Part I includes four different but related topics. In Chapter 1, the history of organizational behavior and its importance to today’s healthcare managers are discussed. Chapter 2 describes the changing environment in which healthcare managers find themselves. The chapter examines the numerous issues that have emerged within the healthcare industry because of th

1

PART I

Introduction

Part I includes four different but related topics. In Chapter 1, the history of organizational behavior and its importance to today’s healthcare managers are discussed. Chapter 2 describes the changing environment in which healthcare managers find themselves. The chapter examines the numerous issues that have emerged within the healthcare industry because of the nation’s changing demographics. Chapter 3 deals with attitudes and perceptions, which are the “backbone” to understanding organizational behavior. You will find the terms attitude and perception frequently referred to within the various organiza- tional behavior theories. Finally, Chapter 4 discusses the importance of com- munications. It is said that 90 percent of the world’s problems are due to ineffective or the lack of communication. In fact, sentinel event data from the Joint Commission (formerly the Joint Commission on Accreditation of Health- care Organizations) estimates that communication failure was the root cause of patient harm 70 percent of the time in 2,400 reported negative outcomes stud- ied. No wonder communication skills are considered one of the top five skills necessary for today’s healthcare leader.

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3

CHAPTER 1

Overview and History of Organizational Behavior

Nancy Borkowski, DBA, CPA, FACHE

LEARNING OUTCOMES

After completing this chapter, the student should understand:

☛ The definition of organizational behavior. ☛ The major challenges facing today’s and tomorrow’s healthcare organizations and

healthcare managers. ☛ The importance of the Hawthorne Studies to the study of organizational behavior. ☛ The importance of McGregor’s Theory X and Theory Y to the study of organiza-

tional behavior. ☛ The difference between organizational behavioral, organization theory, organiza-

tional development, and human resources management.

OVERVIEW

Organizational behavior (OB) is an applied behavioral science that emerged from the disciplines of psychology, sociology, anthropology, political science, and economics. OB is the study of individual and group dynamics within an organization setting. Whenever people work together, numerous and complex factors interact. The discipline of OB attempts to understand these interac- tions so that managers can predict behavioral responses and, as a result, man- age the resulting outcomes.

According to Ott (1996, p. 1), OB asks the following questions:

1. Why do people behave the way they do when they are in organizations? 2. Under what circumstances will people’s behavior in organizations

change? 3. What impacts do organizations have on the behavior of individuals, for-

mal groups (such as departments), and informal groups (such as people from several departments who meet regularly in the company’s lunch- room)?

4. Why do different groups in the same organization develop different behavior norms?

There are three goals of OB. First, OB attempts to explain why individuals and groups behave the way they do within the organizational setting. Second, OB tries to predict how individuals and groups will behave on the basis of internal and external factors. Third, OB provides managers with tools to assist in the management of individuals’ and groups’ behaviors so they will- ingly put forth their best effort to accomplish organizational goals. In the

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4 OVERVIEW AND HISTORY OF ORGANIZATIONAL BEHAVIOR

healthcare industry, OB has become more important because people with diverse backgrounds and cultural values have to work together effectively and efficiently.

WHY STUDY ORGANIZATIONAL BEHAVIOR IN HEALTH CARE?

The largest U.S. industry is health care, which currently employs over 14 million individuals with an expected growth of approximately 22 percent through 2016. This growth will be 11 percent faster than all other industries (Bureau of Labor Statistics, 2008).

Each segment of the healthcare industry (e.g., hospitals, home health, reha- bilitation facilities) employs a different mix of health-related occupations ranging from highly skilled licensed professionals, such as physicians and nurses, to those with on-the-job training. Furthermore, each segment of the industry has various economic structures (e.g., for-profit, not-for-profit, gov- ernmental). As such, today’s healthcare managers need to possess the skills to communicate effectively with, motivate, and lead diverse groups of people within a large, dynamic, and complex industry. Communication, motivation, and leadership are all concepts within the discipline of OB. Furthermore, managers need to understand the causes of workplace problems, such as low performance, turnover, conflict, and stress, so that they may be proactive and minimize these unnecessary negative outcomes. With a greater understand- ing of OB, managers are better able to predict and, thus, influence the behav- ior of employees to achieve organizational goals.

Given the service-related intensity of the industry, the understanding of individuals’ behavior and group dynamics within health service organizations is critical to a healthcare manager’s success. Research indicates that the pri- mary reasons managers fail stem from difficulty in handling change, not being able to work well in teams, and poor interpersonal relations.

THE HEALTHCARE INDUSTRY

Changes within the healthcare industry over the past 25 years have been powerful, far-reaching, and continuous. Since readers are probably familiar with most of these changes from either their own experiences or from a previ- ous healthcare delivery system course, the discussion will address some of the trends or future concerns that will impact tomorrow’s healthcare organization for the industry.

Past changes and future trends are interrelating forces that have or will shape tomorrow’s healthcare organizations, whether they occur at the sys- tem level or the organizational level. Declining reimbursement for services has had, and will continue to have, one of the deepest impacts on the indus- try. Technology has also made a pervasive change in the industry. Biomed- ical and genetic research, along with advances in information technology, is producing rapid changes in treatment. In addition, the industry has ex- perienced increased government mandates such as the Health Insurance Portability and Accountability Act of 1996, the Medicare Prescription Drug, Improvement and Modernization Act of 2003, and most recently the Ameri-

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can Recovery and Reinvestment Act of 2009. With an increased focus on chronic disease management, patients are living longer and are requiring increased long-term and home health care now and in the future. Patients’ and healthcare workers’ characteristics are also changing. Both populations are becoming older and more diverse. Patients are better informed and, as such, have increasingly higher expectations of healthcare professionals. This trend has changed the way healthcare services are delivered, with a focus on patient satisfaction and quality of services. Physician–patient rela- tionships have changed because patients are beginning to understand that much of the responsibility for wellness lies with them. The economics of health care is in a state of flux. For example, reimbursements are directly linking payments to hospitals with quality of care; therefore, we will see an increase in the use of evidence-based medicine. There are continuing short- ages of staff, especially in the areas of nursing, imaging technicians, and pharmacists, leading to competition for well-qualified people. There are changes taking place in the disease environment. Many factors of modern life are contributing to the emergence of new diseases, reemergence of old ones, and evolution of pathogens immune to many of today’s medications. In addition, because of potential terrorism attacks, healthcare providers are concerned with biodisaster preparedness. Finally, there continues to be the issue of caring for the uninsured that contributes to the overuse and misuse of hospital emergency departments.

To deal with these changes, we have seen a number of healthcare organiza- tions restructure themselves into integrated delivery networks, which may be part of a local, regional, or national system. We have seen increased vertical, horizontal, and virtual integration. Vertical integration focuses on the devel- opment of a continuum of care services to meet the patient’s full range of healthcare needs. This integration model, in which a single entity owns and operates all the segments providing care, may include preventive services, specialized and primary ambulatory care, acute care, subacute care, long-term care, and home health care, as well as a health plan. Horizontal integration usually occurs through mergers, acquisitions, and/or consolidation within one segment of the industry. For example, during the 1990s we saw numerous hos- pital acquisitions by the large, for-profit, privately, and publicly held hospital chains of HCA/Columbia, Tenet Healthcare System, or Health Management Association. In addition, not-for-profit hospitals have merged with for-profit health systems as a result of competition. Virtual integration, which empha- sizes coordination of healthcare services through patient-management agree- ments, provider incentives, and/or information systems, has increased. This virtual integration has evolved to meet the need for better technology and information infrastructures that allow for information sharing, patient care management, and cost control.

Because of the dramatic changes and the future trends in the healthcare industry, most managers have been required to change the way they and their employees carry out their job responsibilities. These changes have been forced upon the industry by the need to increase productivity due to decreasing reimbursement and increasing competition. At the same time, healthcare providers must continue to demonstrate high-quality patient

The Healthcare Industry 5

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6 OVERVIEW AND HISTORY OF ORGANIZATIONAL BEHAVIOR

care. These are not easy tasks! As a result, many healthcare providers are breaking down their traditional hierarchical structures and moving toward team-managed environments (Sovie, 1992). Employees are finding themselves in new roles with new responsibilities. All of these changes cause disruptions in the workplace. The study of OB will assist healthcare managers to mini- mize the negative effects (such as stress and conflict) of this “new” environ- ment and maximize their ability to motivate staff and effectively lead their organizations.

HISTORY OF ORGANIZATIONAL BEHAVIOR

The beginnings of OB can be found within the human relations/behavioral management movement, which emerged during the 1920s as a response to the traditional or classic management approach. Beginning in the late 1700s, the Industrial Revolution was the driving force for the development of large facto- ries employing many workers. Managers at that time were concerned “about how to design and manage work in order to increase productivity and help orga- nizations attain maximum efficiency” (Daft, 2004, p. 24). This traditional approach included Frederick Taylor’s (1911) well-known framework of scientific management, or “Taylorism,” as it is now labeled. Taylor believed that efficiency was achieved by creating jobs that economized time, human energy, and other productive resources. Through his time-and-motion studies, Taylor scientifically divided manufacturing processes into small efficient units of work. Through Taylor’s work, productivity greatly increased. For example, Henry Ford devel- oped his assembly line according to the principles of Taylorism and was able to churn out Model Ts at a remarkable and economical pace (Benjamin, 2003).

Although the classic approach to management focused on efficiency within organizations, Taylor did attempt to address a human relations aspect in the workplace. In his book, The Principles of Scientific Management, Taylor stated that:

in order to have any hope of obtaining the initiative (i.e., best endeavors, hard work, skills and knowledge, ingenuity, and good-will) of his work- men the manager must give some special incentive to his men beyond that which is given to the average of the trade. This incentive can be given in several different ways, as, for example, the hope of rapid pro- motion or advancement; higher wages, either in the form of generous piecework prices or of a premium or bonus of some kind for good and rapid work; shorter hours of labor; better surroundings and working conditions than are ordinarily given, etc., and, above all, this special incentive should be accompanied by that personal consideration for, and friendly contact with, his workmen which comes only from a genuine and kindly interest in the welfare of those under him. It is only by giv- ing a special inducement or incentive of this kind that the employer can hope even approximately to get the initiative of his workmen.

Although Taylor discussed a concern for workers within the scientific man- agement approach, the human relations or behavioral movement of manage- ment did not begin until after the landmark Hawthorne Studies.

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THE HAWTHORNE STUDIES

Elton Mayo, Frederick Roethlisberger, and their colleagues from Harvard Business School conducted a number of experiments from 1924 to 1933 at the Hawthorne Plant of the Western Electric Company in Cicero, Illinois. The Hawthorne Studies were significant to the development of OB because they demonstrated the important influence of human factors on worker productiv- ity. It was through these experiments that the Hawthorne Effect was identi- fied. The Hawthorne Effect is the bias that occurs when people know that they are being studied. Roethlisberger and Dickson (1939) in their book Manage- ment and the Worker and Homans (1950) in his book The Human Group pro- vided a comprehensive account of the Hawthorne Studies. There were four phases to the Hawthorne Studies: the illumination experiments, the relay- assembly group experiments, the interviewing program, and the bank-wiring observation-room group studies. The intent of these studies was to determine the effect of working conditions on productivity.

The illumination experiments were conducted to determine whether increasing or decreasing lighting would lead to changes in productivity. The researchers were surprised to learn that productivity increased by both the control group (no change in lighting) and the experimental group (lighting alternated upward and downward). The researchers determined it was not the lighting that caused the increased productivity, but that it resulted from the attention received by the group.

In the relay-assembly group experiments, productivity of a segregated group of workers was studied as they were subjected to different working con- ditions. The researchers and management closely observed the group for five years. During the first part of the experiment, the working conditions of employees were improved by extending their rest periods, decreasing the length of their workday, and providing them a “free” day and lunches. In addi- tion, the workers were consulted before any changes were made, because their agreement had to be obtained before the change would be implemented. The workers of the group were given the freedom to interact with one another dur- ing the workday. Furthermore, one researcher also served as their supervisor who, during the experiment, expressed concern about their physical health and well-being. The researchers eagerly sought the employees’ opinions, hopes, and fears during the experiment. During the improved-conditions period, the workers’ productivity increased. Part two of the experiment called for the original working conditions to be restored. Again, the researchers were surprised to see that the employees’ productivity remained at the previous high level (when they had the improved working conditions). This result was attributed to group dynamics in that the group was allowed to develop socially with a common purpose.

The bank-wiring observation-room experiment was similar to the relay- assembly experiment. A group of workers were segregated so their productiv- ity and group dynamics could be studied. The workers were paid with a piecework rate that reflected both group and individual efforts. The researchers found that the wage incentive did not work. The group had devel- oped its own standard as to what constituted a “proper day’s work.” As such,

The Hawthorne Studies 7

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8 OVERVIEW AND HISTORY OF ORGANIZATIONAL BEHAVIOR

the group’s level of productivity remained constant because they did not want management to know that they could produce at a higher level. If a member of the group produced more than the agreed-upon level, the other members influenced the “rate buster” to return his productivity level to the group’s norm. In addition, if a member of the group failed to produce the required level of output, the other members traded jobs to ensure the group’s output level remained constant. The results of the bank-wiring experiment mirrored the relay-assembly experiment results. The researchers concluded that there was no cause-and-effect relationship between working conditions and produc- tivity and that any increase or decrease in productivity was attributed to group dynamics. (See Chapter 15 for a detailed discussion of group dynamics.)

As a result of the bank-wiring experiment, researchers became very inter- ested in exploring informal employee groups and the social functions that occur within the group and that influence the behavior of the individual group members. As part of the Hawthorne Studies, the researchers conducted exten- sive interviews with the employees. Over 21,000 interviews were conducted to determine the employees’ attitudes toward the company and their jobs. A major outcome of these interviews was that the researchers discovered that workers were not isolated, unrelated individuals; they were social beings and their attitudes toward change in the workplace were based upon (1) the per- sonal social conditioning (values, hopes, fears, expectations, etc.) they brought to the workplace, formed from their previous family or group associations, and (2) the human satisfaction the employee derived from his or her social partici- pation with coworkers and supervisors. As such, the researchers learned that an employee’s expression of dissatisfaction may be a symptom of an underly- ing problem on the job, at home, or in the person’s past.

THEORY X AND Y

Another significant impact in the development of OB came from Douglas McGregor (1957, 1960) when he proposed two theories by which managers motivated their employees: Theory X and Theory Y. However, as Ott (1996, p. 28) points out, McGregor’s Theory X and Theory Y is about much more than the motivation of people at work. “In its totality, it is a cogent articulation of the basic assumptions of the organizational behavior perspective. . . .” Theory X and Theory Y are ways of seeing and thinking about people, which, in turn, affect their behavior.

Theory X states that employees are unintelligent and lazy. They dislike work, avoiding it whenever possible. In addition, employees should be closely controlled because they have little desire for responsibility, have little apti- tude for creativity in solving organizational problems, and will resist change. In contrast, Theory Y states that employees are creative and competent; they want meaningful work; they want to contribute; and they want to participate in decision-making and leadership functions.

Borrowing from Maslow’s Hierarchy of Needs (see Chapter 5 for a full dis- cussion of this motivation theory), McGregor stated that the autocratic, or Theory X managers were no longer effective in the workplace because they relied on an employee’s lower needs for motivation (physiological concerns and

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Theory X and Y 9

safety), but in modern society those needs were mostly satisfied and thus no longer acted as a motivator for the employee. For example, managers would ask, “Why aren’t people more productive? We pay good wages, provide good working conditions, have excellent fringe benefits and steady employment. Yet people do not seem to be willing to put forth more than minimum efforts.” The answers to these questions were embedded in Theory X’s managerial assumptions of people. If managers believed that their employees had an inherent dislike for work and must be coerced, controlled, and directed to achieve organizational goals, the resulting behavior was nothing more than self-fulfilling prophesies. (See Chapter 3 for a discussion of the self-fulfilling prophecy–Pygmalion effect.) The manager’s assumptions caused the staff ’s “unmotivated” behavior.

However, at the opposite end of the spectrum from Theory X, McGregor proposed Theory Y, where managers created opportunities, removed obsta- cles, and encouraged growth and learning for their employees. McGregor stated that participative, or Theory Y managers supported decentralization and delegation of decision making, job enlargement, and participative man- agement because they allowed employees degrees of freedom to direct their own activities and to assume responsibility, thereby satisfying their higher- level needs (see Figure 1–1).

Theory X

Management

Management

Authoritarian, repressive style. Tight control, no development. Produces

limited, depressed culture.

Theory Y

Staff

Staff

Liberating and developmental. Control, achievement, and continuous

improvement achieved by enabling, empowering, and giving responsibility.

Figure 1–1 McGregor X-Y Theory Diagram (SOURCE: © Alan Chapman 2001–4, based on Douglas McGregor’s X-Y Theory. Reprinted with permission.)

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10 OVERVIEW AND HISTORY OF ORGANIZATIONAL BEHAVIOR

SUMMARY

Since 1960, a wealth of information has emerged within the study of OB, which will be addressed in this textbook. In Part I, the issues of diversity, per- ceptions and attitudes, and communication are discussed. Part II addresses motivation and individual behaviors. Part III examines the subject of leader- ship from four approaches—power and influence, behavioral, contingency, and transformational. Part IV emphasizes the importance of intrapersonal and interpersonal issues within the context of stress and conflict management. Part V examines group dynamics, working in groups, and teams and team- building. Part VI provides an overview of managing organizational change within the context of organizational development.

Before we conclude this chapter, I would like to explain the differences between OB and three other related fields—organization theory (OT), organi- zational development (OD), and human resources management (HRM). As noted previously, OB is the study of individual and group dynamics within an organization setting and, therefore, is a micro-approach. OT analyzes the entire organization and is a macro perspective, since the organization is the unit examined. The field of OD describes a planned process of change that is used throughout the organization, with the goal of improving the effectiveness of the organization (see Chapter 17). Since, like OT, OD involves the entire organization, it is a macro examination. Finally, HRM can be viewed as a micro-approach to “managing” people. The difference between HRM and OB is that the latter is theoretically based and the former is commonly viewed as a functional unit within organizations (Luthans, 2002).

END-OF-CHAPTER DISCUSSION QUESTIONS

1. Define organizational behavior. 2. What are some of the major challenges facing today’s and tomorrow’s

healthcare organizations and healthcare managers? Why? 3. Why did the Hawthorne Studies have an impact on the study of organi-

zational behavior? 4. Why did McGregor’s Theory X and Theory Y have an impact on the

study of organizational behavior? 5. Discuss the difference between organizational behavior, organization

theory, organizational development, and human resources management.

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X-Y THEORY QUESTIONNAIRE

X-Y Theory Questionnaire 11

Score the statements (5 = always, 4 = mostly, 3 = often, 2 = occasionally, 1 = rarely, 0 = never), to indicate whether the situation and management style is “X” or “Y”:

SCORE

1. My boss asks me politely to do things, gives me reasons why, and invites my suggestions. ______

2. I am encouraged to learn skills outside of my immediate area of responsibility. ______

3. I am left to work without interference from my boss, but help is available if I want it. ______

4. I am given credit and praise when I do good work or put in extra effort. ______

5. People leaving the company are given an “exit interview” to hear their views on the organization. ______

6. I am incentivized to work hard and well. ______ 7. If I want extra responsibility, my boss will find a way to

give it to me. ______ 8. If I want extra training, my boss will help me find how to

get it or will arrange it. ______ 9. I call my boss and my boss’s boss by their first names. ______

10. My boss is available for me to discuss my concerns or worries or suggestions. ______

11. I know what the company’s aims and targets are. ______ 12. I am told how the company is performing on a regular

basis. ______ 13. I am given an opportunity to solve problems connected

with my work. ______ 14. My boss tells me what is happening in the organization. ______ 15. I have regular meetings with my boss to discuss how I

can improve and develop. ______ TOTAL SCORE ______

RESULTS: 60–75 = strong Y-Theory management (effective short- and long-term) 45–59 = generally Y-Theory management 16–44 = generally X-Theory management 0–15 = strongly X-Theory management (autocratic, may be effective

short-term, poor long-term)

(Continued)

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12 OVERVIEW AND HISTORY OF ORGANIZATIONAL BEHAVIOR

Score the statements (5 = always, 4 = mostly, 3 = often, 2 = occasionally, 1 = rarely, 0 = never), to indicate whether the person prefers being managed by “X” or “Y” style

SCORE 1. I like to be involved and consulted by my boss about how

I can best do my job. ______ 2. I want to learn skills outside of my immediate area of

responsibility. ______ 3. I like to work without interference from my boss, but be

able to ask for help if I need it. ______ 4. I work best and most productively without pressure from

my boss or the threat of losing my job. ______ 5. When I leave the company, I would like an exit interview

to give my views on the organization. ______ 6. I like to be incentivized and praised for working hard

and well. ______ 7. I want to increase my responsibility. ______ 8. I want to be trained to do new things. ______ 9. I prefer to be friendly with my boss and the management. ______

10. I want to be able to discuss my concerns, worries, or suggestions with my boss or another manager. ______

11. I like to know what the company’s aims and targets are. ______ 12. I like to be told how the company is performing on a

regular basis. ______ 13. I like to be given opportunities to solve problems connected

with my work. ______ 14. I like to be told by my boss what is happening in the

organization. ______ 15. I like to have regular meetings with my boss to discuss

how I can improve and develop. ______ TOTAL SCORE ______

RESULTS: 60–75 = strongly prefers Y-Theory management 45–59 = generally prefers Y-Theory management 16–44 = generally prefers X-Theory management 0–15 = strongly prefers X-Theory management

© Alan Chapman 2001–4, based on Douglas McGregor’s X-Y Theory. Reprinted with per- mission.

Most people prefer “Y-Theory” management. These people are generally uncomfortable in “X-Theory” situations and are unlikely to be productive, especially long-term, and are likely to seek alternative situations. These short assessments provide a broad indication as to management style and individual preference, using the “X-Y Theory” definitions.

(Continued)

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REFERENCES

Benjamin, M. (2003, February 24). Fads for any and all eras. U.S. News & World Report, 134, 74–75.

Bureau of Labor Statistics, U.S. Department of Labor. (2008). Career guide to industries, 2008–09 edition, health care, on the Internet at http://www.bls .gov/oco/cg/cgs035.htm, last accessed February 11, 2008.

Daft, R. L. (2004). Organization theory and design (8th ed.). Mason, OH: Thomson South-Western.

Homans, G. C. (1950). The human group. New York: Harcourt, Brace and Company.

Luthans, F. (2002). Organizational behavior (9th ed.). New York: McGraw-Hill Book Company.

McGregor, D. M. (1957). The human side of enterprise. Management Review, 46, 22–28.

McGregor, D. M. (1960). The human side of enterprise. New York: McGraw-Hill Book Company.

Ott, J. S. (1996). Classic readings in organizational behavior (2nd ed.). Albany, NY: Wadsworth Publishing Company.

Roethlisberger, F. J., & Dickson, W. J. (1939). Management and the worker. Cambridge, MA: Harvard University Press.

Sovie, M. (1992). Care and service teams: A new imperative. Nursing Econom- ics, 10, 94–100.

Taylor, F. W. (1911). The principles of scientific management. New York: Harper and Brothers.

References 13

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