Impact Of Positive Organisational Behaviour Saudi Corporation Management Essay

Impact Of Positive Organisational Behaviour Saudi Corporation Management Essay This section includes a comprehensive discussion of the major concepts and theoretical literature that are relevant in this study on the impact of positive organisational behaviour in a Saudi corporation. This chapter builds the research framework by reviewing relevant literature on organisational behaviour, the role of managers and leaders, managing diversity and ethics, the role of behaviour and work outcomes, positive psychological capital, employee engagement, and psychological contract. Organisational Behaviour It is an accepted maxim of the modern business world that if organisations are to obtain a degree of competitive advantage, they require several key factors. Chief amongst these are a highly skilled work force; an excellent level of technological proficiency; and consistency in delivering higher quality products and services than their competitors (OReilly and Pfeffer 2000, p. 48). Obtaining and developing these factors is possible only if a company has a highly motivated workforce, which is willing to devote large amounts of discretionary effort to helping the company meet its goals. This argument has been supported by research that has shown that it is generally employees that drive success in the modern world, regardless of whether that success if defined as profitability, productivity or some other form (Pfeffer and Sutton 2000, p. 32). Unfortunately, the question still remains as to what steps companies can take to consistently motivate their employees to achieve this improved l evel of performance. One of the most prominent systems for achieving this, and one which is widely applied in modern organisations, is the concept of behavioural management (Stajkovic and Luthans 2003, p. 155). This concept focuses on the principle of contingent reinforcement, arguing that by rewarding desirable behaviours and punishing or discouraging undesirable ones, humans will moderate their behaviour to achieve the maximum rewards. However, this theory has come in for criticism with Bandura (1987) arguing that If people acted on the basis of informative cues but remained unaffected by the results of their actions, they would be insensitive to survive very long (p. 228). This implies that, over time, people will work out that the behavioural approach to human resource management is having consequences in terms of making them work harder, and hence will moderate their behaviour further to address this point. The thrust on organisational behaviour as an important human resource management concept did not come until the late 1980s (Robbins 2003). Traditionally, business students and future managers received intensive technical training in economics, statistics, accounting, and management theories in order to equip them with the tools in successfully leading companies. There was no mention of the importance of analysing human behaviour in the management equation. Capitalising on the technical aspect of business management had its advantages, but business researchers and practitioners soon found that while technical skills may have increased employee specialisation, it did little to produce successful employee relationships or interactions. Organisational theorists and researchers such as Luthans, Hodgetts and Rosenkratz (1988) were able to demonstrate that human resource skills and communication skills were in fact vital factors in effective leadership and management of business organizatio ns. The traditional skills such as planning, controlling, and decision-making only accounted for 19 percent of the formula for success. Organisational behaviour is defined as an interdisciplinary field which studies individuals and their behaviour within the context of the organisation in a workplace setting (Miner 2005, p. 3). Organisational behaviour focuses on the moods, feelings, and emotions of people in the workplace and studies stress, employee-manager relationships, physical settings, group dynamics, and reward/punishment systems in the work setting. Miner (2005) stressed the importance of the feelings, thoughts and actions of employees in influencing organisational culture. When workers are unhappy, they are unproductive (Luthans 2002a). However, ensuring excellent performance and high productivity is a multidimensional process. Organisational values change over time and employee behaviour is not static. This makes organisational behaviour a focal point in mapping out organisational development. By examining the behaviour of employees over time, management can formulate policies and solutions that impact emp loyees. So far, studies on management and organisational theory have pointed to different variables that drive employee behaviour and productivity. Managers have decided to implement policies to influence team productivity and enhance overall organisational efficiency with differing results. The strategies and approach have also been heterogeneous no one strategy has been proven to be effective in all internal or external organisational environments. What works for one company may not work for another. What several studies have highlighted is the importance of organisational personality in influencing a positive or negative work environment. Nelson and Cooper (2007) explained that the behavioural approach toward management improves organisational processes, interaction, communication channels between employees and managers, and the overall quality of service delivery of the organisation. Aparnas (as cited in Nelson and Cooper 2007, p. 87) study on team behaviours within organisations sugges ted that an organisations identity is influenced by both internal and external forces. Nelson and Cooper (2007) suggested that an organisations strategic plan can modify organisational culture. This finding supports the theory that external influence is effective in forming organisational personalities. This external influence falls within the scope of the functions of managers and leaders. By crafting strategy plans around organisational behaviour, managers and leaders can influence business success by motivating positive behaviours among employees. Managers and Leaders As pointed out earlier (Nelson and Cooper 2007), managers and leaders have an important role in introducing external influences to promote positive organisational behaviour. Managers and leaders are often referred to in the same context or not distinguished at all but in the study of organisational behaviour, a distinction is made (Nelson and Cooper 2007, p. 23). Categorising managers and leaders on the same level leads to role confusion and sometimes places individuals in functions they are not proficient in. This is especially true for large business organisations. Griffin and Moorhead (2010) believe that in the interest of maximising the true potentials and proficiencies of people in organisations, the organisational structure must differentiate the manager from the leader. Theorists (Bennis 1989, Yukl 2002) consider the manager and the leader as having unique functions and characteristics although these may overlap from time to time. Bennis (1989) considered leaders to display pa rticular traits such as inspiration, innovation, and development while managers were maintainers, controlling, and administrative. A manager is a person who identifies and achieves organisational objectives through the deployment of appropriate resources (Griffin and Moorhead 2010, p. 14). Managers are those that traditionally assume responsibilities in human resources which require communication skills and documentation. In the era of globalisation, managers have been challenged to be more knowledgeable of information technology to greatly enhance the management enterprise and to boost managerial capability to document and communicate with people in the workplace (Bloomberg 2009). On the other hand, a leader is a person who influences a group of people towards the achievement of a goal (Yukl 2002, p. 132). As a characteristic, leadership is considered to be the result of both nature and nurture and while there are people born with natural leadership traits, leadership can be learned (Bennis 1998, Yukl 2002). Moreover, not one leadership style is best-suited in all work environments. Two theories adopt this view: the contingency theory of leadership by Fred Fielder (1978) and the situational leadership theory by Paul Hersey and Ken Blanchard (1969). Fielders contingency theory emphasised on the behaviours and reactions of leaders in particular situations. They believed that effective leadership depends on how a leader matches his style of leading with the organisational environment. Hersey and Blanchards situational leadership theory stressed that there is no singular best leadership style. According to both, successful leadership is task-relevant and is dependent upon two factors: 1) the leadership style adopted and the 2) maturity level of the group being led. Choosing the appropriate leadership style also has to consider the type of tasks or functions which need to be accomplished by the group (Hersey, Blanchard, and Johnson 1996, p. 34). The main difference between managers and leaders is that the former are more goal-driven while the latter vision-driven. Bennis (1985) pinpointed the difference saying, managers are people that do things right and leaders are individuals who do the right thing (p. 21). Whatever differences they may have, Griffin and Moorhead (2010) opined that organisations need both management and leadership if they are to be effective. Leadership is necessary to create and direct change and to help the organisation get through tough times. Management is necessary to achieve coordination and systematic results and to handle administrative activities during times of stability and predictability. Management in conjunction with leadership can help achieve planned orderly change, and leadership in conjunction with management can keep the organisation properly aligned with its environment. Managers and leaders also play a major role in establishing the moral climate of the organisation and in determining the role of ethics in its culture (Griffin and Moorhead 2010). Managing Diversity in the Workplace A prominent reality that managers face in the modern organisational environment is diversity. Diversity is an important facet in the study of organisational behaviour because it characterises the different beliefs, persuasions, and behaviours of employees especially in multicultural organisational environments (Adler and Gundersen 2008, p. 65). Diversity is present when people with similarities and differences in age, ethnicity, religion, culture, and educational attainment are grouped together within the same working environment (Griffin and Moorhead 2010). Workplace settings today have become increasingly diverse due to equal opportunity legislations that secured the presence of women, minorities, and differently-abled persons in the workplace. Managers use different strategies in approaching diversity. On an individual scale, diversity may be handled by learning about others and demonstrating empathy and respect for cultural differences. On an organisational level, managers may use mentoring, training, work/life balance problems and implementing alternative work schedules. To manage diversity, Adler and Gundersen (2008) believe that organisations must establish a system of ethics in the workplace to support an ethical organisational culture. Relevant to this particular study is how to manage diversity in a multicultural workforce. In a society characterised by a melting pot of cultures, managers of Saudi companies are challenged to adapt and handle cultural differences vis a vis ethics and performance (Al Kibsi et al. 2007). Managing diversity in multicultural work environments is difficult but attainable if organisational leaders are sensitive and are committed toward adapting to cultural differences. Diversity must be handled with sensitivity and tolerance. Ethical questions may be interpreted differently by one culture and not by others; connotations may be attached to the meanings of some words which may be taken negatively by individuals or groups. Managing diversity has also become a priority in order to prevent legal claims of employee discrimination (Cameron, Dutton, and Quinn 2003). As a result, oganisations are turning to diversity training and multicultural strategic planning and organisational development to combat these problems. Human resource management is inextricably linked to handling cultural issues (Cameron, Dutton, and Quinn 2003). Because culture defines people, their behaviours and beliefs, managers need to be sensitive and proactive in addressing ethical or work relationship conflicts that pertain to differences in culture. When tackling the human resource strategies that are applicable to specific companies, culture should be seriously taken into account. Bell (2005) explained that managers in Saudi companies face numerous challenges in driving the performance of business organisations due in part to cultural factors. Problems such as low motivation (Bell 2005), tardiness and high turnover (Al Kibsi et al. 2007), and emphasis on higher pay (Al Kibsi et al. 2008) are some of the cultural characteristics of the Saudi workforce. Bell (2005) attributes this to the historical development of Saudi society. Many of its young professionals are members of privileged families and the influence of accumulate d wealth due to the oil boom has instilled a cultural preference for managerial positions and disdain for labour-type jobs. Al Kibsi and colleagues (2007) found in their study that foreign labour has become so necessary in running Saudi companies because private companies are unable to provide organisational structures that meet the desired rewards, career paths, and salaries demanded by Saudi professionals. Gopalakrishnan (2002) revealed in a study of culture of Saudi companies that honest and candid evaluations of performance have a high likelihood of eroding self-esteem among employees. Gopalakrishnan (2002) explained that unlike the highly individualistic culture in the United States, employees in the Middle East value collectivism and group work. Culture is a significant factor that managers must take into consideration because it also impacts employee motivation and consequently, work performance. Motivation in the Workplace Motivation is an important management process because it allows managers to influence the behaviour of employees by knowing what makes them tick (Luthans, 1998). Motivation is defined by Luthans (1998) as the process that arouses, energises, directs, and sustains behaviour and performance (p. 43). Motivating people is stimulating them to work toward a desired task. Employing effective motivation has been shown to impact employee satisfaction an organisational commitment (Luthans 2002a). Salary increases or promotions are not the only effective motivators; other incentives can be offered in order to spur employee motivation. It is a common assumption in management that organisational goals cannot be attained without the sustained commitment of organisational members. Motivation is characterised by factors which cause, channel, and sustain human behaviour in a particular committed direction (Adeyemo as cited in Alder and Gundersen 2008, p. 29). Some of the fundamental assumptions that managers and management researchers have about motivation are: 1) that it is a positive thing because a person cannot be confident about him or herself without being motivated (Alder and Gundersen 2008), 2) motivation is just one among several factors that contribute to a persons work performance aside from skill, resources, and work conditions (Luthans 2002a), 3) motivation is a renewable resource that needs continuing replenishment (Zhao 2009), 4) motivation is a management tool that managers should capitalise on in order to direct organisational performance (Griffin and Moorhead 2010). If managers are knowledgeable about the needs and drives of their workers, they can tailor work assignments and rewards according to what is stimulating for them. Managers motivate by appealing to the needs and desires of individual workers (Luthans 2002b). Theories of motivation Abraham Maslow, in his 1943 seminal work A Theory of Motivation, suggested that human beings five basic needs form a hierarchy: from physiological, to safety, to social, to esteem, to self-actualisation needs (Adler and Gundersen 2008). In his model of the needs hierarchy, Maslow explained that individuals are fundamentally directed toward the satisfaction of physiological needs. Physiological needs include basic human needs such as food, shelter, and clothing. As the primary need, Maslow believed that these needs have to be satisfied first before people can be motivated to satisfy other higher-order needs. After the satisfaction of physiological needs, safety and security go next. Safety and security refer to the need to be free from physical harm, from basic needs deprivation, and self-preservation. Next comes social affiliation which is the need for the individual to belong to one or more social groups and to be part of meaningful human relationships. After the social needs are sa tisfied comes the need to fulfill individual desires such as self-esteem and greater personal recognition from other human beings. Achieving self-esteem allows the individual to acquire self-confidence, power, prestige, and control over their circumstances and their contribution to their immediate environment. When self-esteem is satisfied, individuals progress toward self-actualisation which refers to the need to maximise ones potential and to become what one is capable of becoming (Hersey, Blanchard, and Johnson 1996, p. 81). According to Maslows needs hierarchy model, higher order needs (esteem and self-actualisation) only become activated, and thus motivate behaviour, after lower-order needs have been satisfied. This approach has been critiqued to be applicable only in the Western organisational context since motivation of employees from more collective-oriented cultures differs from that of their more individualistic Western counterparts. An individuals needs are particularly bound by culture (Alder and Gundersen 2008, p. 75). While Maslow concentrated on satisfying extrinsic factors to drive motivation, Frederick Herzbergs two-factor motivation theory stated that intrinsic factors are also important (Alder and Gundersen 2008, p. 76). Extrinsic factors include supervision, relations with co-workers, salary, company policy, supervision, and administration. Intrinsic motivators correspond to higher-order needs on Maslows hierarchy, including the work itself, responsibility, recognition for work done, and achievement and work advancement. Despite the acceptance and recognition of the two-factor motivation theory, its universality cannot be assumed. Factors which act as motivators and demotivators vary across culture (Griffin and Moorhead 2010). Hence, managers who are about to enter a new culture should be observant about the cultural factors which appear important and not assume the transferability of their earlier experiences with a particular culture. Positive Organisational Behaviour While organisations are looking to use human resource management concepts to boost the performance of their employees, only around half of all organisations have positive experiences of using them, and believe that they actually matter (Pfeffer 1998, p. 12). As a result, only a small fraction of organisations consistently implement and devote sufficient attention to high performance HRM practices. This further increases the degree of scepticism amongst workers, as more and more of them encounter poorly implemented practices that are often abandoned due to a lack of time and effort (Luthans and Youssef 2004, p. 143). This can lead to the spread of a negative and pessimistic form of organisational behaviour spreading throughout organisations that are using traditional forms of human resource management. The popularity of positive psychology has led to a reconsideration of traditional HRM practices that focus more on the negative aspects of organisational behaviour. Positive organisational behaviour has been defined by Bakker and Schaufeli (2008) as a management concept which emphasizes the need for more focused theory building, research, and effective application of positive traits, states, and behaviours of employees in organisations (p. 147). This implies that not only do organisations need to work on developing positive organisational behaviour, but also on ensuring that this behaviour is effectively applied and thus produces the desired outcomes. Otherwise, if the positive organisational behaviour fails to produce noticeable improvements, employees may lose heart and much of the optimism in their behaviour may be lost. Further to this, the concept of positive organisational behaviour needs to show the added value of the positive over and above the negative (Bakker and Schaufeli, 2008, p. 147) in order to gain wide acceptance and the attention needed to develop further. One of the main potential methods through which this added value could be demonstrated is that positive organisational behaviour is strongly linked to levels of work engagement. According to Bakker et al (2008) this implies that the development of positive organisational behaviour can lead to a positive, fulfilling, affective-motivational state of work-related well-being that is characterized by vigour, dedication, and absorption (p. 187). In other words, developing positive organisational behaviour is more likely to make employees feel positive about their work, and also to engage more strongly with it. This in turn will lead to the employees caring more about the outcomes of their work as outcomes in their own right, rather than simply as tasks they have to complete in order to gain promotions or justify their salaries. This argument is supported by Bakker et als (2008, p. 187) empirical research, which showed that work engagement is influences strongly by the level of job resource s that employees have access to, and the level of personal resources that are inherent to the employee themselves. Of these, job resources focus on factors such as the supervisory coaching and feedback that the employee receives, whilst personal resources include many of the resources associated with positive organisational behaviour, such as optimism, self-efficacy and self-esteem. In addition to this, the research shows that work engagement is a valid predictor of job performance and client satisfaction, indicating that it can help to achieve the employee performance boost needed by modern organisations (Bakker et al, 2008, p. 187). Positive organisational behaviour [POB] emerged from the positive psychology approach in 1999 and was pioneered by Fred Luthans. Positive psychology departs from the traditional negative thrust of psychology as a field which studies illness rather than wellness and instead, proposes that the strengths and virtues that allow individuals and communities to thrive should be studied. Positive organisational behaviour focuses on theory building, empirical research, and application of positive attitudes, traits, and behaviours of employees within organisations (Luthans and Youssef 2007). Luthans (2002a) defined positive organisational behaviour as the study and application of positively oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed for performance improvement in todays workplace (p. 59). Positive organisational behaviour is a psychology-based approach toward human resource management and operates within a framework t hat considers employee happiness as viable objectives in themselves. Proponents of positive organisational behaviour treat employee well-being and health to be of strategic value for businesses. Instead of viewing occupational health and employee well-being as costs, positive organisational behaviour proponents consider them sound investments. Typically, POB focuses on use of organisational resources in increasing psychological capital, employee engagement, emotional intelligence, and psychological contract. POB is implemented in organisations to stimulate peak performance and enhance the conditions under which employees function and thrive. Psychological Capital The concept of psychological capital has become an important construct, not only in human resource management, but also in other areas such as leadership research. Psychological capital is seen as a key factor in allowing leaders to develop positive organisational behaviour within the organisations that they lead. This link is strongly supported by the research of Toor and Ofori (2010, p. 341) which found that psychological capital is strongly correlated with both leadership authenticity and transformational leadership. In their leadership study on construction and engineering project leaders, a distinction was made between traditional project leaders who drove performance through power, task orientation, and authority and authentic leaders who drove performance through positive values such as morality, ethics, and collective well-being. Authentic leaders who use positive behaviours capitalise on the environment of trust and are able to motivate people better and accomplish challengi ng tasks (Toor and Ofori 2010). Authentic leadership possesses high potential for development as well as veritable performance of construction project leaders. At the same time, the existence of transformational leadership in an organisation plays an important role in the ability of the organisations psychological capital to drive positive organisational behaviour and desired outcomes such as extra effort and satisfaction on the part of employees. However, there is also evidence to suggest that the development of psychological capital in organisations and its ability to drive positive outcomes at both the individual and organisational level, is strongly linked to the level of focused training and development that employees receive (Luthans et al, 2010, p. 41). An exemplary case is UK retailer Tesco which has one of the most impressive workforce development programmes. Tesco employees were considered the happiest and the most loyal in a survey among UK companies (European Monitoring Centre on Change 2007). Tesco has built its image on positive values such as ethics, morality, and human rights. For instance, it has a Working beyond retirement policy which accepts workers above the age of 50, a Remploy policy which brokers jobs for disabled individuals, a basic skills training program, and The Step Change Programme which values the initiatives of employees in suggesting company policies to enhance customer service and satisfactio n. This has resulted to high levels of employee and customer loyalty, positive relationships with suppliers, and efficiency savings amounting to GBP350million (European Monitoring Centre on Change 2007). The Tesco experience implies that psychological capital is not only something which emerges at work through the day to day actions of managers and leaders, but can also be developed through direct training interventions for the workforce. Indeed, the study by Luthans et al (2010, p. 41) indicated that said training interventions not only may be used to develop participants psychological capital, but can also lead to an improvement in their on-the-job performance. This indicates the importance of developing psychological capital at all stages of the human resource management cycle, in order to maximise the potential gains from positive organisational behaviour. Psychological capital refers to the positive psychological states that an individual owns and can use to achieve greater effectiveness in organisations. A comprehensive definition of psychological capital is: An individual state of positive psychological development, which is characterized by: (1) possession of confidence (self-efficacy) by which challenging tasks can be successfully completed through showing and paying necessary efforts; (2) positive attribution should be made on the current and future success (optimism); (3) targets need to be adhered to, and if necessary the line of achieving goals can be re-selected in order to be successful (hope); (4) When confronted with the problems and difficulties, success can be achieved by sticking to goals, quickly restoring and taking roundabout ways (resilience). (Luthans, Youssef and Avolio 2007, p. 15). According to Luthans and colleagues, psychological capital or PsyCap leads to positive organisational behaviour which in turn makes employees work more diligently, adhere to ethics, and acquire higher job satisfaction and improved performance (Luthans, Avolio, Avey, et al. 2007). Psychological capital has four components: 1) self-efficacy, 2) hope, 3) optimism and 4) resilience (Luthans 2005). When used together with social and human capital, psychological capital represents the human resource that each individual owns and which organisations can measure, invest in, develop, and manage effectively. Today, the application of PsyCap is growing in many global companies (Avey 2007). The Kellogg Corporation has institutionalized PsyCap training for all its managers. Engineering leaders and senior managers of The Boeing Company also underwent PsyCap training. Moreover, Boeing has included PsyCap as a workforce development indicator (Avey 2007). Self-efficacy Self-efficacy is the belief that one is capable of attaining specific goals by mobilising motives, cognitive resources and actions (Bandura 1997, p. 76). It refers to positive beliefs and confidence on ones skills and abilities to perform desired task. Persons having high self-efficacy perceive highly that they are capable of taking action and modifying their environment using several resources. Stajkovic and Luthans (1998) believed that people with high psychological capital are more persistent despite failures and are less disheartened and less likely to resign when faced with possibility of failure. Hence, self-efficacy positively impacts work performance. Luthans (2005) recommends ways in which organisations can nurture self-efficacy of employees in his Psychological Capital Intervention [PCI] model. One is to allow employees to identify concrete targets based on employees professional skills. In this manner, employees can process goals in groups and analyze methods in achieving them while criticising and modifying goals. This form of intervention strengthens goal commitment and task control among employees. Another intervention is provide avenues such as trainings and drilling programs where employees can share success stories and exchange experiences in order for them to appreciate that success comes with positive and sustained efforts. Another intervention is to establish expectations by mobilising emotions and persuasions to stimulate confidence among employees that with the proper strategies and timetables, goals can be met. A fourth intervention is the use of positive and constructive defense mechanism in organisational culture through humor, compensation, and sublimation. The idea is to not embarrass or humiliate employees who are frustrated over unachieved goals but to deal with it positively while regaining the employees self-confidence and psychological stability in the process. Hope Hope refers to a positive motivational state characterized by a sense of success resulted from interactions based on agents (goal-oriented vitality) and the paths (plans to achieve goals) (Snyder and Lopez 2002, p. 34). Hope represents an individuals determination that goals are achievable and the individuals conviction that pathways will lead towards attaining these goals. Hope can be determined through two factors: path and willpower (Snyder, Feldman, Taylor, 2000). Peterson