Michael A. Hitt

C. Chet Miller

Adrienne Colella

Slides by R. Dennis Middlemist

Michael A. Hitt

C. Chet Miller

Adrienne Colella

Chapter 1

A Strategic Approach To Organizational

Behavior

Knowledge Objectives

1. Define organizational behavior and explain the strategic approach to OB.

2. Provide a formal definition of organization.

3. Describe the nature of human capital.

4. Discuss the conditions under which human capital is a source of competitive advantage for an organization.

5. Explain the five characteristics of high-involvement management and the importance of this approach to management.

Basic Elements of Strategic Organizational Behavior

Organizational behavior– The actions of individuals and groups in an organizational

context.

Managing organizational behavior– Actions focused on acquiring, developing, and applying the

knowledge and skills of people.

Strategic approach to OB– An approach that involves organizing and managing the

people’s knowledge and skills effectively to implement the organization’s strategy and gain a competitive advantage.

Factors and Outcomes of Strategic Approach

Adapted from: Exhibit 1.1 Factors and Outcomes of a Strategic Approach to Organizational Behavior

Organizational Factors (culture, work

environments, adaptability

Organizational Factors (culture, work

environments, adaptability

Individual Factors (learning ability, personality, values,

motivation, stress)

Individual Factors (learning ability, personality, values,

motivation, stress)

Interpersonal Factors (leadership, communication, decision-making skill, intra- and inter-group dynamics,

communication)

Interpersonal Factors (leadership, communication, decision-making skill, intra- and inter-group dynamics,

communication)

Satisfaction of Individuals and

Groups

Satisfaction of Individuals and

Groups

Productivity of Individuals and

Groups

Productivity of Individuals and

Groups

Organizational SuccessOrganizational Success

Strategic OB Lens

Senior Managers

Organization Level

Activities Required Skills

• Talk with insiders and outsiders about• Vision• Strategy• Other major issues

• Conceptualizing• Communicating• Understanding the

perspectives of others

• Help middle managers• Define and redefine

their roles• Manage conflict

• Listening• Conflict management• Negotiating• Motivating

• Create and maintain the organization’s culture

• Interpersonal influence

Strategic OB Lens

Middle Managers

Organization Level

Activities Required Skills

• Champion strategic ideas

• Help firm to remain adaptive

• Networking• Communicating• Influencing

• Process data and information for use by other individuals

• Analyzing• Communicating

• Deliver strategic initiatives to lower-level managers

• Communicating• Motivating• Understanding values• Managing stress

Strategic OB Lens

Lower-level Managers

Organization Level

Activities Required Skills

• Coaching firm’s associates (workers)

• Teaching• Listening• Understanding personalities• Managing stress

• Removing obstacles for associates

• Deal with personal problems of associates

• Negotiating• Influencing others• Counseling• Understanding personalities

• Design jobs, team structures, and reward systems

• Negotiating• Group dynamics

Foundations of Strategic OB

Behavioral science disciplines– Psychology– Social psychology– Sociology– Economics– Cultural anthropology

Strategic approach integrates knowledge from all these disciplines

Strategic approach focuses on behaviors and processes that help to create competitive advantages and financial success (goal is to improve the outcomes of organizations)

Common Features of Organizations

Network of individuals System Coordinated activities Division of labor Goal orientation Continuity over time, regardless of change in

individual membership

Human Capital and Competitive Advantage

Human capital: The sum of the skills, knowledge, and general attributes of the people in an organization

Competitive advantage: An advantage enjoyed by an organization that can perform some aspect of its work better than competitors or in a way that competitors cannot duplicate such that it offers products/services that are more valuable to customers

Human Capital as Source of Competitive Advantage

Competitive Advantage

Human Capital Value

Associates are capable of performing the basic work of the

organization

Human Capital Rareness

Skills and talents of associates are unique

in the industry

Human Capital Imitability

Skills and talents of associates cannot be

copied by other organizations

Human Capital as Source of Competitive Advantage

Are human resources in the firm . . .

Valuable RareDifficult to

imitateCompetitive implications Performance

NoCompetitive

Disadvantage Below Normal

Yes No Competitive Parity Normal

Yes Yes No

Temporary Competitive Advantage Above Normal

Yes Yes Yes

Sustained Competitive Advantage Above Normal

Supported by effective

management

Exhibit 1.2 Human Capital and Competitive Advantage Source: Adapted from J. Barney and P. Wright, “On Becoming a Strategic Partner,” Human Resource Management 37 (1999): 31–46.

Dimensions of High-Involvement Management

Exhibit 1.3 Dimensions of High-Involvement ManagementAspect Description

Selective Hiring Large pools of applicants are built through advertising, word of mouth, and internal recommendations. Applicants are evaluated rigorously using multiple interviews, tests, and other selection tools. Applicants are selected on the basis of not only skills but also fit with culture and mission.

Extensive Training New associates and managers are thoroughly trained for job skills through dedicated training exercises as well as on-the-job training. They also participate in structured discussions of culture and mission. Existing associates and managers are expected or required to enhance their skills each year through in-house or outside training and development. Often, existing associates and managers are rotated into different jobs for the purpose of acquiring additional skills.

Exhibit 1.3 Dimensions of High-Involvement Management

Dimensions of High-Involvement Management

Exhibit 1.3 Dimensions of High-Involvement ManagementAspect Description

Decision Power Associates are given authority to make decisions affecting their work and performance. Associates handle only those issues about which they have proper knowledge. Lower-level managers shift from closely supervising work to coaching associates. In addition to having authority to make certain decisions, associates participate in decisions made by lower-level and even middle managers.

Information Sharing Associates are given information concerning a broad variety of operational and strategic issues. Information is provided through bulletin boards, company intranets, meetings, posted performance displays, and newsletters.

Incentive Compensation

Associates are compensated partly on the basis of performance. Individual performance, team performance, and business performance all may be considered.

Exhibit 1.3 Dimensions of High-Involvement Management

High-Involvement Managers

High-involvement managers: Identify situations in which responsibility can be

delegated Manage through encouragement and commitment

rather than fear and threats Respect and value each associate’s skills and

knowledge Empower people in ways that are consistent with their

uniqueness as individuals Invest effort in building and maintaining trust

Managing Organizational Behavior

Exhibit 1.4 Managing Organizational Behavior for Competitive Advantage