Affect Of Organizational Behabiour On Competitiveness

Overview & Approach

Before we discuss how Organizational Behaviour can influence the competitiveness and success of organizations, we need to understand what Organizational Behaviour is and its impact on organizations. We then investigate the role of predicting and managing Organizational Behaviour in order to change or influence Organizational Behaviour to increase employee satisfaction and motivation. Then we look at the link between employee job satisfaction and customer satisfaction. Also the link between employee job satisfaction, motivation and competitiveness, competitive advantage, even further sustained competitive advantage will be established. In parallel with the final point, we will also look at the link between employee satisfaction, morale and success of organizations. Finally we will look at the correlation between customer satisfaction, competitiveness, (sustained) competitive advantage and success of organizations.

What is Organizational Behaviour?

Organizational Behaviour is about the attitudes and behaviours of individuals or groups in an organization 1. The field of Organizational Behaviour studies these attitudes and behaviours in an effort to predict, explain and manage these attitudes and behaviours. Certain questions are typically asked when studying Organizational Behaviour Ð'- are people satisfied with their jobs or what can management do to increase motivation and performance, are two such questions. Organizational Behaviour can have a significant influence on the attitudes and behaviours of individuals 2.

What impact does Organizational Behaviour have on organizations?

The actions taken following an organizational behaviour analysis can have a profound impact on an organization's effectiveness, profitability and ultimately its ability to provide positive returns to its shareholders/owners. In considering the best companies to work for in Canada, 60% of the 50 best companies to work for exceeded the S&P/TSX composite index's total shareholder return by 14.4% 3. Royal Bank of Canada (RBC) has realized the benefits of implementing human resources and management practices that focuses on creating a work environment that promotes job satisfaction and high performance. Furthermore, RBC saw an improvement in both employee and customer satisfaction 4.

Predicting and managing Organizational Behaviour to bring about positive change

If one can predict and explain how an individual will behave or react to an organizational event then it would be easier to develop an effective strategy to manage it. This way an organization will be able to develop Human Resource and management practices that can increase employee job satisfaction and motivation. Jeffery Pfeffer in his book Competitive Advantage Through People established the correlation between successful organizations and human resource centric management practices. He found that organizations gain their competitive advantage through its workforce and not through technologies, financial resources, etc since these can be considered a commodity 5. This will be revisited later. Studies have shown a decline in employee's attitude towards their jobs and 50% of employees surveyed have indicated that they are actively or passively looking for other work 6. There has also been a consistent trend of absenteeism in Canadian organizations which has resulted in approximately $3-5 billion per year in work hours lost and approximately $6-10 billion per year in work hours lost and indirect costs 7. In short, a "happy" employee will be more productive and less of a liability than an "unhappy" one.

Employee satisfaction and customer satisfaction

Many studies have linked employee satisfaction and customer satisfaction. According to Heskett

et. al. (1994) "When companies put employees and customers first, their employees are

satisfied, their customers are loyal, their profits increase, and their continued success is sustained" 8.

Johnson et al. (1994) found that higher employee satisfaction ratings at the Ford Motor Company

were associated with higher customer satisfaction, higher market share, higher business volume and lower turnover 9. It is clear to see that improved customer satisfaction leads to improved customer retention and is one of the components of a successful organization.

Employee satisfaction, motivation and competitiveness, (sustained) competitive advantage

Gratton 1997 identified six factors for success: the commitment of top management; the motivation, satisfaction and aspirations of recruits; the core capabilities of the management team; the team's aspirations; the ability to build and maintain alliances; and the integration of the business into a global network 10. All of the six factors above have a direct human element to it. Guest 1990 discovered that if top management trust their workers and gave them challenging tasks, employees will respond with high motivation, commitment and performance 11. Child 1997 goes as far as to question whether organizations should now switch their focus from it's own financial situation and technology to human resources 12. Barney 1991 listed three requisites for a resource to be considered a source of sustained competitive advantage Ð'- it must add value to the firm; it must be inimitable; and it must be non-substitutable 13. Wright et al 1994 demonstrated that human resources meet Barney's criteria to be considered a source of sustained competitive advantage 14. Coff 1994 also agrees with Wright and company's conclusion 15. We can agree that the sources of competitive advantage have shifted from technology and financial resources to human resources. Human resources as a competitive advantage now depend on the employees' attitudes, competencies and skills. Schuler and Jackson 1987 derived three competitive advantage strategies from Porter's 1985 discussion on the five competitive forces and competitive advantage strategies - Innovation, sustained quality and cost reduction strategy16. Jassim 1998 contends that the employee who is motivated by the right human resources practices will deliver on the three strategies stated above 17. For a human capital to be an effective source of sustained competitive advantage, employees must be motivated and generally satisfied in their jobs. There are also many documented cases showing where employee satisfaction, morale contributes to the success of