Organizational Behavior and Leadership MBA 552 Organizational Behavior and Leadership

Introduction to the Field of Organizational Behavior

Organizational behavior (OB) The study of what people think, feel, and do in and around organizations.

Values Stable, long-lasting beliefs about what is important in a variety of situations

What are Organizations? Groups of people who work interdependently toward some purpose Structured patterns of interaction Coordinated tasks Work toward some purpose © N. B. Scott

Why Study Organizational Behavior Understand organizational events Organizational Behavior Research Influence organizational events Predict organizational events

Organizational culture The basic pattern of shared assumptions, values, and beliefs governing the way employees within an organization think about and act on problems and opportunities

Trends: Information Technology Affects how employees interact Virtual teams Telecommuting Affects how organizations are configured Network structures -- alliance of several organizations

Trends: Globalization Global companies: Extend their activities to other parts of the world actively participate in other markets compete against firms in other countries

Trends: Globalization Implications of globalization: New organizational structures Different forms of communication More competition, change, mergers, downsizing, stress Need more sensitivity to cultural differences

Network structure An alliance of several organizations for the purpose of creating a product or serving a client

Virtual teams Cross-functional groups that operate across space, time, and organizational boundaries with members who communicate mainly through information technologies

Contingent work Any job in which the individual does not have an explicit or implicit contract for long-term employment, or one in which the minimum hours of work can vary in a nonsystematic way.

Trends: Employment Relationship Employability employees perform many tasks, not a specific job Contingent work no explicit or implicit contract for long-term employment Telecommuting working from home, usually with a computer connection to the office Virtual teams operate across space, time, and organizational boundaries; mainly communicate through electronic technologies

Trends: Changing Workforce Primary and secondary diversity More women in workforce and professions Different needs of Gen-X, Gen-Y, and baby-boomers Diversity has advantages, but firms need to adjust through: cultural awareness family-friendly empowerment

Primary Dimensions of Diversity Ethnicity Race Mental/Physical Qualities Age Gender Sexual Orientation

Secondary Dimensions of Diversity First Language Life Experiences Geographic Location Behavioral Style Education Income Work Experience Work Style Parental Status Marital Status Occupation Religion

More women in workforce and professions Women represent 50% of the paid workforce. Women represent 50% of professional accountants Women represent 43% of medical school enrollment Women represent 4% of the leadership of corporations

Different needs of Gen-X, Gen-Y, and baby-boomers Baby-boomers born 1946-1964 desire job security and are workaholics Gen-X born 1964-1977 less loyal seek and expect less security Gen-Y born 1978 – 88? Expect plenty of responsibility and involvement in the employment relationship. Different generations bring different values and expectations

Trends: Values and Ethics Stable, long-lasting beliefs about what is important personal, cultural, organizational, professional Importance of values Globalization -- more awareness of different values Values replacing command-and-control More emphasis on ethical business conduct Ethics Moral principles/values -- determines whether actions are right/wrong and outcomes are good/bad

Organizational Behavior Anchors Multidisciplinary anchor Organizational Behavior Anchors Open systems anchor Systematic research anchor Multiple levels of analysis anchor Contingency anchor

Multidisciplinary Anchor Psychology – Motivation, perception, attitudes, personality, job stress, leadership Sociology- Team Dynamics, roles, socialization, communication patterns, organizational power Anthropology- Corporate culture, organizational rituals, cross-cultural dynamics Political Science- Inter-group conflict, coalition formation, power and politics, decision-making Economics- Decision-making, negotiation, power

Multidisciplinary Anchor Industrial engineering- job design, productivity, work measurement Communications- Knowledge management, electronic mail, corporate culture, employee socialization Information systems- Team dynamics, decision-making, knowledge management Marketing- Knowledge management, creativity, decision-making Women’s studies- Organizational power, perceptions

Systematic Research Anchor Systematic collection of data about organizational principles and practices

Scientific method A systematic, controlled, empirical, and critical investigation of hypothetical propositions about the presumed relationships among natural phenomena

Contingency Anchor It depends ------ on the situation Selection of the best strategy depends on the conditions under which a decision must be made.

Contingency approach The idea that a particular action may have different consequences in different situations

Multiple Levels of Analysis Anchor Individual Level - includes the characteristics and behaviors of employees including thought processes such as motivation, perception, personalities, attitudes, and values.

Multiple Levels of Analysis Anchor Team Level – considers interaction of people, teams dynamics, decisions, power, organizational politics, conflict, and leadership. Organizational Level- focuses on how people structure working relationships and how organizations interact with their environment

Open Systems Anchor Organizations that take their sustenance from the environment and, in turn, affect that environment through their output

Open Systems Anchor of OB Feedback Feedback Subsystem Inputs Outputs Organization

Stakeholders Shareholders, customers, suppliers, governments, and any other groups with a vested interest in the organization. They influence the firm’s access to inputs and ability to discharge outputs.

Knowledge Management Defined Any structured activity that improves an organization’s capacity to acquire, share, and use knowledge for its survival and success

Intellectual capital The sum of an organization’s human capital, structural capital, and relationship capital

Intellectual Capital Human capital Knowledge that employees possess and generate Structural capital Knowledge captured in systems and structures Relationship capital Value derived from satisfied customers, reliable suppliers, and others

Knowledge Management Processes Knowledge acquisition Grafting Learning Experimentation Knowledge sharing Communication Communities of practice Knowledge use Awareness Freedom to apply knowledge

Grafting The process of acquiring knowledge by hiring individuals or buying entire companies

Organizational Memory The storage and preservation of intellectual capital Retain intellectual capital by: Keeping knowledgeable employees Transferring knowledge to others Transferring human capital to structural capital

Fully describe intellectual capital, and explain how an organization can retain this capital Intellectual capital is the sum of an organization's human capital, organizational capital, and relationship capital. Human capital refers to the knowledge that employees possess and generate. Structural capital is the knowledge captured and retained in an organization's systems and structures. Relationship capital is the value derived from satisfied customers, reliable suppliers, and other external sources that provide added value.

Intellectual capital retention continued Retaining intellectual capital refers to retaining organizational memory. This includes keeping good employees and systematically transferring their human capital into structural capital when they must leave. It also includes documentation -- bringing out hidden knowledge, organizing it, and putting it in a form that can be available to others. It also includes embedding knowledge in the organization’s systems and structures.

Communities of practice: Informal groups bound together by shared expertise and passion for a particular activity or interest.

Organization Culture Defining culture Does it matter? Describing culture Acquiring culture Changing culture

Defining Culture What is it? Characteristics: “...the shared patterns of thought, belief, feelings, and values that result from shared experience and common learning” “system of shared meaning” “The social glue that holds the organization together” Characteristics: Holistic Historically determined Socially constructed (perceptions) Soft Difficult to change

Climate vs. Culture Climate = actual events Culture = individuals’ perception of events

Does It Matter? Enhances group members’ ability to adapt and survive Reduces uncertainty about what to do and how to do it (and thus, reduces anxiety) Provides sense of mission Strong or widely-held culture may lead to high performance (jury’s out on this one)

Single or Multiple Cultures ? Multiple cultures may be a sign of conflict Mergers Top-down attempts to “manage” culture Subcultures (core culture + adaptations) Countercultures Conflict -- example here is the UP purchase of Oak Ridge -- big corporate meets small town family (the bone marrow transplant); also, “Howie Makem” from Rivethead Subcultures - often by occupational groups Countercultures -- can be a source of change (DeLorean’s attempt to change culture at GM)

What is Included? Common language and conceptual categories Group boundaries and criteria for inclusion and exclusion Power and status Intimacy, friendship, and love Rewards and punishments: what is rewarded and punished, as well as what rewards and punishments are Ideology and “religion”: that is, how to manage the unmanageable and explain the unexplainable

Recognizing Culture Events: Communications Things Rites Ceremonials Rituals Communications Myths Sagas Legends Stories Folktales Things Symbols Language Gestures Physical setting Artifacts Really minor distinctions among these Rites: planned sets of activities involving several forms of cultural expressions (initiation) Ceremonials: several rites, connected with a single occasion or event (Mary Kay convention) Rituals: standardized set of techniques and behaviors (“doubling up”) Myth: dramatic narrative of imaginary events used to explain origins or transformations (i.e., reactions to crises) Saga: a historical narrative about the accomplishments of a group and its leaders Legend: a handed down narrative of an historical event, embellished with fictional details (IBM and the name badge) Story: a narrative based on true events, which may incorporate fiction (The GM refrigerator) Folktale: a completely fictional narrative Symbol: any object, act, event, quality, or relation which serves a s a vehicle to convey meaning Language: the use of language and words to convey meaning Gesture: the use of body movements to convey meaning Physical setting: physical surroundings such as offices, buildings, etc. Artifact: material objects used to facilitate culturally expressive activities

Layers of Culture Practices Symbols Rituals Heroes Values The layers move from more to less visible/tangible. Symbols are “words, gestures, or objects that carry a particular meaning within a culture”. Heroes are “persons, alive or dead, real or imaginary, who possess characteristics highly prized in the culture and who thus serve as models for behavior”. Rituals are “collective activities that are technically superfluous but are socially essential within a culture—they are therefore carried out foe their own sake”. Values are not visible; they are “broad, non-specific feelings of good and evil, beautiful and ugly, normal and abnormal, rational and irrational—feelings that are often unconscious and rarely discussable, that cannot be observed as such but are manifested in alternatives of behavior”.

Cultural Dimensions (Hofstede) Process vs. results Employee vs. job Parochial vs. professional Open vs. closed Loose vs. tight Normative vs. pragmatic Process-oriented vs. results-oriented •Means vs. goals •Process-orientation associated with manufacturing and office units; results-orientation associated with R & D and service units Employee-oriented vs. job-oriented •Concern for people vs. concern for getting the job done •Job-oriented units evaluated on profits; people oriented units evaluated on performance against budget •Total capital higher in employee-oriented organizations Parochial vs. professional •Individuals’ identity derived from organization vs. type of job •Professional organizations more specialized Open system vs. closed system •Communications climate, inclusion of new members Loose control vs. tight control Internal structure and control Organizations with “innovative or unpredictable activities” tended to be loosely controlled; organizations with a product requiring precision or where risk is involved (banks, pharmaceutical mfg.) tend to be tightly controlled Normative vs. pragmatic •Customer orientation; normative equates to product driven, pragmatic is customer driven •Pragmatism associated with service units and competitive markets

Cultural Dimensions (another perspective) Innovation and risk-taking Attention to detail Outcome orientation People orientation Team orientation Aggressiveness Stability

Yet Another Perspective…. I. Managing change II. Achieving goals (how effective) III. Coordinated teamwork IV. Customer orientation V. Cultural strength

Sources of Culture Founders Historical events Industry National culture

Acquiring Culture Selection process Socialization of new members Rites and ceremonies Rite of passage Rite of renewal Rite of integration Rite of Passage facilitate transition of individuals into new social roles and statuses (military basic training, fraternity initiations) Rite of Enhancement enhance individual members’ social identities and increase their status (awards banquets) Rite of Renewal refurbish social structure and improve organizational functioning (teambuilding and other OD activities) Rite of Integration encourage and revive common feelings that bind individuals together and commit them to the organization.

Changing Culture Can it be changed? Should it be changed? In a new organization: The founder effect Maybe yes? Maybe no? Should it be changed? Strong culture can be a barrier to innovation, growth and change

OB in the Cross-Cultural Context Why are cross-cultural issues important? Growing impact of global business New markets Demand for global services Low cost manufacturing U.S. management practices not necessarily likely to translate to different cultures Paradox: may be easier to adjust to a very different culture than to a very similar culture

Why International Management? Important to have a global perspective Overseas suppliers or markets Low cost production Emerging markets (Eastern Europe, LDC) E-business has no borders Immigrant labor force even in U.S. Culture critical to global business, yet hardest to understand Based on unspoken values and assumptions Human behavior isn’t logical But, human behavior is very complex

Approaches to International Business Geocentric Use the best methods, no matter what the source Ethnocentric Home country methods are the best Polycentric Host country

Basic Principles of Culture What is logical and important in one culture may seem irrational and unimportant in another In describing cultures, people tend to stress the differences and overlook the similarities Stereotyping may be inevitable for people who lack frequent contact with another culture Cultures are not homogenous; differences exist due to gender, age, socioeconomic status, education Understanding another culture is a journey, not a goal

Barriers to Cross-Cultural Understanding Cultural chauvinism / corporate imperialism / ethnocentrism Stereotypes (positive and negative) The highly successful organization may find it more difficult to adapt

Cultural Values The ethical dilemma Are there common values? Basic idea of social organization, goal orientation Personality structure (Big 5) What about cultural convergence? Cultural evolution Cultural diffusion Immigration and acculturation

What Kinds of Differences Make a Difference? Some specific items: Language Religion Business practices and etiquette Different laws Different customs Culture in general

Language Issues U.S. one of few countries where we don’t learn a second (or a third) language Languages learned in school often do not translate to business usage Do you try? Not in France, not unless you can pronounce it right ! Other countries, yes: it’s a gesture of goodwill But, even if the language is the same, will we understand? (Britspeak)

Languages of The World Source:http://www.infoplease.com/

World Religions Source:http://www.infoplease.com/

Religious Issues Islam: Ramadan fasting 5 daily prayers (15 minutes or so), even at work Modest dress for women (including head scarf) Friday, not Sunday (noon prayers on Fridays)

Legal Issues Sample of Mexican employment laws Individual employment contracts required Strict limits on overtime Unionization by facility Full pay for workers while on strike Discrimination covers political doctrine and social condition

Different Country, Different Customs: Dress and Address “Casual Days” are a U.S. custom Removing one’s shoes Addressing Other People Herr und Frau, not first names in Germany Titles (Dr., Professor, “Assistant Vice President”, etc.) very important everywhere but U.S. Business cards essential in Latin America, Europe, Japan Personal space: much smaller in Latin America, Spain, Italy

Different Country, Different Customs: Time Time fluid in Latin America, Spain, Italy Time off work: Germany, France, Scandinavia: 6 weeks vacation, August in the country Africa: everyone attends funerals (impact of AIDS) Working hours and pace Europe (esp. Germany) isn’t open 24/7 Latin America, Middle East, Japan: take time to establish relationship before getting down to business

Different Country, Different Customs: Eating and Drinking Tea in Japan Coffee in Egypt Vodka in Russia A pint over lunch in the UK Dietary Restrictions: India: no beef Islamic countries: no pork or alcohol

Perceptions of Corruption Higher score = less corrupt Source: Transparency International

Economic Freedom Higher score = less freedom Source: Wall Street Journal

Cultural Dimensions: Hofstede’s Big 4 Based on survey of IBM employees worldwide The dimensions Collectivism - Individualism Power Distance Uncertainty Avoidance Masculinity / Femininity (quality of life) Weaknesses: Data 20 years old However, recent research confirms this structure

Change in Cultures Hofstede’s data indicates some shift to individualism, but no change in other dimensions Disneyland phenomenon That is, surface indicators change, but meaning does not But….the case of Hong Kong Management values in Hong Kong intermediate between PRC and U.S. Indication of flexibility / change?

Collectivism - Individualism Identification with group vs. identification as an individual Collective cultures: Think in terms of in-groups and out-groups Life decisions made by group Look after one’s in-group, no matter what Individualistic cultures Concern for self and immediate family Individual privacy Association with level of economic development

Collectivism - Individualism: Where Collective…………...……Individualistic Venezuela Pakistan Taiwan Portugal Greece Brazil India Japan Arab countries Spain Israel Austria Germany Norway France Canada Great Britain U.S.

Power Distance The extent to which a culture accepts that power is distributed unevenly High power distance People have a place in society, high or low Superiors are to be respected Less trust and cooperation Low power distance Equal rights for everyone Hierarchies are established for convenience Power can be judged to be legitimate or not

Power Distance: Where High…………………...……...……Low Philippines Mexico India Brazil Hong Kong France Turkey Pakistan Japan Argentina U.S Canada Australia Germany Sweden Ireland Denmark Israel

Uncertainty Avoidance The extent to which a society feels threatened by ambiguity and uncertainty High uncertainty avoidance Lots of policies, rules, regulations Hard work valued, time is money Acceptance of authority Conflict avoided Low uncertainty avoidance Look to common sense Tolerance, constructive conflict Aggression less accepted

Uncertainty Avoidance: Where High…………………...……...……Low Uruguay Belgium Japan France Mexico Israel Italy Austria Arab countries Germany Switzerland East Africa Canada U.S. India Great Britain Sweden Singapore

Masculinity / Femininity (Quality of Life) The extent to which society values typically “masculine” values, such as assertiveness, and acquisition of things, as opposed to caring for others and quality of life. Masculine cultures Clear gender roles; machismo Live to work Ambition, success valued Feminine cultures Sympathy for the unfortunate Work to live People are important

Masculinity / Femininity: Where High…………………...……...……Low Japan Italy Mexico Ireland U.S. Australia Hong Kong Arab countries Brazil Israel Indonesia France Spain South Korea Portugal Finland Netherlands Sweden

…Plus One Confucian Work Dynamic Based on work done in East Asia by “Chinese Cultural Connection” group Focus on: Long-term Order Thrift Persistence Respect for tradition

Different Dimensions…Same Result Company provided housing, marriage brokers, etc. in Asian countries Feminine concern for people? Taking care of the in-group? Cooperative labor negotiations Japan: collective orientation Netherlands: feminine quality of life Economic growth and development Europe: Protestant Work Ethic (Individualistic, High Power Distance, Masculine) Asia: Confucian Work Dynamic

Do National Borders = Cultural Borders? Multiple cultures Canada Belgium India Culturally homogeneous areas Scandinavia Cultural clusters

Cultural Clusters

General Expatriate Issues: The Sojourners How many are there? Nobody really knows Estimated 350,000 or more (estimate from 1996) Who are they? 87% male Managers Sales, technical, professional What happens? Estimated 25% to 50% of assignments fail Cost…$50,000 and up

Why do Expatriates Fail? Family problems (60%) Inability to adjust Lack of flexibility “Culture shock” Lack of sensitivity to host culture

Culture Shock An emotional and psychological reaction to the confusion, ambiguity, value conflicts and hidden clashes that occur as a result of fundamentally different ways of perceiving the world and interacting socially between cultures. Disequilibrium

Aspects of Adjustment Sociocultural Psychological Social skills needed to operate in different culture Psychological Well-being, satisfaction “Culture shock”

What Can Be Done? Selection procedures Organizational support: before, during, and after assignment Training Few U.S. firms train expatriates (30%) Most European / Asian firms do Different success rates clearly establish value of training

Training for Expatriates Knowledge-based Language Cultural differences Cultural sensitivity General Specific Include spouse and, if possible, family members

Other Support Mechanisms Mentor or buddy systems Trips home Assistance with schooling and other family needs Housing / cost of living differentials Security Safe housing Guards, kidnapping insurance, etc.