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 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 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 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 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 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 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 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 criteria to be considered a source of sustained competitive advantage 14. Coff 1994 also agrees with Wright and company 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 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 an organization. Employee satisfaction, morale and success of organizations: There have been recent studies to augment existing studies that shows the correlation between employee satisfaction, morale, motivation and success of organizations. We will define success as the continued ability to provide returns to a company shareholders as a result of sustained profitability. A study conducted by Dr David Sirota 2005, the results of which were published in the book, The Enthusiastic Employee: How Companies Profit By Giving Workers What They Want, found that greater morale led to higher performance and vice-versa 18. The study involved 28 publicly traded firms with a total of 920,000 employees of the span of four years. They found the gains of 16% in 14 companies with high employee morale and 6% gain in the remaining 14 companies with low employee morale 19. Another study by Professor James Oakley of Purdue University found that there is a direct relationship between employee satisfaction and customer satisfaction and that customer satisfaction led to improved financial performance of the company20. Another point to note is that organizations with highly motivated and satisfied employees has significantly lower turnover. The intellectual capital of that organization is preserved which results in greater competitive advantage. Further there will be fewer losses due to training, downtime and loss of productivity as a result of a replacement with a lower initial production capacity. Competitiveness, competitive advantage, and success of organizations: In order for an organization to remain ahead of the competition, it needs to invest heavily into maintaining a competitive advantage. Being able to maintain and increase market share is a top priority for many organizations. Being able to increase market share or even maintain existing market share can influence a company bottom line. An organization can increase market share by having a competitive advantage whereby for example new products launch cycle timeline are reduced. Being able to be the first to market has with it built in customer expectations of higher quality associated with be the pioneer of such a product line. Being able to identify customer needs pre and post sales can also be seen as a competitive advantage. As mentioned before a happy customer translates to increased financial performance of the organization. Conclusion: Understanding what makes people behave the way they do in an organization, what influences their attitudes to work can greatly increase the possibility of being able to successfully formulate human resource strategies and thus practices that would foster a work environment where employees are happy, satisfied and motivated. This is the study of Organizational Behaviour. As mentioned in numerous citations above, a satisfied and highly motivated employee results in a satisfied customer and not necessarily the reverse. There is also a strong correlation between highly motivated, satisfied employee and a very competitive organization. This organization can be seen as having a competitive advantage in its human capital. Also we also established the link between highly motivated, satisfied employees and successful organization. Finally, we saw the correlation between competitive advantage and successful organizations. In conclusion Organizational Behaviour influences the attitudes and behaviour of employees. This in turn can be used to create work environment where employees are satisfied and highly motivated. This results in lower turnover, significantly reduced absenteeism rates and therefore reduced losses. Further highly motivated, satisfied employees provide organizations with the opportunity to leverage these employees to provide a competitive advantage which too provides financial benefits and overall success. References 1- Gary Johns, Alan M Saks. (2005) Organizational Behaviour: Understanding and managing life at work Pearson, Prentice Hill, pp 7. 2- Gary Johns, Alan M Saks. (2005) Organizational Behaviour: Understanding and managing life at work Pearson, Prentice Hill, pp 9. 3- Brearton, S., & Daly, J. (2003, January). The fifty best companies to work for in Canada. Report on Business. 19(7), 53-65, p.60. 4-Chisholm, P. (2000, May 29).What the boss needs to know. Maclean 113(22), 18-22. 5-Pfeffer, J (1994). Competitive advantage through people: Unleashing the power of the workforce Harvard Business School Press: Boston. 6-Galt, V. (2003, January 28). One-third of employees loathe their jobs, consultants find. The Globe and Mail, pp C1, C3. 7-Duxbury, L., & Higgins, C. (2003). Work-life conflict in Canada in the new millennium: A status report. Ottawa: Health Canada. 8-Heskett, James L.; Jones, Thomas O.; Loveman, Gary W.; Sasser, W. Earl, Jr.; Schlesinger, Leonard A. (March/April, 1994), "Putting the Service-Profit Chain to Work"; Harvard Business Review. 9-Johnson, R.H and A. M. Ryan, and M. J. Schmidt, (April 1994) "Employee Attitudes and Branch Performance at Ford Motor Credit" (paper presented at the Ninth annual Conference of the Society of Industrial and Organisational Psychology, Nashville, TN. 10-Gratton, L., (1997), HR Strategy: People Management, Vol. 3, No. 15, 24 July, pp 22-27. 11- Guest, D., (1987), HRM and industrial relations Journal of Management Studies, pp503-521. 12- Child, J. (1972), Organizational structure, environment and performance: the role of strategic choice, Sociology, Vol 6, No. 3, pp. 1-22. 13- Barney, J. (1991), Firm resources and sustained competitive advantage Journal of Management, Vol17, No 1, pp99-120. 14-Wright, P., McMaham, G., Mc William, A., (1994), Human resources and sustained competitive advantage: a resource-based perspective, Int. Journal of HRM, Vol. 5, No. 2, pp 301-326. 15- Coff, R.W., (1994), Human assets and organization control: implication of the resource-based view John M. Olin School of Business Washington University in St. Louis. 16-Schuler, R and Jackson, S., (1987), Link competitive strategies and human resource management practices, Academy of management executive Vol. 1, No. 3, pp 207-219. 17-Jassim R. K & Jaber G., (1998), Competitive advantage through the employees, Research paper, University of Auckland New Zealand. 18- Sirota, D.(2005) The Enthusiastic Employee: How Companies Profit By Giving Workers What They Want Wharton School Publishing. 19-Sirota, D (2005, January). #20025 Press Release, Sirota Consulting. 20-Oakley, James (2004), # 19402 Press Release, Purdue University
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