Organizational Behavior Concepts for Managers

Organization Behavior
EBS MBA Program

Module 1 : Basics of Organization
Behavior
Presented by :
Dr. Karim Hamza
PhD.; MBA; PMP
Dr. Karim Hamza www.karimhamza.com Organisational Behaviourt
1
Agenda
Why Managers Need to Understand O.B
Building Blocks of Individual Differences
Study of Personality & Employees Traits
Job Satisfaction
Employee Work Attitudes
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Organizational Behavior & Managers role
Organizational Behavior is the study of behavior and attitudes of people in
organizations.
Managers role in organizations
Management is a process which is employed by individuals (managers) who are
responsible for achieving organizational objectives through people. job has three
basic components:
Technical: Efficient use of resources to achieve output goals and the application of
technology to achieve productivity goals
Conceptual: Development of new systems and methods of operation.
Human: Concern with employee welfare
As a manager grows in the organization the technical responsibilities diminish
while the conceptual and human aspects take more and more time.
seven key features of a managers job:
1. Managing individual performance (supervising) Supervision
2. Instructing subordinates (teaching and training)
3. Represent ones staff (representation and advocacy)
4. Managing group performance (facilitation) Middle Management
5. Planning and allocating resources (decision-making)
6. Coordinating independent groups (collaboration)
7. Monitoring the business environment (scanning) Executive
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Managers challenges in the 21st century
Past Challenges Future Challenges
Principle duties Give orders to subordinates Encourage the development of subordinates and their work
and control their behavior teams
Training and Reduce these costs by hiring Training and employee development are continuous to achieve
Development workers with requisite skills the goal of a flexible and cross-trained workforce
Reward bases Seniority, rank and effort Merit-based individual and team contributions to competitive
advantage
Influence base Hierarchical position Technical, interpersonal, and organizational expertise
Communication From the top to the bottom Diffusion-based so that the information goes rapidly to where
pattern and style in highly formal teams the decision has to be made
Decision-taking style Superior/boss centered and Team-based and participative
authoritarian
Approach to Resist change and cling to Embrace change and find ways to improve strategic,
organizational change the status quo competitive process
Change in managers job increase because:

1- workforce is changing : optimise the fit between employees with diverse needs and expectations
and their jobs and work groups.
2- Customer expectations are changing : (TQM) increase the organisations ability to add value to
products and services from the customers point of view.
3- Organisations are changing : sources of competitive advantage
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Human Behaviour in Organisations
S O B C
Stimulus Organism Behaviour & Consequence
Situation Actions (outcome)
SOBC model of employee behavior in organizations (micro-level)

Kurt Lewin has postulated that human Behaviour is a function of the Person and the
Environment: B = f(P,E).
SOBC model is a micro model specifies a sequence for understanding the behaviour of
individuals.
S: sensations from the environment which trigger human perception.
O : capacities of the individual which are governed by biological needs, knowledge, skills,
attitudes and values
B : performance or emotional responses and conceptual activities
C : outcomes of behaviour and performance such as recognition and need satisfaction.
(activity triggered in the environment by the behaviours under study)
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Values
Instrumental values : means to achieve goals by using acceptable
behavior to achieve an end state.
Ex.: Ambition, Competence, Courage, Self-control, Forgiving Nature, etc.
Terminal values : the goals to be achieved or the appropriateness of a
desired end state.
Ex.: Achievement, Social status, Wisdom, Equality, Happiness, Inner Calm,
Pleasure, etc.
Locust of control : defined as individuals belief that ones action
influence to outcomes one experiences in life.
Internalizers : believe that they can change the outcome of experiences
through their behavior p.14,15
will work harder when they are told that rewards are based on superior skill and
high performance.
Expect strong cause and effect relationships regarding their behaviour and its
outcomes,managers can use participation to strengthen those expectations.
Externalizers believe that the outcome of experiences lies outside of their
control.
Extroversion : the need to obtain as much social stimulation as
possible from the environment. (outgoing)-salespeople
Introversion : avoidance of external stimulation in favor of internally
oriented, contemplative activity. (shy)
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Personalities
Machiavellian personalities (High Machs) :
Ill do anything at work to achieve my objectives.
manipulate others and try to induce them to think in their terms
believes he is better at giving orders than his superior
MachV Scale : test identifies Machiavellian tendencies.
Sample : Nixon Watergate , guilt behind executive privilege
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Socially Acquired Needs
Need For Achievement Management Utilization
Taking moderate risks by pursuing goals that are difficult but not Use as one basis for screening job applicants
impossible Use it as a factor in promotion decisions
Needs immediate feedback on performance and progress Design jobs with goals that are at least moderately challenging
Finding task activities and accomplishments to be intrinsically Design rewards and feedback that are closely tied to
rewarding, regardless of the financial or economic reward performance behaviors to create an achievement climate in the
Defining work in terms of approaching success instead of firm
avoiding failure Reward employee creativity and institutionalize the role of idea
Being totally task absorbed until the job is done champions in the firm
Need for Affiliation Management Utilization
belongingness, social involvement, and group morale Allow individuals to be arbitrators in work-group
Emphasizing all group members included in events affects the Evaluate social demands of job and match employees with high
morale and cohesion of the group need for affiliation .
Solving or confronting interpersonal conflicts which threaten the Allow individuals to be involved in community affairs which
esprit de corps parallel work interests
social rewards such as recognition, praise, and public acclaim Develop and use many forms of social rewards as possible
Reacting positively to social rewards which are made contingent .dependent on high performance
on excellent performance superior with a high need for affiliation may incorrectly
emphasize social harmony over productivity
Need for Power Management Utilization
behaviors oriented towards influencing others and searching for Employees with a socialized need for power should be selected and
opportunities to gain influence and control. promoted over employees oriented to personalized power
often unproductive Positions requiring socialized power should be made visible in
Reject job responsibilities in favor of personal concerns the organizational hierarchy
Create tense work relationships among subordinates who become Managers with socialized power should take charge of groups
over-anxious where performance and morale is low
Individuals with a socialized need for power tend to achieve Social power managers should be allowed to freely delegate to
personal goals at work through raising the self-esteem of subordinates whose own managerial skills and self-confidence
subordinates and colleagues. will develop more quickly
If manager with high need for achievement should does not have Social power managers career paths should not be blocked.
socialized need for power he will tend to do things himself.
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Job Satisfaction
Job satisfaction is determined by:
Satisfaction with the work itself
Satisfaction with pay
Satisfaction with follow workers
Satisfaction with supervision
Satisfaction with promotions
Early-career dip : employee learns that the job will not meet all personal needs as quickly
as expected.
Expectations: expectations regarding the job formed before the starting are major
determining factor of the job satisfaction in the first few years. (job previews)
Organizational determinants of job satisfaction:
Supervision: support of self esteem and self worth, consultation with employees
Job challenge: design jobs to require creativity, application of personal skills, and risk taking
Job clarity: understanding of what they are to do, performance feedback, chance to participate in
job issues
Incentives: Extrinsic (pay rise, promotion, praise, status symbols) and intrinsic (experienced
internally, e.g. feeling of competence, craftsmanship) rewards
Equity Theory: employees make comparisons about the rewards that they receive
relative to their efforts and performance levels and performance exhibited by other
employees.
Consequences of job satisfaction:
Mental and physical health increase
Lower turnover
Less unexcused absences
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Job Satisfaction and Performance
Both mental and physical health increase with job satisfaction.
Job satisfaction determined by :
Observation of employee behavior
Interviewing employees
Questionnaires on job satisfaction
Organizational commitment defines as the strength of an employees identification with

the organization. It has the following components:
Belief in and acceptance of the organizations goals
Willingness to exert considerable effort on behalf of the organization
Desire to maintain membership in the organization
Job satisfaction might fluctuate considerably over time while organizational commitment
develops slowly and consistently over time. Employees with high organizational
commitment are unlikely to leave their jobs even in a period of low job satisfaction.
Job involvement work attitude defined as the degree to which employees identify with their
job, participate actively in it and consider it a key determinant of their self-worth.
How can managers raise organizational commitment and job involvement?
Demonstrate that they honestly care about their employees welfare
Create opportunities for employees to achieve their personal goals
Modify jobs so employees have more opportunities to achieve intrinsic rewards
Find ways to reward employees regularly
Set goals with employees - some of them are personal development goals
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EBS MBA Program
Module 2 : Stress and Well-Being at
Work
Presented by :
Dr. Karim Hamza
PhD.; MBA; PMP
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Agenda
Stress and Well-Being at Work
Causes and Consequences of Stress
Approaches to Managing Stress
Organisational Job Stress Management
Downsizing
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Stress and Well-Being at Work
Environmental stress : originate from economic, political or technological
uncertainty and induce alarm reaction or press employees into exhaustion .
Distress is a negative physical and psychological reaction to a stressor.
Eustress is a positive physical and psychological reaction to a stressor.
Stress results in employees:
making more physical and mental health claims,
being less productive
exhibiting more turnover absenteeism, and
substance abuse
Karoshi is sudden death by heart attack or stroke
caused by too much work.
General Adaptation Syndrome
Alarm Mind and body prepare to fight or adjust to stressor by

Increasing Harte rate , muscle tension
Resistance Using more resources to adapt to the stressor : Practice , more work
Exhaustion Body begin to wear down : Illness , sleepiness
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Stress Model - Causes and Consequences
Causes of job stress: Environmental, Organisational and Individual.
Consequences of job stress : Physiological, Psychological and behavioural
symptoms.
Job burnout sufferer to devalue work and to see it as a source of dissatisfaction
Causes of Stress Consequences of Stress
Environmental factors Individual differences Physiological symptoms

Economic uncertainty Perception Headaches
Political uncertainty Job Experience High blood pressure
Technological uncertainty Locust of control Heart disease
Type A behavior
Psychological symptoms
Organizational factors
Sleep disturbances
Task demands influences Depression, anxiety
Role demands
Decline in job satisfaction
Interpersonal demands
Organizational structure
Organizational leadership Behavioral symptoms
Experienced Stress
Organizations life-cycle Productivity level
stage Attendance pattern
Quitting the job
Accidents
Individual factors Substance abuse
Family problems
Financial problems
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Individual differences
Locus of control is a pattern of beliefs about the connection between behaviour
and its consequences.
Internalisers believe that they are in control of their lives because they are
responsible for the things that happen to them in life.
Externalisers believe that often fate intrudes to create outcomes in life that are not
related to their behaviour.
internalisers perceive their jobs to be less stressful than do externalisers.
Type A behaviour an action emotion complex that can be observed in any
person who is aggressively involved in chronic, incessant struggle to achieve
more in less and less time, and if required to do so, against the opposing efforts
of other things and other persons.
Work long hard hours under constant deadline pressure and chronic work overload.
Take work home, and are unable to relax on weekends/holidays.
Become frustrated by the work situation, impatient, easily irritated with work efforts of
others.
The emerging portrait is that adaptive Type As reduce experiences stress by being
hard driven, but with no sense of hostility/aggression towards others.
Hostility, anger, aggression, can contribute to stress and are associated with heart
disease, strokes, etc.
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Job Stress Management
Individual techniques :
Exercise.
Relaxation.
Diet.
Opening up.
Professional help.
Organisational Programmes :
Reward by performance and productivity, not face-time spent working
I trust you to get your job done
Live by your values and encourage others to live by theirs
Build respect based on trust and respect
Your family come first
Corporate stress management strategies :
Problem-focused interventions: Designing solution for specific symptoms of
employee job dissatisfaction or job stress. Eg. flextime, and firm-sponsored day care.
Emotion-focused Interventions: help employees cope more effectively with job stress
(as oppose to lowering the level). employee assistance programs (EAPs).
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Downsizing
Using efforts to control costs through downsizing can induce job burnout.
Managers in this environment trying to reduce costs or raise earnings often
experience little accomplishment, emotional exhaustion, and depersonalisation.
Their sense of helplessness to protect subordinates jobs, let alone careers,
undermines their internal locus of control.
When mangers/employees feel these effects they are often self-absorbed and
ineffective at improving output productivity or service quality.
Reasons:
1. Domestic Competition.
2. Merger Mania.
3. Government Spending and Labour Market Involvement.
4. Small is beautiful concept.
5. Restless shareholders.
6. Is downsizing always the right solution?
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EBS MBA Program
Module 3 : Theories of Motivation
Presented by :
Dr. Karim Hamza
PhD.; MBA; PMP
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Agenda
Contemporary theories of motivation
Content theories
Process Theories
Behaviour Modification
Role of Punishment
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Contemporary theories of motivation
Work motivation: referred to as the direction, level of effort, and extent of
persistence in the behaviour of an employee.
distinction between Motivation and Performance?
Performance always involves the evaluation of a persons behaviour on the
job.
Motivation is only one of several factors that affect performance.
Additional factors which affect performance are
1. Ability 2. Personal characteristics 3. Difficulty of
design tasks
4. Working conditions 5. Work attitudes.
Managers who assume poor performance is a result of a lack of
motivation take the wrong steps to correct the problem. They may
overlook the role of training, better equipment, or technology.
Motivation theory :
Content theory :what cause motivation ? Maslows , Herzbergs
Process theory :how motivation occurs ? Equity Theory , Expectancy theory
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Content theory1-Maslows Hierarchy of Needs
Physiological needs must be satisfied first.
Physiological and Safety referred to as lower-order needs.
Belongingness marks the start of higher-level needs.
Higher-order needs learned through contact with social environments.
Esteem needs have external component (recognition, prestige &
Self
appreciation) Internal consists of challenge & self-reliance. Actualization
Self-actualisation defined as the desire to fulfil oneself by making The need to reach
ones fullest potential
maximum use of talents and experiences. personal confidence to
achieve a very high level of performance Esteem
The need to feel good about
Critical points to consider: oneself and ones abilities; and to
A satisfied need ceases to motivate behaviour at that need level. be respected by others and to receive
their approval
Unsatisfied employee needs lead to undesirable outcomes at work
People are assumed to have a need to grow and Belongingness
The need to experience social interaction,
develop to their full potential friendship, and love
strive to move up the hierarchy and satisfy higher order needs.
Safety
Needs are not usually satisfied completely. Need for security, stability, and a safe work environment
Applying the Need Hierarchy:
Tends to parallel employee career development. Physiological
Food, water, shelter, and clothing to ensure survival
Criticisms of Maslows Hierarchy:
Research suggests that hierarchy of needs reduced to two levels.
as manager advances through organisation their needs for security
and safety decrease, but social, esteem, and self-actualisation needs.
while lower-order needs become less important as they are satisfied,
the same cannot be said for higher-order needs.
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Content theory2-Herzbergs 2Factor (Motivator-Hygiene)
Hygienes are contextual factors that, if not present, lead to the impoverishment of the employees job.
Employees experience job frustration and stress if their jobs have few hygienes.
Employees might experience short increases in job satisfaction hygiene factors are improved,
will take them for granted again after a relatively short period of time. If hygienes are removed job
satisfaction plunges.
Motivators are factors that raise job satisfaction and performance in the long run. They are related to
the employee-job interaction and are job-centered characteristics.
job-centred characteristics. Often called intrinsic job factors or context factors.
Absence of motivators can lead to apathy and alienation because jobs are thought of as
unchallenging and boring.
Benefits of Herzbergs Work:
attention it focuses on the effects of company systems and job designs on employee job satisfaction.
Comparing Maslows and Herzbergs Models:
Herzberg is concerned with job and organisational sources of job satisfaction and dissatisfaction.
Maslow focused on human needs, which encompass a variety of life situations.
Maslows lower-order needs resemble hygiene factors in that they do not guarantee this growth for
employees, but merely create the conditions for it to occur if employees value higher-order need
satisfaction at work.
Criticisms of Herzbergs Theory:
The most important centres on the method of testing the theory, which requires employees to
consider their work experiences retrospectively. Such historical comparisons are subject to
distortion.
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Process Theories1-Equity Theory
Felt or perceived inequality in this relationship is a motivating state which
encourages the employee to eliminate it by pursuing various actions.
Negative inequity is perceived when the employee feels that he receives relatively
fewer rewards for his effort that others.
Positive inequity is perceived when an employee feels that he receives relatively
more rewards for his efforts that others.
To restore equity an employee might:
Change work inputs and reduce performance efforts to eliminate negative inequity
Change the outcomes received (e.g. ask for more responsibility to reduce positive
inequity)
Employees reward Others reward
Exit the circumstance (e.g. leave job) compared to
Employees effort Others effort
Change the people that are used for comparison
Mentally distort or alter the comparison
Take a decision to alter the inputs or outcomes of the comparison other (e.g. get the
other to work less hard)
Manager should :
In advance tell employees about salary ranges, pay increases, and promotion
opportunities.
Avoid practices that encourage secrecy about pay policies and procedures.
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Process Theories2-Expectancy Theory
Valence is defined as the personal attractiveness of different outcomes. If an outcome has
a high personal valence, an individual is attracted to behaviors that make that outcome
more likely.
First-level outcomes are results of expending effort in some way (e.g. job performance,
leaving a position) and are important for organizations.
Second-level outcomes are the result of achieving (or not achieving) the first level
outcomes (e.g. getting a promotion, receiving recognition). Employees assign valence to
each type of outcome.
Instrumentality is the personal believe that first-level outcomes lead to second-level
outcomes. Individual Factors
Expectancy is the subjectiveSelf Efficacy

Need for Achievement Expectancy Instrumentality
Locus of Control
belief that a given level of effort Self-Esteem
Personal
will lead to a first level outcome Belief about
result of effort First- Belief
Second
Level
on the job. Effort Outcome
Level
Outcome
Expectancies are judgments Important for
the
important for
the individual
influences organization
about the relationships between
Organizational influences
certain levels of effort and the Factors
Role Ambiguity
Assign Values to Outcomes
Role Conflict
Work
various first level outcomes. Performance Environment
Appraisal System Valences
Reward System
Job Design System
Ability
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Behaviour Modification B MOD
B Mod states that external or environmental consequences determine behaviour.
B Mod is an environmental theory of motivation.
B Mod predicts that employee behaviour occurs because of the learned connection
between behaviour and rewards
B Mod systems can be designed to assist workers in obtaining higher performance levels
and more significant rewards.
Employees are trusted to gather, record, and report on their performance levels to
management.
Criticisms of B Mod
application of B Mod principles reduces valued differences among employees and make
them interchangeable.
They believe that B Mod programs oversimplify work and create rigid patterns in work
behaviour which reduces the creative urges of employees.
B Mod works best with highly repetitive tasks which are learned in a short period of time.
When designed with sustained involvement of employees accusations of manipulation and
subliminal control are reduced.
B Mod programs which are acceptable to employees influence expectancy, instrumentality,
and valences for both first and second level outcomes.
Motivational gains achieved through B Mod are soundly based in expectancy theory.
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Role of Punishment in Management Practices
Managers do not like to talk about punishment because it implies that:
they have hired the wrong employee
the work environment they help create is less than ideal
they and their organization treat their employees badly
Reasons for not using punishment:
For it to be effective managers must closely watch employees behavior
Punishment does not eliminate unwanted behavior, but just suppresses it temporarily
until the punisher is removed.
Employees become anxious, fearful, less creative, hostile and may reject delegated
responsibility
Alternatives to using punishment:
Use of Extinction
Re-engineer the work environment so that undesirable behavior can not occur
Reward behavior which is physically incompatible with undesired behavior (e.g.
reward employees for tidy workplaces)
Be patient and allow time for undesirable behavior to disappear
If punishment is used it should be:
Rapid: Undesirable behavior must be prevented from becoming a habit of the
employee
Intense: Punishment should be intense and immediate, leaving no question about the
undesirability of the behavior
Equitable: Punishment must be equitable across people and infractions. Match the
punishment to the infraction
Informative: Punishment must have informative value: information on why behavior is
undesirable, how to correct behavior, consequences of further infractions
Private and focused: The employees self-esteem should remain intact. He should
remember the behavior to correct instead of how he was mistreated.
Not followed by rewards: Punishment should not be followed by non-contingent
rewards (e.g. lunch to alleviate the supervisors guilt)
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EBS MBA Program
Module 4 : Organizational Control and
Reward Systems
Presented by :
Dr. Karim Hamza
PhD.; MBA; PMP
30
Agenda
Performance Measurement
Performance Appraisal Methods
Management by Objective - MBO
Rewards and Reward Systems
Executive Compensation
Company Pay Practices
Group Based-Rewards Systems
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Why organizations need to assess performance?
Employees need to understand the behavior requirements of the job.
Employees work is evaluated for its contribution to company goals.
Employees receive feedback on their contribution to company goals.
Employees motivation is increased by the performance appraisal system.
Employees performance levels should be used to make decisions about salaries, promotions,
bonuses, training needs, etc.
Validity is the quality of the measuring components of the performance appraisal system (do they
measure what they should?).
Forms of validity:
Content validity: measures and their administration are logically related to the performance measured;
evaluator and employees agree on the dimensions of performance measured and relationship to actual
job behaviors.
Empirical validity: measures are statistically related to work outcomes. Scores on the performance
dimensions are related to quantitative measures of work output
Construct validity: performance appraisal system logically derives from a model or theory of
performance behavior and motivation.
Convergent validity: Multiple measures of the same performance dimension result in equivalent
scores. Observation methods correlate highly with paper and pencil measures of performance.
Disciminant validity: Measures of performance using the same method produce different scores for
different performance
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Errors in performance appraisals:
Personal bias: bias which influences a supervisors rating upward of downward.
Halo effect: rating an employee on one performance dimension based on the evaluation
in other performance dimensions
Recency Error: the emphasis on recent performance examples in making performance
assessments
Central tendency error: Assigning average ratings to all employees resulting in little
variation
Strictness or leniency errors: Supervisors ratings based on the belief the employees do
not measure up or that all employees measure up
Similarity error: the supervisor has a performance quality in himself that she is looking for
in the employees
Forcing the rating to match other criteria: Deciding on an overall rating first and then
going back to individual dimensions to adjust ratings to match overall assessment
How to overcome errors in performance appraisal systems:
Use multiple criteria
Emphasize behavior rather than traits
Use several raters (e.g. 360 degree reviews)
Train the raters
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Performance Appraisal Methods:
Absolute Standards: Each employee is judged against a
fixed and inflexible set of performance criteria.
Graphic Scales Rating System: List of performance
criteria are evaluated on a numerical scale. The ratings
highlight differences in the performance of subordinates as it
encourages the tendency to spread out employees
assessment across each scale.
Behavior Anchored Rating Scale (BARS): BARS
emphasizes work behavior and how the work gets done
rather than characteristics of an employee. Through a
participatory analysis a meaningful and agreed upon set of
behavioral anchors described in the language of the job
under evaluation are developed.
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Management by Objective - MBO
Peter Drucker coined this term and advocates MBO as a process which develops self-
control in managers since these individuals control the process that leads to positive
organisation and employee outcomes. (organisational application of goal setting)
Goals are defined as those end states that reduce the intensity of needs and motives. Goal
setting systems:
Increase motivation and performance
Reduce the stress of conflicting or confusing expectations
Improve accuracy and validity of performance evaluations
Observing caution in the use of an MBO system:
Top management support, commitment, involvement
MBO must have a strong relationship with routine managerial characteristics.
MBO must emphasise organisational and personal development goals.
The firm must devote part of its resources to the effective training of personnel to administer and
function under the MBO system.
MBO systems must be tailored to each department.
Managers must avoid over-emphasis on the # of goals (quality not quantity).
Benefits should far outweigh the costs.
Discussion and evaluation should be equally emphasised
MBO works best when it is flexible and goals can be adjusted to meet unforeseen circumstances.
The seven generic steps of a MBO program:
ANALYZE the mix of people, jobs, work methods, and external demands
PLAN goals, strategy, communication and training
DEFINE the employees job in terms of content, authority, and responsibility
ARTICULATE goal difficulty, clarity, number, feedback
Reach MUTUAL AGREEMENT about goals, methods, measurements & time frame
Make INFORMAL review of goal achievement, methods and probable rewards, and REVISION of
goals and methods if necessary
Make FORMAL review of goal achievement and rewards to be obtained
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Rewards and Reward Systems
Intrinsic rewards those rewards that the employee associates with the job itself.
Extrinsic rewards are given to the employee by the company and they do not occur as
the work unfolds. Extrinsic rewards can be classified as direct compensation, indirect
compensation, and non-financial rewards.
There is great motivational value in building as many intrinsic rewards in to the job as
possible.
Employees will value goal setting more if they know that participation will lead to intrinsic
and extrinsic rewards.
How do companies distribute direct compensation?
Performance
Effort (in the hope that effort will eventually lead to performance)
Seniority
Equality (common in partnerships for managing partners)
Power and Influence
What determines the value of a job to the company? the following factors determine
starting salary, pay grade, and the number of levels in a given pay grade:
Skill requirements
Mental requirement
Physical requirement
Responsibility
Working Conditions
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Executive Compensation
Basic components of Executive Compensation:
Base salary
Benefits
Long-term incentives
Annual bonus
Current trends in executive compensation:
Strengthening the link between executive compensation and the
market value of firms
Executive compensation rises faster than employee wages
CEO pay rises much faster that the pay of the second in command
Pay gaps between American and British executives narrow
More emphasis on the companys net income
Preventing ISO plans from diluting stock value
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Reward Practice Employee perspective Implementation issue
Cafeteria style Creates balance between Installation cost and administration are increasingly outsourced
fringe benefits family needs and benefits
package
Lump-sum Nice to earn a large bonus Likely to be abandoned during downturns, can upset shareholders
payments but might not be clear
what he/she did to earn it.
Skill-based Good incentive for Works if skills are measurable, documented and verified. Should
compensation learning new skills not be tied to external educational or management training
program achievements
Accumulating Helps family, work, child, Strengthens commitment and loyalty. Harder to implement in self-
time-off and elder care demands on directed teams.
employees
The all-salaried Workable if team Easier to implement if union influence is declining. Validity of
team performance is fairly team appraisal system must be high.
measured and teams are
empowered
Open salary Greater perceived pay Computer based and outsourced control systems make
information equity and job satisfaction implementation easy. Requires stable pay brackets and market
with work and supervision based, fair starting salaries.
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Any pay or incentive plan should pass the following five tests:
Does the plan capture the attention of the employees?
Do employees understand the elements of the plan?
Does the plan improve communication?
Does the plan make payments to the employees when it should?
Is the company performing better as a result of the plan?
Guidelines to improve Performance and Effectiveness of the company
incentive plan:
Tie incentives in reward system to actual performance on the job.
incentive system and benefits program should be adjusted for individual
differences of employees in the workforce.
Incentive programs should match the type of work performed by the
employees and the structure of the firm.
The pay system should be consistent with the culture of the firm.
An incentive system should be monitored over time to ensure that
employees are being paid at the prevailing salary level for their work, (fairly)
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Individual & Group Based-Rewards Systems
Scanlon Plans : Gain-sharing plans share the gains associated with cost savings between
the employer and the owner of the company.
powerful tools to lower costs and foster innovation at the level at which the work is done
Important points to remember about gain sharing programs are:
They work best if the company has a dependable history of labor cost.
Seasonal product demand might make gain sharing plans more difficult
The market might have to absorb additional production if the gains lead to higher output.
The company should have a trusted labor-management relationship in order to develop trusted
gain sharing formulae.
Management needs to be committed to the plan and train all employees on the operation of the
system
Well designed team based rewards system can strengthen an organization in the following ways:
Attraction of new skilled employees and retention of existing ones
Timely and attractive incentives increase employees motivation and performance
If rewards are tied to cross-training and skill-building, the team members will acquire the necessary
skills and make the workforce of the company more flexible and gain a competitive advantage.
Linking incentives to corporate values creates an organizational culture that competitors will have
a hard time copying.
Reinforcement and definition of structure. E.g. usage of stock option incentives for every employee
in a de-layered organization.
Since cost is to a large extend driven by incentives, the structure of incentives needs to be driven
by the companys strategic advantages.
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Rucker Plan : measurement of productivity used for incentives (Value added).
Value added : difference between sales income from goods produced and the cost
Rucker plan steps :
Identify a base period
Generate the following data:
Sales Value of Production (SVP)
Cost of Materials, Supplies, services, etc. (COM)
Cost of Labor (COL)
Using this data establish the following standards:
Value added (VA) = SVP COM
Labor Contribution to VA (LCVA) = COL/VA
Economic Productivity Index (EPI) = 1/LCVA
Expected Value of Production (EVP) = EPI x COL (for the bonus period)
At the end of the bonus period calculate the result
Actual Value of Production (AVP) = SVP (COM + COL)
Savings or Loss = EVP AVP
Money placed in bonus pool = LCVA x Savings or Loss
In a Rucker plan 75% of the bonus is paid monthly to employees and the remaining 25% is
held in an escrow account until the years end.
To be successful, a Rucker plan needs to be established in a firm that values its workforce
and practices empowerment.
41
Comparison of characteristics of a Rucker and a Scanlon Plan:
Rucker plan links profit in terms of value added to labors contribution.
Employees that understand the Rucker plan will have ideas for raising labors value added. Thus
problem solving in the team is stressed.
The Rucker plan is less rigid than the Scanlon plan in the requirements for participation
Lower level of hierarchical control in the Rucker plan can shorten time from idea to implementation.
Downsized, these conditions should be met before gain-sharing or Rucker plan is introduced:
The firm has returned to profitability and no further wage freezes are planned
The management tem is stable.
Self-directed teams are working and members have completed training
The company is not being positioned for a sale or a spin-off.
Outsourcing of non-essential functions has been completed
The firm is using service-driven and market-based measures of customer satisfaction
Profit sharing plans are based on the notion that employees should be able to participate
positively if a company is generating a profit. If companies do well, profit sharing plans are
popular, in times of reduced profits or even losses, the popularity falls dramatically.
42
43
EBS MBA Program
Module 5 : Job Design and Employee
Reactions to Work
Presented by :
Dr. Karim Hamza
PhD.; MBA; PMP
44
Agenda
Job design Concept
Job Design method
Job Design Approaches
Self-directed teams
Empowerment
45
Job design Concept
Job design: the specification of task activities associated with a particular job.
Quality of work life (QWL) : refers to the extend to which employees are able to satisfy important
personal needs through their work life. through managements design of more meaningful jobs which
enhance job involvement and motivation.
integrate employees needs with organizational goals,
Improving a competitive edge like product innovation
Lowered warranty claims
Improved customer service
Scientific Management :Traditionally jobs were designed by managers breaking down work in to
elements which were analyzed by number and time necessary to complete them . primary tool time
and motion studies, scientific effect
Limited social interaction
Low skill requirements
Machine pacing
Job activity repetition
Task specialization
Low employee creativity and ingenuity
Tools and methods are pre-specified
The negative effects of this system of job design are as follows:
Over-dependency on work rules and standard production rates at the expense of job control by the
employee
Employees often feel isolated from their co-workers
Craftsmanship, pride in the finished product and product quality is sacrificed for job specialization
and productivity
46
Job Design method
Job enlargement : increases the number of work activities in a job to decrease the
extent of boredom and over-specialization.
Job rotation advanced job enlargement by exposing workers to a variety of specialized
jobs over time.
Cross-training is a variation of job enlargement; employees are trained in different
specialized work activities.
Job enrichment (Herzbergs two-factor theory) proposes that jobs should also include
motivational factors. The absence of motivating factors leads to the loss of employee
initiative, increased work apathy and the cessation of creativity. However, this does not
mean that employees are dissatisfied with their work, but simply that the absence of
motivating factors (intrinsic factors, satisfiers) means that employees have no reason to
form positive work expectations. Serious decrease in job satisfaction occurs when work
hygiene factors (extrinsic factors) are scarce. Hygienes are those factors that maintain a
condition of no dissatisfaction. They include among others:
. Salary . Job security . Working conditions
. Status . Company procedures . Quality of supervision
. Quality of interpersonal relations
Herzbergs principles of job design:
Give employees as much control over the mechanism of task completion as possible.
Hold employees accountable for their performance.
Within limits, let employees set their own work pace.
Design jobs so that employees experience accomplishments.
Design jobs so that employees learn new skills and work procedures
47
Job Design Approaches
Vertically Loaded : When employee experiences more control, autonomy, challenge, and direct responsibility over work
outcomes, as follows:
Employees provided with direct feedback on their performance
Employees given an opportunity to learn new skills
Employees able to influence the scheduling of work
Each job given some unique qualities which differentiate it from other jobs
Employees should have control over job resources
Personal accountability should be increased
four-day work week, job-sharing, telecommuting, and flextime.
Why will interest in job design continue to grow?
Work design alters the relationship between people and their jobs, greatly expanding the number of available intrinsic
rewards
Job design directly changes behavior since it focuses on what people do instead of what people feel.
Job design offers opportunities for initiating other changes e.g. create more flexible employee attitudes, foster
innovation.
Job design helps organizations better satisfy employee needs
What problems can occur in job design?
Technology (technology requires machine pacing)
Program start-up and maintenance cost
Failure to consider employee preference
Managerial and union resistance
48
Self-directed teams
Socio-technical systems theory: integrates 2 opposing forces in the design of work: the scientific
management and human needs relations aspects of the behavioral sciences concerned with human
development in the workplace.
Autonomous workgroups have to be built to account for the interplay of technical and social work
systems:
The group is assigned a task that is sufficiently identifiable and significant so that the members
find the work of the group meaningful
Each member possesses some skills that are required for the completion of the task and so the
flexibility of the group in carrying out the task is increased.
The group is given sufficient autonomy in making decisions on methods of accomplishment,
scheduling, task assignment, and selection of new group members.
Compensation is based on the performance of the group as a whole rather than the
contributions of individual members.
Consideration :
Creation of high performance norms
Minimizing or channeling group conflict to useful ends
Creating satisfying interpersonal relations
Integrating characteristics of the technical work system in to the structure of the group
Guidelines for designing self directed teams:
Team should be relatively small (8-20 people) so that group membership is psychologically
meaningful
If teams are to receive training it should be in work skill areas or cross-training.
Pay system should be structured so that the individual pay is based on the group performance.
Role of manager switch from vertical liaison with higher management to horizontal integrator of
teams.
Team have an expanding job range (authority to plan, organize and control work and responsibility
for quality and quantity of its performance)
A mature self-directed team expected to perform the following tasks:
Evaluate each other using peer reviews
Cross train each other until all members can do all related jobs assigned to the team
Schedule work and assignments within the team
Divide work assignments to fit the needs of team members
49
Empowerment
Empowerment is the sharing of decision-making power by the organization with its employees.It is
commonly found in organizations that support participation and exhibit features of system 4 organizations
Prerequisites for empowerment to be effective:
The capability to become psychologically involved in participative activities.
The employees have a motivation to act autonomously.
The capability to see relevance of participation for once well-being.
Participation in decision making is a core element of job design. From an individuals standpoint
participation has three important features:
Psychological involvement: when employees are involved in decision making, they are often absorbed
in to what they are doing (more higher order needs are satisfied).
Motivation to contribute: Participation encourages employees to make personal contributions to their
organizations. Intrinsic rewards help employees internalize the motivation to contribute.
Acceptance of authority: When employees experience greater control through participation, they
become more willing to accept delegated authority.
Reasons why a company would reasonably avoid empowerment, self-directed teams, and participation
which are expensive and time-consuming to install:
The industry of the firm has high entry barriers or the firm enjoys government protection
Competition tends to overlook the company because it is too small, or the firm has excellent process
and product protection through trademarks, patents and licenses
Worker productivity gains can be achieved without greatly increasing capital intensity
The organization already has a lean staffing system with limited management
Employees jobs are specialized and their work is controlled by standard rules and regulations
Employees abilities for problem solving in empowered teams are not sufficient
Heavily unionized industries might find it hard to redefine jobs
Participation and empowerment often results in layoffs of middle managers. If the company is growing
and middle managers are hard to come by, it might want to keep them around
Is the new job design system is not linked to a strategic plan, the change becomes a means in itself
rather that a means to improve productivity, performance, quality, etc.
50
51
EBS MBA Program
Module 6 : Work Group Dynamics and
Group-Based Problem-Solving
Presented by :
Dr. Karim Hamza
PhD.; MBA; PMP
52
Agenda
Group Structure and Definition
Project Teams
groups & organizations
Work Group
Conflict Management
53
Group Structure and Definition
Group within organization are two or more employees that
interact with each other,
perceive themselves as sharing several common interests or goals,
work together to achieve organizational activity.
Work Group Types :
Formal Groups : formal assignment mechanisms are used to assign
membership in a groups
Two or more members
Prescribed interaction patterns
Purpose(s) started in meaningful organizational terms
Members are aware of the formal groups existence and their involvement in it
Informal Groups are groups of employees that come together voluntarily for
a common purpose, which may or may not be work related. Formal groups
have the following characteristics:
Task Groups work together on a series of related activities
Command Groups exercise authority within the organization.
54
Project Teams and Effective Organisations
Characteristics of successful use of project teams to find
solutions for organizational problems:
The life span of the typical project team is kept short.
Membership is always voluntary; thereby the projects have to be
perceived as interesting an motivating so that people want to join.
The project team is put together quickly without a formal selection
process.
Follow up to the suggested solution is swift as close ties with higher
management are formed.
Team members develop expertise in gaining organizational support.
Communication and Project Documentation are informal so that
the projects focus stays with the problem and does not shift to
creating a paper trail.
55
Aspect of joining groups & organizations
The central aspect of joining groups and organizations is the individuals belief,
that membership creates a pathway to the satisfaction of important needs.
Main factors why individuals want to join groups are as follows:
Interpersonal attraction is defined as a set of factors that lead to the
conclusion that members share similar and highly desirable characteristics
Physical attraction
Attitude, value, and/or belief similarity
Economic and social similarity
Race and gender similarity
Perceived ability of others
Activities of the group
Goals of the group
56
Work Group Composition, Cohesiveness
Composition of group may be homogeneous or heterogeneous with respect to
member traits.
Homogeneous groups have members with similar qualities in several areas (values,
work experience, intelligence, gender and education).
Heterogeneous groups have members who differ in given characteristics.
1) Creates more conflict
2) Increases a groups potential problemsolving capacity.
Cohesiveness important result of group composition , defined as a multifaceted
concept composed of:
1) attraction to the group, including resistance to leaving it,
2) high morale exhibited by members
3) strong coordination of member effort
Managers can raise cohesiveness by:
controlling the work group composition
matching the groups task to the characteristics and qualification of the members in
the group
keeping the group size relatively small
providing clarity on goals and activities
disturbance handler in heterogeneous groups to facilitate agreement and establishing
ground rules for handling conflicts
creating the group perception of a common enemy
carefully timing positive group feedback around group performance successes
Conditions influence work groups will be high performers
1) level of work group cohesiveness,
2) Performance goals set by the group
3) Degree of agreement between group performance goals and organisational
performance goals
57
Work Group Norm
Norms are the groups standards for members behaviour. it exist in any
work group and exhibit several common properties.
Norms streamline and summarize the influence process to make the
workgroup more efficient at policing member behavior.
Norms apply to member behavior and not their thoughts.
Norms develop for behaviors influence levels of member effort and
group goals.
Group norms develop over time and are resistant to change.
Some members have more rights to deviate from work group norms
than other members do.
58
Group think
If cohesiveness is extremely high, members of the work group voluntarily adapt their behaviours to the
groups norms. If a work groups critical thinking process is suspended because of high cohesiveness and
conformity, groupthinkis present.
When groupthink is present, members are much more concerned with solidarity and fellowship than with
the quality of decisions
Symptoms (Sample: Cubas Bay of Pigs, Vietnam War , mad cow )
1 Members conclude that success can be achieved easily even in the face of unfavourable odds.
2 Collective rationalisation.
3 Mindguards. guards who sift through and eliminate unwanted negative external information.
4 Belief in the inherent morality of the group. The group may conclude wrongly that its decision is moral
and upright, and justified on morality
5 Negative stereotyping of the opposition. characterise opposition as dull, stupid, confused
6 Direct pressure applied to dissenters. If a member disagrees with the groups course of action,
considerable pressure is applied by mindguards to bring him back in line.
7 Selfcensorship. Some group members may doubt tgroups decision, but they opt for silence
8 Illusion of unanimity. Each member mistakes the silence of other members as their agreement with the
groups course of action.
How to safeguard against groupthink:
1.Leader assigns role of critical evaluator on a rotating basis to members of the group.
2.Influential members should not pre-specify solutions or methods for reaching solutions.
3.Leaders might have subgroups arrive at their own conclusion first before polling the entire group.
4.outside experts might provide guidance to the group.
5.When group decision-making deals with competitive organizations, sessions should be devoted to
exploration of warning signs and possible forms of retaliation.
6.After group made its decision, second chance meeting for expressing doubts should be held.
59
Group Structure
Group Structure is defined as the arrangement of roles or positions within the group.
Positional status refers to the rank of a position in a work group and is expressed in the
amount of responsibility for managing the group and the groups hierarchy of authority.
Personal status is the rank, standing, or prestige of the individual in the work group.
Group size influences several aspects of a group:
As a group size increases the range of abilities, talents and aptitudes of members for task
accomplishment increases
Larger groups provide for more opportunity to meet interesting colleagues
As work group size
increases the opportunity
for direct participation
Decreases
As work group size
increases the opportunity
for internal conflict
increases.
60
Management of Work Group Size
Middlesized groups (5 to 11 members) tend to make more accurate decisions
than groups outside that size range.
Small groups (2 to 5 members) are better able to achieve consensus than large
groups.
Larger groups (11 or more members) generate more ideas, but as size
increases beyond 20 members, the number of ideas relative to the number of
members (actual performance per member) decreases.
Groups of 4 to 5 members foster greater member satisfaction than middlesized
or large groups.
Very small groups (2 to 3 members) can make members very anxious about
their high performance visibility.
61
Group Dynamics - Work Group Development
62
Brainstorming, Nominal, Delphi Technique
Brainstorming technique for generating ideas, not for evaluating them. It does not require
accountability for the idea, so creativity is more abundant and less inhibited. Procedure
and rules
Assemble work group and appoint a session leader
Define purpose and/or problem (ideas, strategies, solutions, alternatives, etc.).
Set a time limit for the session.
Select a recording method
Review the rules of brainstorming:
Break down complex problems into problems specific enough to be brainstormed.
Any suggestion or idea can be proposed by any member at any time.
Criticisms or evaluations are not allowed during the brainstorming period.
Idea evaluation is separate from and follows idea generation.
Do not use brainstorming as a substitute for individual thinking.
Nominal group technique (NGT) separates idea generation from evaluation; it lessens
the influence of dominant individuals in the group, ensures the systematic movement
towards aggregation of votes to a preferred outcome, and is usually experienced by group
members as satisfying. NGT procedure:
question under study posted in front of the group whose members silently generate ideas
session facilitator goes around the table and asks each participant to read one idea
Each idea recorded is discussed in the order it appeared. The session facilitator reads each item
and asks the participants if there are any questions or points needing clarification.
A final vote is taken
Delphi Technique used for decision making when the group can not meet. Members may
not know other members of the group. This technique also eliminates the effect of
dominant personalities and member status in the group. Delphi procedure:
63
Guidelines for Managing Groups
Guidelines help to minimize the process loss in the group:
Define work groups tasks and problems carefully
Do not jump to idea evaluation before idea generation has created
numerous alternatives
Avoid groupthink
Manage the norms of the group by making values rewards
contingent on high-quality group performance
Make group level rewards contingent on the groups contribution to
work unit success
64
Managing Intergroup Behaviour & Performance
Groups interact with each other due to the following reasons:
Interdependence
Information flow
Integration
Interdependence refers to the frequency and quality of the interaction between the
groups. If the groups have a high level of uncertainty (tasks unclear and/or highly
complex), the information requirements rise rapidly. If the number of interacting groups
rises together with task uncertainty, the information requirements escalate.
If integration requirements between the different groups are low, they can become highly
differentiated and develop their own methods and forms of communication. Integration
requirements generally rise with an increase in task uncertainty.
When and if a company switches from a hierarchical to a delayered structure with self-
directing teams, the above factors can cause major obstacles in successfully making the
change in the organizational structure.
Developing effective intergroup relations:
Create rules and procedures to ensure communication and cooperation between groups for tasks
requiring cooperation.
In order to foster better understanding between the groups, members might be exchanged
temporarily.
Formally creating a position (linking role) designed as overseeing and linking the groups.
Using task-forces to temporarily create a group filling the linking role.
Due to a need for fast decision-making, organizational security, or intergroup conflict the groups
might benefit from decoupling them (potentially just temporarily). focus on integrating product
features rather than competing for scarce product development resources.
65
Laggards - Social Loafing
do not perform their fair share of the groups work
social loafing:
1) equity of effort (Everyone else is goofing off, why shouldnt I?);
2) loss of personal responsibility (Its a large group, so no one will miss me);
3) reduced effort caused by reward sharing (Everyone is paid the same, so
why should I put in extra hours?);
4) coordination complexity in larger groups (There are so many of us that
were getting under each others feet).
How to manage social loafing:
Focus on the interesting and important aspects of the task to increase the
level of job involvement of group members.
Assure group members that their individual contributions are identifiable
and significant.
Tell group members that they should not tolerate inadequate effort or
performance from group members.
Tell them that they should expect to have their performance evaluated.
Ensure that some portion of rewards received by group members is
dependent on their performance.
66
Decision-Making in Teams
The Vroom-Yetton-Jago normative decision model lists the following forms of
decision making:
AI: A manager makes a decision alone, using the information currently
available. This is the most authoritarian, boss-centered style of decision-making.
AII: A manager seeks information from subordinates or group members and
then makes a decision. Employees may or may not be aware of the problem
before the manager takes a decision.
CI: A manager explains the problem to his subordinates in a one-to-one
format. The manager takes a decision which may or may not reflect the ideas of
his subordinates.
CII: A manager explains the problem at hand to his subordinates in a group
format. The manager takes a decision which may or may not reflect the ideas of
his subordinates.
GII: A manager explains the problem to his subordinates in a group format.
With the manager, the group makes a final decision.
67
Conflict Management
Traditional View : Organisations use two categories in managing conflict in and
between work groups:
1) conflict is always dysfunctional and unhealthy for the organisation
2) conflict is a byproduct of organisational life and it is unavoidable but manageable.
keep conflict under strict control
Contemporary View : conflict in and between groups can be a useful deviation
from the status quo.
if deviation can be managed, then positive byproducts can emerge.
suppression or avoidance of conflict is impossible and far too costly to merit serious
managerial consideration.
Methods used to deal with conflict:
Avoidance: is usually a short-run, damage control strategy. It is used when
there is no chance of satisfying the concern,
the cost of disruption outweigh the benefits of resolution,
Accommodating: should be selected when
a manager decides he is wrong and shows reasonableness,
an issue is more important to others than it is to the decision maker,
to cut losses when in a loosing argument,
the goal of harmony is more important than the potential benefit of the resolution, or
Forcing: should be selected when
emergency conditions require decisive action,
the issues is extremely important and unpopular actions have to be implemented,
the company is at stake and the decision maker knows he is right, or
Compromising: should be used when
the opponent has equal power and is committed to mutually exclusive goals,
a temporary solution is needed for a complex issue,
time pressure dictates a quick resolution, or
Collaboration: both parties are involved in solving the problem permanently through
mutual commitment to the solution. Usually these steps are followed:
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69
EBS MBA Program
Module 7 : Influence ,Leadership and
Entrepreneurship
Presented by :
Dr. Karim Hamza
PhD.; MBA; PMP
70
Agenda
Power
Leadership
Entrepreneurship
71
Types of power
Types of power and how to obtain it
Power is the ability to influence someone else. and capacity to modify employee behavior
Characteristics:
It can only be wielded in a relationship which other people depend upon in some way. It
has no meaning outside of human relationships.
Individuals can learn to wield power effectively
power can flow in any direction in an organization
Authority right to order or ask others to do what you want them to do.
Influence process of affecting the thoughts, feelings, and behavior of others.
Interpersonal power classified into:

Reward power is the capacity to exert influence by providing positive outcomes and
preventing negative outcomes. It is often used to back up legitimate power.
Coercive power is the capacity to exert influence by the use of punishment and threat.
Again, it often supports legitimate power.
Legitimate power is the capacity to direct the behavior of others due to ones position in
the organizational hierarchy.
Referent power power-holder is well-liked and admired by others. based on interpersonal
attraction and is much more personal than either reward or coercive power.
Expert power represents power gained through the possession of expert knowledge that
is valued in the organization.
72
How do employees obtain power?
Building an image of success.
Creating obligation in others (quid pro quo).
Identifying with powerful people.
Giving excellent performance.
Limiting access to information,
Controlling supplies, resources.
Developing a network.
Reorganizing the job (taking new responsibilities, adding objectives and tasks)
Taking risks and being creative
Being a knowledge worker
Manipulating rules
Controlling personnel decisions
Controlling financial resources
Managing your boss
73
Uses and Abuses of Power: Playing Politics
The following factors influence the power of a subunit or organizational group:
- Scarcity - Uncertainty - Centrality - Absence of Substitutes
Organizational Politics refers to the management of influence to obtain ends not
sanctioned by the organisation or to obtain sanctioned ends through nonsanctioned
(illegal) means
Approved methods & approved outcomes : No political activity is occurring
Approved methods & unapproved outcomes : organisations rules are followed to achieve
organisationally undesirable outcomes.
Unapproved methods & approved outcomes : pursuit of valued outcomes by using
questionable methods
Unapproved methods & unapproved outcomes : mastering art of covering their tracks
How Managers play political :

1) whistleblowing : informs a reporter, Government - high ethical standards
2) line versus staff conflict Line managers fear the encroachment of staff experts in their line
authority. Practises: withholding information, gaining access to powerful executives, building better
images and increasing centrality,
3) sponsorship and coalitionbuilding employee attaches himself to someone (or to a group)
4) Insurgency or resisting authority following the letter of the law, or interpreting and enforcing
policies in a manner unintended by management.
Looking Upward: Managing the Boss : well-understood needs styles & expectations;
keeping your boss informed: dependability and honesty; documented performance;
selective use of your bosss time and resources.
74
Leadership
Leadership is the power of one individual to guide the actions of another.
Leaders are individuals who advocate change and who try new approaches to
problems.
Manager common roles 3 categories:
Interpersonal : Figurehead/chief , Leader/encourager , Liaison/linking pin:
Informational : Monitor/surveyor , Distributor , Advocate
Decisional implement and monitor progress towards
Research in leadership categorized in:
Trait Approach the leader himself has some influence on the outcome of work and
the success of the organization.
Behavioral Approach stresses the importance of the constancy and predictability of
leaders behavior across leadership situations.
Situational Approach the leaders traits and behaviors are considered in terms of the
situation that they confronts.
Situational leadership theories
Fiedlers contingency theory proposes that leader behavior interacts with the
favorableness of the situation to determine the level of group effectiveness. Some
situations are more or less favorable.
Houses path-goal theory is concerned with situations that cause various leader
behaviors to be most effective. transactional theory of leadership how a leader
exchanges rewards for performance and effort from subordinates.
75
Entrepreneurship
Entrepreneurship is the creation of wealth by assuming risk through equity,
time,or career commitment to add value to a product or service.
Intrapreneurship Entrepreneurship activity is performed in a large organisation
Drucker, entrepreneurship is a discipline which can be learned and it is
characterised more by hard work than by romanticism
How do organizations encourage entrepreneurial employees and innovation?

Idea Champion Each innovation in an organization begins with a Champ that
generates an idea and retains responsibility for developing the idea in the
organization.
Sponsor who nurtures the new concept and applies organizational resources to the
increasingly disruptive and expensive development of the idea.
Godfather organization must have employees who occupy the role of orchestrator or
who handles all of the political obstacles surrounding the commercialization of the
product, service, etc.
GreenHouses Large organizations might also need to create horizontal co-ordination
mechanisms which protect innovation teams from outside influences.
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77
EBS MBA Program
Module 8 : Organisational Design
Presented by :
Dr. Karim Hamza
PhD.; MBA; PMP
78
Agenda
Organisational Structure
Coordination and Control
Service Quality
79
Introduction
how managers put people together to coordinate their work and to achieve the
organisations goals.
Companys structure resolves 2 basic tasks of getting work done:
1) dividing up the work in the organisation
2) ensuring the work gets done by providing coordination and control of employees
work activities.
The organisational arrangements include:
1) Division of labour : is the degree of job specialization in a firm. It is the specific
tasks and work methods of an employees job. Division of labor results in
specialization and it is the primary source of increasing marginal productivity in work
units.
2) Delegation of authority:how much authority to give to a subordinate.
3) departmentalisation : how work activities are grouped together.
Functional Design , Territorial Design and Combined Product & Territorial Design
Matrix departmentalisation : evolved in aerospace firms which often work on very
complex projects requiring more coordination than is possible in any of the previous
designs.
4) Span of Control number of subordinates that a manager is supervising
80
Organisational Structure
81
Departmentalization - Functional design
Functional design established workgroups based on the function that they perform in the company
Advantages of Functional Design : Disadvantages of Functional Design:
structure is logical reflection of the firms functions. Overspecialization and this can narrow the business
based on specialization (i.e., the purchasing ) viewpoints in functional departments.
efficient because individuals in functional development of managers is limited to their functional
departments learn to speak a common language areas.
minimizes the extent of duplication of effort. Coordination between departments can weaken.
Training of employees is narrowed and simplified. Employees identify more strongly with their
facilitates tight control and the legitimate authority of departments than with the culture of the firm.
the chain of command is reinforced. chief executive may be overburdened.
Managers may fail to develop a strong focus on
customers, products or markets
82
Departmentalization - Territorial design
Territorial design establishes work groups based on a geographic area
Advantages of Territorial Design: Disadvantages of Territorial Design:
Tailors work units to the particular features of danger of duplication of effort across departments
customers in a given region, i.e., British, serving various territories or regions.
provides excellent training ground for managers as company must be able to hire general managers
they are assigned to different regions. who are capable of handling several functions such
provides an excellent basis for the career as production, sales and human resources.
development of managers (movement from field
operations to company headquarters).
creates work units that are highly responsive to
specialized customer needs.
83
Departmentalization - Product design
Product divisional design establishes the work groups based on products of the company
Advantages of Product Divisional design : Disadvantages of Product Divisional design

provides adaptability & flexibility in meeting the Product divisions can duplicate effort and resources
needs of customers and the companys ability to as they attempt to solve similar problems without
manage a set of related products. consulting other divisions
External changes can be detected more readily and Finding and training people to head each division is
understood in product-relevant terms. a difficult job.
Employees gain deep understanding of product and When product divisions attempt joint ventures
market characteristics (good training for developing conflicts can arise due to sharing resources and
managers with generalizable skills). agreeing on transfer prices.
The structure encourages the development of
separate business units (profit-centers) which top
management can pit against each other through
friendly competition to maximize profits.
Performance measures are easy to create and
judging the performance of various product divisions
is less complicated.
The design shifts some of the burden for general
management from corporate executives to division
executives
84
Departmentalization - Matrix design
Matrix design overlays a project or product design on a functional design.
Advantages of Matrix Design: Disadvantages of Matrix Design
combines the strengths of the product divisional and It is a confusing design because employees may
functional designs. not know who their real boss is.
blends an emphasis on market changes with The design requires excellent planning and
management and technical expertise in given resource allocation to ensure that functional work
product or project areas. proceeds and projects do not starve.
develops managers with technical product and Project managers must have excellent technical,
project knowledge who can communicate effectively political communication, and managerial skills.
with marketing, production, and personnel from other When an organization decides to go matrix, it must
functional departments. often do extensive training or hire new employees
A self-contained department can devote its with project management experience.
undivided attention to the needs of its product, may lead to excessive overhead costs because
project or customer groups. projects may over-hire technical and support staff.
firm can focus on specific products and their
development without creating permanent units which
may outlive their usefulness.
85
Organisational Structure: Basics
Centralization is the retention of authority to make decisions by top management.
Highly centralized firms usually trigger:
Formalization, which is defined as written documentation of rules, regulations, and procedures
which guide employee behavior and organizational decision-making.
Standardization, which is the degree to which behavior variation is allowed in a job or a series of
jobs.
Decentralization is the process of pushing authority down the organizational hierarchy so that decisions
are made as close to the origin of organizational problems as possible.
Strength Weaknesses
Meshes well with rapid change and fast company growth Innovation is often restricted to projects or specialized
programs
High awareness for projects, programs, or products Difficult to allocate pooled resources such as computer
analysis
High task focus that yields control over time, financial, & Co-ordination problems in joint functions,ie
resources purchasing
Customer can determine task responsibilities and project- Deterioration of broad managerial skills and potential
personnel are highly responsive to their needs for loss of technically skilled employees
Concurrent multiple tasks can be coordinated across Jurisdictional and priority disputes
functional departments
Possible neglect of high level coordination to ensure
organizational effectiveness
86
Inter-organizational Designs
common forms of inter-organizational designs are :
Conglomerate (Unrelated diversification) is a holding company that acquires many other
companies which have entirely different business strategies and operate in diverse industries. It is
the expression of the strategic principle of unrelated diversification.
acquisition of companies because they are:
undervalued,
financially distressed; or
likely to grow but cannot because they have limited capital.
Making a conglomerate successful requires the linking of comparatively autonomous
companies into a successful enterprise that increases shareholder wealth faster than
alternative uses of capital.
strategic business unit is a grouping of companies based on an important strategic
element such as overlapping competitors, a closely related strategic mission, or a common
need to compete globally. (GE)
Conglomerates are not confined North America and Europe. In Japan they are called a
keiretsu which is a corporate system that links suppliers and manufacturers that are
clustered together to take advantage of geographic, logistical, and financial proximity.
Mitsubishi is an example of a keiretsu. It is composed of three leading companies: 1)
Mitsubishi Corporation, 2) Mitsubishi Bank and 3) Mitsubishi Heavy Industries
87
Inter-organizational Designs
Strategic Alliance is a cooperative agreement between two
firms that fall short of a merger or full partnership.
Used To :
overcome a competitive disadvantage in international markets.
gain economies of scale in production or marketing,
fill perceived gaps in technical or manufacturing skills,
gain access to markets by lowering entry barriers.
Drawbacks of alliances
require exhaustive coordination through meetings and task forces,
decisions have to be made on what is shared and what remains
proprietary,
overcoming language and cultural barriers,
need to rise above suspicion and mistrust,
potential to depend too much on expertise in another company.
88
Coordination and Control
Amount of coordination necessary depends on the amount of information that needs to be processed
during task execution.
Coordination is required to reduce the amount of uncertainty for employees and their subunits about
what they are supposed to do.
Vertical coordination strengthens the link between organization levels & must decrease uncertainty
Teams and task forces
Direct supervision
Standardization of work processes
Standardization of outputs
Performance appraisals
Management Information System
Horizontal coordination mechanisms ensure the orderly processing of the companys workflow:
Direct contact
Liaison roles
Cross-functional teams
Permanent teams to manager recurring workflow problems
Control is the set of mechanisms used to keep action and outcomes within predetermined limits.
setting of work standards,
measuring results against plan,
initiating corrective action.
Control can be used in the form of either process control or results control.
Process control deals with the standardization of task performance in order to achieve economic efficiency
by reducing the marginal costs of production. External process controls that are often perceived as resulting
in mindless jobs have been largely replaced by internal process controls applied by self-directed teams.
Results-oriented control system is management by objectives (MBO). MBO systems try to ensure that
managers set specific measurable goals, monitor progress toward these goals, and receive rewards based
on their accomplishments. Firms relying on output controls can remain more open to environmentally induced
uncertainty.
89
Characteristics of MBO Systems
MBO relies on superiorsubordinate meetings
1) to establish goals,
2) to review periodically goal activities and results,
3) to resolve conflicts and take corrective actions.
Success of MBO system :
Knowledge of what is expected (Reduction of misunderstandings)
Knowledge of results (performance feedback)
The function of the superior (provide feedback which is work oriented & not personality oriented)
Steps in the MBO Process:
Members establish goals and action plans for achieving those goals.
ensures that everybody understands them.
Employees in the work unit establish their own action plans for achieving their goals.
superior and subordinate jointly establish outcome criteria for assessing success.
superior conducts periodic formal and informal feedback
system is documented with all goals set down on paper.
Goals are cascaded down the hierarchy. (become more specific & quantified at lower levels.)
Problems when implementing MBO:
Employees can develop tunnel vision about results and they may not give adequate attention to
how task activities should be done. MBO can be more effective if it is linked to product and service
quality standards.
MBO degenerates into a paper chase,
Superiors fall into an either punish or reward mentality regarding results achieved by
subordinates.
collaborative aspects of the system are lost if employees have too many goals or they are worried
about accomplishing their specific goals.
90
Responsive Organisation
strategies to regain or maintain Competitive Advantage :
Simplify and delayer
Reassign supporting staff employees
Widen spans of control
Empower the workforce
Create team based work systems
Boundaryless Organization is one in which traditional vertical and horizontal boundaries are made
more permeable and flexible by using self-directed teams, technologically sophisticated
communications, responsiveness to customers, outsourcing, and strategic alliances.
Authority Boundary is the natural distinction between leaders and followers in firms. To overcome the
authority boundary managers must learn to lead while remaining open to criticism and advice from lower
ranking employees that are experts on the various problems that arise. down-sizing and other decisions
taken by management often lead to a reappearance of the authority boundary.
Task Boundary emerges when someone decides who must do what when departments work together.
The biggest threat to overcoming the task boundary is managements view of cost versus investments.
When management sees accounting view of costs (like training, R&D, etc) associated with employees
they will drive towards minimizing cost. When managers instead adopt the value-added approach all
costs are seen in the context of adding to future earnings; they become investments.
Political Boundary is made up from the different political agendas which can divide company units and
create conflict. The boundaryless firm manages such political disagreements by creating a culture which
emphasizes the best interests of the work teams, the network and the firm through the complementary
processes of accommodation and conflict management.
Identity Boundary consists of employees shared experiences and beliefs which they insist set them
apart from the rest of the company. When this boundary is well developed, members of departments
and work groups have an us versus them attitude. To overcome it, firms try to excel at socializing new
members to get them to identify with the company and its goals.
91
Horizontal firm
The horizontal firm depends less on traditional departments composed of
employees with functional expertise.
functional specialists are uniformly spread among the work teams which perform
core processes.
Companies are going horizontal for a number of reasons.
1 The structure reduces cycle time in production and service. Documents and
decisions pass through fewer layers and among fewer teams before decisions are
taken.
2 The benefits (competitive advantage) of downsizing diminish rapidly in firms that
cling to the hierarchically oriented functional or product divisional structures.
3 Downsizing may reduce costs, raise productivity and temporarily increase
profitability but it does not fundamentally change the way work is done.
Work is still handed from one department to another even though there are fewer
people in the departments.
Any firm can downsize and obtain some temporary economic gains. To hold a
competitive advantage, downsizing must be done in conjunction with a
fundamental alteration in the way work is organised and completed.
92
Selecting the Best Design
The emergent designs for highly competitive firms are no
longer the functional, product, territorial or matrix
configurations.
Instead, these designs are delayered, technologically
sophisticated and highly customer oriented.
Breakdown of boundaries among units in the firm and
between the firm and its customers is driven by the search
for competitive advantage in industries that are more
deregulated And global.
93
Service Quality
Reasons why service quality improvement is a driver of sustainable competitive
advantage:
Differentiating service is often easier and faster than differentiating products in terms
of their physical characteristics.
Customers demand better quality.
Service improvements strengthen brand loyalty and erect market segment and
industry entry barriers.
Bad service quickly drives off customers and lowers or erases profits.
Developing services differs from manufacturing products
Not until service is demanded is it produced
Service is often provided by employees not under the direct supervision of a manager
Services are provided when and where the customer desires.
Services are labor intensive.
Service is intangible and its characteristics are more difficult to measure than the
features of a product with distinctive performance and physical characteristics.
Service is often produced in the presence of the customer who participates in the
delivery process.
Competitive advantage through service improvement,
A well-conceived strategy for service
Customer-oriented front-line people
Customer-friendly systems
94
Service Quality
Principles of service quality improvements :
Classifying the services on the client/customer spectrum
Organizing to improve customer service
Using employee empowerment
Abandon manufacturing assumptions in service quality delivery
Steps necessary to create a service-driven organization:
Conduct a service audit
Develop a company wide service strategy
Conduct wall-to-wall employee training
Implement the service improvement program
Make the service improvements permanent
95
96
EBS MBA Program
Module 9 : Managing Transitions:
Organisational Culture and Change
Presented by :
Dr. Karim Hamza
PhD.; MBA; PMP
97
Agenda
Organizational Culture
Organisational Life-Cycle
Organisational Change
98
Organizational Culture is the value and beliefs which are understood by employees.
Organization might have multiple cultures,
quality of the fit between the organizations culture and its strategy direction influences the organization.
strong culture that integrates the various subunits and occupational cultures enables excellent
integration and methods for managing conflict.
Disadvantages of a strong company culture:
A strong culture might limit the flexibility of a company in the face of rapid change required to
adjust to changed circumstances.
Strong cultures may not mix well when one firm acquires another.
Some strong cultures threaten reaching of organizational goals because the culture legitimizes
infighting, secrecy, and empire-building.
Socialization Process : In order to familiarize employees with the culture of an organization,
Realistic job previews during hiring
Debasement and indoctrination are used to humiliate and indoctrinate to open new employees up
for corporate norms and standards of excellence
Intensive on the job training on core job areas
Adjust the reward and promotion system
Use top managers as personal role models for the companys culture
Reinforce the culture with stories about the organization and its founder
Use mentors to develop younger employees
99
A companys culture should:
strongly reinforce its long-term financial performance. A strong culture
forges powerful bonds among workforce motivation, company financial
performance (ROI, ROE, ROA), company controls and organizational structure.
align with strategic or market goals. If a company pursues the low-cost
producer strategy, its culture must support principles of lean staffing, few
management layers, decentralized decision-making and so on.
The adaptation aspect of culture emphasizes flexibility and it encourages the
workforce to adapt to the firms financial and market strategies.
The HOME approach to culture improvements P.9/10
based on 1- managements trust and respect for the workforce and 2- improvement of
the quality of the employment relationship in the company.
History
Oneness
Membership
Exchange
The central aspect of organizational culture is adaptiveness.
Example : Watson on IBM, Gates on Microsoft, and Michael Dell on Dell
100
Organisational Life-Cycle
101
Organisational Change
Companies with high environmental uncertainties have to actively plan for change. They must have the
ability to monitor and survey their environments constantly and proactively search to anticipate change
rather than react to it.
Change of goals and strategies: organizations may introduce new products and services, or
segment markets.
Change of technology: introduction of new (sometimes disruptive) technologies can lead to
organizational change.
Change of structure: Organizations can modify themselves by changing from a functional to a
product or territorial design while shifting from centralized to decentralized decision-making.
Indicators of poor organizational health such as
diminished productivity,
increased customer complaints,
increased absenteeism,
strikes
Organizations often respond to these environmental challenges by changing.
Job design. The work performed by individuals or teams can be modified to provide more
opportunities for satisfying the needs of employees.
People. The organization improves the quality of service and speeds up decision-making by
developing a program of employee empowerment based on the use of self-directed teams.
Control systems. organization can alter its performance appraisal and reward systems. These
changes encourage new behaviors which employees believe will result in their receiving rewards .
Auccessful corporate transitions three conditions have to be met:
Dissatisfaction with the status quo among employees who must change their behavior.
Need for a model or vision of the future, which will guide the redesign of the organization.
need for a well-managed process of change to help employees modify their attitudes and
Dr. Karim Hamzabehavior. www.karimhamza.com Organisational Behaviourt
102
Organizational Change Process
Planned change goes through the following stages:
Unfreezing occurs when employees feel dissatisfied with the old culture and processes in the organization.
constructive destruction of ineffective company processes and features.
Diagnosis is the collaborative process between the organization and a change agent to bring organizational
problems into focus. Diagnosis is an integral part of the unfreezing process and it is usually triggered by an internal
or external event which has created uncertainty for managers.
Changing occurs when an action plan is implemented to move the organization and its members to adopt new
behaviors and accept changes to culture.
Resistance happens when employees fear that the personal and organizational costs of change will exceed the
benefits or The other side of the resistance coin is preference for the status quo.
economic uncertainty,
knowledge obsolescence,
loss of personal power,
increased conflict or
changes in work relationships.
Carry-Over to the work setting: Some change programs are conducted off the work site and participating
employees are supposed to sustain the behavior change back on the job. successful transfer depends on:
The elements in the change process correspond to specific features of the work environment.
The change is perceived to be immediately useful in the work environment.
The changed attitudes or behaviors are supported by others in the work environment.
Refreezing occurs when newly developed behaviors, work designs, organizational structures and processes are
adopted and become permanent parts of the firm and its culture.
Evaluation: Once organizations begin to benefit from change programs, managers are often so pleased with the
results that they pay little attention to understanding why the successes occurred.
Institutionalization: If a change program achieves favorable outcomes, the firm will want to make the change a
permanent part of its systems, culture and structure.
Diffusion: Most change programs do not include the entire organization. They start small and build momentum
during the early project successes. Diffusion refers to the institutionalization of the change throughout the firm.
103
Organizational Change Process
104
Change Methods
Organizational Development (OD) is a system-wide application of
behavioural science knowledge to the planned development and
reinforcement of organisational strategies, structures and processes for
improving an organisations effectiveness. A strong emphasis is placed
on interpersonal and group processes.
OD is based on the following assumptions:
Employees are growth seeking and they desire self-fulfilment.
Employees can assume delegated authority and they try to contribute to
organisational goals.
Open and honest communication in organisations is desirable.
Most organisations can benefit from improved trust and cooperation.
Interpersonal and group change efforts:
OD change methods classified:
1) interpersonal and group (ODs origin),
2) system wide process changes
3) Grid OD. Largescale
105
OD change methods
interpersonal and group (ODs origin),
T-group (sensitivity groups change) developed by Kurt Lewin . concentrate on the
interaction in face to face groups. managed by a change agent (facilitator) to provide
members with realistic experiences in interpersonal relations
Teambuilding has been developed in response to the problem of carryover in Tgroups.It
focuses on work groups, project teams or newly created work units which must work
together to achieve organisational goals.
Teambuilding objectives:
1 Developing methods to make decisions and set goals.
2 Handling conflict between project teams and functional units.
3 Improving relationships between the groups manager and its members.
4 Solving product or service quality problems.
5 Integrating new members in formal or project groups.
6 Clarifying job requirements and work expectations for members.
7 Attacking departmental or organisational co-ordination problems.
Teambuilding steps:
Team-building workshop
Data collection
Data confrontation
Action planning
Team-building
Intergroup Team-building
106
OD change methods
Survey feedback form of systemwide process change. It consists of
collecting questionnaire data from employees,
summarising the data,
feeding them back to employee groups
using the groups to diagnose problems
develop action plans to solve them.
Grid OD: (prepackaged OD method) a comprehensive, longterm effort directed
at changing the entire organisation. developed by Robert Blake and Jane
Mouton . basic assumption of the method is that company success can be
achieved only if there is a simultaneous concern for high performance and the
maintenance of a psychologically healthy work environment.
successfully change
In most cases it takes several OD methods or interventions to successfully
change a company/group.
A successful combination of interventions is one in which:
all employees participated in goal-setting, decision-making and job redesign,
employee empowerment was created through self-directed teams and
the company was delayered.
107
OD change methods
108
109

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Organization Behavior

EBS MBA Program

Dr. Karim Hamza www.karimhamza.com Organisational Behaviourt

Why Managers Need to Understand O.B

Building Blocks of Individual Differences

Study of Personality & Employees Traits

Employee Work Attitudes

Dr. Karim Hamza www.karimhamza.com Organisational Behaviourt

Dr. Karim Hamza www.karimhamza.com Organisational Behaviourt

Change in managers job increase because:

SOBC model of employee behavior in organizations (micro-level)

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Dr. Karim Hamza www.karimhamza.com Organisational Behaviourt

Dr. Karim Hamza www.karimhamza.com Organisational Behaviourt

Organizational commitment defines as the strength of an employees identification with

Dr. Karim Hamza www.karimhamza.com Organisational Behaviourt

Stress and Well-Being at Work

Causes and Consequences of Stress

Approaches to Managing Stress

Organisational Job Stress Management

Dr. Karim Hamza www.karimhamza.com Organisational Behaviourt

General Adaptation Syndrome

Alarm Mind and body prepare to fight or adjust to stressor by

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Environmental factors Individual differences Physiological symptoms

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Contemporary theories of motivation

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Expectancy is the subjectiveSelf Efficacy

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Performance Appraisal Methods

Management by Objective - MBO

Rewards and Reward Systems

Company Pay Practices

Group Based-Rewards Systems

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Job design Concept

Job Design method

Job Design Approaches

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