Significance of Organizational Behaviour in Managing Human Resources - Essay Example

Introduction In almost all cases, human resources are considered as the key towards the success of a business organization. Considering the tight competition in the global markets, proper management of human resources has gained importance within the private and public sector. In general, this report will discuss significant contribution of organizational behaviour in the management of human resources. As compared to the use of other leadership style, this report will highlight the benefit of using transformational leadership style when it comes to managing, motivating and maximizing the use of each employee’s talent and acquired skills. With this in mind, differences between the benefits of using transformational leadership will be compared with the use of autocratic, authoritative and transactional leadership approach in managing employees. Also related to the idea of motivating employees to perform well in their assigned task, this report will explore the benefit of using intrinsic rewards over the use of extrinsic form of rewards. To ensure that HR managers are able to effectively handle and properly manage a group of diverse employees, this report will discuss the importance of establishing a strong organizational culture that is focused on making each employee become self-sufficient. As part of the study conclusion, the contribution of organizational behaviour in the management of human resources will be tackled in details. Different Leadership Approach A corporate leadership is a special skill that each manager should possess in order to make them become a competitive leader. In almost all circumstances, it is unacceptable for a leader to make a quick judgment towards people and/or a business situation without having a concrete evidence to back him up in the end. It means that a good leader is expected to have a combination of wisdom, integrity, sensitivity, and tenacity (WITS) (van Maurik 1994). Since a manager must always base decisions on concrete facts, the author mentioned that a good leader must have these traits to be able to have a clear vision of the business trends. Kotter (1999, p. 1) mentioned that having a good leadership skill is important in terms of enabling managers to become more effective in terms of delegating task to each employee. Even though there are some managers who are fully equipped with proper management skills, some of them will remain unable to make a business successful in terms of competing in the global market because of the absence of good leadership skill. For this reason, managers should be aware of the best leadership skill which could effectively motivate each employee towards reaching the organizational goal. According to Dessler (2001, pp. 296 – 297), leaders are individuals who are capable of inspiring other people. In most cases, corporate leaders have important characteristics such as: (1) the drive to achieve their goals; (2) desire to lead; (3) self-confidence; (4) competitive cognitive ability; (5) honesty and integrity; and (6) sufficient knowledge in doing business. On top of these personality traits, corporate leaders are expected to influence the rest of employees without having the need to use violence or coercion. Aside from having the ability to know specific needs and wants of other people, a good leader are those who can make use of his personal power through the application of good communication skills (Huth 2001). Aside from being able to manage human resources, the use of the right type of leadership style enables the manager have the capacity to develop effective business plan. For this reason, managers should know exactly what type of leadership style is more effective when managing a group of diverse employees. Each type of leadership style has its own advantages and disadvantages. In relation to globalization, the use of autocratic leadership style is no longer effective when dealing with a diverse workforce since a self-efficient employee has gained importance in terms of making a business organization competitive in the global market. On the contrary, the use of authoritative leaders tends to mobilize employee towards a single organizational vision. Unlike the use of autocratic or authoritative leadership style, transformational leaders tend to go beyond what is happening around his environment because of their ability to implement new ideas all the time. Through the use of transformational leadership style, managers can motivate employees to be more flexible with organizational changes. Furthermore, the use of transformational leadership style can make employees easily adapt with the implementation of a new strategic plan. Once a group of employee is guided by a transformational leader, there is a strong possibility that the members of the team will instinctively adopt with the organizational change (Burke 2002, p. 243). Burke (2002, pp. 201 – 203) mentioned that the application of transformational leadership style is more beneficial in the implementation of a discontinued change process in a business organization rather than the use of a transactional leadership style whereas transactional leadership style is more effective when applied for a continuous organizational change process. Similar with the use of transformational leadership style, the use of charismatic leadership style is also effective in terms of making effective implementation of organizational change. This is possible since charismatic leaders are able to inspire employees. However, this particular leadership style does not focus on the fact that each employee demand respect and freedom of choice (Posakoff and Schriesheim 1985). Collaborative leaders do not only have the initiative to do a job but is also competent and supportive in guiding the development and implementation of their own organizational culture and structure necessary in achieving the organizational goal. This type of leaders also works well with their colleagues by creating, supporting, and maintaining a work environment wherein employees can learn and develop their competency to improve their knowledge. As a result of tight market situation, the need for continuous organizational change becomes necessary to empower a business organization to compete in the global market. In response to globalization, a strong collaborative leadership becomes an essential part of doing business not only in terms of enabling the managers to successfully implement a long list of organizational changes but also in terms of solving organizational problems and decision-making. Intrinsic Rewards vs. Extrinsic Rewards Having an effective reward system together with employee involvement has a significant impact when it comes to solving organizational conflicts. In some cases, the moral hazard and/or non-satisfaction with work is possible in case employees are not given any incentives in exchange for the extra work responsibility that is assigned to them (Ben-Ner and Jones 1995). Among the types of extrinsic reward includes the act of offering cash, bonuses and gift items whereas the type of intrinsic reward includes words of praises or public recognition (Shamir et al. 1993). In most cases, the type of company rewards offered by any business organization contributes a lot in the quality of work performance, work motivation and job satisfaction of its employees. Although the use of traditional reward system such as compensation and promotions can still be effective to some employees, this type of reward are slowly becoming ineffective in terms of motivating the generation X and Y employees (Craig 1989). Several authors explained that the use of material rewards such as cash incentives could only demotivate employees (Anthony, Dearden and Bedford 1989: p. 57; Cecil Hill1989). Excessive use of extrinsic rewards can somehow hurt the pride and decreases job satisfaction of employees. For this reason, excessive use of ‘pay-for-performance’ is not an effective way of motivating employees. In fact, several studies confirmed that the use of ‘pay-for-performance’ strategy does not guarantee the improvement in employees’ work performance, retention rate, and job satisfaction (Bowley and Link 2005; Sherwood and Wechsler 1986). With regards to the relationship between the use of pay practices and employee retention, the study that was conducted by Guthrie (2000) revealed that the use of skill-based pay system is better than the use of group-based compensation in terms of imrpoving employee retention. Furthermore, the author also reported that the use of group-based compensation is very much associated with higher rate of employee turnover (Guthrie, 2000). A reward system that combines both employee-ownership and individual incentives can be the most effective since employees will be rewarded financially as they make important decisions on behalf of the business organization. Since employees will become motivated in making the financial performance of the business organization more successful, employees often exert extra effort in effectively solving organizational problems and conflicts. Eventhough extrinsic rewards such as increase in pay or bonus given to employees could still be effective in terms of motivating employees and increasing their job satisfaction (Heywood and Wei 2006), a study shows that the use of intrinsic rewards such as congratulating employees for a job well done either verbally, written on a personal note, through public recognition, or implementing a celebration for success in work performance is more effective in motivating employees to increase their work performance (Graham and Unruh 1990). Importance of Establishing a Strong Organizational Structure and Culture Establishing a strong organizational structure is important because it serves as a framework that informs employees on what is expected from them in each department. In most cases, organizational structure is very much influenced by the company’s size. In case a business organization is big, the matrix organizational design that the company should be characterized as FLAT and TALL. It means that organizational structure should have a wider range of departments combined with a multitiered hierarchy as compared to a smaller business organization which normally adapts a TALL hierarchy. The problem with having FLAT and TALL hierarchy is associated with problems related to mis communication among the managers. This makes the management of human resources and the implemention of a new organizational plan more difficult. Furthermore, this type of organizational structure causes lack of coordination among the department managers, distortion, and lack of motivation among the middle managers. This makes employees unable to make a new organizational goal successful. Based on Mintzberg strategy, the process of strengthening organizational structure and culture should be interrelated with one another in order to enable HR managers to effectively implement a list of business strategies. Since the reason for establishing an organizational structure is to organize and distribute work among the employees, the absence of strong organizational structure and culture can make managers experience problems managing a group of diverse employees. In response to the pressure caused by globalization, organizational culture should encourage employees to become flexible and easily adapt with the changes in the market. Since organizational culture is a pattern of behaviour that enables an organization to cope with problems related to external adaptation and internal integration aside from enabling the employees to feel and think positively (David 1999, p. 143), managers should enhance the company’s culture to empower its employees to deal with internal and external organizational problems. Organizational change is necessary to keep a business organization competitive. As a common knowledge, the absence of effective communication among the managers can make the concerns of each employee left unresolved. This alone is a serious organizational problem as it can make employees become less motivated at work. Since organizational culture is a collective attitudes, experiences, beliefs and values shared by group of people within an organization (MacIntosh and Doherty 2007), the top management should take it as a challenge to develop an organizational culture that is diverse, practices good communication and leadership approach, and open to organizational change (Schein 2004, p. 11). Conclusion The study of organizational behaviour has a significant contribution in the effective management of human resources. Through the use of organizational behaviour concept and theories, managers can easily understood strategic ways on how to effectively motivate employees in terms of increasing their production rate and over all work performance. In this report, we have mentioned the significance of organizational structure in the establishment of organizational culture that is focused on minimizing the risk of organizational failure. Combined with the use of effective rewards system, organizational culture could also affect how each employee would behave and accept internal and external challenges that they may encounter on a daily basis. *** End *** References Anthony, R., Dearden, J., & Bedford, N., 1989. Management Control Systems, 5th Edition. Irwin: Homewood, III. Ben-Ner, A., & Jones, D., 1995. Employee Participation, Ownership, and Productivity: A Theoretical Framework. In Pagano U. & Rowthorn R. (eds) Democracy and Efficiency in the Economic Enterprise. Routledge. Bowley, J., & Link, D. A., 2005. Supporting Pay for Performance with the Right Technology. Compensation & Benefits Review , 37(5), pp. 36 - 41. Burke, W., 2002. Organizational Change: Theory and Practice. Sage Publication. Cecil Hill, F., 1989. Generating Ideas that Lower Costs and Boost Productivity. National Productivity Review , 8(2), p. 161. David, F., 1999. Strategic Management: Concepts. 7th Edition. NJ: Prentice-Hall. Dessler, G., 2001. 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