Thursday, November 29, 2007

Developing OR OB model

A model is an abstraction of reality, a simplified representation of some real-world phenomenon. A mannequin in a retail store is a model. So, too, is the accountant’s formula: Assets + Liabilities = Owner’s Equity. The information below shows the Basic OB model and its levels on which it is constructed.

Basic OB Model
  • Organization Systems level
  • Group level
  • Individual level

It proposes that there are three levels of analysis in OB and that, as we move from the individual level to the organization system level, we add systematically to our understanding of behavior in organizations. The three basic levels are analogous to building blocks; each level is constructed on the previous level. Group concepts grow out of the foundation laid in the individual section; we overlay structural constraints on the individual and group in order to arrive at organizational behavior.

The Dependent Variables

A dependent variable is the key factor that you want to explain or predict and that is affected by some other factor. What are the primary dependent variables in OB? Scholars have historically tended to emphasize productivity, absenteeism, turnover, and job satisfaction. More recently, a fifth variable—organizational citizenship—- has been added to this list. Let’s briefly review each of these variables to ensure that we understand what they mean and why they’ve achieved their level of distinction.

Productivity

An organization is productive if it achieves its goals and does so by transferring inputs to outputs at the lowest cost. As such, productivity implies a concern for both effectiveness and efficiency.

A hospital is effective when it successfully meets the needs of its clientele. It is efficient when it can do so at a low cost. If a hospital manages to achieve higher output by reducing the average number of days a patient is confined to the bed or by increasing the number of staff-patient contacts per day that is productive efficiency.

Popular measures of organizational efficiency include return on investment, profit per dollar of sales, and output per hour of labor. We can also look at productivity from the perspective of the individual employee.

Organizations in service industries also need to include “attention to customer needs and requirements? in assessing their effectiveness. Why? Because, there is a clear chain of cause-and-effect running from employee attitudes and behavior to customer attitudes and behavior to an organization’s revenues and profits. Sears, in fact, has carefully documented this chain. The company’s management found that a 5% improvement in employee attitudes leads to a 1.3 % increase in customer satisfaction, which in turn translates into a 0.5 % improvement in revenue growth. More specifically, Sears found that by training employees to improve the employee—customer interaction, it was able to improve customer satisfaction by 4% over a 12-month period, which generated an estimated $200 million in additional revenues.

In summary, one of OB’s major concerns is productivity. We want to know what factors will influence the effectiveness and efficiency of individuals, of groups, and of the overall organization.

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