ACT 201

Fermina Kassandra Dela

Cruz
Learning Objectives

• Define organizational behavior and organizations and

discuss the importance of this field of inquiry.
• Diagram an organization from an open-systems
perspective.
• Define intellectual capital and describe the
organizational learning perspective of organizational
effectiveness.

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study of what people think, feel, and do
in and around organizations

• focus is on employee behavior,

decisions, perceptions, and
emotional responses

• how individuals and teams in

organizations relate to each other

• systematically studies: individual,

team, organization

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collective organized entities

• groups of people who

work interdependently
toward some purpose

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1. OB theories help us to make sense of
the workplace

2. It helps them to get things done in

organizations

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According to one estimate, firms that apply
performance-based rewards, employee
communication, work–life balance, and other
OB practices have three times the level of
financial success that companies have where
these practices are absent.

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Another study concluded that companies
that earn “the best place to work” awards
have significantly higher financial and long-
term stock market performance.

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The benefits of OB are well known to Warren
Buffett and other financial gurus; they
consider the organization’s leadership and
quality of employees as two of the best
predictors of the firm’s financial potential.

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organizational effectiveness

“ultimate dependent
variable”

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the extent to which an organization achieved its
stated goals

• no longer accepted because:

• companies can establish easily achievable
goals

• goals can be so abstract that it is difficult to

know how well the organization has achieved
them

• a company’s stated objectives might threaten

its long-term survival 10
• when they have a good fit with their external
environment

• when their internal subsystems are

configured for a high-performance workplace

• when they are learning organizations

• when they satisfy the needs of key

stakeholders

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• Internal-Subsystems Effectiveness

• how well it transforms inputs into

outputs

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Internal-Subsystems Effectiveness

• organizational efficiency

• also called productivity

• amount of outputs relative to inputs

• Companies that produce more goods or

services with less labor, materials, and
energy are more efficient

• Strategy: lean management

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Lean Management

• Based on practices developed by Toyota

Motor Company, lean management
involves continuously reducing:

• waste

• unevenness

• overburden in the production

process
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 EFFICIENCY EFFECTIVENESS

doing things right doing the right things

BUT IN BOTH WAYS:

Organizations often need more adaptive
and innovative transformation processes

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Internal-Subsystems Effectiveness

• Another important issue in the

transformation process is how well
the organization’s subsystems
coordinate with each other

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• also called knowledge management

• organizational effectiveness depends

on the organization’s capacity to
acquire, share, use, and store
valuable knowledge.

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a. Knowledge acquisition
• information is brought into the organization
from the external environment
b. Knowledge sharing
• distribution of knowledge throughout the
organization
c. Knowledge use
• application of knowledge to organizational
processes in ways that improve the
organization’s effectiveness
d. Knowledge storage
• ways that companies retain valuable 19
knowledge
Dillema: To recognize the value of new
information, assimilate it, and use it for
value-added activities, organizations
require sufficient absorptive capacity.

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• A company’s stock of knowledge,
including:

a. human capital

b. structural capital

c. relationship capital

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• Organizational memory - refers to the
storage and preservation of intellectual
capital

• Unlearning - removes knowledge that no

longer adds value and, in fact, may
undermine the organization’s effectiveness

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1. by keeping good employees

2. systematically transfer knowledge to

other employees

3. transfer knowledge into structural

capital

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1. replacing dysfunctional policies,
procedures, and routines

2. erase attitudes, beliefs, and

assumptions

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Fermina Kassandra
D. Dela Cruz
ACT 201