Chapter One
An Overview of Organizational Behavior
Chapter Overview ……………………………………………………………………………………………. 1
Learning Outcomes …………………………………………………………………………………………. 2
Real-World Challenge: Managing Growth at Google …………………………………………. 2
Chapter Outline ………………………………………………………………………………………………. 3
I. WHAT IS ORGANIZATIONAL BEHAVIOR? ……………………………………………….. 3
II. THE MANAGERIAL CONTEXT OF ORGANIZATIONAL BEHAVIOR …………. 5
Chapter Overview
Managers strive to make their organizations as effective and successful as possible. To do this, they rely
on assets such as financial reserves and earnings, technology and equipment, raw materials, information,
and operating systems and processes. At the center of everything are the employees who work for the
products. No matter how effective a manager might be, all organizational successes—and failures—are
the result of the behaviors of many people. Indeed, no manager can succeed without the assistance of
others.
This book is about those people. It is also about the organization itself and the managers who operate it.
Together, the study of organizations and the study of the people who work in them constitute the field of
organizational behavior. Our starting point in exploring this field begins with a more detailed discussion
of its meaning and its importance to employees, business owners, and managers.
Learning Outcomes
After studying this chapter, students should be able to:
1. Define organizational behavior and describe how it impacts both personal and organizational
success.
2. Identify the basic management functions and essential skills that comprise the management
Real-World Challenge: Managing Growth at Google
Summary: Google’s popular search engine was created in 1998 with the goal of making the world’s
information available to everyone. Google’s explosive growth needed to be closely monitored, and its
employees needed to continue feeling like an important part of the team. The founders wanted to make
Google an engaging place to work and set out to design the organization and its culture in a way that
would appeal to its current and future employees.
the fast growing company. The founders believed that people thrive in and are loyal to their jobs when
they feel fully supported and authentically valued. This understanding led to the development of a culture
anchored by trust, transparency, and inclusion.
Google is now known for offering its employees a wide variety of perks. Google regularly surveys
employees about their managers, using the information to publicly recognize the best ones and give the
Chapter Outline
I. WHAT IS ORGANIZATIONAL BEHAVIOR?
A. The Meaning of Organizational Behavior
Organizational behavior (OB) is the study of human behavior in organizational settings, the
B. How Organizational Behavior Impacts Personal Success
The core of OB is being effective at work. Since most people reading this book are either
C. How Organizational Behavior Impacts Organizational Success
Organizations as a whole also benefit from OB.
Case Study: The J.M. Smucker Company
Summary: From its founding in 1897, the J.M. Smucker Company recognizes that acting ethically is a
key element of its success. The manufacturer wants to ensure that its fruit spreads, frostings, juices, and
beverages remain American staples and that its daily operations are guided by honesty, respect, trust,
responsibility, and fairness.
1. Why would ethics be important to a company like J.M. Smucker? How can its focus on values
and ethics improve its business performance?
Acting ethically is a key element of the company’s success. The benefits to the company include
2. Appearing on “best places to work” lists can increase an employer’s popularity, even among
lower-qualified applicants. The increased volume of applicants can be costly and time-
consuming. What do you feel are the benefits and drawbacks to being on this type of list? Do you
feel that it is generally beneficial to be publicly recognized as a good employer? Why or why not?
The benefits include employee pride in working for an organization known for its high ethical
3. Do J.M. Smucker’s values and culture appeal to you as a potential employee? Why or why not?
II. THE MANAGERIAL CONTEXT OF ORGANIZATIONAL BEHAVIOR
The managerial context of OB can be viewed from the perspective of basic management functions, critical
management skills, and overall human resource management.
A. Basic Management Functions and Organizational Behavior
In characterizing managerial work, most experts find it useful to conceptualize the activities
performed by managers as reflecting one or more of four basic functions.
1. Planning is the process of determining an organization’s desired future position and the
best means of getting there.
B. Critical Management Skills and Organizational Behavior
In general, most successful managers have a strong combination of technical, interpersonal,
conceptual, and diagnostic skills.
C. Organizational Behavior and Human Resource Management
Human resource management (HRM) is the set of organizational activities directed at
attracting, developing, and maintaining an effective workforce.
motivate and retain employees, and create programs for training and developing employees.
III. THE STRATEGIC CONTEXT OF ORGANIZATIONAL BEHAVIOR
Competitive advantage is anything that gives a firm an edge over rivals in attracting customers and
defending itself against competition.
A. Sources of Competitive Advantage
There are many sources of competitive advantage, including having the best-made or cheapest
product, providing the best customer service, being more convenient to buy from, having
shorter product development times, and having a well-known brand name.
organization’s talent is the key to securing each of these.
B. Types of Business Strategies
A company may create value based on price, technological leadership, customer service, or
some combination of these and other factors.
Business strategies are partially planned and partially reactive to changing circumstances.
Companies may also pursue more than one strategy at a particular time.
Three primary business strategies are:
3. Specialization
1. Cost leadership strategy strives to be the lowest-cost producer for a particular level of
product quality. Walmart is a good example of a firm that uses a cost leadership strategy.
2. Differentiation strategy develops a product or service that has unique characteristics valued
by customers.
3. Specialization strategy focuses on a narrow market segment or niche and pursues either a
differentiation or cost leadership strategy within that market segment.
4. Growth strategy occurs when companies expand organically or through acquisitions.
C. Integrating Business Strategy and Organizational Behavior
There are a number of significant linkages that connect business strategy and OB.
For instance, a firm that relies on a cost leadership strategy will usually need to keep all of its
expenses as low as possible. Therefore, this strategy might dictate relying on low-wage
employees and trying to automate as many jobs as possible. These actions, in turn, clearly relate
to employee motivation and the design of work.
A specialization strategy often requires employees with specialized skills and abilities.
Effective managers understand what needs to be done to execute a company’s business
IV. CONTEXTUAL PERSPECTIVES ON ORGANIZATIONAL BEHAVIOR
A. What Are the Origins of Organizational Behavior?
Formal study of OB began in the 1890s, following the industrial relations movement spawned
The four principles of Taylor’s scientific management are:
1. Replace rule-of-thumb work methods with methods based on scientifically studying the
Although scientific management improved productivity, it also increased the monotony of
work.
After World War I, attention shifted to understanding the role of human factors and psychology
B. Organizations as Open Systems
A system is an interrelated set of elements that function as a whole. The framework for systems
study consists of inputs, transformation, outputs, and feedback.
C. Situational Perspectives on Organizational Behavior
Another useful viewpoint for understanding behavior in organizations comes from the
situational perspective, which suggests that in most organizations, situations and outcomes are
D. Interactionalism: People and Situations
Interactionalism suggests that individuals and situations interact continuously to determine
various situations.
V. MANAGING FOR EFFECTIVENESS
Essentially, managers and leaders generally try to direct the behaviors of people in their
organizations in ways that promote organizational effectiveness.
A. Enhancing Individual and Team Performance Behaviors
Several individual behaviors result from a person’s participation in an organization.
B. Enhancing Employee Commitment and Engagement
Levels of job satisfaction or dissatisfaction, organizational commitment, and employee
engagement all play an important role in OB.
C. Promoting Organizational Citizenship Behaviors
Organizational citizenship is the behavior of individuals that makes a positive overall
contribution to the organization.
D. Minimizing Dysfunctional Behaviors
Some work-related behaviors are dysfunctional in nature.
Dysfunctional behaviors are those that detract from, rather than contribute to, organizational
performance.
E. Driving Strategic Execution
Finally, another set of outcome variables exists at the organizational level. These outcomes
usually relate to strategic execution—how well managers and their employees understand and
F. How Do We Know What We Know?
Another important part of being an effective manager is understanding the quality of the
information you use to make decisions. Not all information is accurate! Accordingly, it is
important for you to understand the processes that have been used to establish our knowledge
about OB, and why we know what we know.
1. Intuition
Decades of research have both reinforced some of the things many people intuitively
2. The Scientific Method
Rather than relying on experience or intuition, or just assuming that ideas are correct
because they seem to make sense, the scientific method relies on systematic studies that
identify and replicate a result using a variety of methods, samples, and settings. Sir Francis
Bacon developed the scientific method in the 1600s.
3. Global Replication
Assuming that everyone in the world shares the same values, norms, and expectations about
work is incorrect. National boundaries no longer limit many organizations, and many U.S.
companies employ people from around the world.
Global Issues Feature: Managing across Cultures
Summary: Effective management requires flexibility and an appreciation that expectations and values
differ. The U.S. workforce is expected to become more diverse. The more comfortable students are in
VI. THE FRAMEWORK OF THE BOOK
Figure 1.7 presents the framework around which our book is organized.
Summary and Application
OB is the study of human behavior in organizational settings, the interface between human behavior and
the organization, and the organization itself. The study of OB is important because organizations have a
powerful influence on our lives, and it directly relates to management in organizations.
Why is it that some people rise in organizations despite being only average accountants, marketers,
researchers, and so on? Often the answer is that those people know how to interact effectively with other
Discussion Questions
1. What do you think are the most important things a manager does? Is how a manager does these
things also important? Why or why not?
The ability to understand what people think and feel, knowing how to persuade and motivate others,
2. Some people have suggested that understanding human behavior at work is the single most
important requirement for managerial success. Do you agree or disagree with this statement?
Why?
To some degree, students’ responses may depend on their major field of study, especially if it is not
3. The chapter identifies four basic managerial functions. Based on your own experiences and
observations, provide an example of each function.
4. Why will learning about OB help you to get a better job and a better career and be a better
manager?
OB provides a foundation for the effective management of people in organizations. Because it
5. Some people believe that individuals working in an organization have basic human rights to
satisfaction with their work and to the opportunity to grow and develop. How would you defend
this position? How would you argue against it?
In defense of this position, it may be argued that organizations have a responsibility to society to
6. Think of something that you believe leads to employee productivity based on intuition that may
not prove to be true if tested systematically. Now apply the scientific method and describe how
you might test your theory.
Paying for increased production seems intuitively to lead to increased productivity. In fact, workers
Understand Yourself Exercise—Global Mindset
1. Do you think that your score accurately reflects your global mindset? Why or why not? What,
if anything, is missing from the assessment?
Student answers will vary. The assessment relies on students’ abilities to accurately assess
2. How do you think that having a higher global mindset will help you to be a better manager and
leader? How can this characteristic help you succeed in your career?
3. What might you do in the next year to increase your global mindset? Identify and discuss three
specific behaviors, activities, or other things that increase your global mindset.
The self-assessment offers a number of viable free and inexpensive suggestions. The central element
exposure to new cultural and linguistic experiences will help students increase their global mindset.
Group Exercise—Managing A Successful Restaurant
Learning Objective: Applying concepts learned in this chapter such as employee engagement,
organizational citizenship, dysfunctional behaviors, and managing for effectiveness.
Task: Form groups of 3–5 students.
Imagine that you are all managers in a local restaurant. There are many restaurants in town,
Your management team next decides that it will be important to minimize dysfunctional
employee behaviors if the restaurant is to succeed. First, think independently about what your
restaurant can do to minimize the occurrence of these destructive behaviors. Then share your
ideas with the group and identify your top three suggestions for the restaurant. Be ready to share
them with the class.
Video Exercises
Videos and questions can be found in the eBook and MindTap video folder.
Managing at Camp Bow Wow
Summary: Sue Ryan left the corporate world to open her own business, Camp Bow Wow, to enjoy—and
pass on—the better managerial practices that she’d encountered in her career. Her strategy for managing
her business is to mentor and develop other managers to help her.
1. How does Sue Ryan perform the three basic managerial roles—interpersonal, informational,
and decision making—in her role at Camp Bow Wow?
In the interpersonal category, Sue assumes the leader role and encourages workers to increase
2. How do Candace Stathis and Sue Ryan apply the four critical managerial skills—technical,
interpersonal, conceptual, and diagnostic—in their roles at the company? Which of these skills
do you think is most important skill for a manager at Camp Bow Wow and why?
Ryan and Stathis need technical skills associated with operations such as handling the dogs. They
3. How do Ryan and Stathis balance the three levels of business outcomes—individual, group and
team, and organizational? How would each manager rank the importance of the three
outcomes? Why are their rankings likely to be the same or different?
Sue Ryan would rank organizational outcomes first because she is a manager who realizes the effect
Now What?
Imagine being a new manager at Happy Time Toys, a company that designs and manufactures novelty
OB Concepts Applied: The managerial functions of planning, organizing, directing, and controlling; the
role of OB in managing effectively.
Discussion Questions
1. Which aspects of management and OB discussed in this chapter are illustrated in these videos?
Explain your answer.
OB explains how people interpret events and behave in organizations and describes how
organizations shape behavior. OB explains how organizations work. OB can improve a firm’s
2. How could a company’s talent strategy undermine its ability to create a competitive advantage?
A competitive advantage offers quality, service, and an acceptable price, and an organization’s talent
3. How else might you answer the question of how Happy Time Toys can create a competitive
advantage through its talent?
Another approach for Happy Time Toys could be a specialization strategy that focuses on a narrow
