Organizational Behavior and Human Capital
This section covers Organizational Behavior and Human Capital. The exam tests how individual motivation, team design, culture and HR systems affect performance, and whether you can use evidence rather than intuition.
Core rules and concepts
- Motivation theories differ: expectancy theory links effort to performance and reward; equity theory focuses on perceived fairness; job characteristics model links skill variety, task identity, significance, autonomy and feedback to engagement.
- Teams need clear goals, psychological safety and role clarity. Group norms can support or undermine performance. Culture is reinforced by what leaders measure and reward.
- Human capital metrics include turnover, time-to-fill, engagement, productivity and cost per hire. They must be tied to outcomes and compared with a relevant baseline.
Worked example
A firm has 100 employees, 20% annual turnover and a replacement cost of 50% of a $40,000 salary, or $20,000 per exit. Turnover cost = 20 × $20,000 = $400,000. A $100,000 programme cuts turnover to 12%, saving 8 exits × $20,000 = $160,000. Net benefit is $60,000, before productivity effects. Reason: the business case depends on avoided exits, not on the attractiveness of the programme.
Traps
Assuming engagement survey scores cause performance; confusing correlation with causation; using personality tests without validity evidence; treating forced ranking as objective performance data; ignoring manager quality in turnover.