Business Management
Organizational behavior, management functions, IPO model, leadership, and decision-making (BADM 310)
W1A: Management Basics
Is management just common sense?
Is Management Common Sense?
Management is not simply common sense. Many intuitive management beliefs are empirically wrong or incomplete. Effective management requires systematic study of evidence from psychology, sociology, anthropology, and economics — not just gut feeling.
Key insight
Common-sense beliefs about people and organizations are often contradicted by research. OB provides a scientific, evidence-based framework for understanding workplace behavior.
Traditional Functions of Management (POLC)
The four classic functions managers perform, often taught as the foundation of management:
Setting goals and determining how to achieve them. Defining objectives, strategies, and action plans.
Arranging resources and tasks to accomplish goals. Designing structure, assigning roles, allocating resources.
Directing and influencing people to work toward goals. Motivating, communicating, and resolving conflict.
Monitoring performance and taking corrective action. Measuring outcomes against plans and adjusting as needed.
IPO Model (Input → Process → Outcome)
A core framework in OB: organizational outcomes depend on the processes that transform inputs. The key managerial implication is to fix the process, not blame the person.
Input
- Individual characteristics
- Group mechanisms
- Organizational context
Process
- Job satisfaction
- Motivation
- Stress
- Learning & decisions
- Trust / ethics
Outcome
- Job performance
- Organizational commitment
- Organizational results
Fix the process, not the person: When outcomes are poor, examine and redesign the process rather than simply replacing individuals.
W1B: What is Organizational Behavior?
Definition, disciplines, and the integrative model
Definition of OB
Organizational Behavior (OB) is an interdisciplinary field dedicated to understanding and managing people at work.
OB draws on multiple social sciences to explain why people think, feel, and act the way they do in organizational settings, and to help managers make better decisions about people.
Contributing Disciplines
Psychology
Individual behavior, personality, motivation, perception, learning, attitudes
Sociology
Group dynamics, organizational structure, social norms, team behavior
Anthropology
Culture, values, cross-cultural behavior, organizational culture
Economics
Incentives, decision-making under constraints, labor markets, agency theory
Integrative Model of OB
The integrative model shows how individual, group, and organizational factors flow through individual mechanisms to produce outcomes.
| Level | Inputs / Mechanisms | Role in the Model |
|---|---|---|
| Individual Characteristics | Personality & cultural values, ability | Input — shape how individuals process situations |
| Group Mechanisms | Teams & diversity, communication, power & influence, leadership | Input — the social context around individuals |
| Individual Mechanisms | Job satisfaction, stress, motivation, trust/justice/ethics, learning & decision-making | Process — the psychological states that drive behavior |
| Individual Outcomes | Job performance, organizational commitment | Outcome — directly observable results |
| Organizational Outcome | Unit/firm performance, financial results | Outcome — aggregate organizational results |
Good Management
Effective managers use OB principles to:
- Attract talented people to the organization
- Develop skills and capabilities in their teams
- Motivate people to perform at high levels
- Retain key talent over the long term
- Organize and coordinate individuals and groups effectively
- Provide wise, ethical, and effective leadership
Management sits atop the core business functions (Operations, Finance, Marketing, R&D), integrating and directing them all.
W1C: Why Does OB Matter?
Research evidence for the business impact of good people management
Startup IPO Survival Study
A landmark study tracked 170 companies that went public (IPO). After 5 years:
170
IPO startups tracked
48%
still in business after 5 years
OB
practices predicted survival
Survivors were more likely to:
- Offer stock options or profit-sharing to all employees (not just executives)
- Use full-time employees rather than contractors
- Invest in training and development programs
Takeaway: OB best practices — equity, stability, and development — significantly predict organizational survival.
Burger King Study — Social Recognition
An experiment tested whether social recognition (non-financial acknowledgment of good work) improves performance.
Intervention
- Managers trained to recognize employees verbally for good work
- Simple, low-cost behavioral change
Results
- 44 sec drive-through time (trained) vs. 62 sec (control)
- 16% better employee retention rate
Key finding: A simple OB intervention (social recognition) produced measurable improvements in both performance and retention — at essentially zero cost.
W1D: The Resource Perspective
Individuals and teams as valuable organizational resources
The resource perspective frames people as a key organizational resource — one that can be managed to simultaneously increase revenue and decrease costs.
Increase Revenue
- +Team synergy — Coordinated teams produce more than the sum of individuals
- +Loyalty & motivation — Committed employees go above and beyond for customers
- +Charismatic leadership — Inspires teams to achieve more than expected
- +Effective decision-making — Better decisions lead to better products and strategies
- +Customer satisfaction — Satisfied employees create satisfied customers who return
- +Diversity fosters innovation — Diverse teams generate more creative solutions
Decrease Costs
- −Lower turnover costs — Retaining employees avoids recruitment, hiring, and training expenses
- −Reduced stress costs — Managing workplace stress reduces absenteeism and health costs
- −Better retention — High commitment = less churn = fewer replacement costs
- −Fewer formal processes — Satisfied, trusted employees need less formal monitoring and control
- −Effective decisions — Fewer costly errors and misallocations
- −Less financial incentive reliance — Non-monetary motivation reduces compensation overhead
Wrap-Up: The IPO Model Revisited
The resource perspective reinforces the IPO model: investing in people (inputs) and designing effective processes (OB interventions) generates measurable outcomes — both financial performance and individual well-being.
W1E: Framing and Addressing Management Problems
Diagnosing why people don't do what they need to do
What is a Management Problem?
A management problem exists when individuals, groups, or organizations fail to meet their goals because people are not doing what they need to do. The root question is always: Why not?
Not ABLE
Lack skills, resources, clear expectations, or capacity
Don't CHOOSE to
Not motivated, don't see value, or choose not to
Addressing Management Problems
The manager's job is to create conditions under which people both:
ABLE to behave
- Clear expectations and goals
- Proper skills and training
- Adequate resources and tools
- Supportive work environment
CHOOSE to behave
- Motivation and incentives
- Meaningful and satisfying work
- Trust, fairness, and respect
- Culture that values the behavior
Case Examples
Intense pressure to meet sales targets led employees to engage in fraudulent sales practices. The CHOOSE dimension was corrupted — employees chose unethical behavior because the culture rewarded results at any cost.
Rapid growth required employees to work smarter and harder, but people weren't adapting fast enough. Both ABLE (needed new skills) and CHOOSE (motivation to embrace change) were involved.
Slow processes and staff not following updated protocols led to inefficiency. Root cause: were staff not ABLE (didn't know the protocols) or not CHOOSING to (resistant to change)?
W2A: Job Performance
What counts as performance and how to measure it
What is Job Performance?
Job performance = the set of employee behaviors that contribute positively or negatively to organizational goal accomplishment.
Performance is about behaviors, not just outcomes. The same outcome can result from different behaviors, and behaviors are more directly under management control than outcomes.
Task Performance
Task performance refers to behaviors that directly involve the transformation of organizational resources into the goods or services the organization produces.
Routine Task Performance
Programmed
Responding to task demands in a habitual or programmed way — well-defined procedures and predictable situations.
e.g. Processing a standard insurance claim using established procedures
Adaptive Task Performance
Flexible
Responding to task demands that are novel, unusual, or unpredictable — adjusting when circumstances change.
e.g. Handling an unexpected system outage by improvising a workaround
Creative Task Performance
Generative
Generating novel and useful ideas or solutions to problems — going beyond existing procedures.
e.g. Designing a new customer onboarding process from scratch
O*NET — Occupational Information Network
O*NET is the US Department of Labor database that describes the tasks, skills, and requirements for virtually every occupation. It provides empirical, detailed task profiles managers can use to define and assess job performance.
How it helps managers:
- Define clear task expectations before hiring
- Identify which performance behaviors matter most for a given role
- Create objective performance appraisal criteria
- Compare jobs across organizations for compensation benchmarking
W2B: Citizenship & Counterproductive Behavior
The full spectrum of work behavior — going above and beyond vs. actively harming
Citizenship Behavior (OCB)
Organizational Citizenship Behaviors (OCBs) are voluntary behaviors not directly required by the job description that nonetheless benefit the organization. They represent the discretionary effort employees choose to give.
Organizational OCBs
Directed at the organization as a whole
- Voice:Speaking up with ideas for improving procedures or policies
- Civic Virtue:Attending optional meetings, keeping up with org news, participating in governance
- Boosterism:Representing the company positively to outsiders
Interpersonal OCBs
Directed at individual coworkers
- Helping:Assisting coworkers with work tasks or personal problems
- Courtesy:Keeping others informed about changes, giving advance notice
- Sportsmanship:Tolerating inevitable inconveniences without complaining
Counterproductive Work Behavior (CWB)
CWBs are employee behaviors that intentionally hinder the organization or its members from achieving goals. They fall into a 2×2 matrix based on target (organizational vs. interpersonal) and severity (serious vs. minor).
| Organizational Target | Interpersonal Target | |
|---|---|---|
| Serious | Property Deviance Sabotage, theft, vandalism, misusing organizational resources deliberately | Personal Aggression Harassment, physical abuse, threats, verbal abuse directed at coworkers |
| Minor | Production Deviance Cyber-loafing, wasting supplies, leaving early, working slowly on purpose | Political Deviance Gossip, favoritism, taking credit for others' work, spreading rumors |
W2C: Performance Management
Setting expectations, assessing performance, and providing feedback
The Performance Management Cycle
- Define clear goals and standards
- Communicate what 'good' looks like
- Align individual goals with org goals
- Use job descriptions and OKRs
- Formal appraisals (annual/quarterly)
- BARS — Behaviorally Anchored Rating Scales
- 360-degree multi-source feedback
- Continuous observation and data
- Regular 1-on-1 coaching conversations
- Developmental feedback (not just evaluation)
- Recognize and reward good performance
- Address gaps with support plans
BARS — Behaviorally Anchored Rating Scales
BARS is an appraisal method that anchors each rating level with specific behavioral examples, reducing rater bias and improving consistency.
Example: "Customer Communication" dimension
5 — Excellent
Proactively updates customers before they ask, anticipates concerns, follows up after resolution
3 — Acceptable
Responds to customer inquiries within 24 hours, answers questions accurately
1 — Poor
Often fails to respond, provides incorrect information, leaves customer issues unresolved
Traditional vs. Modern Performance Management
| Dimension | Traditional | Modern (Recommended) |
|---|---|---|
| Frequency | Annual review | Continuous / ongoing |
| Direction | Top-down (manager evaluates) | Two-way dialogue |
| Focus | Past performance evaluation | Future development |
| Purpose | Compensation decision | Growth & improvement |
| Tone | Evaluative, summative | Coaching, developmental |
| Employee role | Passive recipient | Active participant |
McKinsey Recommendations for Modern PM
- Focus on future development rather than evaluating the past
- Have meaningful conversations throughout the year, not just at review time
- Decouple compensation decisions from developmental conversations — keep them separate
- Make feedback a habit, not a once-a-year event
W2D: Organizational Commitment
Why employees stay — and why it matters for performance
What is Organizational Commitment?
Organizational Commitment = the desire to remain a member of an organization.
Emotional attachment and identification with the organization. Employees stay because they genuinely want to.
Love the mission, proud of the culture, feel part of the team
Awareness of the costs associated with leaving. Employees stay because switching is too costly.
High salary hard to replicate, pension vesting, no other options, relocation cost
Sense of obligation or moral duty to remain. Employees stay because it feels wrong to leave.
Loyalty, reciprocity for training invested, sense of debt to the org
EVLN Model — Responses to Negative Events
When employees experience dissatisfaction or negative events, they respond in four ways along two axes: active vs. passive and constructive vs. destructive.
| Constructive | Destructive | |
|---|---|---|
| Active | Voice Actively trying to improve conditions — speaking up, suggesting changes, giving feedback to management | Exit Actively leaving — quitting, transferring, searching for a new job |
| Passive | Loyalty Passively waiting and hoping things improve — staying put, remaining faithful | Neglect Passively allowing conditions to worsen — reduced effort, chronic lateness, higher error rates |
Consequences of Low Organizational Commitment
Psychological Withdrawal
"Warm-chair attrition" — physically present, mentally absent
- Daydreaming
- Excessive socializing
- Looking busy without working
- Moonlighting (working on personal projects)
- Cyber-loafing (personal internet use at work)
Physical Withdrawal
Physically removing oneself from work
- Tardiness
- Extended breaks
- Missing meetings
- Absenteeism
- Quitting (turnover)
Research Evidence
Canadian Food Service Study
- Affective commitment ↑ → higher job performance
- Continuance commitment ↑ → lower job performance
- Employees who stay because they want to work harder; those who stay because they have to do just enough
Meyer et al. 2002 Meta-Analysis
- Affective commitment: positively correlated with performance
- Normative commitment: positively correlated with performance (though weaker)
- Continuance commitment: negatively correlated with performance
Managerial implication: Build affective commitment, not just continuance commitment. Employees who stay because they want to — not because they feel trapped — perform significantly better.
How to Increase Affective Commitment
Mind Your Culture
- Foster diversity, equity & inclusion (DEI)
- Build a genuine culture of commitment
- Celebrate employee milestones and contributions
Examples: Employee Appreciation Day, Ben & Jerry's social values, Mary Kay recognition culture
Manage Well
- Build trusting manager–employee relationships
- Set clear goals with contingent rewards
- Provide regular, honest feedback
- Support employees' growth and well-being
W2E: Managing, Mentoring & Retaining Employees
Problem employees, coaching, mentoring, and keeping your best people
Managing Problem Employees
When an employee is underperforming, the instinct is often to ignore it or go straight to discipline. A more structured approach:
Ignoring performance problems signals that underperformance is acceptable and demoralizes high performers.
Is it ABLE (lack of skills, resources, clarity) or CHOOSE (motivation, attitude)? The fix differs for each.
Get input from peers and other supervisors — is this pattern consistent, or situational?
Have a direct, honest, and respectful conversation. Identify the gap and agree on a path forward.
Performance Improvement Plan (PIP)
A formal document outlining: expected performance standards, specific gaps, timeline for improvement, available support, and consequences if goals are not met.
Reassignment
Sometimes the issue is fit, not effort. Jim Collins: "Get the right people in the right seats on the bus." Reassignment puts mismatched employees where they can succeed.
Coaching Employees
Expert Approach
Coach provides answers, advice, and direction. Useful when the employee genuinely lacks knowledge and needs direct instruction.
Consultative Approach
Coach draws out the employee's own thinking through questions. Builds ownership, insight, and lasting behavior change. Usually more effective.
Who is Coachable? (7 traits)
Coaching Your Boss
- Ask permission first — don't assume your boss wants coaching
- Appeal to superordinate goals — frame feedback in terms of shared team/org goals
- Specify behaviors — focus on observable actions, not personality
- Stay future-focused — avoid relitigating the past
Mentoring Employees
Mentoring is a longer-term developmental relationship where a more experienced colleague (mentor) guides and supports the professional growth of a less experienced person (mentee).
Mentor provides:
- Career guidance and navigation
- Organizational knowledge and context
- Networking introductions
- Emotional support and encouragement
Mentee gains:
- Faster career development
- Insights from experience
- Increased organizational commitment
- Visibility and sponsorship
Training & Development
Organizations invest heavily in employee development — and the most effective learning doesn't happen in classrooms.
PwC 70-20-10 Development Model
70%
By Doing
On-the-job experience, stretch assignments, new challenges
20%
From Others
Coaching, mentoring, peer feedback, observation
10%
Formal Training
Courses, workshops, e-learning, certifications
$55.8B
US training expenditures (2012)
$101.6B
US training expenditures (2022)
Retaining Talent
3.5M
people quit per month in the US
18%
of the workforce turns over annually
~20%
of annual salary to replace one employee
Why People Quit
- Poor relationship with their boss
- Lack of growth opportunities
- Better offer from another employer
- Predictors: low job satisfaction + low organizational commitment
Strategies to Reduce Turnover
- Design satisfying and meaningful jobs
- Develop high performers (training & growth)
- Provide realistic job previews (avoid unmet expectations)
- Ensure pay equity relative to market
- Hire for person–organization fit