Organizational Behaviour, emerging knowledge and practice for the real world, by S. McShane, M. Von Glinow (fifth edition) – Summary chapter 1

Organizational behaviour is the study of what people think, feel and do in and around organizations. It also encompasses how organizations interact with their environment. Organizations are groups of people who work interdependently toward some purpose. Organizations are collective entities. Organizational behaviour theories are important because they influence organizational events (1), they comprehend and predict work events (2) and they adopt more accurate personal theories (3).

There are several major environmental developments facing organizations:

1. Technological change
   This boosts productivity, but also have the possibility to displace employees and render entire occupational groups obsolete. It can also alter the relationships between co-workers, clients and suppliers.
2. Globalization
   This refers to economic, social and cultural connectivity with people in other parts of the world. There is an intense level of connectivity and interdependence around the globe in organizations. It brings more complexity and new ways of working to the workplace, but also requires additional knowledge and skills.
3. Emerging employment relationships
   The work-life balance is changing. This is the degree to which a person minimizes conflict between work and non-work demands.
4. Increasing workforce diversity
   Surface-level diversity, the observable demographic or physiological differences in people, has increased over the past few decades. Deep-level diversity refers to differences in the psychological characteristics of employees.

Telecommuting is working from home one or more workdays per month rather than commute to the office. Telecommuters usually experience better work-life balance, but these telecommuters need privacy at home for this. Telecommuting increases productivity and is better for the environment. Disadvantages of telecommuting include more social isolation, lower team cohesion and a weaker organizational culture.

There is a difference in deep-level diversity among age cohorts. Workforce diversity has advantages, such as more creativity and better decision making. Disadvantages to diversity in the workplace are that diverse people take longer to effectively communicate and there is a risk of dysfunctional conflict, which reduces information sharing and satisfaction with co-workers.

There are several anchors of organizational behaviour knowledge:

The systematic research anchor states that knowledge should be based on systematic research. This is the basis for evidence-based management. This is the practice of making decisions and taking actions based on research evidence. Managers rarely make use of evidence-based management, because they receive a lot of ideas, the sources of those ideas are rewarded for marketing those ideas and the research is often very broad. The multidisciplinary anchor states that knowledge and theories from other disciplines should be welcomed. The contingency anchor states that the effect of one variable on another variable often depends on the characteristics of the situation or people involved. The multiple levels of analysis anchor state that organizational events should be placed into three levels of analysis: individual, team and organization.

Organizational effectiveness refers to a broad concept which includes the organization’s fit with the external environment, internal subsystems, configuration for high performance, emphasis on organizational learning and ability to satisfy the needs of key stakeholders. In short, it refers to how effective an organization is. There are four perspectives of organizational effectiveness:

1. Open systems perspective
   This is a perspective that holds that organizations depend on the external environment for resources, affect that environment through their output and consist of internal subsystems (e.g: departments) that transform inputs to outputs. This perspective states that organizations are effective when they maintain a good fit with their external environment. Organizations can do this in three ways: adapting to the environment (1), influence the environment (2) and move to a more favourable environment (3). There are three indicators of effective internal subsystems: efficiency, adaptability and innovativeness.
2. Organizational learning perspective
   This is a perspective that holds that organizational effectiveness depends on the organization’s capacity to acquire, share, use and store valuable knowledge. Knowledge is also called intellectual capital, which exists in three forms: human capital (1), structural capital (e.g: finished products) (2) and relationship capital (3).
3. High-performance work practices perspective
   This is a perspective that holds that effective organizations incorporate several workplace practises that leverage the potential of human capital. There are four major high-performance work practices: employee involvement (1), job autonomy (2), competency development (3) and rewards for performance and competencies (4).
4. Stakeholder perspective
   This perspective states that organizations are more effective when they understand, manage and satisfy stakeholder needs and expectations. Stakeholders include individuals, groups and other entities that affect or are affected by the organization’s objectives and actions. This perspective personalizes the open systems perspective.

An organization’s intellectual capital develops and is maintained through four organizational learning processes: acquiring knowledge (1), sharing knowledge (2), using knowledge (3) and storing knowledge (4). Retained knowledge in the organization is known as organizational memory. Values are relatively stable, evaluative beliefs that guide a person’s preference for outcomes or courses of action in a variety of situations. Ethics determine what’s right and wrong. Corporate social responsibility consists of organizational activities intended to benefit society and the environment beyond the firm’s immediate financial interests or legal obligations.