A Strategic Approach to Organizational Behavior

1
Chapter 1

• A Strategic Approach to Organizational Behavior

2
Chapter Outline

• Strategic Use of Human Capital
• Foundations of a Strategic Approach
• The Role of Human Capital in Creating a
  Competitive Advantage
• High-Involvement Management

3
Strategic Use of Human Capital

• The Mens Wearhouse philosophy
• Training
• Discretion responsibility
• Accountability
• Reward systems

4
Strategic Use of Human Capital

• The Mens Wearhouse results
• Lower turnover
• Higher employee satisfaction
• Stronger employee motivation
• NI superior to industry average
• ROI superior to industry average

5
Strategic Use of Human Capital

• The Mens Wearhouse has excelled in an
• industry where financial success is uncommon.
• No strong barriers to entry
• Little power over customers suppliers
• Highly competitive industry
• Less than favorable labor pool
• Most would get a better job if they could

6
Foundations of a Strategic Approach

• Builds on behavioral sciences
• Primarily psychology sociology
• Integrates knowledge
• Focuses on behaviors processes that improve the
  organizations performance
• Unlike other behavior sciences where focus is
  simply on understanding human behavior

7
The Role of Human Capital in Creating a
Competitive Advantage
Inputs
Outputs
Organization
8
The Role of Human Capital in Creating a
Competitive Advantage

• Tangible resources
• Property, factories, equipment, inventory
• Industrial economy
• Tangible resources were primary means of
  production competition
• Most valuable input

9
The Role of Human Capital in Creating a
Competitive Advantage

• Intangible resources
• Organizational culture, brand name, relationships
  with suppliers customers, reputation, knowledge
  skill of employees
• Knowledge based economy
• Intangible resources difficult to
• quantify value, yet most valued input
• Human capital is critical

10
The Role of Human Capital in Creating a
Competitive Advantage

• Human Capital
• The sum of skills, knowledge, general
• attributes of the people in an organization.
• Includes values, beliefs, attitudes
• Does not suffer from law of diminishing returns
  does not depreciate with use
• Grows more valuable as it is shared
• used over time

11
The Role of Human Capital in Creating a
Competitive Advantage

• Knowledge Management
• any structured activity that improves an
• organizations capacity to acquire, share,
• use knowledge for its survival success.
• Human Capital
• Structural Capital
• Relationship Capital
• Intellectual Capital

12
Human Capital as a Source of Competitive Advantage

• Value
• Are employees capable of producing work that
  supports the organizations strategy?
• Rareness
• Are skills talents of the organizations people
  unique in the industry?
• Imitability
• Can skills talents of the organizations people
  be copied by other organizations?

13
High-Involvement Management

• High-Involvement Management
• Carefully selecting training associates and
• giving them significant decision-making power,
• information, and incentive compensation.
• Senior, middle, lower-level managers must
  recognize human capital as most important resource

14
High-Involvement Management

• Selective Hiring
• Effort to generate large pool of applicants
• Assess through rigorous evaluations
• Multiple rounds of interviews
• Look at fit with organizations culture not just
  technical skills

15
High-Involvement Management

• Extensive Training
• Socialization into organizational norms
• Build skills beyond those needed in current
  position
• Training in latest tools
• Decision Power
• Empowerment can increase employee
• work effort

16
High-Involvement Management

• Information Sharing
• Share business plan, operating results, cost of
  materials, cost of turnover absenteeism,
  competitor information, etc.
• Information sharing is necessary for employees to
  be effective in using decision making power

17
High-Involvement Management

• Incentive Compensation
• Piece-rate system
• Performance bonus
• Knowledge-based pay
• Profit sharing
• Gain sharing
• Stock options

Incentive pay increases productivity
competitiveness