BA105-1: BA105-1:

Organizational BehaviorOrganizational Behavior

Spring 2004Spring 2004

Professor Jim LincolnProfessor Jim Lincoln

Walter A. Haas School of BusinessUniversity of California, Berkeley

Class Agenda for TodayClass Agenda for Today

1.1. Introduction to OBIntroduction to OB

2.2. Course mechanicsCourse mechanics

2. Overview of topics 2. Overview of topics

When organizations do well or When organizations do well or poorly, what is the poorly, what is the firstfirst

explanation that comes to mind?explanation that comes to mind?– The CEO did it!The CEO did it!

– Beware of attribution bias!Beware of attribution bias!

• The tendency to attribute causation/agency to the individual rather than The tendency to attribute causation/agency to the individual rather than the situationthe situation

Organizational behavior teaches that the effectiveness of people in Organizational behavior teaches that the effectiveness of people in organizations depends on their situation-specific relationships with organizations depends on their situation-specific relationships with

one another one another

What is Organizational Behavior?What is Organizational Behavior?

• The study of (general/people) managementThe study of (general/people) management

• More precisely: More precisely:

– The study of the behavior and attitudes of The study of the behavior and attitudes of individuals and groups in organizations (micro OB)individuals and groups in organizations (micro OB)

– The study of the structure, culture, and leadership of The study of the structure, culture, and leadership of organizations in relation to their tasks and their organizations in relation to their tasks and their environments (macro OB)environments (macro OB)

OB draws on all of social & OB draws on all of social & behavioral sciencebehavioral science

• PsychologyPsychology

• SociologySociology

• EconomicsEconomics

• Political SciencePolitical Science

• AnthropologyAnthropology

• HistoryHistory

Even some engineering now and then…Even some engineering now and then…

Some OB journals Some OB journals • Practitioner-oriented:Practitioner-oriented:

– Academy of Management ExecutiveAcademy of Management Executive– Business HorizonsBusiness Horizons– California Management ReviewCalifornia Management Review– Harvard Business ReviewHarvard Business Review– Sloan Management ReviewSloan Management Review

• Scholar-oriented:Scholar-oriented:– Academy of Management JournalAcademy of Management Journal– Administrative Science QuarterlyAdministrative Science Quarterly– Journal of Applied PsychologyJournal of Applied Psychology– Organizational Behavior and Human Decision ProcessesOrganizational Behavior and Human Decision Processes– Organization ScienceOrganization Science– Strategic Management JournalStrategic Management Journal

Some OB GurusSome OB Gurus• Warren BennisWarren Bennis• Peter DruckerPeter Drucker• Michael HammerMichael Hammer• Rosabeth KanterRosabeth Kanter• Henry MintzbergHenry Mintzberg• Tom PetersTom Peters• Jeffrey PfefferJeffrey Pfeffer

Research methods in OB run the Research methods in OB run the social science gamutsocial science gamut

– Experiments (both lab and field)Experiments (both lab and field)

– SurveysSurveys

– EthnographyEthnography

– Archival ResearchArchival Research

How does OB differ from HR? How does OB differ from HR?

• OB is a line, not a specialized staff, responsibilityOB is a line, not a specialized staff, responsibility– Much OB management is CEO-level Much OB management is CEO-level

• Vision and cultureVision and culture

• Re-orgsRe-orgs

• OB is about principles, policies, & strategiesOB is about principles, policies, & strategies– HR is about tools and implementationHR is about tools and implementation

Why should business students study Why should business students study OB? OB?

• ManagersManagers– How to organize and motivate your employeesHow to organize and motivate your employees– How to initiate and manage changeHow to initiate and manage change

• EntrepreneursEntrepreneurs– You have the big idea, you have the venture You have the big idea, you have the venture

capital lined up. How do you organize and capital lined up. How do you organize and motivate your team? motivate your team?

Why should business students Why should business students study OB? study OB?

• ConsultantsConsultants– problem-solving toolproblem-solving tool– useful for case interviewsuseful for case interviews

• InvestorsInvestors– will that merger work?will that merger work?– will that reorganization actually add will that reorganization actually add

shareholder value? shareholder value? – is that CEO as competent as s/he thinks s/he is? is that CEO as competent as s/he thinks s/he is?

Why should business students study Why should business students study OB? OB?

• Issues critical to managing your career:Issues critical to managing your career:– understanding culture and person-job fitunderstanding culture and person-job fit– gaining in power and influencegaining in power and influence– implementing your ideasimplementing your ideas

Some criticisms of OBSome criticisms of OB

• Isn’t it obvious or common-sensical?Isn’t it obvious or common-sensical?

– Many things are “obvious” after-the-fact. Example:Many things are “obvious” after-the-fact. Example:

• The best form of organization is flat, flexible, & empowering The best form of organization is flat, flexible, & empowering

• The best form of organization depends on the context The best form of organization depends on the context (e.g., tasks, people, competition, technology, etc.) (e.g., tasks, people, competition, technology, etc.)

Beware of hindsight bias!Beware of hindsight bias!

• Isn’t it obvious or common-sensical?Isn’t it obvious or common-sensical?

– Many things are “obvious” after-the-fact. Example:Many things are “obvious” after-the-fact. Example:

• The best form of organization is flat, flexible, & empowering The best form of organization is flat, flexible, & empowering

• The best form of organization depends on the context The best form of organization depends on the context (e.g., tasks, people, competition, technology, etc.) (e.g., tasks, people, competition, technology, etc.)

Beware of hindsight bias!Beware of hindsight bias!

Other criticismsOther criticisms• OB might be important, but it’s an art, not a science OB might be important, but it’s an art, not a science

– i.e., can’t be systematically analyzed or taughti.e., can’t be systematically analyzed or taught

• Can only be learned by doing Can only be learned by doing

– Maybe it’s religion…Maybe it’s religion…

• There is an element of preaching in OB There is an element of preaching in OB

– Tom Peters as bible-thumping evangelistTom Peters as bible-thumping evangelist

• OB may be important for OB may be important for maintainingmaintaining an organization, but it is not an organization, but it is not strategicstrategic

• OB might be important, but it’s an art, not a science OB might be important, but it’s an art, not a science

– i.e., can’t be systematically analyzed or taughti.e., can’t be systematically analyzed or taught

• Can only be learned by doing Can only be learned by doing

– Maybe it’s religion…Maybe it’s religion…

• There is an element of preaching in OB There is an element of preaching in OB

– Tom Peters as bible-thumping evangelistTom Peters as bible-thumping evangelist

• OB may be important for OB may be important for maintainingmaintaining an organization, but it is not an organization, but it is not strategicstrategic

OB OB isis strategic strategic

OB and HR are OB and HR are key to the development of key to the development of critical & hard-to-imitate capabilitiescritical & hard-to-imitate capabilities

• Capabilities are a company’s proficiencies in the business processes that allow it to distinguish itself continually in ways that are important to its customers.

– Critical CapabilitiesCritical Capabilities are capabilities that provide the are capabilities that provide the company with sustainable competitive advantage. company with sustainable competitive advantage.

• Clear vision and strong culturesClear vision and strong cultures• Motivated peopleMotivated people• Effective teams and networksEffective teams and networks

• Studies of IPOs among 200+ firms showed that Studies of IPOs among 200+ firms showed that people-centered practices were associated with people-centered practices were associated with faster time to IPO and higher survival rates.faster time to IPO and higher survival rates.

• A worldwide study of the automobile industry showed A worldwide study of the automobile industry showed that innovative people management methods were that innovative people management methods were associated with almost twice the productivity and quality associated with almost twice the productivity and quality as conventional mass production. Similar studies in steel, as conventional mass production. Similar studies in steel, apparel, semiconductors, and oil refining industries reveal apparel, semiconductors, and oil refining industries reveal similar positive effects.similar positive effects.

There is abundant evidence that people There is abundant evidence that people management is key to management is key to

competitive strategy and successcompetitive strategy and success

• A study of 105,000 employees across 2,500A study of 105,000 employees across 2,500 business units by the Gallup Organization found business units by the Gallup Organization found that happier employees were associated withthat happier employees were associated with higher levels of profit, productivity, retention,higher levels of profit, productivity, retention, and customer satisfaction.and customer satisfaction.

• Watson, Wyatt, an HR consulting firm, concluded Watson, Wyatt, an HR consulting firm, concluded that “Companies that link employee developmentthat “Companies that link employee development to business strategy have 40% higher total share-to business strategy have 40% higher total share- holder returns than companies that do not.”holder returns than companies that do not.”

• Studies have shown that a one standard Studies have shown that a one standard deviation improvement in OB and HR managementdeviation improvement in OB and HR management practices produces increases of $20,000-$40,000 practices produces increases of $20,000-$40,000 in stock market value in stock market value per employeeper employee..

• A Bain study showed that brokerage firms thatA Bain study showed that brokerage firms that increased broker retention by 10% increased increased broker retention by 10% increased broker value by 155%. Studies in trucking, retail,broker value by 155%. Studies in trucking, retail, and hospitality have found similar results.and hospitality have found similar results.

“ “All organizations now routinely say, All organizations now routinely say, ‘ ‘People are our greatest asset.’ Yet fewPeople are our greatest asset.’ Yet few practice what they preach, let alone trulypractice what they preach, let alone truly believe it…”believe it…”

Peter Drucker (1992)Peter Drucker (1992)

    ““You got a problem with the You got a problem with the

guy in the cubicle next to you? guy in the cubicle next to you? I don’t care; shoot him”I don’t care; shoot him”

Marc Andreessen, Marc Andreessen, Co-founder of Co-founder of NetscapeNetscape

Marc Andreessen, Marc Andreessen, Co-founder of Co-founder of NetscapeNetscape

““In the new economy, competition isIn the new economy, competition isglobal, capital is abundant, ideas areglobal, capital is abundant, ideas aredeveloped quickly and cheaply, anddeveloped quickly and cheaply, andpeople are willing to change jobs often.people are willing to change jobs often.In that kind of environment…all thatIn that kind of environment…all thatmatters is talent…superior talent willmatters is talent…superior talent willbe tomorrow’s prime source of be tomorrow’s prime source of competitive advantage.” competitive advantage.”

E. Chambers et al. (1998). E. Chambers et al. (1998). ““The War for Talent.”The War for Talent.”The McKinsey Quarterly, The McKinsey Quarterly, 2-15.2-15.

The problem, then, is how to get, The problem, then, is how to get, keep, and utilize talented peoplekeep, and utilize talented people

• It is not just a question of payIt is not just a question of pay

• Even talented people must be Even talented people must be organized and motivated organized and motivated

“While analysts on Wall Street or GE's own investors view Welch's likely legacy as creating the world's most valuable company in stock market terms, Welch himself sees things quite differently. The man who spends more than 50% of his time on people issues considers his greatest achievement the care and feeding of talent. ''This place runs by its great people,'' says Welch. ''The biggest accomplishment I've had is to find great people. An army of them. They are all better than most CEOs. They are big hitters, and they seem to thrive here.''

He believes he has to know people well enough to trust them and their judgments. ''I don't know how to build an aircraft engine,'' he says. ''I don't know what should run on NBC at 9 p.m. on Thursday nights. We're in the cat-and-dog insurance business in England. I don't really want to be in that business, but the guy who brought me that idea wanted to be in it, and I trust him. He'll take it and make it work.''

Welch knows by sight the names and responsibilities of at least the top 1,000 people at GE. ''He knows their names. He knows what they do. That's an incredible reinforcement to the individual that he or she counts,'' says Dunham of GE's Medical Systems business.”

“While analysts on Wall Street or GE's own investors view Welch's likely legacy as creating the world's most valuable company in stock market terms, Welch himself sees things quite differently. The man who spends more than 50% of his time on people issues considers his greatest achievement the care and feeding of talent. ''This place runs by its great people,'' says Welch. ''The biggest accomplishment I've had is to find great people. An army of them. They are all better than most CEOs. They are big hitters, and they seem to thrive here.''

He believes he has to know people well enough to trust them and their judgments. ''I don't know how to build an aircraft engine,'' he says. ''I don't know what should run on NBC at 9 p.m. on Thursday nights. We're in the cat-and-dog insurance business in England. I don't really want to be in that business, but the guy who brought me that idea wanted to be in it, and I trust him. He'll take it and make it work.''

Welch knows by sight the names and responsibilities of at least the top 1,000 people at GE. ''He knows their names. He knows what they do. That's an incredible reinforcement to the individual that he or she counts,'' says Dunham of GE's Medical Systems business.” “How Jack Welch runs GE.”

Business Week, May 29, 1998.

“How Jack Welch runs GE.” Business Week, May 29, 1998.

Jack Welch as hands-on manager of talentJack Welch as hands-on manager of talent

And some organizations get excellent And some organizations get excellent results with merely “OK” peopleresults with merely “OK” people

See C. A. O'Reilly III and J. Pfeffer: See C. A. O'Reilly III and J. Pfeffer: Hidden Value: How Great Companies Hidden Value: How Great Companies Achieve Extraordinary Results With Achieve Extraordinary Results With Ordinary PeopleOrdinary People. . Harvard Business School Press, 2000.Harvard Business School Press, 2000.

See C. A. O'Reilly III and J. Pfeffer: See C. A. O'Reilly III and J. Pfeffer: Hidden Value: How Great Companies Hidden Value: How Great Companies Achieve Extraordinary Results With Achieve Extraordinary Results With Ordinary PeopleOrdinary People. . Harvard Business School Press, 2000.Harvard Business School Press, 2000.

Only 10% of people are in the top 10%. Great companies not only hire talent, they build it and unleash the energy and talent of all their people.

Only 10% of people are in the top 10%. Great companies not only hire talent, they build it and unleash the energy and talent of all their people.

Course Mechanics…Course Mechanics…

Course Website

• SyllabusSyllabus

• Supplementary readings Supplementary readings

• Useful linksUseful links

• Course announcementsCourse announcements

• Powerpoints posted Powerpoints posted afterafter lecture lecture

• Sample papers & examsSample papers & exams

Class meetingsClass meetings

• Tuesday: Tuesday: – Introduce a new topic Introduce a new topic – Lecture/discussion Lecture/discussion

• ThursdayThursday– Class businessClass business– Review of lecture and readingsReview of lecture and readings– Case analysisCase analysis– Team project discussionsTeam project discussions

ReadingsReadings

• Course reader available in F371 Haas.Course reader available in F371 Haas.

• Other readings handed out, placed on reserve Other readings handed out, placed on reserve in the Long Library, or posted on the website in the Long Library, or posted on the website – Readings on the syllabus are required. Other Readings on the syllabus are required. Other

readings are recommended unless otherwise readings are recommended unless otherwise indicated indicated

• Cases and readings must be prepared prior to Cases and readings must be prepared prior to the class in which they are discussedthe class in which they are discussed

Course RequirementsCourse Requirements• Class participation (15%)Class participation (15%)

– In-class discussions, particularly of casesIn-class discussions, particularly of cases– Oral presentation on team projectsOral presentation on team projects– Team member ratingsTeam member ratings

• A take-home midterm and final exam (50%)A take-home midterm and final exam (50%)– Each will be a written case analysisEach will be a written case analysis– One or more objective (true-false/multiple choice) exams One or more objective (true-false/multiple choice) exams

• Team project (30%)Team project (30%) – You will be assigned to teams of 4-5 persons eachYou will be assigned to teams of 4-5 persons each– You will study OB problems/issues in a real organization You will study OB problems/issues in a real organization – Oral presentation and paper (12-15 pages)Oral presentation and paper (12-15 pages)

• In general, all members will receive the same gradeIn general, all members will receive the same grade

• Participation in research experiments (5%)Participation in research experiments (5%)

Course overview….Course overview….

A focus on problem-solvingA focus on problem-solving

• You will learn to diagnose organizational You will learn to diagnose organizational problems, and design and implement problems, and design and implement solutions solutions

• The congruence model as a frameworkThe congruence model as a framework– organizations as unified systems: strategy, organizations as unified systems: strategy,

tasks, people, formal structure, informal tasks, people, formal structure, informal structure, etc., must all fit togetherstructure, etc., must all fit together

Critical issuesCritical issues• Best practices in organizational designBest practices in organizational design

– how to know if that reorg makes sensehow to know if that reorg makes sense

• How to design and lead teams that perform well How to design and lead teams that perform well and and avoid the pitfalls of teamworkavoid the pitfalls of teamwork

• What is leadership and how should you do it? What is leadership and how should you do it? – so you have a brilliant idea-how do you get people to follow you? so you have a brilliant idea-how do you get people to follow you?

• How to analyze and change organizational cultureHow to analyze and change organizational culture

More critical issuesMore critical issues

• How to design jobs and incentive systems that motivate How to design jobs and incentive systems that motivate employeesemployees– Clue: “just pay them more” is not enough.Clue: “just pay them more” is not enough.

• How to maximize your own power and efficacyHow to maximize your own power and efficacy– Building and managing through networks Building and managing through networks – Getting power and using itGetting power and using it

• Leveraging diversity at home and abroad for competitive Leveraging diversity at home and abroad for competitive advantageadvantage

Schedule of topicsSchedule of topics

• Part 1: Introduction (1 week)Part 1: Introduction (1 week)– an introduction to course themesan introduction to course themes– the congruence modelthe congruence model

• Part 2: The hard stuff: formal structure (3 weeks)Part 2: The hard stuff: formal structure (3 weeks)– Traditional designs, modern designs, teamsTraditional designs, modern designs, teams

• Part 3: The soft stuff: the informal organization (2 weeks)Part 3: The soft stuff: the informal organization (2 weeks)– Leadership and culture Leadership and culture

Course overviewCourse overview

• Part 4: The micro side: Motivation, incentives, and Part 4: The micro side: Motivation, incentives, and decision-making (3 weeks)decision-making (3 weeks)

• Part 5: More informal organization: Politics and Part 5: More informal organization: Politics and networks (2 weeks)networks (2 weeks)

• Part 6: Managing diversity at home and Part 6: Managing diversity at home and abroad (2 weeks)abroad (2 weeks)

Other course businessOther course business

• Enrollment: handout availableEnrollment: handout available• Arrival and attendanceArrival and attendance• Face cards and name tentsFace cards and name tents• Seating: please pick a seat you love and stay there!Seating: please pick a seat you love and stay there!• GSI/Readers: Jennifer and NydiaGSI/Readers: Jennifer and Nydia• Class reps• EmailEmail

Thursday sessionThursday session

• Introduction to discussion sectionIntroduction to discussion section• Prepare to discuss:Prepare to discuss:

– What general managers doWhat general managers do• Read Kotter articleRead Kotter article

– The congruence model as a framework for The congruence model as a framework for organizational problem-solvingorganizational problem-solving

• Read Nadler and Tushman chapterRead Nadler and Tushman chapter