When MBA Alumni Are Asked Which Class Was Most Important During Their MBA Curriculum, The #1 Answer Is Organizational Behaviour

Is OB important?
When MBA alumni are asked which class was most important during their MBA
curriculum, the #1 answer is organizational behaviour
OB Definition
OB = the study of individuals and groups in an organization
Why does it matter?

Symptom OB deals with
 Business is about people … ways to deal with people
 Business is about management… …how to run an organization effectively
 Management is not only an innate ability… …what makes good management
 A good system not applied… …understand people, align incentives
 Soft skills… for hard results …delivering results and fulfillment
© Stéphane Guerraz
Langara OB2200 / 2008
1
When OB is understood
A number of disasters that can be traced back to OB issues… as well as many
successes
Both NASA shuttle explosions
Weak FBI anti-terrorist activities prior to 9/11
CIA faulty intelligence
Sub-prime mortgage crisis
Failure of a leader or of a group
Team dying on the Everest in 1996 when information to make a better
Enron decision was discarded
ERP deployments
Barings Bank bankruptcy
LTCM failure
Intel switch from memory to chips

General electric workouts and quality circles Cases where an organization
West Jet quality of service adjusted remarkably well because it
was designed to do so
McKinsey management consulting dominance
2002 Canadian Olympic team
Apple turnaround
2
High Performance
Why do executives care about OB and strive to build high performance organizations?
 Generate lasting competitive advantage:

– to win
– to generate profits
– to grow
– to minimize risk
– to survive
 Threat of laziness, diminishing results of hard work, benefits of smart work
 Working smart: using people’s hands or people’s brains
 Sometimes, the high performance organization is the business itself. Without it,
no business. E.g. management consulting companies
3
High Performance
What functions are impacted by the organizational dynamics in a business setting?
Where does the human dynamics matter?
Mission statement
SBU #1 SBU #2 Goals: profits / market share?
Target markets?
People affect the performance of all org units

Organizations affect people’s quality of life
… … … Marketing
R&D Finance Operations HR
& Sales
Innovation Capital struct. Mktg Strategy -Efficient scale -Recrut.
IP Measure/Acctg Marketing Mix: -Quality -Training
Invent v. license -Product -Cost structure -Perf Mgt
Standards/compatib. -Price -Make v. buy -Career Mgt
Partnerships -Promotion -Pay/Benef
-Place
4
Organizational Models
There are various ways to model organizations, but success always starts with people.
Examples of organizations?
An Organization = a collection of people working together to achieve a common purpose
1 Gather Resources Transform/ Deliver

(input) Process (output)
People
Information
Technology
Finished Goods &
Work
Materials Services
Facilities
Money
Customer Feedback
The single best predictor of overall success is 2 People

Output
a company’s ability to attract, motivate and
retain talented people
Source: Fortune survey of most admired US firms
Strategy Execution
© Stéphane Guerraz Source: Larry Bossidy, former CEO of Allied Signal

5
Organizational learning
OB is also about how organizations learn
 Organizational learning: the process of acquiring knowledge and using information to

adapt successfully to changing circumstances
 Core concept: only way for an organization to succeed is to constantly change itself by
learning new ways of conducting itself
– Competitive or cost pressures
– Changes in the environment
– True for individuals too
– Lifelong learning: mentoring, formal training, seminars, workshops, etc.
6
Learning about OB
How do we learn about OB?
 Use knowledge from many disciplines

– Psychology, sociology, anthropology, economics, political science…
 Take a scientific approach
– Controlled systematic data collection
– Careful testing of proposed explanations
– Only accept proven explanations
– Field studies, lab studies, surveys, case studies, meta analyses
 Some OB assumptions:
– Organizations are dynamic
– No one solution fits all
7
Learning about OB
The Four Levels of Analysis Used in Organizational Behaviour
Systemic Constraints
Big Demographic Changes

(e.g. aging boomers)
Recession
&
Group Processes
Prosperity
Individual Processes
Globalization Big Political Changes
(civil rights, feminism,
free markets)
Organizational Structure
and Culture
War and Peace
8
Thinking about OB
The Four Levels of Analysis Used in Organizational Behaviour
1. Psychological knowledge: personality, motivation, judgmental bias

2. Group-process knowledge: conformity, social influence, leadership
3. Organizational knowledge: culture, incentive systems, reporting lines
4. Sensitivity to broader societal context
9
The Manager
What is the priority of a manager?
 Get her team to consistently achieve (high performance) goals

 First focus: task performance; second focus: job satisfaction
 Oftentimes, the real, untold focus is their own careers
 4 functions of management:
Manager 4 functions of management

Plan, Planning: defining goals, performance objectives, and actions needed
Lead execution
Organize
Organizing: creating work structures and systems, arranging resources
People
Leading: motivating to achieve
Controlling: ensuring that things go well by monitoring performance and
taking corrective action
Control
10
The Manager
What roles and skills should a manager have?
 Management roles Management Roles

– Interpersonal (as figurehead, leader, liaison)
– Informational (as monitor, spokesperson, disseminator)
– Decisional (as entrepreneur, disturbance handler, negotiator, resource
allocator)
 Management skills Management Skills

– Technical – ability to perform specialized tasks
– Human – ability to work well with others
– Including emotional intelligence (self-awareness, thinking before acting,
self-motivation, empathy, social skills), creating effective networks and
reaching out
– Conceptual/Methodological – ability to analyse and solve complex problems;
methods to manage project; incorporate heterogeneous data
11
Benefits of Studying OB
Some of the benefits you will harvest from attending and working on OB content
What?
 Increased self-awareness: assess yourself, your personality, values, biases,
management style
 Better understanding of others: why people react the way they do
 Insights into decision-making
 Better understanding of management in a business context
 Broad array of frameworks to deal with situations
How?
 Your own observations – introspection, interaction

 Your own answers and behavior – tests, group work
 The feedback you will receive
 The stories you will learn about
12
Globalization and BC
What global industries have an impact on BC?
Examples of BC Exports
 Forestry
 Mining
 Oil & Gas
 Technology
 Biotech/Pharma
Example of BC Imports
 Manufactured goods (e.g. cars)

 Food Where are the products you
 Financial services buy from?
 Oil
13
Global companies
Why are companies, even small ones, operating worldwide?
 Client base scattered around the world (e.g. metals, IP)

– More than $400B in exports in a $1.2Trn economy
 Partnerships and JV (e.g. fuel cells development, carbon projects)
 Outsourcing of operations (e.g. banks)
 Suppliers (e.g. parts for mines)
 Regulations (e.g. fuel standards in California)
 Mergers and Acquisitions (e.g. Intrawest).
– Canadians had $358B in fixed assets outside of Canada in 2003
 Talents found worldwide for a multicultural workforce
 Other reasons?
Globalization = the growing worldwide interdependence of resources

suppliers, product markets and business competition
14
Regional Alliances
Why do countries enter regional alliances?
Examples of Regional Economic Alliances

 European Union:
– political structures, monetary union for some members
– 450M customers
 NAFTA: North American Free Trade Agreement

 CARICOM, Andean Pact, APEC: Asia-Pacific Economic Co-operation Forum
Why?
 Larger market with same rules and standards/regulations
 Protecting a market while industry is not competitive
 Bargaining and political power with other blocks or powerful countries
 Avoiding sanctions…
 Avoiding another war…
15
What is Culture?
Culture is the learned and shared way of thinking and acting among a group of people or
society
Some dimensions of Culture

1. Language
2. Time orientation
3. Use of space
4. Religion
16
Dimensions of Culture
1. Language
 Language may influence thinking

– E.g. reading and vocalization
– E.g. left brain/right brain and tonal languages
 Language is used differently by different cultures:

– In low-context cultures (e.g., Canada), messages are expressed mainly by
the spoken and written word
– In high-context cultures, words express only part of the message; the
remainder emerges in the context (e.g., body language, physical setting, past
relationships)
17
2. Time Orientation
 Polychronic cultures
– See time as a circle with much repetition, so no pressures for immediate action
– Emphasize the present, often do more than one thing at a time
– E.g.: Italy
 Monochronic cultures
– View time as a straight line, so past is gone, present is brief, future is near
– Measure time precisely
– Pressure for action and performance, planning, and long-range goals
– E.g.: Uk
18
3. Use of Space
 Proxemics = study of how people use space to communicate
 Cultures vary in personal space maintained around a person; can create cross-cultural
misunderstandings
 Cultures organize space differently

– E.g.: space set up so many activities can be carried out simultaneously (public square in
polychronic cultures)
– E.g.: preferred workspaces vary from open floor plans (Japan) to individual offices (Canada)
Write down what’s your most comfortable distance to talk one on one
with a stranger is
19
4. Religion
 Often specifies rituals, holy days, foods
 Basis of ethical and moral beliefs
20
What are some of the values underlying culture?
Hofstede’s dimensions
Hofstede’s dimensions on varying cultural values

1. Power distance
2. Uncertainty avoidance
3. Individualism-collectivism
4. Masculinity-femininity
5. Long-term/short-term orientation
21
Values underlying culture
1. Power Distance
 Willingness of a culture to accept status and power

differences among its members, to respect hierarchy and
rank in organizations
 Example of high-power distance: Indonesia

 Example of low-power distance: Sweden
22
2. Uncertainty avoidance
 The cultural tendency to be uncomfortable with

uncertainty and risk in everyday life; preference for
structured versus unstructured organizational
situations
 Example of high uncertainty avoidance culture: France

 Example of low uncertainty avoidance culture: Hong
Kong
23
3. Individualism/Collectivism
 The tendency of a culture to emphasize individual self-

interests or group relationships; reflects likely preference
for working as individuals or working together in groups
 Example of individualistic culture: U.S.

 Example of collective culture: Mexico, Japan
24
4. Maculinity/Feminity
 The degree to which a society values assertiveness

and competition ( stereotypical masculine traits) or
interpersonal sensitivity and concern for relationships
(stereotypical feminine traits)
 Example of masculine culture: Japan

 Example of feminine culture: Thailand
25
5. Long term/short term orientation
 Degree to which a culture emphasizes values associated with

the future (like persistence and thrift) or values that focus
largely on the present; reflects whether performance is viewed
from a long-term or short-term perspective
 Korea has long-term orientation

 Canada is more short-term oriented
26
Problems in international dealings
Cultural sensitivity is important in establishing strong business relationships
 Parochialism (assuming the ways of your culture are the only

ways of doing things, e.g. Wal-Mart in Germany)
 Ethnocentrism (assuming the ways of your culture are the best

ways of doing things, e.g. kickbacks and US law)
 Ignorance of what matters in another culture. E.g. touching

somebody’s head in a Buddhist culture
 Can be avoided by understanding one’s own culture and

maintaining an openness to other cultures
27
Problems in international dealings
Cultural sensitivity is important in establishing strong business relationships
 Ethical challenges resulting from diversity in cultures, governments, legal systems

– E.g., issues regarding bribery, corruption, child labour, prison labour, “sweatshops”
 Ethical behaviour approached two opposite ways:

– Cultural relativism – believes there is no universal right way to behave; it depends on
the cultural context (“When in Rome do as the Romans do”)
– Ethical absolutism – believe single moral standard applies in all situations, to all
cultures
28
Cultural differences in solving problems
Trompenaars suggests cultures vary in the way they solve 3 types of problems
 Relationships with people

– E.g., focus on earned status as opposed to ascribed status, relative
emphasis on individual freedom or group interests and consensus
 Attitudes toward time
– Sequential versus synchronic
 Attitudes toward the environment
– Inner-directed see selves as separate from nature and able to control it;
outer-directed view selves as part of nature and believe they must go
along with it
29
Cultural differences in solving problems
Management practices around the world are not universal
 Management theories are NOT universal

– Adjustments needed for cultural factors
– Culture is one of the contingencies that must be accounted for in organizational
behaviour
 Search for “best practices” around world; acceptance that excellence may
appear anywhere
30

When MBA Alumni Are Asked Which Class Was Most Important During Their MBA Curriculum, The #1 Answer Is Organizational Behaviour

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When MBA Alumni Are Asked Which Class Was Most Important During Their MBA Curriculum, The #1 Answer Is Organizational Behaviour

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Is OB important?

Why does it matter?

Intel switch from memory to chips

 Generate lasting competitive advantage:

Where does the human dynamics matter?

People affect the performance of all org units

1 Gather Resources Transform/ Deliver

The single best predictor of overall success is 2 People

© Stéphane Guerraz Source: Larry Bossidy, former CEO of Allied Signal

 Organizational learning: the process of acquiring knowledge and using information to

 Use knowledge from many disciplines

Big Demographic Changes

1. Psychological knowledge: personality, motivation, judgmental bias

 Get her team to consistently achieve (high performance) goals

Manager 4 functions of management

 Management roles Management Roles

 Management skills Management Skills

 Your own observations – introspection, interaction

 Manufactured goods (e.g. cars)

 Client base scattered around the world (e.g. metals, IP)

Globalization = the growing worldwide interdependence of resources

Examples of Regional Economic Alliances

 NAFTA: North American Free Trade Agreement

Some dimensions of Culture

 Language may influence thinking

 Language is used differently by different cultures:

 Proxemics = study of how people use space to communicate

 Cultures organize space differently

 Often specifies rituals, holy days, foods

 Basis of ethical and moral beliefs

Hofstede’s dimensions on varying cultural values

 Willingness of a culture to accept status and power

 Example of high-power distance: Indonesia

 The cultural tendency to be uncomfortable with

 Example of high uncertainty avoidance culture: France

 The tendency of a culture to emphasize individual self-

 Example of individualistic culture: U.S.

 The degree to which a society values assertiveness

 Example of masculine culture: Japan

5. Long term/short term orientation

 Degree to which a culture emphasizes values associated with

 Korea has long-term orientation

Cultural sensitivity is important in establishing strong business relationships

 Parochialism (assuming the ways of your culture are the only

 Ethnocentrism (assuming the ways of your culture are the best

 Ignorance of what matters in another culture. E.g. touching

 Can be avoided by understanding one’s own culture and

Cultural sensitivity is important in establishing strong business relationships

 Ethical challenges resulting from diversity in cultures, governments, legal systems

 Ethical behaviour approached two opposite ways:

 Relationships with people

 Management theories are NOT universal

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