Organizational Behavior and its Impact on Corporate America - Research Paper Example

 Organizational Behavior and its Impact on Corporate America ABSTRACT The Home Depot is world-renowned for its strong team focus and family-based structure that serves mentoring and coaching to effectively build employee commitment. The behaviors of management and leadership provide Home Depot with considerable competitive advantages in terms of reward structures, promoting volunteerism, establishing feedback systems, and removing the barriers between authority and employees. Human capital development through motivation is the company’s greatest strength and its largest impact on corporate America. By adding more emphasis on interpersonal communication and communication clarity, The Home Depot serves as a benchmark for other industries in similar markets. Introduction When assessing an organizational environment worthy of being declared a leader in positive organizational behavior, no example is more relevant than The Home Depot. The Home Depot ranked #29 in the Fortune 100 list of best companies due to its commitment to customer service excellence, employee participation schemes, and a variety of reward programs that foster collaboration, motivation and commitment from its many employees and managers. In 2010, The Home Depot earned $6.6 billion in revenues (CNN Money, 2011), due to its reputation as a service leader and the ability to foster harmonious work teams dedicated to meeting the mission and vision of the organization. This paper describes the organizational behavior elements that drive Home Depot’s success with an insight into what programs and management philosophies build this employee and management commitment. These factors include establishment of multiple reward schemes, improving interpersonal communications and clarity between many different ranks of authority, setting corporate social responsibility efforts, and providing ample feedback systems to give recognition to employees who succeed and meet corporate goals. Important Elements of Organizational Behavior In order to gain employee and management commitment, it is first necessary to establish team membership, something especially true at The Home Depot whose cornerstone is employee involvement and participation. “For a team to develop, its members must want to belong to the team and come to identify with the team” (Bushe & Coetzer, 2007, p.185). When new employees enter the organization, they come into employment with their own personal need, goals and ambitions, thus effective leadership must work diligently to bring employees and managers into the team fold by creating a new social identity. “People strongly identified with a group can even be willing to sacrifice personal needs for the betterment of the group” (Bushe & Coetzer, p.186). This is the foundation of The Home Depot’s employment strategies: To ensure commitment and a transformation from pre-existing values to employees who are committed to meeting Home Depot’s mission and goal for excellence in service delivery. Group affiliation is crucial to success in profit and service delivery at Home Depot since service is the foundation of its core values of business operations. Gaining commitment related to teamworking is necessary in an environment where customers are considered the most important resource to corporate success and the business must rely on direct employee/customer interventions in order to generate higher sales volumes and satisfy customers of widely different socio-economic demographics. Building team focus is the most primary organizational behavior at The Home Depot that continues to lead to its position as a market leader in its industry. How is this accomplished at the organization? The first step is to ensure that there is a perception of inclusion and affiliation. Under Abraham Maslow’s Hierarchy of Needs, there are inherent motivations that are shared by virtually every employee. These include the need for job security, establishment of a sense of belonging, and ultimately self-confidence and self-esteem development. “Individuals need to feel useful and also feel that they have some affect on their environment” (Gambrel & Cianci, 2003, p.144). The Home Depot understands these core needs, building on job security through profit sharing programs and then establishes the team-based methodology required to coach and mentor employees to gain self-esteem and feel like a valued and trusted member of the organization. There is a great deal of psychological theory utilized at The Home Depot as it relates to the provision of needs fulfillment to gain commitment and motivation. Bambacas & Bordia (2009, p.224) identify the importance of providing training that employees perceive to be non-transferrable to another organization, thus making it “too costly to leave”. By reinforcing team-based methodology and principles of harmonious working conditions, along with ample human resources strategies for coaching and development, employees find a somewhat priceless sense of belonging that cannot be found elsewhere. For example, the Home Depot has a list of core values, two of which are volunteerism and service excellence. It is a transformational leadership style that promotes concepts related to good works, charity and harmonious working conditions (Bass & Steidlmeier, 1999). Through positive reinforcement and modeling behaviors, the management and leadership teams are able to foster this sense of commitment, much like a family, thus psychologically fulfilling basic human needs for affiliation. By coupling these activities with tangible human resources policies for career development, employees are left believing that such training and mentoring cannot be found elsewhere and thus The Home Depot enjoys much lower turnover rates than similar industry competitors. Rewards, Team-Working and Volunteerism The Home Depot also utilizes what is referred to as schemes of recurrence, related directly to reward structures. “If reward structures reflect what is asked for, it will become a systematic reality. If they do not, requests will fall on deaf ears” (Spitzer, 2000, p.46). The Home Depot refers to their employees as “orange-blooded” associates in praise of its harmonious working culture based on teamwork and provides a Success Sharing package as a means to foster further commitment to meeting goals. It is referred to in the Annual Report as a value-based business that paid five times more Success Sharing rewards to employees in 2010 than in 2006 (The Home Depot, 2010). These high profit-sharing increases illustrate that by labeling employees as valued and entrusted members of the organization and establishing a scheme of recurrence related to rewards, the organization maintains high profit and reduced turnover. At the same time, these rewards provide the incentive and motivation to meet its service excellence goals related to the customer that is unparalleled in this particular market. Without an effective reward strategy, most businesses have a difficult time gaining employee commitment. However, Employee Benefits (2008) identifies that in order to gain commitment, reward structure establishment is not the only effective organizational behavior available. In fact, money as the only motivational tool is short-lived and can eventually become a demotivator since it only provides short-term extrinsic rewards. In order to build a long-term commitment and a sense of inclusion, rewards must also be intrinsic such as providing interesting, autonomous, and worthwhile work structures (Employee Benefits). How does Home Depot accomplish intrinsic rewards successful as a positive organizational behavior? It goes back to establishing an ongoing and continuous sense of affiliation with all members of staff from subordinates to management teams. The Home Depot’s CEO established a cultural assessment model that encourages employees to participate in voicing their opinions. The organization established a regular anonymous survey that gives employees opportunities to express their grievances or innovations to improve work conditions and team unity. More than 300 to 400 surveys are assessed monthly as a means to improve the total corporate culture (Epstein, Buhovac & Yuthas, 2010). This provides employees with a sense of importance in the organization, something required as an element of leader behavior to gain long-term support and dedication. Another intrinsic reward is Home Depot’s strong commitment to corporate social responsibility efforts. Thus, the business rewards individuals for volunteerism with a variety of community programs. Some of the company’s eight core values are “taking care of people, excellent customer service, respect for all people, giving back, and building strong relationships” (Epstein, et al, p.44). The organization is able to build more commitment between team members by supporting their volunteerism efforts, allowing individuals to become familiar with one another inside and outside of the work environment. Says the CEO, “If we post a sign that says sign up for an effort to build a children’s playground, it fills up fast” (Epstein, et al, p.45). Volunteerism for Home Depot’s corporate social responsibility programs is strictly voluntary and not at all mandated through policy, which reinforces how well the business’ organizational behaviors lead to commitment to meeting goals and values. Employees who do volunteer and show their spirit related to Home Depot values are rewarded with positive feedback, recognition, and opportunities for promotional rewards related to their career objectives with the organization. “Effective recognition programs are an opportunity for companies to hold up exemplary staff as role models, anchoring a firm’s values throughout the workforce” (Goasdoue, 2008, p.63). There is a theory in psychology referred to as social learning theory in which individuals will model the behaviors of a trusted role model based on the level of reward they witness for these behaviors. If the role model is deemed credible and worthwhile, employees will take on these same characteristics based on the positive outcomes witnessed. The Home Depot recognizes this particular element of human behavior and thus motivates employees to remain dedicated to providing support for a culture of service and teamworking by promoting volunteerism excellence across the entire organizational staff. Interpersonal Communications It cannot be reinforced enough the psychological and sociological mechanisms of organizational behavior that are utilized at The Home Depot as a means of gaining dedication and loyalty. The business blends intrinsic and extrinsic rewards successfully through positive feedback systems and through monetary reward. There is a heavy emphasis on the human resources function at the organization with a great deal of interpersonal communication and interaction between multiple layers of management and employee groups. A recent study targeting 32 different HR managers that worked with over 100 staff in their organizations identified that effective interpersonal communication was vital to building a collaborative work environment (Bambacas & Patrickson, 2008). This includes the ability to listen effectively, speak with clarity, and model behaviors that are trustworthy and ethical. The Home Depot’s strong emphasis on human resources work provides a more horizontal hierarchy of control where messages and innovations move upward through the organization. Unlike other industries where authoritarian control systems, flowing from the top-down, drive organizational productivity, The Home Depot is effective in producing worker independence, sovereignty, and self-sufficiency when it comes to employee involvement in a variety of corporate decision-making scenarios. By constantly modeling behaviors that are transformational, including ethics policies and trust, employees are invited to work directly with senior and mid-level management as active contributors to organizational success. The company has developed a weekly television program to provide this open discussion related to products, policies, and personnel spotlights related to employee or management excellence (Epstein, et al). This unique and innovative forum provides the same mechanisms required to ensure a team environment so that employees do not feel as though they are being neglected in relation to decision-making and knowledge exchanges about business function. Additionally, the CEO takes direct feedback from employees to listen to their concerns and allow opportunities to offer suggestions for improvement (Epstein, et al). “Employees love giving their opinions, it gives them a voice and they’re heard” (Robbins & Judge, 2008, p.88). Maintaining positive job attitudes is built with this interconnectivity between all ranking officials of The Home Depot as another behavioral activity designed to build team harmony and loyalty. This provides employees with a feeling of prestige, control and higher volumes of self-confidence in relation to their role at the organization. Home Depot Impact on Corporate America The Home Depot’s liberal employee policies and team methodologies has given the business a reputation as a leader in service delivery and in employee commitment, sporting much lower turnover rates than in other similar markets. The Home Depot has been benchmarked both for its quality programs and for its team philosophies that continue to drive loyalty and employee satisfaction. Just recently, a major competitor, Lowe’s Home Improvement, laid off over 1,000 employees due to underperforming sales units while Home Depot continues to see shareholder value increase and new store development occurring regularly. This speaks as a corporate testament to the positive organizational behaviors occurring from within that routinely outperform competition in human resources, profit, and growth. Many organizations across the United States struggle with establishing a corporate culture of unity and must assign many change agents simply to champion structural or policy-based changes without resistance. The volumes of literature available on the subject and the corporate examples of struggling industries reflect how widespread this problem is related to teamworking success and goal attainment. The Home Depot’s constant reinforcement of employee value and importance, along with its multiple reward strategies and ability to foster collaboration even outside of the work environment, provides the benchmark that other industries can adopt as a means to improve their competitive position. The Home Depot is a master at using psychologically-based strategies to build a positive social identity that begins immediately after the employee has been hired. Group behaviors are the cultural norm at this organization and members not only understand the image of the ideal team, but work consistently to live up to these standards and other modeled behaviors. It is the family-based environment at Home Depot that deserves the most recognition for its impact on changing corporate America. Other industries attempt to use cognitive strategies to gain commitment while The Home Depot focuses on the emotional responses of worker groups and thus serves needs fulfillment in its every strategy and behavior. Conclusion Understanding what drives human behavior is a fundamental element of The Home Depot’s employee focus as a means to build long-term loyalty to meeting corporate goals related to vision and mission. Rather than focusing on structural elements such as radically changing job design to meet satisfaction, this organization understands the importance of establishing a superior socialization network and promotes interpersonal communication as a primary method of achieving knowledge management and profit growth. The emphasis on human resources has no equal in similar markets and in many other industries with its strategies designed to appeal to employee sensitivity, self-expression, and overall job satisfaction. The blending of surveys for employee creativity and innovation expression, monetary reward schemes, volunteerism, development of feedback systems, and multiple coaching and mentoring strategies are the primary elements of organizational behavior that has made Home Depot a leader in its marketplace. The concept of “orange blooded” employee groups and individuals continues to reinforce, using appropriate marketing and promotion, that employees are the most vital contributors to long-term success. Recognizing employees and giving positive feedback for individual career development should be heralded for its impact on changing the human resources principles of other businesses in corporate America. The most innovative practice developed by Home Depot senior-level leadership is the feedback survey that is a routine part of the organizational culture. It provides a template to build self-confidence in employees which is vital to the customer interaction occurring each and every day. This feedback and auditing tool should be noted as a quality management tool and a positive organizational behavior that builds significant commitment to achieving performance targets and fulfilling the core values of customer service that has given The Home Depot its current positive market reputation among competition and competitive advantage with human capital development. No other business maintains such effective organizational behaviors than The Home Depot and the organization’s ability to balance employee needs effectively with profit expectations. References Bambacas, M. & Prashant, B. (2009). Predicting Different Components: The Relative Effects of How Career Development HRM Practices are Perceived, Journal of Management and Organization, 15(2), p.224. Bambacas, Mary & Patrickson, Maraget. (2008). Interpersonal Communication Skills that Enhance Organizational Commitment, Journal of Communication Management, 12(1), p.51. Bass, B. & Steidlmeier, P. (1999). 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The Spirit of Leadership: Optimizing Creativity and Change in Organizations, UT Executive Excellence. Read More