SHB2034 – Management Guru & Quality

Chapter 5: Organizational Behavior

TABLE OF CONTENTS
OBJECTIVES.........................................................................................................2
ABSTRACT............................................................................................................2
5.1 INTRODUCTION..............................................................................................3
5.2 HERBERT ALEXANDER SIMON ...................................................................4
5.3 OLIVER SHELDON..........................................................................................5
5.4 HENRY MINTZBERG.......................................................................................6
5.5 CHRIS ARGYRIS.............................................................................................8
5.6 CHARLES HANDY ..........................................................................................9
5.7 BURT NANUS................................................................................................11
5.8 BENJAMIN SEEBOHN ROWNTREE............................................................15
5.9 EDGAR H. SCHEIN........................................................................................17
ADDITIONAL MATERIALS..................................................................................19
OBJECTIVES
At the end of this topic, you will be able to:
• Enable learners to understand the lives, philosophies, ideas and contributions of
Organizational Behavior Gurus and Thinkers
• Enable learners to assess and evaluate the importance and impact of those ideas in
organizations and society
• Enable learners to relate the ideas to other management gurus from other disciplines of
knowledge
• Enable learners to apply the best and the most relevant concepts formulated by
management gurus and thinkers in behaviors and practices in daily lives.

ABSTRACT

Organizational Behavior is a contemporary management approach that studies and identifies

management activities that promote employee effectiveness by examining the complex and
dynamic nature of individual groups and organizational processes.
5.1 INTRODUCTION
The organizational behavior theory is a study that concerned with the actions of people at work.
Personal characteristics of organizational members such as abilities, attitudes, personality, and
culture are identified and examined to understand how these factors influence the effectiveness
of organizations and their members.

Significant time is devoted to frameworks for understanding motivation and behavior in

organizations and theories that provide direction for managing organizational members
effectively. The management gurus then explored the theories with a focus on understanding how
and why people react to organizational change and identifying the effective implementation of
change. These gurus include Herbert Simon, Oliver Sheldon, Henry Mintzberg, Chris Argyris,
Charles Handy, Burt Nanus, Benjamin Rowntree, and Ed Schein.
5.2 HERBERT ALEXANDER SIMON
Herbert Simon has made a major impact upon our understanding of the processes of
management. In place of a super-rational economic model of man assumed by classical
economics, he advocates an administrative model, a person of much more modest ability who is
incompletely informed about available options and their outcomes and who therefore 'satisfices'.
Satisficing is accepting a satisfactory out-comes rather than striving to maximize utilities through
ever more comprehensive search and involved computations. It is a process whereby decision-
makers take short cuts, use rules of thumb and a whole range of intuitive methods.

The associated psychological condition is 'bounded rationality', a condition whereby it is accepted

that perfect knowledge about options can never be achieved in complex decision making.
However, minimum performance standards can be set and once this minimum performance
standard is reached an appropriate choice is made and search for further options stopped.

Herbert Alexander Simon

Simon was born in Milwaukee. He majored in political science at the University of Chicago, but
was also interested in cognitive psychology and artificial intelligence, as well as economics and
decision making. In the late 1940s he moved to the Carnegie Institute of Technology which was
just establishing a Graduate School of Industrial Administration (his dissertation became
Administrative Behavior).

Apart from his interest in artificial intelligence, Simon is most often associated with the phrase
"bounded rationality" which indicates that decision making is subject to limitations and
acknowledges that we live in a 'satisficing' world (a neologism coined from 'satisfy' and 'suffice'.)
He won the Nobel Prize for Economics in 1978, the National Science Medal in 1986 and
published over 600 articles on a variety of subjects.
5.3 OLIVER SHELDON
Oliver Sheldon, who spent his entire career working for the well-known British Quaker company.
Sheldon was born in 1894 and died in 1951. According to him, it was the responsibility of the
company towards the society. It thought that the company had to serve the society and that the
ethics and the values were so indispensable in administration as in economy. The goods and
services had to be offered to the compatible lowest prices with a good quality level.

In 1923 Oliver Sheldon published the book; "The Philosophy of Management". He pointed out,
that management has a social responsibility. A business has a "soul", "as a major partner the
community'', and ''alongside capital and labour".

Responsibility of the Company Towards the Society

According to Sheldon, a company should be responsible to the well being of the society. This is
based on his main principles which were:
• The policies, conditions and methods of industry shall conduce to communal wellbeing.
• Management shall endeavor to interpret the highest moral sanction of the community as
a whole, to give practical effect to those ideas of social justice, which would generally be
accepted by the most unbiased portion of communal opinion.
• Management shall take the initiative in raising the general ethical standard and
conception of social justice.
5.4 HENRY MINTZBERG
Mintzberg through his observation on the manager characteristics at work identified 10
managerial roles that are divided into three areas; interpersonal, information and decision
making. Understanding these roles are very useful in working with managers in assisting them to
examine what they do with their time, is it appropriate for what they need to do or not.

His work on organization structures divides them into 5 categories - simple, machine,
professional, divisional and adhocracy. Within each of these the functions are further sub divided
into 5 groups - strategic, technical, operating, middle line, support. The value of each varies
depending on the task of the organization.

Henry Mintzberg
Henry Mintzberg, a Canadian academic born in 1939 is one of the most interesting of
management thinkers. His breakthrough ideas: strategy as craft, roles of managers and
management education makes him a great debunker of received wisdom.

Mintzberg is Professor of Management at McGill University, Montreal and Professor of

Organization at INSEAD in Fontainebleau, France. He graduated in mechanical engineering from
McGill University in 1961 completed a general arts degree in the evenings. Between 1961 and
1963, Mintzberg worked in the operational research branch of Canadian Railways before going
onto MIT's Sloan School from where he has a PhD in management.

The Manager Characteristics at Work

Mintzberg identified the characteristics of the manager at work by:
1. Performs a great quantity of work at an unrelenting pace.
2. Undertakes activities marked by variety, brevity and fragmentation
3. Has a preference for issues which are current, specific and non-routine
4. Prefers verbal rather than written means of communication
5. Acts within a web of internal and external contracts
6. Is subject to heavy constraints but can exert some control over the work

On the other hand, in defining ' strategy as craft, Mintzberg stated the following characteristics of
strategy making:
• Derived from synthesis
• Informal and visionary, rather than programmed and formalized
• Relies on divergent thinking, intuition and using the subconscious. This leads to outbursts
of creativity as new discoveries are made
• Irregular, unexpected, ad hoc, instinctive. It upsets stable patterns
• Managers are adaptive information manipulators, opportunists, rather than aloof
conductors
• Done in time of instability characterized by discontinuous change
• Results from an approach, which takes in broad perspectives and is therefore visionary,
and involves a variety of actors capable of experimenting and then integrating.

Interpersonal Roles
• Figurehead: representing the organization/unit to outsiders
• Leader: motivating subordinates, unifying effort
• Liaiser: maintaining lateral contacts
Informational Roles
• Monitor: of information flows
• Disseminator: of information to subordinates
• Spokesman: transmission of information to outsiders

Decisional Roles
• Entrepreneur: initiator and designer of change
• Disturbance handler: handling non-routine events
• Resource allocator: deciding who gets what and who will do what
• Negotiator: negotiating
5.5 CHRIS ARGYRIS
Chris Argyris believes that humans need to be integrated into their organizations in a way that
allows them to realize their full potential and at the same time lets them contribute to making their
organizations more effective. He has designed new organizational structures and policies that
enhance this integration.

Since 1970's together with Donald Schon, he writes about learning organizations. They are
interested in two related problems that inhibit both individual and organizational learning and
propose remedies for both problems in terms of two types of learning skills that need to be
developed.

Chris Argyris
Argyris was born in Newark, New Jersey. He graduated from Clark and Kansas University before
completing his Ph.D. at Cornell in the early 1950s. He is a director of the Monitor Company, the
James Bryant Conant Professor of Education and Organizational Behavior at the Graduate
School of Business, Harvard University.

He was awarded a degree in Psychology from Clark University (1947); M.A. degree in Economics
and Psychology from Kansas University (1949); and Ph.D. degree in Organizational Behavior
from Cornell University (1951). From 1951 to 1971, he was a faculty member at Yale University,
serving as Professor of Administrative Sciences and as chairperson of the Administrative
Sciences Department during the latter part of this period. He is the author of thirty-one books on
organizations and the people in them.

Problems
Two related problems that inhibit both individual and organizational learning:
1. Our failure to recognize and challenge the mental models that control our actions.
2. Our failure to make our assumptions clear to others and to help them do the same.

Learning Skills
Two types of learning skills those need to be developed:
1. Reflection - slowing down our thinking process to become more aware of our mental
models.
2. Inquiry - being more open about the assumptions behind our actions and helping others
do the same.
5.6 CHARLES HANDY
Charles Handy is an independent writer and broadcaster with a psychological and philosophical
focus. He tries to bring management a spiritual and ethical dimension.

His concepts in the 'Gods of Management' is concern about the implications to the society and to
the individuals of the dramatic changes in technology and economics that are interjected to the
workplace and to all our lives.

Charles Handy
Handy was born in Kildare, Ireland in 1932, the son of an Archdeacon, and was educated in
England and the United States. He graduated from Oriel College, Oxford, with first-class honors
in an intellectual study of classics, history and philosophy. Handy has said that these disciplines
"gave me the ability to think".

After college, Handy worked for Shell International as a marketing executive, an economist and a
management educator, in South-East Asia and London before entering the Sloan School of
Management at the Massachusetts Institute of Technology. After only one week at Sloan, Handy
already met Warren Bennis, Chris Argyris, Ed Schein and Mason Haire, among others, people
who fired his fascination with organizations and how they work. When he received his MBA from
Sloan in 1967, he returned to England to design and manage the only Sloan's Program outside
the United States, at Britain's first Graduate Business School, in London.

In 1972 Handy became a full Professor at the school, specializing in managerial psychology.
From 1977 to 1981, Handy served as Warden of St. George's House in Windsor Castle, a private
conference and study center concerned with ethics and values in society. He was Chairman of
the Royal Society of Arts in London from 1986 to 1988, and holds honorary doctorates from four
British Universities. He is know to many in Britain for his "Thoughts for Today" on the BBC's Radio
Today program.

Handy and his wife Elizabeth, a portrait photographer as well as his business partner, have two
grown children and live in London and Norfolk in England, and in Tuscany in Italy. They live what
Handy has termed a "portfolio" life, balancing their skills and their time to make the most of their
independent careers.

Gods of Management
Archetypes drawn from the classical past of Europe which seek to serve as metaphors for
organizational culture, and the 'shamrock organization', which describes the new decentralized or
'federal' organization of the future. He focuses on themes such as discontinuity and human
dynamics, and sees the organization of the future as being smaller and more networked, with
core teams handling essential functions and contracting out work to skilled employees.

His famous books include ''The Empty Raincoat'' (The Age of Paradox in the U.S), is a sequel to
his earlier best-selling ''The Age of Unreason'', which first explored these changes, and was
named by both Fortune and Business Week as one of the ten best business books of the year.

In total, his books, which include the popular ''Gods of Management'' (Business Books 1992) as
well as the standard textbook ''Understanding Organisations'', have now sold well over one million
copies around the world. His article for the Harvard Business Review, ''Balancing Corporate
Power: A New Federalist Paper'', won the McKinsey Award for 1992, and his next article for the
Review, ''Trust and the Virtual Organisation'', won the second McKinsey Award in 1995. ''The
Empty Raincoat'' (Age of Paradox in the U.S) was awarded the JSK Accord Prize in 1994.
''Beyond Certainty'', a collection of his articles and essays, was published in 1995 (1996 in the
U.S), as was ''Waiting For The Mountain To Move'', a collection of his radio "Thoughts" over ten
years.

''The Hungry Spirit'' was published in the UK in September 1997 and in the USA in January 1998.
In it he surfaces his doubts about the consequences of free market capitalism and questions
whether material success can ever provide the true meaning of life. The latest book have
combined his and his wife's - ''The New Alchemists'' - a photographic and literary portrait of
Londoners who have "created something out of nothing", published in 1999.
5.7 BURT NANUS
Burt Nanus provides a four-step process consisting of a series of questions that you and your
visioning team can answer to construct a vision for your organizations.

These four processes are:

1. Taking stock - understanding the current status of the organization
2. Testing reality - drawing the boundaries for the vision
3. Establishing the vision context - positioning the organization in its future external environment
4. Choosing the vision - defining and packaging the new vision

Taking Stock - Understanding the Current Status of the Organization

What business are we How do we operate The vision audit

really in?
1. What is the 1. What are the 1. Does the
current stated values and the organization have
mission or organization a clearly state
purpose of your culture that vision? If so, what
organization? govern behavior is it?
2. What value does and decision 2. If the organization
the organization making? continues on its
provide to the 2. What are the current path,
society? operating where will it be
3. What is the strengths and heading over the
character of the weaknesses of next decade? How
industry or the organization? good would such a
institutional 3. What is the direction be?
framework current strategy, 3. Do the key people
within which and can it be in the organization
your defended? know where the
organizational organization is
operates? headed and again
4. What is your on the direction?
organization's 4. Do the structures,
unique position processes,
in that industry personnel,
or institutional incentives, and
structure? information
5. What does it systems support
take for your the current
organization to
succeed?
Testing Reality - Drawing the Boundaries for the Vision

Who are the major stakeholders and How should the new vision be bounded?
what are their needs?
1. Who are the most critical 1. What are the boundaries (time,
stakeholders - inside and geographic, social) to your new
outside the organization - and vision?
these, which are the most 2. What must the vision
importance? accomplish? How will you know
2. What are the major interests when it is successful?
and expectations of the five or 3. Which critical issues must be
six most important addressed in the vision?
stakeholders regarding the
future of your organization?
3. What are the threat or
opportunities emanate from
these critical stakeholders?
4. Considering yourself a
stakeholder, what do you
personally and passionately
want to make happen in your
organization?

Establishing the Vision Context - Positioning the Organization in Its Future External
Environment

What future Which future What three or four

developments are likely developments are likely to scenarios are possible
to influence your vision have greatest impact on given the occurrence of
statement? your organization's future the developments with the
direction if they were to highest impact (Priority
occur as expected? One developments)

1. What major Priority One = Greatest Write four or five narrative

changes can be impact descriptions of the future.
expected in the Priority two = Next Either start with the
needs and wants greatest impact present and describe what
served by your Priority Three = Third will happen
organization in greatest impact chronologically up to the
the future? Priority Four = Least future time or pick a future
2. What changes impact period and describe what
can be expected it is like, especially as to
in the major how the world got to the
stakeholders of way you envision it.
your organization
in the future?
3. What major
changes can be
expected in the
relevant
economic
environments in
the future?
4. What major
changes can be
expected in the
relevant social
environments in
the future?
5. What major
changes can be
expected can be
expected in the
relevant political
environments in
the future?
6. What major
changes can be
expected in the
relevant
technological
environments in
the future?
7. What major
changes can be
expected in other
external
environments in
the future?
Choosing the Vision - Defining and Packaging the New Vision

What are the several alternative visions? Which of the possible visions
best fit the criteria for a good
vision?
(Nanus suggests a method for
scoring and weighting
alternatives on pages 121-126
of his book Visionary
Leadership.)

Of all of the possible directions you could take 1. Is the vision future
over the next five to seven years, which one oriented?
offer the greatest promise of dramatically 2. Will it lead to a better
improving your position and achieving the future for the
greatest success for you and for your key organization?
stakeholders? 3. Does it fit with the
organization's history,
culture, and values?
4. Does it set standards
of excellence and
reflect high ideals?
5. Does it clarify purpose
and direction?
6. Will it inspire
enthusiasm and
encourage
commitment?
7. Does it reflect the
uniqueness of the
organization, its
distinctive
competence, an what
it stands for?
8. Is it ambitious
enough?
5.8 BENJAMIN SEEBOHN ROWNTREE
Benjamin Seebohm Rowntree was inspired by his father's work and the study by Charles Booth,
author of ''Life and Labor of the People in London'', which then he carry out his own investigations
into poverty in York.
• Rowntree spent two years on his first study, Poverty - A Study of Town Life. It was
published in 1901.
• In the 1930's Seebohm Rowntree carried out a second survey of York in Progress and
Poverty (1941).
• Rowntree published a third study of York in Poverty and the Welfare State in 1951.

Benjamin Seebohm Rowntree

Rowntree was born in York on 7th July 1871. He was the third child of Joseph Rowntree and
Emma Seebohm. He was educated at the York Quaker Boarding School and Owen College,
Manchester. He died on 7th October 1954.

In 1897 Rowntree was appointed as a director of his father's successful business in York. Like his
father, Seebohm believed it was his duty to help the poor and disadvantaged. On Sundays, he
taught at the York Adult School. He also visited the homes of his students and obtained first-hand
knowledge of their problems.

Poverty, A Study of Town Life

Rowntree distinguished between families suffering from primary and secondary poverty. Primary
poverty, he argued, was where the family lacked the earnings sufficient to obtain even the
minimum necessities, whereas families suffering from secondary poverty had earnings that were
sufficient, but were spending some of that money on other things. Whereas some of these were
"useful". Others, like spending on alcohol, were "wasteful".

Rowntree's study provided a wealth of statistical data on wages, hours of work, nutritional needs,
food consumed, health and housing. The book illustrated the failings of the capitalist system and
argued that new measures were needed to overcome the problems of unemployment, old-age
and ill-health.

Rowntree, a strong supporter of the Liberal Party, hoped that the conclusions that he had drawn
from his study would be adopted as party policy. David Lloyd George, president of the Board of
Trade, met Rowntree in 1907 and the two became close friends. The following year Lloyd George
became Chancellor of the Exchequer and introduced a series of reforms influenced by Rowntree,
including the Old Age Pension Act (1908) and the National Insurance Act (1911).

David Lloyd George asked Rowntree to carry out a study of rural conditions in Britain. His report,
''The Land'', published in 1913, argued that an increase in small landholdings would make
agriculture more efficient and productive. In 1913 Rowntree also published, ''How the Labourer
Lives'', a detailed study of fifty-two farming families.

Seebohm Rowntree believed that healthy and well-fed workers, were also efficient workers.
Working closely with his father, Joseph Rowntree, Seebohm introduced a series of reforms at his
own company. One change was an increase in wages for the 4,000 people the company
employed. Seebohm argued that employers who refused to pay decent wages to their workers
should be put out of business as their existence was bad for the "nation's economy and
humanity".In his book, ''The Human Needs of Labour'', (1918), Rowntree argued strongly for a
government enforced minimum wage and the introduction of family allowances. Moreover, in ''The
Human Factor in Business'', (1921), Seebohm urged employers to abandon their preferred style
of autocratic management in industry. However, few companies followed Rowntree's example of
establishing industrial democracy by the use of Works Councils.

Progress and Poverty

Rowntree argued that the city had experienced a fifty per cent reduction in poverty since his first
study. He also pointed out that in the 1930's the main cause of poverty was unemployment,
whereas in the 1890s it had been low wages.

However, he argued that there was still much to be done and the conclusions of his report helped
influence the policies of the post-war Labour Government. As a person said at the time,
Rowntree's work made him the "Einstein of the Welfare State".

Poverty and the Welfare State

Rowntree argued that the measures introduced by the Labour Government between 1945 and
1951 were dealing successfully with the worst aspects of poverty that he had recorded in his
earlier studies.
5.9 EDGAR H. SCHEIN
Ed Schein, a social psychologist, is one of the originators of the field of organizational
psychology. His thinking on corporate culture and careers has proved highly important.

Key to the creation and development of corporate culture are values embraced by organization.
Schein identifies three stages in the development of a corporate culture. More recently Schein's
work on culture has identified three cultures of management, which he labels 'the key to
organisational learning in the 21st century'.

Ed Schein
Ed Schein was born in 1928. He was graduated from Chicago in 1946 and then studied at
Stanford. He completed a PhD in social psychology at Harvard and after graduating in 1952,
carried out research into leadership as part of the Army Program.

In 1956, upon the invitation of Dauglas McGregor, he joined MIT Business School and remained
there ever since. Schein's first paper was entitled 'Management development as process of
influence', which applied the brainwashing model from prison camps to the corporate world. In
addition, the ability of strong value to influence groups of people in a strand, which has continued
through out Schein's work.

Corporate Culture
Schein's work on corporate culture culminated in the book ''Organizational Culture and
Leadership'', (1985). Schein describe culture as a pattern of basic assumptions. These basic
assumptions can be categorized into five dimensions:
1. Humanity's relationship to nature - while some companies regard themselves as masters
of their own destiny, others are submissive, willing to accept the domination of their
external environment.
2. The nature of reality and truth - organizations and managers adopt a wide variety of
methods to reach what becomes accepted as the organizational 'truth' - through debate,
dictatorship, or through simple acceptance that if something achieved the objective it is
right.
3. The nature of human nature - organizations differs in their views of human nature. Some
follow McGregor's Theory X and work on the principle that people will not do the job if
they can avoid it. Others regard people in more positive light and attempt to enable them
to fulfil their potential for the benefit of both sides.
4. The nature of human activity - the West has traditionally emphasized tasks and their
completion rather than the more philosophical side of work. Achievement is all. Schein
suggestion alternative approach - 'being-in-becoming' - emphasizing self-fulfillment and
development.
5. The nature of human relationships - organizations make a variety of assumptions about
how people interact with each other. Some facilitate social interaction, while others regard
it as an unnecessary distraction.
Stages in the Development of Corporate Culture
Three stages in the development of a corporate culture:
• birth and early growth
• organizational mid-life
• organizational maturity

Cultures of Management
Three cultures of management are:
1. Operator culture (''an internal culture based on operational success'')
2. The engineering culture (created by ''the designers and technocrats who drive the core
technologies of the organization'')
3. The executive culture (formed by executive management, the CEO and immediate
subordinates)
ADDITIONAL MATERIALS

• http://www.business.com/
• http://www.ifticonferences.com/handy/agenda.htm