Lecture notes in Organizational behavior pdf

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Chapter 1 Organizational Behavior LEARNING OBJECTIVES After reading this chapter, you should be able to understand and articulate answers to the following questions: 1. What is organizational behavior (OB)? 2. Why does organizational behavior matter? 3. How can I maximize my learning in this course? 4. What research methods are used to study organizational behavior? 5. What challenges and opportunities exist for OB? Employees Come First at Wegmans Ever since Fortune magazine created its list of the 100 Best Companies to Work For, Wegmans has consistently remained within its ranks. In 2007, Wegmans was given the Food Network’s award as the nation’s top supermarket. Wegmans is a thriving grocery store chain based in Rochester, New York, that grew to 71 stores across Maryland, New Jersey, New York, Pennsylvania, and Virginia by 2008. Wegmans is a family-run business. Daniel Wegman, the current CEO, is the grandson of the company’s cofounder. Daniel’s daughter Colleen Wegman is president of the company. The Fortune magazine ranking came as a surprise to many in the grocery industry, as Wegmans is characterized by low profit margins, low-paying and tedious jobs, and demanding customer interactions. There are many reasons that Wegmans has such loyal workers and a turnover rate of only 8% for their 35,000 employees (compared to the industry average, which is closer to 50%). They utilize job sharing and a compressed workweek Saylor URL: http://www.saylor.org/books Saylor.org 2 and also offer telecommuting for some employees. Ultimately, Wegmans created an environment that shows employees they matter. The company motto is “Employees first. Customers second” is based on the belief that when employees feel cared for, they will in turn show concern for the customers they serve. In response to the 2008 ranking as the third best company in the United States to work for, CEO Danny Wegman said, “Every one of our employees and customers should stand up and take a bow, because together they make Wegmans a special place.” Wegmans has also consistently brought innovations to a fairly traditional industry. For example, Wegmans launched a Web site for its stores in 1996 with specifics on health and recipes and other helpful information for its customers. Many have called the experience at Wegmans “Food Theater.” With sales of organic foods in the United States soaring to 17 billion, Wegmans supermarkets started its own 50-acre organic research farm. Its goal is to develop best practices in terms of health and efficiency and to share those practices with the hundreds of farmers that supply their stores with fresh fruits and vegetables. Wegmans is demonstrating that being both socially and environmentally responsible can increase employee loyalty, growth, and profits, creating a win–win situation for the organization, important stakeholders such as employees and customers, and the communities where they are located. Sources: Based on information contained in Ezzedeen, S. R., Hyde, C. M., & Laurin, K. R. (2006). Is strategic human resource management socially responsible? The case of Wegmans Food Markets, Inc. Employee Responsibility and Rights Journal,18, 295–307; Niedt, B. (2008, January 22). Wegmans no. 3 on Fortune’s “Best companies to work for” list. The Post- Saylor URL: http://www.saylor.org/books Saylor.org 3 Standard; Borden, M., Chu, J., Fishman, C., Prospero, M. A., & Sacks, D. (2008, September 11). 50 ways to green your business. Fast Company. Retrieved January 27, 2008, from http://www.fastcompany.com/magazine/120/50-ways-to-green-your- business_5.html; 100 best companies to work for. (2008). Retrieved January 27, 2008, from the Fortune Web site: http://money.cnn.com/magazines/fortune/bestcompanies/2008/snapshots/ 3.html. 1.1 Understanding Organizational Behavior LEARNING OBJECTIVES 1. Learn about the layout of this book. 2. Understand what organizational behavior is. 3. Understand why organizational behavior matters. 4. Learn about OB Toolboxes in this book. About This Book The people make the place. Benjamin Schneider, Fellow of the Academy of Management This book is all about people, especially people at work. As evidenced in the opening case, we will share many examples of people making their workplaces work. People can make work an exciting, fun, and productive place to be, or they can make it a routine, boring, and ineffective place where everyone dreads to go. Steve Jobs, cofounder, chairman, and CEO of Apple Inc. attributes the innovations at Apple, which include the iPod, MacBook, and iPhone, to people, noting, “Innovation has nothing to do with how many R&D Saylor URL: http://www.saylor.org/books Saylor.org 4 dollars you have.…It’s not about money. It’s about the people you have, how 1 you’re led, and how much you get it.” This became a sore point with investors in early 2009 when Jobs took a medical leave of absence. Many wonder if Apple will be as successful without him at the helm, and Apple stock 2 plunged upon worries about his health. Mary Kay Ash, founder of Mary Kay Inc., a billion-dollar cosmetics company, makes a similar point, saying, “People are definitely a company’s greatest asset. It doesn’t make any difference whether the product is cars or cosmetics. 3 A company is only as good as the people it keeps.” Just like people, organizations come in many shapes and sizes. We understand that the career path you will take may include a variety of different organizations. In addition, we know that each student reading this book has a unique set of personal and work-related experiences, capabilities, and career goals. On average, a person working in the United States will change jobs 10 4 times in 20 years. In order to succeed in this type of career situation, individuals need to be armed with the tools necessary to be lifelong learners. So, this book will not be about giving you all the answers to every situation you may encounter when you start your first job or as you continue up the career ladder. Instead, this book will give you the vocabulary, framework, and critical thinking skills necessary for you to diagnose situations, ask tough questions, evaluate the answers you receive, and act in an effective and ethical manner regardless of situational characteristics. Throughout this book, when we refer to organizations, we will include examples that may apply to diverse organizations such as publicly held, for- profit organizations like Google and American Airlines, privately owned businesses such as S. C. Johnson & Son Inc. (makers of Windex glass cleaner) Saylor URL: http://www.saylor.org/books Saylor.org 5 and Mars Inc. (makers of Snickers and M&Ms), and not-for-profit organizations such as the Sierra Club or Mercy Corps, and nongovernmental organizations (NGOs) such as Doctors Without Borders and the International Red Cross. We will also refer to both small and large corporations. You will see examples from Fortune 500 organizations such as Intel Corporation or Home Depot Inc., as well as small start-up organizations. Keep in mind that some of the small organizations of today may become large organizations in the future. For example, in 1998, eBay Inc. had only 29 employees and 47.4 million in income, but by 2008 they had grown to 11,000 employees and over 7 billion 5 in revenue. Regardless of the size or type of organization you may work for, people are the common denominator of how work is accomplished within organizations. Together, we will examine people at work both as individuals and within work groups and how they impact and are impacted by the organizations where they work. Before we can understand these three levels of organizational behavior, we need to agree on a definition of organizational behavior. What Is Organizational Behavior? Organizational behavior (OB) is defined as the systematic study and application of knowledge about how individuals and groups act within the organizations where they work. As you will see throughout this book, definitions are important. They are important because they tell us what something is as well as what it is not. For example, we will not be addressing childhood development in this course—that concept is often covered in psychology—but we might draw on research about twins raised apart to understand whether job attitudes are affected by genetics. Saylor URL: http://www.saylor.org/books Saylor.org 6 OB draws from other disciplines to create a unique field. As you read this book, you will most likely recognize OB’s roots in other disciplines. For example, when we review topics such as personality and motivation, we will again review studies from the field of psychology. The topic of team processes relies heavily on the field of sociology. In the chapter relating to decision making, you will come across the influence of economics. When we study power and influence in organizations, we borrow heavily from political sciences. Even medical science contributes to the field of organizational behavior, particularly to the study of stress and its effects on individuals. Figure 1.3 OB spans topics related from the individual to the organization. Those who study organizational behavior—which now includes you—are interested in several outcomes such as work attitudes (e.g., job satisfaction and organizational commitment) as well as job performance (e.g., customer Saylor URL: http://www.saylor.org/books Saylor.org 7 service and counterproductive work behaviors). A distinction is made in OB regarding which level of the organization is being studied at any given time. There are three key levels of analysis in OB. They are examining the individual, the group, and the organization. For example, if I want to understand my boss’s personality, I would be examining the individual level of analysis. If we want to know about how my manager’s personality affects my team, I am examining things at the team level. But, if I want to understand how my organization’s culture affects my boss’s behavior, I would be interested in the organizational level of analysis. Why Organizational Behavior Matters OB matters at three critical levels. It matters because it is all about things you care about. OB can help you become a more engaged organizational member. Getting along with others, getting a great job, lowering your stress level, making more effective decisions, and working effectively within a team…these are all great things, and OB addresses them It matters because employers care about OB. A recent survey by the National Association of Colleges and Employers (NACE) asked employers which skills are the most important for them when evaluating job candidates, 6 and OB topics topped the list. The following were the top five personal qualities/skills: 1. Communication skills (verbal and written) 2. Honesty/integrity 3. Interpersonal skills (relates well to others) 4. Motivation/initiative 5. Strong work ethic Saylor URL: http://www.saylor.org/books Saylor.org 8 These are all things we will cover in OB. Finally, it matters because organizations care about OB. The best companies in the world understand that the people make the place. How do we know this? Well, we know that organizations that value their employees are 7 more profitable than those that do not. Research shows that successful organizations have a number of things in common, such as providing employment security, engaging in selective hiring, utilizing self-managed teams, being decentralized, paying well, training employees, reducing status 8 differences, and sharing information. For example, every Whole Foods store has an open compensation policy in which salaries (including bonuses) are listed for all employees. There is also a salary cap that limits the maximum cash compensation paid to anyone in the organization, such as a CEO, in a given year to 19 times the companywide annual average salary of all full-time employees. What this means is that if the average employee makes 30,000 per year, the highest potential pay for their CEO would be 570,000, which is a lot of money but pales in comparison to salaries such as Steve Jobs of Apple at 14.6 million or the highest paid CEO in 2007, Larry Ellison of Oracle, at 9 192.9 million. Research shows that organizations that are considered healthier and more effective have strong OB characteristics throughout them such as role clarity, information sharing, and performance feedback. Unfortunately, research shows that most organizations are unhealthy, with 50% of respondents saying that their organizations do not engage in effective 10 OB practices. In the rest of this chapter, we will build on how you can use this book by adding tools to your OB Toolbox in each section of the book as well as assessing your own learning style. In addition, it is important to understand the research methods used to define OB, so we will also review those. Finally, Saylor URL: http://www.saylor.org/books Saylor.org 9 you will see what challenges and opportunities businesses are facing and how OB can help overcome these challenges. Adding to Your OB Toolbox Your OB Toolbox OB Toolboxes appear throughout this book. They indicate a tool that you can try out today to help you develop your OB skills. Throughout the book, you will see many OB Toolbox features. Our goal in writing this book is to create something useful for you to use now and as you progress through your career. Sometimes we will focus on tools you can use today. Other times we will focus on things you may want to think about that may help you later. As you progress, you may discover some OB tools that are particularly relevant to you while others are not as appropriate at the moment. That’s great—keep those that have value to you. You can always go back and pick up tools later on if they don’t seem applicable right now. The important thing to keep in mind is that the more tools and skills you have, the higher the quality of your interactions with others will be and the more 11 valuable you will become to organizations that compete for top talent. It is not surprising that, on average, the greater the level of education you have, the more money you will make. In 2006, those who had a college degree made 12 62% more money than those who had a high school degree. Organizations value and pay for skills as the next figure shows. Tom Peters is a management expert who talks about the concept of individuals thinking of themselves as a brand to be managed. Further, he recommends Saylor URL: http://www.saylor.org/books Saylor.org 10 13 that individuals manage themselves like free agents. The following OB Toolbox includes several ideas for being effective in keeping up your skill set. Your OB Toolbox: Skill Survival Kit  Keep your skills fresh. Consider revolutionizing your portfolio of skills at least every 6 years.  Master something. Competence in many skills is important, but excelling at something will set you apart.  Embrace ambiguity. Many people fear the unknown. They like things to be predictable. Unfortunately, the only certainty in life is that things will change. Instead of running from this truth, embrace the situation as a great opportunity.  Network. The term has been overused to the point of sounding like a cliché, but networking works. This doesn’t mean that having 200 connections on MySpace, LinkedIn, or Facebook makes you more effective than someone who has 50, but it does mean that getting to know people is a good thing in ways you can’t even imagine now.  Appreciate new technology. This doesn’t mean you should get and use every new gadget that comes out on the market, but it does mean you need to keep up on what the new technologies are and how they may affect you and the business you are in. Source: Adapted from ideas in Peters, T. (2007). Brand you survival kit. Fast Company. Retrieved July 1, 2008, from http://www.fastcompany.com/magazine/83/playbook.html. A key step in building your OB skills and filling your toolbox is to learn the language of OB. Once you understand a concept, you are better able to recognize it. Once you recognize these concepts in real-world events and Saylor URL: http://www.saylor.org/books Saylor.org 11 understand that you have choices in how you will react, you can better manage yourself and others. An effective tool you can start today is journaling, which helps you chart your progress as you learn new skills. For more on this, see the OB Toolbox below. OB Toolbox: Journaling as a Developmental Tool  What exactly is journaling? Journaling refers to the process of writing out thoughts and emotions on a regular basis.  Why is journaling a good idea? Journaling is an effective way to record how you are feeling from day to day. It can be a more objective way to view trends in your thoughts and emotions so you are not simply relying on your memory of past events, which can be inaccurate. Simply getting your thoughts and ideas down has been shown to have health benefits as well such as lowering the writer’s blood pressure, heart rate, and decreasing stress levels.  How do I get started? The first step is to get a journal or create a computer file where you can add new entries on a regular basis. Set a goal for how many minutes per day you want to write and stick to it. Experts say at least 10 minutes a day is needed to see benefits, with 20 minutes being ideal. The quality of what you write is also important. Write your thoughts down clearly and specifically while also conveying your emotions in your writing. After you have been writing for at least a week, go back and examine what you have written. Do you see patterns in your interactions with others? Do you see things you like and things you’d like to change about yourself? If so, great These are the things you can work on and reflect on. Over time, you will also be able to track changes in yourself, which can be motivating as well. Sources: Created based on ideas and information in Bromley, K. (1993). Journaling: Engagements in reading, writing, and thinking. New York: Scholastic; Caruso, D., & Salovey, P. (2004). The emotionally intelligent Saylor URL: http://www.saylor.org/books Saylor.org 12 manager: How to develop and use the four key emotional skills of leadership. San Francisco: Jossey-Bass; Scott, E. (2008). The benefits of journaling for stress management. Retrieved January 27, 2008, from About.com:http://stress.about.com/od/generaltechniques/p/profilejournal.htm. Isn’t OB Just Common Sense? As teachers we have heard this question many times. The answer, as you might have guessed, is no—OB is not just common sense. As we noted earlier, OB is the systematic study and application of knowledge about how individuals and groups act within the organizations where they work. Systematic is an important word in this definition. It is easy to think we understand something if it makes sense, but research on decision making shows that this can easily lead to faulty conclusions because our memories fail us. We tend to notice certain things and ignore others, and the specific manner in which information is framed can affect the choices we make. Therefore, it is important to rule out alternative explanations one by one rather than to assume we know about human behavior just because we are humans Go ahead and take the following quiz and see how many of the 10 questions you get right. If you miss a few, you will see that OB isn’t just common sense. If you get them all right, you are way ahead of the game Putting Common Sense to the Test Please answer the following 10 questions by noting whether you believe the sentence is true or false. 1. Brainstorming in a group is more effective than brainstorming alone. _____ 2. The first 5 minutes of a negotiation are just a warm-up to the actual negotiation and don’t matter much. _____ 3. The best way to help someone reach their goals is to tell them to do their best. _____ Saylor URL: http://www.saylor.org/books Saylor.org 13 4. If you pay someone to do a task they routinely enjoy, they’ll do it even more often in the future. _____ 5. Pay is a major determinant of how hard someone will work. _____ 6. If a person fails the first time, they try harder the next time. _____ 7. People perform better if goals are easier. _____ 8. Most people within organizations make effective decisions. _____ 9. Positive people are more likely to withdraw from their jobs when they are dissatisfied. _____ 10. Teams with one smart person outperform teams in which everyone is average in intelligence. ______ You may check your answers with your instructor. KEY TAKEAWAY This book is about people at work. Organizations come in many shapes and sizes. Organizational behavior is the systematic study and application of knowledge about how individuals and groups act within the organizations where they work. OB matters for your career, and successful companies tend to employ effective OB practices. The OB Toolboxes throughout this book are useful in increasing your OB skills now and in the future. EXERCISES 1. Which type of organizations did you have the most experience with? How did that affect your understanding of the issues in this chapter? 2. Which skills do you think are the most important ones for being an effective employee? 3. What are the three key levels of analysis for OB? 4. Have you ever used journaling before? If so, were your experiences positive? Do you think you will use journaling as a tool in the future? Saylor URL: http://www.saylor.org/books Saylor.org 14 5. How do you plan on using the OB Toolboxes in this book? Creating a plan now can help to make you more effective throughout the term. 1.2 Understanding Your Learning Style LEARNING OBJECTIVES 1. Understand different dimensions of learning styles. 2. Diagnose your own learning style. 3. Explore strategies for working with your preferred learning style. Learning Styles In order to maximize your learning in this course and in any learning situation, it’s important to understand what type of learner you are. Some people learn better by seeing information. For example, if you notice that you retain more information by reading and seeing diagrams and flow charts, you may be a visual learner. If you primarily learn by listening to others such as in lectures, conversations, and videos, you may be anauditory learner. Finally, if you have a preference for actually doing things and learning from trial and error, you may be a kinesthetic learner. If you are unaware of what your primary learning style is, take a moment to diagnose it at the Web site listed below. What Is Your Learning Style? Take the following online learning style quiz to find out what type of learner you are: http://www.vark-learn.com/english/page.asp?p=questionnaire Saylor URL: http://www.saylor.org/books Saylor.org 15 Now that you have established which type of learner you are, let’s go through some recommendations for your style. Here are some learning 1 recommendations.  If you are a visual learner,  draw pictures and diagrams to help you understand;  take careful notes during class so you can refer back to them later on;  summarize the main points of what you learn using charts.  If you are an auditory learner,  join study groups so you can discuss your questions and ideas and hear responses;  write down any oral instructions you hear in class right away;  consider taping lectures if your professor says it is OK and view online lectures on topics you are interested in.  If you are a kinesthetic learner,  schedule your homework and study sessions so you can take breaks and move around between reading your notes or chapters;  take good notes during class—this will force you to pay attention and process information even when you feel like you are “getting it”;  don’t sign up for long once-a-week classes—they normally require too much sitting and listening time. For various reasons, using flash cards seems to help with all three learning styles. For example, for an auditory learner, saying the answers aloud when using flash cards helps to solidify concepts. For a visual learner, seeing the answers written down on the flash card can be helpful. And for the kinesthetic learner, the act of creating and organizing flash cards helps the concepts stick. Saylor URL: http://www.saylor.org/books Saylor.org 16 KEY TAKEAWAY People tend to have a preferred learning style. Visual learners see things to learn them. Auditory learners hear things to learn them. Kinesthetic learners do things to learn them. EXERCISES 1. Were you surprised by your primary learning style? Why or why not? 2. How does your learning style affect the kinds of classes you take? 3. Try out a few of the suggestions for your learning style over the next week and see how they work. 4. Now that you’ve learned more about your own learning style, are there some things you might consider doing to expand on your other styles? If so, what steps might you take to do this? 1.3 Understanding How OB Research Is Done LEARNING OBJECTIVES 1. Learn the terminology of research. 2. Understand the different types of OB research methods used. OB Research Methods OB researchers have many tools they use to discover how individuals, groups, and organizations behave. Researchers have working hypotheses based on their own observations, readings on the subject, and information from individuals within organizations. Based on these ideas, they set out to understand the relationships among different variables. There are a number of different research methods that researchers use, and we will discuss a few of these below. Imagine that your manager has asked you to find out if setting Saylor URL: http://www.saylor.org/books Saylor.org 17 goals will help to make the employees at your company more productive. We will cover the different ways you could use research methods to answer this question, impress your boss, and hopefully get a promotion. Surveys Surveys are one of the primary methods management researchers use to learn about OB. A basic survey involves asking individuals to respond to a number of questions. The questions can be open-ended or close-ended. An example of an open-ended question that could be used to address your manager’s question would be to ask employees how they feel about goal setting in relation to productivity, then summarize your findings. This might work if you have a small organization, but open-ended surveys can be time consuming to summarize and hard to interpret at a glance. You could get more specific by asking employees a series of close-ended questions in which you supply the response key, such as a rating of 1 to 5. Today it is easy to create online surveys that quickly compile the results automatically. There are even several free survey tools available online such as http://freeonlinesurveys.com/ and http://www.surveygizmo.com/, or you can use paper-and-pencil surveys. Sample Survey About the Effectiveness of Goal Setting Instructions: We would like to gather your opinions about different aspects of work. Please answer the following three questions using the scale below: Response Scale: 1=Strongly disagree 2=Disagree 3=Neither agree nor disagree 4=Agree 5=Strongly agree Saylor URL: http://www.saylor.org/books Saylor.org 18 Setting goals at work helps me to focus 1 2 3 4 5 Goal setting is effective in improving performance 1 2 3 4 5 I get more done when I use goal setting 1 2 3 4 5 Regardless of the method you choose to collect your information, the next step is to look at the average of the responses to the questions and see how the responses stack up. But this still wouldn’t really answer the question your boss asked, which is whether using goal setting would help employees be more effective on the job. To do this, you would want to conduct a field study. Field Studies Field studies are also effective ways to learn about what is truly going on within organizations. There are survey field studies like the one above, but more compelling evidence comes from field studies that employ an experimental design. Here you would assign half the employees at your company to the goal setting condition and the other half to the control group condition. The control group wouldn’t get any information on goal setting but the treatment group would. If you found that the treatment group was more effective than the control group, you could tell your boss that goal setting works. Laboratory Studies OB researchers are often interested in basic research questions such as “Can we show that goal setting increases performance on a simple task?” This is how research on goal setting started, and it is also how we can establish the conditions under which it works more or less effectively. Again, to address this, researchers may conduct a lab study in which one group is assigned one condition and the other group is assigned the control condition (generally the Saylor URL: http://www.saylor.org/books Saylor.org 19 control condition involves no change at all). You may even have been involved in a lab study during your time at your university. One of the most important concepts to understand with lab studies is that they give the researcher a great deal of control over the environment they are studying but do so in a less “realistic” way, since they are not studying real employees in real work settings. For example, in a lab study, a researcher could simulate hiring and firing employees to see if firing some employees affected the goal-setting behavior of the remaining employees. While this wouldn’t be legal or ethical to do in a real organization, it could be a compelling lab study. At the same time, however, firing someone in a lab setting does not necessarily carry the same consequences as it would in real life. Case Studies Case studies are in-depth descriptions of a single industry or company. Case writers typically employ a systematic approach to gathering data and explaining an event or situation in great detail. The benefits of case studies are that they provide rich information for drawing conclusions about the circumstances and people involved in the topics studied. The downside is that it is sometimes difficult to generalize what worked in a single situation at a single organization to other situations and organizations. Meta-Analysis Meta-analysis is a technique used by researchers to summarize what other researchers have found on a given topic. This analysis is based on taking observed correlations from multiple studies, weighting them by the number of observations in each study, and finding out if, overall, the effect holds or not. For example, what is the average relationship between job satisfaction and performance? Research shows that, looking across 300 studies, the 1 relationship is moderately strong. This is useful information because for Saylor URL: http://www.saylor.org/books Saylor.org 20 years people had thought that the relationship did not exist, but when all the studies to date were examined together, the original beliefs about the satisfaction–performance relationship deteriorated. The advantage of meta- analysis is that it gives a more definitive answer to a question than a single study ever could. The downside is that meta-analysis is only possible if sufficient research has been done on the topic in question. Measurement Issues in OB Another important thing to understand is the difference between reliability and validity. Imagine you own a trucking company. A major component in trucking is managing the weight of different cargo. If you had a scale that gave you the same weight three times, we would say that was a very reliable scale. But, if it turns out the weights given are in kilograms instead of pounds, it would not be a valid measure if you charge for delivery by the pound. Finally, much of management research addresses correlations between two concepts rather than actual causation. Correlation simply means that two things co-vary. For example, it would be inaccurate to assume that because 99% of the people who died this year also drank water, consuming water kills people. Yet many people claim their product caused a positive outcome when, in fact, the data do not support their claim any more than the water example. This brings up something that confuses even seasoned researchers. When you have only one observation it is called a datum. When you use the word data, it refers to multiple observations, so it is always plural. KEY TAKEAWAY OB researchers test hypotheses using different methods such as surveys, field studies, case studies, and meta-analyses. Reliability refers to consistency of the Saylor URL: http://www.saylor.org/books Saylor.org 21

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