A Comprehensive Model of Organizational Learning

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B.B.A
Banking & Insurance
Assignment on: A Comprehensive Model of Organizational Learning
Submitted to
Lecture: Ms.Tasmia Tahlil
Department of Finance
Faculty of Business Administration
Premier University, Chittagong.
Group: B
Prepared By:
.
Md. Ariful Islam Saimon Chy
1022114412

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Literature Review
1.0. Organizational learning
Organizational learning is the process of creating, retaining, and transferring knowledge within an
organization. An organization improves over time as it gains experience. From this experience, it is
able to create knowledge. This knowledge is broad, covering any topic that could better an
organization. Examples may include ways to increase production efficiency or to develop beneficial
investor relations. Knowledge is created at four different units: individual, group, organizational, and
inter-organizational.
An organization learns successfully when it is able to retain this knowledge and transfer it to, or
spread it throughout, the various divisions within an organization. Organizational learning can be
measured in different ways; however one common measurement used is a learning curve.
Relevance Organizational learning happens frequently within an organization and allows the
organization to stay competitive in an ever- changing environment. It is a process of improvement
that can increase efficiency, accuracy, or profits, to name a few examples. Organizational learning is
an aspect of organizations and a subfield of organizational studies. As an aspect of an organization,
organizational learning is the process of creating, retaining, and transferring knowledge. Knowledge
creation, knowledge retention, and knowledge transfer can be seen as adaptive processes that are
functions of experience.
1.1.The 4I Framework: A Comprehensive Model of Organizational Learning
In 1999, Crossan, Lane and White presented a model of organizational learning called “The
4I framework” which identifies four main processes (intuiting, interpreting, integrating and
institutionalizing) through which learning occurs across the three organizational levels
(individual, group, organization). The 4I framework is depicted in figure (1) below.
Intuiting occurs when individuals recognize patterns in their own past or present
experiences and identify their potential use in their current work environment. In many
ways, this process is seen as a preconscious process.
Interpreting is the process through which individuals verbalize or put into action their own
insights and ideas. Language and metaphors are often used to help individuals interpret and
share their intuitions with others. As the interpretation process moves beyond the
individual and the ideas become embraced by the group, integration occurs.

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Integrating is the collective development of a shared understanding of new ideas and of
how to put them into action. When new ways of thinking and acting are recurrent and have
a sufficiently significant impact on organizational action, the changes become
institutionalized.
Institutionalization “is the process of embedding learning that has occurred by individuals
and groups into the institutions of the organization including systems, structures,
procedures, and strategy” (Crossan & Bedrow, 2003, p. 1090). Crossan, Lane and White
(1999) also explained that “(i)nstitutionalizing is the process of ensuring that routinized
actions occur” (italics added) (p. 525). This implies that there is a deliberate effort to embed
knowledge at the organizational level so that it may persist and be repeated in the future
with sufficient regularity so that it can be recognized as an institution of the organization.
Institutionalization is the process that distinguishes organizational learning from individual
and group learning as it is through this process that ideas are transformed into institutions
of the organization, which are available to all employees (Lawrence, Mauws, Kleysen and
Dyck, 2005).
Individual Group Organization
Individual
Group
Organization
Figure 1. 4I framework of organizational learning (Crossan, Lane and White, 1999).
Feedback
Feed forward
Intuiting
Institutionalizing
Interpreting
Integrating

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2.0. Organizational justice
Greenberg (1987) introduced the concept of organizational justice with regard to how an
employee judges the behaviour of the organization and the employee's resulting attitude
and behaviour. (e.g., if a firm makes redundant half of the workers, an employee may feel a
sense of injustice with a resulting change in attitude and a drop in productivity). Justice or
fairness refers to the idea that an action or decision is morally right, which may be defined
according to ethics, religion, fairness, equity, or law. People are naturally attentive to the
justice of events and situations in their everyday lives, across a variety of contexts (Tabibnia,
Satpute, & Lieberman, 2008). Individuals react to actions and decisions made by
organizations every day. An individual’s perceptions of these decisions as fair or unfair can
influence the individual’s subsequent attitudes and behaviours. Fairness is often of central
interest to organizations because the implications of perceptions of injustice can impact job
attitudes and behaviours at work. Justice in organizations can include issues related to
perceptions of fair pay, equal opportunities for promotion, and personnel selection
procedures. Overview Organizational justice is conceptualized as a multidimensional
construct.
Organizational justice refers to employee perceptions of fairness in the workplace. These
perceptions can be classified into four categories; distributive, procedural, informational,
and interactional.
Distributive justice reflects perceptions regarding fairness of outcomes, while procedural
justice reflects perceptions of processes that lead to these outcomes. A third type of justice,
informational justice, relates to the accounts provided for justice-related events. Finally,
interpersonal justice reflects perceptions of interpersonal interactions and treatment.
Research demonstrates that, although correlated, these specific justice judgments are each
predictive of work- and worker-related outcomes. Whereas this classic taxonomy reflects
historically relevant theories that sought to identify criteria or decision rules used to
determine the fairness of outcomes, procedures, and interpersonal treatment, more
contemporary perspectives have cast a broader net. Contemporary justice research
examines the reasons employees care about justice (content theories) and the processes

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that lead to both the formation of fairness perceptions, as well as individuals reactions to
perceived injustice
There are Three major Types of Organizational Justice. These are:
 Procedural Justice
 Distributive Justice
 Interactional Justice; It can be further classified into two category, these are;
o Interpersonal Justice
o Informational Justice
2.1. Procedural Justice
Definition Procedural justice affects how decisions are made and policies are established. It is based
on the premise that the most fair and respectful decision will be made. Procedural justice is also
concerned about creating policies and procedures that take all perspectives and concerns into
consideration. When a situation cannot be resolved between the parties and a leader or manager is
required to make a ruling.
Procedural justice suggests that decisions be neutral, based on fact, and appropriate for the actions.
When employees believe problems will be resolved fairly and honestly, they will have more
confidence in the decision. This puts a burden on companies to create procedures and policies that
demonstrate procedural justice, meaning the response will be fair and consistent regardless of who
is involved in the situation. Procedural Justice Theory in the Workplace One of the greatest
challenges companies face is ensuring there is equity and fair treatment among all rank of
employees, regardless of their background, experience, or perceived value to the business. If a policy
is created for a division, that policy needs to apply to everyone in that group. When a policy is
developed for the entire company, all employees must be held to the same standard. If the policy is
altered for different people, procedural justice is not implemented appropriately. Likewise, when
policies are created, procedural justice needs to be considered. The policy must be fair to everyone
in the organization, regardless of race, gender, age, position, education, or training. Procedural
Justice Examples to further examine procedural justice, an example is helpful. If a company has a
strict tardiness policy with specific punishments if employees are repeatedly late, that policy must
apply to every person at every level. If some people are exempt from the rule, procedural justice is
not being enacted.

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2.2. Distributive Justice
Defined Part of being a member of a modern society is accepting that all goods will be distributed
through society by some means. This is not a concept that is universal throughout history. In
kingdoms and empires, the monarch would own all goods, but permit his or her people to enjoy
them in his or her name. There is no central power which owns all goods in Western society.
Distributive justice addresses who owns these goods and how they are acquired. Distributive justice
is a concept that addresses the ownership of goods in a society. It assumes that there is a large
amount of fairness in the distribution of goods. Equal work should provide individuals with an equal
outcome in terms of goods acquired or the ability to acquire goods. Distributive justice is absent
when equal work does not produce equal outcomes or when an individual or a group acquires a
disproportionate amount of goods.
2.3.0Interactional Justice
Have you ever had a job where your co-workers also treated you as their friend, and your bosses
listened to your perspectives? Have you ever felt like you were discriminated against at work?
Interactional justice is the standard applied to how employees relate to each other at work. This is
not just determining how managers treat their team members; it can also relate to how co-workers
and colleagues interact with each other. Establishing standards of conduct is critical to ensuring a
high level of respect is shown to employees and to ensure the organization is regarded as a fair and
safe workplace.
A Lesson in Interactional Justice in the Workplace There are several ways that interactional justice is
important in the workplace: how managers interact with their employees, how co-workers interact
with each other, and how employees treat external customers and vendors. 1. Managers and
employees. As leaders interact with employees, interactional justice pertains to the behavior of the
leaders and managers as they execute their decisions and authority. As a manager, a person is
responsible to create a positive, productive work environment. This requires interacting in a honest,
fair, and respectful way with employees. When managers effectively exercise interactional justice,
they are open, consistent, and fair to their employees. For example, when a manager is exercising
interactional justice, she or he will promote an employee based on experience, merit, and
performance. However, if a manager promotes someone because she or he is a friend, family
member, or can help the manager personally, that behavior is a direct violation of fairness.

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Again Interactional justice can be categorized into two categories. These are Interpersonal justice
and Informational justice. Interpersonal justice refers to perceptions of respect and propriety in
one’s treatment while informational justice relates to the adequacy of the explanations given in
terms of their timeliness, specificity, and truthfulness.
2.3.1. Interpersonal justice “reflects the degree to which people are treated with politeness,
dignity, and respect by authorities and third parties involved in executing procedures or determining
outcomes” .
2.3.2. Informational justice “focuses on explanations provided to people that convey information
about why procedures were used in a certain way or why outcomes were distributed in a certain
fashion”
3.0. Compensation
Compensation is the total amount of the monetary and non-monetary pay provided to an employee
by an employer in return for work performed as required. Compensation is based on: market
research about the worth of similar jobs marketplace, employee contributions and
accomplishments, the availability of employees with like skills in the marketplace, the desire of the
employer to attract and retain a particular employee for the value they are perceived to add to the
employment the profitability of the company or the funds available in a non-profit or public sector
setting, and thus, the ability of an employer to pay marker-rate compensation.
3.1. Types of Compensation
There are two forms of compensation provided to employees; direct and indirect. Direct forms of
compensation have a multitude of types or methods, from salaries to bonuses. Indirect
compensation is primarily the various types of benefits and long term incentives.
 Direct Compensation:
One of the forms of compensation is direct remuneration for services rendered by the employee.
The term used for this is wages. It consists of four different groups of payment from the employer
to the employee. They are:
I.Salary: This type of wage is customarily a set sum of remuneration over a defined
period of time. The most traditional form is a money amount over a period of one year. The
frequency of payment is another part of the compensation and is based on industry standards. Most
businesses pay for services twice a month. Most commonly used tool to pay professional or licensed

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employees. In general there is an expectation from the employer of a longer term commitment
from the employee for providing a regular uninterrupted compensation.
II.Hourly Wages: This is a amount per hour of service to the employer, more
commonly used to compensate unskilled and skilled laborers in the workforce. This form of
compensation comes with an implied understanding that during times of slow or minimal workloads,
the employee may not be used to provide services. In effect, there is no guarantee of a regular cycle
of pay.
III.Commission: When compensation is based on volume or some form of
performance, this is known as commission based remuneration. Other terms used include
piecework or piecemeal. Many industries used this type of remuneration to get a minimum standard
of production in exchange for compensation. It is used to shift risk from the employer to the
employee. There are two methods to calculate commission. One is based on volume of services and
the other is based on sales. An example of an industry that uses volume remuneration extensively is
the fishing industry. The men that work on the boats have a risk that the captain will not find fish. In
exchange, the captain may hit upon some nice fishing grounds and bring in a large catch. Once the
fish is offloaded, the processors use commission to compensate the production workers. These
workers are paid by piecemeal, that is, how much final product they can generate from the catch.
Typically their cuts of the meat are weighed and they are compensated based on that measurement
for services rendered. An example of an industry that uses sales based commissions is the auto retail
dealerships. Here the salesman is enticed to get the buyer to purchase the vehicle so that he may
receive compensation for his services. Other commission based industries include, brokers, real
estate agents, door to door salesmen, internet website owners and some folks in the cleaning
services.
IV.Bonuses: Are used to increase performance from the employee. This is a variable
type of remuneration and is more commonly found with salaried staff to incentivize them for a
particular goal whether time or volume based. Other reasons used for bonuses are to increase or
maintain retention of certain skills or the pool of skill sets needed in the company. Sometimes
bonuses are paid when a company meets certain financial standards or goals over an extended
period of time. Bonuses are not commonly used with hourly or commission based employees due to
the nature of the type of compensation already established. However, in small businesses it is used
as a tool to incentivize these two types of remuneration to meet certain goals.

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 Indirect Compensation
The other form of compensation is indirect in value. This includes benefits and equity based
programs. In general, these two types of indirect compensation provide value to an employee over
a longer period of time.
I. Benefits: In which particular group is traditionally thought of in the form of
insurances (health, dental, life, disability and vision) and retirement. Very few small businesses
provide benefits to their employees due to cost involved. When small businesses begin providing
benefits, they customarily start out with retirement because of simplicity and low cost. As they
grow, they add health insurance and continue to expand the benefit package as the number of
employees increase and the risk of business performance decreases. Benefits allow for retention and
recruitment. Other benefits can include transportation, paid time off, vacation time, and customized
incentives (lodging, meals, phones, etc.).
II. Equity Based Programs: Rarely found in the small business world for several
reasons. These types of indirect compensation tie the employee to the company via ownership.
Due to the complexity and the legal issues involved, very few small businesses use this tool.
4.0. Performance Appraisal
Performance Appraisal is the systematic evaluation of the performance of employees and to
understand the abilities of a person for further growth and development. Performance appraisal is
generally done in systematic ways which are as follows:
1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better performance. Performance
Appraisal is done for following reasons:
1. To maintain records in order to determine compensation packages, wage structure, salaries raises,
etc.
2. To identify the strengths and weaknesses of employees to place right men on right job.

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3. To maintain and assess the potential present in a person for further growth and development. 4.
To provide a feedback to employees regarding their performance and related status.
5. To provide a feedback to employees regarding their performance and related status.
6. It serves as a basis for influencing working habits of the employees.
7. To review and retain the promotional and other training program.
Performance appraisal serves as a motivational tool. Through evaluating performance of employees,
a person’s efficiency can be determined if the targets are achieved. This very well motivates a person
for better job and helps him to improve his performance in the workplace.
4.1. Methods of Performance appraisal
There many methods around that are used to measure the performance of employees.
Those methods are categorized into two broad categories. Those are explained in below;
 Past Oriented Methods
1. Rating Scales: Rating scales consists of several numerical scales representing job
related performance criterions such as dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total numerical scores are computed and final
conclusions are derived. Advantages – Adaptability, easy to use, low cost, every type of job can be
evaluated, large number of employees covered, no formal training required. Disadvantages – Rater’s
biases
2. Checklist: Under this method, checklist of statements of traits of employee in
the form of Yes or No based questions is prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation. Advantages – economy, ease of
administration, limited training required, standardization. Disadvantages – Raters biases, use of
improper weighs by HR, does not allow rater to give relative ratings
3. Forced Choice Method: The series of statements arranged in the blocks of two
or more are given and the rater indicates which statement is true or false. The rater is forced to
make a choice. HR department does actual assessment. Advantages – Absence of personal biases
because of forced choice. Disadvantages – Statements may be wrongly framed.
4. Forced Distribution Method: here employees are clustered around a high point
on a rating scale. Rater is compelled to distribute the employees on all points on the scale. It is
assumed that the performance is conformed to normal distribution. Advantages – Eliminates
Disadvantages – Assumption of normal distribution, unrealistic, errors of central tendency.
5. Critical Incidents Method: The approach is focused on certain critical behaviors
of employee that makes all the difference in the performance. Supervisors as and when they occur
record such incidents. Advantages – Evaluations are based on actual job behaviors, ratings are
supported by descriptions, feedback is easy, reduces recency biases, chances of subordinate

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improvement are high. Disadvantages – Negative incidents can be prioritized, forgetting incidents,
overly close supervision; feedback may be too much and may appear to be punishment.
6. Behaviorally Anchored Rating Scales: statements of effective and ineffective
behaviors determine the points. They are said to be behaviorally anchored. The rater is supposed to
say, which behavior describes the employee performance. Advantages – helps overcome rating
errors. Disadvantages – Suffers from distortions inherent in most rating techniques.
7. Field Review Method: This is an appraisal done by someone outside employees’
own department usually from corporate or HR department. Advantages – Useful for managerial level
promotions, when comparable information is needed, Disadvantages – Outsider is generally not
familiar with employees work environment, Observation of actual behaviors not possible.
8. Performance Tests & Observations: This is based on the test of knowledge or
skills. The tests may be written or an actual presentation of skills. Tests must be reliable and
validated to be useful. Advantage – Tests may be apt to measure potential more than actual
performance. Disadvantages – Tests may suffer if costs of test development or administration are
high.
9. Confidential Records: Mostly used by government departments, however its
application in industry is not ruled out. Here the report is given in the form of Annual Confidentiality
Report (ACR) and may record ratings with respect to following items; attendance, self expression,
team work, leadership, initiative, technical ability, reasoning ability, originality and resourcefulness
etc. The system is highly secretive and confidential. Feedback to the assessed is given only in case of
an adverse entry. Disadvantage is that it is highly subjective and ratings can be manipulated because
the evaluations are linked to HR actions like promotions etc.
10. Essay Method: In this method the rater writes down the employee description
in detail within a number of broad categories like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of performing jobs, strengths and weaknesses
and training needs of the employee. Advantage – It is extremely useful in filing information gaps
about the employees that often occur in a better-structured checklist. Disadvantages – It its highly
dependent upon the writing skills of rater and most of them are not good writers. They may get
confused success depends on the memory power of raters.
11. Cost Accounting Method: Here performance is evaluated from the monetary
returns yields to his or her organization. Cost to keep employee, and benefit the organization derives
is ascertained. Hence it is more dependent upon cost and benefit analysis.
12. Comparative Evaluation Method (Ranking & Paired Comparisons): These are
collection of different methods that compare performance with that of other co-workers. The usual
techniques used may be ranking methods and paired comparison method. Ranking Methods:
Superior ranks his worker based on merit, from best to worst. However how best and why best are
not elaborated in this method. It is easy to administer and explanation. Paired Comparison Methods:
In this method each employee is rated with another employee in the form of pairs. The number of
comparisons may be calculated with the help of a formula as under. [N x (N-1) ].

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 Future Oriented Methods
1. Management By Objectives: It means management by objectives and the
performance is rated against the achievement of objectives stated by the management. MBO
process goes as under. Establish goals and desired outcomes for each subordinate Setting
performance standards Comparison of actual goals with goals attained by the employee Establish
new goals and new strategies for goals not achieved in previous year. Advantage – It is more useful
for managerial positions. Disadvantages – Not applicable to all jobs, allocation of merit pay may
result in setting short-term goals rather than important and long-term goals etc.
2. Psychological Appraisals: These appraisals are more directed to assess
employees potential for future performance rather than the past one. It is done in the form of in-
depth interviews, psychological tests, and discussion with supervisors and review of other
evaluations. It is more focused on employees emotional, intellectual, and motivational and other
personal characteristics affecting his performance. This approach is slow and costly and may be
useful for bright young members who may have considerable potential. However quality of these
appraisals largely depend upon the skills of psychologists who perform the evaluation.
3. Assessment Centers: This technique was first developed in USA and UK in 1943.
An assessment center is a central location where managers may come together to have their
participation in job related exercises evaluated by trained observers. It is more focused on
observation of behaviours across a series of select exercises or work samples. Assessees are
requested to participate in in-basket exercises, work groups, computer simulations, role playing and
other similar activities which require same attributes for successful performance in actual job. The
characteristics assessed in assessment center can be assertiveness, persuasive ability,
communicating ability, planning and organizational ability, self confidence, resistance to stress,
energy level, decision making, sensitivity to feelings, administrative ability, creativity and mental
alertness etc. Disadvantages – Costs of employees traveling and lodging, psychologists, ratings
strongly influenced by assessee’s inter-personal skills. Solid performers may feel suffocated in
simulated situations. Those who are not selected for this also may get affected. Advantages – well-
conducted assessment center can achieve better forecasts of future performance and progress than
other methods of appraisals. Also reliability, content validity and predictive ability are said to be high
in assessment centers. The tests also make sure that the wrong people are not hired or promoted.
Finally it clearly defines the criteria for selection and promotion.
4. 360-Degree Feedback: It is a technique which is systematic collection of
performance data on an individual group, derived from a number of stakeholders like immediate
supervisors, team members, customers, peers and self. In fact anyone who has useful information
on how an employee does a job may be one of the appraisers. This technique is highly useful in
terms of broader perspective, greater self-development and multi-source feedback is useful. 360-
degree appraisals are useful to measure inter-personal skills, customer satisfaction and team
building skills. However on the negative side, receiving feedback from multiple sources can be
intimidating, threatening etc. Multiple raters may be less adept at providing balanced and objective
feedback.

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Analysis
5.0. Fairness Perception of Compensation
5.1. Procedural Justice Perception of Compensation
-Grand Average of all 3 Sample organization (23+29+29)/7*3=3.86
- I find a grand average of 3.86 in a scale of 5 about the perception of the employees about
the fairness of procedures that are used to make compensation. And this grand average indicates
that employees regard the compensation somewhat fair.
5.2.Distributive Justice Perception of Compensation
- Grand Average of all 3 Sample organization (14+13+14)/4*3=3.42
- I find a grand average of 3.42 in a scale of 5 about the perception of the employees
about the fairness of distribution of work that are used to make compensation. And this grand
average indicates that employees regard the compensation somewhat fair.
5.3. Interpersonal Justice Perception of Compensation
- I find a grand average of 4.00 in a scale of 5 about the perception of the
employees about the fairness of Interpersonal skill that are used to make compensation.
And this grand average indicates that employees regard the compensation seems fair.
employees about the fairness of Information that are used to make compensation. And this
grand average indicates that employees regard the compensation seems fair.

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6.0. Fairness Perception of Performance Appraisal
6.1. Procedural Justice Perception of Compensation
-Grand Average of all 3 Sample organization (24+29+26)/7*3=3.76
- I find a grand average of 3.76 in a scale of 5 about the perception of the employees about
the fairness of procedures that are used for performance appraisal of employees. And this grand
average indicates that employees regard the performance appraisal somewhat fair.
6.2. Distributive Justice Perception of Compensation
- I find a grand average of 3.42 in a scale of 5 about the perception of the employees
about the fairness of distribution of work that are used for performance appraisal of employees. And
this grand average indicates that employees regard the for performance appraisal of somewhat fair.
employees about the fairness of Interpersonal skill that are used for performance appraisal of
employees. And this grand average indicates that employees regard the performance appraisal
seems fair.
employees about the fairness of Information that are used for performance appraisal of
employees. And this grand average indicates that employees regard the performance appraisal
seems fair.

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7.0. Organizational Learning
7.1. Intuiting and Interpreting
- The grand average of 4.87 in a scale of 7 indicates somewhat moderate level of
intuiting and interpreting among the Individual level of learning.
7.2. Individual Impact on Group
- The grand average of 4.10 in a scale of 7 indicates somewhat moderate level of
Individual impact on Group learning.
7.3. Integration
- The grand average of 4.94 in a scale of 7 indicates that the level of integration
for group learning is somewhat moderate.
7.4. Group Impact on Organization
- The grand average of 3.81 in a scale of 7 indicates that the level of group
impact on organizational learning is low.
7.5. Institutionalization
- The grand average of 4.71 in a scale of 7 indicates that the level of
Institutionalization is somewhat moderate.
7.6. Organization impact on Individual
- The grand average of 4.63 in a scale of 7 indicates that the level of organization
impact on individual is somewhat moderate.

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