, members do what they are told to do. Avoidance approach - negative reward systems, minimal or zero accountability. Aggressive Defensive Culture Oppositional approach - confrontation and negativism recognized and rewarded. Power structure - well defined with tight definitions of who reports to whom. Competitive - winning at all costs; zero sum game strategy. Perfectionistic - persistent, work hard, don't give up. Culture and Outcomes Organizational culture correlates with employee attitudes and behavior. Alignment between organizational values and individual values leads to commitment, satisfaction, retention, and motivation. Organizational culture is not a predictor of financial performance. Failure of many mergers and acquisitions attributable to incompatible cultures. Strong culture - consensus on values that shape the organization; intensity visible even to outsiders. Strong culture results in superior performance due to: Goal alignment (between organization and individuals). High motivation (shared values). Harmony and control minus the negative effects of bureaucracy. Fit perspective - a culture is effective only if it fits the industry and aligns with the firm's strategy. The degree of fit is a function of the competitive environment (fragmented or consolidated), customer expectations, and societal expectations. Consider the case of Wells Fargo, one of the largest banks in the U.S. Why did the bank resort to dubious means and open fictitious accounts? A part of the answer can be found in the environment (sluggish economic environment, very low interest rates, limited opportunities for growth). Or consider the case of Chipotle. The company had a hard time explaining how its offerings contained ingredients that the company claimed it was avoiding. Here, customer expectations drive the company to be defensive. Societal expectations related to equity, diversity, and non-discrimination also shape culture. Adaptive culture - dynamic; encourages risk-taking; leadership that embraces change and shuns the status-quo; anticipates and even creates customer expectations. Organizations with adaptive cultures care deeply about all stakeholders. Thus, value creation (for shareholders), superior products and services (customers), great work environment, salary, and benefits (employees), ethical practices (competition), and concern for environment (society) are pursued as complementary goals. Key Attributes of Culture Leadership: What do leaders (and followers) believe in? What do leaders (and followers) care about? How do leaders (and followers) behave? How are rewards allocated? How are people hired (and fired)? Socialization Process Before an employee enters an organization, knowledge about company culture is likely to be minimal unless the company is well-known and its practices have been documented. The employee arrives with a set of assumptions, feelings, and perceptions based on upbringing, education, and experience. The first encounter may happen at the hiring stage. The interviewer is likely to explain the values and culture of the organization. It stands to reason that only positive aspects would be revealed. The real encounters happen during orientation and subsequent absorption in the workforce. A metamorphosis occurs based on these encounters. The outcomes are productivity (personal and contributions to the team), commitment (loyalty, trust, hard work) based on the encounters and perceived expectations, and satisfaction. On the other hand, if the encounters show a mismatch between the individual's values and organizational values, the result may be turnover (employee leaving the organization). How are Cultures Embedded? Formal statements - mission, vision, corporate philosophy, core values. Physical layout - open / closed layout, lighting, colors, personal space. Symbols - logo, tag line, colors. Mentoring - continuous, discrete, natural or forced process. Rewards and Punishments - explicit and implicit. Processes and Outcomes - well-defined or abstract, easy or stretch. Workflow - harmonious or full of friction, status-quo oriented or innovative. Culture Change Mechanism (Schein) Schein's culture change mechanism pairs the organization stage with the function of culture. For example, the organization's stage of birth and early growth of an organization, pairs with a culture characterized by a source of identity and commitment is high. They call this the glue that holds things together. The succession phase of an organization is characterized with the question of keeping the status quo or changing. Do we keep or change the culture with new leadership? An organization's mid-life phase is characterized by the decline in culture of cohesion and integration, maybe an identity crisis or an opportunity to manage the direction of cultural change. When an organization reaches the maturity stage, the culture constrains innovation but is a source of self-esteem. In the stage of transformation option, the role of culture is to preserve essential elements, and change as needed. The final stage of an organization is the destruction option which is bankruptcy or a takeover. The culture is fundamentally changed through replacement of people. Organizational StageFunction of CultureBirth and Early GrowthSource of identity and commitment; the "glue."Succession phaseStatus quo vs change; keep or change culture?Organizational mid-lifeCohesion and integration decline; identity crisis; opportunity to manage direction of cultural change.Organizational maturityCulture a constraint on innovation; culture a source of self-esteem.Transformation optionPreserve essential elements; change culture as needed.Destruction option (bankruptcy, takeover)Fundamental cultural change; change through replacement of people. Continuous Change Process Model The continuous change process model is described as a five step process. Forces for change exist. Recognize and define the problem. Perform a problem-solving process. Implement the change. Measure, evaluate and control. Step 5 leads back to step 2 where we recognize and define the problem. Sometimes the process begins at step 4, implement change due to transition management. A change agent can impact steps 2-5 at any point. The Forces of Change can be: People - Generation X, Y, Z. Technologists vs Generalists. Home country vs Foreign employees. Technology - Artificial Intelligence, Machine Learning, Robotics, Internet of Things (IOT). Communication - video conferencing, augmented reality. Competition - global markets, trade agreements, tariff and non-tariff barriers, emerging nations. Recognize and Define: For example, instead of asking whether technology will replace people, it may be more useful to ask: "How can we develop skills for the new demands of work?" Problem solving - through prototypes, pilot studies, or trying in a limited domain before full implementation. Implement - across the organization. Measure, evaluate, and control - are we better off or worse off after the change? Be objective. Don't let emotions come in the way. Transition management - often a neglected area. Skills development. Training. Mentoring. The challenge: How to achieve a seamless transition?

Leadership Theories

Traits - drive, honesty and integrity, self-confidence, intelligence, and knowledge (traits are supposed to differentiate leaders from non-leaders). Behaviors - two-dimensional models: Ohio State, Blake and Mouton's Leadership Grid, Michigan Studies. Contingency - Fiedler (traits), Hersey and Blanchard (behaviors). Classical Leadership Theories Early trait theories tried to explain leadership in terms of certain personal characteristics. The great man approach studied leaders who had achieved greatness and attempted to determine what made them great and extrapolated the model to explore people with similar traits. The physical, social, and personality-oriented traits were posited as universal and applicable to any situation. Thus, stamina, energy, education, mobility, decisiveness, judgment, knowledge, and intelligence were considered universal traits of leaders. Limitation: Traits may indicate potential. They do not guarantee success. Classical Leadership Theories Ohio State model looked at leader behavior along two dimensions: Initiating Structure referred to behavior aimed at accomplishing tasks - directing, controlling, emphasizing timelines. Consideration referred to behavior towards people - being mindful, establishing trust, having open communication, and nurturing teamwork. The 2 x 2 model gives rise to four quadrants of behavior. The four quadrants include low structure and low consideration; low structure and high consideration; high structure and low consideration and high structure and high consideration. Blake and Mouton's leadership grid also looked at two dimensions: Concern for results (similar to task) and concern for people. Specific names were given to the leadership styles. For instance, a high concern for people along with a high concern for results is called Team Management. Besides the four extremes, a middle-of-the-road category was included to suggest that one could be "average" along both dimensions. Quadrant 1 is a low concern for results and a low concern for people. This is entitled the impoverished management. A high concern for results and a low concern for people quadrant is called produce or perish management. A high concern for people and low concern for results is called a country club management. A high concern for both people and results is called team management. Middle of the road management is the intersection of all four quadrants. Michigan Studies placed leadership on a continuum - with job-centered leaders at one end and employee-centered leaders at the other. These two were considered either / or. In other words, the model argued that a leader could not be both job-centered and employee-centered. Today, we know that the either / or proposition is not valid. Fiedler's Contingency Model identified situational variables - leader-member relations, task structure, and position power - and tried to posit traits or styles appropriate for each. Thus, we see that no style is appropriate for all situations. A task-oriented style works well in octants 1, 6, 7, and 8. A relation-oriented style works well in octants 2, 3, 4, and 5. Fiedler Contingency Model Fiedler's Contingency Model identified situational variables - leader-member relations, task structure, and position power - and tried to posit traits or styles appropriate for each. Thus, we see that no style is appropriate for all situations. A task-oriented style works well in octants 1, 6, 7, and 8. A relation-oriented style works well in octants 2, 3, 4, and 5. Situations (i.e., contingencies)Leader-Member RelationsLowHighTask StructureLowHighLowHighPosition PowerLowHighLowHighLowHighLowHighFavored StyleTaskRelationalRelationalRelationalRelationalTaskTaskTask The table above shows the relationship between leader-member relations, task structure and position power creates a favored style of leadership focus. For example a low leader-member focus with a low task structure and a low position power favors a task style of leadership. If you change the position power to high the favored style of leadership is relational. A low leader-member relations with a high task structure and either a high or low position structure leads to a relational style. A high leader-member relations with a low task structure and low position power leads to relational style. Change the position power to high and the favored leadership style is task. A high leader-member relations with a high task structure and either high or low position power leads to a task favored leadership style. Hersey-Blanchard Situational Leadership® Model Hersey and Blanchard's situational leadership model looks at situational variables as the followers' readiness / maturity being due to ability and willingness. Leader's behavior is termed as task behavior (high or low) and relationship behavior (high or low). The corresponding styles correspond to telling, selling, participating, and delegating. S1 is the quadrant called Telling and is a high task behavior (directive behavior) with a low relationship behavior (supportive behavior). This provides specific instructions and closely supervise performance. S2 is the Selling quadrant. This is high task and high performance behavior. This leads to explaining decisions and providing opportunities for clarification. S3, called the Participating quadrant is high relationship low task focus. Here we share ideas and facilitate in decision making. S4 or the Delegating quadrant is low task and low relationship. Here we turn over the responsibility for decisions and implementation. Contemporary Approaches Transactional leader -articulates subordinates' roles and responsibilities, develops an appropriate structure, designs a reward and punishment system, displays empathy and consideration for subordinates. This is an extension of having a high task orientation with a medium people orientation. Charismatic leader - one whose personality motivates and inspires subordinates to perform beyond expectations. Visionary leader - one who imagines a bright future and creates a passion among followers to work for that dream future. Transformational leader - characterized by the twin qualities of creativity (innovation) and change (adaptation and agility) and is able to inspire followers without coercion or force. Servant leader - a leader who perceives leadership as an opportunity to serve - not to be served; a servant leader fulfills subordinates' aspirations and in the process also realizes the organization's mission. Level 5 leader - builds enduring greatness through a paradoxical blend of personal humility and professional resolve. (Jim Collins) Interactive leader - focused on consensus-building, open and inclusive, encourages participation. Authentic leader - authenticity is the ultimate test of a leader. An authentic leader is genuine (does not put on an act), ethical, highly people-oriented, committed to the organizational mission and vision, and exhibits a high level of emotional intelligence. Implications Leaders need to understand and recognize their: Preferred style. Followers. Mission to be accomplished. Environment in which the organization operates. Next, leaders need to fit their style to meet the requirements of the followers, the mission, and the environment. Leaders need to constantly enhance their expert and referent powers. Leaders need to look at the future with hope and optimism, and inspire followers to do the same. Leadership Substitutes and Neutralizers Substitutes - organizational, functional, or individual characteristics that outweigh the leader's ability to affect subordinates' performance and satisfaction. For example, when individuals, due to a combination of upbringing, values, education, and experience are professional, self-motivated, and are indifferent to rewards, the leader's ability to affect their performance is redundant. Similarly when the tasks involve highly automated or structured routines (software testing), are intrinsically satisfying (designing new products), or those that have embedded feedback systems (artificial intelligence, machine learning) the leader's role is marginalized. Neutralizers are factors that render ineffective a leader's ability to display a variety of leadership behaviors. A young leader asked to lead a team of highly experienced professionals may be rendered ineffective either because the team is already achieving superior performance or because the team may decide to turn in the minimum acceptable level of performance and the leader may be powerless to do anything. Similarly, a person who is used to performance-linked incentives may find the method completely useless when confronted with a strong union used to negotiations and bargaining. In such situations, the leader would do well to turn into a coach instead of being a supervisor.

What is Leadership?

Leadership is the ability to influence people towards the achievement of organizational goals. Leadership is in essence a "people" activity. Leadership is dynamic - there is no single style that is appropriate for all situations and all contexts. Leadership is also the ability to anticipate and implement change within the organization, and to respond to changes in the environment (political, economic, social, and technological). Contemporary approaches emphasize humility, modesty, and the ability to place the organization ahead of oneself. Leadership and Management The primary focus of leadership is on the future - an aspiration to be something at a certain point in time - and the tools required to achieve that state - innovation, creativity, adaptation, agility, and change. The primary focus of management is on the present - problem solving, decision making, structures and mechanisms - how to maintain stability. The two concepts are complementary. Ideally, leaders should know how to manage and managers should know how to lead. The importance of leadership is due to its profound influence to shape individual and group behavior. Leader and Manager Qualities LeaderManagerCreatesRationalInspiresPersistsCourageousSolvesImaginesAnalyticalExperimentsStructuredInitiates ChangeStabilizesPersonal PowerPosition Power Leader qualities include creates, inspires, courageous, imagines, experiments, initiates change and personal power. Manager qualities include rational, persists, solves, analytical, structured, stabilizes, and position power.

Groups and Interpersonal Dynamics

A group can be defined as two or more persons who interact with and influence each other. Groups can be formal - established by the organization to perform certain tasks or processes - or informal - established by the members of the group with no specific agenda. Groups can also be classified by duration - temporary groups such as those formed to manage a particular event, process, or project, and permanent groups such as marketing, sales, service, technology, human resources, operations, finance, and other functions. Interpersonal relations are interactions between members of a group and the members of one group with those of another. Interpersonal and group processes are at the heart of modern organizations. They determine the success or failure of an organization. Group Characteristics Both formal and informal groups exhibit certain characteristics: The extent to which individuals identify themselves with the group. The extent to which individuals contribute to the goals of the group. The extent to which individuals perceive their needs to have been satisfied. Since groups are the primary mechanism in most organizations to achieve the desired results, the success or failure of a group is largely a function of the cohesiveness of the group and the extent to which the members value others' contributions. Interpersonal Dynamics Interactions in an organization occur at different levels: Between individuals within a group. Between individuals in different groups. Between groups. Between individuals and groups. Interactions at any level can be positive or negative depending on how the members perceive each other. Interactions can remain professional without any personal element in them. This enables organizational goals to be achieved even though the individuals or groups may not find the interactions enriching and worthwhile. What happens when individuals or groups interact? People have different needs - physiological, safety and security, social, self-esteem, self-actualization, and transcendence needs. Interactions with others tend to fulfill - either for the better or worse - our social needs. Colleagues and peers can be a strong source of social support when we need it the most - as for example when we meet with an accident, fall ill, or suffer a bereavement. Ideally, when individuals and groups interact, the expected result is synergy - the process through which the total result is greater than the sum of the individual results. However, interactions can also lead to anger, disappointment, conflict, and even hostility. The challenge for organizations is to create an environment in which positive outcomes are nurtured and negative outcomes are mitigated if not eliminated altogether. How Do Groups Evolve? Since groups, whether formal or informal, are comprised of individuals, they are dynamic. That is, they evolve over time and coalesce around some common attributes. Consider a project such as developing a new product or service. Consider also that a group is put together for this purpose. In the beginning, the members may not know each other very well. Therefore, behavior at this stage is defensive. Members try to learn about and understand each other. Thus, the first stage, which may be termed the acceptance stage, is comprised of members discussing many issues that may not be related to new product development at all. Members may try to learn about each other by sharing information about their likes and dislikes, their families, their last vacation, favorite sport and so on. It is obvious that none of these has a direct impact on new product development. Productivity in the initial stages is typically low. Once members know something about other members, their behavior becomes more open. Members discuss whether the new product represents a radical, breakthrough, incremental, sustaining, or efficiency innovation. They try to define the product's characteristics - features, possible customers, value proposition, mode of delivery, pricing, and promotion in terms of the "big picture" - that is, without getting into all the details. We can call this the communication and decision stage. Since new product development can be seen as a project, the members arrive at a time for completion, a budget within which the project needs to be completed, and quality attributes that are aligned to the organization's quality philosophy such as zero defects, Six Sigma, minimum acceptable, or any other defined ethos. With these in place, the group moves away from individual concerns and starts focusing on the overall goals. This is the stage in which members work closely with each other, test new ideas, challenge each other in a positive way, and contribute to the well-being of the group. We can call this the motivation and productivity stage. Going back to our discussion of a system, the group tries to relate the actual outcomes to the expected outcomes. How did we do - in time, on budget, and meeting the desired quality? What did we learn? How do we institutionalize the process? How do we share our experience with others in the organization? What are the areas for improvement? What are the corrective and preventive measures that we can take in future projects? We can call this process of assessing and learning the control and organization stage. When groups reach a mature stage, they tend to be productive, flexible, adaptive, and capable of addressing deviations from within - self correcting. Such groups are in a mode of constant discovery and learning as a virtuous cycle. In today's world, change is the only constant. Hence, groups need to be flexible and agile. Experience should lead to learning; learning to wisdom; and wisdom to transcendence - the ability to look beyond one's self. Group Performance Group performance is a function of several factors: Group size - small or large. Group composition - homogeneous or heterogeneous; functional or interdisciplinary; local or global. Group norms - how are decisions made? By consensus or by command? How do members relate to each other - with empathy, compassion, and understanding or in a spirit of competition, conflict, and friction? Group cohesiveness - the extent to which members perceive interdependencies and as a consequence are willing to cooperate and collaborate with others. Small groups tend to perform better on relatively simple projects with a tight time frame and budgetary constraints. Large groups tend to perform better on large, complex projects - for example, a space shuttle mission. Homogeneous groups tend to perform better when the task to be performed is largely technical - for example, designing a database system. Heterogeneous groups tend to perform better on projects that require non-linear thinking - for example, new product development. Small, homogeneous groups with a well-defined goal, free and frank interactions, a sense of interdependency, and past success tend to be cohesive. As a consequence, members derive high levels of satisfaction, produce results, and reinforce organizational learning. The danger is that beyond a point, cohesiveness leads to groupthink - the idea proposed by a leader becomes acceptable to the members and the scope for new ideas rapidly diminishes. In contrast, large, heterogeneous groups that may be dispersed by location, having vague goals (increase revenue), and a track record of members' failure, tend to be less cohesive. As a consequence, they struggle to achieve the desired objectives. In turn, this leads to frustration, anxiety, and disappointment. Fault finding and one-upmanship may become the norm. Individuals may start acting in self-interest rather than the interests of the group. Again, the challenge for organizations is to strike a balance so as to derive the benefits of small groups where possible and to manage large groups where inevitable. One feature common to groups, small or large, is the propensity of some members not expending enough effort (called loafing) thus adding to the pressure on other members. A well-defined feedback and control system can minimize the problem. In many situations, the problem may not be identified before it is too late. It is important for members to understand that management is like mountain-climbing, members depend on each other, and cooperation, collaboration, and open communication are essential for group goals to be achieved. Intergroup Dynamics An organization can be expected to have many groups - formal and informal. The extent to which the various groups work with each other in the common mission of accomplishing organizational objectives is a function of: Organizational Culture - the work environment; the extent to which the organization relies on rules, protocols and procedures at one extreme, and trust and confidence at the other extreme. Performance measurement and reward systems - the extent to which they are perceived to be fair, transparent, and equitable. Decision making - centralized, consensual, or autonomous. Proximity - one location or widely dispersed. Goal orientation - how does the organization measure success? Does everyone understand success the same way? Group Decision Making When groups make decisions - simple or complex - it may be useful to guard against certain common phenomena. Groupthink - a process in which members are inclined to seek unanimity as opposed to constructive dialogue and alternative scenarios and ideas before making a decision; a tendency to agree with a leader's viewpoint even when one's experience or expertise seems to suggest otherwise.Groupthink can occur due to a variety of factors - from a sense of infallibility, to a propensity to rationalize any event, to a censorship of divergent views. Whatever be the cause, groupthink can be destructive and needs to be avoided. Group Polarization - the tendency of members to move towards more extreme positions than the ones they held prior to a decision.For example, if a member is a risk-taker and the group decision is one that involves a high degree of risk, the member may feel vindicated and be prone to take even greater risks in the future.Similarly, if a member is risk-averse and the group decision is one that validates the position, the member may move further away from risk-taking.Therefore, it is important for group decisions to balance the aspirations of stakeholders. Any effort to move decisions in a predetermined direction can have tragic consequences. Group Problem-solving - the method by which a group considers alternative ideas and arrives at a decision.Brainstorming - a technique in which ideas are initially generated without looking at their merits, and in subsequent steps, filters (such as technical, operational, economic, or financial feasibility) are applied to weed out ideas that cannot be implemented in an effort to find the best solution.Devil's Advocate - for each idea generated or proposal made, a counter idea is proposed or all that is wrong with the idea is outlined. Again, the hope and expectation is that considering opposing viewpoints will lead to a better solution than would otherwise be the case. Nominal group technique - after generating ideas, members try to build on each other's ideas. A rank-order of ideas may be undertaken to lend a degree of objectivity. The technique can overcome differences in status and position of members. Its limitation is that it has a tendency to stifle creativity. The attempt may result in a mediocre solution being accepted because it appears to be the lowest common denominator. Delphi technique - a series of iterations with a moderator enabling refinement of ideas at each stage in the hope that the final solution represents the best possible combination of ideas. Dialectic inquiry - a process of subgroups developing sets of thesis and anti-thesis, and through discussion and dialogue, arrive at a synthesis.

Teams

Although in common parlance groups, teams, autonomous work groups, self-directed teams, and participative management are used synonymously, they are not the same. In particular, we need to differentiate teams from groups. Groups refer to two or more persons gathered together - the members may or may not have a common goal. A work group is the collection of people reporting to one supervisor or manager. A team, in contrast, is a group designed to work together towards a common goal. Work Groups and Teams Work Groups are generally formed around specific skills - welding work group, carpentry work group, plumbing work group, painting work group. The supervisor directs the work group in their day-to-day activities. Such direction may be in the form of allocating members to specific tasks. Performance measurement and incentives are usually at the individual level - thus, a person with higher productivity is likely to receive higher incentives. By the same argument, penalties also tend to be at the individual level. In contrast, a team may or may not have a formal head or leader. Teams are formed around broad categories - marketing, sales, service, accounting and finance, human resources, technology. Team members generally have some degree of autonomy in determining who will do what. Performance measurement and incentives are for the team as a whole. When a team accomplishes its goals, all members are rewarded. When they fail, all members have to accept collective responsibility. Reward Systems for Teams Profit Sharing - all members of all teams may be eligible to receive a part of the profits as reward for attaining certain goals such as revenues, profits, market share, or market value. Such rewards are suitable at the strategic business unit and corporate level. Team bonus - whereas profit sharing plans are designed for strategic business unit or corporate levels, team bonuses can be designed to reward teams that achieve beyond a certain key performance metric such as revenue per employee, defects per million, or cost reduction in percent. Skill-based pay - increases in pay and benefits may be linked to team members acquiring certain competencies related to their work - Project Management Certification, Quality Certification, HR Certification, IT Certification, or Marketing Certification. How do Teams Benefit Organizations? Organizational performance improves through lower unit costs (Southwest Airlines, Nucor Steel), better quality (Toyota Motor, GE), and enhanced service (Starbucks, Marriott). Employee benefit improvements lead to higher satisfaction levels (Google, Sales Force, Wegmans Food Markets, The Boston Consulting Group, and Genentech - all among "Best Companies to Work For"). Organizational costs come down due to reduced absenteeism and turnover (Boeing) and increased safety (Alcoa). Organizational success can be sustained through innovation (Apple, Amazon), agility (United Colors of Benetton, IKEA), and flexibility (Bank of America, Deloitte). Types of Teams Teams can be characterized in a number of ways - by level - strategic, tactical and operational; by function - marketing, operations, finance, IT, human resources; by nature - fact finding, recommendatory, problem solving. Work teams - comprised of people performing similar work - paramedical staff of a hospital, security staff at a factory, janitorial staff and so on. These tend to be of a permanent nature although individuals may change - due to attrition, retirement, or hiring. Quality circles - started in Japan as a mechanism for enhancing quality and ensuring continuous improvement across processes. Determine their priorities, milestones, and metrics to be aligned with organizational goals. Problem solving - temporary teams assigned to address specific problems. Why did some cars accelerate when the brake pedal was pressed? Why did batteries in a tablet explode and catch fire? What caused an oil spill? Typically formed as a response to a crisis and dismantled once the problem has been solved. Management teams - interdisciplinary teams required to address complex scenarios. When to enter a market or segment? At what price? Through which types of promotion? And which modes of distribution? New Product Development teams - interdisciplinary teams for generating ideas, screening ideas, carrying out a feasibility analysis, concept testing, prototyping, test marketing, and formal launch - generally a combination of work groups and problem solving teams drawn from different domains to speed up the concept-to-market cycle. Virtual teams - comprised of people in different geographic locations working together towards a common goal using technology and communication - video and teleconferencing, virtual meetings, discussion boards, and mobile apps. Agile Teams - fast and flexible teams charged with the responsibility of developing a new product or service against tight schedules (as low as three weeks). Features of Effective Teams Clearly defined purpose and direction. Work designed to be carried out by a team rather than by an individual. Rewards and recognition linked directly to team performance. Required resources (financial, technological) to be made available in time. Team makes decisions about how to proceed. Team goals are aligned to organizational goals. Team culture nurtures creativity and new ideas. High Performance Team Characteristics Clearly defined "stretch" goals. A culture that celebrates results. Members with required skills. Commitment to overall good. Collaboration. Excellence as an end in itself. Ethical leadership. How Can Organizations Create Great Teams? Three building blocks: A rewards and recognition system that objectively measures both individual contribution and team performance. A support system (technology, work environment) that fosters creativity and leads to camaraderie and interdependence between members. A mentoring and training system that focuses on imparting new skills and prepares individuals to take on greater responsibilities. How Can Individuals Contribute? Understand uniqueness of organization and team. Avoid groupthink and group polarization. Be sensitive to diversity of team and implications for members. Be dynamic - never be satisfied with the status-quo - listen and question. Contribute to the team's effort wholeheartedly and unconditionally. "It's amazing what you can accomplish if you do not care who gets the credit."

Types of Organizational Communication

Downward - managers to their direct reports; leaders to followers; informational, instructional, inspirational. Upward - direct reports to managers; employees to their supervisor; followers to leaders; information, clarification, analysis, basis for decision-making. Horizontal - peers; essential for functional cooperation and collaboration; for example, marketing manager and finance manager; finance manager and HR manager. Diagonal - managers with employees of other functions and vice-versa; for example, finance manager seeking details from a customer service executive; function of organizational structure whether open, cross-functional communication is possible. Formal communication - memos, reports, bulletins, letters, electronic mail, telephone, face-to-face interactions, meetings - real and virtual. Informal - water cooler conversations, social interactions, lunch-time small talk. Channel richness contributes to communication quality - for example, face-to-face conversations have the advantage of facilitating two-way communication, nuanced exchange of views, and instant feedback. At the other extreme, channels with low richness - such as memos and reports - have the advantages of providing clarity, maintaining a record, and ease of dissemination. The challenge is to deploy a judicious mix so as to derive the maximum benefits with minimal effort. Organizations require the subsystems (marketing, finance, HR, IT) to work in tandem. Communication is critical for organizational success. Managers need to be able to inform, influence, and inspire others through personal example and effective communication. Hence, communication is a vital component of managerial effectiveness. Non-verbal Communication Non-verbal Communication is an integral part of face-to-face interactions. The words we use (language, vocabulary) are important. The way we speak (tone, loudness or softness, calm or angry, conciliatory or confrontational) is more important than the words. The way we use gestures (use of hands, facial expressions) is more important than the way we speak. Since non-verbal communication often occurs subconsciously or unconsciously, managers need to develop sound communication skills through constant practice and active feedback. Critical Factors for Effective Communication Clear and purposeful message. Use of appropriate channel. Courtesy, respect, and trust. Well-defined expectation (what is the receiver supposed to do?) Listening (more difficult than we think). Practice, practice, and practice. Importance of Listening 75% of effective communication is listening. Reality: The typical manager spends less than 25% listening. Our attention span can be as little as 45 seconds. Hence, we need to cultivate the craft of listening. Useful tips: Show genuine interest, avoid distractions, be aware that thought is much faster than speech, respond by asking intelligent questions, avoid being judgmental, identify the idea, work at listening through practice with colleagues. Downward Communication Mission, Vision, Strategies, Goals, and Objectives. Processes, Procedures, Policies, and Protocol. Logic and Reasoning behind Key Decisions. Orientation of New Employees. Performance feedback, Mentoring, and Counseling. Problems with Downward Communication Ambiguity. Distortion. "Lost in translation" - mismatch between encoding and decoding processes. Suggestions: Use appropriate channel. Be clear and concise - don't beat around the bush. Listen before you respond. Be consistent with verbal and non-verbal components. Upward Communication Reports (daily, weekly, monthly, quarterly, annually). Problems and issues. Metrics and measurement. Concerns, conflicts, and confirmation. Functional (marketing, HR, accounting and finance, IT, research) reports. Problems with Upward Communication Managers' reluctance to accept reports of failure and poor performance. Lack of trust leading to critical information being suppressed. Employees' anxieties. Gatekeepers who filter out unfavorable information. Suggestions: Listen. Create an environment of trust. Encourage people to speak up. "Good news by snail mail; bad news by fax or telephone." Horizontal Communication Lateral and Diagonal communication between peers and colleagues. Vital for coordination, cooperation, and collaboration. Useful in solving complex, cross-functional problems. Starting point for change management. Integral component of learning organizations (avoids "silo" thinking). Team Communication Team communication is a function of: Team purpose. Team type (permanent or temporary). Team size (large teams may prefer formal communication; small teams may be fine with informal communication). Team maturity (chaotic, repeatable, defined, managed, optimizing). Personal Communication Formal - in person, over phone, through electronic mail. Informal - unrelated to structure and hierarchy; social networks; "grapevine" - how a message spreads through the organization outside of formal channels. Suggestions: Fact-based management (avoid gossip). Constantly think of win-win scenarios. Embrace differing viewpoints and diversity (of every kind). Open Communication Sharing of strategic, tactical, and operational level information - financial, market, human, technological, customer-focused - across the organization without limits and boundaries. Recent trend based on: Trust. Empowerment. Collaboration. Flat organization (absence of hierarchies). Discussion and Dialogue Edgar Schein's Construct: In a discussion, the parties state their respective positions, defend those positions based on logic, and try to persuade the other party to one's view. Discussions are useful in resolving problems on a day-to-day basis. Since the basic premise is to force a certain way rather than building on common ground, the result is a static or fixed mindset. In contrast, a dialogue addresses innermost feelings, explores alternative perspectives, suspends assumptions and personal beliefs, and tries to build on common ground. The result is lasting, innovative solutions, shared values and meaning, and a growth mind-set. Communication in a Crisis Crisis here is failure, a significant deviation between expected results, a sudden loss of market share, a shipment that arrives late, a suspected infection in food - anything that has implications throughout the organization. It does not refer to natural calamities. Suggestions: Face the reality. Be truthful. "When in doubt, disclose." Be visible and upfront. Communicate hope, optimism, and an overarching vision. Feedback Feedback is the most neglected component of communication. Both giving and receiving feedback can be difficult - but it has to be done. Organizational learning can occur only when the following questions are constantly asked and truthfully answered: What were we supposed to do or achieve? What did we do? What are the gaps? What have we learned? How can we do better? Overcoming Communication Barriers Individual: Listen. Choose an appropriate channel every time. Try to understand others' viewpoints and perspectives. Practice Management By Wandering Around (MBWA). Service Above Self. Organizational: Establish a culture of trust. Minimize hierarchies and power structures. Encourage multiple channels - formal and informal. Reach out.

Managerial Functions

Henri Fayol conceived of five management functions. Today, these have been reduced to four: Plan Organize Lead Control Plan: How do we achieve organizational objectives? How do we allocate resources - money, materials, and people? How do we set timelines for achieving our goals? How do we prioritize all that we need to do? Organize: What processes are required in our organization? Who is responsible for each of the processes? What are the relationships between different functions? What are the relationships between different people? Who supervises whom? Why? How do we ensure cooperation and collaboration? Lead: What are our goals? Why are they important? How do we communicate our goals, our values, and our priorities? How can we steer the organizational ship effectively and safely? How do we do better than our competition? How do we grow? How do we change? Why do we change? Control: How do we monitor performance? Of individuals? Teams? Functions? What do we compare performance with? Our own historically? Our competition? The best-in-class? Why or why not? What corrective measures do we take when results vary from our goals? What preventive measures do we take to avoid the same mistakes or errors? How do we learn? As individuals? As an organization? Managerial Roles Henry Mintzberg, one of the great management thinkers of today, looked at the various roles that managers are called upon to play: Graphic demonstrates the connection between roles. Each role feeds information to another and uses information from each other. Interpersonal Roles: Figurehead - represent a team or group, represent the organization, be available when needed. Leader - set direction, motivate, set an example. Liaison - cooperate, collaborate, interface with others. Interpersonal roles provide information that lead into the informational roles as process information and the decisional role uses the information provided to make decisions. The informational role and decisional role both provide feedback to the interpersonal role. Informational Roles: Monitor - track results, examine changes, set things right before they become problems. Disseminator - communicate, communicate, and communicate! Spokesperson - speak on behalf of a team or organization. Decisional Roles: Entrepreneur - innovate, generate new ideas, new ways of thinking, take risks. Disturbance Handler - deal with conflicts, be firm but fair, be yourself. Resource Allocator - all resources are scarce; use them judiciously as if they were your own. Remember:The roles are not mutually exclusive. You may have to play all roles in the course of a week, or even a day. Be prepared. Managerial Activities Fred Luthans found in his study that all managers engage in four activities: Traditional - planning, making decisions, and controlling (average time: 32%). Communication - collection, processing, and exchanging information (29%). Human Resource Management - motivating, counseling, training, and conflict management (20%). Networking - socializing, politicking, and interacting with outsiders (19%). Luthans found differences in time allocated between "successful" managers (those who were promoted faster) and "effective" managers (those who got the job done). The study concluded successful managers spent more time and effort in socializing, interacting and networking. They spent less time engaging in traditional and human resource management activities (Luthans, 1988). Thus, successful managers are not necessarily effective and are not always focused on the same day to day activities as their effective managerial counterparts. Management - Art or Science? Management is not without its share of controversy. Some will argue that beyond the hype, management is no more than common sense, and very often, intuition or gut feeling are the requirements for a decision. Others, who would like management to be considered a science, look at relationships between variables, cause and effect, and argue that more information will lead to better decisions. A third group relies on Evidence Based Management (EBM) that seeks to look at precedent and experience before arriving at a decision. The truth is all three have uses - the challenge is to recognize when to use which method. The Challenge for OB Human behavior cannot be discussed in absolute terms. Every behavior has a context and is a situational variable. A significant part of behavior is rooted in culture and norms. A few examples: Nodding one's head can mean agreement in one culture and disagreement in another. For some cultures, black is a sign of mourning while in others, white is a sign of mourning. Something as simple as shaking one's hand may be inappropriate in some cultures. Maintaining a certain distance is expected in some cultures while in others proximity is considered fine. Thus, it is important to remember that concepts need to be understood based on the context and the situation.

Motivation Models and Theories

Motivation is the process that initiates, guides, and maintains goal-oriented behaviors. Motivation is the set of internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job, a role, or subject, or to make an effort to attain a goal. Like intelligence, motivation cannot be directly observed. Motivation can only be inferred by observing a person's behavior. In the context of organizations, job performance is a function of motivation, ability, and the work environment. To achieve excellence, an employee must: Want to do the job well (motivation). Be able to do the job efficiently and effectively (ability). Have the resources (materials, technology, information) to do the job (work environment). Motivation Framework Motivated behavior starts when a person perceives one or more needs. Although a fulfilled need can also trigger action, unfulfilled needs tend to be more powerful motivators in directing behavior. For example, a person who is very hungry will look for food and settle for any food that is available to satisfy the hunger. A person who has just had lunch or dinner is unlikely to be motivated to eat. Once a need deficiency is perceived, we search for ways in which we can satisfy that need. The basic motivation framework is employee centered. The employee has 6 areas of needs that impact his level of motivation. Those areas are 1. needs deficiencies, 2. search for ways to satisfy needs, 3. goal-directed behaviors, 4. performance, 5. rewards or punishments, and 6. need deficiencies reassessed by the employee. Consider a student perceiving her academic performance to be insufficient to gain admission to an Ivy League University. The student can: Work harder. Work with more accomplished students. Seek teachers' help to improve performance. Attend extra classes and tutorials. Augment learning by registering for a flexible, on-line course. All these behaviors are directed towards the goal of improving performance. The behaviors result in performance that is either aligned to what is required by Ivy League Universities or falls short of those requirements (reward or punishment). If the performance results in the student gaining admission in an Ivy League University, the behaviors adopted are likely to be reinforced and continued in college. Otherwise, the student may rationalize her / his limitations and seek admission in a university that does not require high academic credentials (reassessment). Historical Perspectives The scientific management approach (Frederick Taylor) assumed that economic gains (money) were the principal motivating factor. The approach considered work as being inherently unpleasant and that monetary incentives were needed to drive employees to perform. While the importance of money cannot be dismissed, motivation is much more than just money. The human relations approach (1930s) assumed that at the heart of motivation are social needs, and favorable attitudes of colleagues result in higher levels of motivation and enhanced performance. A sense of perceived importance was expected to result in improved performance. The human resource approach (1950s) assumes that people want to contribute to the overall good and indeed are able to make valuable contributions. The approach has contemporary relevance in that many leading organizations embrace this philosophy and encourage participation through empowerment and decentralization. Need Based Approaches (Maslow) Maslow proposed a hierarchy of needs, a modified form of which is shown. The three needs at the bottom are termed deficiency needs because they must be satisfied for a person to feel comfortable. The higher needs are termed growth needs since they are instrumental in personal development and growth. In an organization, physiological needs may be satisfied through a base salary. Safety needs may be addressed through retirement plans. Belongingness needs may be satisfied through friends, colleagues, and social networks. Esteem needs may be satisfied through increased responsibilities and job titles. Higher order needs are the most difficult to satisfy through external stimuli. They are essentially driven from within. Cognitive needs require a person to passionately believe in learning as a life-long experience. Aesthetic needs require reflection and mindfulness. Few people reach self-actualization and transcendence. A person leaving a high-paying job with a fancy title to work as a teacher or with a non-profit may be showing signs of self-actualization. A person trying to make a difference in others may be showing signs of transcendence. Self-actualization and transcendence are ideals - always to be striven for, perhaps never to be fully realized. Limitations: Needs do not necessarily follow a hierarchy. For example, the Indian leader Gandhi often overlooked a basic need such as food in an effort to gain freedom for the country - a transcendent goal. Need structures are unstable and variable. Managers rarely understand the nuances and hence their attempts to use this model often leads to unfavorable results. ERG Theory (Alderfer) Proposed by Yale Psychologist Clayton Alderfer. Has similarities to Maslow's model. ERG stand for Existence, Relatedness, and Growth. Existence needs are basic for our survival and are similar to the physiological and safety needs of Maslow. Relatedness is the need to relate to others and corresponds to the belongingness and esteem needs of Maslow. Growth is a higher-order need and is similar to self-awareness, self-actualization, and transcendence. Differences: ERG theory suggests that more than one type of need may motivate a person at a given point in time. More importantly, ERG has a satisfaction-progression component and a frustration-regression component. The satisfaction-progression aspect suggests that once a particular need is reasonably satisfied, a person moves to the next level. On this, ERG and Maslow's hierarchy are similar. The frustration-regression component makes the distinction that a person frustrated in attempts to satisfy a higher level need will regress to the preceding level. Dual Structure Theory (Herzberg) Herzberg proposed the two-factor theory which later on became the dual structure theory. Although not favored by scholars, the model is appealing to practitioners. One set of factors, called motivational factors, affect satisfaction. Another set of factors, called hygiene factors, determine dissatisfaction. Motivational factors are intrinsic to the work and include achievement, recognition, and responsibility. Hygiene factors are extrinsic to the work and include pay, job security, personal life, and policies. Herzberg suggested a two-step approach: Step 1: Eliminate dissatisfaction factors. Step 2: Create motivational factors. Although popular among practitioners, the theory has been criticized by scholars. The theory is "method bound" - a researcher using a different method is likely to come up with contradictory results. Original sample does not represent general population. Factors vary widely across cultures. Other Important Needs Achievement Need (McClelland) - an individual's desire to accomplish or achieve a goal more effectively than in the past. For example, a CEO may track return on investment as a key metric. If, during a particular year, the ROI is 15%, an achievement-oriented CEO might try to achieve more than 15% the following year. Achievement oriented individuals tend to have certain characteristics: A need for immediate feedback. Preoccupation with work to the exclusion of everything else (16-hour work days?). Assume responsibility to get things done (a sales target, a product launch). Affiliation need - is the need for human companionship. Individuals with a high affiliation need: Expect approval and reassurance from colleagues and supervisors. Tend to be sensitive to others' feelings. Follow the golden rule (treat others as they would like to be treated). Individuals with a low affiliation need: Work best when left alone. Find it difficult to be courteous and friendly all the time. Power - the desire to control the environment and resources - financial, material, information, and people. Some people actively seek power. Others avoid it. Prerequisites for those with a high power need to be successful managers: Seek power to enhance organizational performance, not to extend personal influence. Have a low affiliation need. Process Based Perspectives How people behave in their attempts to satisfy their needs. Equity theory (Adams) - the relatively simple concept that people in organizations want to be treated fairly. Equity - the belief that we are being treated fairly in relation to others. Inequity - the belief that we are being treated unfairly in relation to others. People form perceptions of equity through a four-step process: Step 1: How am I being treated? What is the (outcome / inputs) ratio? Outcomes relate to pay, incentives, and recognition. Inputs are the totality of education, experience, and effort. Step 2: How is a similar person/s being treated? What is the outcome/input? Step 3: Compare ratio of step 1 with ratio of step 2 to form perception of equity or inequity. Step 4: Based on strength of perception formed in step 3, take alternative courses of action. The process based perspectives is like a scale that balances inputs and outcomes. Inputs include experience, skills, knowledge, effort, energy, time, responsibility, flexibility, and work characteristics such as, dangerous, monotonous, complex, too much, bad working conditions, physical environment and working tools. Outcomes include salary, reward, bonus, security, recognition, learning and development opportunities, good working conditions, and work characteristics such as interesting, challenging, complex job, and achievement. The comparison may lead to anger, satisfaction, or overconfidence / guilt feeling. If perception is that of equity, the individual is motivated to maintain the status-quo. If perception is that of inequity, the individual may: change inputs, change perception of self, change perception of other, change comparison, or leave the situation (organization). The structure of equity in the workplace is based on the ratio of inputs to outcomes. Ratio ComparisonsPerceptionSituation of an Employee(Individual's outcome/Individual's input) < (Other's Outcome/Other's Input)InequityAnger(Individual's outcome/Individual's input) = (Other's Outcome/Other's Input)EquitySatisfied(Individual's outcome/Individual's input) > (Other's Outcome/Other's Input)InequityPride, Overconfidence,Guilt The structure of equity in the workplace is based on the ratio of inputs to outcomes. If an individual's outcome divided by their input is less than others' outcome divided by their input there is a perception of inequity and the employee displays anger. If an individual's outcome divided by their input is equal to others' outcome divided by their input the perception is equity and the employee displays satisfaction. If an individual's outcome divided by their input is greater than others' outcome divided by their input the perception is inequity and the employee displays pride, overconfidence and guilt. Equity theory has been validated in settings of piece-rates or hourly rates. Less useful when reward systems are not transparent. Implications: Everyone in the organization must know the basis for rewards. People look at rewards from multiple perspectives - thus as important as tangible rewards are, intangibles cannot be ignored. People act based on their perceptions. An evaluation cycle happens where a person compares their situation to someone else. This creates some feeling that leads to action and another evaluation to determine if the employee is satisfied. The cycle repeats itself. An example is the comparison of pay where person A is paid less for the same job than person B. This leads to tension where person A feels angry and person B feels guilty. This leads to actions, such as person A can ask for a raise and person B can work harder. This leads to an evaluation of satisfaction, such as whether either action to resolve matters satisfies both parties, otherwise the cycle will be repeated. Expectancy Theory Expectancy theory (Vroom) is more comprehensive than equity theory. Motivation is a function of how much we want something and how likely we think we will get it. Thus, motivation is a function of effort, performance, and rewards. Effort-to-performance expectancy: An individual's perception of the probability that effort will likely lead to performance. Performance-to-outcome expectancy: An individual's perception of the probability that performance will likely lead to outcomes. Outcome - the result of a particular behavior. Valence - the relative attractiveness or unattractiveness (the value) of the outcome. Example shows the relationship between effort, performance, and rewards; It starts with the question: Will my effort lead to high performance? If so, will the high performance lead to outcomes (rewards)? If performance leads to outcomes, are the outcomes desirable? In summary, effort leads to performance, which leads to rewards. Motivated behavior occurs when: Effort-to-performance expectancy is greater than zero. Performance-to-outcome expectancy is greater than zero. The sum of all valences must be positive. Positive valence: higher pay, job title, recognition. Negative valence: hard work, stress, and fatigue. Expectancy Theory (Porter-Lawler) An intriguing variation of expectancy theory: If rewards are adequate, higher levels of performance may lead to higher levels of satisfaction. Abilities, traits, and role perceptions are additional variables. Perceived equity of intrinsic (accomplishment, inner satisfaction) and extrinsic (pay, promotion) rewards determines satisfaction. Porter-Lawler's version of expectancy theory predicts that satisfaction is determined by the perceived equity of intrinsic and extrinsic rewards for high-level performance. Like the previous expectancy theory, effort, or a person's ability and traits as well as role perceptions, lead to performance. Performance is evaluated by intrinsic rewards and extrinsic rewards which lead to a level of satisfaction. The value of the reward feeds back into effort. The perceived probability of a reward also feeds into effort, thus impacting performance. Expectancy Theory Implications Difficult to implement in practice. Some useful guidelines for leaders: What are the desired or expected outcomes? What are the performance criteria required to achieve organizational goals? Are the performance criteria realistic? How can we link outcomes to performance? What are the positive and negative valences to be considered? Are the rewards significant? Is the system equitable to everyone? Learning Based Perspectives Learning - a relatively permanent change in behavior resulting from direct or indirect experience. Learning is a critical component in motivation. Individuals quickly assimilate and learn which behaviors are rewarded and which behaviors are punished. The traditional view of learning is that of classical conditioning - a conditioned response to an unconditional stimulus (was my boss' anger triggered by the color of my dress?). Classical conditioning is wholly inadequate to explain human learning as we know it now. The contemporary view of learning is that it is a cognitive process - we are active participants in what and how we learn. A well-known contemporary view is reinforcement theory. Behavior is a function of its consequences. If a certain behavior results in pleasant or positive consequences, we are likely to repeat that behavior. If a certain behavior results in unpleasant or negative consequences, we are less likely to repeat the behavior; we may avoid such behavior. Reinforcement Theory Positive reinforcement - a reward or desirable consequence arising out of an exhibited behavior. Negative reinforcement or avoidance - opportunity to avoid an unpleasant consequence arising out of an exhibited behavior. Punishment - an unpleasant consequence arising out of an exhibited behavior. Extinction - decreases frequency of a behavior by removing a reward or desirable consequence arising out of an exhibited behavior. Reinforcement theory can be drawn like a box with 4 quadrants: labeled positive reinforcement, negative reinforcement, punishment, and extinction. Positive reinforcement is positive behavior followed by positive consequences, such as a manager praises the employee. Negative reinforcement is positive behavior followed by removal of a negative consequence, such as the manager stops nagging the employee. Punishment is negative behavior followed by negative consequences, such as the manager demotes the employee. Extinction, which is positive behavior followed by removal of a positive consequence, such as a manager ignores the behavior which may result in unintentionally lowering the desirable behavior. Social Learning Social learning occurs when we observe the behavior of others, are able to recognize the consequences of the behavior, and alter our own behaviors accordingly. Social learning can occur when: The behavior we observe and try to imitate is simple. The learning is discrete and not purely intellectual (we can learn how to operate the coffee brewer but not as easily to write an essay). We have the ability to reproduce the behavior (we can improve our presentation skills by observing great presentations; we cannot all hope to become orators or inspirational speakers). A-B-C of OB Mod Antecedents - a new policy, procedure, incentive system, or performance measurement is announced. Behavior - the resultant behavior is observed. Consequences - desirable behavior is rewarded; undesirable behavior is punished or ignored. Example: An antecedent, or what happens before behavior, could be the announcement of an attendance bonus system. The behavior, or what a person says or does, might be the employee attends work as scheduled. The consequences, or what happens after behavior, might be the employee receives an attendance bonus. OB Mod Criticisms Raises ethical issues related to choice and manipulation. Managers may choose what is beneficial to the organization and ignore what is beneficial to individuals. Many other interventions pose a similar dilemma. Use with caution. Luthans' and Kreitner's 5-step OB Mod: step 1 is identification, which leads to step 2-measurement, which leads to analysis, which leads to intervention, which leads finally to step 5-evaluation. Motivation - An Integrated Model Motivation should lead to work effort by individuals and teams. When such effort is accompanied by individual skills and abilities, and a work environment that nurtures the effort, one can expect excellence in performance. The extent to which the excellent performance is repeated is a function of equity and reinforcement. Ideally, satisfaction and rewards should form a virtuous cycle leading to enhanced motivation and sustained superior performance. Individual attributes + work effort + organizational support = performance. Extrinsic rewards + net intrinsic rewards + equity comparison = satisfaction or dissatisfaction leading to superior or diminished performance. Individual attributes + work effort + organizational support = performance. Extrinsic rewards + net intrinsic rewards + equity comparison = satisfaction or dissatisfaction leading to superior or diminished performance. Motivation in Practice Job design and job specialization - how jobs are structured and standardized; rooted in scientific management; can result in efficiency but also in monotony. Job rotation - popularized in Japan; moving people from one type of work to another at periodic intervals in an effort to reduce monotony and fatigue. Job enlargement - increasing the number of tasks performed by individuals in the hope that increased "ownership" of tasks leads to higher productivity - for example, changing sequential processes to parallel processes; also called horizontal loading. Job enrichment - increases individual tasks as in job enlargement and also gives individuals considerable freedom for achieving desired results - also called vertical loading. For example, janitorial staff being allowed to perform tasks in any sequence and also allowed to be responsible for buying supplies. Job characteristics theory - combines essential elements of job - task, skill, significance, autonomy, and feedback - with key psychological elements - extent to which individual perceives job to be valuable and meaningful; the extent to which individual feels personal accountability for outcomes; and the extent to which individual understands how effectively the job has been done. Participation - providing opportunities for employees to be involved in decision-making. Empowerment - enabling individuals to set goals, develop processes, make decisions, and solve problems in their domain of activity. Flextime - allowing individuals to have control over their work hours. Teleworking - allowing individuals to work from home or a remote location. Job sharing - facilitating part-time employees to share parts of a job that would otherwise be performed by a full-time employee. Mechanisms for Motivation in Practice Pay for performance - consistent with equity, expectancy, and reinforcement theories. Works when transparent practices are adopted. Merit pay - pay increases linked to individual performance; suffers from bias in evaluation, ambiguous goals, and lack of consistency in application. Skill-based pay - pay linked to job-related skills; often difficult to define and understand. Bonus pay - one-time payment (once a year) for reaching specific milestones or targets. Profit sharing - some or all employees receive a portion of net profit. Gain sharing - teams share savings through reduced costs and increased productivity. Employee Stock Option Plans (ESOP) - employees given the option of owning stock without or with lock-in periods. Benefits - health care, wellness, retirement, professional membership, professional development, vacations, paid leave, and investment advice; maternity and paternity leave; free or subsidized food and beverages; fitness centers in the workplace; allowing pets in the workplace; allowing children in the workplace - the list can be as long as one's imagination.

Organizational Development (OD)

OD is the process of planning and implementing change in organizations with the objective of enhancing organizational performance through interventions based on the knowledge of the behavioral sciences. Three key elements: OD requires a plan - it cannot be an ad hoc process. OD aims to enhance performance - thus, it cannot be undertaken as a fad. OD relies on the behavioral sciences - not on technology, finance, or marketing. Structural Change Refers to organization-wide changes - a rearrangement of tasks, functions, and structure. Process redesign that requires an organization to question the status quo, adopt aspirational goals, and implement major changes is a mechanism for structural change. As a result, an organization may combine tasks and functions, reallocate work based on specialization, move from a functional structure to a geographic structure or a matrix structure, and radically alter performance measurement and reward systems. Structural changes are complex and may take years before they show tangible results. Quality of Life Programs Focus on creating a work environment in which employees can satisfy their individual needs. Training and development, flexible working, remote working, nutritious food at the workplace, fitness centers, child care centers, pet care centers, alternative therapies including yoga and meditation, mindfulness, and family get-together are all meant to facilitate the fulfillment of individual needs even while pursuing organizational goals. Resistance to Change Practically all organizations face resistance - at the individual and organizational levels. Structural inertia - organizations get so obsessed with a finite set of skills, job descriptions, and job requirements that they forget the overall context and dynamic environment in which they need to operate. Narrow focus - many organizational initiatives are too narrow to succeed - enhanced customer service without considering interdependencies among functions or increased revenues without bothering to look at competitive forces. Threatened power and expertise - any change that alters the status quo inevitably threatens individuals and groups. It is important to get the buy-in of key stakeholders before initiating any major change. Resource allocation - any changes in the way resources are allocated is likely to cause a sense of insecurity among those likely to be adversely affected. Habit - habits die hard - it is difficult to jettison the way we work and adapt to a new way or a new role. Security - we are secure in our comfort zone and resist attempts to radically change the environment - physical, work group, task, or organizational. Fear of the unknown - the future will always be uncertain; any change involves risk - simple things such as reporting structures or a re-alignment of goals can lead to anxiety and even depression. Social factors - we are conditioned to imagine others' perceptions of our work. Any change in this can lead to debilitating consequences for individuals. Managing Change and Development The big picture view - always look at the organization as a whole and as a system with many interdependent subsystems. Start small - pilot projects and prototypes are a means to achieving stakeholder buy-in. Ensure top management support - no change process can succeed without the full and wholesome support of top management. Encourage participation - be open to contrarian viewpoints, do not cast anything aside merely because you don't like it. Foster open communication - eschew groupthink, be transparent. Reward those who embrace change and contribute to organizational goals. Be conscious of cultural differences when operating in other countries.

Lesson 18 - Section Review Elements of Organizational Structure

Organizational Design refers to the process of creating or changing an organization's structure. Organizational Structure refers to the formal mechanism by which functions and tasks are grouped, divided, and coordinated. Structure is often depicted in the form of an Organizational Chart. Design elements - work specialization (leading to work scale economies), departmentalization (how functional division is achieved - marketing, finance, HR), chain of command (position power and lines of reporting), span of control (number of employees reporting to a manager), centralization / decentralization (decision making - whether concentrated in a few individuals at the top or flows through the organization at all levels), and formalization (degree to which work processes are standardized through job descriptions, policies, procedures, and protocols). Work Specialization The degree to which activities in an organization are subdivided into discrete tasks to make efficient use of organizational resources and employee skills. Up to a point, specialization increases productivity. Thereafter, productivity declines due to human inadequacies - lethargy, and tiredness from repetition. Departmentalization Process by which jobs or tasks are grouped together. Can be by: Function - marketing, operations, finance, HR, IT, and customer service. Product - servers, desktops, laptops, and tablets. Geography - Americas, Europe, Asia, Africa, Middle-East, Asia-Pacific. Process - sheet metal, extrusion, assembly, welding, painting. Customer - segments and clusters - by demographics, psychographics, or behavioral attributes. Chain of Command Hierarchical structure denoting reporting mechanisms - who reports to whom and who is the final authority in the chain. Refers to position power. Span of Control Number of employees who report to a supervisor, executive, or manager. Span of control impacts organizational structure. In general, tall structures have narrow spans of control. Flat structures (with few layers) have wide spans of control. Optimal span - narrow enough to afford effective supervision and wide enough to avoid micro-managing. Centralization/Decentralization Centralized - few individuals at the top make all decisions. Decentralized - decision-making is dispersed through the organization; decisions are made at the lowest level possible based on context and implication. Centralization is helpful when organizational crisis occurs, management has a high desire for control, or there is an emphasis on increasing consistency and reducing costs. Decentralization is helpful when the organization is complex due to size or diversity, or there is an emphasis on empowerment. Formalization Degree to which tasks, jobs, and processes are standardized. Standardization ensures consistency and avoids the need to look at alternatives each time. Can be achieved through clear job descriptions, well-defined procedures, and expected outcomes. Standardization can lead to mediocrity - the lowest common denominator. Organizational Designs Simple Organizational Structure The simple structure is common in small firms and new ventures. The entrepreneur is the owner-manager and the first set of employees report to her. Functional Structure Work is divided according to function. Functional managers may have executives and employees reporting to them. Affords work specialization and efficiency. Limitations: Tends to push towards narrow, short-term focus. Works when business environment is stable. The CEO has functions reporting to her including Marketing, Production, Human resources, Information Technology and Customer Service. Divisional Structure Each division has some autonomy. Also called Strategic Business Unit (SBU) structure. Divisions can be created according to geography, product category, or processes. Widely used in large organizations. Example: the managing director has functional responsibility for footwear, garments, jewelry and leather accessories. Within the function of jewelry, there are functions of production, sales, marketing and advertising. Matrix Structure Hybrid structure combining functional and divisional forms. Managers and staff report to two bosses - a functional manager and a divisional manager. Useful for project management. A general manager has the following direct reports: production manager, finance manager, marketing manager, and R & D manager. These are function areas. Project manager A includes a production group that also reports to the production manager; a finance group that also reports to the finance manager; a marketing group that reports to the marketing manager and a personal group that reports through the R & D manager. Each subsequent project manager has groups within each functional area on their work team. Mechanistic and Organic Structures Mechanistic structures are characterized by: Narrow spans of control. High degree of formalization. High degree of centralization. Organic structures are characterized by: Wide spans of control. Little or no formalization. High degree of decentralization and empowerment. Network Structure Interconnected network of managers or functions or processes or divisions. Suitable for knowledge-based organizations such as consulting, investment banking, and professional services. Requires high level of maturity and leadership that permeates the organization. A network structure looks more like a spider web than a hierarchal structure. In this example the general manager is the center of the web, having 4 directors reporting to him. Each director has managers within his work group. This network does not define levels or importance of positions. Environment and Structure Stable environment - steady, predictable conditions; mechanistic structure. Dynamic environment - rapid change, unpredictable conditions; organic, network structure. Complex and large organizations - decentralize. Simple and small organizations - centralize. Several products and locations, global market - divisional structure. Single product, market, or geography - functional structure. Fragmented industry, intense competition - organic structure for agility. Munificent industry, less competition - mechanistic structure.

Organization as a System

It is useful to view an organization as a system. A system is a set of interrelated parts that work together towards a well-defined objective. A system has some distinct characteristics: One or more inputs One or more processes that transform the inputs One or more outputs A feedback loop to measure efficiency and effectiveness Most systems have a control mechanism to correct and prevent deviation from the desired level in system performance. Control can be at the input, process, or output stage. Inputs to an organizational system (manufacturing) include: Capital People Raw materials Information Technology The processes may involve: Physical Chemical Mechanical Electronic Assembly Lines Test facilities The output is one or more products, some waste, and information. Feedback can be about quality, efficiency, or productivity. Control would be steps to minimize deviations. Education as a System Consider education as a system. You can easily identify your role as well as that of your teacher. You belong to a family system as well. Similarly, your teacher belongs to an institution system. Education as a system is shown in a diamond shape with inputs from students on the left and teachers on the right. Teachers make assignments, students receive assignments. Students hand in homework. Teacher receives homework. Teachers give grades. Students receive grades. Also shown are outside influences, such as the parents impacting the students or the institution impacting the teachers. Systems and Subsystems A typical system has many subsystems. An organizational system, for example, has marketing, finance, manufacturing, service, human resources, and technology subsystems. In this example of an airline, there are systems for passenger check-in, inventory, distribution and fares, filing and publication. Within the system for passenger check-in, there exists a process for passenger check-in and a process for reservations & online booking. Within the system of fares, filing and publication, there are systems for fares, revenue management, revenue accounting, and ticketing. Multiple subsystems exist within an airline organization. Similarly, the organization itself is a part of a larger system that includes the political, economic, social, and technological systems. Organization as a System - Baldrige Model One of the widely used frameworks or models for understanding and improving organizational systems is the Baldrige Excellence Model. The Baldrige framework is depicted as a circle with an organization's core values and concepts as the base layer that everything is built upon. In an organizational profile, seven concepts, or subsystems are addressed. The model has several subsystems. Leadership - the first subsystem, provides the mission, vision, objectives, and core values of the organization. Mission - What is our business? Vision - What do we aspire to become? Objectives - How do we measure? Core Values - What do we believe in and stand for? Strategy - How do we succeed? By lowering costs? By offering something unique? By operational excellence? By understanding and serving our customers? By combining all of the above? Customers - Who are our customers? Where are they located? What are they looking for? What is the "job to be done"? How do we offer what our customers want? Internal and External customers. Workforce - the most important resource of an organization are its people. How to hire, orient, train, motivate, compensate, develop, and retain a talented workforce. Operations - How do we transform inputs into outputs better than competitors? How do we maintain world-class quality? How do we provide exceptional service? Results - How do we measure success? Profits? Shareholder value? Market share? Customer satisfaction? Reputation? Brand recognition? Integration - How do we ensure that all the subsystems work in harmony? How do we analyze results and initiate steps to improve performance? How do we capture, assimilate, and disseminate knowledge so that the entire organization grows and learns both from successes and failures? Core Values - What do we stand for? Honesty? Integrity? Fairness? Empathy? Service Above Self? The Golden Rule? Our Ethical and Moral Compass? Why Study OB? Robert Katz identified three types of skills as being critical for organizational success. Technical Human Conceptual Graphic shows that at a first line management level technical skills are most important, followed by human skills, and finally by conceptual skills which are least important at this level. At a middle management level, human skills are the most important. Conceptual skills are less important; however they are of greater importance than conceptual skills for the first line management. Technical skills are also of smaller importance, almost equal to conceptual skills. At the top management level, conceptual skills are the highest of importance with human skills being next greatest and technical skills being the smallest in importance. Technical skills are important at the entry level. Conceptual skills are important at the leadership level. Human or interpersonal skills are critical at every level. To understand human skills, we need to study OB.