Organizational Behavior - Business Report (Deadline 11/26)
twinkletoes
Binder6.pdf
Week 6 Citations (Aronowitz, De Smet, & McGinty, 2015) Aronowitz, S., De Smet, A., & McGinty, D. (2015, June). Getting organizational redesign right. McKinsey Quarterly, 1-11. Retrieved November 20, 2020, from https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Organization/Our%20Insights/Gettin g%20organizational%20redesign%20right/Getting%20organizational%20redesign%20right.pdf?shouldInde x=false (Bartelt, Dennis, Yuan, & Barlow, 2013) Bartelt, V., Dennis, A., Yuan, L., & Barlow, J. (2013, January). Individual Priming in Virtual Team Decision- Making. Group Decision and Negotiation, 22(5), 873-896. doi:10.1007/s10726-012-9333-3 (Katzenbach & Smith, 1992) Katzenbach, J. R., & Smith, D. K. (1992). Why Teams Matter. McKinsey Quarterly (3), 3-27. Retrieved November 20, 2020, from https://learn.umgc.edu/content/enforced/327094-001135-01-2188-OL1- 6380/Katzenbach%20why%20teams%20matter%20from%20the%20wisdom%20of%20teams1.pdf (Katzenbach & Smith, The Discipline of Teams, 1993) Katzenbach, J. R., & Smith, D. K. (1993, March). The Discipline of Teams. Harvard Business Review, 162-171. Retrieved November 20, 2020, from https://hbr.org/1993/03/the-discipline-of-teams-2 (Kirkland & Bohnet, 2017) Kirkland, R., & Bohnet, I. (2017, April). Focusing on what works for workplace diversity. Retrieved November 20, 2020, from McKinsey & Company: https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/Women%20matter/Focusing%20on%2 0what%20works%20for%20workplace%20diversity/Focusing-on-what-works-for-workplace- diversity.pdf?shouldIndex=false (Saylor Academy, 2012) Saylor Academy. (2012). Chapter 10: Conflict and Negotiations. In Organizational Behavior (pp. 1-51). Saylor Foundation. Retrieved November 20, 2020, from https://learn.umgc.edu/content/enforced/522907-001135- 01-2208-OL3-7380/Organizational%20Behavior%20-%20Chapter%2010.pdf (Saylor Academy, 2012) Saylor Academy. (2012). Chapter 15: Organizational Culture. In Organizational Behavior (pp. 1-60). Saylor Foundation. Retrieved November 20, 2020, from https://learn.umgc.edu/content/enforced/522907-001135- 01-2208-OL3-7380/Organizational%20Behavior%20-%20Chapter%2015.pdf (Saylor Academy, 2012) Saylor Academy. (2012). Chapter 2: Managing Demographic and Cultural Diversity. In Organizational Behavior (pp. 1-52). Saylor Foundation. Retrieved November 20, 2020, from https://learn.umgc.edu/content/enforced/522907-001135-01-2208-OL3- 7380/Organizational%20Behavior%20-%20Chapter%202.pdf (Saylor Academy, 2012) Saylor Academy. (2012). Chapter 9: Managing Groups and Team. In Organizational Behavior (pp. 1-48). Saylor Foundation. Retrieved November 20, 2020, from https://learn.umgc.edu/content/enforced/522907- 001135-01-2208-OL3-7380/Organizational%20Behavior%20-%20Chapter%209.pdf
1
This text was adapted by The Saylor Foundation under a Creative
Commons Attribution-NonCommercial-ShareAlike 3.0 License without
attribution as requested by the work’s original creator or licensee.
2
Chapter 9 Managing Groups and Teams
L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to do the following:
1. Recognize and understand group dynamics and development.
2. Understand the difference between groups and teams.
3. Compare and contrast different types of teams.
4. Understand how to design effective teams.
5. Explore ideas around teams and ethics.
6. Understand cross-cultural influences on teams.
Teamwork at General Electric In Durham, North Carolina, Robert Henderson was opening a factory for
General Electric Company (GE). The goal of the factory was to manufacture
the largest commercial jet engine in the world. Henderson’s opportunity was
great and so were his challenges. GE hadn’t designed a jet engine from the
ground up for over two decades. Developing the jet engine project had already
cost GE $1.5 billion. That was a huge sum of money to invest—and an
unacceptable sum to lose should things go wrong in the manufacturing stage.
How could one person fulfill such a vital corporate mission? The answer,
Henderson decided, was that one person couldn’t fulfill the mission. Even
Jack Welch, GE’s CEO at the time said, “We now know where productivity
comes from. It comes from challenged, empowered, excited, rewarded teams
of people.”
Empowering factory workers to contribute to GE’s success sounded great in
theory. But how to accomplish these goals in real life was a more challenging
question. Factory floors, traditionally, are unempowered workplaces where
3
workers are more like cogs in a vast machine than self-determining team
members.
In the name of teamwork and profitability, Henderson traveled to other
factories looking for places where worker autonomy was high. He
implemented his favorite ideas at the factory at Durham. Instead of hiring
generic “mechanics,” for example, Henderson hired staffers with FAA
mechanic’s licenses. This superior training created a team capable of making
vital decisions with minimal oversight, a fact that upped the factory’s output
and his workers’ feelings of worth.
Henderson’s “self-managing” factory functioned beautifully. And it looked
different, too. Plant manager Jack Fish described Henderson’s radical factory,
saying Henderson “didn't want to see supervisors, he didn't want to see
forklifts running all over the place, he didn't even want it to look traditional.
There's clutter in most plants, racks of parts and so on. He didn't want that.”
Henderson also contracted out non-job-related chores, such as bathroom
cleaning, that might have been assigned to workers in traditional factories. His
insistence that his workers should contribute their highest talents to the team
showed how much he valued them. And his team valued their jobs in turn.
Six years later, a Fast Company reporter visiting the plant noted,
“GE/Durham team members take such pride in the engines they make that
they routinely take brooms in hand to sweep out the beds of the 18-wheelers
that transport those engines—just to make sure that no damage occurs in
transit.” For his part, Henderson, who remained at GE beyond the project,
noted, “I was just constantly amazed by what was accomplished there.”
4
GE’s bottom line showed the benefits of teamwork, too. From the early 1980s,
when Welch became CEO, until 2000, when he retired, GE generated more
wealth than any organization in the history of the world.
Sources: Fishman, C. (1999, September). How teamwork took flight. Fast
Company. Retrieved August 1, 2008,
from http://www.fastcompany.com/node/38322/print; Lear, R. (1998, July–
August). Jack Welch speaks: Wisdom from the world's greatest business
leader, Chief Executive; Guttman, H. (2008, January–February). Leading
high-performance teams: Horizontal, high-performance teams with real
decision-making clout and accountability for results can transform a
company. Chief Executive, 231, 33.
9.1 Group Dynamics
L E A R N I N G O B J E C T I V E S
1. Understand the difference between informal and formal groups.
2. Learn the stages of group development.
3. Identify examples of the punctuated equilibrium model.
4. Learn how group cohesion affects groups.
5. Learn how social loafing affects groups.
6. Learn how collective efficacy affects groups.
Types of Groups: Formal and Informal
What is a group? A group is a collection of individuals who interact with each
other such that one person’s actions have an impact on the others. In
organizations, most work is done within groups. How groups function has
5
important implications for organizational productivity. Groups where people
get along, feel the desire to contribute to the team, and are capable of
coordinating their efforts may have high performance levels, whereas teams
characterized by extreme levels of conflict or hostility may demoralize
members of the workforce.
In organizations, you may encounter different types of
groups. Informal work groups are made up of two or more individuals who are
associated with one another in ways not prescribed by the formal
organization. For example, a few people in the company who get together to
play tennis on the weekend would be considered an informal group. A
formal work group is made up of managers, subordinates, or both with close
associations among group members that influence the behavior of individuals
in the group. We will discuss many different types of formal work groups later
on in this chapter.
Stages of Group Development
Forming, Storming, Norming, and Performing
American organizational psychologist Bruce Tuckman presented a robust
model in 1965 that is still widely used today. Based on his observations of
group behavior in a variety of settings, he proposed a four-stage map of group
evolution, also known as the forming-storming-norming-
performing model. [1]
Later he enhanced the model by adding a fifth and final
stage, the adjourning phase. Interestingly enough, just as an individual moves
through developmental stages such as childhood, adolescence, and adulthood,
so does a group, although in a much shorter period of time. According to this
theory, in order to successfully facilitate a group, the leader needs to move
through various leadership styles over time. Generally, this is accomplished by
6
first being more directive, eventually serving as a coach, and later, once the
group is able to assume more power and responsibility for itself, shifting to a
delegator. While research has not confirmed that this is descriptive of how
groups progress, knowing and following these steps can help groups be more
effective. For example, groups that do not go through the storming phase early
on will often return to this stage toward the end of the group process to
address unresolved issues. Another example of the validity of the group
development model involves groups that take the time to get to know each
other socially in the forming stage. When this occurs, groups tend to handle
future challenges better because the individuals have an understanding of
each other’s needs.
Forming
In the forming stage, the group comes together for the first time. The
members may already know each other or they may be total strangers. In
either case, there is a level of formality, some anxiety, and a degree of
guardedness as group members are not sure what is going to happen next.
“Will I be accepted? What will my role be? Who has the power here?” These
are some of the questions participants think about during this stage of group
formation. Because of the large amount of uncertainty, members tend to be
polite, conflict avoidant, and observant. They are trying to figure out the “rules
of the game” without being too vulnerable. At this point, they may also be
quite excited and optimistic about the task at hand, perhaps experiencing a
level of pride at being chosen to join a particular group. Group members are
trying to achieve several goals at this stage, although this may not necessarily
be done consciously. First, they are trying to get to know each other. Often this
can be accomplished by finding some common ground. Members also begin to
explore group boundaries to determine what will be considered acceptable
behavior. “Can I interrupt? Can I leave when I feel like it?” This trial phase
7
may also involve testing the appointed leader or seeing if a leader emerges
from the group. At this point, group members are also discovering how the
group will work in terms of what needs to be done and who will be responsible
for each task. This stage is often characterized by abstract discussions about
issues to be addressed by the group; those who like to get moving can become
impatient with this part of the process. This phase is usually short in duration,
perhaps a meeting or two.
Storming
Once group members feel sufficiently safe and included, they tend to enter
the storming phase. Participants focus less on keeping their guard up as they
shed social facades, becoming more authentic and more argumentative. Group
members begin to explore their power and influence, and they often stake out
their territory by differentiating themselves from the other group members
rather than seeking common ground. Discussions can become heated as
participants raise contending points of view and values, or argue over how
tasks should be done and who is assigned to them. It is not unusual for group
members to become defensive, competitive, or jealous. They may even take
sides or begin to form cliques within the group. Questioning and resisting
direction from the leader is also quite common. “Why should I have to do this?
Who designed this project in the first place? Why do I have to listen to you?”
Although little seems to get accomplished at this stage, group members are
becoming more authentic as they express their deeper thoughts and feelings.
What they are really exploring is “Can I truly be me, have power, and be
accepted?” During this chaotic stage, a great deal of creative energy that was
previously buried is released and available for use, but it takes skill to move
the group from storming to norming. In many cases, the group gets stuck in
the storming phase.
8
OB Toolbox: Avoid Getting Stuck in the Storming Phase! There are several steps you can take to avoid getting stuck in the storming
phase of group development. Try the following if you feel the group process
you are involved in is not progressing:
Normalize conflict. Let members know this is a natural phase in the group-
formation process.
Be inclusive. Continue to make all members feel included and invite all views
into the room. Mention how diverse ideas and opinions help foster creativity
and innovation.
Make sure everyone is heard. Facilitate heated discussions and help
participants understand each other.
Support all group members. This is especially important for those who feel
more insecure.
Remain positive. This is a key point to remember about the group’s ability to
accomplish its goal.
Don’t rush the group’s development. Remember that working through the
storming stage can take several meetings.
Once group members discover that they can be authentic and that the group is
capable of handling differences without dissolving, they are ready to enter the
next stage, norming.
Norming
“We survived!” is the common sentiment at the norming stage. Group
members often feel elated at this point, and they are much more committed to
each other and the group’s goal. Feeling energized by knowing they can handle
the “tough stuff,” group members are now ready to get to work. Finding
themselves more cohesive and cooperative, participants find it easy to
9
establish their own ground rules (or norms) and define their operating
procedures and goals. The group tends to make big decisions, while subgroups
or individuals handle the smaller decisions. Hopefully, at this point the group
is more open and respectful toward each other, and members ask each other
for both help and feedback. They may even begin to form friendships and
share more personal information with each other. At this point, the leader
should become more of a facilitator by stepping back and letting the group
assume more responsibility for its goal. Since the group’s energy is running
high, this is an ideal time to host a social or team-building event.
Performing
Galvanized by a sense of shared vision and a feeling of unity, the group is
ready to go into high gear. Members are more interdependent, individuality
and differences are respected, and group members feel themselves to be part
of a greater entity. At the performing stage, participants are not only getting
the work done, but they also pay greater attention to how they are doing it.
They ask questions like, “Do our operating procedures best support
productivity and quality assurance? Do we have suitable means for addressing
differences that arise so we can preempt destructive conflicts? Are we relating
to and communicating with each other in ways that enhance group dynamics
and help us achieve our goals? How can I further develop as a person to
become more effective?” By now, the group has matured, becoming more
competent, autonomous, and insightful. Group leaders can finally move into
coaching roles and help members grow in skill and leadership.
Adjourning
Just as groups form, so do they end. For example, many groups or teams
formed in a business context are project oriented and therefore are temporary
in nature. Alternatively, a working group may dissolve due to an
10
organizational restructuring. Just as when we graduate from school or leave
home for the first time, these endings can be bittersweet, with group members
feeling a combination of victory, grief, and insecurity about what is coming
next. For those who like routine and bond closely with fellow group members,
this transition can be particularly challenging. Group leaders and members
alike should be sensitive to handling these endings respectfully and
compassionately. An ideal way to close a group is to set aside time to debrief
(“How did it all go? What did we learn?”), acknowledge each other, and
celebrate a job well done.
The Punctuated-Equilibrium Model
As you may have noted, the five-stage model we have just reviewed is a linear
process. According to the model, a group progresses to the performing stage,
at which point it finds itself in an ongoing, smooth-sailing situation until the
group dissolves. In reality, subsequent researchers, most notably Joy H.
Karriker, have found that the life of a group is much more dynamic and
cyclical in nature. [2]
For example, a group may operate in the performing stage
for several months. Then, because of a disruption, such as a competing
emerging technology that changes the rules of the game or the introduction of
a new CEO, the group may move back into the storming phase before
returning to performing. Ideally, any regression in the linear group
progression will ultimately result in a higher level of functioning. Proponents
of this cyclical model draw from behavioral scientist Connie Gersick’s study
of punctuated equilibrium. [3]
The concept of punctuated equilibrium was first proposed in 1972 by
paleontologists Niles Eldredge and Stephen Jay Gould, who both believed that
evolution occurred in rapid, radical spurts rather than gradually over time.
Identifying numerous examples of this pattern in social behavior, Gersick
11
found that the concept applied to organizational change. She proposed that
groups remain fairly static, maintaining a certain equilibrium for long periods
of time. Change during these periods is incremental, largely due to the
resistance to change that arises when systems take root and processes become
institutionalized. In this model, revolutionary change occurs in brief,
punctuated bursts, generally catalyzed by a crisis or problem that breaks
through the systemic inertia and shakes up the deep organizational structures
in place. At this point, the organization or group has the opportunity to learn
and create new structures that are better aligned with current realities.
Whether the group does this is not guaranteed. In sum, in Gersick’s model,
groups can repeatedly cycle through the storming and performing stages, with
revolutionary change taking place during short transitional windows. For
organizations and groups who understand that disruption, conflict, and chaos
are inevitable in the life of a social system, these disruptions represent
opportunities for innovation and creativity.
Cohesion
Cohesion can be thought of as a kind of social glue. It refers to the degree of
camaraderie within the group. Cohesive groups are those in which members
are attached to each other and act as one unit. Generally speaking, the more
cohesive a group is, the more productive it will be and the more rewarding the
experience will be for the group’s members. [4]
Members of cohesive groups
tend to have the following characteristics: They have a collective identity; they
experience a moral bond and a desire to remain part of the group; they share a
sense of purpose, working together on a meaningful task or cause; and they
establish a structured pattern of communication.
The fundamental factors affecting group cohesion include the following:
12
Similarity. The more similar group members are in terms of age, sex,
education, skills, attitudes, values, and beliefs, the more likely the group
will bond.
Stability. The longer a group stays together, the more cohesive it
becomes.
Size. Smaller groups tend to have higher levels of cohesion.
Support. When group members receive coaching and are encouraged to
support their fellow team members, group identity strengthens.
Satisfaction. Cohesion is correlated with how pleased group members
are with each other’s performance, behavior, and conformity to group
norms.
As you might imagine, there are many benefits in creating a cohesive group.
Members are generally more personally satisfied and feel greater self-
confidence and self-esteem when in a group where they feel they belong. For
many, membership in such a group can be a buffer against stress, which can
improve mental and physical well-being. Because members are invested in the
group and its work, they are more likely to regularly attend and actively
participate in the group, taking more responsibility for the group’s
functioning. In addition, members can draw on the strength of the group to
persevere through challenging situations that might otherwise be too hard to
tackle alone.
OB Toolbox: Steps to Creating and Maintaining a Cohesive Team Align the group with the greater organization. Establish common objectives
in which members can get involved.
Let members have choices in setting their own goals. Include them in
decision making at the organizational level.
13
Define clear roles. Demonstrate how each person’s contribution furthers the
group goal—everyone is responsible for a special piece of the puzzle.
Situate group members in close proximity to each other. This builds
familiarity.
Give frequent praise. Both individuals and groups benefit from praise. Also
encourage them to praise each other. This builds individual self-confidence,
reaffirms positive behavior, and creates an overall positive atmosphere.
Treat all members with dignity and respect. This demonstrates that there are
no favorites and everyone is valued.
Celebrate differences. This highlights each individual’s contribution while also
making diversity a norm.
Establish common rituals. Thursday morning coffee, monthly potlucks—these
reaffirm group identity and create shared experiences.
Can a Group Have Too Much Cohesion?
Keep in mind that groups can have too much cohesion. Because members can
come to value belonging over all else, an internal pressure to conform may
arise, causing some members to modify their behavior to adhere to group
norms. Members may become conflict avoidant, focusing more on trying to
please each other so as not to be ostracized. In some cases, members might
censor themselves to maintain the party line. As such, there is a superficial
sense of harmony and less diversity of thought. Having less tolerance for
deviants, who threaten the group’s static identity, cohesive groups will often
excommunicate members who dare to disagree. Members attempting to make
a change may even be criticized or undermined by other members, who
perceive this as a threat to the status quo. The painful possibility of being
marginalized can keep many members in line with the majority.
14
The more strongly members identify with the group, the easier it is to see
outsiders as inferior, or enemies in extreme cases, which can lead to increased
insularity. This form of prejudice can have a downward spiral effect. Not only
is the group not getting corrective feedback from within its own confines, it is
also closing itself off from input and a cross-fertilization of ideas from the
outside. In such an environment, groups can easily adopt extreme ideas that
will not be challenged. Denial increases as problems are ignored and failures
are blamed on external factors. With limited, often biased, information and no
internal or external opposition, groups like these can make disastrous
decisions. Groupthink is a group pressure phenomenon that increases the risk
of the group making flawed decisions by allowing reductions in mental
efficiency, reality testing, and moral judgment. Groupthink is most common in
highly cohesive groups. [5]
Cohesive groups can go awry in much milder ways. For example, group
members can value their social interactions so much that they have fun
together but spend little time on accomplishing their assigned task. Or a
group’s goal may begin to diverge from the larger organization’s goal and
those trying to uphold the organization’s goal may be ostracized (e.g., teasing
the class “brain” for doing well in school).
In addition, research shows that cohesion leads to acceptance of group
norms. [6]
Groups with high task commitment do well, but imagine a group
where the norms are to work as little as possible? As you might imagine, these
groups get little accomplished and can actually work together against the
organization’s goals.
Figure 9.4
15
Groups with high cohesion and high task commitment tend to be the most
effective.
Social Loafing
Social loafing refers to the tendency of individuals to put in less effort when
working in a group context. This phenomenon, also known as the Ringelmann
effect, was first noted by French agricultural engineer Max Ringelmann in
1913. In one study, he had people pull on a rope individually and in groups. He
found that as the number of people pulling increased, the group’s total pulling
force was less than the individual efforts had been when measured alone. [7]
Why do people work less hard when they are working with other people?
Observations show that as the size of the group grows, this effect becomes
larger as well. [8]
The social loafing tendency is less a matter of being lazy and
more a matter of perceiving that one will receive neither one’s fair share of
rewards if the group is successful nor blame if the group fails. Rationales for
this behavior include, “My own effort will have little effect on the outcome,”
“Others aren’t pulling their weight, so why should I?” or “I don’t have much to
contribute, but no one will notice anyway.” This is a consistent effect across a
great number of group tasks and countries. [9]
Research also shows that
16
perceptions of fairness are related to less social loafing. [10]
Therefore, teams
that are deemed as more fair should also see less social loafing.
OB Toolbox: Tips for Preventing Social Loafing in Your Group When designing a group project, here are some considerations to keep in
mind:
Carefully choose the number of individuals you need to get the task done. The
likelihood of social loafing increases as group size increases (especially if the
group consists of 10 or more people), because it is easier for people to feel
unneeded or inadequate, and it is easier for them to “hide” in a larger group.
Clearly define each member’s tasks in front of the entire group. If you assign
a task to the entire group, social loafing is more likely. For example, instead of
stating, “By Monday, let’s find several articles on the topic of stress,” you can
set the goal of “By Monday, each of us will be responsible for finding five
articles on the topic of stress.” When individuals have specific goals, they
become more accountable for their performance.
Design and communicate to the entire group a system for evaluating each
person’s contribution. You may have a midterm feedback session in which
each member gives feedback to every other member. This would increase the
sense of accountability individuals have. You may even want to discuss the
principle of social loafing in order to discourage it.
Build a cohesive group. When group members develop strong relational
bonds, they are more committed to each other and the success of the group,
and they are therefore more likely to pull their own weight.
Assign tasks that are highly engaging and inherently rewarding. Design
challenging, unique, and varied activities that will have a significant impact on
the individuals themselves, the organization, or the external environment. For
17
example, one group member may be responsible for crafting a new incentive-
pay system through which employees can direct some of their bonus to their
favorite nonprofits.
Make sure individuals feel that they are needed. If the group ignores a
member’s contributions because these contributions do not meet the group’s
performance standards, members will feel discouraged and are unlikely to
contribute in the future. Make sure that everyone feels included and needed
by the group.
Collective Efficacy
Collective efficacy refers to a group’s perception of its ability to successfully
perform well. [11]
Collective efficacy is influenced by a number of factors,
including watching others (“that group did it and we’re better than them”),
verbal persuasion (“we can do this”), and how a person feels (“this is a good
group”). Research shows that a group’s collective efficacy is related to its
performance. [12]
In addition, this relationship is higher when task
interdependence (the degree an individual’s task is linked to someone else’s
work) is high rather than low.
K E Y T A K E A W A Y
Groups may be either formal or informal. Groups go through developmental stages
much like individuals do. The forming-storming-norming-performing-adjourning
model is useful in prescribing stages that groups should pay attention to as they
develop. The punctuated-equilibrium model of group development argues that
groups often move forward during bursts of change after long periods without
change. Groups that are similar, stable, small, supportive, and satisfied tend to be
more cohesive than groups that are not. Cohesion can help support group
performance if the group values task completion. Too much cohesion can also be a
18
concern for groups. Social loafing increases as groups become larger. When
collective efficacy is high, groups tend to perform better.
E X E R C I S E S
1. If you believe the punctuated-equilibrium model is true about groups, how can you
use this knowledge to help your own group?
2. Think about the most cohesive group you have ever been in. How did it compare in
terms of similarity, stability, size, support, and satisfaction?
3. Why do you think social loafing occurs within groups?
4. What can be done to combat social loafing?
5. Have you seen instances of collective efficacy helping or hurting a team? Please
explain your answer.
9.2 Understanding Team Design Characteristics
L E A R N I N G O B J E C T I V E S
1. Understand the difference between groups and teams.
2. Understand the factors leading to the rise in the use of teams.
3. Understand how tasks and roles affect teams.
4. Identify different types of teams.
5. Identify team design considerations.
Effective teams give companies a significant competitive advantage. In a high-
functioning team, the sum is truly greater than the parts. Team members not
only benefit from each other’s diverse experiences and perspectives but also
stimulate each other’s creativity. Plus, for many people, working in a team can
be more fun than working alone.
19
Differences Between Groups and Teams
Organizations consist of groups of people. What exactly is the difference
between a group and a team? A group is a collection of individuals. Within an
organization, groups might consist of project-related groups such as a product
group or division, or they can encompass an entire store or branch of a
company. The performance of a group consists of the inputs of the group
minus any process losses, such as the quality of a product, ramp-up time to
production, or the sales for a given month. Process loss is any aspect of group
interaction that inhibits group functioning.
Why do we say group instead of team? A collection of people is not a team,
though they may learn to function in that way. A team is a cohesive coalition of
people working together to achieve mutual goals. Being on a team does not
equate to a total suppression of personal agendas, but it does require a
commitment to the vision and involves each individual working toward
accomplishing the team's objective. Teams differ from other types of groups in
that members are focused on a joint goal or product, such as a presentation,
discussing a topic, writing a report, creating a new design or prototype, or
winning a team Olympic medal. Moreover, teams also tend to be defined by
their relatively smaller size. For example, according to one definition, “A team
is a small number of people with complementary skills who are committed to
a common purpose, performance goals, and approach for which they are
mutually accountable.” [1]
The purpose of assembling a team is to accomplish larger, more complex goals
than what would be possible for an individual working alone or even the
simple sum of several individuals’ working independently. Teamwork is also
needed in cases in which multiple skills are tapped or where buy-in is required
from several individuals. Teams can, but do not always, provide improved
20
performance. Working together to further a team agenda seems to increase
mutual cooperation between what are often competing factions. The aim and
purpose of a team is to perform, get results, and achieve victory in the
workplace. The best managers are those who can gather together a group of
individuals and mold them into an effective team.
The key properties of a true team include collaborative action in which, along
with a common goal, teams have collaborative tasks. Conversely, in a group,
individuals are responsible only for their own area. They also share the
rewards of strong team performance with their compensation based on shared
outcomes. Compensation of individuals must be based primarily on a shared
outcome, not individual performance. Members are also willing to sacrifice for
the common good, in which individuals give up scarce resources for the
common good instead of competing for those resources. For example, in
soccer and basketball teams, the individuals actively help each other, forgo
their own chance to score by passing the ball, and win or lose collectively as a
team.
The early 1990s saw a dramatic rise in the use of teams within organizations,
along with dramatic results such as the Miller Brewing Company increasing
productivity 30% in the plants that used self-directed teams compared to
those that used the traditional organization. This same method allowed Texas
Instruments Inc. in Malaysia to reduce defects from 100 parts per million to
20 parts per million. In addition, Westinghouse Electric Corporation reduced
its cycle time from 12 to 2 weeks and Harris Corporation was able to achieve
an 18% reduction in costs. [2]
The team method has served countless
companies over the years through both quantifiable improvements and more
subtle individual worker-related benefits.
21
Companies like Schneider Electric, maker of Square D circuit breakers,
switched to self-directed teams and found that overtime on machines such as
the punch-press dropped 70%. Productivity increased because the set-up
operators themselves were able to manipulate the work in much more
effective ways than a supervisor could dictate. [3]
In 2001, clothing retailer
Chico’s Retailer Services Inc. was looking to grow its business. The company
hired Scott Edmonds as president, and 2 years later revenues had almost
doubled from $378 million to $760 million. By 2006, revenues were $1.6
billion and Chico’s had 9 years of double-digit same-store sales growth. What
did Edmonds do to get these results? He created a horizontal organization
with high-performance teams that were empowered with decision-making
ability and accountability for results.
The use of teams also began to increase because advances in technology have
resulted in more complex systems that require contributions from multiple
people across the organization. Overall, team-based organizations have more
motivation and involvement, and teams can often accomplish more than
individuals. [4]
It is no wonder organizations are relying on teams more and
more.
It is important to keep in mind that teams are not a cure-all for organizations.
To determine whether a team is needed, organizations should consider
whether a variety of knowledge, skills, and abilities are needed, whether ideas
and feedback are needed from different groups within the organization, how
interdependent the tasks are, if wide cooperation is needed to get things done,
and whether the organization would benefit from shared goals. [5]
If the answer
to these questions is yes, then a team or teams might make sense. For
example, research shows that the more team members perceive that outcomes
are interdependent, the better they share information and the better they
22
perform. [6]
Let’s take a closer look at the different team characteristics, types
of teams companies use, and how to design effective teams.
Team Tasks
Teams differ in terms of the tasks they are trying to accomplish. Richard
Hackman identified three major classes of tasks: production tasks, idea-
generation tasks, and problem-solving tasks. [7]
Production tasks include
actually making something, such as a building, product, or a marketing
plan. Idea-generation tasks deal with creative tasks, such as brainstorming a
new direction or creating a new process. Problem-solving tasks refer to
coming up with plans for actions and making decisions. For example, a team
may be charged with coming up with a new marketing slogan, which is an
idea-generation task, while another team might be asked to manage an entire
line of products, including making decisions about products to produce,
managing the production of the product lines, marketing them, and staffing
their division. The second team has all three types of tasks to accomplish at
different points in time.
Another key to understanding how tasks are related to teams is to understand
their level of task interdependence. Task interdependence refers to the degree
that team members are dependent on one another to get information, support,
or materials from other team members to be effective. Research shows that
self-managing teams are most effective when their tasks are highly
interdependent. [8]
There are three types of task interdependence.
Pooled interdependence exists when team members may work independently
and simply combine their efforts to create the team’s output. For example,
when students meet to divide the section of a research paper and one person
simply puts all the sections together to create one paper, the team is using the
23
pooled interdependence model. However, they might decide that it makes
more sense to start with one person writing the introduction of their research
paper, then the second person reads what was written by the first person and,
drawing from this section, writes about the findings within the paper. Using
the findings section, the third person writes the conclusions. If one person’s
output becomes another person’s input, the team would be experiencing
sequential interdependence. And finally, if the student team decided that in
order to create a top-notch research paper they should work together on each
phase of the research paper so that their best ideas would be captured at each
stage, they would be undertaking reciprocal interdependence. Another
important type of interdependence that is not specific to the task itself
is outcome interdependence, in which the rewards that an individual receives
depend on the performance of others.
Team Roles
Robert Sutton points out that the success of U.S. Airways Flight 1549 to land
with no fatalities when it crashed into the Hudson River in New York City is a
good example of an effective work team. [9]
For example, reports show that
Captain Chesley Sullenberger took over flying from copilot Jeff Skiles, who
had handled the takeoff, but had less experience in the Airbus. [10]
This is
consistent with the research findings that effective teams divide up tasks so
the best people are in the best positions.
Studies show that individuals who are more aware of team roles and the
behavior required for each role perform better than individuals who do not.
This fact remains true for both student project teams as well as work teams,
even after accounting for intelligence and personality. [11]
Early research found
that teams tend to have two categories of roles consisting of those related to
the tasks at hand and those related to the team’s functioning. For example,
24
teams that focus only on production at all costs may be successful in the short
run, but if they pay no attention to how team members feel about working 70
hours a week, they are likely to experience high turnover.
Based on decades of research on teams, 10 key roles have been
identified. [12]
Team leadership is effective when leaders are able to adapt the
roles they are contributing or asking others to contribute to fit what the team
needs given its stage and the tasks at hand. [13]
Ineffective leaders might always
engage in the same task role behaviors, when what they really need is to focus
on social roles, put disagreements aside, and get back to work. While these
behaviors can be effective from time to time, if the team doesn’t modify its role
behaviors as things change, they most likely will not be effective.
Figure 9.7
Teams are based on many roles being carried out, as summarized by the Team Role
Typology. These 10 roles include task roles (green), social roles (yellow), and
boundary-spanning roles (orange).
25
Source: Mumford, T. V., Van Iddekinge, C., Morgeson, F. P., & Campion, M. A.
(2008). The team role test: Development and validation of a team role knowledge
situational judgment test. Journal of Applied Psychology, 93, 250–267; Mumford, T.
V., Campion, M. A., & Morgeson, F. P. (2006). Situational judgments in work teams: A
team role typology. In J. A. Weekley and R. E. Ployhart (Eds.),Situational judgment
tests: Theory, measurement, and application (pp. 319–344). Mahwah, NJ: Erlbaum.
Task Roles
Five roles make up the task portion of the typology. The contractor role
includes behaviors that serve to organize the team’s work, including creating
team timelines, production schedules, and task sequencing. The creator role
deals more with changes in the team’s task process structure. For example,
reframing the team goals and looking at the context of goals would fall under
this role. The contributor role is important, because it brings information and
expertise to the team. This role is characterized by sharing knowledge and
training with those who have less expertise to strengthen the team. Research
shows that teams with highly intelligent members and evenly distributed
workloads are more effective than those with uneven workloads. [14]
The
completer role is also important, as it transforms ideas into action. Behaviors
associated with this role include following up on tasks, such as gathering
needed background information or summarizing the team’s ideas into reports.
Finally, the critic role includes “devil’s advocate” behaviors that go against the
assumptions being made by the team.
Social Roles
Social roles serve to keep the team operating effectively. When the social roles
are filled, team members feel more cohesive, and the group is less prone to
suffer process losses or biases such as social loafing, groupthink, or a lack of
participation from all members. Three roles fall under the umbrella of social
26
roles. The cooperator role includes supporting those with expertise toward the
team’s goals. This is a proactive role. The communicator role includes
behaviors that are targeted at collaboration, such as practicing good listening
skills and appropriately using humor to diffuse tense situations. Having a
good communicator helps the team to feel more open to sharing ideas. The
calibrator role is an important one that serves to keep the team on track in
terms of suggesting any needed changes to the team’s process. This role
includes initiating discussions about potential team problems such as power
struggles or other tensions. Similarly, this role may involve settling
disagreements or pointing out what is working and what is not in terms of
team process.
Boundary-Spanning Roles
The final two goals are related to activities outside the team that help to
connect the team to the larger organization. [15]
Teams that engage in a greater
level of boundary-spanning behaviors increase their team
effectiveness. [16]
The consul role includes gathering information from the
larger organization and informing those within the organization about team
activities, goals, and successes. Often the consul role is filled by team
managers or leaders. The coordinator role includes interfacing with others
within the organization so that the team’s efforts are in line with other
individuals and teams within the organization.
Types of Teams
There are several types of temporary teams. In fact, one-third of all teams in
the United States are temporary in nature. [17]
An example of a temporary team
is a task force that is asked to address a specific issue or problem until it is
resolved. Other teams may be temporary or ongoing, such as product
development teams. In addition, matrix organizations have cross-
27
functional teams in which individuals from different parts of the organization
staff the team, which may be temporary or long-standing in nature.
Virtual teams are teams in which members are not located in the same
physical place. They may be in different cities, states, or even different
countries. Some virtual teams are formed by necessity, such as to take
advantage of lower labor costs in different countries with upwards of 8.4
million individuals working virtually in at least one team. [18]
Often, virtual
teams are formed to take advantage of distributed expertise or time—the
needed experts may be living in different cities. A company that sells products
around the world, for example, may need technologists who can solve
customer problems at any hour of the day or night. It may be difficult to find
the caliber of people needed who would be willing to work at 2:00 a.m. on a
Saturday, for example. So companies organize virtual technical support teams.
BakBone Software Inc., for example, has a 13-member technical support team.
All members have degrees in computer science and are divided among offices
in California, Maryland, England, and Tokyo. BakBone believes it has been
able to hire stronger candidates by drawing from a diverse talent pool and
hiring in different geographic regions rather than being limited to one region
or time zone. [19]
Despite potential benefits, virtual teams present special management
challenges. Managers often think that they have to see team members working
in order to believe that work is being done. Because this kind of oversight is
impossible in virtual team situations, it is important to devise evaluation
schemes that focus on deliverables. Are team members delivering what they
said they would? In self-managed teams, are team members producing the
results the team decided to measure itself on?
28
Another special challenge of virtual teams is building trust. Will team
members deliver results just as they would in face-to-face teams? Can
members trust each other to do what they said they would do? Companies
often invest in bringing a virtual team together at least once so members can
get to know each other and build trust. [20]
In manager-led virtual teams,
managers should be held accountable for their team’s results and evaluated on
their ability as a team leader.
Finally, communication is especially important in virtual teams, be it through
e-mail, phone calls, conference calls, or project management tools that help
organize work. If individuals in a virtual team are not fully engaged and tend
to avoid conflict, team performance can suffer. [21]
A wiki is an Internet-based
method for many people to collaborate and contribute to a document or
discussion. Essentially, the document remains available for team members to
access and amend at any time. The most famous example is Wikipedia, which
is gaining traction as a way to structure project work globally and get
information into the hands of those that need it. Empowered organizations
put information into everyone’s hands. [22]
Research shows that empowered
teams are more effective than those that are not empowered. [23]
Top management teams are appointed by the chief executive officer (CEO)
and, ideally, reflect the skills and areas that the CEO considers vital for the
company. There are no formal rules about top management team design or
structure. The top team often includes representatives from functional areas,
such as finance, human resources, and marketing, or key geographic areas,
such as Europe, Asia, and North America. Depending on the company, other
areas may be represented, such as legal counsel or the company’s chief
technologist. Typical top management team member titles include chief
operating officer (COO), chief financial officer (CFO), chief marketing officer
29
(CMO), or chief technology officer (CTO). Because CEOs spend an increasing
amount of time outside their companies (e.g., with suppliers, customers, and
regulators), the role of the COO has taken on a much higher level of internal
operating responsibilities. In most American companies, the CEO also serves
as chairman of the board and can have the additional title of president.
Companies have top teams to help set the company’s vision and strategic
direction. Top teams make decisions on new markets, expansions,
acquisitions, or divestitures. The top team is also important for its symbolic
role: How the top team behaves dictates the organization’s culture and
priorities by allocating resources and by modeling behaviors that will likely be
emulated lower down in the organization. Importantly, the top team is most
effective when team composition is diverse—functionally and
demographically—and when it can truly operate as a team, not just as
a group of individual executives. [24]
Chapter 1 "Organizational Behavior" began with the quote that the people
make the place, and this holds especially true for members of the top
management team. In a study of 15 firms that demonstrated excellence,
defined as sustained performance over a 15-year period, leadership researcher
Jim Collins noted that those firms attended to people first and strategy
second. “They got the right people on the bus, moved the wrong people off the
bus, ushered the right people to the right seats—then they figured out where to
drive it.” [25]
The best teams plan for turnover. Succession planning is the
process of identifying future members of the top management team. Effective
succession planning allows the best top teams to achieve high performance
today and create a legacy of high performance for the future.
30
Team Leadership and Autonomy
Teams also vary in terms of how they are led. Traditional manager-
led teams are teams in which the manager serves as the team leader. The
manager assigns work to other team members. These types of teams are the
most natural to form, with managers having the power to hire and fire team
members and being held accountable for the team’s results.
Self-managed teams are a new form of team that rose in popularity with the
Total Quality Movement in the 1980s. Unlike manager-led teams, these teams
manage themselves and do not report directly to a supervisor. Instead, team
members select their own leader, and they may even take turns in the
leadership role. Self-managed teams also have the power to select new team
members. As a whole, the team shares responsibility for a significant task,
such as assembly of an entire car. The task is ongoing rather than a temporary
task such as a charity fund drive for a given year.
Organizations began to use self-managed teams as a way to reduce hierarchy
by allowing team members to complete tasks and solve problems on their own.
The benefits of self-managed teams extend much further. Research has shown
that employees in self-managed teams have higher job satisfaction, increased
self-esteem, and grow more on the job. The benefits to the organization
include increased productivity, increased flexibility, and lower turnover. Self-
managed teams can be found at all levels of the organization, and they bring
particular benefits to lower level employees by giving them a sense of
ownership of their jobs that they may not otherwise have. The increased
satisfaction can also reduce absenteeism, because employees do not want to
let their team members down.
31
Typical team goals are improving quality, reducing costs, and meeting
deadlines. Teams also have a “stretch” goal—a goal that is difficult to reach but
important to the business unit. Many teams also have special project goals.
Texas Instruments (TI), a company that makes semiconductors, used self-
directed teams to make improvements in work processes. [26]
Teams were
allowed to set their own goals in conjunction with managers and other teams.
TI also added an individual component to the typical team compensation
system. This individual component rewarded team members for learning new
skills that added to their knowledge. These “knowledge blocks” include topics
such as leadership, administration, and problem solving. The team decides
what additional skills people might need to help the team meet its objectives.
Team members would then take classes and/or otherwise demonstrate their
proficiency in that new skill on the job in order to get certification for mastery
of the skill. Individuals could then be evaluated based on their contribution to
the team and how they are building skills to support the team.
Self-managed teams are empowered teams, which means that they have the
responsibility as well as the authority to achieve their goals. Team members
have the power to control tasks and processes and to make decisions.
Research shows that self-managed teams may be at a higher risk of suffering
from negative outcomes due to conflict, so it is important that they are
supported with training to help them deal with conflict effectively. [27]
Self-
managed teams may still have a leader who helps them coordinate with the
larger organization. [28]
For a product team composed of engineering,
production, and marketing employees, being empowered means that the team
can decide everything about a product’s appearance, production, and cost
without having to get permission or sign-off from higher management. As a
result, empowered teams can more effectively meet tighter deadlines. At AT&T
Inc., for example, the model-4200 phone team cut development time in half
32
while lowering costs and improving quality by using the empowered team
approach. [29]
A special form of self-managed teams are self-directed teams,
which also determine who will lead them with no external oversight.
Designing Effective Teams
Designing an effective team means making decisions about team composition
(who should be on the team), team size (the optimal number of people on the
team), and team diversity (should team members be of similar background,
such as all engineers, or of different backgrounds). Answering these questions
will depend, to a large extent, on the type of task that the team will be
performing. Teams can be charged with a variety of tasks, from problem
solving to generating creative and innovative ideas to managing the daily
operations of a manufacturing plant.
Who Are the Best Individuals for the Team?
A key consideration when forming a team is to ensure that all the team
members are qualified for the roles they will fill for the team. This process
often entails understanding the knowledge, skills, and abilities (KSAs) of team
members as well as the personality traits needed before starting the selection
process. [30]
When talking to potential team members, be sure to communicate
the job requirements and norms of the team. To the degree that this is not
possible, such as when already existing groups are utilized, think of ways to
train the team members as much as possible to help ensure success. In
addition to task knowledge, research has shown that individuals who
understand the concepts covered in this chapter and in this book, such as
conflict resolution, motivation, planning, and leadership, actually perform
better on their jobs. This finding holds for a variety of jobs, including being an
officer in the U.S. Air Force, an employee at a pulp mill, or a team member at a
box manufacturing plant. [31]
33
How Large Should My Team Be?
Interestingly, research has shown that regardless of team size, the most active
team member speaks 43% of the time. The difference is that the team member
who participates the least in a 3-person team is still active 23% of the time
versus only 3% in a 10-person team. [32]
When deciding team size, a good rule
of thumb is a size of two to twenty members. Research shows that groups with
more than 20 members have less cooperation. [33]
The majority of teams have
10 members or less, because the larger the team, the harder it is to coordinate
and interact as a team. With fewer individuals, team members are more able
to work through differences and agree on a common plan of action. They have
a clearer understanding of others’ roles and greater accountability to fulfill
their roles (remember social loafing?). Some tasks, however, require larger
team sizes because of the need for diverse skills or because of the complexity
of the task. In those cases, the best solution is to create subteams in which one
member from each subteam is a member of a larger coordinating team. The
relationship between team size and performance seems to greatly depend on
the level of task interdependence, with some studies finding larger teams
outproducing smaller teams and other studies finding just the
opposite. [34]
The bottom line is that team size should be matched to the goals
of the team.
How Diverse Should My Team Be?
Team composition and team diversity often go hand in hand. Teams whose
members have complementary skills are often more successful, because
members can see each other’s blind spots. One team member’s strengths can
compensate for another’s weaknesses. [35]
For example, consider the challenge
that companies face when trying to forecast future sales of a given product.
Workers who are educated as forecasters have the analytic skills needed for
34
forecasting, but these workers often lack critical information about customers.
Salespeople, in contrast, regularly communicate with customers, which means
they’re in the know about upcoming customer decisions. But salespeople often
lack the analytic skills, discipline, or desire to enter this knowledge into
spreadsheets and software that will help a company forecast future sales.
Putting forecasters and salespeople together on a team tasked with
determining the most accurate product forecast each quarter makes the best
use of each member’s skills and expertise.
Diversity in team composition can help teams come up with more creative and
effective solutions. Research shows that teams that believe in the value of
diversity performed better than teams that do not. [36]
The more diverse a team
is in terms of expertise, gender, age, and background, the more ability the
group has to avoid the problems of groupthink. [37]
For example, different
educational levels for team members were related to more creativity in R&D
teams and faster time to market for new products. [38]
Members will be more
inclined to make different kinds of mistakes, which means that they’ll be able
to catch and correct those mistakes.
K E Y T A K E A W A Y
Groups and teams are not the same thing. Organizations have moved toward the
extensive use of teams within organizations. The tasks a team is charged with
accomplishing affect how they perform. In general, task interdependence works well
for self-managing teams. Team roles consist of task, social, and boundary-spanning
roles. Different types of teams include task forces, product development teams,
cross-functional teams, and top management teams. Team leadership and autonomy
varies, depending on whether the team is traditionally managed, self-managed, or
self-directed. Teams are most effective when they comprise members with the right
35
skills for the tasks at hand, are not too large, and contain diversity across team
members.
E X E R C I S E S
1. Think of the last team you were in. Did the task you were asked to do affect the
team? Why or why not?
2. Which of the 10 work roles do you normally take in a team? How difficult or easy do
you think it would be for you to take on a different role?
3. Have you ever worked in a virtual team? If so, what were the challenges and
advantages of working virtually?
4. How large do you think teams should be and why?
9.3 Management of Teams
L E A R N I N G O B J E C T I V E S
1. Understand how to create team norms, roles, and expectations.
2. Identify keys to running effective team meetings.
Establishing Team Norms
Team Norms
Norms are shared expectations about how things operate within a group or
team. Just as new employees learn to understand and share the assumptions,
norms, and values that are part of an organization’s culture, they also must
learn the norms of their immediate team. This understanding helps teams be
more cohesive and perform better. Norms are a powerful way of ensuring
coordination within a team. For example, is it acceptable to be late to
36
meetings? How prepared are you supposed to be at the meetings? Is it
acceptable to criticize someone else’s work? These norms are shaped early
during the life of a team and affect whether the team is productive, cohesive,
and successful.
Square Wheels Exercise and Group Discussion Sometimes it can be challenging to start a conversation around team ground
rules and performance. The following exercise can be used to get individuals
talking about what works and what doesn’t work in teams they’ve worked in
and how your team can be designed most effectively.
Figure 9.10
Used with permission. © Performance Management Company, 1992–2004.
Square Wheels® is a registered servicemark of PMC.
What is happening in this picture represents how many organizations seem to
operate. On a piece of paper have everyone in your team write on this form
and identify as many of the key issues and opportunities for improvement as
you can. Following this, have a conversation around what this illustration
might mean for your own team.
Team Contracts
Scientific research, as well as experience working with thousands of teams,
show that teams that are able to articulate and agree on established ground
rules, goals, and roles and develop a team contract around these standards are
better equipped to face challenges that may arise within the team. [1]
Having a
team contract does not necessarily mean that the team will be successful, but
it can serve as a road map when the team veers off course. The following
questions can help to create a meaningful team contract:
37
Team Values and Goals
o What are our shared team values?
o What is our team goal?
Team Roles and Leadership
o Who does what within this team? (Who takes notes at the
meeting? Who sets the agenda? Who assigns tasks? Who runs the
meetings?)
o Does the team have a formal leader?
o If so, what are his or her roles?
Team Decision Making
o How are minor decisions made?
o How are major decisions made?
Team Communication
o Who do you contact if you cannot make a meeting?
o Who communicates with whom?
o How often will the team meet?
Team Performance
o What constitutes good team performance?
o What if a team member tries hard but does not seem to be
producing quality work?
o How will poor attendance/work quality be dealt with?
Team Meetings
Anyone who has been involved in a team knows it involves team meetings.
While few individuals relish the idea of team meetings, they serve an
38
important function in terms of information sharing and decision making. They
also serve an important social function and can help to build team cohesion
and a task function in terms of coordination. Unfortunately, we’ve all attended
meetings that were a waste of time and little happened that couldn’t have been
accomplished by reading an e-mail in 5 minutes. To run effective meetings, it
helps to think of meetings in terms of three sequential steps. [2]
Before the Meeting
Much of the effectiveness of a meeting is determined before the team gathers.
There are three key things you can do to ensure the team members get the
most out of their meeting.
Is a meeting needed? Leaders should do a number of things prior to the
meeting to help make it effective. The first thing is to be sure a meeting is even
needed. If the meeting is primarily informational in nature, ask yourself if it is
imperative that the group fully understands the information and if future
decisions will be built upon this information. If so, a meeting may be needed.
If not, perhaps simply communicating with everyone in a written format will
save valuable time. Similarly, decision-making meetings make the most sense
when the problem is complex and important, there are questions of fairness to
be resolved, and commitment is needed moving forward.
Create and distribute an agenda. An agenda is important in helping to inform
those invited about the purpose of the meeting. It also helps organize the flow
of the meeting and keep the team on track.
Send a reminder prior to the meeting. Reminding everyone of the purpose,
time, and location of the meeting helps everyone prepare themselves. Anyone
who has attended a team meeting only to find there is no reason to meet
39
because members haven’t completed their agreed-upon tasks knows that, as a
result, team performance or morale can be negatively impacted. Follow up to
make sure everyone is prepared. As a team member, inform others
immediately if you will not be ready with your tasks so that they can
determine whether the meeting should be postponed.
During the Meeting
During the meeting there are several things you can do to make sure the team
starts and keeps on track.
Start the meeting on time. Waiting for members who are running late only
punishes those who are on time and reinforces the idea that it’s OK to be late.
Starting the meeting promptly sends an important signal that you are
respectful of everyone’s time.
Follow the meeting agenda. Veering off agenda communicates to members
that the agenda is not important. It also makes it difficult for others to keep
track of where you are in the meeting.
Manage group dynamics for full participation. As you’ve seen in this chapter,
a number of group dynamics can limit a team’s functioning. Be on the lookout
for full participation and engagement from all team members, as well as any
potential problems such as social loafing, group conflict, or groupthink.
Summarize the meeting with action items. Be sure to clarify team member
roles moving forward. If individuals’ tasks are not clear, chances are that role
confusion will arise later. There should be clear notes from the meeting
regarding who is responsible for each action item and the time frames
associated with next steps.
40
End the meeting on time. This is vitality important, as it shows that you
respect everyone’s time and are organized. If another meeting is needed to
follow up, schedule it later, but don’t let the meeting run over.
After the Meeting
Follow up on action items. During the meeting, participants probably
generated several action items. It is likely that you’ll need to follow up on the
action items of others.
K E Y T A K E A W A Y
Much like group development, team socialization takes place over the life of the
team. The stages move from evaluation to commitment to role transition. Team
norms are important for the team process and help to establish who is doing what
for the team and how the team will function. Creating a team contract helps with
this process. Keys to address in a team contract are team values and goals, team
roles and leadership, team decision making, team communication expectations, and
how team performance is characterized. Team meetings can help a team coordinate
and share information. Effective meetings include preparation, management during
the meeting, and follow-up on action items generated in the meeting.
E X E R C I S E S
1. Have the norms for most of the teams you have belonged to been formal or
informal? How do you think that has affected these teams?
2. Have you ever been involved in creating a team contract? Explain how you think that
may have influenced how the team functioned.
3. Should the person requesting a meeting always prepare a meeting agenda? Why or
why not?
4. Do you think conducting team meetings standing up is a good idea? Why or why
not?
41
9.4 Barriers to Effective Teams
L E A R N I N G O B J E C T I V E S
1. Recognize common barriers to effective teams.
2. Learn how to address some of the most common barriers and maintain group
effectiveness.
Problems can arise in any team that will hurt the team’s effectiveness. Here
are some common problems faced by teams and how to deal with them.
Common Problems Faced by Teams
Challenges of Knowing Where to Begin
At the start of a project, team members may be at a loss as to how to begin.
Also, they may have reached the end of a task but are unable to move on to the
next step or put the task to rest. Floundering often results from a lack of clear
goals, so the remedy is to go back to the team’s mission or plan and make sure
that it is clear to everyone. Team leaders can help move the team past
floundering by asking, “What is holding us up? Do we need more data? Do we
need assurances or support? Does anyone feel that we’ve missed something
important?”
Dominating Team Members
Some team members may have a dominating personality that encroaches on
the participation or air time of others. This overbearing behavior may hurt the
team morale or the momentum of the team. A good way to overcome this
barrier is to design a team evaluation to include a “balance of participation” in
42
meetings. Knowing that fair and equitable participation by all will affect the
team’s performance evaluation will help team members limit domination by
one member and encourage participation from all members, even shy or
reluctant ones. Team members can say, “We’ve heard from Mary on this issue,
so let’s hear from others about their ideas.”
Poor Performance of Team Members
Research shows that teams deal with poor performers in different ways,
depending on members’ perceptions of the reasons for poor performance. [1]
In
situations in which the poor performer is perceived as lacking in ability, teams
are more likely to train the member. When members perceive the individual as
simply being low on motivation, they are more likely to try to motivate or
reject the poor performer. Keep in mind that justice is an important part of
keeping individuals working hard for the team. [2]
Be sure that poor
performers are dealt with in a way that is deemed fair by all the team
members.
Poorly Managed Team Conflict
Disagreements among team members are normal and should be expected.
Healthy teams raise issues and discuss differing points of view, because that
will ultimately help the team reach stronger, more well-reasoned decisions.
Unfortunately, sometimes disagreements arise owing to personality issues or
feuds that predated a team’s formation. Ideally, teams should be designed to
avoid bringing adversaries together on the same team. If that is not possible,
the next best solution is to have adversaries discuss their issues privately, so
the team’s progress is not disrupted. The team leader or other team member
can offer to facilitate the discussion. One way to make a discussion between
conflicting parties meaningful is to form a behavioral contract between the
43
two parties. That is, if one party agrees to do X, then the other will agree to do
Y. [3]
K E Y T A K E A W A Y
Barriers to effective teams include the challenges of knowing where to begin,
dominating team members, the poor performance of team members, and poorly
managed team conflict.
E X E R C I S E S
1. How could some of the things discussed in “Understanding Team Design
Characteristics” help to avoid the common barriers to team effectiveness?
2. Have you ever been involved in a team where dominating team members hurt the
team’s performance? Share what happened and how the team dealt with this.
9.5 The Role of Ethics and National Culture
L E A R N I N G O B J E C T I V E S
1. Consider the role of ethics and teams.
2. Consider teams around the globe.
Ethics and Teams
The use of teams, especially self-managing teams, has been seen as a way to
overcome the negatives of bureaucracy and hierarchical control. Giving teams
the authority and responsibility to make their own decisions seems to
empower individuals and the team alike by distributing power more equitably.
Interestingly, research by James Barker shows that sometimes replacing a
hierarchy with self-managing teams can actually increase control over
44
individual workers and constrain members more powerfully than a
hierarchical system. [1]
Studying a small manufacturing company that switched
to self-managing teams, Barker interviewed team members and found an
unexpected result: Team members felt more closely watched under self-
managing teams than under the old system. Ronald, a technical worker, said,
“I don't have to sit there and look for the boss to be around; and if the boss is
not around, I can sit there and talk to my neighbor or do what I want. Now the
whole team is around me and the whole team is observing what I'm doing.”
Ronald said that while his old supervisor might tolerate someone coming in a
few minutes late, his team had adopted a “no tolerance” policy on tardiness,
and members carefully monitored their own behaviors.
Team pressure can harm a company as well. Consider a sales team whose
motto of “sales above all” hurts the ability of the company to gain loyal
customers. [2]
The sales team feels pressure to lie to customers to make sales.
Their misrepresentations and unethical behavior gets them the quick sale but
curtails their ability to get future sales from repeat customers.
Teams Around the Globe
People from different cultures often have different beliefs, norms, and ways of
viewing the world. These kinds of country-by-country differences have been
studied by the GLOBE Project, in which 170 researchers collected and
analyzed data on cultural values, practices, and leadership attributes from
over 17,000 managers in 62 societal cultures. [3]
GLOBE identified nine
dimensions of culture. One of the identified dimensions is a measure
called collectivism. Collectivism focuses on the degree to which the society
reinforces collective over individual achievement. Collectivist societies value
interpersonal relationships over individual achievement. Societies that rank
high on collectivism show more close ties between individuals. The United
45
States and Australia rank low on the collectivism dimension, whereas
countries such as Mexico and Taiwan rank high on that dimension. High
collectivism manifests itself in close, long-term commitment to the member
group. In a collectivist culture, loyalty is paramount and overrides most other
societal rules and regulations. The society fosters strong relationships in which
everyone takes responsibility for fellow members of their group.
Harrison, McKinnon, Wu, and Chow explored the cultural factors that may
influence how well employees adapt to fluid work groups. [4]
The researchers
studied groups in Taiwan and Australia. Taiwan ranks high on collectivism,
while Australia ranks low. The results: Australian managers reported that
employees adapted more readily to working in different teams, working under
different leaders, and taking on leadership of project teams than the middle
managers in Taiwan reported. The two samples were matched in terms of the
functional background of the managers, size and industries of the firms, and
local firms. These additional controls provided greater confidence in
attributing the observed differences to cultural values.
In other research, researchers analyzed the evaluation of team member
behavior by part-time MBA students in the United States and Mexico. [5]
The
United States ranks low on collectivism while Mexico ranks high. They found
that collectivism (measured at the individual level) had a positive relationship
to the evaluation of a teammate. Furthermore, the evaluation was higher for
in-group members among the Mexican respondents than among the U.S.
respondents.
Power distance is another culture dimension. People in high power distance
countries expect unequal power distribution and greater stratification,
whether that stratification is economic, social, or political. An individual in a
46
position of authority in these countries expects (and receives) obedience.
Decision making is hierarchical, with limited participation and
communication. Countries with a low power distance rating, such as Australia,
value cooperative interaction across power levels. Individuals stress equality
and opportunity for everyone.
Another study by researchers compared national differences in teamwork
metaphors used by employees in six multinational corporations in four
countries: the United States, France, Puerto Rico, and the Philippines. [6]
They
identified five metaphors: military, family, sports, associates, and community.
Results showed national variation in the use of the five metaphors.
Specifically, countries high in individualism (United States and France)
tended to use the sports or associates metaphors, while countries high in
power distance (Philippines and Puerto Rico) tended to use the military or
family metaphors. Further, power distance and collectivistic values were
negatively associated with the use of teamwork metaphors that emphasized
clear roles and broad scope. These results suggest that the meaning of
teamwork may differ across cultures and, in turn, imply potential differences
in team norms and team-member behaviors.
K E Y T A K E A W A Y
Self-managing teams shift the role of control from management to the team itself.
This can be highly effective, but if team members put too much pressure on one
another, problems can arise. It is also important to make sure teams work toward
organizational goals as well as specific team-level goals. Teams around the globe vary
in terms of collectivism and power distance. These differences can affect how teams
operate in countries around the world.
E X E R C I S E S
47
1. Have you ever felt pressure from team members to do something you didn’t want to
do? If so, how did you handle it?
2. In what ways do you think culture can affect a team?
9.6 Conclusion Research shows that group formation is a beneficial but highly dynamic
process. The life cycle of teams can often closely resemble various stages in
individual development. In order to maintain group effectiveness, individuals
should be aware of key stages as well as methods to avoid becoming stuck
along the way. Good leadership skills combined with knowledge of group
development will help any group perform at its peak level. Teams, though
similar, are different from groups in both scope and composition. Groups are
often small collections of individuals with various skill sets that combine to
address a specific issue, whereas teams can be much larger and often consist
of people with overlapping abilities working toward a common goal.
Many issues that can plague groups can also hinder the efficacy of a team.
Problems such as social loafing or groupthink can be avoided by paying careful
attention to team member differences and providing clear definitions for roles,
expectancy, measurement, and rewards. Because many tasks in today’s world
have become so complex, groups and teams have become an essential
component of an organization’s success. The success of the team/group rests
within the successful management of its members and making sure all aspects
of work are fair for each member.
48
9.7 Exercises
E T H I C A L D I L E M M A
Imagine you work at an ad agency and your team is charged with coming up with the
name for BeautyBees’s latest perfume. You have been with the company for 6
months. The branding team has been brainstorming for the last 2 hours, filling up
pages and pages of the flipchart with innovative, imaginative names. Feeling daunted
by how loudly, quickly, and assertively branding team members are shouting out
suggestions, you decide to sit this one out, even though you have some ideas. You
are uncomfortable shouting over everyone else and you reason that the group would
discount your input anyway. Plus, everyone else is generating so many good names
that the group is bound to succeed regardless of your input.
What Do You Think?
1. Is your lack of participation ethical? Why or why not?
2. What are the implications of speaking up or not speaking up?
3. Would you change your answer if you’d been with the company for 10 years instead
of 6 months?
1
This text was adapted by The Saylor Foundation under a Creative
Commons Attribution-NonCommercial-ShareAlike 3.0 License without
attribution as requested by the work’s original creator or licensee.
2
Chapter 10 Conflict and Negotiations
L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to do the following:
1. Understand the different types of conflict.
2. Understand the causes of conflict.
3. Understand the consequences of conflict.
4. Understand how to manage conflict effectively.
5. Understand the stages of the negotiation process.
6. Understand how to avoid common negotiation mistakes.
7. Engage in conflict management and negotiation ethically.
8. Understand cross-cultural differences in conflict and negotiation.
Negotiation Failure: The Case of PointCast In 1997, a company called PointCast Network Inc. was the hottest start-up in
Silicon Valley. Its founder and CEO, Christopher Hassett, was “the most
famous guy on the Internet,” said Hassett’s former attorney, Allen Morgan.
Hassett was named CNet’s newsmaker of the year—an honor previously
bestowed on giants such as Bill Gates of Microsoft and Larry Ellison of Oracle.
The “push technology” that PointCast pioneered was making headlines as well
as being featured on the cover of Wired as “The Radical Future of the Media
beyond the Web.”
All the attention around PointCast motivated one of the world’s largest
communications companies—Rupert Murdoch’s News Corporation—to make
them an offer of $450 million. Negotiations were intense and lasted weeks.
With media speculation that PointCast—a company with almost no revenue—
deserved to be valued at $750 million, some people say Hassett started
3
believing the hype and with the support of his board asked for more money.
“People involved in the company thought they’d be the next Netscape. They
hung out for more,” Murdoch said. The Murdochs, instead, lowered their
initial offer to $400 million, but added incentive clauses that brought the offer
close to the original $450 million if PointCast met its financial projections.
PointCast also rejected that offer and News Corp walked away from the
bargaining table. The timing couldn’t have been worse for PointCast, as “push”
technology became old news thanks to the maturing of alternatives such as
Yahoo. By the time PointCast decided to go public in 1998, the company was
valued at half of News Corp’s last offer. Worse, the process of filing an initial
public offering (IPO) requires the company to disclose all potential dangers to
investors. PointCast’s disclosures—such as news that customers had left
because of poor performance—scared off so many investors that PointCast
ultimately withdrew its IPO. By that time Hassett had been forced out by the
board, but the company never fully recovered. In the end, PointCast was
acquired in 1999 by Idealab for $7 million. In this case, stalled negotiations
cost the firm a steep price of $443 million.
Referring to the missed opportunity, an industry expert said, “It may go down
as one of the biggest mistakes in Internet history.” According to Steve Lippin,
writing in the Wall Street Journal, “Merger professionals point to these
euphemistically called ‘social issues’—ego and corporate pride, that is—as
among the most difficult aspects of negotiating multibillion-dollar mergers
these days. Although financial issues can be vexing too, these social issues can
be deal-breakers.”
In a similar and more recent situation in 2008, Yahoo CEO Jerry Yang was
ousted by the Board of Directors following failed deals with Microsoft and
4
Google. Yang’s behavior during negotiations indicated that he wasn’t
interested in bargaining as much as playing “hard to get.” He “kept saying we
should get more money, we should get more money, and [he was] not realizing
how precarious their position was,” says high-tech analyst Rob Enderle. In
other words, even deals that look great financially can fall apart if participants
fail to pay attention to organizational behavior issues such as perception,
groupthink, and power and influence.
Sources: Arnoldy. B. (2008, November 19). Why Yahoo’s Jerry Yang stepped
down. Retrieved January 20, 2009, from the Christian Science Monitor Web
site:http://www.csmonitor.com/2008/1119/p02s01-usec.html; Auletta, K.
(1998, November 19). The last sure thing. New Yorker; Lipin, S. (1996, August
22). In many merger deals, ego and pride play big roles in which way talks
go. Wall Street Journal, Eastern edition, p. C1; Wired News Report. (1999,
May 11). PointCast fire sale. Wired. Retrieved November 14, 2008,
fromhttp://www.wired.com/techbiz/media/news/1999/05/19618.
10.1 Understanding Conflict
L E A R N I N G O B J E C T I V E S
1. Define conflict.
2. Understand different types of conflict.
3. Address whether conflict is always negative.
Let’s take a closer look at these social issues such as conflict to understand
how they can derail companies and individuals alike—and what to do to
prevent such consequences from happening to you. In this chapter, you’ll see
5
that managing conflict and engaging in effective negotiation are both key for
effective organizational behavior within organizations as well as daily life.
Conflicts range from minor annoyances to outright violence. For example, one
million workers (18,000 people per week) are assaulted on the job in the
United States alone. [1]
One of the major ways to avoid conflicts escalating to
these levels is through understanding the causes of conflict and developing
methods for managing potential negative outcomes. Negotiation is one of the
most effective ways to decrease conflict and will also be examined in depth in
this chapter.
Similar to how conflicts can range from minor to major, negotiations vary in
terms of their consequences. A high-stakes negotiation at work might mean
the difference between a company’s survival and its demise. On the other end
of the spectrum, we deal with minor negotiations on a regular basis, such as
negotiating with a coworker about which movie to see. Maybe you make a
concession: “OK, we’ll watch what you want but I get to pick where we eat.”
Maybe you hold tough: “I don’t want to watch anything except a comedy.”
Perhaps you even look for a third option that would mutually satisfy both
parties. Regardless of the level, conflict management and negotiation tactics
are important skills that can be learned. First, let’s take a deeper look at
conflict.
Conflict is a process that involves people disagreeing. Researchers have noted
that conflict is like the common cold. Everyone knows what it is, but
understanding its causes and how to treat it is much more challenging. [2]
As
we noted earlier, conflict can range from minor disagreements to workplace
violence. In addition, there are three types of conflict that can arise within
organizations. Let’s take a look at each of them in turn.
6
Types of Conflict
Intrapersonal Conflict
Intrapersonal conflict arises within a person. For example, when you’re
uncertain about what is expected or wanted, or you have a sense of being
inadequate to perform a task, you are experiencing intrapersonal conflict.
Intrapersonal conflict can arise because of differences in roles. A manager may
want to oversee a subordinate’s work, believing that such oversight is a
necessary part of the job. The subordinate, on the other hand, may consider
such extensive oversight to be micromanagement or evidence of a lack of trust.
Role conflict, another type of intrapersonal conflict, includes having two
different job descriptions that seem mutually exclusive. This type of conflict
can arise if you’re the head of one team but also a member of another team. A
third type of intrapersonal conflict involves role ambiguity. Perhaps you’ve
been given the task of finding a trainer for a company’s business writing
training program. You may feel unsure about what kind of person to hire—a
well-known but expensive trainer or a local, unknown but low-priced trainer.
If you haven’t been given guidelines about what’s expected, you may be
wrestling with several options.
Interpersonal Conflict
Interpersonal conflict is among individuals such as coworkers, a manager and
an employee, or CEOs and their staff. For example, in 2006 the CEO of Airbus
S.A.S., Christian Streiff, resigned because of his conflict with the board of
directors over issues such as how to restructure the company. [3]
This example
may reflect a well-known trend among CEOs. According to one estimate,
31.9% of CEOs resigned from their jobs because they had conflict with the
board of directors. [4]
CEOs of competing companies might also have public
conflicts. In 1997, Michael Dell was asked what he would do about Apple
7
Computer. “What would I do? I’d shut it down and give the money back to
shareholders.” Ten years later, Steve Jobs, the CEO of Apple Inc., indicated he
had clearly held a grudge as he shot back at Dell in an e-mail to his employees,
stating, “Team, it turned out Michael Dell wasn’t perfect in predicting the
future. Based on today’s stock market close, Apple is worth more than
Dell.” [5]
In part, their long-time disagreements stem from their differences.
Interpersonal conflict often arises because of competition, as the Dell/Apple
example shows, or because of personality or values differences. For example,
one person’s style may be to “go with the gut” on decisions, while another
person wants to make decisions based on facts. Those differences will lead to
conflict if the individuals reach different conclusions. Many companies suffer
because of interpersonal conflicts. Keeping conflicts centered around ideas
rather than individual differences is important in avoiding a conflict
escalation.
Intergroup Conflict
Intergroup conflict is conflict that takes place among different groups. Types
of groups may include different departments or divisions in a company, and
employee union and management, or competing companies that supply the
same customers. Departments may conflict over budget allocations; unions
and management may disagree over work rules; suppliers may conflict with
each other on the quality of parts. Merging two groups together can lead to
friction between the groups—especially if there are scarce resources to be
divided among the group. For example, in what has been called “the most
difficult and hard-fought labor issue in an airline merger,” Canadian Air and
Air Canada pilots were locked into years of personal and legal conflict when
the two airlines’ seniority lists were combined following the
merger. [6]
Seniority is a valuable and scarce resource for pilots, because it
helps to determine who flies the newest and biggest planes, who receives the
8
best flight routes, and who is paid the most. In response to the loss of
seniority, former Canadian Air pilots picketed at shareholder meetings,
threatened to call in sick, and had ongoing conflicts with pilots from Air
Canada. The conflicts with pilots continue to this day. The history of past
conflicts among organizations and employees makes new deals challenging.
Is Conflict Always Bad?
Most people are uncomfortable with conflict, but is conflict always bad?
Conflict can be dysfunctional if it paralyzes an organization, leads to less than
optimal performance, or, in the worst case, leads to workplace violence.
Surprisingly, a moderate amount of conflict can actually be a healthy (and
necessary) part of organizational life. [7]
To understand how to get to a positive
level of conflict, we need to understand its root causes, consequences, and
tools to help manage it. The impact of too much or too little conflict can
disrupt performance. If conflict is too low, then performance is low. If conflict
is too high, then performance also tends to be low. The goal is to hold conflict
levels in the middle of this range. While it might seem strange to want a
particular level of conflict, a medium level of task-related conflict is often
viewed as optimal, because it represents a situation in which a healthy debate
of ideas takes place.
Figure 10.4 The Inverted U Relationship Between Performance and Conflict
9
Task conflict can be good in certain circumstances, such as in the early stages
of decision making, because it stimulates creativity. However, it can interfere
with complex tasks in the long run. [8]
Personal conflicts, such as personal
attacks, are never healthy because they cause stress and distress, which
undermines performance. The worst cases of personal conflicts can lead to
workplace bullying. At Intel Corporation, all new employees go through a 4-
hour training module to learn “constructive confrontation.” The content of the
training program includes dealing with others in a positive manner, using
facts rather than opinion to persuade others, and focusing on the problem at
hand rather than the people involved. “We don’t spend time being defensive or
taking things personally. We cut through all of that and get to the issues,”
notes a trainer from Intel University. [9]
The success of the training remains
unclear, but the presence of this program indicates that Intel understands the
potentially positive effect of a moderate level of conflict. Research focusing on
effective teams across time found that they were characterized by low but
increasing levels of process conflict (how do we get things done?), low levels of
relationship conflict with a rise toward the end of the project (personal
10
disagreements among team members), and moderate levels of task conflict in
the middle of the task time line. [10]
K E Y T A K E A W A Y
Conflict can be a problem for individuals and organizations. There are several
different types of conflict, including intrapersonal, interpersonal, and intergroup
conflict. Moderate conflict can be a healthy and necessary part of organizational life.
E X E R C I S E S
1. What are the types of conflicts that individuals may have at work? Which type have
you experienced the most?
2. What are some primary causes of conflict at work?
3. Explain how miscommunication might be related to a conflict at work.
10.2 Causes and Outcomes of Conflict
L E A R N I N G O B J E C T I V E S
1. Understand different causes of conflict.
2. Understand jobs at risk for conflict.
3. Learn the outcomes of conflict.
There are many potential root causes of conflict at work. We’ll go over six of
them here. Remember, anything that leads to a disagreement can be a cause of
conflict. Although conflict is common to organizations, some organizations
have more than others.
Causes of Conflict
11
Organizational Structure
Conflict tends to take different forms, depending upon the organizational
structure. [1]
For example, if a company uses a matrix structure as its
organizational form, it will have decisional conflict built in, because the
structure specifies that each manager report to two bosses. For example,
global company ABB Inc. is organized around a matrix structure based on the
dimensions of country and industry. This structure can lead to confusion as
the company is divided geographically into 1,200 different units and by
industry into 50 different units. [2]
Limited Resources
Resources such as money, time, and equipment are often scarce. Competition
among people or departments for limited resources is a frequent cause for
conflict. For example, cutting-edge laptops and gadgets such as a BlackBerry
or iPhone are expensive resources that may be allocated to employees on a
need-to-have basis in some companies. When a group of employees have
access to such resources while others do not, conflict may arise among
employees or between employees and management. While technical
employees may feel that these devices are crucial to their productivity,
employees with customer contact such as sales representatives may make the
point that these devices are important for them to make a good impression to
clients. Because important resources are often limited, this is one source of
conflict many companies have to live with.
Task Interdependence
Another cause of conflict is task interdependence; that is, when
accomplishment of your goal requires reliance on others to perform their
tasks. For example, if you’re tasked with creating advertising for your product,
you’re dependent on the creative team to design the words and layout, the
12
photographer or videographer to create the visuals, the media buyer to
purchase the advertising space, and so on. The completion of your goal (airing
or publishing your ad) is dependent on others.
Incompatible Goals
Sometimes conflict arises when two parties think that their goals are mutually
exclusive. Within an organization, incompatible goals often arise because of
the different ways department managers are compensated. For example, a
sales manager’s bonus may be tied to how many sales are made for the
company. As a result, the individual might be tempted to offer customers
“freebies” such as expedited delivery in order to make the sale. In contrast, a
transportation manager’s compensation may be based on how much money
the company saves on transit. In this case, the goal might be to eliminate
expedited delivery because it adds expense. The two will butt heads until the
company resolves the conflict by changing the compensation scheme. For
example, if the company assigns the bonus based on profitability of a sale, not
just the dollar amount, the cost of the expediting would be subtracted from the
value of the sale. It might still make sense to expedite the order if the sale is
large enough, in which case both parties would support it. On the other hand,
if the expediting negates the value of the sale, neither party would be in favor
of the added expense.
Personality Differences
Personality differences among coworkers are common. By understanding
some fundamental differences among the way people think and act, we can
better understand how others see the world. Knowing that these differences
are natural and normal lets us anticipate and mitigate interpersonal conflict—
it’s often not about “you” but simply a different way of seeing and behaving.
13
For example, Type A individuals have been found to have more conflicts with
their coworkers than Type B individuals. [3]
Communication Problems
Sometimes conflict arises simply out of a small, unintentional communication
problem, such as lost e-mails or dealing with people who don’t return phone
calls. Giving feedback is also a case in which the best intentions can quickly
escalate into a conflict situation. When communicating, be sure to focus on
behavior and its effects, not on the person. For example, say that Jeff always
arrives late to all your meetings. You think he has a bad attitude, but you don’t
really know what Jeff’s attitude is. You do know, however, the effect that Jeff’s
behavior has on you. You could say, “Jeff, when you come late to the meeting,
I feel like my time is wasted.” Jeff can’t argue with that statement, because it is
a fact of the impact of his behavior on you. It’s indisputable, because it is your
reality. What Jeff can say is that he did not intend such an effect, and then you
can have a discussion regarding the behavior.
In another example, the Hershey Company was engaged in talks behind closed
doors with Cadbury Schweppes about a possible merger. No information
about this deal was shared with Hershey’s major stakeholder, the Hershey
Trust. When Robert Vowler, CEO of the Hershey Trust, discovered that talks
were underway without anyone consulting the Trust, tensions between the
major stakeholders began to rise. As Hershey’s continued to underperform,
steps were taken in what is now called the “Sunday night massacre,” in which
several board members were forced to resign and Richard Lenny, Hershey’s
then current CEO, retired. [4]
This example shows how a lack of
communication can lead to an escalation of conflict. Time will tell what the
lasting effects of this conflict will be, but in the short term, effective
14
communication will be the key. Now, let’s turn our attention to the outcomes
of conflict.
Outcomes of Conflict
One of the most common outcomes of conflict is that it upsets parties in the
short run. [5]
However, conflict can have both positive and negative outcomes.
On the positive side, conflict can result in greater creativity or better decisions.
For example, as a result of a disagreement over a policy, a manager may learn
from an employee that newer technologies help solve problems in an
unanticipated new way.
Positive outcomes include the following:
Consideration of a broader range of ideas, resulting in a better, stronger
idea
Surfacing of assumptions that may be inaccurate
Increased participation and creativity
Clarification of individual views that build learning
On the other hand, conflict can be dysfunctional if it is excessive or
involves personal attacks or underhanded tactics.
Examples of negative outcomes include the following:
Increased stress and anxiety among individuals, which decreases
productivity and satisfaction
Feelings of being defeated and demeaned, which lowers individuals’
morale and may increase turnover
A climate of mistrust, which hinders the teamwork and cooperation
necessary to get work done
Is Your Job at Risk for Workplace Violence?
15
You may be at increased risk for workplace violence if your job involves the
following:
Dealing With People
o Caring for others either emotionally or physically, such as at a nursing home.
o Interacting with frustrated customers, such as with retail sales.
o Supervising others, such as being a manager.
o Denying requests others make of you, such as with customer service.
Being in High-Risk Situations
o Dealing with valuables or exchanging money, such as in banking.
o Handling weapons, such as in law enforcement.
o Working with drugs, alcohol, or those under the influence of them, such as
bartending.
o Working nights or weekends, such as gas station attendants.
Sources: Adapted from information in LeBlanc, M. M., & Kelloway, E. K.
(2002). Predictors and outcomes of workplace violence and
aggression. Journal of Applied Psychology, 87, 444–453; National Institute
for Occupational Safety and Health. (1997). Violence in the workplace.
Retrieved November 12, 2008, fromhttp://www.cdc.gov/niosh/violfs.html;
National Institute for Occupational Safety and Health. (2006). Workplace
prevention strategies and research needs. Retrieved November 12, 2008,
from http://www.cdc.gov/niosh/docs/2006-144/.
Given these negative outcomes, how can conflict be managed so that it does
not become dysfunctional or even dangerous? We’ll explore this in the next
section.
K E Y T A K E A W A Y
16
Conflict has many causes, including organizational structures, limitations on
resources, task interdependence, goal incompatibility, personality differences, and
communication challenges. Outcomes of well-managed conflict include increased
participation and creativity, while negatives of poorly managed conflict include
increased stress and anxiety. Jobs that deal with people are at higher risk for conflict.
E X E R C I S E S
1. What are some primary causes of conflict at work?
2. What are the outcomes of workplace conflict? Which types of job are the most at
risk for workplace violence? Why do you think that is?
3. What outcomes have you observed from conflict?
10.3 Conflict Management
L E A R N I N G O B J E C T I V E S
1. Understand different ways to manage conflict.
2. Understand your own communication style.
3. Learn to stimulate conflict if needed.
There are a number of different ways of managing organizational conflict,
which are highlighted in this section. Conflict management refers to resolving
disagreements effectively.
Ways to Manage Conflict
Change the Structure
When structure is a cause of dysfunctional conflict, structural change can be
the solution to resolving the conflict. Consider this situation. Vanessa, the lead
17
engineer in charge of new product development, has submitted her
components list to Tom, the procurement officer, for purchasing. Tom, as
usual, has rejected two of the key components, refusing the expenditure on the
purchase.
Vanessa is furious, saying, “Every time I give you a request to buy a new part,
you fight me on it. Why can’t you ever trust my judgment and honor my
request?”
Tom counters, “You’re always choosing the newest, leading-edge parts—
they’re hard to find and expensive to purchase. I’m supposed to keep costs
down, and your requests always break my budget.”
“But when you don’t order the parts we need for a new product, you delay the
whole project,” Vanessa says.
Sharon, the business unit’s vice president, hits upon a structural solution by
stating, “From now on, both of you will be evaluated on the total cost and the
overall performance of the product. You need to work together to keep
component costs low while minimizing quality issues later on.”
If the conflict is at an intergroup level, such as between two departments, a
structural solution could be to have those two departments report to the same
executive, who could align their previously incompatible goals.
Change the Composition of the Team
If the conflict is between team members, the easiest solution may be to change
the composition of the team, separating the personalities that were at odds. In
instances in which conflict is attributed to the widely different styles, values,
18
and preferences of a small number of members, replacing some of these
members may resolve the problem. If that’s not possible because everyone’s
skills are needed on the team and substitutes aren’t available, consider a
physical layout solution. Research has shown that when known antagonists
are seated directly across from each other, the amount of conflict increases.
However, when they are seated side by side, the conflict tends to decrease. [1]
Create a Common Opposing Force
Group conflict within an organization can be mitigated by focusing attention
on a common enemy such as the competition. For example, two software
groups may be vying against each other for marketing dollars, each wanting to
maximize advertising money devoted to their product. But, by focusing
attention on a competitor company, the groups may decide to work together to
enhance the marketing effectiveness for the company as a whole. The “enemy”
need not be another company—it could be a concept, such as a recession, that
unites previously warring departments to save jobs during a downturn.
Consider Majority Rule
Sometimes a group conflict can be resolved through majority rule. That is,
group members take a vote, and the idea with the most votes is the one that
gets implemented. The majority rule approach can work if the participants feel
that the procedure is fair. It is important to keep in mind that this strategy will
become ineffective if used repeatedly with the same members typically
winning. Moreover, the approach should be used sparingly. It should follow a
healthy discussion of the issues and points of contention, not be a substitute
for that discussion.
19
Problem Solve
Problem solving is a common approach to resolving conflict. In problem-
solving mode, the individuals or groups in conflict are asked to focus on the
problem, not on each other, and to uncover the root cause of the problem. This
approach recognizes the rarity of one side being completely right and the other
being completely wrong.
Conflict-Handling Styles
Individuals vary in the way that they handle conflicts. There are five common
styles of handling conflicts. These styles can be mapped onto a grid that shows
the varying degree of cooperation and assertiveness each style entails. Let us
look at each in turn.
Figure 10.6 Conflict-Handling Styles
20
Avoidance
The avoiding style is uncooperative and unassertive. People exhibiting this
style seek to avoid conflict altogether by denying that it is there. They are
prone to postponing any decisions in which a conflict may arise. People using
this style may say things such as, “I don’t really care if we work this out,” or “I
don’t think there’s any problem. I feel fine about how things are.” Conflict
avoidance may be habitual to some people because of personality traits such
as the need for affiliation. While conflict avoidance may not be a significant
problem if the issue at hand is trivial, it becomes a problem when individuals
avoid confronting important issues because of a dislike for conflict or a
perceived inability to handle the other party’s reactions.
Accommodation
The accommodating style is cooperative and unassertive. In this style, the
person gives in to what the other side wants, even if it means giving up one’s
personal goals. People who use this style may fear speaking up for themselves
or they may place a higher value on the relationship, believing that disagreeing
with an idea might be hurtful to the other person. They will say things such as,
“Let’s do it your way” or “If it’s important to you, I can go along with it.”
Accommodation may be an effective strategy if the issue at hand is more
important to others compared to oneself. However, if a person perpetually
uses this style, that individual may start to see that personal interests and
well-being are neglected.
Compromise
The compromising style is a middle-ground style, in which individuals have
some desire to express their own concerns and get their way but still respect
the other person’s goals. The compromiser may say things such as, “Perhaps I
21
ought to reconsider my initial position” or “Maybe we can both agree to give in
a little.” In a compromise, each person sacrifices something valuable to them.
For example, in 2005 the luxurious Lanesborough Hotel in London advertised
incorrect nightly rates for £35, as opposed to £350. When the hotel received a
large number of online bookings at this rate, the initial reaction was to insist
that customers cancel their reservations and book at the correct rate. The
situation was about to lead to a public relations crisis. As a result, they agreed
to book the rooms at the advertised price for a maximum of three nights,
thereby limiting the damage to the hotel’s bottom line as well as its
reputation. [2]
Competition
People exhibiting a competing style want to reach their goal or get their
solution adopted regardless of what others say or how they feel. They are more
interested in getting the outcome they want as opposed to keeping the other
party happy, and they push for the deal they are interested in making.
Competition may lead to poor relationships with others if one is always
seeking to maximize their own outcomes at the expense of others’ well-being.
This approach may be effective if one has strong moral objections to the
alternatives or if the alternatives one is opposing are unethical or harmful.
Collaboration
The collaborating style is high on both assertiveness and cooperation. This is a
strategy to use for achieving the best outcome from conflict—both sides argue
for their position, supporting it with facts and rationale while listening
attentively to the other side. The objective is to find a win–win solution to the
problem in which both parties get what they want. They’ll challenge points but
not each other. They’ll emphasize problem solving and integration of each
other’s goals. For example, an employee who wants to complete an MBA
22
program may have a conflict with management when he wants to reduce his
work hours. Instead of taking opposing positions in which the employee
defends his need to pursue his career goals while the manager emphasizes the
company’s need for the employee, both parties may review alternatives to find
an integrative solution. In the end, the employee may decide to pursue the
degree while taking online classes, and the company may realize that paying
for the employee’s tuition is a worthwhile investment. This may be a win–win
solution to the problem in which no one gives up what is personally important,
and every party gains something from the exchange.
Which Style Is Best?
Like much of organizational behavior, there is no one “right way” to deal with
conflict. Much of the time it will depend on the situation. However, the
collaborative style has the potential to be highly effective in many different
situations.
We do know that most individuals have a dominant style that they tend to use
most frequently. Think of your friend who is always looking for a fight or your
coworker who always backs down from a disagreement. Successful individuals
are able to match their style to the situation. There are times when avoiding a
conflict can be a great choice. For example, if a driver cuts you off in traffic,
ignoring it and going on with your day is a good alternative to “road rage.”
However, if a colleague keeps claiming ownership of your ideas, it may be time
for a confrontation. Allowing such intellectual plagiarism to continue could
easily be more destructive to your career than confronting the individual.
Research also shows that when it comes to dealing with conflict, managers
prefer forcing, while their subordinates are more likely to engage in avoiding,
accommodating, or compromising. [3]
It is also likely that individuals will
23
respond similarly to the person engaging in conflict. For example, if one
person is forcing, others are likely to respond with a forcing tactic as well.
What If You Don’t Have Enough Conflict Over Ideas?
Part of effective conflict management is knowing when proper stimulation is
necessary. Many people think that conflict is inherently bad—that it
undermines goals or shows that a group or meeting is not running smoothly.
In fact, if there is no conflict, it may mean that people are silencing themselves
and withholding their opinions. The reality is that within meaningful group
discussions there are usually varying opinions about the best course of action.
If people are suppressing their opinions, the final result may not be the best
solution. During healthy debates, people point out difficulties or weaknesses
in a proposed alternative and can work together to solve them. The key to
keeping the disagreement healthy is to keep the discussion focused on the
task, not the personalities. For example, a comment such as “Jack’s ideas have
never worked before. I doubt his current idea will be any better” is not
constructive. Instead, a comment such as “This production step uses a
degreaser that’s considered a hazardous material. Can we think of an
alternative degreaser that’s nontoxic?” is more productive. It challenges the
group to improve upon the existing idea.
Traditionally, Hewlett-Packard Development Company LP was known as a
“nice” organization. Throughout its history, HP viewed itself as a scientific
organization, and their culture valued teamwork and respect. But over time,
HP learned that you can be “nice to death.” In fact, in the 1990s, HP found it
difficult to partner with other organizations because of their culture
differences. During role plays created to help HP managers be more dynamic,
the trainers had to modify several role-plays, because participants simply said,
“That would never happen at HP,” over the smallest conflict. All this probably
24
played a role in the discomfort many felt with Carly Fiorina’s style as CEO and
the merge she orchestrated with Compaq Computer Corporation, which
ultimately caused the board of directors to fire Fiorina. On the other hand, no
one is calling HP “too nice” anymore.
OB Toolbox: How Can You Stimulate Conflict? Encourage people to raise issues and disagree with you or the status quo
without fear of reprisal. An issue festering beneath the surface, when brought
out into the open, may turn out to be a minor issue that can be easily
addressed and resolved.
Assign a devil’s advocate to stimulate alternative viewpoints. If a business
unit is getting stagnant, bring in new people to “shake things up.”
Create a competition among teams, offering a bonus to the team that comes
up with the best solution to a problem. For example, have two product
development teams compete on designing a new product. Or, reward the team
that has the fewest customer complaints or achieves the highest customer
satisfaction rating.
Build some ambiguity into the process. When individuals are free to come up
with their own ideas about how to complete a task, the outcome may be
surprising, and it allows for more healthy disagreements along the way.
K E Y T A K E A W A Y
Conflict management techniques include changing organizational structures to avoid
built-in conflict, changing team members, creating a common “enemy,” using
majority rules, and problem solving. Conflict management styles include
accommodating others, avoiding the conflict, collaborating, competing, and
compromising. People tend to have a dominant style. At times it makes sense to
build in some conflict over ideas if none exists.
E X E R C I S E S
25
1. List three ways to decrease a conflict situation. What are some pros and cons of each
of these approaches?
2. Do you deal with conflict differently with friends and family than you do at work? If
so, why do you think that is?
3. What is your usual conflict-handling style at work? Do you see it as effective or
ineffective?
4. Describe a situation in which not having enough conflict can be a problem.
10.4 Negotiations
L E A R N I N G O B J E C T I V E S
1. Learn the five phases of negotiation.
2. Learn negotiation strategies.
3. Avoid common mistakes in negotiations.
4. Learn about third-party negotiations.
A common way that parties deal with conflict is via negotiation. Negotiation is
a process whereby two or more parties work toward an agreement. There are
five phases of negotiation, which are described below.
The Five Phases of Negotiation
Figure 10.8 The Five Phases of Negotiation
26
Phase 1: Investigation
The first step in negotiation is the investigation, or information gathering
stage. This is a key stage that is often ignored. Surprisingly, the first place to
begin is with yourself: What are your goals for the negotiation? What do you
want to achieve? What would you concede? What would you absolutely not
concede? Leigh Steinberg, the most powerful agent in sports (he was the role
model for Tom Cruise’s character in Jerry Maguire), puts it this way: “You
need the clearest possible view of your goals. And you need to be brutally
honest with yourself about your priorities.” [1]
During the negotiation, you’ll inevitably be faced with making choices. It’s best
to know what you want, so that in the heat of the moment you’re able to make
the best decision. For example, if you’ll be negotiating for a new job, ask
yourself, “What do I value most? Is it the salary level? Working with coworkers
whom I like? Working at a prestigious company? Working in a certain
27
geographic area? Do I want a company that will groom me for future positions
or do I want to change jobs often in pursuit of new challenges?”
Phase 2: Determine Your BATNA
If you don’t know where you’re going, you will probably end up somewhere
else.
Lawrence J. Peter
One important part of the investigation and planning phase is to determine
your BATNA, which is an acronym that stands for the “best alternative to a
negotiated agreement.” Roger Fisher and William Ury coined this phrase in
their book Getting to Yes: Negotiating without Giving In.
Thinking through your BATNA is important to helping you decide whether to
accept an offer you receive during the negotiation. You need to know what
your alternatives are. If you have various alternatives, you can look at the
proposed deal more critically. Could you get a better outcome than the
proposed deal? Your BATNA will help you reject an unfavorable deal. On the
other hand, if the deal is better than another outcome you could get (that is,
better than your BATNA), then you should accept it.
Think about it in common sense terms: When you know your opponent is
desperate for a deal, you can demand much more. If it looks like they have a
lot of other options outside the negotiation, you’ll be more likely to make
concessions.
As Fisher and Ury said, “The reason you negotiate is to produce something
better than the results you can obtain without negotiating. What are those
results? What is that alternative? What is your BATNA—your Best Alternative
28
To a Negotiated Agreement? That is the standard against which any proposed
agreement should be measured.” [2]
The party with the best BATNA has the best negotiating position, so try to
improve your BATNA whenever possible by exploring possible alternatives. [3]
Going back to the example of your new job negotiation, consider your options
to the offer you receive. If your pay is lower than what you want, what
alternatives do you have? A job with another company? Looking for another
job? Going back to school? While you’re thinking about your BATNA, take
some time to think about the other party’s BATNA. Do they have an employee
who could readily replace you?
Once you’ve gotten a clear understanding of your own goals, investigate the
person you’ll be negotiating with. What does that person (or company) want?
Put yourself in the other party’s shoes. What alternatives could they have? For
example, in the job negotiations, the other side wants a good employee at a
fair price. That may lead you to do research on salary levels: What is the pay
rate for the position you’re seeking? What is the culture of the company?
Greenpeace’s goals are to safeguard the environment by getting large
companies and organizations to adopt more environmentally friendly
practices such as using fewer plastic components. Part of the background
research Greenpeace engages in involves uncovering facts. For instance,
medical device makers are using harmful PVCs as a tubing material because
PVCs are inexpensive. But are there alternatives to PVCs that are also cost-
effective? Greenpeace’s research found that yes, there are. [4]
Knowing this lets
Greenpeace counter those arguments and puts Greenpeace in a stronger
position to achieve its goals.
OB Toolbox: BATNA Best Practices
29
1. Brainstorm a list of alternatives that you might conceivably take if the
negotiation doesn’t lead to a favorable outcome for you.
2. Improve on some of the more promising ideas and convert them into
actionable alternatives.
3. Identify the most beneficial alternative to be kept in reserve as a fall-back
during the negotiation.
4. Remember that your BATNA may evolve over time, so keep revising it to make
sure it is still accurate.
5. Don’t reveal your BATNA to the other party. If your BATNA turns out to be
worse than what the other party expected, their offer may go down, as
PointCast learned in the opening case.
Sources: Adapted from information in Spangler, B. (2003, June). Best
Alternative to a Negotiated Agreement (BATNA). Retrieved November 12,
2008, from http://www.beyondintractability.org/essay/batna/; Conflict
Research Consortium, University of Colorado. (1998). Limits to agreement:
Better alternatives. Retrieved November 12, 2008, from
http://www.colorado.edu/conflict/peace/problem/batna.htm; Venter, D.
(2003).What is a BATNA? Retrieved January 14, 2008, from
http://www.negotiationeurope.com/articles/batna.html.
Phase 3: Presentation
The third phase of negotiation is presentation. In this phase, you assemble the
information you’ve gathered in a way that supports your position. In a job
hiring or salary negotiation situation, for instance, you can present facts that
show what you’ve contributed to the organization in the past (or in a previous
position), which in turn demonstrates your value. Perhaps you created a blog
that brought attention to your company or got donations or funding for a
charity. Perhaps you’re a team player who brings out the best in a group.
30
Phase 4: Bargaining
During the bargaining phase, each party discusses their goals and seeks to get
an agreement. A natural part of this process is making concessions, namely,
giving up one thing to get something else in return. Making a concession is not
a sign of weakness—parties expect to give up some of their goals. Rather,
concessions demonstrate cooperativeness and help move the negotiation
toward its conclusion. Making concessions is particularly important in tense
union-management disputes, which can get bogged down by old issues.
Making a concession shows forward movement and process, and it allays
concerns about rigidity or closed-mindedness. What would a typical
concession be? Concessions are often in the areas of money, time, resources,
responsibilities, or autonomy. When negotiating for the purchase of products,
for example, you might agree to pay a higher price in exchange for getting the
products sooner. Alternatively, you could ask to pay a lower price in exchange
for giving the manufacturer more time or flexibility in when they deliver the
product.
One key to the bargaining phase is to ask questions. Don’t simply take a
statement such as “we can’t do that” at face value. Rather, try to find out why
the party has that constraint. Let’s take a look at an example. Say that you’re a
retailer and you want to buy patio furniture from a manufacturer. You want to
have the sets in time for spring sales. During the negotiations, your goal is to
get the lowest price with the earliest delivery date. The manufacturer, of
course, wants to get the highest price with the longest lead time before
delivery. As negotiations stall, you evaluate your options to decide what’s more
important: a slightly lower price or a slightly longer delivery date? You do a
quick calculation. The manufacturer has offered to deliver the products by
April 30, but you know that some of your customers make their patio furniture
31
selection early in the spring, and missing those early sales could cost you $1
million. So, you suggest that you can accept the April 30 delivery date if the
manufacturer will agree to drop the price by $1 million.
“I appreciate the offer,” the manufacturer replies, “but I can’t accommodate
such a large price cut.” Instead of leaving it at that, you ask, “I’m surprised
that a 2-month delivery would be so costly to you. Tell me more about your
manufacturing process so that I can understand why you can’t manufacture
the products in that time frame.”
“Manufacturing the products in that time frame is not the problem,” the
manufacturer replies, “but getting them shipped from Asia is what’s expensive
for us.”
When you hear that, a light bulb goes off. You know that your firm has
favorable contracts with shipping companies because of the high volume of
business the firm gives them. You make the following counteroffer: “Why
don’t we agree that my company will arrange and pay for the shipper, and you
agree to have the products ready to ship on March 30 for $10.5 million instead
of $11 million?” The manufacturer accepts the offer—the biggest expense and
constraint (the shipping) has been lifted. You, in turn, have saved money as
well. [5]
Phase 5: Closure
Closure is an important part of negotiations. At the close of a negotiation, you
and the other party have either come to an agreement on the terms, or one
party has decided that the final offer is unacceptable and therefore must be
walked away from. Most negotiators assume that if their best offer has been
rejected, there’s nothing left to do. You made your best offer and that’s the
32
best you can do. The savviest of negotiators, however, see the rejection as an
opportunity to learn. “What would it have taken for us to reach an
agreement?”
Recently, a CEO had been in negotiations with a customer. After learning the
customer decided to go with the competition, the CEO decided to inquire as to
why negotiations had fallen through. With nothing left to lose, the CEO placed
a call to the prospect’s vice president and asked why the offer had been
rejected, explaining that the answer would help improve future offerings.
Surprisingly, the VP explained the deal was given to the competitor because,
despite charging more, the competitor offered after-sales service on the
product. The CEO was taken by surprise, originally assuming that the VP was
most interested in obtaining the lowest price possible. In order accommodate
a very low price, various extras such as after-sales service had been cut from
the offer. Having learned that the VP was seeking service, not the lowest cost,
the CEO said, “Knowing what I know now, I’m confident that I could have
beaten the competitor’s bid. Would you accept a revised offer?” The VP
agreed, and a week later the CEO had a signed contract. [6]
Sometimes at the end of negotiations, it’s clear why a deal was not reached.
But if you’re confused about why a deal did not happen, consider making a
follow-up call. Even though you may not win the deal back in the end, you
might learn something that’s useful for future negotiations. What’s more, the
other party may be more willing to disclose the information if they don’t think
you’re in a “selling” mode.
Should You Negotiate for a Higher Salary? Yes! According to a survey conducted by CareerBuilder.com, 58% of hiring
managers say they leave some negotiating room when extending initial job
33
offers. The survey also found that many of the hiring managers agree to a
candidate’s request for a higher salary. “Salary negotiation has become a
growing opportunity in the job acquisition process,” says Bill Hawkins,
president and CEO of The Hawkins Company, a full-service executive search
firm with offices in Los Angeles and Atlanta. “Candidates who fail to make a
counteroffer could forfeit significant income.”
Source: Adapted from information in Reed-Woodard, M. (2007, April).
Taking money off the table. Black Enterprise, 37(9), 60–61.
Negotiation Strategies
Distributive Approach
The distributive view of negotiation is the traditional fixed-pie approach. That
is, negotiators see the situation as a pie that they have to divide between them.
Each tries to get more of the pie and “win.” For example, managers may
compete over shares of a budget. If marketing gets a 10% increase in its
budget, another department such as R&D will need to decrease its budget by
10% to offset the marketing increase. Focusing on a fixed pie is a common
mistake in negotiation, because this view limits the creative solutions possible.
Integrative Approach
A newer, more creative approach to negotiation is called
the integrative approach. In this approach, both parties look for ways to
integrate their goals under a larger umbrella. That is, they look for ways
to expand the pie, so that each party gets more. This is also called a win–win
approach. The first step of the integrative approach is to enter the negotiation
from a cooperative rather than an adversarial stance. The second step is all
about listening. Listening develops trust as each party learns what the other
34
wants and everyone involved arrives at a mutual understanding. Then, all
parties can explore ways to achieve the individual goals. The general idea is,
“If we put our heads together, we can find a solution that addresses
everybody’s needs.” Unfortunately, integrative outcomes are not the norm. A
summary of 32 experiments on negotiations found that although they could
have resulted in integrated outcomes, only 20% did so. [7]
One key factor
related to finding integrated solutions is the experience of the negotiators who
were able to reach them. [8]
OB Toolbox: Seven Steps to Negotiating a Higher Salary Step 1: Overcome your fear.
The first step is to overcome your fears. Many people don’t even begin a salary
negotiation. We may be afraid of angering the boss or think that because we
are doing a good job, we’ll automatically be rewarded. But, just because you’re
doing a good job doesn’t mean you’ll automatically get a raise. Why? If you
don’t ask for one, the boss may believe you’re satisfied with what you’re
getting. So why should he pay you more? Imagine going into a car dealership
and being absolutely delighted with a car choice. The sticker price is $19,000.
Would you pay the dealer $23,000 just because you really like the car? Of
course not. You probably wouldn’t even offer $19,000. If the car was up for
auction, however, and another bidder offered $20,000, you’d likely increase
your offer, too.
That’s what salary negotiation is like. Your boss may be thrilled with you but
at the same time is running a business. There’s no reason to pay an employee
more if you seem satisfied with your current salary.
Step 2: Get the facts.
Before you enter into the negotiation, do some background research. What are
other companies paying people in your position? Check sites such as
35
Payscale.com, salary.com, and salaryexpert.com to get a feel for the market.
Look at surveys conducted by your professional organization.
Step 3: Build your case.
How important are you to the organization? How have you contributed?
Perhaps you contributed by increasing sales, winning over angry customers,
getting feuding team members to cooperate, and so on. Make a list of your
contributions. Be sure to focus on the contributions that your boss values
most. Is it getting recognition for the department? Easing workload? If
another employer has shown interest in you, mention that as a fact. However,
don’t use this as a threat unless you’re prepared to take the other offer.
Mentioning interest from another employer gets the boss to think, “If I don’t
give this raise, I may lose the employee.” (By the way, if you don’t feel you
have a strong case for your raise, perhaps this isn’t the time to ask for one.)
Step 4: Know what you want.
Set your target salary goal based on your research and the norms of what your
organization will pay. Now ask yourself, if you don’t get this figure, would you
quit? If not, are there other alternatives besides a salary increase that you’d
consider? For example, would you accept a higher title? More vacation time?
Paid training to learn a new skill? Flexible hours?
Step 5: Begin assertively.
Start the discussion on a strong but friendly tone. “I think I’m worth more
than I’m being paid.” List the ways you’ve contributed to the company.
Step 6: Don’t make the first offer.
Let your boss name the figure. You can do this by asking, “How much of a
raise could you approve?” However, if the boss insists that you name a figure,
36
ask for the most that you can reasonably expect to get. You want to be
reasonable, but you need to allow room to make a concession. Your boss will
assume your opening number was high and will offer you less, so asking for
the actual figure you want may leave you feeling disappointed.
If the boss opens with, “The salary range for this position is $66,000 to
78,000,” ask for the high end. If your goal was higher than that range,
challenge the range by explaining how you are an exception and why you
deserve more.
Step 7: Listen more than talk.
You’ll learn more by listening rather than talking. The more you listen, the
better the boss will feel about you—people tend to like and trust people who
listen to them.
If you can’t get a raise now, get your boss to agree to one in a few months if
you meet agreed-upon objectives.
Sources: Adapted from information in Brodow, E. (2006). Negotiation boot
camp. New York: Currency/Doubleday; Nemko, M. (2007, December 31). The
general way to get a raise. U.S. News & World Report, 57.
Avoiding Common Mistakes in Negotiations
Failing to Negotiate/Accepting the First Offer
You may have heard that women typically make less money than men.
Researchers have established that about one-third of the gender differences
observed in the salaries of men and women can be traced back to differences
in starting salaries, with women making less, on average, when they start their
jobs. [9]
Some people are taught to feel that negotiation is a conflict situation,
and these individuals may tend to avoid negotiations to avoid conflict.
37
Research shows that this negotiation avoidance is especially prevalent among
women. For example, one study looked at students from Carnegie-Mellon who
were getting their first job after earning a master’s degree. The study found
that only 7% of the women negotiated their offer, while men negotiated 57% of
the time. [10]
The result had profound consequences. Researchers calculate that
people who routinely negotiate salary increases will earn over $1 million more
by retirement than people who accept an initial offer every time without
asking for more. [11]
The good news is that it appears that it is possible to
increase negotiation efforts and confidence by training people to use effective
negotiation skills. [12]
Letting Your Ego Get in the Way
Thinking only about yourself is a common mistake, as we saw in the opening
case. People from the United States tend to fall into a self-serving bias in
which they overinflate their own worth and discount the worth of others. This
can be a disadvantage during negotiations. Instead, think about why the other
person would want to accept the deal. People aren’t likely to accept a deal that
doesn’t offer any benefit to them. Help them meet their own goals while you
achieve yours. Integrative outcomes depend on having good listening skills,
and if you are thinking only about your own needs, you may miss out on
important opportunities. Remember that a good business relationship can
only be created and maintained if both parties get a fair deal.
Having Unrealistic Expectations
Susan Podziba, a professor of mediation at Harvard and MIT, plays broker for
some of the toughest negotiations around, from public policy to marital
disputes. She takes an integrative approach in the negotiations, identifying
goals that are large enough to encompass both sides. As she puts it, “We are
38
never going to be able to sit at a table with the goal of creating peace and
harmony between fishermen and conservationists. But we can establish goals
big enough to include the key interests of each party and resolve the specific
impasse we are currently facing. Setting reasonable goals at the outset that
address each party’s concerns will decrease the tension in the room, and will
improve the chances of reaching an agreement.” [13]
Those who set
unreasonable expectations are more likely to fail.
Getting Overly Emotional
Negotiations, by their very nature, are emotional. The findings regarding the
outcomes of expressing anger during negotiations are mixed. Some
researchers have found that those who express anger negotiate worse deals
than those who do not, [14]
and that during online negotiations, those parties
who encountered anger were more likely to compete than those who did
not. [15]
In a study of online negotiations, words such as despise,
disgusted, furious, and hate were related to a reduced chance of reaching an
agreement. [16]
However, this finding may depend on individual personalities.
Research has also shown that those with more power may be more effective
when displaying anger. The weaker party may perceive the anger as potentially
signaling that the deal is falling apart and may concede items to help move
things along. [17]
This holds for online negotiations as well. In a study of 355
eBay disputes in which mediation was requested by one or both of the parties,
similar results were found. Overall, anger hurts the mediation process unless
one of the parties was perceived as much more powerful than the other party,
in which case anger hastened a deal. [18]
Another aspect of getting overly
emotional is forgetting that facial expressions are universal across cultures,
and when your words and facial expressions don’t match, you are less likely to
be trusted. [19]
39
Letting Past Negative Outcomes Affect the Present Ones
Research shows that negotiators who had previously experienced ineffective
negotiations were more likely to have failed negotiations in the future. Those
who were unable to negotiate some type of deal in previous negotiation
situations tended to have lower outcomes than those who had successfully
negotiated deals in the past. [20]
The key to remember is that there is a
tendency to let the past repeat itself. Being aware of this tendency allows you
to overcome it. Be vigilant to examine the issues at hand and not to be overly
swayed by past experiences, especially while you are starting out as a
negotiator and have limited experiences.
Tips for Negotiation Success Focus on agreement first. If you reach an impasse during negotiations,
sometimes the best recourse is to agree that you disagree on those topics and
then focus only on the ones that you can reach an agreement on. Summarize
what you’ve agreed on, so that everyone feels like they’re agreeing, and leave
out the points you don’t agree on. Then take up those issues again in a
different context, such as over dinner or coffee. Dealing with those issues
separately may help the negotiation process.
Be patient. If you don’t have a deadline by which an agreement needs to be
reached, use that flexibility to your advantage. The other party may be forced
by circumstances to agree to your terms, so if you can be patient you may be
able to get the best deal.
Whose reality? During negotiations, each side is presenting their case—their
version of reality. Whose version of reality will prevail? Leigh Steinberg offers
this example from the NFL, when he was negotiating the salary of Warren
Moon. Moon was 41 years old. That was a fact. Did that mean he was hanging
on by a thread and lucky to be employed in the first place? “Should he be
grateful for any money that the team pays him?” Steinberg posed, “Or is he a
40
quarterback who was among the league leaders in completions and attempts
last year? Is he a team leader who took a previously moribund group of
players, united them, and helped them have the best record that they’ve had in
recent years?” All those facts are true, and negotiation brings the relevant facts
to the forefront and argues their merit.
Deadlines. Research shows that negotiators are more likely to strike a deal by
making more concessions and thinking more creatively as deadlines loom
than at any other time in the negotiation process.
Be comfortable with silence. After you have made an offer, allow the other
party to respond. Many people become uncomfortable with silence and feel
they need to say something. Wait and listen instead.
Sources: Adapted from information in Stuhlmacher, A. F., Gillespie, T. L., &
Champagne, M. V. (1998). The impact of time pressure in negotiation: A meta-
analysis. International Journal of Conflict Management, 9, 97–116; Webber, A.
(1998, October). How to get them to show you the money. Fast Company.
Retrieved November 13, 2008 from
http://www.fastcompany.com/magazine/19/showmoney.html.
When All Else Fails: Third-Party Negotiations
Alternative Dispute Resolution
Alternative Dispute Resolution (ADR) includes mediation, arbitration, and
other ways of resolving conflicts with the help of a specially trained, neutral
third party without the need for a formal trial or hearing. [21]
Many companies
find this effective in dealing with challenging problems. For example, Eastman
Kodak Company added an alternative dispute resolution panel of internal
employees to help them handle cases of perceived discrimination and
hopefully stop a conflict from escalating. [22]
41
Mediation
In mediation, an outside third party (the mediator) enters the situation with
the goal of assisting the parties in reaching an agreement. The mediator can
facilitate, suggest, and recommend. The mediator works with both parties to
reach a solution but does not represent either side. Rather, the mediator’s role
is to help the parties share feelings, air and verify facts, exchange perceptions,
and work toward agreements. Susan Podziba, a mediation expert, has helped
get groups that sometimes have a hard time seeing the other side’s point of
view to open up and talk to one another. Her work includes such groups as
pro-choice and pro-life advocates, individuals from Israel and Palestine, as
well as fishermen and environmentalists. According to the U.S. Equal
Employment Opportunity Commission, “Mediation gives the parties the
opportunity to discuss the issues raised in the charge, clear up
misunderstandings, determine the underlying interests or concerns, find areas
of agreement and, ultimately, to incorporate those areas of agreements into
resolutions. A mediator does not resolve the charge or impose a decision on
the parties. Instead, the mediator helps the parties to agree on a mutually
acceptable resolution. The mediation process is strictly confidential.” [23]
One
of the advantages of mediation is that the mediator helps the parties design
their own solutions, including resolving issues that are important to both
parties, not just the ones under specific dispute. Interestingly, sometimes
mediation solves a conflict even if no resolution is reached. Here’s a quote
from Avis Ridley-Thomas, the founder and administrator of the Los Angeles
City Attorney’s Dispute Resolution Program, who explains, “Even if there is no
agreement reached in mediation, people are happy that they engaged in the
process. It often opens up the possibility for resolution in ways that people had
not anticipated.” [24]
An independent survey showed 96% of all respondents
42
and 91% of all charging parties who used mediation would use it again if
offered. [25]
You Know It’s Time for a Mediator When… The parties are unable to find a solution themselves.
Personal differences are standing in the way of a successful solution.
The parties have stopped talking with one another.
Obtaining a quick resolution is important.
Sources: Adapted from information in Crawley, J. (1994). Constructive
conflict management. San Diego: Pfeiffer; Mache, K. (1990). Handbook of
dispute resolution: Alternative dispute resolution in action. London: Routledge.
Arbitration
In contrast to mediation, in which parties work with the mediator to arrive at a
solution, in arbitration the parties submit the dispute to the third-party
arbitrator. It is the arbitrator who makes the final decision. The arbitrator is a
neutral third party, but the decision made by the arbitrator is final (the
decision is called the “award”). Awards are made in writing and are binding to
the parties involved in the case. [26]
Arbitration is often used in union-
management grievance conflicts.
Arbitration-Mediation
It is common to see mediation followed by arbitration. An alternative
technique is to follow the arbitration with mediation. The format of this
conflict resolution approach is to have both sides formally make their cases
before an arbitrator. The arbitrator then makes a decision and places it in a
sealed envelope. Following this, the two parties work through mediation. If
they are unable to reach an agreement on their own, the arbitration decisions
43
become binding. Researchers using this technique found that it led to
voluntary agreements between the two parties 71% of the time versus 50% for
mediation followed by arbitration. [27]
K E Y T A K E A W A Y
Negotiation consists of five phases that include investigation, determining your
BATNA, presentation, bargaining, and closure. Different negotiation strategies
include the distributive approach (fixed-pie approach) and the integrative approach
(expanding-the-pie approach). Research shows that some common mistakes made
during negotiations include accepting the first offer made, letting egos get in the
way, having unrealistic expectations, getting overly emotional, and letting past
negative outcomes affect the present ones. Third-party negotiators are sometimes
needed when two sides cannot agree.
E X E R C I S E S
1. What are the negotiation phases and what goes on during each of them?
2. When negotiating, is establishing a BATNA important? Why or why not?
3. What are the third-party conflict resolution options available?
10.5 The Role of Ethics and National Culture
L E A R N I N G O B J E C T I V E S
1. Consider the role of ethics in negotiation.
2. Consider the role of national culture in negotiation.
Ethics and Negotiations
Are hardball tactics OK to use? Sometimes a course of action is legal but is
questionable in terms of ethics. A good rule of thumb is that hardball tactics
44
should not be used because the negotiation is likely not to be the last time you
will interact with the other party. Therefore, finding a way to make a deal that
works for both sides is preferable. Otherwise, if you have the complete upper
hand and use it to “destroy” the other party, it’s likely that at a future date the
other party will have the upper hand and will use it to retaliate mercilessly
against you. What’s more, your reputation as a negotiator will suffer. As J.
Paul Getty said, “My father said: ‘You must never try to make all the money
that’s in a deal. Let the other fellow make some money too, because if you have
a reputation for always making all the money, you won’t have many deals.’” [1]
Ethics establish a way of doing what is right, fair, and honest. If your
counterpart feels you are being unfair or dishonest, he or she is less likely to
make any concessions—or even to negotiate with you in the first place.
Here are some tips for ethical negotiations:
Be honest.
Keep your promises.
Follow the Platinum Rule. The Golden Rule tells us to treat others the way
we want to be treated. Author Tony Alessandra goes a step further with the
Platinum Rule: “Treat people the way they want to be treated.” Caring
about others enough to treat them the way they want to be treated helps
build long-term relationships based on ethics and trust. [2]
Negotiation Around the Globe
Not understanding cultural differences is another common mistake. Some
cultures have a higher or lower threshold for conflict. For example, in
countries such as Japan or Korea, the preference is for harmony (called wa in
Japan) rather than overt conflict. [3]
Americans and Germans have a much
higher tolerance for conflict as a way of working through issues. In a study of
Japanese, German, and American cultures, it was found that almost half of the
45
preference for different conflict management styles was related to the country
in which participants were raised. [4]
In Japan, much like Pakistan, the tendency is not to trust what is heard from
the other party until a strong relationship is formed. Similarly, in China,
conversations start out with innocuous topics to set a mood of friendliness. [5]
This differs a great deal from American negotiators who tend to like to “get
down to business” and heavily weigh first offers as reference points that
anchor the process as both sides make demands and later offers.
There are also differences in how individuals from different cultures use
information and offers during the negotiation process. Observations show that
Japanese negotiators tend to use offers as an information exchange
process. [6]
Research has found that American negotiators tend to reveal more
information than their Japanese counterparts. [7]
Japanese negotiators might
learn little from a single offer, but patterns of offers over time are interpreted
and factored into their negotiations. Since Japan is a high-context culture,
information is learned from what is not said as well as from what is said.
Even the way that negotiations are viewed can differ across cultures. For
example, the Western cultures tend to think of negotiations as a business
activity rather than a social activity, but in other cultures, the first step in
negotiations is to develop a trusting relationship. Negotiators in Brazil, for
example, seriously damaged relationships when they tried to push
negotiations to continue during the Carnival festival. “The local guys took that
as a disrespectful action,” said Oscar Lopez, commercial director for
Hexaprint, S.A. De C.V. in Mexico. “It took several weeks to restore confidence
and move on.” [8]
Also keep in mind what agreement means in different cultures. For example,
in China, nodding of the head does not mean that the Chinese counterpart is
46
agreeing to what you are proposing, merely that they are listening and
following what you are saying. “Culturally, Chinese companies and workers do
not like to say no,” says a buyer at a manufacturer based in the United States.
Here’s how to overcome the problem. Instead of phrasing a question as, “Can
you do this for us?” which would put the Chinese official in an uncomfortable
position of saying no (which they likely would not do), rephrase the question
as, “How will you do this for us and when will it be done?” [9]
K E Y T A K E A W A Y
Being honest during negotiations, keeping your promises, and treating others as you
would like to be treated all help you negotiate ethically. Not understanding the
culture of a person or group of people you are negotiating with can be a major
mistake. Try to learn as much as you can about the culture of others involved and be
sure to clarify key points along the way. Also, keep in mind that agreement (e.g.,
nodding one’s head up and down or saying “yes, yes”) may not mean the same thing
in all cultures.
E X E R C I S E S
1. Is the goal of negotiation to maximize your economic outcome at all costs? Why or
why not? Is it ethical to do so?
2. What are some similarities and differences in conflict management preference and
negotiation practices among different countries around the globe? Have you had any
experiences with individuals from other cultures? If so, how did it go? How might it
have gone better?
47
10.6 Conclusion Conflict can run the gamut from minor annoyances to physically violent
situations. At the same time, conflict can increase creativity and innovation, or
it can bring organizations to a grinding halt. There are many different types of
conflict, including interpersonal, intrapersonal, and intergroup. Within
organizations, there are many common situations that can spur conflict.
Certain organizational structures, such as a matrix structure, can cause any
given employee to have multiple bosses and conflicting or overwhelming
demands. A scarcity of resources for employees to complete tasks is another
common cause of organizational conflict, particularly if groups within the
organization compete over those resources. Of course, simple personality
clashes can create intrapersonal conflict in any situation. Communication
problems are also a very common source of conflict even when no actual
problem would exist otherwise. When conflict arises, it can be handled by any
number of methods, each with varying degrees of cooperation and
competitiveness. Different situations require different conflict handling
methods, and no one method is best.
Negotiations occur during many important processes, and possessing astute
negation skills can be an incredible tool. A key component to negotiations
involves having a BATNA, or “best alternative to a negotiated agreement.”
Negotiations typically move through five phases, including investigation,
determining your BATNA, presentation, bargaining, and closure. During a
negotiation, it is important not to make any number of common mistakes.
These mistakes can include accepting the first offer, letting ego get in the way,
having unrealistic expectations of the outcome of the negotiation, becoming
too emotional during the process, or being weighed down by previous failures
and letting the past repeat itself. It is important to keep in mind that many
cultures have preferential methods for handling conflict and negotiation.
48
Individuals should understand the cultural background of others to better
navigate what could otherwise become a messy situation.
10.7 Exercises
E T H I C A L D I L E M M A
Imagine that you are part of a bargaining team that has been engaged in
negotiations for 6 long months. One night, as you are getting ready to leave and are
gathering your things, you notice a piece of green paper on the ground near where
Devin, a member of the opposite negotiation team, was sitting just a few minutes
earlier. When you pick it up, you realize that it is a list of the ideal outcome for the
other team.
At first you are ecstatic—this is the information you need to end these negotiations!
Then you begin to recall your organizational behavior course and all those ethical
dilemmas that seemed so easy back then. What should you do? Should you use the
information for your team? I mean, why not, they were careless enough to leave it
behind? On the other hand, would that be ethical?
Thinking back to that OB course, you recall some key questions you should ask
yourself during negotiations:
Would this be honest?
Would this involve keeping my promises?
Would I be following the Platinum Rule and be “treating people the way they want
to be treated?”
49
As you are pondering these questions, you also realize that this is a key decision.
There are some additional questions you should ask yourself around making ethical
decisions if you plan on using this information to help your team:
Is this decision fair?
Will I feel better or worse about myself after I make this decision?
Does this decision break any organizational rules?
Does this decision break any laws?
How would I feel if this decision were broadcast on the news?
Just as you think you’ve made your decision, Devin from the opposing team walks
back in and asks you if you’ve seen a green piece of paper.
What would you do?
What are the ethical dilemmas involved?
How would you justify your choice?
What would be the consequences of your choice?
I N D I V I D U A L E X E R C I S E
A Case of Listening: When Silence Is Golden [1]
Listening can be an effective tool during negotiations. William Devine was
representing a client on a land purchase. “The owner and I spent 2 hours on the
phone horse-trading contract issues, then turned to the price,” Devine explained.
“We were $100,000 apart.” The owner then said, “The price your client proposes will
leave us well short of our projections. That makes it very tough on us.” The line went
silent.
“My impulse was to say something in response to the silence, and I started to speak,
then stopped. As I hesitated, I sensed that if I said, ‘My client can pay all cash,’ or ‘It’s
still a good deal for you,’ then the owner would take my comment as an invitation to
joust, we would battle over the hundred grand, and my client would end up having
to pay some or all of that sum. The owner had not asked a question or proposed a
50
compromise, so no response was required from me at that moment. I decided to
remain silent. After what felt like days but was probably less than 30 seconds, I
heard, ‘But I guess it’s good for us [i.e., his company] to just get this deal done, so
we’ll do it.’”
Devine saved his client $100,000 by staying silent.
Questions to Think About
1. What does this case suggest about the role of silence in negotiations?
2. Have you ever had a similar experience when saying nothing paid off?
3. Are there times when silence is a bad idea? Explain your answer.
G R O U P E X E R C I S E
Salary Negotiations
Thinking about negotiations is a lot easier than actually engaging in them. In order to
give you some practice with the information in this chapter, you will engage in a
salary negotiation.
1. To make this more meaningful, the exercise will be based on a job that you are
actually interested in. Think of a job you would like to have (either now or in the
future). Imagine you have been offered this job. The salary is OK. It is about 15%
below the market rate for this type of job, but you really want the job.
2. What will you do?
o Will you negotiate for a higher salary?
o What are the pros and cons of this choice?
3. If you’ve decided to negotiate (and we strongly suggest you do), work through the
next six steps in the OB Toolbox “Seven Steps to Negotiating a Higher Salary.” Once
you are up to step 5, let your instructor know you are ready to begin the negotiation
process.
51
Group Decis Negot (2013) 22:873–896 DOI 10.1007/s10726-012-9333-3
Individual Priming in Virtual Team Decision-Making
Valerie L. Bartelt · Alan R. Dennis · Lingyao Yuan · Jordan B. Barlow
Published online: 4 January 2013 © Springer Science+Business Media Dordrecht 2012
Abstract Virtual teams have different interactions than face-to-face teams because they rely on information and communication technologies, which can impede or assist certain human cognitive processes. Past research has shown that although virtual teams exchange more information than face-to-face teams, poor decisions often result, because team members do not consider the unique information they receive from others. Drawing from cognitive psychology, our research explored a unique way to improve team decision-making through the use of cognitive priming. We proposed that priming group members to pay attention to others or to engage in counterfactual think- ing would improve team members’ cognition and, therefore, team performance. Prior research with individuals and brainstorming teams has shown these forms of priming to improve performance; however, no research has attempted to use priming to improve the outcomes of virtual team decision-making, which requires deeper interaction and cognitive involvement than brainstorming. We performed two lab experiments using primes that have been found to improve the individual decision-making process. We found that priming had some impact, but it did not significantly improve decision quality. Various reasons are discussed to explain why priming techniques may not be as powerful in teams as in individuals, and future research ideas are suggested to build on our initial work on priming in virtual team decision-making.
V. L. Bartelt Department of Information Systems, College of Business Administration, Texas A&M University-Kingsville, MSC 182, Texas A&M University-Kingsville, Kingsville, TX 78363-8202, USA
A. R. Dennis · L. Yuan · J. B. Barlow (B) Operations and Decision Technologies Department, Kelley School of Business, Indiana University, BUS 670, 1309 E. Tenth Street, Bloomington, IN 47405, USA e-mail: [email protected]
123
874 V. L. Bartelt et al.
Keywords Priming · Cognition · Virtual teams · Decision-making · Decision quality · Team performance
1 Introduction
Virtual teams are groups of geographically dispersed individuals who communicate through information and communication technologies (ICT) (Bell and Kozlowski 2002). Such teams are now prevalent in organizations (Chudoba et al. 2005), and the effectiveness of virtual team interactions is a major research stream in IS and collaboration literature (Kahai et al. 2007). Prior research suggests that ICT use can reduce workloads by 50 percent or more (Reinig et al. 1995-1996).
The use of ICT can affect various virtual team processes (Schmidt et al. 2001), including the decision-making process. In particular, decision quality often suffers in virtual teams (Dennis et al. 1997–1998; Martz and Shepherd 2004). Virtual teams often face the challenge of bringing together multiple perspectives from differing team mem- bers, yet virtual teams tend to have poor information exchange (Dennis 1996). Prior research has identified possible culprits affecting the information exchange process in virtual teams that may result in poor decisions. One main possibility is that team members do not fully consider the information they receive from others (Dennis 1996; Heninger et al. 2006; Hilmer and Dennis 2001). Thus a primary reason for poor team performance may not lie in the group interaction processes of social psychology, but rather in the individual thought processes of cognitive psychology (Kolfschoten 2011; Nagasundaram and Dennis 1993).
Prior research shows that many types of individual cognitive challenges are com- mon to group work (O’Leary 2011) and to virtual teams in particular (Powell 1994; Whitworth et al. 2000). There is also evidence to show that changes in individ- ual cognition can change group level outcomes (e.g., Curseu and Schruijer 2008). Thus, we believe that improving individual-level cognition can improve group-level performance.
There are many approaches researchers can take to better understand the collabora- tion process and the effects of individual cognition in that process. We adopt the concept of priming from cognitive psychology. Priming is a phenomenon where exposure to a stimulus causes concepts related to that stimulus to be activated in an individual’s working memory, which in turn subconsciously influences subsequent behavior. For example, if a person is primed with words associated with the concept of old age, he or she walks slower than those not primed (Bargh and Chartrand 2000) because when the concept of old age is introduced into an individual’s working memory, he or she subconsciously acts “older” and yet is completely unaware of the change in behavior (Bargh and Chartrand 2000).
Priming techniques have been extensively studied in psychology research and have successfully been used to increase individuals’ decision-making performance (Bargh and Chartrand 2000; Bargh et al. 2001; Koriat and Feuerstein 1976; Reb and Connolly 2009). In information systems research, priming has also been found to improve group electronic brainstorming (Dennis et al. 2012). Despite the research on using priming
123
Virtual Team Decision-Making 875
to change individual behavior, priming has not been studied in group-level decision- making tasks that require group collaboration and deep interaction among individuals.
We propose that priming at the individual level will improve group decision making by improving individual cognition during group processes. A major barrier to higher decision quality in virtual team decision making lies in individual cognition—a failure to fully consider the information shared by others (Heninger et al. 2006). Specifically, we propose that priming can be used to increase participants’ desire to share their information and consider others’ information during virtual team discussions, thus improving decision quality.
2 Theory and Prior Research
2.1 Virtual Teams and Decision-Making
Collaborative work creates unique cognitive challenges beyond those of individual tasks. Many research streams have investigated the creation of systems, processes, and training that allow groups to reduce excessive cognitive loads during the collaborative process (e.g., Kolfschoten et al. 2011; Kolfschoten and Lee 2010).
Increasingly, employees are working in virtual teams, which face additional chal- lenges (Bell and Kozlowski 2002; Chudoba et al. 2005). Virtual teams often span geographical, temporal, and organizational boundaries (Bell and Kozlowski 2002; Chudoba et al. 2005). These barriers add additional problems and cognitive chal- lenges to those faced by traditional teams. Even though ICT are helpful in virtual team formation, functioning and ultimate performance, prior research has found that these lean tools reduce the amount of emotional content shared (Reinig et al. 1995-1996) which is also vital for healthy team interactions (McGrath 1991). Prior research also shows that group tasks requiring convergence are less likely to be successful virtu- ally than face-to-face (Kerr and Murthy 2004). In an effort to improve virtual team interactions, researchers have focused on various electronic collaboration outcomes— including attitudinal outcomes (Cohen and Bailey 1997) such as satisfaction and con- fidence (e.g., Reinig 2003; Reinig and Shin 2002; Credé and Sniezek 2003; Reinig et al. 1995-1996). Many different process techniques derived from social psychology have been developed and tested in groups (Briggs et al. 2004). In this paper, we take a different approach by focusing on individual cognitive processes based on research from cognitive psychology.
Team decision-making presents unique cognitive challenges due to the need to negotiate multiple team members’ opinions (Dean and Sharfman 1996). Team mem- bers must process information concerning not only the task at hand, but also interper- sonal dynamics and team consensus (Whitworth et al. 2000). Teamwork is a complex process, in which the ideas and comments from many different participants needs to be considered. The need to both contribute information and consider the information from other team members increases cognitive load, often to a point where team members have insufficient cognitive resources to do both successfully (Heninger et al. 2006). The cognitive challenges of collaborative teams often lead to poor decision quality because team members do not pay attention to information from others on their team
123
876 V. L. Bartelt et al.
(Dennis 1996; Dennis et al. 1997–1998; Heninger et al. 2006; Hilmer and Dennis 2001).
Because of the cognitive demands of virtual teamwork, team members often cut cognitive corners. Prior research indicates that many individuals experience confir- mation bias during teamwork, meaning they seek information to confirm their initial impressions (Webster et al. 1996) rather than being open to new ideas from other team members. Confirmation bias is a phenomenon where people interpret new information based on their current beliefs and ignore contradictory information (Ask and Granhag 2005). This cognition bias occurs as the result of cognitive dissonance (Festinger 1957; Jonas et al. 2001), which is built on the premise that people are not comfortable with two opposing thoughts existing at the same time. Decision quality tends to decrease if people justify their a priori choices and do not fully consider other information options raised during the team discussion (Dean and Sharfman 1993).
In general, people often seek easily available information instead of digging deeper to find contrary evidence (Ask and Granhag 2005). This cognitive need for closure often results in them locking into their initial decisions, strengthening the cognitive bias toward their own impressions and stereotypes. Under the influence of these cognition biases, people tend to make individual decisions based on previous information, often anchoring to their initial conclusions that were made before team discussions (Ask and Granhag 2005).
Previous research has examined the role of individual cognition in face-to-face groups (e.g., Kersten and Cray 1996; O’Leary 2011) and virtual teams (e.g., Antunes and Ferreira 2011; Espinosa et al. 2011; Stahl 2006; Powell 1994; Whitworth et al. 2000), but few studies have attempted to influence individual cognition in order to improve virtual team collaboration and performance. Curseu and Schruijer (2008) used framing as a method for changing cognition in face-to-face teams completing negotiation tasks. In their study, teams who read instructions framing the information as dangerous used more defensive strategies during negotiations, and ultimately had lower performance than neutral teams. We propose that priming, a similar concept, may be used to influence individual cognition in order to improve group level outcomes and improve team performance, particularly in virtual teams.
2.2 Priming
Priming is a cognitive phenomenon where exposure to a stimulus causes a behavioral response to a subsequent stimulus. Priming activates implicit memory, which involves subconscious and unintentional cognition (Graf and Schacter 1985; Schacter 1987). Prior research shows that much of human behavior uses subconscious cognition (Bargh and Chartrand 2000), and priming can be used to manipulate subconscious cognition. Usually, priming is implemented in research by presenting stimuli to a participant in order to activate internal representations of related concepts or attitudes. The activation of these concepts then changes subsequent behavior (Bargh and Chartrand 2000).
Primes can be delivered through two different levels of awareness—subliminal or supraliminal. With subliminal priming, individuals are not aware of any priming. For instance, a word may flash in front of them without their knowledge of it. In
123
Virtual Team Decision-Making 877
supraliminal priming, individuals are provided with a conscious task, but they are not aware of the prime’s effects (Bargh and Chartrand 2000; DeCoster and Claypool 2004). Prior research shows that supraliminal priming can influence an individual’s attitudes and behavior in subsequent tasks (Chalfoun and Frasson 2011).
Researchers have developed many sophisticated supraliminal priming techniques, including the use of scenarios (Connolly and Reb 2003) and semantic (word) priming (Bargh and Chartrand 2000; Higgins and Chaires 1980). Semantic priming works by activating semantic networks in an individual’s cognition. Semantic networks are networks of words and concepts built in the brain through prior experience (Martin and Chao 2001). Research has shown that accessing semantic networks through words can activate abstract concepts and categories that ultimately affect behavior (Bargh et al. 2001).
The usefulness of priming first emerged as researchers explored ways of altering the environment to cause people to unknowingly think differently (Bargh and Chartrand 2000; Duncker 1945). Subsequent research shows that priming can affect judgments, goal motivation (Stajkovic et al. 2006), and individual decision-making (Bargh and Chartrand 2000).
We believe priming is a potential method that may influence group level outcomes by changing individual cognition. Priming is usually conducted on the individual level, and, to our knowledge, only one study has used priming at the group level (Dennis et al. 2012). The study by Dennis et al. (2012) used priming to affect individual motivation and creativity, leading to an improvement of performance on a group electronic brain- storming task. In their study, group performance (measured as the number of ideas generated by a group) was significantly better for groups under a priming treatment than for groups under the placebo treatment.
However, it would be difficult to conclude that priming improves group level perfor- mance based on the results of one study. During the Dennis et al. (2012) experiment, participants performed a brainstorming task where group performance was largely a function of the sum of individual performance. Other types of group activities, such as decision-making, require different cognitive and collaborative processes than those required in additive tasks such as brainstorming (Steiner 1972); thus, priming may have differing effects.
In our research, we focus on priming two distinct concepts (one positive and one negative), to see which, if either, has a better result on group decision-making processes in virtual teams. First, we discuss achievement priming, a concept that has been effec- tive for both individual performance and simple group brainstorming tasks. Second, we discuss regret priming, a concept that has been effective for individual decision- making tasks.
3 Study 1: Achievement and Attention Priming
3.1 Hypothesis Development
Previous research shows that priming positive concepts can improve individual decision-making and task performance by improving individual cognition (Bargh et al. 2001; Galinsky and Moskowitz 2000). Bargh et al. (2001) postulated that priming the
123
878 V. L. Bartelt et al.
achievement concept would improve individual task performance. They found that achievement priming leads individuals to subconsciously create high goals for them- selves in their current situation. Subjects were exposed to two different sets of priming words in a word search puzzle game, one related to achievement (e.g., compete, win, succeed) and another to neutral words (e.g., ranch, carpet, shampoo). Individuals primed with the achievement words performed better in the subsequent tasks than those primed with neutral words. Being primed with words associated with achieve- ment activated the achievement concept through the semantic networks of individuals’ cognition, which led to individuals subconsciously creating goal pursuits of achieve- ment (Bargh et al. 2001).
Achievement priming was also used in a study by Shantz and Latham (2009) to improve individual brainstorming. In this case, the priming was done using an image of a woman winning a race, rather than by using words.
Achievement priming was also positively related to group level performance for idea generation tasks. Dennis et al. (2012) conducted an experiment to investigate the priming effect on group level electronic brainstorming. In the experimental group, participants were primed with words related to achievement. After the priming, par- ticipants completed a task where they were asked to brainstorm ideas in groups of five. The achievement prime activated an automatic goal in pursuit of achievement, which improved their motivation and ability to brainstorm as a team. Groups primed for achievement generated more ideas that were also more relevant, novel, and workable than ideas produced by the control groups.
We believe the achievement prime should have the same effect in team decision- making tasks. We consider that the activation of achievement concepts in the minds of individuals should motivate them to work hard during the group task to over- come cognitive loads and biases that normally affect group decision-making tasks. Because decision-making tasks involve more complex team processes than simple brainstorming tasks, including the processes of disseminating and integrating crucial information, so the achievement concept alone may not be powerful enough to change group behavior. One of the reasons that computer-mediated groups sometimes have low decision-making performance is that group members don’t pay attention to other group members’ information or opinions (Dennis 1996; Heninger et al. 2006; Hilmer and Dennis 2001). Paying attention to other team members is even more critical in situations where each group member is in possession of some unique information that cannot otherwise be accessed by other members. This condition makes it necessary for group members to collaborate on solving the group task. Thus, for a prime to work in this complex environment, it should not only activate high performance goals in team members, but also stimulate group members to pay attention to one another. In this manner, not only will individual behavior be changed, but the key group-level concept of integrating information should be improved.
Despite the importance of attention in cognitive processes and collaborative work, we found no previous work on the effect of priming attention in individuals or groups. However, our reasoning suggests that the attention priming effect should strengthen the achievement priming effect for virtual team decision-making processes where attention is necessary for success. We propose that achievement priming and attention priming together should alter individual cognition (increased focus on information),
123
Virtual Team Decision-Making 879
Priming Individual Cognition
Group Information Processing
Group Decision Quality
Fig. 1 Process of priming effects on group decision quality
which will be reflected in the group process (increased dissemination and integration of information), which will lead to higher quality decisions, as shown in Fig. 1.
Hypothesis 1 Individual team member exposure to achievement and attention priming prior to team decision-making will improve decision quality.
3.2 Methodology
We conducted a lab experiment to test the effect of achievement and attention priming on virtual team decision-making.
3.2.1 Participants
One hundred thirty undergraduate business students from a large state university were assigned to 26 five-person teams and participated in this study. 92 percent of the participants were within the age range of 19–21. The remaining 8 percent were within the 23–27 age range. Thirty-five percent of the participants were female. There were 11 teams in the neutral treatment, and 15 teams in the achievement/attention priming treatment. All participants received extra credit for their participation.
3.2.2 Task
The task was to choose at most three students to admit to the university from a set of five possible candidates. All teams selected exactly three candidates to admit. Researchers have used the task in previous experiments on virtual team decision-making (Dennis 1996; Robert and Dennis 2005). We selected this particular task because the application process is familiar to most participants.
The student admission task was also appropriate because it is a hidden profile task as defined by Stasser (1992). In a hidden profile task, each team member makes independent decisions on incomplete information, and then they come together to discuss and make a team decision. Incomplete information consists of both common information, which is known to every participant, and unique information, which is known to only one participant. Because all information must be shared to reach the best decision, the hidden profile task is designed to facilitate discussion among team members. The team can only come to the correct decision if all the information is shared and attended to. Hidden profile tasks have been commonly used in team research because they are similar to the tasks real groups face (Stasser 1992); in real groups, not all participants have complete information to make the best decision individually.
Participants were first asked to read and learn facts about the candidates whose information would be shared. Four minutes were allowed for participants to read and
123
880 V. L. Bartelt et al.
come to an individual decision based on incomplete information. Then, 15 min were allowed for participants to work together as a team to share, read, and discuss their information with others in order to reach a team decision. Prior research determined this was a sufficient amount of time for this task.
Eighteen pieces of information were distributed among the team members. Con- sistent with prior research, each participant was provided with six pieces of common information: the candidates’ names, gender, GPA, verbal SAT, and math SAT scores, and commitment to major (Dennis 1996; Robert and Dennis 2005). Two unique pieces of information were provided to each of the five participants (including intended major, quality of the high school, commitment to their major, motivation to attend, parents’ affiliation with the university, letters of recommendation, extra-curricular activities, missing courses, class rank, advanced placement courses, residence, and additional comments). Additional information included circumstantial information about the can- didates, such as whether their high school grades have steadily improved or declined. Two facts contained in the unique information should have led to a denial of the appli- cants (one student was missing two courses and another student had a lower class rank from a poor quality school).
Three directors of the undergraduate admissions office individually ranked the university’s admissions criteria. An average of the directors’ scores was referenced when designing the task of admitting the students to the university. After the task was designed, the director of admissions determined which candidates to reject and accept. This was used as a scoring key for the panel of applicants that the participants were given in the experiment.
Participants used Gmail Chat to work together to discuss the task. This software is similar to other group chat software in that there is one lower window in which partic- ipants type ideas, with a larger scrolling window on top in which the ideas contributed by group members are displayed. The participants sat in separate cubicles in front of individual personal computers during the study so no verbal communication occurred.
3.2.3 Treatments
There were two treatments: achievement/attention priming and neutral priming. We used the Scrambled Sentence Test (SST), a form of supraliminal priming (Bargh and Chartrand 2000; Srull and Wyer 1979). This technique has been used in prior priming research (Bargh and Chartrand 2000), including prior research on electronic brain- storming in teams (Dennis et al. 2012). We used the same priming procedure used by Dennis et al. (2012)—a modified version of the SST delivered as a computer game. Par- ticipants were instructed to create an interesting headline for the university newspaper by using four out of the five words that had been provided by the game. Each word was assigned a point value, and participants were encouraged to create a headline that gen- erated the highest score. The participants were allowed 8 min to play the priming game.
Prior research has determined both the strength and the duration of prime to be important factors for optimal priming effects, and 8 min was considered sufficient for the priming to take effect (Bargh and Chartrand 2000; Srull and Wyer 1979). The longer length of the game play design ensured that participants would not finish early, countering the possibility of decaying effects among participants. Prior research
123
Virtual Team Decision-Making 881
has found the immediacy of the task following the prime to affect the similarity of participants’ responses to the intended prime (Bargh and Chartrand 2000).
The achievement/attention priming version of the game included one achievement word drawn from Bargh et al. (2001) in each set of five words. Achievement words included “win,” “award,” “honor,” and so forth. In addition, we added one word related to “paying attention” in each set of five words. Attention words included “listen,” “noticed,” and so forth. Both types of priming words were obtained as instructed in Bargh and Chartrand’s (2000) article. Synonyms of the intended meaning (either achievement or attention) were included in the word list.
Neutral words were used for the control groups. The neutral words were taken from prior research (Bargh et al. 2001) and validated using the Affective Norms of English Words (ANEW) database (Bradley and Lang 1999). In this database, words are rated based on arousal and valance levels. Neutral words were selected from the database that produced moderate arousal and valence levels. Some examples of neutral priming words included, “worker,” “room,” and “short.” A full list of the priming words can be found in the appendix.
3.2.4 Dependent Variable
Decision quality was determined for each team based on the correct admit/reject decision for each of five candidates. The director of admissions at the university where the study was conducted assessed each candidate and determined whether that individual would be admitted. The decision performance scale ranges from 0–5.
3.2.5 Procedures
Participants were randomly assigned to treatments and were provided with prede- termined usernames to ensure anonymity among team members. Participants began the experiment by playing the priming game. Upon finishing the priming game (or after 8 min had elapsed), participants were provided 4 min to read the admission task information that they had been given, which contained both unique and common infor- mation about the candidates. They were then asked to make their individual decision to admit no more than three candidates to the university. Participants were told that each team member had been given both common information known to everyone and unique information only they knew. They were informed that it was important for them to contribute the information they knew and carefully read the information they received from others in order to make a good team decision. Next, participants worked together as a team using Gmail Chat to arrive at a team decision of no more than three candidates to admit. Then, participants completed a survey indicating their team’s decision and individual demographic information.
3.3 Results
We analyzed the data with one-way between-groups ANOVA. Teams primed for achievement and attention failed to have significantly higher decision quality than teams receiving the neutral priming (F(1,24) = 0.700, p = 0.411).
123
882 V. L. Bartelt et al.
Table 1 Achievement/attention prime results (Number of correct decisions)
n Mean SD ANOVA F (1,24) ANOVA p value
Kruskal–Wallis p value
Achievement/attention 15 3.87 0.990 0.700 0.411 0.929 Neutral 11 3.73 1.009
In order to examine one possible reason that the ANOVA tests were not statistically significant, we tested whether the data met the assumptions of an ANOVA test. First, Levene’s test was run to test homogeneity of variance on the dependent variable, decision quality. This test was used because the normality of the data is not assumed when using this procedure (Glass 1966). Decision quality was not significant (Levene statistic = 0.687; df = 1,24; p = 0.416), indicating an equality of variance in the data. Second, to determine the normality of the data, the Shapiro–Wilk test was used on each treatment due to its appropriateness for sample sizes that are less than 50. Decision quality was found to be significant ( p < 0.01) in all treatments, indicating that the data was not normal.
Because the data was not normal, we used the Kruskal–Wallis test, the non- parametric alternative to ANOVA, to test differences between groups. The results of the Kruskal–Wallis test were not statistically significant ( p = 0.929), indicating no difference in decision quality between groups. Therefore, Hypothesis 1 was not supported. Results are summarized in Table 1.
Since decision quality was not significant, we conducted a post-hoc analysis of the transcripts to identify whether the prime had any effect on earlier steps of the process presented in Fig. 1. We did not have the information available to test whether the priming changed how well the individuals paid attention and integrated information from others. However, we downloaded the transcripts from the experiment and exam- ined the information exchanged by team members to see if the amount of information contributed to the discussion was different between the two treatments, and whether the amount of information shared in teams truly led to better decision quality. One rater coded the number of correct pieces of information in the transcript of each group. A second rater independently coded half of the transcripts. Inter-rater reliability was 81 percent (calculated as 1 - the number of disagreements / total number of codings), which is adequate.
We used a one-way ANOVA to test whether the amount of information shared differed between treatments. The results indicate no difference between priming treat- ments (F = 3.428; df = 1,24; p = 0.076). We again tested whether the data met the assumptions of an ANOVA test. First, Levene’s test was run to test homogeneity of variance. Information shared was not significant (Levene statistic = 1.080; df = 1,24; p = 0.309), indicating an equality of variance in the data. To determine the normality of the data, the Shapiro–Wilk test was used on each treatment. Information shared was not significant ( p > 0.05) in all treatments, indicating normality of the data. Thus, the assumptions of the ANOVA test are met, so we did not use a Kruskal–Wallis test. Results are summarized in Table 2.
123
Virtual Team Decision-Making 883
Table 2 Achievement/attention prime results (Information shared)
n Mean SD ANOVA F (1,24) ANOVA p value
Achievement/attention 15 13.47 7.376 3.428 0.076 Neutral 11 19.27 8.580
A simple linear regression testing the effect of information sharing on decision quality was not significant ( p = 0.534). Because the data is not linear, we also used a Kendall’s tau correlation test, a common nonparametric alternative to linear regression, to see if there was a significant correlation between information sharing and decision quality. This result was also not statistically significant ( p = 0.417), indicating that even when team members shared more information, other elements of group information processing were not strong; participants did not fully integrate the information shared, and decision quality remained low.
3.4 Discussion
The results from the achievement and attention priming experiment did not support Hypothesis 1, which means that achievement and attention priming does not improve group decision-making. The positive emotions evoked by achievement priming may have affected individuals in some ways, but were not sufficient to cause a significant difference in overall group performance. The key question is: why didn’t achieve- ment and attention priming have an effect? We hypothesized that this priming would increase motivation and attention to information, but it did not. Priming did not lead to increased sharing of information, and even when team members shared more informa- tion for any reason, other team members did not integrate that information to make a quality decision. It could be that the achievement priming encouraged team members to behave in a more individualistic manner to “achieve” more; that is, it encouraged them to become more anchored on their original decisions and focus more on what they already knew, actually reinforcing the confirmation bias, rather than consider the new information received from other team members.
How can we encourage team members to think more about what others contribute? Prior research in individual decision making has found self-blame regret priming to induce counter factual thinking (Reb and Connolly 2009; Zeelenberg and Pieters 2007). Counter factual thinking is the process of actively challenging the facts you currently have; that is, second-guessing what you know and asking yourself what if the facts you have are not true. This seedling of doubt that is planted in your mind causes you to ask questions that consider possibilities other than the initial position you first held. Counter-factual thinking would result in seeking more information, which would lead to more informed decision-making and better decisions. Although its influence may induce negative emotions, regret priming has been found to improve individual decision-making (Reb and Connolly 2009; Zeelenberg and Pieters 2007). We next describe a study we conducted to explore the effects of a negative prime, regret, on group performance.
123
884 V. L. Bartelt et al.
4 Study 2: Regret Priming
4.1 Hypothesis Development
Regret is a counterfactual, or negative, cognitively-based emotional experience which results from visualizing a better situation if an alternate decision had been made (Gilbert et al. 2004; Reb and Connolly 2009; Zeelenberg and Pieters 2007). Regret usually involves some sort of self-berating due to wishing that the alternate decision had been made (Reb and Connolly 2009; Zeelenberg 1999). Regret is often associated with a feeling of self-blame—a distinguishing factor between regret and disappointment (Gilbert et al. 2004; Zeelenberg et al. 1998).
Research has begun to examine the role of negative emotions in the decision- making process, especially regret (Connolly and Zeelenberg 2002). Research has found anticipated regret to affect individual decision-making (Connolly and Zeelenberg 2002; Zeelenberg 1999). When individual decision makers do not consider alternate outcomes, a series of poor decision-making typically ensues (Reb and Connolly 2009). People prefer to avoid future regret (Reb 2008; Reb and Connolly 2009; Wroe et al. 2004), and especially avoid regret-inducing feedback (Reb and Connolly 2009; Zeelenberg and Beattie 1997; Zeelenberg et al. 1996). People even prefer to forego the possibility of positive outcomes in their desire to avoid negative experiences (Reb and Connolly 2009; Taylor 1991).
Individuals who want to minimize the experience of regret about a future outcome often expend greater cognitive attention during the decision-making process (Connolly and Zeelenberg 2002; Reb 2008; Reb and Connolly 2009; Simonson 1992). Because individuals would like to avoid feeling regret in the future, they use more careful cognitive processes during decision-making, increasing attention to information in order to ensure that they do not lose key information that could result in a wrong decision. Self-blame regret may cognitively trigger participants to pay attention to and more thoroughly consider new information proposed by others during the decision- making process. As a result, regret priming has improved individual decision-making (Reb and Connolly 2009).
Regret priming techniques have been used to increase the desire to read and consider available information. These techniques encourage individuals to engage in hypothet- ical thinking (Byrne and Girotto 2009), where they consider situations in which they wished they had behaved differently (Kahneman and Miller 1986; Wong et al. 2009). For example, prior research involving a decision task with monetary incentives found self-blame regret to improve decision quality (Reb and Connolly 2009). In that study, those primed with self-blame regret accepted more feedback and paid attention to it, which led to better decisions (Reb and Connolly 2009).
Since prior literature has found regret priming to improve individual decision- making ability by increasing attention during the process (Byrne and Girotto 2009; Connolly and Zeelenberg 2002; Wong et al. 2009), it follows that regret priming should improve virtual team decision-making as well by affecting the cognition of team members so that they pay more attention to key information, again as depicted in Fig. 1.
123
Virtual Team Decision-Making 885
Hypothesis 2 Individual team member exposure to regret priming prior to team decision-making will improve decision quality.
4.2 Methodology
We conducted a second lab experiment to test the effect of regret priming on virtual team decision-making.
4.2.1 Participants
Participants were 200 undergraduate business students from a large state university assigned to 40 five-person teams. There were 20 teams in the neutral prime treatment, and 20 teams in the regret prime treatment. All participants received extra credit for their participation. Demographic information for Study 2 was not available, but such information is likely very similar to the participants of Study 1.
4.2.2 Task
The experiment used the same task as outlined in Sect. 3.2.2. All teams again selected exactly three candidates to admit.
4.2.3 Treatments
In this experiment, participants played a computer game modeled after the Scrambled Sentence Test (SST), as described in Sect. 3.2.3. However, instead of using words related to achievement and attention, the version of the game used for Study 2 included regret words drawn from Reb and Connolly (2009). Regret words, using synonyms related to “regret” and “remorse,” were used to put participants in this mindset. The set of neutral words used for the neutral treatment was the same as used for the control group in Study 1. The full list of priming words can be found in the appendix.
4.2.4 Dependent Variable
As in Study 1, decision quality was determined for each team based on the correct set of candidates who were accepted to the university.
4.2.5 Procedures
The same procedures were followed for this experiment as those used in Study 1, as described in Sect. 3.2.5.
4.3 Results
ANOVA analysis showed that the regret priming treatment had no significant effect on decision quality (F (1,38) = 0.066, p = 0.798). We again tested whether the data met
123
886 V. L. Bartelt et al.
Table 3 Regret prime results (Number of correct decisions)
n Mean SD ANOVA F (1,38) ANOVA p value
Kruskal–Wallis p value
Regret 20 3.30 1.174 0.066 0.0798 0.813 Neutral 20 3.20 1.281
Table 4 Regret prime results (Information shared)
n Mean SD ANOVA F (1,38) ANOVA p value
Kruskal–Wallis p value
Regret 20 41.60 20.699 7.074 0.011 0.050 Neutral 20 27.75 10.672
the assumptions of an ANOVA test. First, Levene’s test was run to test homogeneity of variance on the dependent variable, decision quality. Decision quality was not significant (Levene statistic = 0.036; df = 1,38; p = 0.852), indicating an equality of variance in the data. To determine the normality of the data, the Shapiro–Wilk test was used on each treatment. Decision quality was found to be significant ( p < 0.01) in all treatments, indicating that the data was not normal. The results of the Kruskal–Wallis test were not statistically significant ( p = 0.813), again indicating no difference in decision quality between groups. Therefore, Hypothesis 2 is not supported. Results are summarized in Table 3.
We again conducted a post-hoc analysis of the transcripts to count the amount of information contributed to the discussion. An ANOVA indicates that the amount of information shared in the primed groups was significantly higher than the information shared in control groups (F = 7.074; df = 1,38; p = 0.011). We next tested whether the data met the assumptions of an ANOVA test in order to confirm these results. First, Levene’s test was run to test homogeneity of variance. Information shared was significant (Levene statistic = 21.922; df = 1,38; p < 0.001), indicating a violation of the equality of variance assumption. To determine the normality of the data, the Shapiro–Wilk test was used on each treatment. Information shared was not significant ( p= 0.113) in the control groups, indicating normality of the data. However, in the primed groups, information shared was significant ( p = 0.009) indicating lack of normality. The Kruskal–Wallis test was performed as an alternative to ANOVA. Results were statistically significant ( p = 0.050), confirming the difference between groups. Results are summarized in Table 4.
A simple linear regression testing the effect of information sharing on decision quality was not significant ( p = 0.329). Because the data is not linear, we also used a Kendall’s tau correlation test, a common nonparametric alternative to linear regression, to see if there was a significant correlation between information sharing and decision quality. This result was also not statistically significant ( p = 0.495), indicating that even though the prime caused some change at the individual level, the group level processing of information that was shared was not affected.
123
Virtual Team Decision-Making 887
4.4 Discussion
Although prior research has found regret priming to affect individual decision-making (Reb and Connolly 2009), this study shows that this priming had a different effect on teams. It increased the amount of information contributed to the discussions, but it had no impact on decision quality. The prime was strong enough to affect individual behavior, but not strong enough to combat the cognitive biases and complex processes of information processing in a group decision-making task.
We conclude that regret priming may not be an appropriate prime for improving team decision quality because of its negative effect on emotion. It may be that nega- tive emotion escalates during team discussion, more so than during individual decision making. When all team members are primed negatively, it may be that the negative emotions feed the discussion and the negative contributions build on each other, inten- sifying the negative tone. This negativity may therefore be reinforced and become stronger in team discussions than in individual decision making. This strong negative tone may have a detrimental impact on team decision making (Baumann and Kuhl 2005) that interferes with the counter factual thinking that is triggered in individual decision making.
5 Discussion
5.1 Comparison to Previous Research
A key reason that virtual teams often make poor decisions is that individuals within teams fail to consider unique information provided by others (Heninger et al. 2006; Hilmer and Dennis 2001). This may be due to the dual task interference that is cre- ated when participants attempt to both contribute information to discussions and read the large volume of information contributed by others (Heninger et al. 2006). This interference and resulting cognitive load may increase confirmation bias, which occurs when team members seek information that supports their initial pre-discussion individual decisions, rather than fully considering information that challenges those pre-discussion decisions (Ask and Granhag 2005). For these reasons, we aimed to understand whether achievement/attention and/or regret priming could affect indi- vidual cognition in such a way that individuals would pay attention to and use the information provided by other team members to improve group decision making.
Both types of priming have been successful in research on individuals (Bargh et al. 2001; Reb and Connolly 2009), and achievement priming has been shown to improve the performance of electronic brainstorming groups (Dennis et al. 2012). Some exam- ples of previous research where priming has been successful in these areas are shown in Table 5. The examples of individual-level priming in the table include only those studies that have used regret or achievement as priming concepts—there are hundreds of individual-level priming studies on other concepts being primed. However, the table shows all known team-level priming studies, and highlights the need for research on priming in group decision-making.
123
888 V. L. Bartelt et al.
Table 5 Examples of previous priming research by level of analysis and task
Individual level Group level
Brainstorming Stajkovic et al. (2006) Dennis et al. (2012) Achievement prime Achievement prime Delivered via SST Delivered via SST
Shantz and Latham (2009) Achievement prime Delivered via pictures
Decision making Bargh et al. (2001) None Achievement prime Delivered via SST
Galinsky and Moskowitz (2000) Regret prime Delivered via scenarios
Reb and Connolly (2009) Regret prime Monetary delivery
This study was the first to explore the effects of priming on virtual team decision- making. While the results were not statistically significant, this study helps to inform future research by explaining key processes and issues that must be addressed and giving an example of how priming studies can be carried out for group decision- making tasks.
5.2 Alternative Explanations of Results
Based on the results of two experiments, we conclude that achievement/attention priming and regret priming do not significantly improve group decision-making. Non- significant results are often not published because they do not present a clear story (Browman 1999). Nonetheless, results that fail to confirm theoretically based hypothe- ses can be important because they challenge existing theory, whether to suggest its revision or to point out important boundary conditions (Allchin 1999). Thus, the key questions following from our two studies are: Why did individual priming not improve group decision making in these initial experiments? How can priming be refined to have an effect? What is different between group brainstorming and group decision-making, and between individual decision-making and group decision-making that caused prim- ing to have no impact? In the section below, we outline six plausible reasons for our results.
The first possible reason may be that priming influences individual performance (and by extension, group performance in additive tasks that are essentially a sum of individual performance), but does not as easily affect performance when team members must work together to develop a consensus. Research shows that virtual teams have varying success in electronic settings depending upon the task (Kerr and Murthy 2004; Dennis et al. 2001; Santanen et al. 2004). Thus, priming and other effects of individual cognition also may have differing results. In a study where achievement priming was used at the group level (Dennis et al. 2012), participants performed a brainstorming
123
Virtual Team Decision-Making 889
task. Brainstorming is an additive task (Steiner 1972) in which group performance is largely a function of the sum of individual performance (i.e., the number of ideas produced by a group is dependent on the sum of ideas produced by individuals). Prior research has identified social loafing as a common deterrent during brainstorming tasks (Shepherd et al. 1995-1996), yet the additive nature of brainstorming tasks means that if individual performance improves and an individual contributes one additional idea, then the overall group performance improves (assuming that the idea does not inhibit the production of ideas by other group members). If priming was successful on only some individuals in the group (or even one individual), the group would still have a higher number of ideas generated overall. This straightforward effect of individual priming for group brainstorming is not as simple in group decision-making.
A second possible reason for the lack of impact on team decision-making may be that the priming techniques were not very strong. For decision-making tasks, it is important for all members of the group to pay attention to key information and arrive at the correct decision. Thus it could be that if priming is not effective for most group members, it may have limited effects on group performance for tasks that require reaching a consensus.
A third possible reason is that the primes we used caused unintended effects on the decision-making process. For instance, it is possible that multiple people interacting in a regret mindset caused the discussion to be too critical, and thus the group was not cohesive enough to reach better decisions. Conversely, the regret prime might have triggered empathy with the candidates not chosen, making it harder for participants to make choice. Likewise, multiple people interacting in an achievement mindset might induce a focus on individual achievement rather than team consensus and thus team members may have failed to focus on others’ comments. Also, the individual achieve- ment may have inadvertently sparked a spirit of competition between team members.
A fourth possible reason why individual priming was not effective in group decision- making is that we may not have selected the proper primes. Because of the complex nature of decision-making as compared to individual decision-making or group brain- storming tasks, it may be that only particular primes work. Achievement/attention priming and regret priming emphasize the importance of comprehending key informa- tion but neglect the importance of organizing information to reach consensus among group members on the shared information. However, the key to high quality team decision-making, also the goal of group collaboration, is organizing shared informa- tion according to its importance and building consensus among group members.
Fifth, the priming we selected may have reduced individuals’ confidence, either by using negative emotions in Study 2, or by focusing attention on others, thereby reducing confidence in self, in Study 1. Coupled with prior findings indicating that collaborative technology lessens confidence in team decisions (Credé and Sniezek 2003), the additional reduction of confidence levels due to priming may have affected team decision quality to a greater extent than during individual decision-making. It is possible that implementing a positive prime that is conducive for thoughtfulness, such as accountability or personal responsibility, may improve both confidence and team decision quality.
Finally, it is possible that the way the prime was delivered may not have been effective for the purposes of this study. The computer game we used to deliver the
123
890 V. L. Bartelt et al.
Scrambled Sentence Test may not have been an effective priming delivery vehicle for group decision-making tasks. We chose text words as the priming technique because they are close to the modality of interest (typed text) and are simple to execute. During the Scrambled Sentence Test, the prime is delivered subconsciously by using a conscious task (Bargh and Chartrand 2000; Srull and Wyer 1979). The prime is also delivered semantically by word association (Bargh and Chartrand 2000). This type of prime may not have had as pronounced an effect during the team decision-making task. It is possible that other types of priming delivery methods would be more effective for team decision-making.
5.3 Implications for Future Research
More research needs to be devoted to overall virtual team decision-making to better understand what factors influence decision quality. First, it is possible that individual team members may have reacted differently to the primes. Different personalities have been affected differently by priming. Extroverts were more affected by incentive moti- vation and were also found to be more affected by positive priming (Robinson et al. 2010). Other individual differences play a role in priming effects. In an experiment about social judgment, it was found that people with a high need for cognition were greater affected by subtle priming (Petty et al. 2008). Subtle priming was more effec- tive than blatant priming because those with a high need for cognition had a greater tendency to overanalyze situations. Due to greater cognitive resources devoted to the task, they were able to determine the prime if it was too obvious. If the same prime is given to each team member, possible differences in individual reactions to the prime may produce inconsistencies at the group level.
A type of prime may be needed that specifically targets individual’s recall and memory. Over the years, experiments have studied the effect of priming on memory and recall (Graf et al. 1982; Jacoby and Dallas 1981; Tulving et al. 1982). It is possible that either of these types of priming would be more beneficial to group decision-making abilities.
Second, it is possible that the general team atmosphere and dynamics were not beneficial to achieving optimal decisions. The primes we used were chosen based on their effects on individual decision-making abilities (Reb and Connolly 2009; Bargh et al. 2001) and group brainstorming (Dennis et al. 2012). Yet, other priming words have been found to affect behavior and persuasion and may be more appropriate for group interactions. Prior research has found words like ‘partner’ primed feelings of trust in comparison to the word ‘opponent’ (Burnham et al. 2000). Additionally, priming for goal-relevant cognition was found to affect persuasion (Strahan et al. 2002). Thus, a different type of priming that more appropriately affects group decision- making processes may be needed.
Currently, priming experiments have explored group cohesion (Pendry and Carrick 2001; Pichon et al. 2007) and social norms (Blair and Banaji 1996; Otten and Wentura 1999). Prior research has found that those given the “conformity” prime were more likely to conform to the group than those who were given a neutral prime (Pendry and Carrick 2001). Those with the “anarchy” prime reacted similarly to those who performed the task in isolation, and were less likely to conform to group pressures
123
Virtual Team Decision-Making 891
(Pendry and Carrick 2001). These individual-level primes were found to be effective on changing group cohesion. However, none has done an analysis at the group level. It is possible that certain individual primes work differently in group situations and should be modified for this intent. Thus, one possible direction for future research is identifying the correct mechanism of priming that influences group decision-making. For instance, a team that is more competitive may result in better decisions than a team that is more cooperative (Montoya-Weiss et al. 2001). Conversely, social sensitivity has been found to be a key factor in group decision making, at least for face-to-face teams (Woolley et al. 2010). Perhaps priming competition or social sensitivity could improve performance.
It would also be interesting to see if group decision-making would improve if team members were given different primes. In this way, each team member would be approaching one another from a different mindset. This may counter the effects of groupthink by causing team members to have a heightened awareness of various mentalities.
Third, although the priming we used did not affect decision quality, it is important to consider participants’ mindsets during the experiment, especially during individual tasks when priming has been found to be effective (Reb and Connolly 2009). A neutral- izing prime may need to be introduced prior to running experiments to ensure that each person is operating from an intended mindset. Also, because priming effects have not been considered in IS research, results from previous experiments need to be revisited to ensure consistency of participants’ mindsets before the experiment commences.
According to Bargh and Chartrand (2000), the effect of the priming often lasts 10 min after the prime. We had our participants begin the task immediately after priming ended, but the group discussion did not start until 4 min later. Future research could change the order of presentation, so that the group discussion begins immediately after the priming task.
Since regret priming triggers a heightened emotional state (Larsen and Ketelaar 1991), conversations in the priming treatments have elicited more emotionally charged content. Analytical software tools like Linguistic Inquiry and Word Count could be used to determine the amount of emotional and cognitive processes that may have affected the priming treatments. Some prior research shows that negative emotions could impair decision-making abilities (Baumann and Kuhl 2005). If greater negative emotional content is found during the team discussions during the priming treatment, it is possible that these emotions are impairing decision-making abilities. Team dis- cussions may intensify negative mindsets to a debilitating degree in comparison to the effect of the negative prime during individual decision-making. Future research invok- ing regret priming could also assess the mood of the subjects pre- and post-priming to better understand the effects on emotion.
Fourth, other research methods such as qualitative data may help to provide insights on how priming affects team members’ mindsets and the behaviors that ensue. Alter- nately, brain studies could be performed to determine what is taking place in the brain throughout the decision-making process (Dimoka et al. 2012). Different brain functioning like working memory, emotions, and attention could be monitored. It is possible that particular moments in the decision-making process are more memo- rable than others. This could affect decision-making abilities. It is also possible that
123
892 V. L. Bartelt et al.
attention could decrease as the discussion continues, and this could ultimately impair decision-making abilities. Based on these revealing results, different communication tool interventions could be implemented to combat the potential pitfalls during the decision-making process.
Fifth, another type of prime delivery mechanism other than the computer game version of the Scrambled Sentence Test (SST) may be more appropriate for team deci- sions. The SST is a type of implicit word-association prime (Bargh and Chartrand 2000). Our goal was to stimulate increased cognition, primarily with regard to typed text. Words of text are semantic and cognitive, whereas images are more emotional. The idea is to invoke the semantic concepts connected to these words into working memory. We chose text words because they are linked to these cognitive, semantic concepts, and because they are simple to execute. However, explicit primes may be more effective due to the sensory areas that are involved, which may be more appealing to the emotions and team dynamics. Prior research has found contextual (Meyers-Levy and Zhu 2007) and material primes (Kay et al. 2004) to affect decision-making which may have implications for the design of 3D virtual worlds. For instance, ceiling height variations in architectural designs primed consumers to process information differ- ently (Meyers-Levy and Zhu 2007). Based on ceiling height, perceptions of freedom or confinement caused consumers to choose relational or item-specific processing, respectively (Meyers-Levy and Zhu 2007). Additionally, presenting participants with business-related objects in the room caused those to perceive games to be more com- petitive and also affected the amount of money that the participants proposed to keep for themselves (Kay et al. 2004). Seeing an image of a woman winning a race caused employees to more effectively brainstorm due to the activation of the achievement concept (Shantz and Latham 2009). Would these effects also apply to virtual worlds?
5.4 Ethical Consideration
A final consideration of this research study is the ethical issues associated with deliber- ately manipulating people through subconscious means. We found that regret priming changed the way team members interacted with each other (though participants likely did not notice this change in behavior). Researchers and practitioners should fully evaluate and discuss the ethics of deploying such a technique in the field—that is, outside of a research laboratory.
The critical issue is to consider whether it is ethical to subconsciously induce changes in behavior that participants are not aware of, even though the change is for the better (in that it increased the amount of information exchanged in some cases). We recommend that well-defined rules or procedures be developed and put in place to regulate the usage of any form of priming, especially negative priming, before putting it in practice in the field. Our participants gave informed consent to participate in a research study, although they remained unaware of its intended and actual effects, even after the study. If we were to deploy priming in the field (separate and distinct from a research project), it may be wise to advise participants of what is going on and obtain their informed consent to being subconsciously manipulated.
123
Virtual Team Decision-Making 893
6 Conclusion
This research explored the possibility of improving virtual team decision-making performance through priming. Although priming has been successful in individual and group-brainstorming tasks, priming did not significantly influence decision quality in two separate experiments of virtual team decision-making.
Based on the results of our studies, we were able to gain key insights that will inform future research in this area. Such research is needed to better understand the effects of priming at the team level. First, we demonstrated that the priming techniques and words used in individual-level and group brainstorming studies were not effective in the same form for decision-making groups. Future researchers will need to be more creative and thoughtful in designing primes to work for decision-making groups. Second, we provide discussion and interpretation of the reasons that priming in decision-making groups is different than other situations where priming has been successful. We hope that future studies will take into account this discussion when considering alternative ways to prime decision-making groups.
Acknowledgments The authors would like to thank Rosh Dhanawade for his assistance in generating potential attention priming words and collecting data during Study 1.
References
Allchin D (1999) Negative results as positive knowledge, and zeroing in on significant problems. Mar Ecol 793 Prog Ser 191:303–305 http://www.int-res.com/articles/theme/m191p301.pdf .
Antunes P, Ferreira A (2011) Developing collaboration awareness support from a cognitive perspective. In: Proceedings of the 44th annual hawaii international conference on system sciences, January 4–7, 2011, Computer Society Press, pp 1–10
Ask K, Granhag PA (2005) Motivational sources of confirmation bias in criminal investigations: the need for cognitive closure. J Investig Psychol Offender Profiling 2(1):43–63
Bargh JA, Chartrand TL (2000) A practical guide to priming and automaticity research. In: Reis H, Judd C (eds) Handbook of research methods in social psychology. Cambridge University Press, New York, pp 253–285
Bargh JA, Gollwitzer PM, Lee-Chai A, Barndollar K, Trötschel R (2001) The automated will: nonconscious activation and pursuit of behavioral goals. J Pers Soc Psychol 81(6):1014–1027
Baumann N, Kuhl J (2005) Positive affect and flexibility: overcoming the precedence of global over local processing of visual information. Motiv Emot 29(2):123–134
Bell BS, Kozlowski SWJ (2002) A typology of virtual teams: implications for effective leadership. Group Organ Manag 27(1):14–49
Blair IV, Banaji MR (1996) Automatic and controlled processes in stereotype priming. J Pers Soc Psychol 70(6):1142–1163
Bradley MM, Lang PJ (1999) Affective norms for english words (ANEW): instruction manual and affective ratings. Technical Report C-1. The Center for Research in Psychophysiology, University of Florida
Briggs RO, de Vreede GJ, Nunamaker JF (2004) Collaboration engineering with thinklets to pursue sustained success with group support systems. J Manag Inf Syst 19(4):31–64
Browman HI (1999) Negative results. Mar Ecol Prog Ser 191: 301–302. http://www.int-res.com/articles/ theme/m191p301.pdf
Burnham T, McCabe K, Smith VL (2000) Friend-or-foe intentionality priming in an extensive form trust game. J Econ Behav Organ 43(1):57–73
Byrne RMJ, Girotto V (2009) Cognitive processes in counterfactual thinking. In: Markman KD, Klein WMP, Surh JA (eds) Handbook of imagination and mental simulation. Psychology Press, New York, pp 151–160
123
894 V. L. Bartelt et al.
Chalfoun P, Frasson C (2011) Subliminal cues while teaching: HCI technique for enhanced learning. Adv Hum-Comput Interact 2011:1–15
Chudoba KM, Wynn E, Lu M, Watson-Manheim MB (2005) How virtual are we? measuring virtuality and understanding its impact in a global organization. Inf Syst J 15(4):279–306
Cohen SG, Bailey DE (1997) What makes teams work: group effectiveness research from the shop floor to the executive suite. J Manag 23(3):239–290
Connolly T, Reb J (2003) Omission bias in vaccination decisions: where’s the ’omission’? Where’s the ’bias’? Organ Behav Hum Decis Process 91(2):186–202
Connolly T, Zeelenberg M (2002) Regret in decision making. Curr Dir Psychol Sci 11(6):212–216 Credé M, Sniezek JA (2003) Group judgment processes and outcomes in video-conferencing versus face-
to-face groups. Int J Hum-Comput Stud 59(6):875–897 Curseu PL, Schruijer S (2008) The effects of framing on inter-group negotiation. Group Decis Negot
17(4):347–362 Dean JW Jr, Sharfman MP (1993) Procedural rationality in the strategic decision making process. J Manag
Stud 30(4):587–610 Dean JW Jr, Sharfman MP (1996) Does decision process matter? A study of strategic decision-making
effectiveness. Acad Manag J 39(2):368–396 DeCoster J, Claypool HM (2004) A meta-analysis of priming effects on impression formation supporting
a general model of information biases. Pers Soc Psychol Rev 8(1):2–27 Dennis AR (1996) Information exchange and use in group decision making: you can lead a group to
information, but you can’t make it think. MIS Q 20(4):433–455 Dennis AR, Hilmer KM, Taylor NJ (1997–1998) Information exchange and use in GSS and verbal group
decision making: effect of minority influence. J Manag Inf Syst 14(3):61–68 Dennis AR, Minas RK, Bhagwatwar A (2012) Sparking creativity: improving electronic brainstorming
with individual cognitive priming. In: Proceedings of the 45th annual Hawaii international conference on system sciences, January 4–7, 2012, Computer Society Press, pp 139–148
Dennis AR, Wixom BH, Vandenberg RJ (2001) Understanding fit and appropriation effects in group support systems via meta-analysis. MIS Q 25(2):167–193
Dimoka A, Banker RD, Benbasat I, Davis FD, Dennis AR, Gefen D, Gupta A, Ischebeck A, Kenning P, Pavlou PA, Müller-Putz G, Riedl R, vom Brocke J, Weber B (2012) On the use of neurophysiological tools in information systems research: Developing a research agenda for NeuroIS. MIS Q, forthcoming
Duncker K (1945) On problem solving. Psychological monographs. Am Psychol Assoc 58(5) Espinosa JA, Armour F, Boh WF (2011) The role of group cognition in enterprise architecting. Proceedings
of the 44th annual Hawaii international conference on system sciences, January 4–7, 2011, Computer Society Press, pp 1–10
Festinger L (1957) A theory of cognitive dissonance. Stanford University Press, Stanford Galinsky AD, Moskowitz GB (2000) Counterfactuals as behavioral primes: priming the simulation heuristic
and consideration of alternatives. J Exp Soc Psychol 36(4):384–409 Gilbert DT, Morewedge CK, Risen JL, Wilson TD (2004) Looking forward to looking backward: the
misprediction of regret. Assoc Psychol Sci 15(5):346–350 Glass GV (1966) Testing homogeneity of variances. Am Educ Res J 3(3):187–190 Graf P, Mandler G, Haden P (1982) Simulating amnesic symptoms in normal subjects. Science
218(4578):1243–1244 Graf P, Schacter DL (1985) Implicit and explicit memory for new associations in normal and amnesic
subjects. J Exp Psychol Learn Mem Cognit 11(3):501–518 Heninger WG, Dennis AR, Hilmer KM (2006) Individual cognition and dual-task interference in group
support systems. Inf Syst Res 17(4):415–424 Higgins ET, Chaires WM (1980) Accessibility of interrelational constructs: implications for stimulus encod-
ing and creativity. J Exp Soc Psychol 16(4):348–361 Hilmer KM, Dennis AR (2001) Stimulating thinking in decision making: cultivating better decisions with
groupware one individual at a time. J Manag Inf Syst 17(3):93–114 Jacoby LL, Dallas M (1981) On the relationship between autobiographical memory and perceptual learning.
J Exp Psychol Gen 110(3):306–340 Jonas E, Schulz-Hardt S, Frey D, Thelen N (2001) Confirmation bias in sequential information search
after preliminary decisions:an expansion of dissonance theoretical research on selective exposure to information. J Pers Soc Psychol 80(4):557–571
Kahai SS, Carroll E, Jestice R (2007) Team collaboration in virtual worlds. SIGMIS Database 38(4):61–68
123
Virtual Team Decision-Making 895
Kahneman D, Miller D (1986) Norm theory: comparing reality to its alternatives. Psychol Rev 93(2):136– 153
Kay AC, Wheeler SC, Bargh JA, Ross L (2004) Material priming: the influence of mundane physical objects on situational construal and competitive behavioral choice. Organ Behav Hum Decis Process 95(1):83–96
Kerr DS, Murthy US (2004) Divergent and convergent idea generation in teams: a comparison of computer- mediated and face-to-face communication. Group Decis Negot 13(4):381–399
Kersten GE, Cray D (1996) Perspectives on representation and analysis of negotiation: towards cognitive support systems. Group Decis Negot 5(4–6):433–467
Kolfschoten GL (2011) Cognitive load in collaboration—brainstorming. In: Proceedings of the 44th annual Hawaii international conference on system sciences, January 4–7, 2011, Computer Society Press, pp 1–9
Kolfschoten GL, Lee C (2010) Self-guiding group support systems: can groups use GSS without support? In: Proceedings of the 43rd annual Hawaii international conference on system sciences, January 5–8, 2010, Computer Society Press, pp 1–6
Kolfschoten GL, Vreede G-J, Pietron LR (2011) A training approach for the transition of repeatable col- laboration processes to practitioners. Group Decis Negot 20(3):347–371
Koriat A, Feuerstein N (1976) The recovery of incidentally acquired information. Acta Psychol 40(6):463– 464
Larsen RJ, Ketelaar T (1991) Personality and susceptibility to positive and negative emotional states. J Pers Soc Psychol 61(1):132–140
Martin A, Chao LL (2001) Semantic memory and the brain: structure and processes. Curr Opin Neurobiol 11(2):194–201
Martz WB, Shepherd MM (2004) Group consensus: the impact of multiple dialogues. Group Decis Negot 13(4):315–325
McGrath JE (1991) Time, interaction, and performance (TIP): a theory of groups. Small Group Res 22(2):147–174
Meyers-Levy J, Zhu R (2007) The influence of ceiling height: the effect of priming on the type of processing that people use. J Consum Res 34(2):174–186
Montoya-Weiss MM, Massey AP, Song M (2001) Getting it together: temporal coordination and conflict management in global virtual teams. Acad Manag J 44(6):1251–1262
Nagasundaram M, Dennis AR (1993) When a group is not a group. Small Group Res 24(4):463–489 O’Leary D (2011) The emergence of individual knowledge in a group setting: mitigating cognitive fallacies.
Group Decis Negot 20(1):3–18 Otten S, Wentura D (1999) About the impact of automaticity in the minimal group paradigm: evidence from
affective priming tasks. J Soc Psychol 29(8):1049–1071 Pendry L, Carrick R (2001) Doing what the mob do: priming effects on conformity. Eur J Soc Psychol
31(1):83–92 Petty RE, DeMarree KG, Briñol P, Horcajo J, Strathman AJ (2008) Need for cognition can magnify or
attenuate priming effects in social judgment. Pers Soc Psychol Bull 34(7):900–912 Pichon I, Boccato G, Saroglou V (2007) Nonconscious influences of religion on prosociality: a priming
study. Eur J Soc Psychol 37(5):1032–1045 Powell CA (1994) Cognitive hurdles in the use of decision support systems to enhance problem understand-
ing. Group Decis Negot 3(4):413–421 Reb J (2008) Regret aversion and decision process quality: effects of regret salience on decision process
carefulness. Organ Behav Hum Decis Process 105(2):169–182 Reb J, Connolly T (2009) Myopic regret avoidance: feedback avoidance and learning in repeated decision
making. Organ Behav Hum Decis Process 109(2):182–189 Reinig B (2003) Toward an understanding of satisfaction with the process and outcomes of teamwork. J
Manag Inf Syst 19(4):65–83 Reinig B, Briggs RO, Shepherd MM, Yen J, Nunamaker JF, Jr (1995–1996) Affective reward and the
adoption of group support systems: productivity is not always enough. J Manag Inf Syst 12(3):171–185 Reinig B, Shin B (2002) The dynamic effects of group support systems on group meetings. J Manag Inf
Syst 19(2):303–325 Robert L, Dennis AR (2005) The paradox of richness: a cognitive model of media choice. IEEE Trans Prof
Commun 48(1):10–21
123
896 V. L. Bartelt et al.
Robinson MD, Moeller SK, Ode S (2010) Extraversion and reward-related processing: incentive motivation in affective priming tasks. Emotion 10(5):615–626
Santanen EL, Briggs RO, de Vreede GJ (2004) Causal relationships in creative problem solving: compaing faciliatation interventions for ideation. J Manag Inf Syst 20(4):167–197
Schacter DL (1987) Implicit memory: history and current status. J Exp Psychol Mem Learn Cognit 13(3):501–518
Schmidt JB, Montoya-Weiss MM, Massey AP (2001) New product development decision-making effec- tiveness: comparing individuals, face-to-face teams, and virtual teams. Decis Sci 32(4):575–600
Shantz A, Latham GP (2009) An exploratory field experiment of the effect of subconscious and conscious goals on employee performance. Organ Behav Hum Decis Process 109(1):9–17
Shepherd MM, Briggs RO, Reinig BA, Yen J, Nunamaker JR (1995–1996) Invoking social comparison to improve electronic brainstorming: Beyond anonymity. J Manag Inf Syst 12(3): 155–170
Simonson I (1992) The influence of anticipating regret and responsibility on purchase decisions. J Consum Res 19(1):105–118
Srull TK, Wyer RS Jr (1979) The role of category accessibility in the interpretation of information about persons: some determinants and implications. J Pers Soc Psychol 37(10):1660–1672
Stahl G (2006) Analyzing and designing the group cognition experience. Int J Co-op Inf Syst 15(2):157–178 Stajkovic AD, Locke EA, Blair ES (2006) A first examination of the relationships between primed subcon-
scious goals, assigned conscious goals, and task performance. J Appl Psychol 91(5):1172–1180 Stasser G (1992) Information salience and the discovery of hidden profiles by decision-making groups: a
thought experiment. Organ Behav Hum Decis Process 52(1):156–181 Steiner ID (1972) Group process and productivity. Academic Press, New York Strahan EJ, Spencer SJ, Zanna MP (2002) Subliminal priming and persuasion: striking while the iron is
hot. J Exp Soc Psychol 38(6):556–568 Taylor SE (1991) Asymmetric effects of positive and negative events: the mobilization-minimization hypoth-
esis. Psychol Bull 110(1):67–85 Tulving E, Schacter DL, Stark HA (1982) Priming effects in word-fragment completion are independent
of recognition memory. J Exp Psychol Learn Mem Cognit 8(4):336–342 Webster DM, Richter L, Kruglanski AW (1996) On leaping to conclusions when feeling tired: mental fatigue
effects on impressional primacy. J Exp Soc Psychol 32(2):181–195 Whitworth B, Gallupe B, McQueen R (2000) A cognitive three-process model of computer-mediated group
interaction. Group Decis Negot 9(5):431–456 Woolley AW, Chabris CF, Pentland A, Hashmi N, Malone TW (2010) Evidence for a collective intelligence
factor in the performance of human groups, Science 330 (29 October):686–688 Wong EM, Galinsky AD, Kray LJ (2009) The counterfactual mind-set: a decade of research. In: Markman
KD, Klein WMP, Surh JA (eds) Handbook of imagination and mental simulation. Psychology Press, New York, pp 161–174
Wroe AL, Turner N, Salkovskis PM (2004) Understanding and predicting parental decisions about early childhood immunizations. Health Psychol 23(1):33–41
Zeelenberg M (1999) The use of crying over spilled milk: a note on the rationality and functionality of regret. Philos Psycol 12(3):325–340
Zeelenberg M, Beattie J (1997) Consequences of regret aversion 2: additional evidence for effects of feedback on decision making. Organ Behav Hum Decis Process 72(1):63–78
Zeelenberg M, Beattie J, van der Pligt J, de Vries NK (1996) Consequences of regret aversion: effects of expected feedback on risky decision making. Organ Behav Hum Decis Process 65(2):148–158
Zeelenberg M, Pieters R (2007) A theory of regret regulation 1.0. J Consum Psychol 17(1):3–18 Zeelenberg M, van Dijk WW, Manstead ASR, van der Pligt J (1998) The experience of regret and disap-
pointment. Cognit Emot 12(2):221–230
123
Copyright of Group Decision & Negotiation is the property of Springer Science & Business Media B.V. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.
Copyright of McKinsey Quarterly is the property of McKinsey & Company, Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.
/
Organizational Culture
The Discipline of Teams
by Jon R. Katzenbach and Douglas K. Smith
From the Magazine (March–April 1993)
Summary. Groups don’t become teams because that is what someone calls them.
Nor do teamwork values by themselves ensure team performance. So what is a
team? How can managers know when the team option makes sense and what they
can do to ensure...
Early in the 1980s, Bill Greenwood and a small band of rebel
railroaders took on most of the top management of Burlington
Northern and created a multibillion-dollar business in “piggybacking”
rail services despite widespread resistance, even resentment, within
the company. The Medical Products Group at Hewlett-Packard owes
most of its leading performance to the remarkable efforts of Dean
Morton, Lew Platt, Ben Holmes, Dick Alberting, and a handful of their
colleagues who revitalized a health care business that most others had
written off. At Knight-Ridder, Jim Batten’s “customer obsession”
vision took root at the Tallahassee Democrat when 14 frontline
enthusiasts turned a charter to eliminate errors into a mission of
major change and took the entire paper along with them.
more
/
Such are the stories and the work of teams—real teams that perform,
not amorphous groups that we call teams because we think that the
label is motivating and energizing. The difference between teams that
perform and other groups that don’t is a subject to which most of us
pay far too little attention. Part of the problem is that team is a word
and concept so familiar to everyone.
Or at least that’s what we thought when we set out to do research for
our book The Wisdom of Teams. We wanted to discover what
differentiates various levels of team performance, where and how
teams work best, and what top management can do to enhance their
effectiveness. We talked with hundreds of people on more than 50
different teams in 30 companies and beyond, from Motorola and
Hewlett-Packard to Operation Desert Storm and the Girl Scouts.
We found that there is a basic discipline that makes teams work. We
also found that teams and good performance are inseparable; you
cannot have one without the other. But people use the word team so
loosely that it gets in the way of learning and applying the discipline
that leads to good performance. For managers to make better
decisions about whether, when, or how to encourage and use teams,
it is important to be more precise about what a team is and what it
isn’t.
Most executives advocate teamwork. And they should. Teamwork
represents a set of values that encourage listening and responding
constructively to views expressed by others, giving others the benefit
of the doubt, providing support, and recognizing the interests and
achievements of others. Such values help teams perform, and they
also promote individual performance as well as the performance of an
entire organization. But teamwork values by themselves are not
exclusive to teams, nor are they enough to ensure team performance.
Nor is a team just any group working together. Committees, councils,
and task forces are not necessarily teams. Groups do not become
teams simply because that is what someone calls them. The entire
/
work force of any large and complex organization is never a team, but
think about how often that platitude is offered up.
To understand how teams deliver extra performance, we must
distinguish between teams and other forms of working groups. That
distinction turns on performance results. A working group’s
performance is a function of what its members do as individuals. A
team’s performance includes both individual results and what we call
“collective work-products.” A collective work-product is what two or
more members must work on together, such as interviews, surveys,
or experiments. Whatever it is, a collective work-product reflects the
joint, real contribution of team members.
Working groups are both prevalent and effective in large
organizations where individual accountability is most important. The
best working groups come together to share information,
perspectives, and insights; to make decisions that help each person do
his or her job better; and to reinforce individual performance
standards. But the focus is always on individual goals and
accountabilities. Working-group members don’t take responsibility
for results other than their own. Nor do they try to develop
incremental performance contributions requiring the combined work
of two or more members.
Teams differ fundamentally from working groups because they
require both individual and mutual accountability. Teams rely on
more than group discussion, debate, and decision; on more than
sharing information and best practice performance standards. Teams
produce discrete work-products through the joint contributions of
their members. This is what makes possible performance levels
greater than the sum of all the individual bests of team members.
Simply stated, a team is more than the sum of its parts.
The first step in developing a disciplined approach to team
management is to think about teams as discrete units of performance
and not just as positive sets of values. Having observed and worked
/
with scores of teams in action, both successes and failures, we offer
the following. Think of it as a working definition or, better still, an
essential discipline that real teams share.
A team is a small number of people with complementary skills who
are committed to a common purpose, set of performance goals, and
approach for which they hold themselves mutually accountable.
The essence of a team is common commitment. Without it, groups
perform as individuals; with it, they become a powerful unit of
collective performance. This kind of commitment requires a purpose
in which team members can believe. Whether the purpose is to
“transform the contributions of suppliers into the satisfaction of
customers,” to “make our company one we can be proud of again,” or
to “prove that all children can learn,” credible team purposes have an
element related to winning, being first, revolutionizing, or being on
the cutting edge.
Teams develop direction, momentum, and commitment by working
to shape a meaningful purpose. Building ownership and commitment
to team purpose, however, is not incompatible with taking initial
direction from outside the team. The often-asserted assumption that
a team cannot “own” its purpose unless management leaves it alone
actually confuses more potential teams than it helps. In fact, it is the
exceptional case—for example, entrepreneurial situations—when a
team creates a purpose entirely on its own.
Most successful teams shape their purposes in response to a demand
or opportunity put in their path, usually by higher management. This
helps teams get started by broadly framing the company’s
performance expectation. Management is responsible for clarifying
the charter, rationale, and performance challenge for the team, but
management must also leave enough flexibility for the team to
develop commitment around its own spin on that purpose, set of
specific goals, timing, and approach.
/
The best teams invest a tremendous amount of time and effort
exploring, shaping, and agreeing on a purpose that belongs to them
both collectively and individually. This “purposing” activity continues
throughout the life of the team. In contrast, failed teams rarely
develop a common purpose. For whatever reason—an insufficient
focus on performance, lack of effort, poor leadership—they do not
coalesce around a challenging aspiration.
The best teams also translate their common purpose into specific
performance goals, such as reducing the reject rate from suppliers by
50% or increasing the math scores of graduates from 40% to 95%.
Indeed, if a team fails to establish specific performance goals or if
those goals do not relate directly to the team’s overall purpose, team
members become confused, pull apart, and revert to mediocre
performance. By contrast, when purposes and goals build on one
another and are combined with team commitment, they become a
powerful engine of performance.
Transforming broad directives into specific and measurable
performance goals is the surest first step for a team trying to shape a
purpose meaningful to its members. Specific goals, such as getting a
new product to market in less than half the normal time, responding
to all customers within 24 hours, or achieving a zero-defect rate
while simultaneously cutting costs by 40%, all provide firm footholds
for teams. There are several reasons:
Specific team performance goals help to define a set of work-
products that are different both from an organizationwide mission
and from individual job objectives. As a result, such work-products
require the collective effort of team members to make something
specific happen that, in and of itself, adds real value to results. By
contrast, simply gathering from time to time to make decisions will
not sustain team performance.
The specificity of performance objectives facilitates clear
communication and constructive conflict within the team. When a
plant-level team, for example, sets a goal of reducing average
/
machine changeover time to two hours, the clarity of the goal
forces the team to concentrate on what it would take either to
achieve or to reconsider the goal. When such goals are clear,
discussions can focus on how to pursue them or whether to change
them; when goals are ambiguous or nonexistent, such discussions
are much less productive.
The attainability of specific goals helps teams maintain their focus
on getting results. A product-development team at Eli Lilly’s
Peripheral Systems Division set definite yardsticks for the market
introduction of an ultrasonic probe to help doctors locate deep
veins and arteries. The probe had to have an audible signal through
a specified depth of tissue, be capable of being manufactured at a
rate of 100 per day, and have a unit cost less than a pre-established
amount. Because the team could measure its progress against each
of these specific objectives, the team knew throughout the
development process where it stood. Either it had achieved its goals
or not.
As Outward Bound and other team-building programs illustrate,
specific objectives have a leveling effect conducive to team
behavior. When a small group of people challenge themselves to get
over a wall or to reduce cycle time by 50%, their respective titles,
perks, and other stripes fade into the background. The teams that
succeed evaluate what and how each individual can best contribute
to the team’s goal and, more important, do so in terms of the
performance objective itself rather than a person’s status or
personality.
Specific goals allow a team to achieve small wins as it pursues its
broader purpose. These small wins are invaluable to building
commitment and overcoming the inevitable obstacles that get in
the way of a long-term purpose. For example, the Knight-Ridder
team mentioned at the outset turned a narrow goal to eliminate
errors into a compelling customer-service purpose.
/
Performance goals are compelling. They are symbols of
accomplishment that motivate and energize. They challenge the
people on a team to commit themselves, as a team, to make a
difference. Drama, urgency, and a healthy fear of failure combine to
drive teams who have their collective eye on an attainable, but
challenging, goal. Nobody but the team can make it happen. It is
their challenge.
Not All Groups Are Teams: How to Tell the Difference
The combination of purpose and specific goals is essential to
performance. Each depends on the other to remain relevant and vital.
Clear performance goals help a team keep track of progress and hold
itself accountable; the broader, even nobler, aspirations in a team’s
purpose supply both meaning and emotional energy.
Goals help a team keep track of
progress, while a broader purpose
supplies meaning and emotional
energy.
/
Virtually all effective teams we have met, read or heard about, or been
members of have ranged between 2 and 25 people. For example, the
Burlington Northern “piggybacking” team had 7 members, the
Knight-Ridder newspaper team, 14. The majority of them have
numbered less than 10. Small size is admittedly more of a pragmatic
guide than an absolute necessity for success. A large number of
people, say 50 or more, can theoretically become a team. But groups
of such size are more likely to break into subteams rather than
function as a single unit.
Why? Large numbers of people have trouble interacting
constructively as a group, much less doing real work together. Ten
people are far more likely than fifty are to work through their
individual, functional, and hierarchical differences toward a common
plan and to hold themselves jointly accountable for the results.
Large groups also face logistical issues, such as finding enough
physical space and time to meet. And they confront more complex
constraints, like crowd or herd behaviors, which prevent the intense
sharing of viewpoints needed to build a team. As a result, when they
try to develop a common purpose, they usually produce only
superficial “missions” and well-meaning intentions that cannot be
translated into concrete objectives. They tend fairly quickly to reach a
point when meetings become a chore, a clear sign that most of the
people in the group are uncertain why they have gathered, beyond
some notion of getting along better. Anyone who has been through
one of these exercises knows how frustrating it can be. This kind of
failure tends to foster cynicism, which gets in the way of future team
efforts.
In addition to finding the right size, teams must develop the right mix
of skills, that is, each of the complementary skills necessary to do the
team’s job. As obvious as it sounds, it is a common failing in potential
teams. Skill requirements fall into three fairly self-evident categories:
/
Technical or functional expertise. It would make little sense for a group
of doctors to litigate an employment discrimination case in a court of
law. Yet teams of doctors and lawyers often try medical malpractice
or personal injury cases. Similarly, product-development groups that
include only marketers or engineers are less likely to succeed than
those with the complementary skills of both.
Problem-solving and decision-making skills. Teams must be able to
identify the problems and opportunities they face, evaluate the
options they have for moving forward, and then make necessary
trade-offs and decisions about how to proceed. Most teams need
some members with these skills to begin with, although many will
develop them best on the job.
Interpersonal skills. Common understanding and purpose cannot arise
without effective communication and constructive conflict, which in
turn depend on interpersonal skills. These include risk taking, helpful
criticism, objectivity, active listening, giving the benefit of the doubt,
and recognizing the interests and achievements of others.
Obviously, a team cannot get started without some minimum
complement of skills, especially technical and functional ones. Still,
think about how often you’ve been part of a team whose members
were chosen primarily on the basis of personal compatibility or
formal position in the organization, and in which the skill mix of its
members wasn’t given much thought.
For HBR Subscribers
Must Reads on Leading Teams
HBR’s definitive articles on managing teams will help you
understand how teams have come to the fore in organizations
today—and how best to lead them.
Show Reading List
/
It is equally common to overemphasize skills in team selection. Yet in
all the successful teams we’ve encountered, not one had all the
needed skills at the outset. The Burlington Northern team, for
example, initially had no members who were skilled marketers
despite the fact that their performance challenge was a marketing
one. In fact, we discovered that teams are powerful vehicles for
developing the skills needed to meet the team’s performance
challenge. Accordingly, team member selection ought to ride as much
on skill potential as on skills already proven.
Effective teams develop strong commitment to a common approach,
that is, to how they will work together to accomplish their purpose.
Team members must agree on who will do particular jobs, how
schedules will be set and adhered to, what skills need to be developed,
how continuing membership in the team is to be earned, and how the
group will make and modify decisions. This element of commitment
is as important to team performance as is the team’s commitment to
its purpose and goals.
Agreeing on the specifics of work and how they fit together to
integrate individual skills and advance team performance lies at the
heart of shaping a common approach. It is perhaps self-evident that
an approach that delegates all the real work to a few members (or
staff outsiders), and thus relies on reviews and meetings for its only
“work together” aspects, cannot sustain a real team. Every member of
a successful team does equivalent amounts of real work; all members,
including the team leader, contribute in concrete ways to the team’s
work-product. This is a very important element of the emotional logic
that drives team performance.
When individuals approach a team situation, especially in a business
setting, each has preexisting job assignments as well as strengths and
weaknesses reflecting a variety of backgrounds, talents, personalities,
and prejudices. Only through the mutual discovery and
understanding of how to apply all its human resources to a common
purpose can a team develop and agree on the best approach to achieve
its goals. At the heart of such long and, at times, difficult interactions
/
lies a commitment-building process in which the team candidly
explores who is best suited to each task as well as how individual
roles will come together. In effect, the team establishes a social
contract among members that relates to their purpose and guides and
obligates how they must work together.
No group ever becomes a team until it can hold itself accountable as a
team. Like common purpose and approach, mutual accountability is a
stiff test. Think, for example, about the subtle but critical difference
between “the boss holds me accountable” and “we hold ourselves
accountable.” The first case can lead to the second; but without the
second, there can be no team.
Companies like Hewlett-Packard and Motorola have an ingrained
performance ethic that enables teams to form “organically” whenever
there is a clear performance challenge requiring collective rather than
individual effort. In these companies, the factor of mutual
accountability is commonplace. “Being in the boat together” is how
their performance game is played.
At its core, team accountability is about the sincere promises we make
to ourselves and others, promises that underpin two critical aspects
of effective teams: commitment and trust. Most of us enter a potential
team situation cautiously because ingrained individualism and
experience discourage us from putting our fates in the hands of
others or accepting responsibility for others. Teams do not succeed by
ignoring or wishing away such behavior.
Think about the difference between
“the boss holds me accountable” and
“we hold ourselves accountable.”
/
Mutual accountability cannot be coerced any more than people can be
made to trust one another. But when a team shares a common
purpose, goals, and approach, mutual accountability grows as a
natural counterpart. Accountability arises from and reinforces the
time, energy, and action invested in figuring out what the team is
trying to accomplish and how best to get it done.
When people work together toward a common objective, trust and
commitment follow. Consequently, teams enjoying a strong common
purpose and approach inevitably hold themselves responsible, both as
individuals and as a team, for the team’s performance. This sense of
mutual accountability also produces the rich rewards of mutual
achievement in which all members share. What we heard over and
over from members of effective teams is that they found the
experience energizing and motivating in ways that their “normal”
jobs never could match.
On the other hand, groups established primarily for the sake of
becoming a team or for job enhancement, communication,
organizational effectiveness, or excellence rarely become effective
teams, as demonstrated by the bad feelings left in many companies
after experimenting with quality circles that never translated
“quality” into specific goals. Only when appropriate performance
goals are set does the process of discussing the goals and the
approaches to them give team members a clearer and clearer choice:
they can disagree with a goal and the path that the team selects and,
in effect, opt out, or they can pitch in and become accountable with
and to their teammates.
The discipline of teams we’ve outlined is critical to the success of all
teams. Yet it is also useful to go one step further. Most teams can be
classified in one of three ways: teams that recommend things, teams
that make or do things, and teams that run things. In our experience,
each type faces a characteristic set of challenges.
/
Teams that recommend things. These teams include task forces, project
groups, and audit, quality, or safety groups asked to study and solve
particular problems. Teams that recommend things almost always
have predetermined completion dates. Two critical issues are unique
to such teams: getting off to a fast and constructive start and dealing
with the ultimate handoff required to get recommendations
implemented.
The key to the first issue lies in the clarity of the team’s charter and
the composition of its membership. In addition to wanting to know
why and how their efforts are important, task forces need a clear
definition of whom management expects to participate and the time
commitment required. Management can help by ensuring that the
team includes people with the skills and influence necessary for
crafting practical recommendations that will carry weight throughout
the organization. Moreover, management can help the team get the
necessary cooperation by opening doors and dealing with political
obstacles.
Missing the handoff is almost always the problem that stymies teams
that recommend things. To avoid this, the transfer of responsibility
for recommendations to those who must implement them demands
top management’s time and attention. The more top managers
assume that recommendations will “just happen,” the less likely it is
that they will. The more involvement task force members have in
implementing their recommendations, the more likely they are to get
implemented.
To the extent that people outside the task force will have to carry the
ball, it is critical to involve them in the process early and often,
certainly well before recommendations are finalized. Such
involvement may take many forms, including participating in
interviews, helping with analyses, contributing and critiquing ideas,
and conducting experiments and trials. At a minimum, anyone
responsible for implementation should receive a briefing on the task
force’s purpose, approach, and objectives at the beginning of the
effort as well as regular reviews of progress.
/
Teams that make or do things. These teams include people at or near
the front lines who are responsible for doing the basic manufacturing,
development, operations, marketing, sales, service, and other value-
adding activities of a business. With some exceptions, like new-
product development or process design teams, teams that make or do
things tend to have no set completion dates because their activities
are ongoing.
In deciding where team performance might have the greatest impact,
top management should concentrate on what we call the company’s
“critical delivery points,” that is, places in the organization where the
cost and value of the company’s products and services are most
directly determined. Such critical delivery points might include
where accounts get managed, customer service performed, products
designed, and productivity determined. If performance at critical
delivery points depends on combining multiple skills, perspectives,
and judgments in real time, then the team option is the smartest one.
When an organization does require a significant number of teams at
these points, the sheer challenge of maximizing the performance of so
many groups will demand a carefully constructed and performance-
focused set of management processes. The issue here for top
management is how to build the necessary systems and process
supports without falling into the trap of appearing to promote teams
for their own sake.
Where does the team option make
sense? Where the cost and value of
the company’s products and services
are most directly determined.
/
The imperative here, returning to our earlier discussion of the basic
discipline of teams, is a relentless focus on performance. If
management fails to pay persistent attention to the link between
teams and performance, the organization becomes convinced that
“this year we are doing ‘teams.’” Top management can help by
instituting processes like pay schemes and training for teams
responsive to their real time needs, but more than anything else, top
management must make clear and compelling demands on the teams
themselves and then pay constant attention to their progress with
respect to both team basics and performance results. This means
focusing on specific teams and specific performance challenges.
Otherwise “performance,” like “team,” will become a cliché.
Teams that run things. Despite the fact that many leaders refer to the
group reporting to them as a team, few groups really are. And groups
that become real teams seldom think of themselves as a team because
they are so focused on performance results. Yet the opportunity for
such teams includes groups from the top of the enterprise down
through the divisional or functional level. Whether it is in charge of
thousands of people or a handful, as long as the group oversees some
business, ongoing program, or significant functional activity, it is a
team that runs things.
The main issue these teams face is determining whether a real team
approach is the right one. Many groups that run things can be more
effective as working groups than as teams. The key judgment is
whether the sum of individual bests will suffice for the performance
challenge at hand or whether the group must deliver substantial
Top management’s focus on teams
and performance challenges will
keep both “performance” and
“team” from becoming clichés.
/
incremental performance requiring real, joint work-products.
Although the team option promises greater performance, it also
brings more risk, and managers must be brutally honest in assessing
the trade-offs.
Members may have to overcome a natural reluctance to trust their
fate to others. The price of faking the team approach is high: at best,
members get diverted from their individual goals, costs outweigh
benefits, and people resent the imposition on their time and
priorities; at worst, serious animosities develop that undercut even
the potential personal bests of the working-group approach.
Working groups present fewer risks. Effective working groups need
little time to shape their purpose since the leader usually establishes
it. Meetings are run against well-prioritized agendas. And decisions
are implemented through specific individual assignments and
accountabilities. Most of the time, therefore, if performance
aspirations can be met through individuals doing their respective jobs
well, the working-group approach is more comfortable, less risky, and
less disruptive than trying for more elusive team performance levels.
Indeed, if there is no performance need for the team approach, efforts
spent to improve the effectiveness of the working group make much
more sense than floundering around trying to become a team.
Building Team Performance
Although there is no guaranteed how-to recipe for building
team performance, we observed a number of approaches
shared by many successful teams. Establish urgency,
demanding performance ...
/
Having said that, we believe the extra level of performance teams can
achieve is becoming critical for a growing number of companies,
especially as they move through major changes during which
company performance depends on broad-based behavioral change.
When top management uses teams to run things, it should make sure
the team succeeds in identifying specific purposes and goals.
This is a second major issue for teams that run things. Too often, such
teams confuse the broad mission of the total organization with the
specific purpose of their small group at the top. The discipline of
teams tells us that for a real team to form there must be a team
purpose that is distinctive and specific to the small group and that
requires its members to roll up their sleeves and accomplish
something beyond individual end-products. If a group of managers
looks only at the economic performance of the part of the
organization it runs to assess overall effectiveness, the group will not
have any team performance goals of its own.
While the basic discipline of teams does not differ for them, teams at
the top are certainly the most difficult. The complexities of long-term
challenges, heavy demands on executive time, and the deep-seated
individualism of senior people conspire against teams at the top. At
the same time, teams at the top are the most powerful. At first we
thought such teams were nearly impossible. That is because we were
looking at the teams as defined by the formal organizational
structure, that is, the leader and all his or her direct reports equals the
team. Then we discovered that real teams at the top were often
smaller and less formalized—Whitehead and Weinberg at Goldman,
Sachs; Hewlett and Packard at HP; Krasnoff, Pall, and Hardy at Pall
Corp; Kendall, Pearson, and Calloway at Pepsi; Haas and Haas at Levi
Strauss; Batten and Ridder at Knight-Ridder. They were mostly twos
and threes, with an occasional fourth.
/
Nonetheless, real teams at the top of large, complex organizations are
still few and far between. Far too many groups at the top of large
corporations needlessly constrain themselves from achieving real
team levels of performance because they assume that all direct
reports must be on the team; that team goals must be identical to
corporate goals; that the team members’ positions rather than skills
determine their respective roles; that a team must be a team all the
time; and that the team leader is above doing real work.
As understandable as these assumptions may be, most of them are
unwarranted. They do not apply to the teams at the top we have
observed, and when replaced with more realistic and flexible
assumptions that permit the team discipline to be applied, real team
performance at the top can and does occur. Moreover, as more and
more companies are confronted with the need to manage major
change across their organizations, we will see more real teams at the
top.
We believe that teams will become the primary unit of performance in
high-performance organizations. But that does not mean that teams
will crowd out individual opportunity or formal hierarchy and
process. Rather, teams will enhance existing structures without
replacing them. A team opportunity exists anywhere hierarchy or
organizational boundaries inhibit the skills and perspectives needed
for optimal results. Thus, new-product innovation requires
preserving functional excellence through structure while eradicating
functional bias through teams. And frontline productivity requires
preserving direction and guidance through hierarchy while drawing
on energy and flexibility through self-managing teams.
Teams at the top are the most
difficult but also the most powerful.
/
We are convinced that every company faces specific performance
challenges for which teams are the most practical and powerful
vehicle at top management’s disposal. The critical role for senior
managers, therefore, is to worry about company performance and the
kinds of teams that can deliver it. This means that top management
must recognize a team’s unique potential to deliver results, deploy
teams strategically when they are the best tool for the job, and foster
the basic discipline of teams that will make them effective. By doing
so, top management creates the kind of environment that enables
team as well as individual and organizational performance.
Jon R. Katzenbach is a founder and co-leader of
the Katzenbach Center at PwC, which focuses on
cultural and leadership joint research within client
situations. He has authored several articles and
books, including The Critical Few, The Wisdom of
Teams and Leading Outside the Lines.
Douglas K. Smith is Chairman of the Board of
The Rapid Results Institute as well as the author
of On Value and Values: Thinking Differently About
We In An Age Of Me.
JK
DS
1
This text was adapted by The Saylor Foundation under a Creative
Commons Attribution-NonCommercial-ShareAlike 3.0 License without
attribution as requested by the work’s original creator or licensee.
2
Chapter 15 Organizational Culture
L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to do the following:
1. Describe organizational culture and why it is important for an organization.
2. Understand the dimensions that make up a company’s culture.
3. Distinguish between weak and strong cultures.
4. Understand factors that create culture.
5. Understand how to change culture.
6. Understand how organizational culture and ethics relate.
7. Understand cross-cultural differences in organizational culture.
Customer Service Culture: The Case of Nordstrom Nordstrom Inc. is a Seattle-based department store rivaling the likes of Saks
Fifth Avenue, Neiman Marcus, and Bloomingdale’s. Nordstrom is a Hall of
Fame member of Fortune Magazine’s “100 Best Companies to Work for” list,
including being ranked 34th in 2008. Nordstrom is known for its quality
apparel, upscale environment, and generous employee rewards. However,
what Nordstrom is most famous for is its delivery of customer service above
and beyond the norms of the retail industry. Stories about Nordstrom service
abound. For example, according to one story the company confirms, in 1975
Nordstrom moved into a new location that had formerly been a tire store. A
customer brought a set of tires into the store to return them. Without a word
about the mix-up, the tires were accepted and the customer was fully refunded
the purchase price. In a different story, a customer tried on several pairs of
shoes but failed to find the right combination of size and color. As she was
about to leave, the clerk called other Nordstrom stores, but could only locate
3
the right pair at Macy’s, a nearby competitor. The clerk had Macy’s ship the
shoes to the customer’s home at Nordstrom’s expense. In a third story, a
customer describes wandering into a Portland, Oregon Nordstrom looking for
an Armani tuxedo for his daughter’s wedding. The sales associate took his
measurements just in case one was found. The next day, the customer got a
phone call, informing him that the tux was available. When pressed, she
revealed that using her connections she found one in New York, had it put on
a truck destined to Chicago, and dispatched someone to meet the truck in
Chicago at a rest stop. The next day she shipped the tux to the customer’s
address, and the customer found that the tux had already been altered for his
measurements and was ready to wear. What is even more impressive about
this story is that Nordstrom does not sell Armani tuxedos.
How does Nordstrom persist in creating these stories? If you guessed that they
have a large number of rules and regulations designed to emphasize quality in
customer service, you’d be wrong. In fact, the company gives employees a 5½-
inch by 7½-inch card as the employee handbook. On one side of the card, the
company welcomes employees to Nordstrom, states that their number one
goal is to provide outstanding customer service, and for this they have only
one rule. On the other side of the card, the single rule is stated: “Use good
judgment in all situations.” By leaving it in the hands of Nordstrom associates,
the company seems to have managed to empower employees who deliver
customer service heroics every day.
Sources: Adapted from information in Chatman, J. A., & Eunyoung Cha, S.
(2003). Leading by leveraging culture. California Management Review, 45,
19–34; McCarthy, P. D., & Spector, R. (2005). The Nordstrom way to customer
service excellence: A handbook for implementing great service in your
organization. Hoboken, NJ: John Wiley; Pfeffer, J. (2005). Producing
4
sustainable competitive advantage through the effective management of
people. Academy of Management Executive, 19, 95–106.
Just like individuals, you can think of organizations as having their own
personalities, more typically known as organizational cultures. The opening
case illustrates that Nordstrom is a retailer with the foremost value of
making customers happy. At Nordstrom, when a customer is unhappy,
employees are expected to identify what would make the person satisfied,
and then act on it, without necessarily checking with a superior or
consulting a lengthy policy book. If they do not, they receive peer pressure
and may be made to feel that they let the company down. In other words,
this organization seems to have successfully created a service culture.
Understanding how culture is created, communicated, and changed will
help you be more effective in your organizational life. But first, let’s define
organizational culture.
15.1 Understanding Organizational Culture
L E A R N I N G O B J E C T I V E S
1. Define organizational culture.
2. Understand why organizational culture is important.
3. Understand the different levels of organizational culture.
What Is Organizational Culture?
Organizational culture refers to a system of shared assumptions, values, and
beliefs that show employees what is appropriate and inappropriate
behavior. [1]
These values have a strong influence on employee behavior as well
as organizational performance. In fact, the term organizational culture was
5
made popular in the 1980s when Peters and Waterman’s best-selling book In
Search of Excellence made the argument that company success could be
attributed to an organizational culture that was decisive, customer oriented,
empowering, and people oriented. Since then, organizational culture has
become the subject of numerous research studies, books, and articles.
However, organizational culture is still a relatively new concept. In contrast to
a topic such as leadership, which has a history spanning several centuries,
organizational culture is a young but fast-growing area within organizational
behavior.
Culture is by and large invisible to individuals. Even though it affects all
employee behaviors, thinking, and behavioral patterns, individuals tend to
become more aware of their organization’s culture when they have the
opportunity to compare it to other organizations. If you have worked in
multiple organizations, you can attest to this. Maybe the first organization you
worked was a place where employees dressed formally. It was completely
inappropriate to question your boss in a meeting; such behaviors would only
be acceptable in private. It was important to check your e-mail at night as well
as during weekends or else you would face questions on Monday about where
you were and whether you were sick. Contrast this company to a second
organization where employees dress more casually. You are encouraged to
raise issues and question your boss or peers, even in front of clients. What is
more important is not to maintain impressions but to arrive at the best
solution to any problem. It is widely known that family life is very important,
so it is acceptable to leave work a bit early to go to a family event. Additionally,
you are not expected to do work at night or over the weekends unless there is a
deadline. These two hypothetical organizations illustrate that organizations
have different cultures, and culture dictates what is right and what is
acceptable behavior as well as what is wrong and unacceptable.
6
Why Does Organizational Culture Matter?
An organization’s culture may be one of its strongest assets, as well as its
biggest liability. In fact, it has been argued that organizations that have a rare
and hard-to-imitate organizational culture benefit from it as a competitive
advantage. [2]
In a survey conducted by the management consulting firm Bain
& Company in 2007, worldwide business leaders identified corporate culture
as important as corporate strategy for business success. [3]
This comes as no
surprise to many leaders of successful businesses, who are quick to attribute
their company’s success to their organization’s culture.
Culture, or shared values within the organization, may be related to
increased performance. Researchers found a relationship between
organizational cultures and company performance, with respect to success
indicators such as revenues, sales volume, market share, and stock
prices. [4]
At the same time, it is important to have a culture that fits with the
demands of the company’s environment. To the extent shared values are
proper for the company in question, company performance may benefit from
culture. [5]
For example, if a company is in the high-tech industry, having a
culture that encourages innovativeness and adaptability will support its
performance. However, if a company in the same industry has a culture
characterized by stability, a high respect for tradition, and a strong preference
for upholding rules and procedures, the company may suffer as a result of its
culture. In other words, just as having the “right” culture may be a competitive
advantage for an organization, having the “wrong” culture may lead to
performance difficulties, may be responsible for organizational failure, and
may act as a barrier preventing the company from changing and taking risks.
7
In addition to having implications for organizational performance,
organizational culture is an effective control mechanism for dictating
employee behavior. Culture is in fact a more powerful way of controlling and
managing employee behaviors than organizational rules and regulations.
When problems are unique, rules tend to be less helpful. Instead, creating a
culture of customer service achieves the same result by encouraging
employees to think like customers, knowing that the company priorities in this
case are clear: Keeping the customer happy is preferable to other concerns
such as saving the cost of a refund.
Levels of Organizational Culture
Organizational culture consists of some aspects that are relatively more
visible, as well as aspects that may lie below one’s conscious awareness.
Organizational culture can be thought of as consisting of three interrelated
levels. [6]
At the deepest level, below our awareness lie basic assumptions. Assumptions
are taken for granted, and they reflect beliefs about human nature and reality.
At the second level, values exist. Values are shared principles, standards, and
goals. Finally, at the surface we have artifacts, or visible, tangible aspects of
organizational culture. For example, in an organization one of the basic
assumptions employees and managers share might be that happy employees
benefit their organizations. This assumption could translate into values such
as social equality, high quality relationships, and having fun. The artifacts
reflecting such values might be an executive “open door” policy, an office
layout that includes open spaces and gathering areas equipped with pool
tables, and frequent company picnics in the workplace. For example, Alcoa
Inc. designed their headquarters to reflect the values of making people more
visible and accessible, and to promote collaboration. [7]
In other words,
8
understanding the organization’s culture may start from observing its
artifacts: the physical environment, employee interactions, company policies,
reward systems, and other observable characteristics. When you are
interviewing for a position, observing the physical environment, how people
dress, where they relax, and how they talk to others is definitely a good start to
understanding the company’s culture. However, simply looking at these
tangible aspects is unlikely to give a full picture of the organization. An
important chunk of what makes up culture exists below one’s degree of
awareness. The values and, at a deeper level, the assumptions that shape the
organization’s culture can be uncovered by observing how employees interact
and the choices they make, as well as by inquiring about their beliefs and
perceptions regarding what is right and appropriate behavior.
K E Y T A K E A W A Y
Organizational culture is a system of shared assumptions, values, and beliefs that
help individuals within an organization understand which behaviors are and are not
appropriate within an organization. Cultures can be a source of competitive
advantage for organizations. Strong organizational cultures can be an organizing as
well as a controlling mechanism for organizations. And finally, organizational culture
consists of three levels: assumptions, which are below the surface, values, and
artifacts.
E X E R C I S E S
1. Why do companies need culture?
2. Give an example of an aspect of company culture that is a strength and one that is a
weakness.
3. In what ways does culture serve as a controlling mechanism?
4. If assumptions are below the surface, why do they matter?
5. Share examples of artifacts you have noticed at different organizations.
9
15.2 Characteristics of Organizational Culture
L E A R N I N G O B J E C T I V E S
1. Understand different dimensions of organizational culture.
2. Understand the role of culture strength.
3. Explore subcultures within organizations.
Dimensions of Culture
Which values characterize an organization’s culture? Even though culture may
not be immediately observable, identifying a set of values that might be used
to describe an organization’s culture helps us identify, measure, and manage
culture more effectively. For this purpose, several researchers have proposed
various culture typologies. One typology that has received a lot of research
attention is the organizational culture profile (OCP), in which culture is
represented by seven distinct values. [1]
We will describe the OCP as well as
two additional dimensions of organizational culture that are not represented
in that framework but are important dimensions to consider: service culture
and safety culture.
Figure 15.4 Dimensions of Organizational Culture Profile (OCP)
10
Source: Adapted from information in O’Reilly, C. A., III, Chatman, J. A., &
Caldwell, D. F. (1991). People and organizational culture: A profile
comparison approach to assessing person-organization fit. Academy of
Management Journal, 34, 487–516.
Innovative Cultures
According to the OCP framework, companies that have innovative cultures are
flexible and adaptable, and experiment with new ideas. These companies are
characterized by a flat hierarchy in which titles and other status distinctions
tend to be downplayed. For example, W. L. Gore & Associates Inc. is a
company with innovative products such as GORE-TEX® (the breathable
fabric that is windproof and waterproof), Glide dental floss, and Elixir guitar
strings, earning the company the distinction of being elected as the most
innovative company in the United States by Fast Company magazine in 2004.
W. L. Gore consistently manages to innovate and capture the majority of
market share in a wide variety of industries, in large part due to its unique
11
culture. In this company, employees do not have bosses in the traditional
sense, and risk taking is encouraged by celebrating failures as well as
successes. [2]
Companies such as W. L. Gore, Genentech Inc., and Google also
encourage their employees to take risks by allowing engineers to devote 20%
of their time to projects of their own choosing. [3]
Aggressive Cultures
Companies with aggressive cultures value competitiveness and outperforming
competitors: By emphasizing this, they may fall short in the area of corporate
social responsibility. For example, Microsoft Corporation is often identified as
a company with an aggressive culture. The company has faced a number of
antitrust lawsuits and disputes with competitors over the years. In aggressive
companies, people may use language such as “We will kill our competition.” In
the past, Microsoft executives often made statements such as “We are going to
cut off Netscape’s air supply.…Everything they are selling, we are going to give
away.” Its aggressive culture is cited as a reason for getting into new legal
troubles before old ones are resolved. [4]
Recently, Microsoft founder Bill Gates
established the Bill & Melinda Gates foundation and is planning to devote his
time to reducing poverty around the world. [5]
It will be interesting to see
whether he will bring the same competitive approach to the world of
philanthropy.
Outcome-Oriented Cultures
The OCP framework describes outcome-oriented cultures as those that
emphasize achievement, results, and action as important values. A good
example of an outcome-oriented culture may be Best Buy Co. Inc. Having a
culture emphasizing sales performance, Best Buy tallies revenues and other
relevant figures daily by department. Employees are trained and mentored to
sell company products effectively, and they learn how much money their
12
department made every day. [6]
In 2005, the company implemented a results
oriented work environment (ROWE) program that allows employees to work
anywhere and anytime; they are evaluated based on results and fulfillment of
clearly outlined objectives. [7]
Outcome-oriented cultures hold employees as
well as managers accountable for success and utilize systems that reward
employee and group output. In these companies, it is more common to see
rewards tied to performance indicators as opposed to seniority or loyalty.
Research indicates that organizations that have a performance-oriented
culture tend to outperform companies that are lacking such a culture. [8]
At the
same time, some outcome-oriented companies may have such a high drive for
outcomes and measurable performance objectives that they may suffer
negative consequences. Companies over rewarding employee performance
such as Enron Corporation and WorldCom experienced well-publicized
business and ethical failures. When performance pressures lead to a culture
where unethical behaviors become the norm, individuals see their peers as
rivals and short-term results are rewarded; the resulting unhealthy work
environment serves as a liability. [9]
Stable Cultures
Stable cultures are predictable, rule-oriented, and bureaucratic. These
organizations aim to coordinate and align individual effort for greatest levels
of efficiency. When the environment is stable and certain, these cultures may
help the organization be effective by providing stable and constant levels of
output. [10]
These cultures prevent quick action, and as a result may be a misfit
to a changing and dynamic environment. Public sector institutions may be
viewed as stable cultures. In the private sector, Kraft Foods Inc. is an example
of a company with centralized decision making and rule orientation that
suffered as a result of the culture-environment mismatch. [11]
Its bureaucratic
culture is blamed for killing good ideas in early stages and preventing the
13
company from innovating. When the company started a change program to
increase the agility of its culture, one of their first actions was to fight
bureaucracy with more bureaucracy: They created the new position of VP of
business process simplification, which was later eliminated. [12]
People-Oriented Cultures
People-oriented cultures value fairness, supportiveness, and respect for
individual rights. These organizations truly live the mantra that “people are
their greatest asset.” In addition to having fair procedures and management
styles, these companies create an atmosphere where work is fun and
employees do not feel required to choose between work and other aspects of
their lives. In these organizations, there is a greater emphasis on and
expectation of treating people with respect and dignity. [13]
One study of new
employees in accounting companies found that employees, on average, stayed
14 months longer in companies with people-oriented cultures. [14]
Starbucks
Corporation is an example of a people-oriented culture. The company pays
employees above minimum wage, offers health care and tuition
reimbursement benefits to its part-time as well as full-time employees, and
has creative perks such as weekly free coffee for all associates. As a result of
these policies, the company benefits from a turnover rate lower than the
industry average. [15]
The company is routinely ranked as one of the best places
to work by Fortune magazine.
Team-Oriented Cultures
Companies with team-oriented cultures are collaborative and emphasize
cooperation among employees. For example, Southwest Airlines Company
facilitates a team-oriented culture by cross-training its employees so that they
are capable of helping each other when needed. The company also places
emphasis on training intact work teams. [16]
Employees participate in twice
14
daily meetings named “morning overview meetings” (MOM) and daily
afternoon discussions (DAD) where they collaborate to understand sources of
problems and determine future courses of action. In Southwest’s selection
system, applicants who are not viewed as team players are not hired as
employees. [17]
In team-oriented organizations, members tend to have more
positive relationships with their coworkers and particularly with their
managers. [18]
Detail-Oriented Cultures
Organizations with detail-oriented cultures are characterized in the OCP
framework as emphasizing precision and paying attention to details. Such a
culture gives a competitive advantage to companies in the hospitality industry
by helping them differentiate themselves from others. For example, Four
Seasons Hotels Ltd. and the Ritz-Carlton Company LLC are among hotels who
keep records of all customer requests, such as which newspaper the guest
prefers or what type of pillow the customer uses. This information is put into a
computer system and used to provide better service to returning customers.
Any requests hotel employees receive, as well as overhear, might be entered
into the database to serve customers better. Recent guests to Four Seasons
Paris who were celebrating their 21st anniversary were greeted with a bouquet
of 21 roses on their bed. Such clear attention to detail is an effective way of
impressing customers and ensuring repeat visits. McDonald’s Corporation is
another company that specifies in detail how employees should perform their
jobs by including photos of exactly how French fries and hamburgers should
look when prepared properly. [19]
Service Culture
Service culture is not one of the dimensions of OCP, but given the importance
of the retail industry in the overall economy, having a service culture can make
15
or break an organization. Some of the organizations we have illustrated in this
section, such as Nordstrom, Southwest Airlines, Ritz-Carlton, and Four
Seasons are also famous for their service culture. In these organizations,
employees are trained to serve the customer well, and cross-training is the
norm. Employees are empowered to resolve customer problems in ways they
see fit. Because employees with direct customer contact are in the best
position to resolve any issues, employee empowerment is truly valued in these
companies. For example, Umpqua Bank, operating in the northwestern United
States, is known for its service culture. All employees are trained in all tasks to
enable any employee to help customers when needed. Branch employees may
come up with unique ways in which they serve customers better, such as
opening their lobby for community events or keeping bowls full of water for
customers’ pets. The branches feature coffee for customers, Internet kiosks,
and withdrawn funds are given on a tray along with a piece of chocolate. They
also reward employee service performance through bonuses and incentives. [20]
What differentiates companies with service culture from those without such a
culture may be the desire to solve customer-related problems proactively. In
other words, in these cultures employees are engaged in their jobs and
personally invested in improving customer experience such that they identify
issues and come up with solutions without necessarily being told what to do.
For example, a British Airways baggage handler noticed that first-class
passengers were waiting a long time for their baggage, whereas stand-by
passengers often received their luggage first. Noticing this tendency, a baggage
handler notified his superiors about this problem, along with the suggestion to
load first-class passenger luggage last. [21]
This solution was successful in
cutting down the wait time by half. Such proactive behavior on the part of
employees who share company values is likely to emerge frequently in
companies with a service culture.
16
Figure 15.6
The growth in the number of passengers flying with Southwest Airlines from
1973 until 2007. In 2007, Southwest surpassed American Airlines as the most
flown domestic airline. While price has played a role in this, their emphasis on
service has been a key piece of their culture and competitive advantage.
Source: Adapted from
http://upload.wikimedia.org/wikipedia/commons/6/69/Southwest-
airlines-passengers.jpg.
Safety Culture
Some jobs are safety sensitive. For example, logger, aircraft pilot, fishing
worker, steel worker, and roofer are among the top ten most dangerous jobs in
the United States. [22]
In organizations where safety-sensitive jobs are
performed, creating and maintaining a safety culture provides a competitive
advantage, because the organization can reduce accidents, maintain high
levels of morale and employee retention, and increase profitability by cutting
workers’ compensation insurance costs. Some companies suffer severe
consequences when they are unable to develop such a culture. For example,
17
British Petroleum experienced an explosion in their Texas City, Texas, refinery
in 2005, which led to the death of 15 workers while injuring 170. In December
2007, the company announced that it had already depleted the $1.6-billion
fund to be used in claims for this explosion. [23]
A safety review panel
concluded that the development of a safety culture was essential to avoid such
occurrences in the future. [24]
In companies that have a safety culture, there is a
strong commitment to safety starting at management level and trickling down
to lower levels. M. B. Herzog Electric Inc. of California, selected as one of
America’s safest companies by Occupational Hazards magazine in 2007, had
a zero accident rate for the past 3 years. The company uses safety training
programs tailored to specific jobs within the company, and all employees are
encouraged to identify all safety hazards they come across when they are
performing their jobs. They are also asked to play the role of an OSHA
(Occupational Safety and Health Administration) inspector for a day to
become more aware of the hidden dangers in the workplace. Managers play a
key role in increasing the level of safe behaviors in the workplace, because they
can motivate employees day-to-day to demonstrate safe behaviors and act as
safety role models. A recent study has shown that in organizations with a
safety culture, leaders encourage employees to demonstrate behaviors such as
volunteering for safety committees, making recommendations to increase
safety, protecting coworkers from hazards, whistleblowing, and in general
trying to make their jobs safer. [25]
Strength of Culture
A strong culture is one that is shared by organizational members. [26]
In other
words, if most employees in the organization show consensus regarding the
values of the company, it is possible to talk about the existence of a strong
culture. A culture’s content is more likely to affect the way employees think
and behave when the culture in question is strong. For example, cultural
18
values emphasizing customer service will lead to higher quality customer
service if there is widespread agreement among employees on the importance
of customer service-related values. [27]
It is important to realize that a strong culture may act as an asset or liability
for the organization, depending on the types of values that are shared. For
example, imagine a company with a culture that is strongly outcome oriented.
If this value system matches the organizational environment, the company
outperforms its competitors. On the other hand, a strong outcome-oriented
culture coupled with unethical behaviors and an obsession with quantitative
performance indicators may be detrimental to an organization’s effectiveness.
An extreme example of this dysfunctional type of strong culture is Enron.
A strong culture may sometimes outperform a weak culture because of the
consistency of expectations. In a strong culture, members know what is
expected of them, and the culture serves as an effective control mechanism on
member behaviors. Research shows that strong cultures lead to more stable
corporate performance in stable environments. However, in volatile
environments, the advantages of culture strength disappear. [28]
One limitation of a strong culture is the difficulty of changing a strong culture.
If an organization with widely shared beliefs decides to adopt a different set of
values, unlearning the old values and learning the new ones will be a
challenge, because employees will need to adopt new ways of thinking,
behaving, and responding to critical events. For example, the Home Depot
Inc. had a decentralized, autonomous culture where many business decisions
were made using “gut feeling” while ignoring the available data. When Robert
Nardelli became CEO of the company in 2000, he decided to change its
culture, starting with centralizing many of the decisions that were previously
left to individual stores. This initiative met with substantial resistance, and
19
many high-level employees left during his first year. Despite getting financial
results such as doubling the sales of the company, many of the changes he
made were criticized. He left the company in January 2007. [29]
A strong culture may also be a liability during a merger. During mergers and
acquisitions, companies inevitably experience a clash of cultures, as well as a
clash of structures and operating systems. Culture clash becomes more
problematic if both parties have unique and strong cultures. For example,
during the merger of Daimler AG with Chrysler Motors LLC to create
DaimlerChrysler AG, the differing strong cultures of each company acted as a
barrier to effective integration. Daimler had a strong engineering culture that
was more hierarchical and emphasized routinely working long hours. Daimler
employees were used to being part of an elite organization, evidenced by flying
first class on all business trips. On the other hand, Chrysler had a sales culture
where employees and managers were used to autonomy, working shorter
hours, and adhering to budget limits that meant only the elite flew first class.
The different ways of thinking and behaving in these two companies
introduced a number of unanticipated problems during the integration
process. [30]
Differences in culture may be part of the reason that, in the end,
the merger didn’t work out.
Do Organizations Have a Single Culture?
So far, we have assumed that a company has a single culture that is shared
throughout the organization. However, you may have realized that this is an
oversimplification. In reality there might be multiple cultures within any given
organization. For example, people working on the sales floor may experience a
different culture from that experienced by people working in the warehouse. A
culture that emerges within different departments, branches, or geographic
locations is called a subculture. Subcultures may arise from the personal
20
characteristics of employees and managers, as well as the different conditions
under which work is performed. Within the same organization, marketing and
manufacturing departments often have different cultures such that the
marketing department may emphasize innovativeness, whereas the
manufacturing department may have a shared emphasis on detail orientation.
In an interesting study, researchers uncovered five different subcultures
within a single police organization. These subcultures differed depending on
the level of danger involved and the type of background experience the
individuals held, including “crime-fighting street professionals” who did what
their job required without rigidly following protocol and “anti-military social
workers” who felt that most problems could be resolved by talking to the
parties involved. [31]
Research has shown that employee perceptions regarding
subcultures were related to employee commitment to the
organization. [32]
Therefore, in addition to understanding the broader
organization’s values, managers will need to make an effort to understand
subculture values to see its impact on workforce behavior and attitudes.
Moreover, as an employee, you need to understand the type of subculture in
the department where you will work in addition to understanding the
company’s overall culture.
Sometimes, a subculture may take the form of a counterculture. Defined as
shared values and beliefs that are in direct opposition to the values of the
broader organizational culture, [33]
countercultures are often shaped around a
charismatic leader. For example, within a largely bureaucratic organization,
an enclave of innovativeness and risk taking may emerge within a single
department. A counterculture may be tolerated by the organization as long as
it is bringing in results and contributing positively to the effectiveness of the
organization. However, its existence may be perceived as a threat to the
broader organizational culture. In some cases this may lead to actions that
21
would take away the autonomy of the managers and eliminate the
counterculture.
K E Y T A K E A W A Y
Culture can be understood in terms of seven different culture dimensions, depending
on what is most emphasized within the organization. For example, innovative
cultures are flexible and adaptable, and they experiment with new ideas, while
stable cultures are predictable, rule-oriented, and bureaucratic. Strong cultures can
be an asset or a liability for an organization but can be challenging to change.
Organizations may have subcultures and countercultures, which can be challenging
to manage.
E X E R C I S E S
1. Think about an organization you are familiar with. Based on the dimensions of OCP,
how would you characterize its culture?
2. Out of the culture dimensions described, which dimension do you think would lead
to higher levels of employee satisfaction and retention? Which one would be related
to company performance?
3. What are the pros and cons of an outcome-oriented culture?
4. When bureaucracies were first invented they were considered quite innovative. Do
you think that different cultures are more or less effective at different points in time
and in different industries? Why or why not?
5. Can you imagine an effective use of subcultures within an organization?
15.3 Creating and Maintaining Organizational Culture
L E A R N I N G O B J E C T I V E S
1. Understand how cultures are created.
22
2. Learn how to maintain a culture.
3. Recognize organizational culture signs.
How Are Cultures Created?
Where do cultures come from? Understanding this question is important so
that you know how they can be changed. An organization’s culture is shaped as
the organization faces external and internal challenges and learns how to deal
with them. When the organization’s way of doing business provides a
successful adaptation to environmental challenges and ensures success, those
values are retained. These values and ways of doing business are taught to new
members as the way to do business. [1]
Figure 15.8 Culture Creation and Maintenance
The factors that are most important in the creation of an organization’s culture
include founders’ values, preferences, and industry demands.
23
Founder’s Values
A company’s culture, particularly during its early years, is inevitably tied to the
personality, background, and values of its founder or founders, as well as their
vision for the future of the organization. This explains one reason why culture
is so hard to change: It is shaped in the early days of a company’s history.
When entrepreneurs establish their own businesses, the way they want to do
business determines the organization’s rules, the structure set-up in the
company, and the people they hire to work with them. As a case in point, some
of the existing corporate values of the ice cream company Ben & Jerry’s
Homemade Holdings Inc. can easily be traced to the personalities of its
founders Ben Cohen and Jerry Greenfield. In 1978, the two ex-hippie high
school friends opened up their first ice-cream shop in a renovated gas station
in Burlington, Vermont. Their strong social convictions led them to buy only
from the local farmers and devote a certain percentage of their profits to
charities. The core values they instilled in their business can still be observed
in the current company’s devotion to social activism and sustainability, its
continuous contributions to charities, use of environmentally friendly
materials, and dedication to creating jobs in low-income areas. Even though
the company was acquired by Unilever PLC in 2000, the social activism
component remains unchanged and Unilever has expressed its commitment to
maintaining it. [2]
There are many other examples of founders’ instilling their
own strongly held beliefs or personalities to the businesses they found. For
example, as mentioned earlier, Microsoft’s aggressive nature is often traced
back to Bill Gates and his competitiveness. According to one anecdote, his
competitive nature even extends to his personal life such that one of his
pastimes is to compete with his wife in solving identical jigsaw puzzles to see
who can finish faster. [3]
Similarly, Joseph Pratt, a history and management
professor, notes, “There definitely is an Exxon way. This is John D.
24
Rockefeller’s company, this is Standard Oil of New Jersey, this is the one that
is most closely shaped by Rockefeller’s traditions. Their values are very clear.
They are deeply embedded. They have roots in 100 years of corporate
history.” [4]
Founder values become part of the corporate culture to the degree they help
the company be successful. For example, the social activism of Ben & Jerry’s
was instilled in the company because founders strongly believed in these
issues. However, these values probably would not be surviving three decades
later if they had not helped the company in its initial stages. In the case of Ben
& Jerry’s, these charitable values helped distinguish their brand from larger
corporate brands and attracted a loyal customer base. Thus, by providing a
competitive advantage, these values were retained as part of the corporate
culture and were taught to new members as the right way to do business.
Similarly, the early success of Microsoft may be attributed to its relatively
aggressive corporate culture, which provided a source of competitive
advantage.
Industry Demands
While founders undoubtedly exert a powerful influence over corporate
cultures, the industry characteristics also play a role. Industry characteristics
and demands act as a force to create similarities among organizational
cultures. For example, despite some differences, many companies in the
insurance and banking industries are stable and rule oriented, many
companies in the high-tech industry have innovative cultures, and companies
in the nonprofit industry tend to be people oriented. If the industry is one with
a large number of regulatory requirements—for example, banking, health care,
and nuclear power plant industries—then we might expect the presence of a
large number of rules and regulations, a bureaucratic company structure, and
25
a stable culture. Similarly, the high-tech industry requires agility, taking quick
action, and low concern for rules and authority, which may create a relatively
more innovative culture. [5]
The industry influence over culture is also
important to know, because this shows that it may not be possible to imitate
the culture of a company in a different industry, even though it may seem
admirable to outsiders.
How Are Cultures Maintained?
As a company matures, its cultural values are refined and strengthened. The
early values of a company’s culture exert influence over its future values. It is
possible to think of organizational culture as an organism that protects itself
from external forces. Organizational culture determines what types of people
are hired by an organization and what types are left out. Moreover, once new
employees are hired, the company assimilates new employees and teaches
them the way things are done in the organization. We call these attraction-
selection-attrition and onboarding processes. We will also examine the role
of leaders and reward systems in shaping and maintaining an organization’s
culture. It is important to remember two points: The process of culture
creation is in fact more complex and less clean than the name implies.
Additionally, the influence of each factor on culture creation is reciprocal. For
example, just as leaders may influence what type of values the company has,
the culture may also determine what types of behaviors leaders demonstrate.
Attraction-Selection-Attrition (ASA)
Organizational culture is maintained through a process known as attraction-
selection-attrition. First, employees are attracted to organizations where they
will fit in. In other words, different job applicants will find different cultures to
be attractive. Someone who has a competitive nature may feel comfortable and
prefer to work in a company where interpersonal competition is the norm.
26
Others may prefer to work in a team-oriented workplace. Research shows that
employees with different personality traits find different cultures attractive.
For example, out of the Big Five personality traits, employees who
demonstrate neurotic personalities were less likely to be attracted to
innovative cultures, whereas those who had openness to experience were more
likely to be attracted to innovative cultures. [6]
As a result, individuals will self-
select the companies they work for and may stay away from companies that
have core values that are radically different from their own.
Of course this process is imperfect, and value similarity is only one reason a
candidate might be attracted to a company. There may be other, more
powerful attractions such as good benefits. For example, candidates who are
potential misfits may still be attracted to Google because of the cool perks
associated with being a Google employee. At this point in the process, the
second component of the ASA framework prevents them from getting in:
Selection. Just as candidates are looking for places where they will fit in,
companies are also looking for people who will fit into their current corporate
culture. Many companies are hiring people for fit with their culture, as
opposed to fit with a certain job. For example, Southwest Airlines prides itself
for hiring employees based on personality and attitude rather than specific
job-related skills, which are learned after being hired. This is important for job
applicants to know, because in addition to highlighting your job-relevant
skills, you will need to discuss why your personality and values match those of
the company. Companies use different techniques to weed out candidates who
do not fit with corporate values. For example, Google relies on multiple
interviews with future peers. By introducing the candidate to several future
coworkers and learning what these coworkers think of the candidate, it
becomes easier to assess the level of fit. The Container Store Inc. ensures
culture fit by hiring among their customers. [7]
This way, they can make sure
27
that job candidates are already interested in organizing their lives and
understand the company’s commitment to helping customers organize theirs.
Companies may also use employee referrals in their recruitment process. By
using their current employees as a source of future employees, companies may
make sure that the newly hired employees go through a screening process to
avoid potential person-culture mismatch.
Even after a company selects people for person-organization fit, there may be
new employees who do not fit in. Some candidates may be skillful in
impressing recruiters and signal high levels of culture fit even though they do
not necessarily share the company’s values. Moreover, recruiters may suffer
from perceptual biases and hire some candidates thinking that they fit with
the culture even though the actual fit is low. In any event, the organization is
going to eventually eliminate candidates who do not fit in through attrition.
Attrition refers to the natural process in which the candidates who do not fit in
will leave the company. Research indicates that person-organization misfit is
one of the important reasons for employee turnover. [8]
Click and Learn More Texas Instruments Inc. includes a Workplace and Values Check on its Web
page for potential applicants to see if they fit Texas Instrument’s culture.
To view this Web site, go
to http://focus.ti.com/careers/docs/fitchecktool.tsp?sectionId=152&tabId=1
678
As a result of the ASA process, the company attracts, selects, and retains
people who share its core values. On the other hand, those people who are
different in core values will be excluded from the organization either during
the hiring process or later on through naturally occurring turnover. Thus,
28
organizational culture will act as a self-defending organism where intrusive
elements are kept out. Supporting the existence of such self-protective
mechanisms, research shows that organizations demonstrate a certain level of
homogeneity regarding personalities and values of organizational members. [9]
New Employee Onboarding
Another way in which an organization’s values, norms, and behavioral
patterns are transmitted to employees is through onboarding (also referred to
as the organizational socialization process). Onboarding refers to the
process through which new employees learn the attitudes, knowledge, skills,
and behaviors required to function effectively within an organization. If an
organization can successfully socialize new employees into becoming
organizational insiders, new employees feel confident regarding their ability to
perform, sense that they will feel accepted by their peers, and understand and
share the assumptions, norms, and values that are part of the organization’s
culture. This understanding and confidence in turn translate into more
effective new employees who perform better and have higher job satisfaction,
stronger organizational commitment, and longer tenure within the
company. [10]
There are many factors that play a role in the successful adjustment of new
employees. New employees can engage in several activities to help increase
their own chances of success at a new organization. Organizations also engage
in different activities, such as implementing orientation programs or matching
new employees with mentors, which may facilitate onboarding.
What Can Employees Do During Onboarding?
New employees who are proactive, seek feedback, and build strong
relationships tend to be more successful than those who do not. [11]
for
29
example, feedback seeking helps new employees. Especially on a first job, a
new employee can make mistakes or gaffes and may find it hard to understand
and interpret the ambiguous reactions of coworkers. New hires may not know
whether they are performing up to standards, whether it was a good idea to
mention a company mistake in front of a client, or why other employees are
asking if they were sick over the weekend because of not responding to work-
related e-mails. By actively seeking feedback, new employees may find out
sooner rather than later any behaviors that need to be changed and gain a
better understanding of whether their behavior fits with the company culture
and expectations. Several studies show the benefits of feedback seeking for
new employee adjustment.
Relationship building, or networking, is another important behavior new
employees may demonstrate. Particularly when a company does not have a
systematic approach to onboarding, it becomes more important for new
employees to facilitate their own onboarding by actively building
relationships. According to one estimate, 35% of managers who start a new job
fail in the new job and either voluntarily leave or are fired within 1.5 years. Of
these, over 60% report not being able to form effective relationships with
colleagues as the primary reason for their failure. [12]
New employees may take
an active role in building relations by seeking opportunities to have a
conversation with their new colleagues, arranging lunches or coffee with them,
participating in company functions, and making the effort to build a
relationship with their new supervisor. [13]
OB Toolbox: You’ve Got a New Job! Now How Do You Get on Board? Gather information. Try to find as much about the company and the job as
you can before your first day. After you start working, be a good observer,
30
gather information, and read as much as you can to understand your job and
the company. Examine how people are interacting, how they dress, and how
they act to avoid behaviors that might indicate to others that you are a misfit.
Manage your first impression. First impressions may endure, so make sure
that you dress appropriately, are friendly, and communicate your excitement
to be a part of the team. Be on your best behavior!
Invest in relationship development. The relationships you develop with your
manager and with coworkers will be essential for you to adjust to your new
job. Take the time to strike up conversations with them. If there are work
functions during your early days, make sure not to miss them!
Seek feedback. Ask your manager or coworkers how well you are doing and
whether you are meeting expectations. Listen to what they are telling you and
also listen to what they are not saying. Then, make sure to act upon any
suggestions for improvement. Be aware that after seeking feedback, you may
create a negative impression if you consistently ignore the feedback you
receive.
Show success early on. In order to gain the trust of your new manager and
colleagues, you may want to establish a history of success early. Volunteer for
high-profile projects where you will be able to demonstrate your skills.
Alternatively, volunteer for projects that may serve as learning opportunities
or that may put you in touch with the key people in the company.
Sources: Adapted from ideas in Couzins, M., & Beagrie, S. (2005, March 1).
How to…survive the first six months of a new job. Personnel Today, 27;
Wahlgreen, E. (2002, December 5). Getting up to speed at a new job. Business
Week Online. Retrieved January 29, 2009, from
http://www.businessweek.com/careers/content/dec2002/ca2002123_2774.h
tm.
31
What Can Organizations Do During Onboarding?
Many organizations, including Microsoft, Kellogg Company, and Bank of
America, take a more structured and systematic approach to new employee
onboarding, while others follow a “sink or swim” approach in which new
employees struggle to figure out what is expected of them and what the norms
are.
A formal orientation program indoctrinates new employees to the company
culture, as well as introduces them to their new jobs and colleagues. An
orientation program is important, because it has a role in making new
employees feel welcome in addition to imparting information that may help
new employees be successful on their new jobs. Many large organizations have
formal orientation programs consisting of lectures, videotapes, and written
material, while some may follow more unusual approaches. According to one
estimate, most orientations last anywhere from one to five days, and some
companies are currently switching to a computer-based orientation. Ritz-
Carlton, the company ranked number 1 in Training magazine’s 2007 top 125
list, uses a very systematic approach to employee orientation and views
orientation as the key to retention. In the two-day classroom orientation,
employees spend time with management, dine in the hotel’s finest restaurant,
and witness the attention to customer service detail firsthand. For example,
they receive hand-written welcome notes and their favorite snacks during the
break. During these two days, they are introduced to the company’s intensive
service standards, team orientation, and its own language. Later, on their 21st
day, they are tested on the company’s service standards and are
certified. [14]
Research shows that formal orientation programs are helpful in
teaching employees about the goals and history of the company, as well as
communicating the power structure. Moreover, these programs may also help
32
with a new employee’s integration into the team. However, these benefits may
not be realized to the same extent in computer-based orientations. In fact,
compared to those taking part in a regular, face-to-face orientation,
individuals undergoing a computer-based orientation were shown to have
lower understanding of their job and the company, indicating that different
formats of orientations may not substitute for each other. [15]
What Can Organizational Insiders Do During Onboarding?
One of the most important ways in which organizations can help new
employees adjust to a company and a new job is through organizational
insiders—namely supervisors, coworkers, and mentors. Research shows that
leaders have a key influence over onboarding, and the information and
support leaders provide determine how quickly employees learn about the
company politics and culture. Coworker influence determines the degree to
which employees adjust to their teams. Mentors can be crucial to helping new
employees adjust by teaching them the ins and outs of their jobs and how the
company really operates. A mentor is a trusted person who provides an
employee with advice and support regarding career-related matters. Although
a mentor can be any employee or manager who has insights that are valuable
to the new employee, mentors tend to be relatively more experienced than
their protégés. Mentoring can occur naturally between two interested
individuals, or organizations can facilitate this process by having formal
mentoring programs. These programs may successfully bring together
mentors and protégés who would not come together otherwise. Research
indicates that the existence of these programs does not guarantee their
success, and there are certain program characteristics that may make these
programs more effective. For example, when mentors and protégés feel that
they had input in the mentor-protégé matching process, they tend to be more
satisfied with the arrangement. Moreover, when mentors receive training
33
beforehand, the outcomes of the program tend to be more positive. [16]
Because
mentors may help new employees interpret and understand the company’s
culture, organizations may benefit from selecting mentors who personify the
company’s values. Thus, organizations may need to design these programs
carefully to increase their chance of success.
Leadership
Leaders are instrumental in creating and changing an organization’s culture.
There is a direct correspondence between a leader’s style and an organization’s
culture. For example, when leaders motivate employees through inspiration,
corporate culture tends to be more supportive and people oriented. When
leaders motivate by making rewards contingent on performance, the corporate
culture tends to be more performance oriented and competitive. [17]
In these
and many other ways, what leaders do directly influences the cultures their
organizations have.
Part of the leader’s influence over culture is through role modeling. Many
studies have suggested that leader behavior, the consistency between
organizational policy and leader actions, and leader role modeling determine
the degree to which the organization’s culture emphasizes ethics. [18]
The
leader’s own behaviors will signal to employees what is acceptable behavior
and what is unacceptable. In an organization in which high-level managers
make the effort to involve others in decision making and seek opinions of
others, a team-oriented culture is more likely to evolve. By acting as role
models, leaders send signals to the organization about the norms and values
that are expected to guide the actions of organizational members.
Leaders also shape culture by their reactions to the actions of others around
them. For example, do they praise a job well done, or do they praise a favored
34
employee regardless of what was accomplished? How do they react when
someone admits to making an honest mistake? What are their priorities? In
meetings, what types of questions do they ask? Do they want to know what
caused accidents so that they can be prevented, or do they seem more
concerned about how much money was lost as a result of an accident? Do they
seem outraged when an employee is disrespectful to a coworker, or does their
reaction depend on whether they like the harasser? Through their day-to-day
actions, leaders shape and maintain an organization’s culture.
Reward Systems
Finally, the company culture is shaped by the type of reward systems used in
the organization, and the kinds of behaviors and outcomes it chooses to
reward and punish. One relevant element of the reward system is whether the
organization rewards behaviors or results. Some companies have reward
systems that emphasize intangible elements of performance as well as more
easily observable metrics. In these companies, supervisors and peers may
evaluate an employee’s performance by assessing the person’s behaviors as
well as the results. In such companies, we may expect a culture that is
relatively people or team oriented, and employees act as part of a
family. [19]
On the other hand, in companies that purely reward goal
achievement, there is a focus on measuring only the results without much
regard to the process. In these companies, we might observe outcome-oriented
and competitive cultures. Another categorization of reward systems might be
whether the organization uses rankings or ratings. In a company where the
reward system pits members against one another, where employees are
ranked against each other and the lower performers receive long-term or
short-term punishments, it would be hard to develop a culture of people
orientation and may lead to a competitive culture. On the other hand,
evaluation systems that reward employee behavior by comparing them to
35
absolute standards as opposed to comparing employees to each other may
pave the way to a team-oriented culture. Whether the organization rewards
performance or seniority would also make a difference in culture. When
promotions are based on seniority, it would be difficult to establish a culture
of outcome orientation. Finally, the types of behaviors that are rewarded or
ignored set the tone for the culture. Service-oriented cultures reward,
recognize, and publicize exceptional service on the part of their employees. In
safety cultures, safety metrics are emphasized and the organization is proud of
its low accident ratings. What behaviors are rewarded, which ones are
punished, and which are ignored will determine how a company’s culture
evolves.
OB Toolbox: Best Practices How to Maximize Onboarding Success
Onboarding plans should have the following characteristics:
Written down. If your organization does not have a formal plan, write one
yourself. It may not make sense to share it with others, but at least you will
have a roadmap. If your organization does have one, refer to it on a monthly
basis.
Participatory. The power of onboarding programs is in the interaction. Try to
get participation from others to the extent possible and engage in onboarding
activities offered to you by the organization.
Tracked over time. Keep in mind that research shows onboarding has a
rhythm of 30-, 60-, 90-, and 180-day milestones. Be sure to track your
progress.
Clear on objectives, timeline, roles, and responsibilities. This will help ensure
that role conflict and ambiguity doesn’t detour your onboarding process.
36
Clear on scheduled key stakeholder meetings with managers and mentors.
Include a plan for
1. going over strengths and development areas;
2. hearing about potential problems and critical advice to help you be successful.
Be sure to include a list of your key questions and things you need to help you
do your job better.
Source: Adapted from Bauer, T. N., & Elder, E. (2006). Onboarding
newcomers into an organization. 58th Annual Society for Human Resource
Management (SHRM) Conference & Exposition. Washington, DC.
Visual Elements of Organizational Culture
How do you find out about a company’s culture? We emphasized earlier that
culture influences the way members of the organization think, behave, and
interact with one another. Thus, one way of finding out about a company’s
culture is by observing employees or interviewing them. At the same time,
culture manifests itself in some visible aspects of the organization’s
environment. In this section, we discuss five ways in which culture shows itself
to observers and employees.
Mission Statement
A mission statement is a statement of purpose, describing who the company is
and what it does. Many companies have mission statements, but they do not
always reflect the company’s values and its purpose. An effective mission
statement is well known by employees, is transmitted to all employees starting
from their first day at work, and influences employee behavior.
Not all mission statements are effective, because some are written by public
relations specialists and can be found in a company’s Web site, but it does not
37
affect how employees act or behave. In fact, some mission statements reflect
who the company wants to be as opposed to who they actually are. If the
mission statement does not affect employee behavior on a day-to-day basis, it
has little usefulness as a tool for understanding the company’s culture. An oft-
cited example of a mission statement that had little impact on how a company
operates belongs to Enron. Their missions and values statement began, “As a
partner in the communities in which we operate, Enron believes it has a
responsibility to conduct itself according to certain basic principles.” Their
values statement included such ironic declarations as “We do not tolerate
abusive or disrespectful treatment. Ruthlessness, callousness and arrogance
don’t belong here.” [20]
A mission statement that is taken seriously and widely communicated may
provide insights into the corporate culture. For example, the Mayo Clinic’s
mission statement is “The needs of the patient come first.” This mission
statement evolved from the founders who are quoted as saying, “The best
interest of the patient is the only interest to be considered.” Mayo Clinics have
a corporate culture that puts patients first. For example, no incentives are
given to physicians based on the number of patients they see. Because doctors
are salaried, they have no interest in retaining a patient for themselves and
they refer the patient to other doctors when needed. [21]
Wal-Mart Stores Inc.
may be another example of a company who lives its mission statement, and
therefore its mission statement may give hints about its culture: “Saving
people money so they can live better.” [22]
In fact, their culture emphasizes
thrift and cost control in everything they do. For example, even though most
CEOs of large companies in the United States have lavish salaries and showy
offices, Wal-Mart’s CEO Michael Duke and other high-level corporate officers
work out of modest offices in the company’s headquarters.
38
Figure 15.10 Visual Elements of Culture
Rituals
Rituals refer to repetitive activities within an organization that have symbolic
meaning. [23]
Usually rituals have their roots in the history of a company’s
culture. They create camaraderie and a sense of belonging among employees.
They also serve to teach employees corporate values and create identification
with the organization. For example, at the cosmetics firm Mary Kay Inc.,
employees attend award ceremonies recognizing their top salespeople with an
award of a new car—traditionally a pink Cadillac. These ceremonies are
conducted in large auditoriums where participants wear elaborate evening
gowns and sing company songs that create emotional excitement. During this
ritual, employees feel a connection to the company culture and its values, such
as self-determination, will power, and enthusiasm. [24]
Another example of
rituals is the Saturday morning meetings of Wal-Mart. This ritual was first
created by the company founder Sam Walton, who used these meetings to
39
discuss which products and practices were doing well and which required
adjustment. He was able to use this information to make changes in Wal-
Mart’s stores before the start of the week, which gave him a competitive
advantage over rival stores who would make their adjustments based on
weekly sales figures during the middle of the following week. Today, hundreds
of Wal-Mart associates attend the Saturday morning meetings in the
Bentonville, Arkansas, headquarters. The meetings, which run from 7:00 to
9:30 a.m., start and end with the Wal-Mart cheer; the agenda includes a
discussion of weekly sales figures and merchandising tactics. As a ritual, the
meetings help maintain a small-company atmosphere, ensure employee
involvement and accountability, communicate a performance orientation, and
demonstrate taking quick action. [25]
Rules and Policies
Another way in which an observer may find out about a company’s culture is
to examine its rules and policies. Companies create rules to determine
acceptable and unacceptable behavior, and thus the rules that exist in a
company will signal the type of values it has. Policies about issues such as
decision making, human resources, and employee privacy reveal what the
company values and emphasizes. For example, a company that has a policy
such as “all pricing decisions of merchandise will be made at corporate
headquarters” is likely to have a centralized culture that is hierarchical, as
opposed to decentralized and empowering. Similarly, a company that extends
benefits to both part-time and full-time employees, as well as to spouses and
domestic partners, signals to employees and observers that it cares about its
employees and shows concern for their well-being. By offering employees
flexible work hours, sabbaticals, and telecommuting opportunities, a company
may communicate its emphasis on work-life balance. The presence or absence
of policies on sensitive issues such as English-only rules, bullying or unfair
40
treatment of others, workplace surveillance, open-door policies, sexual
harassment, workplace romances, and corporate social responsibility all
provide pieces of the puzzle that make up a company’s culture.
Physical Layout
A company’s building, including the layout of employee offices and other work
spaces, communicates important messages about a company’s culture. The
building architecture may indicate the core values of an organization’s culture.
For example, visitors walking into the Nike Inc. campus in Beaverton, Oregon,
can witness firsthand some of the distinguishing characteristics of the
company’s culture. The campus is set on 74 acres and boasts an artificial lake,
walking trails, soccer fields, and cutting-edge fitness centers. The campus
functions as a symbol of Nike’s values such as energy, physical fitness, an
emphasis on quality, and a competitive orientation. In addition, at fitness
centers on the Nike headquarters, only those wearing Nike shoes and apparel
are allowed in. This sends a strong signal that loyalty is expected. The
company’s devotion to athletes and their winning spirits is manifested in
campus buildings named after famous athletes, photos of athletes hanging on
the walls, and honorary statues dotting the campus. [26]
A very different tone
awaits visitors to Wal-Mart headquarters, where managers have gray and
windowless offices. [27]
By putting its managers in small offices and avoiding
outward signs of flashiness, Wal-Mart does a good job of highlighting its
values of economy.
The layout of the office space also is a strong indicator of a company’s culture.
A company that has an open layout where high-level managers interact with
employees may have a culture of team orientation and egalitarianism, whereas
a company where high-level managers have their own floor may indicate a
higher level of hierarchy. Microsoft employees tend to have offices with walls
41
and a door, because the culture emphasizes solitude, concentration, and
privacy. In contrast, Intel Corporation is famous for its standard cubicles,
which reflect its culture of equality. The same value can also be observed in its
avoidance of private and reserved parking spots. [28]
The degree to which
playfulness, humor, and fun is part of a company’s culture may be indicated in
the office environment. For example, Jive Software boasts a colorful, modern,
and comfortable office design. Their break room is equipped with a keg of
beer, free snacks and sodas, an XBOX 360, and Nintendo Wii. A casual
observation of their work environment sends the message that employees who
work there see their work as fun. [29]
Stories
Perhaps the most colorful and effective way in which organizations
communicate their culture to new employees and organizational members is
through the skillful use of stories. A story can highlight a critical event an
organization faced and the collective response to it, or can emphasize a heroic
effort of a single employee illustrating the company’s values. The stories
usually engage employee emotions and generate employee identification with
the company or the heroes of the tale. A compelling story may be a key
mechanism through which managers motivate employees by giving their
behavior direction and energizing them toward a certain goal. [30]
Moreover,
stories shared with new employees communicate the company’s history, its
values and priorities, and serve the purpose of creating a bond between the
new employee and the organization. For example, you may already be familiar
with the story of how a scientist at 3M invented Post-it notes. Arthur Fry, a 3M
scientist, was using slips of paper to mark the pages of hymns in his church
choir, but they kept falling off. He remembered a super-weak adhesive that
had been invented in 3M’s labs, and he coated the markers with this adhesive.
Thus, the Post-it notes were born. However, marketing surveys for the interest
42
in such a product were weak, and the distributors were not convinced that it
had a market. Instead of giving up, Fry distributed samples of the small yellow
sticky notes to secretaries throughout his company. Once they tried them,
people loved them and asked for more. Word spread, and this led to the
ultimate success of the product. As you can see, this story does a great job of
describing the core values of a 3M employee: Being innovative by finding
unexpected uses for objects, persevering, and being proactive in the face of
negative feedback. [31]
OB Toolbox: As a Job Candidate, How Would You Find Out If You Are a Good Fit? Do your research. Talking to friends and family members who are familiar
with the company, doing an online search for news articles about the
company, browsing the company’s Web site, and reading their mission
statement would be a good start.
Observe the physical environment. Do people work in cubicles or in offices?
What is the dress code? What is the building structure? Do employees look
happy, tired, or stressed? The answers to these questions are all pieces of the
puzzle.
Read between the lines. For example, the absence of a lengthy employee
handbook or detailed procedures might mean that the company is more
flexible and less bureaucratic.
How are you treated? The recruitment process is your first connection to the
company. Were you treated with respect? Do they maintain contact with you,
or are you being ignored for long stretches at a time?
Ask questions. What happened to the previous incumbent of this job? What
does it take to be successful in this firm? What would their ideal candidate for
the job look like? The answers to these questions will reveal a lot about the
way they do business.
43
Listen to your gut. Your feelings about the place in general, and your future
manager and coworkers in particular, are important signs that you should not
ignore.
Sources: Adapted from ideas in Daniel, L., & Brandon, C. (2006). Finding
the right job fit. HR Magazine, 51, 62–67; Sacks, D. (2005). Cracking your next
company’s culture. Fast Company, 99, 85–87.
K E Y T A K E A W A Y
Organization cultures are created by a variety of factors, including founders’ values
and preferences, industry demands, and early values, goals, and assumptions.
Culture is maintained through attraction-selection-attrition, new employee
onboarding, leadership, and organizational reward systems. Signs of a company’s
culture include the organization’s mission statement, stories, physical layout, rules
and policies, and rituals.
E X E R C I S E S
1. Do you think it is a good idea for companies to emphasize person-organization fit
when hiring new employees? What advantages and disadvantages do you see when
hiring people who fit with company values?
2. What is the influence of company founders on company culture? Give examples
based on your personal knowledge.
3. What are the methods companies use to aid with employee onboarding? What is the
importance of onboarding for organizations?
4. What type of a company do you feel would be a good fit for you? What type of a
culture would be a misfit for you? In your past work experience, were there any
moments when you felt that you did not fit with the organization? Why?
5. What is the role of physical layout as an indicator of company culture? What type of
a physical layout would you expect from a company that is people oriented? Team
oriented? Stable?
44
15.4 Creating Culture Change
L E A R N I N G O B J E C T I V E S
1. Explain why culture change may be necessary.
2. Understand the process of culture change.
How Do Cultures Change?
Culture is part of a company’s DNA and is resistant to change efforts.
Unfortunately, many organizations may not even realize that their current
culture constitutes a barrier against organizational productivity and
performance. Changing company culture may be the key to the company
turnaround when there is a mismatch between an organization’s values and
the demands of its environment.
Certain conditions may help with culture change. For example, if an
organization is experiencing failure in the short run or is under threat of
bankruptcy or an imminent loss of market share, it would be easier to
convince managers and employees that culture change is necessary. A
company can use such downturns to generate employee commitment to the
change effort. However, if the organization has been successful in the past,
and if employees do not perceive an urgency necessitating culture change, the
change effort will be more challenging. Sometimes the external environment
may force an organization to undergo culture change. Mergers and
acquisitions are another example of an event that changes a company’s
culture. In fact, the ability of the two merging companies to harmonize their
corporate cultures is often what makes or breaks a merger effort. When Ben &
Jerry’s was acquired by Unilever, Ben & Jerry’s had to change parts of its
45
culture while attempting to retain some of its unique aspects. Corporate social
responsibility, creativity, and fun remained as parts of the culture. In fact,
when Unilever appointed a veteran French executive as the CEO of Ben &
Jerry’s in 2000, he was greeted by an Eiffel tower made out of ice cream pints,
Edith Piaf songs, and employees wearing berets and dark glasses. At the same
time, the company had to become more performance oriented in response to
the acquisition. All employees had to keep an eye on the bottom line. For this
purpose, they took an accounting and finance course for which they had to
operate a lemonade stand. [1]
Achieving culture change is challenging, and
many companies ultimately fail in this mission. Research and case studies of
companies that successfully changed their culture indicate that the following
six steps increase the chances of success. [2]
Figure 15.12 Six Steps to Culture Change
Creating a Sense of Urgency
In order for the change effort to be successful, it is important to communicate
the need for change to employees. One way of doing this is to create a sense of
46
urgency on the part of employees and explain to them why changing the
fundamental way in which business is done is so important. In successful
culture change efforts, leaders communicate with employees and present a
case for culture change as the essential element that will lead the company to
eventual success. As an example, consider the situation at IBM Corporation in
1993 when Lou Gerstner was brought in as CEO and chairman. After decades
of dominating the market for mainframe computers, IBM was rapidly losing
market share to competitors, and its efforts to sell personal computers—the
original “PC”—were seriously undercut by cheaper “clones.” In the public’s
estimation, the name IBM had become associated with obsolescence. Gerstner
recalls that the crisis IBM was facing became his ally in changing the
organization’s culture. Instead of spreading optimism about the company’s
future, he used the crisis at every opportunity to get buy-in from employees. [3]
Changing Leaders and Other Key Players
A leader’s vision is an important factor that influences how things are done in
an organization. Thus, culture change often follows changes at the highest
levels of the organization. Moreover, in order to implement the change effort
quickly and efficiently, a company may find it helpful to remove managers and
other powerful employees who are acting as a barrier to change. Because of
political reasons, self interest, or habits, managers may create powerful
resistance to change efforts. In such cases, replacing these positions with
employees and managers giving visible support to the change effort may
increase the likelihood that the change effort succeeds. For example, when
Robert Iger replaced Michael Eisner as CEO of the Walt Disney Company, one
of the first things he did was to abolish the central planning unit, which was
staffed by people close to ex-CEO Eisner. This department was viewed as a
barrier to creativity at Disney, and its removal from the company was helpful
in ensuring the innovativeness of the company culture. [4]
47
Role Modeling
Role modeling is the process by which employees modify their own beliefs and
behaviors to reflect those of the leader. [5]
CEOs can model the behaviors that
are expected of employees to change the culture. The ultimate goal is that
these behaviors will trickle down to lower level employees. For example, when
Robert Iger took over Disney, in order to show his commitment to innovation,
he personally became involved in the process of game creation, attended
summits of developers, and gave feedback to programmers about the games.
Thus, he modeled his engagement in the idea creation process. In contrast,
modeling of inappropriate behavior from the top will lead to the same
behavior trickling down to lower levels. A recent example of this type of role
modeling is the scandal involving Hewlett-Packard Development Company LP
board members. In 2006, when board members were suspected of leaking
confidential company information to the press, the company’s top-level
executives hired a team of security experts to find the source of the leak. The
investigators sought the phone records of board members, linking them to
journalists. For this purpose, they posed as board members and called phone
companies to obtain the itemized home phone records of board members and
journalists. When the investigators’ methods came to light, HP’s chairman and
four other top executives faced criminal and civil charges. When such behavior
is modeled at top levels, it is likely to have an adverse impact on the company
culture. [6]
Training
Well-crafted training programs may be instrumental in bringing about culture
change by teaching employees the new norms and behavioral styles. For
example, after the space shuttle Columbia disintegrated upon reentry from a
February 2003 mission, NASA decided to change its culture to become more
48
safety sensitive and minimize decision-making errors leading to unsafe
behaviors. The change effort included training programs in team processes
and cognitive bias awareness. Similarly, when auto repairer Midas
International Corporation felt the need to change its culture to be more
committed to customers, they developed a training program making
employees familiar with customer emotions and helping form better
connections with them. Customer reports have been overwhelmingly positive
in stores that underwent this training. [7]
Changing the Reward System
The criteria with which employees are rewarded and punished have a powerful
role in determining the cultural values in existence. Switching from a
commission-based incentive structure to a straight salary system may be
instrumental in bringing about customer focus among sales employees.
Moreover, by rewarding employees who embrace the company’s new values
and even promoting these employees, organizations can make sure that
changes in culture have a lasting impact. If a company wants to develop a
team-oriented culture where employees collaborate with each other, methods
such as using individual-based incentives may backfire. Instead, distributing
bonuses to intact teams might be more successful in bringing about culture
change.
Creating New Symbols and Stories
Finally, the success of the culture change effort may be increased by
developing new rituals, symbols, and stories. Continental Airlines Inc. is a
company that successfully changed its culture to be less bureaucratic and
more team oriented in the 1990s. One of the first things management did to
show employees that they really meant to abolish many of the detailed
procedures the company had and create a culture of empowerment was to
49
burn the heavy 800-page company policy manual in their parking lot. The new
manual was only 80 pages. This action symbolized the upcoming changes in
the culture and served as a powerful story that circulated among employees.
Another early action was the redecorating of waiting areas and repainting of
all their planes, again symbolizing the new order of things. [8]
By replacing the
old symbols and stories, the new symbols and stories will help enable the
culture change and ensure that the new values are communicated.
K E Y T A K E A W A Y
Organizations need to change their culture to respond to changing conditions in the
environment, to remain competitive, and to avoid complacency or stagnation.
Culture change often begins by the creation of a sense of urgency. Next, a change of
leaders and other key players may enact change and serve as effective role models
of new behavior. Training can also be targeted toward fostering these new
behaviors. Reward systems are changed within the organization. Finally, the
organization creates new stories and symbols.
E X E R C I S E S
1. Can new employees change a company’s culture? If so, how?
2. Are there conditions under which change is not possible? If so, what would such
conditions be?
3. Have you ever observed a change process at an organization you were involved
with? If so, what worked well and what didn’t?
4. What recommendations would you have for someone considering a major change of
culture within their own organization?
50
15.5 The Role of Ethics and National Culture
L E A R N I N G O B J E C T I V E S
1. Consider the role of culture in ethical behavior.
2. Consider the role of national culture on organizational culture.
Organizational Culture and Ethics
A recent study of 3,000 employees and managers in the United States
confirms that the degree to which employees in an organization behave
ethically depends on the culture of the organization. [1]
Without a culture
emphasizing the importance of integrity, honesty, and trust, mandatory ethics
training programs are often doomed to fail. Thus, creating such a culture is
essential to avoiding the failures of organizations such as WorldCom and
Enron. How is such a culture created?
The factors we highlighted in this chapter will play a role in creating an ethical
culture. Among all factors affecting ethical culture creation, leadership may be
the most influential. Leaders, by demonstrating high levels of honesty and
integrity in their actions, can model the behaviors that are demanded in an
organization. If their actions contradict their words, establishing a culture of
ethics will be extremely difficult. As an example, former chairman and CEO of
Enron Kenneth Lay forced all his employees to use his sister’s travel agency,
even though the agency did not provide high-quality service or better
prices. [2]
Such behavior at the top is sure to trickle down. Leaders also have a
role in creating a culture of ethics, because they establish the reward systems
being used in a company. There is a relationship between setting very difficult
goals for employees and unethical behavior. [3]
When leaders create an
extremely performance-oriented culture where only results matter and there is
no tolerance for missing one’s targets, the culture may start rewarding
51
unethical behaviors. Instead, in organizations such as General Electric
Company where managers are evaluated partly based on metrics assessing
ethics, behaving in an ethical manner becomes part of the core company
values. [4]
Organizational Culture Around the Globe
The values, norms, and beliefs of a company may also be at least partially
imposed by the national culture. When an entrepreneur establishes an
organization, the values transmitted to the organization may be because of the
cultural values of the founder and the overall society. If the national culture in
general emphasizes competitiveness, a large number of the companies
operating in this context may also be competitive. In countries emphasizing
harmony and conflict resolution, a team-oriented culture may more easily take
root. For example, one study comparing universities in Arab countries and
Japan found that the Japanese universities were characterized by modesty and
frugality, potentially reflecting elements of the Japanese culture. The study
also found that the Arab universities had buildings that were designed to
impress and had restricted access, which may be a reflection of the relatively
high power distance of the Arab cultures. Similarly, another study found that
elements of Brazilian culture such as relationships being more important than
jobs, tendency toward hierarchy, and flexibility were reflected in
organizational culture values such as being hierarchical and emphasizing
relational networks. [5]
It is important for managers to know the relationship
between national culture and company culture, because the relationship
explains why it would sometimes be challenging to create the same company
culture globally.
K E Y T A K E A W A Y
52
Without a culture emphasizing the importance of integrity, honesty, and trust, the
mandatory ethics training programs are often doomed to fail. The values, norms, and
beliefs of a company may also be at least partially imposed by the national culture.
E X E R C I S E S
1. Have you seen examples of ethical or unethical organizational cultures? Describe
what you observed.
2. Have you seen examples of national culture affecting an organization’s culture?
3. What advice would you give to someone who was interested in starting a new
division of a company in another culture?
15.6 Conclusion To summarize, in this chapter we have reviewed what defines organizational
culture, how it is created, and how it can be changed. Corporate culture may
be the greatest strength or a serious limitation for a company, depending on
whether the values held are in line with corporate strategy and environmental
demands. Even though changing an organization’s culture is difficult, success
of the organization may require the change. Leaders, through their actions,
role modeling, rule making, and story creation, serve as instrumental change
agents.
15.7 Exercises
E T H I C A L D I L E M M A
Your company is in the process of hiring a benefits specialist. As a future peer of the
person to be hired, you will be one of the interviewers and will talk to all candidates.
53
The company you are working for is a small organization that was acquired. The job
advertisement for the position talks about the high level of autonomy that will be
available to the job incumbent. Moreover, your manager wants you to sell the
position by highlighting the opportunities that come from being a part of
a Fortune 500, such as career growth and the opportunity to gain global expertise.
The problem is that you do not believe being part of a larger company is such a
benefit. In fact, since the company has been acquired by the Fortune 500, the way
business is being conducted has changed dramatically. Now there are many rules and
regulations that prevent employees from making important decisions autonomously.
Moreover, no one from this branch was ever considered for a position in the
headquarters or for any global openings. In other words, the picture being painted
by the hiring managers and the company’s HR department in the job advertisements
is inflated and not realistic. Your manager feels you should sell the job and the
company because your competitors are doing the same thing, and being honest
might mean losing great candidates. You know that you and your manager will
interview several candidates together.
Is this unethical? Why or why not? What would you do before and during the
interview to address this dilemma?
I N D I V I D U A L E X E R C I S E
Impact of HR Practices on Organizational Culture
Below are scenarios of critical decisions you may need to make as a manager. Read
each question and select one from each pair of statements. Then, think about the
impact your choice would have on the company’s culture.
1. You need to lay off 10 people. Would you
o lay off the newest 10 people?
o lay off the 10 people who have the lowest performance evaluations?
54
2. You need to establish a dress code. Would you
o ask employees to use their best judgment?
o create a detailed dress code highlighting what is proper and improper?
3. You need to monitor employees during work hours. Would you
o not monitor them because they are professionals and you trust them?
o install a program monitoring their Web usage to ensure that they are spending work
hours actually doing work?
4. You need to conduct performance appraisals. Would you
o evaluate people on the basis of their behaviors?
o evaluate people on the basis of their results (numerical sales figures and so on)?
5. You need to promote individuals. Would you promote individuals based on
o seniority?
o objective performance?
G R O U P E X E R C I S E
Recruiting Employees Who Fit the Culture
You are an employee of a local bookstore. The store currently employs 50 employees
and is growing. This is a family-owned business, and employees feel a sense of
belonging to this company. Business is conducted in an informal manner, there are
not many rules, and people feel like they are part of a family. There are many
friendships at work, and employees feel that they have a lot of autonomy regarding
how they perform their jobs. Customer service is also very important in this
company. Employees on the sales floor often chat with their customers about books
and recommend readings they might like. Because the company is growing, they will
need to hire several employees over the next months. They want to establish
55
recruitment and selection practices so that they can hire people who have a high
degree of fit with the current culture.
Working within groups, discuss the effectiveness of the following recruitment tools.
Evaluate each recruitment source. Which ones would yield candidates with a high
degree of fit with the company’s current culture?
1. Newspaper advertisements
2. Magazine advertisements
3. Radio advertisements
4. Hiring customers
5. Hiring walk-ins
6. Employee referrals
7. Using the state unemployment agency
Next, create interview questions for a person who will work on the sales floor. What
types of questions would you ask during the interview to assess person-organization
fit? How would you conduct the interview (who would be involved in the
interviewing process, where would you conduct the interview, and so on) to
maximize the chances of someone with a high person-organization fit?
E N D O F C H A P T E R C A S E — G O O G L E
Google is one of the best-known and most admired companies around the
world. [1] So much so that googling is the term many use to refer to searching
information on the Web. Founded in 1998 by two Stanford university graduates,
Larry Page and Sergey Brin, Google is responsible for creating the most frequently
used Web search engine on the Internet, as well as other innovative applications
such as Gmail, Google Earth, Google Maps, and Picasa. The envy of other Silicon
Valley companies, Google grew from 10 employees working in a garage in Palo Alto
to 10,000 employees operating around the world. What is the formula behind this
56
success? Can it be traced to any single concept such as effective leadership, reward
systems, or open communication?
It seems that Google has always operated based on solid principles that may be
traced back to its founders. In a world crowded with search engines, they were
probably the first company that put users first. Their mission statement summarizes
their commitment to end user needs: “To organize the world’s information and to
make it universally accessible and useful.” While other companies were focused on
marketing their sites and increasing advertising revenues, Google stripped the search
page of all distractions and presented Internet users with a blank page consisting
only of a company logo and a search box. Google resisted pop-up advertising,
because the company felt that it was annoying to end users. They insisted that all
their advertisements would be clearly marked as “sponsored links.” Improving user
experience and always putting it before making money in the short term seem to
have been critical to Google’s success.
Keeping employees happy is also a value they take to heart. Google created a unique
work environment that attracts, motivates, and retains the best players in the field.
Google was ranked as the number 1 place to work for by Fortune magazine in 2008.
This is no surprise if one looks closer at how Google treats employees. In its
Mountain View, California, campus called the “Googleplex,” employees are treated
to free gourmet food including sushi bars and espresso stations. In fact, many
employees complain that once they started working for Google, they gained 10 to 15
pounds. Employees have access to gyms, shower facilities, video games, on-site child
care, and doctors. A truly family friendly place, Google offers 12 weeks of maternity
or paternity leave with 75% of full pay, and offers $500 for take-out meals for the
entire family with a newborn. All these perks and more create a place where
employees feel that they are treated well and their needs are taken care of.
57
Moreover, these perks contribute to the feeling that employees are working at a
unique, cool place that is different from everywhere else they have ever worked.
In addition to offering many perks to employees, thereby encouraging employees to
actually want to spend time at work rather than someplace else, Google encourages
employee risk taking and innovativeness. How is this done? When a vice president in
charge of the company’s advertising system made a mistake that cost the company
millions of dollars and apologized for the mistake, she was commended by Larry
Page, who congratulated her for making the mistake and noting that he would rather
run a company where people are moving quickly and doing too much, as opposed to
being too cautious and doing too little. This attitude toward acting fast and accepting
the cost of resulting mistakes as a natural consequence of moving fast may explain
why the company is outperforming competitors such as Microsoft and Yahoo! Inc.
One of the current challenges for Google is to expand into new fields outside their
Web search engine business. To promote new ideas, Google encourages all
engineers to spend 20% of their time working on individual projects.
Decisions at Google are made in teams. Even the company management is in the
hands of a triad: Larry Page and Sergey Brin hired Eric Schmidt to act as the CEO of
the company, and they are reportedly leading the company by consensus. In other
words, this is not a company where decisions are made by the most senior person
and then implemented top down. It is common for several small teams to attack
each problem and for employees to try to influence each other using rational
persuasion and data. Gut feeling has little impact on how decisions are made. In
some meetings, people reportedly are not allowed to say, “I think…” and instead
they must say, “The data suggests…” To facilitate teamwork, employees work in
open office environments where private offices are assigned only to a select few.
Even Kai-Fu Lee, the famous employee whose defection from Microsoft was the
target of a lawsuit, did not get his own office and shared a cubicle with two other
employees.
58
How do they maintain these unique values? In a company emphasizing hiring the
smartest people, it is very likely that they will attract big egos that are difficult to
work with. Google realizes that its strength comes from its small-company values
emphasizing risk taking, agility, and cooperation. Therefore, Google employees take
their hiring process very seriously. Hiring is extremely competitive and getting to
work at Google is not unlike applying to a college. Candidates may be asked to write
essays about how they will perform their future jobs. Recently, they targeted
potential new employees using billboards featuring brain teasers directing potential
candidates to a Web site where they were subjected to more brain teasers.
Candidates who figure out the answers to the brain teasers would then be invited to
submit resumes. Each candidate may be interviewed by as many as eight people on
several occasions. Through this scrutiny, hiring personnel are trying to select
“Googley” employees who will share the company’s values, perform their jobs well,
and be liked by others within the company. By attracting kindred spirits, selecting
those who will fit in, and keeping potential misfits out, the company perpetuates its
own values that have made it successful.
Will this culture survive in the long run? It may be too early to tell, given that the
company is only a little over a decade old. The founders emphasized that becoming a
publicly traded company would not change their culture, and they would not
introduce more rules or change the way things are done at Google to please Wall
Street. But can a public corporation really act like a start-up? Can a global giant
facing scrutiny on issues including privacy, copyright, and censorship maintain its
culture rooted in its days in a Palo Alto garage? Larry Page is quoted as saying, “We
have a mantra: don’t be evil, which is to do the best things we know how for our
users, for our customers, for everyone. So I think if we were known for that, it would
be a wonderful thing.” As long as this mantra continues to guide the company’s
59
actions, we might expect the company to retain its distinctive personality, regardless
of what the future holds.
Discussion Questions
1. Describe Google’s culture using the OCP typology presented in this chapter.
2. What are the factors responsible for the specific culture that exists in Google?
3. Do you think Google’s culture is responsible for its performance? Or does Google
have this particular culture because it is so successful?
4. How does Google protect its culture?
5. Do you see any challenges Google may face in the future because of its culture?
60
1
This text was adapted by The Saylor Foundation under a Creative
Commons Attribution-NonCommercial-ShareAlike 3.0 License without
attribution as requested by the work’s original creator or licensee.
2
Chapter 2 Managing Demographic and Cultural Diversity
L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to do the following:
1. Understand what constitutes diversity.
2. Explain the benefits of managing diversity.
3. Describe challenges of managing a workforce with diverse demographics.
4. Describe the challenges of managing a multicultural workforce.
5. Understand diversity and ethics.
6. Understand cross-cultural issues regarding diversity.
Managing Diversity at IBM When you are a company that operates in over 170 countries with a workforce
of over 350,000 employees, understanding and managing diversity effectively
is not optional—it is a key business priority. A company that employs
individuals and sells products worldwide needs to understand the diverse
groups of people that make up the world.
Starting from its early history in the United States, IBM Corporation has been
a pioneer in valuing and appreciating its diverse workforce. In 1935, almost 30
years before the Equal Pay Act guaranteed pay equality between the sexes,
then IBM President Thomas Watson promised women equal pay for equal
work. In 1943, the company had its first female vice president. Again, 30 years
before the Family and Medical Leave Act (FMLA) granted women unpaid
leave for the birth of a child, IBM offered the same benefit to female
employees, extending it to 1 year in the 1960s and to 3 years in 1988. In fact,
the company has been ranked in the top 10 on the Working Mother magazine’s
3
100 Best Companies list in 2007 and has been on the list every year since its
inception in 1986.
IBM has always been a leader in diversity management. Yet, the way diversity
was managed was primarily to ignore differences and provide equal
employment opportunities. This changed when Louis Gerstner became the
CEO in 1993. Gerstner was surprised at the low level of diversity in the senior
ranks of the company. For all the effort being made to promote diversity, the
company still had what he perceived a masculine culture. In 1995, he created
eight diversity task forces around demographic groups such as women and
men, as well as Asians, African Americans, LBGT (lesbian, bisexual, gay,
transgender) individuals, Hispanics, Native Americans, and employees with
disabilities. These task forces consisted of senior-level, well-respected
executives and higher level managers, and members were charged with
gaining an understanding of how to make each constituency feel more
welcome and at home at IBM. Each task force conducted a series of meetings
and surveyed thousands of employees to arrive at the key factors concerning
each particular group. For example, the presence of a male-dominated culture,
lack of networking opportunities, and work–life management challenges
topped the list of concerns for women. Asian employees were most concerned
about stereotyping, lack of networking, and limited employee development
plans. African American employee concerns included retention, lack of
networking, and limited training opportunities. Armed with a list of priorities,
the company launched a number of key programs and initiatives to address
these issues. As an example, employees looking for a mentor could use the
company’s Web site to locate one willing to provide guidance and advice. What
is probably most unique about this approach is that the company acted on
each concern whether it was based on reality or perception. They realized that
some women were concerned that they would have to give up leading a
4
balanced life if they wanted to be promoted to higher management, whereas
about 70% of the women in higher levels actually had children, indicating that
perceptual barriers can also act as a barrier to employee aspirations. IBM
management chose to deal with this particular issue by communicating better
with employees as well as through enhancing their networking program.
Today, the company excels in its recruiting efforts to increase the diversity of
its pool of candidates. One of the biggest hurdles facing diversity at IBM is the
limited minority representation in fields such as computer sciences and
engineering. For example, only 4% of students graduating with a degree in
computer sciences are Hispanic. To tackle this issue, IBM partners with
colleges to increase recruitment of Hispanics to these programs. In a program
named EXITE (Exploring Interest in Technology and Engineering), they bring
middle school female students together for a weeklong program where they
learn math and science in a fun atmosphere from IBM’s female engineers. To
date, over 3,000 girls have gone through this program.
What was the result of all these programs? IBM tracks results through global
surveys around the world and identifies which programs have been successful
and which issues no longer are viewed as problems. These programs were
instrumental in more than tripling the number of female executives worldwide
as well as doubling the number of minority executives. The number of LBGT
executives increased sevenfold, and executives with disabilities tripled. With
growing emerging markets and women and minorities representing a $1.3
trillion market, IBM’s culture of respecting and appreciating diversity is likely
to be a source of competitive advantage.
Sources: Based on information from Ferris, M. (2004, Fall). What everyone
said couldn’t be done: Create a global women’s strategy for IBM. The Diversity
Factor,12(4), 37–42; IBM hosts second annual Hispanic education day (2007,
5
December–January). Hispanic Engineer, 21(2), 11; Lee, A. M. D. (2008,
March). The power of many: Diversity’s competitive advantage. Incentive,
182(3), 16–21; Thomas, D. A. (2004, September). Diversity as strategy.
Harvard Business Review, 82(9), 98–108.
Around the world, the workforce is becoming diverse. In 2007, women
constituted 46% of the workforce in the United States. In the same year, 11%
of the workforce was African American, 14% were of Hispanic origin, and 5%
were Asian. [1]
Employees continue to work beyond retirement, introducing
age diversity to the workforce. Regardless of your gender, race, and age, it
seems that you will need to work with, communicate with, and understand
people different from you at school as well as at work.
Understanding cultures different from your own is also becoming increasingly
important due to the globalization of business. In the United States, 16% of
domestic employees were foreign born, indicating that even those of us who
are not directly involved in international business may benefit from
developing an appreciation for the differences and similarities between
cultures. [2]
In this chapter, we will examine particular benefits and challenges
of managing a diverse workforce and discuss ways in which you can increase
your effectiveness when working with diversity.
As we discuss differing environments faced by employees with different
demographic traits, we primarily concentrate on the legal environment in the
United States. Please note that the way in which demographic diversity is
treated legally and socially varies around the globe. For example, countries
such as Canada and the United Kingdom have their own versions of equal
employment legislation. Moreover, how women, employees of different races,
older employees, employees with disabilities, and employees of different
6
religions are viewed and treated shows much variation based on the societal
context.
2.1 Demographic Diversity
L E A R N I N G O B J E C T I V E S
1. Explain the benefits of managing diversity effectively.
2. Explain the challenges of diversity management.
3. Describe the unique environment facing employees with specific traits such as
gender, race, religion, physical disabilities, age, and sexual orientation.
Diversity refers to the ways in which people are similar or different from each
other. It may be defined by any characteristic that varies within a particular
work unit such as gender, race, age, education, tenure, or functional
background (such as being an engineer versus being an accountant). Even
though diversity may occur with respect to any characteristic, our focus will be
on diversity with respect to demographic, relatively stable, and visible
characteristics: specifically gender, race, age, religion, physical abilities, and
sexual orientation. Understanding how these characteristics shape
organizational behavior is important. While many organizations publicly rave
about the benefits of diversity, many find it challenging to manage diversity
effectively. This is evidenced by the number of complaints filed with the Equal
Employment Opportunity Commission (EEOC) regarding discrimination. In
the United States, the Age Discrimination Act of 1975 and Title VII of the Civil
Rights Act of 1964 outlaw discrimination based on age, gender, race, national
origin, or religion. The 1990 Americans with Disabilities Act prohibits
discrimination of otherwise capable employees based on physical or mental
disabilities. In 2008, over 95,000 individuals filed a complaint claiming that
7
they were discriminated based on these protected characteristics. Of course,
this number represents only the most extreme instances in which victims must
have received visibly discriminatory treatment to justify filing a complaint. It
is reasonable to assume that many instances of discrimination go unreported
because they are more subtle and employees may not even be aware of
inconsistencies such as pay discrimination. Before the passing of
antidiscrimination laws in the United States, many forms of discrimination
were socially acceptable. This acceptance of certain discrimination practices is
more likely to be seen in countries without similar employment laws. It seems
that there is room for improvement when it comes to benefiting from
diversity, understanding its pitfalls, and creating a work environment where
people feel appreciated for their contributions regardless of who they are.
Benefits of Diversity
What is the business case for diversity? Having a diverse workforce and
managing it effectively have the potential to bring about a number of benefits
to organizations.
Higher Creativity in Decision Making
An important potential benefit of having a diverse workforce is the ability to
make higher quality decisions. In a diverse work team, people will have
different opinions and perspectives. In these teams, individuals are more
likely to consider more alternatives and think outside the box when making
decisions. When thinking about a problem, team members may identify novel
solutions. Research shows that diverse teams tend to make higher quality
decisions. [1]
Therefore, having a diverse workforce may have a direct impact on
a company’s bottom line by increasing creativity in decision making.
8
Better Understanding and Service of Customers
A company with a diverse workforce may create products or services that
appeal to a broader customer base. For example, PepsiCo Inc. planned and
executed a successful diversification effort in the recent past. The company
was able to increase the percentage of women and ethnic minorities in many
levels of the company, including management. The company points out that in
2004, about 1% of the company’s 8% revenue growth came from products that
were inspired by the diversity efforts, such as guacamole-flavored Doritos
chips and wasabi-flavored snacks. Similarly, Harley-Davidson Motor
Company is pursuing diversification of employees at all levels because the
company realizes that they need to reach beyond their traditional customer
group to stay competitive. [2]
Wal-Mart Stores Inc. heavily advertises in
Hispanic neighborhoods between Christmas and The Epiphany because the
company understands that Hispanics tend to exchange gifts on that day as
well. [3]
A company with a diverse workforce may understand the needs of
particular groups of customers better, and customers may feel more at ease
when they are dealing with a company that understands their needs.
More Satisfied Workforce
When employees feel that they are fairly treated, they tend to be more
satisfied. On the other hand, when employees perceive that they are being
discriminated against, they tend to be less attached to the company, less
satisfied with their jobs, and experience more stress at work. [4]
Organizations
where employees are satisfied often have lower turnover.
Higher Stock Prices
Companies that do a better job of managing a diverse workforce are often
rewarded in the stock market, indicating that investors use this information to
9
judge how well a company is being managed. For example, companies that
receive an award from the U.S. Department of Labor for their diversity
management programs show increases in the stock price in the days following
the announcement. Conversely, companies that announce settlements for
discrimination lawsuits often show a decline in stock prices afterward. [5]
Lower Litigation Expenses
Companies doing a particularly bad job in diversity management face costly
litigations. When an employee or a group of employees feel that the company
is violating EEOC laws, they may file a complaint. The EEOC acts as a
mediator between the company and the person, and the company may choose
to settle the case outside the court. If no settlement is reached, the EEOC may
sue the company on behalf of the complainant or may provide the injured
party with a right-to-sue letter. Regardless of the outcome, these lawsuits are
expensive and include attorney fees as well as the cost of the settlement or
judgment, which may reach millions of dollars. The resulting poor publicity
also has a cost to the company. For example, in 1999, the Coca-Cola Company
faced a race discrimination lawsuit claiming that the company discriminated
against African Americans in promotions. The company settled for a record
$192.5 million. [6]
In 2004, the clothing retailer Abercrombie & Fitch faced a
race discrimination lawsuit that led to a $40 million settlement and over $7
million in legal fees. The company had constructed a primarily Caucasian
image and was accused of discriminating against Hispanic and African
American job candidates, steering these applicants to jobs in the back of the
store. As part of the settlement, the company agreed to diversify its workforce
and catalog, change its image to promote diversity, and stop recruiting
employees primarily from college fraternities and sororities. [7]
In 2007, the
new African American district attorney of New Orleans, Eddie Jordan, was
accused of firing 35 Caucasian employees and replacing them with African
10
American employees. In the resulting reverse-discrimination lawsuit, the
office was found liable for $3.7 million, leading Jordan to step down from his
office in the hopes of preventing the assets of the office from being
seized. [8]
As you can see, effective management of diversity can lead to big cost
savings by decreasing the probability of facing costly and embarrassing
lawsuits.
Higher Company Performance
As a result of all these potential benefits, companies that manage diversity
more effectively tend to outperform others. Research shows that in companies
pursuing a growth strategy, there was a positive relationship between racial
diversity of the company and firm performance. [9]
Companies ranked in the
Diversity 50 list created by DiversityInc magazine performed better than their
counterparts. [10]
And, in a survey of 500 large companies, those with the
largest percentage of female executives performed better than those with the
smallest percentage of female executives. [11]
Challenges of Diversity
If managing diversity effectively has the potential to increase company
performance, increase creativity, and create a more satisfied workforce, why
aren’t all companies doing a better job of encouraging diversity? Despite all
the potential advantages, there are also a number of challenges associated
with increased levels of diversity in the workforce.
Similarity-Attraction Phenomenon
One of the commonly observed phenomena in human interactions is the
tendency for individuals to be attracted to similar individuals. [12]
Research
shows that individuals communicate less frequently with those who are
perceived as different from themselves. [13]
They are also more likely to
11
experience emotional conflict with people who differ with respect to race, age,
and gender. [14]
Individuals who are different from their team members are
more likely to report perceptions of unfairness and feel that their
contributions are ignored. [15]
The similarity-attraction phenomenon may explain some of the potentially
unfair treatment based on demographic traits. If a hiring manager chooses
someone who is racially similar over a more qualified candidate from a
different race, the decision will be ineffective and unfair. In other words,
similarity-attraction may prevent some highly qualified women, minorities, or
persons with disabilities from being hired. Of course, the same tendency may
prevent highly qualified Caucasian and male candidates from being hired as
well, but given that Caucasian males are more likely to hold powerful
management positions in today’s U.S.-based organizations, similarity-
attraction may affect women and minorities to a greater extent. Even when
candidates from minority or underrepresented groups are hired, they may
receive different treatment within the organization. For example, research
shows that one way in which employees may get ahead within organizations is
through being mentored by a knowledgeable and powerful mentor. Yet, when
the company does not have a formal mentoring program in which people are
assigned a specific mentor, people are more likely to develop a mentoring
relationship with someone who is similar to them in demographic
traits. [16]
This means that those who are not selected as protégés will not be
able to benefit from the support and advice that would further their careers.
Similarity-attraction may even affect the treatment people receive daily. If the
company CEO constantly invites a male employee to play golf with him while a
female employee never receives the invitation, the male employee may have a
serious advantage when important decisions are made.
12
Why are we more attracted to those who share our demographic attributes?
Demographic traits are part of what makes up surface-level diversity. Surface-
level diversity includes traits that are highly visible to us and those around us,
such as race, gender, and age. Researchers believe that people pay attention to
surface diversity because they are assumed to be related to deep-
level diversity, which includes values, beliefs, and attitudes. We want to
interact with those who share our values and attitudes, but when we meet
people for the first time, we have no way of knowing whether they share
similar values. As a result, we tend to use surface-level diversity to make
judgments about deep-level diversity. Research shows that surface-level traits
affect our interactions with other people early in our acquaintance with them,
but as we get to know people, the influence of surface-level traits is replaced by
deep-level traits such as similarity in values and attitudes. [17]
Age, race, and
gender dissimilarity are also stronger predictors of employee turnover during
the first few weeks or months within a company. It seems that people who are
different from others may feel isolated during their early tenure when they are
dissimilar to the rest of the team, but these effects tend to disappear as people
stay longer and get to know other employees.
Figure 2.3
13
Individuals often initially judge others based on surface-level diversity. Over time, this
effect tends to fade and is replaced by deep-level traits such as similarity in values and
attitudes.
As you may see, while similarity-attraction may put some employees at a
disadvantage, it is a tendency that can be managed by organizations. By
paying attention to employees early in their tenure, having formal mentoring
programs in which people are assigned mentors, and training managers to be
aware of the similarity-attraction tendency, organizations can go a long way in
dealing with potential diversity challenges.
Faultlines
A faultline is an attribute along which a group is split into subgroups. For
example, in a group with three female and three male members, gender may
act as a faultline because the female members may see themselves as separate
from the male members. Now imagine that the female members of the same
team are all over 50 years old and the male members are all younger than 25.
In this case, age and gender combine to further divide the group into two
14
subgroups. Teams that are divided by faultlines experience a number of
difficulties. For example, members of the different subgroups may avoid
communicating with each other, reducing the overall cohesiveness of the
team. Research shows that these types of teams make less effective decisions
and are less creative. [18]
Faultlines are more likely to emerge in diverse teams,
but not all diverse teams have faultlines. Going back to our example, if the
team has three male and three female members, but if two of the female
members are older and one of the male members is also older, then the
composition of the team will have much different effects on the team’s
processes. In this case, age could be a bridging characteristic that brings
together people divided across gender.
Research shows that even groups that have strong faultlines can perform well
if they establish certain norms. When members of subgroups debate the
decision topic among themselves before having a general group discussion,
there seems to be less communication during the meeting on pros and cons of
different alternatives. Having a norm stating that members should not discuss
the issue under consideration before the actual meeting may be useful in
increasing decision effectiveness. [19]
Figure 2.4
The group on the left will likely suffer a strong faultline due to the lack of
common ground. The group to the right will likely only suffer a weak faultline
15
because the men and women of the different groups will likely identify with each
other.
Stereotypes
An important challenge of managing a diverse workforce is the possibility that
stereotypes about different groups could lead to unfair decision
making. Stereotypes are generalizations about a particular group of people.
The assumption that women are more relationship oriented, while men are
more assertive, is an example of a stereotype. The problem with stereotypes is
that people often use them to make decisions about a particular individual
without actually verifying whether the assumption holds for the person in
question. As a result, stereotypes often lead to unfair and inaccurate decision
making. For example, a hiring manager holding the stereotype mentioned
above may prefer a male candidate for a management position over a well-
qualified female candidate. The assumption would be that management
positions require assertiveness and the male candidate would be more
assertive than the female candidate. Being aware of these stereotypes is the
first step to preventing them from affecting decision making.
Specific Diversity Issues
Different demographic groups face unique work environments and varying
challenges in the workplace. In this section, we will review the particular
challenges associated with managing gender, race, religion, physical ability,
and sexual orientation diversity in the workplace.
Gender Diversity in the Workplace
In the United States, two important pieces of legislation prohibit gender
discrimination at work. The Equal Pay Act (1963) prohibits discrimination in
pay based on gender. Title VII of the Civil Rights Act (1964) prohibits
16
discrimination in all employment-related decisions based on gender. Despite
the existence of strong legislation, women and men often face different
treatment at work. The earnings gap and the glass ceiling are two of the key
problems women may experience in the workplace.
Earnings Gap
An often publicized issue women face at work is the earnings gap. The median
earnings of women who worked full time in 2008 was 79% of men working full
time. [20]
There are many potential explanations for the earnings gap that is
often reported in the popular media. One explanation is that women are more
likely to have gaps in their résumés because they are more likely to take time
off to have children. Women are still the primary caregiver for young children
in many families and career gaps tend to affect earnings potential because it
prevents employees from accumulating job tenure. Another potential
explanation is that women are less likely to pursue high-paying occupations
such as engineering and business.
In fact, research shows that men and women have somewhat different
preferences in job attributes, with women valuing characteristics such as good
hours, an easy commute, interpersonal relationships, helping others, and
opportunities to make friends more than men do. In turn, men seem to value
promotion opportunities, freedom, challenge, leadership, and power more
than women do. [21]
These differences are relatively small, but they could
explain some of the earnings gap. Finally, negotiation differences among
women are often cited as a potential reason for the earnings gap. In general,
women are less likely to initiate negotiations. [22]
Moreover, when they actually
negotiate, they achieve less favorable outcomes compared to
men. [23]
Laboratory studies show that female candidates who negotiated were
more likely to be penalized for their attempts to negotiate and male evaluators
17
expressed an unwillingness to work with a female who negotiated. [24]
The
differences in the tendency to negotiate and success in negotiating are
important factors contributing to the earnings gap. According to one estimate,
as much as 34% of the differences between women’s and men’s pay can be
explained by their starting salaries. [25]
When differences in negotiation skills
or tendencies affect starting salaries, they tend to have a large impact over the
course of years.
If the earnings gap could be traced only to résumé gaps, choice of different
occupations, or differences in negotiation behavior, the salary difference might
be viewed as legitimate. Yet, these factors fail to completely account for gender
differences in pay, and lawsuits about gender discrimination in pay abound. In
these lawsuits, stereotypes or prejudices about women seem to be the main
culprit. In fact, according to a Gallup poll, women are over twelve times more
likely than men to perceive gender-based discrimination in the
workplace. [26]
For example, Wal-Mart Stores Inc. was recently sued for
alleged gender-discrimination in pay. One of the people who initiated the
lawsuit was a female assistant manager who found out that a male assistant
manager with similar qualifications was making $10,000 more per year. When
she approached the store manager, she was told that the male manager had a
“wife and kids to support.” She was then asked to submit a household budget
to justify a raise. [27]
Such explicit discrimination, while less frequent,
contributes to creating an unfair work environment.
Glass Ceiling
Another issue that provides a challenge for women in the workforce is the so-
called glass ceiling. While women may be represented in lower level positions,
they are less likely to be seen in higher management and executive suites of
companies. In fact, while women constitute close to one-half of the workforce,
18
men are four times more likely to reach the highest levels of
organizations. [28]
In 2008, only twelve of the Fortune 500 companies had
female CEOs, including Xerox Corporation, PepsiCo, Kraft Foods Inc., and
Avon Products Inc. The absence of women in leadership is unfortunate,
particularly in light of studies that show the leadership performance of female
leaders is comparable to, and in some dimensions such as transformational or
change-oriented leadership, superior to, the performance of male leaders. [29]
One explanation for the glass ceiling is the gender-based stereotypes favoring
men in managerial positions. Traditionally, men have been viewed as more
assertive and confident than women, while women have been viewed as more
passive and submissive. Studies show that these particular stereotypes are still
prevalent among male college students, which may mean that these
stereotypes may be perpetuated among the next generation of
managers. [30]
Assumptions such as these are problematic for women’s
advancement because stereotypes associated with men are characteristics
often associated with being a manager. Stereotypes are also found to influence
how managers view male versus female employees’ work accomplishments.
For example, when men and women work together in a team on a “masculine”
task such as working on an investment portfolio and it is not clear to
management which member has done what, managers are more likely to
attribute the team’s success to the male employees and give less credit to the
female employees. [31]
It seems that in addition to working hard and
contributing to the team, female employees should pay extra attention to
ensure that their contributions are known to decision makers.
There are many organizations making the effort to make work environments
more welcoming to men and women. For example, IBM is reaching out to
female middle school students to get them interested in science, hoping to
19
increase female presence in the field of engineering. [32]
Companies such as
IBM, Booz Allen Hamilton Inc., Ernst & Young Global Ltd., and General Mills
Inc. top the 100 Best Companies list created by Working Mother magazine by
providing flexible work arrangements to balance work and family demands. In
addition, these companies provide employees of both sexes with learning,
development, and networking opportunities. [33]
Race Diversity in the Workplace
Race is another demographic characteristic that is under legal protection in
the United States. Title VII of the Civil Rights Act (1964) prohibits race
discrimination in all employment-related decisions. Yet race discrimination
still exists in organizations. In a Korn-Ferry/Columbia University study of 280
minority managers earning more than $100,000, 60% of the respondents
reported that they had seen discrimination in their work assignments and 45%
have been the target of racial or cultural jokes. The fact that such
discrimination exists even at higher levels in organizations is
noteworthy. [34]
In a different study of over 5,500 workers, only 32% reported
that their company did a good job hiring and promoting minorities. [35]
One
estimate suggests that when compared to Caucasian employees, African
Americans are four times more likely and Hispanics are three times more
likely to experience discrimination. [36]
Ethnic minorities experience both an earnings gap and a glass ceiling. In
2008, for every dollar a Caucasian male employee made, African American
males made around 79 cents while Hispanic employees made 64
cents. [37]
Among Fortune 500 companies, only three (American Express
Company, Aetna Inc., and Darden Restaurants Inc.) have African American
CEOs. It is interesting that while ethnic minorities face these challenges, the
demographic trends are such that by 2042, Caucasians are estimated to
20
constitute less than one-half of the population in the United States. This
demographic shift has already taken place in some parts of the United States
such as the Los Angeles area where only 30% of the population is
Caucasian. [38]
Unfortunately, discrimination against ethnic minorities still occurs. One study
conducted by Harvard University researchers found that when Chicago-area
companies were sent fictitious résumés containing identical background
information, résumés with “Caucasian” sounding names (such as Emily and
Greg) were more likely to get callbacks compared to résumés with African
American sounding names (such as Jamal and Lakisha). [39]
Studies indicate that ethnic minorities are less likely to experience a satisfying
work environment. One study found that African Americans were more likely
to be absent from work compared to Caucasians, but this trend existed only in
organizations viewed as not valuing diversity. [40]
Similarly, among African
Americans, the perception that the organization did not value diversity was
related to higher levels of turnover. [41]
Another study found differences in the
sales performance of Hispanic and Caucasian employees, but again this
difference disappeared when the organization was viewed as valuing
diversity. [42]
It seems that the perception that the organization does not value
diversity is a fundamental explanation for why ethnic minorities may feel
alienated from coworkers. Creating a fair work environment where diversity is
valued and appreciated seems to be the key.
Organizations often make news headlines for alleged or actual race
discrimination, but there are many stories involving complete turnarounds,
suggesting that conscious planning and motivation to improve may make
organizations friendlier to all races. One such success story is Denny’s
21
Corporation. In 1991, Denny’s restaurants settled a $54 million race
discrimination lawsuit. In 10 years, the company was able to change the
situation completely. Now, women and minorities make up half of their board
and almost half of their management team. The company started by hiring a
chief diversity officer who reported directly to the CEO. The company
implemented a diversity-training program, extended recruitment efforts to
diverse colleges, and increased the number of minority-owned franchises. At
the same time, customer satisfaction among African Americans increased
from 30% to 80%. [43]
Age Diversity in the Workplace
The workforce is rapidly aging. By 2015, those who are 55 and older are
estimated to constitute 20% of the workforce in the United States. The same
trend seems to be occurring elsewhere in the world. In the European Union,
employees over 50 years of age are projected to increase by 25% in the next 25
years. [44]
According to International Labor Organization (ILO), out of the
world’s working population, the largest group is those between 40 and 44
years old. In contrast, the largest segment in 1980 was the 20- to 24-year-old
group. [45]
In other words, age diversity at work will grow in the future.
What happens to work performance as employees get older? Research shows
that age is correlated with a number of positive workplace behaviors,
including higher levels of citizenship behaviors such as volunteering, higher
compliance with safety rules, lower work injuries, lower counterproductive
behaviors, and lower rates of tardiness or absenteeism. [46]
As people get older,
they are also less likely to want to quit their job when they are dissatisfied at
work. [47]
22
Despite their positive workplace behaviors, employees who are older often
have to deal with age-related stereotypes at work. For example, a review of a
large number of studies showed that those between 17 and 29 years of age tend
to rate older employees more negatively, while younger employees were
viewed as more qualified and having higher potential. [48]
However, these
stereotypes have been largely refuted by research. Another review showed that
stereotypes about older employees—they perform on a lower level, they are
less able to handle stress, or their performance declines with age—are simply
inaccurate. [49]
The problem with these stereotypes is that they may discourage
older workers from remaining in the workforce or may act as a barrier to their
being hired in the first place.
In the United States, age discrimination is prohibited by the Age
Discrimination in Employment Act of 1967, which made it illegal for
organizations to discriminate against employees over 40 years of age. Still, age
discrimination is prevalent in workplaces. For example, while not admitting
wrongdoing, Honeywell International Inc. recently settled an age
discrimination lawsuit for $2.15 million. A group of older sales representatives
were laid off during company reorganization while younger employees with
less experience were kept in their positions. [50]
Older employees may also face
discrimination because some jobs have a perceived “correct age.” This was
probably the reason behind the lawsuit International Creative Management
Inc. faced against 150 TV writers. The lawsuit claimed that the talent agency
systematically prevented older workers from getting jobs at major
networks. [51]
What are the challenges of managing age diversity beyond the management of
stereotypes? Age diversity within a team can actually lead to higher team
performance. In a simulation, teams with higher age diversity were able to
23
think of different possibilities and diverse actions, leading to higher
performance for the teams. [52]
At the same time, managing a team with age
diversity may be challenging because different age groups seem to have
different opinions about what is fair treatment, leading to different
perceptions of organizational justice. [53]
Age diversity also means that the
workforce will consist of employees from different generations. Some
organizations are noticing a generation gap and noting implications for the
management of employees. For example, the pharmaceutical company Novo
Nordisk Inc. noticed that baby boomers (those born between 1946 and 1964)
were competitive and preferred individual feedback on performance, while
Generation Y workers (born between 1979 and 1994) were more team
oriented. This difference led one regional manager to start each performance
feedback e-mail with recognition of team performance, which was later
followed by feedback on individual performance. Similarly, Lockheed Martin
Corporation noticed that employees from different generations had different
learning styles, with older employees preferring PowerPoint presentations and
younger employees preferring more interactive learning. [54]
Paying attention
to such differences and tailoring various aspects of management to the
particular employees in question may lead to more effective management of
an age-diverse workforce.
Religious Diversity in the Workplace
In the United States, employers are prohibited from using religion in
employment decisions based on Title VII of the Civil Rights Act of 1964.
Moreover, employees are required to make reasonable accommodations to
ensure that employees can practice their beliefs unless doing so provides an
unreasonable hardship on the employer. [55]
After September 11, cases
involving religion and particularly those involving Muslim employees have
been on the rise. [56]
Religious discrimination often occurs because the religion
24
necessitates modifying the employee’s schedule. For example, devout Muslim
employees may want to pray five times a day with each prayer lasting 5 to 10
minutes. Some Jewish employees may want to take off Yom Kippur and Rosh
Hashanah, although these days are not recognized as holidays in the United
States. These situations pit employers’ concerns for productivity against
employees’ desires to fulfill religious obligations.
Accommodating someone’s religious preferences may also require companies
to relax their dress code to take into account religious practices such as
wearing a turban for Sikhs or covering one’s hair with a scarf for Muslim
women. In these cases, what matters most is that the company makes a good
faith attempt to accommodate the employee. For example, in a recent lawsuit
that was decided in favor of Costco Wholesale Corporation, the retailer was
accused of religious discrimination. A cashier who belonged to the Church of
Body Modification, which is a church with about 1,000 members worldwide,
wanted to be able to display her tattoos and facial piercings, which was against
the dress code of Costco. Costco wanted to accommodate the employee by
asking the individual to cover the piercings with skin-colored Band-Aids,
which the employee refused. This is likely the primary reason why the case
was decided in favor of Costco. [57]
Employees with Disabilities in the Workplace
Employees with a wide range of physical and mental disabilities are part of the
workforce. In 2008 alone, over 19,000 cases of discrimination based on
disabilities have been filed with the EEOC. The Americans with Disabilities
Act of 1990 (ADA) prohibits discrimination in employment against individuals
with physical as well as mental disabilities if these individuals are otherwise
qualified to do their jobs with or without reasonable accommodation. For
example, an organization may receive a job application from a hearing
25
impaired candidate whose job responsibilities will include talking over the
phone. With the help of a telephone amplifier, which costs around $50, the
employee will be able to perform the job; therefore, the company cannot use
the hearing impairment as a reason not to hire the person, again, as long as
the employee is otherwise qualified. In 2008, the largest groups of complaints
were cases based on discrimination related to disabilities or illnesses such as
cancer, depression, diabetes, hearing impairment, manic-depressive disorder,
and orthopedic impairments, among others. [58]
Particularly employees
suffering from illnesses that last for a long time and require ongoing care seem
to be at a disadvantage, because they are more likely to be stereotyped, locked
into dead-end jobs, and employed in jobs that require substantially lower
skills and qualifications than they possess. They also are more likely to quit
their jobs. [59]
What can organizations do to create a better work environment for employees
with disabilities? One legal requirement is that, when an employee brings up a
disability, the organization should consider reasonable accommodations. This
may include modifying the employee’s schedule and reassigning some
nonessential job functions. Organizations that offer flexible work hours may
also make it easier for employees with disabilities to be more effective. Finally,
supportive relationships with others seem to be the key for making these
employees feel at home. Particularly, having an understanding boss and an
effective relationship with supervisors are particularly important for
employees with disabilities. Because the visible differences between
individuals may act as an initial barrier against developing rapport, employees
with disabilities and their managers may benefit from being proactive in
relationship development. [60]
26
Sexual Orientation Diversity in the Workplace
Lesbian, bisexual, gay, and transgender (LBGT) employees in the workplace
face a number of challenges and barriers to employment. There is currently no
federal law in the United States prohibiting discrimination based on sexual
orientation, but as of 2008, 20 states as well as the District of Columbia had
laws prohibiting discrimination in employment based on sexual
orientation. [61]
Research shows that one of the most important issues relating to sexual
orientation is the disclosure of sexual identity in the workplace. According to
one estimate, up to one-third of lesbian, gay, and bisexual employees do not
disclose their sexual orientation at work. Employees may fear the reactions of
their managers and coworkers, leading to keeping their sexual identity a
secret. In reality though, it seems that disclosing sexual orientation is not the
key to explaining work attitudes of these employees—it is whether or not they
are afraid to disclose their sexual identity. In other words, those employees
who fear that full disclosure would lead to negative reactions experience lower
job satisfaction, reduced organizational commitment, and higher intentions to
leave their jobs. [62]
Creating an environment where all employees feel welcome
and respected regardless of their sexual orientation is the key to maintaining a
positive work environment.
How can organizations show their respect for diversity in sexual orientation?
Some companies start by creating a written statement that the organization
will not tolerate discrimination based on sexual orientation. They may have
workshops addressing issues relating to sexual orientation and facilitate and
create networking opportunities for lesbian and gay employees. Perhaps the
most powerful way in which companies show respect for sexual orientation
diversity is by extending benefits to the partners of same-sex couples. In fact,
27
more than half of Fortune 500 companies currently offer health benefits to
domestic partners of same-sex couples. Research shows that in companies
that have these types of programs, discrimination based on sexual orientation
is less frequent, and the job satisfaction and commitment levels are higher. [63]
OB Toolbox: I think I am being asked illegal interview questions. What can I do? In the United States, demographic characteristics such as race, gender,
national origin, age, and disability status are protected by law. Yet according
to a survey of 4,000 job seekers, about one-third of job applicants have been
asked illegal interview questions. How can you answer such questions?
Here are some options.
Refuse to answer. You may point out that the question is illegal and refuse to
answer. Of course, this may cost you the job offer, because you are likely to
seem confrontational and aggressive.
Answer shortly. Instead of giving a full answer to a question such as “are you
married,” you could answer the question briefly and change the subject. In
many cases, the interviewer may be trying to initiate small talk and may be
unaware that the question is potentially illegal.
Answer the intent. Sometimes, the illegal question hides a legitimate concern.
When you are being asked where you are from, the potential employer might
be concerned that you do not have a work permit. Addressing the issue in your
answer may be better than answering the question you are being asked.
Walk away from the interview. If you feel that the intent of the question is
discriminatory, and if you feel that you would rather not work at a company
that would ask such questions, you can always walk away from the interview.
If you feel that you are being discriminated against, you may also want to talk
to a lawyer later on.
28
Sources: Cottle, M. (1999, April 25). Too personal at the interview. New York
Times, p. 10; Thomas, J. (1999, July–August). Beware of illegal interview
questions. Women in Business, 51(4), 14.
Suggestions for Managing Demographic Diversity
What can organizations do to manage diversity more effectively? In this
section, we review research findings and the best practices from different
companies to create a list of suggestions for organizations.
Build a Culture of Respecting Diversity
In the most successful companies, diversity management is not the
responsibility of the human resource department. Starting from top
management and including the lowest levels in the hierarchy, each person
understands the importance of respecting others. If this respect is not part of
an organization’s culture, no amount of diversity training or other programs
are likely to be effective. In fact, in the most successful companies, diversity is
viewed as everyone’s responsibility. The United Parcel Service of America Inc.
(UPS), the international shipping company, refuses to hire a diversity officer,
underlining that it is not one person’s job. Companies with a strong culture—
where people have a sense of shared values, loyalty to the organization is
rewarded, and team performance is celebrated—enable employees with vastly
different demographics and backgrounds to feel a sense of belonging. [64]
Make Managers Accountable for Diversity
People are more likely to pay attention to aspects of performance that are
measured. In successful companies, diversity metrics are carefully tracked.
For example, in PepsiCo, during the tenure of former CEO Steve Reinemund,
half of all new hires had to be either women or minorities. Bonuses of
managers partly depended on whether they had met their diversity-related
29
goals. [65]
When managers are evaluated and rewarded based on how effective
they are in diversity management, they are more likely to show commitment
to diversity that in turn affects the diversity climate in the rest of the
organization.
Diversity Training Programs
Many companies provide employees and managers with training programs
relating to diversity. However, not all diversity programs are equally
successful. You may expect that more successful programs are those that occur
in companies where a culture of diversity exists. A study of over 700
companies found that programs with a higher perceived success rate were
those that occurred in companies where top management believed in the
importance of diversity, where there were explicit rewards for increasing
diversity of the company, and where managers were required to attend the
diversity training programs. [66]
Review Recruitment Practices
Companies may want to increase diversity by targeting a pool that is more
diverse. There are many minority professional groups such as the National
Black MBA Association or the Chinese Software Professionals Association. By
building relations with these occupational groups, organizations may attract a
more diverse group of candidates to choose from. The auditing company Ernst
& Young Global Ltd. increases diversity of job candidates by mentoring
undergraduate students. [67]
Companies may also benefit from reviewing their
employment advertising to ensure that diversity is important at all levels of
the company. [68]
30
Affirmative Action Programs
Policies designed to recruit, promote, train, and retain employees belonging to
a protected class are referred to as affirmative action. Based on Executive
order 11246 (1965), federal contractors are required to use affirmative action
programs. In addition, the federal government, many state and local
governments, and the U.S. military are required to have affirmative action
plans. An organization may also be using affirmative action as a result of a
court order or due to a past history of discrimination. Affirmative action
programs are among the most controversial methods in diversity management
because some people believe that they lead to an unfair advantage for minority
members.
In many cases, the negative perceptions about affirmative action can be
explained by misunderstandings relating to what such antidiscrimination
policies entail. Moreover, affirmative action means different things to different
people and therefore it is inaccurate to discuss affirmative action as a uniform
package.
Four groups of programs can be viewed as part of affirmative action
programs: [69]
1. Simple elimination of discrimination. These programs are the
least controversial and are received favorably by employees.
2. Targeted recruitment. These affirmative action plans involve
ensuring that the candidate pool is diverse. These programs are also
viewed as fair by most employees.
3. Tie-breaker. In these programs, if all other characteristics are equal,
then preference may be given to a minority candidate. In fact, these
programs are not widely used and their use needs to be justified by
organizations. In other words, organizations need to have very specific
reasons for why they are using this type of affirmative action, such as
31
past illegal discrimination. Otherwise, their use may be illegal and lead
to reverse discrimination. These programs are viewed as less fair by
employees.
4. Preferential treatment. These programs involve hiring a less-
qualified minority candidate. Strong preferential treatment programs
are illegal in most cases.
It is plausible that people who are against affirmative action programs may
have unverified assumptions about the type of affirmative action program the
company is using. Informing employees about the specifics of how affirmative
action is being used may be a good way of dealing with any negative attitudes.
In fact, a review of the past literature revealed that when specifics of
affirmative action are not clearly defined, observers seem to draw their own
conclusions about the particulars of the programs. [70]
In addition to employee reactions to affirmative action, there is some research
indicating that affirmative action programs may lead to stigmatization of the
perceived beneficiaries. For example, in companies using affirmative action,
coworkers of new hires may make the assumption that the new hire was
chosen due to gender or race as opposed to having the necessary
qualifications. These effects may even occur in the new hires themselves, who
may have doubts about the fact that they were chosen because they were the
best candidate for the position. Research also shows that giving coworkers
information about the qualifications and performance of the new hire
eliminates these potentially negative effects of affirmative action programs. [71]
OB Toolbox: Dealing with Being Different At any time in your career, you may find yourself in a situation in which you
are different from those around you. Maybe you are the only male in an
32
organization where most of your colleagues and managers are females. Maybe
you are older than all your colleagues. How do you deal with the challenges of
being different?
Invest in building effective relationships. Early in a relationship, people are
more attracted to those who are demographically similar to them. This means
that your colleagues or manager may never get to find out how smart, fun, or
hardworking you are if you have limited interactions with them. Create
opportunities to talk to them. Be sure to point out areas of commonality.
Choose your mentor carefully. Mentors may help you make sense of the
organization’s culture, give you career-related advice, and help you feel like
you belong. That said, how powerful and knowledgeable your mentor is also
matters. You may be more attracted to someone at your same level and who is
similar to you, but you may have more to learn from someone who is more
experienced, knowledgeable, and powerful than you are.
Investigate company resources. Many companies offer networking
opportunities and interest groups for women, ethnic minorities, and
employees with disabilities among others. Check out what resources are
available through your company.
Know your rights. You should know that harassment based on protected
characteristics such as gender, race, age, or disabilities, as well as
discrimination based on these traits are illegal in the United States. If you face
harassment or discrimination, you may want to notify your manager or your
company’s HR department.
K E Y T A K E A W A Y
Organizations managing diversity effectively benefit from diversity because they
achieve higher creativity, better customer service, higher job satisfaction, higher
stock prices, and lower litigation expenses. At the same time, managing a diverse
workforce is challenging for several key reasons. Employees are more likely to
33
associate with those who are similar to them early in a relationship, the distribution
of demographic traits could create faultlines within a group, and stereotypes may act
as barriers to advancement and fair treatment of employees. Demographic traits
such as gender, race, age, religion, disabilities, and sexual orientation each face
unique challenges. Organizations can manage demographic diversity more effectively
by building a culture of respect, making managers accountable for diversity, creating
diversity-training programs, reviewing recruitment practices, and under some
conditions, utilizing affirmative action programs.
E X E R C I S E S
1. What does it mean for a company to manage diversity effectively? How would you
know if a company is doing a good job of managing diversity?
2. What are the benefits of effective diversity management?
3. How can organizations deal with the “similarity-attraction” phenomenon? Left
unchecked, what are the problems this tendency can cause?
4. What is the earnings gap? Who does it affect? What are the reasons behind the
earnings gap?
5. Do you think that laws and regulations are successful in eliminating discrimination in
the workplace? Why or why not?
2.2 Cultural Diversity
L E A R N I N G O B J E C T I V E S
1. Explain what culture is.
2. Define the four dimensions of culture that are part of Hofstede’s framework.
3. Describe some ways in which national culture affects organizational behavior.
34
Culture refers to values, beliefs, and customs that exist in a society. In the
United States, the workforce is becoming increasingly multicultural, with close
to 16% of all employees being born outside the country. In addition, the world
of work is becoming increasingly international. The world is going through a
transformation in which China, India, and Brazil are emerging as major
players in world economics. Companies are realizing that doing international
business provides access to raw materials, resources, and a wider customer
base. For many companies, international business is where most of the profits
lie, such as for Intel Corporation, where 70% of all revenues come from
outside the United States. International companies are also becoming major
players within the United States. For example, China’s Lenovo acquired IBM’s
personal computer business and became the world’s third largest computer
manufacturer. [1]
As a result of these trends, understanding the role of national culture for
organizational behavior may provide you with a competitive advantage in your
career. In fact, sometime in your career, you may find yourself working as an
expatriate. An expatriate is someone who is temporarily assigned to a position
in a foreign country. Such an experience may be invaluable for your career and
challenge you to increase your understanding and appreciation of differences
across cultures.
How do cultures differ from each other? If you have ever visited a country
different from your own, you probably have stories to tell about what aspects
of the culture were different and which were similar. Maybe you have noticed
that in many parts of the United States people routinely greet strangers with a
smile when they step into an elevator or see them on the street, but the same
behavior of saying hello and smiling at strangers would be considered odd in
many parts of Europe. In India and other parts of Asia, traffic flows with rules
35
of its own, with people disobeying red lights, stopping and loading passengers
in highways, or honking continuously for no apparent reason. In fact, when it
comes to culture, we are like fish in the sea: We may not realize how culture is
shaping our behavior until we leave our own and go someplace else. Cultural
differences may shape how people dress, how they act, how they form
relationships, how they address each other, what they eat, and many other
aspects of daily life. Of course, talking about national cultures does not mean
that national cultures are uniform. In many countries, it is possible to talk
about the existence of cultures based on region or geography. For example, in
the United States, the southern, eastern, western, and midwestern regions of
the country are associated with slightly different values.
Thinking about hundreds of different ways in which cultures may differ is not
very practical when you are trying to understand how culture affects work
behaviors. For this reason, the work of Geert Hofstede, a Dutch social
scientist, is an important contribution to the literature. Hofstede studied IBM
employees in 66 countries and showed that four dimensions of national
culture explain an important source of variation among cultures. Research
also shows that cultural variation with respect to these four dimensions
influence employee job behaviors, attitudes, well-being, motivation,
leadership, negotiations, and many other aspects of organizational behavior. [2]
Individualism-Collectivism
Individualistic cultures are cultures in which people define themselves as an
individual and form looser ties with their groups. These cultures value
autonomy and independence of the person, self-reliance, and creativity.
Countries such as the United States, United Kingdom, and Australia are
examples of individualistic cultures. In contrast, collectivistic cultures are
cultures where people have stronger bonds to their groups and group
36
membership forms a person’s self identity. Asian countries such as China and
Japan, as well as countries in Latin America are higher in collectivism.
In collectivistic cultures, people define themselves as part of a group. In fact,
this may be one way to detect people’s individualism-collectivism level. When
individualists are asked a question such as “Who are you? Tell me about
yourself,” they are more likely to talk about their likes and dislikes, personal
goals, or accomplishments. When collectivists are asked the same question,
they are more likely to define themselves in relation to others, such as “I am
Chinese” or “I am the daughter of a doctor and a homemaker. I have two
brothers.” In other words, in collectivistic cultures, self identity is shaped to a
stronger extent by group memberships. [3]
In collectivistic societies, family bonds are more influential in people’s daily
lives. While individualists often refer to their nuclear family when thinking
about their families, collectivists are more likely to define family in a broader
sense, including cousins, uncles, aunts, and second cousins. Family members
are more involved in each others’ lives. For example, in societies such as Iran,
Greece, and Turkey, extended family members may see each other several
times a week. In many collectivistic societies, the language reflects the level of
interaction among extended family members such that there may be different
words used to refer to maternal versus paternal grandparents, aunts, or
uncles. In addition to interacting with each other more often, family members
have a strong sense of obligation toward each other. For example, children
often expect to live with their parents until they get married. In collectivistic
countries such as Thailand, Japan, and India, choosing a career or finding a
spouse are all family affairs. In these cultures, family members feel
accountable for each others’ behavior such that one person’s misbehavior may
cbe a cause of shame for the rest of the family. [4]
Understanding the
37
importance of family in collectivistic cultures is critical to understanding their
work behaviors. For example, one multinational oil company in Mexico was
suffering from low productivity. When the situation was investigated, it
became clear that the new manager of the subsidiary had gotten rid of a
monthly fiesta for company employees and their families under the
assumption that it was a waste of time and money. Employees had interpreted
this to mean that the company no longer cared about their families. [5]
In
India, companies such as Intel organize “take your parents to work day” and
involve parents in recruitment efforts, understanding the role of parents in the
career and job choices of prospective employees. [6]
Collectivists are more attached to their groups and have more permanent
attachments to these groups. Conversely, individualists attempt to change
groups more often and have weaker bonds to them. It is important to
recognize that to collectivists the entire human universe is not considered to
be their in-group. In other words, collectivists draw sharper distinctions
between the groups they belong to and those they do not belong to. They may
be nice and friendly to their in-group members while acting much more
competitively and aggressively toward out-group members. This tendency has
important work implications. While individualists may evaluate the
performance of their colleagues more accurately, collectivists are more likely
to be generous when evaluating their in-group members. Freeborders, a
software company based in San Francisco, California, found that even though
it was against company policy, Chinese employees were routinely sharing
salary information with their coworkers. This situation led them to change
their pay system by standardizing pay at job levels and then giving raises after
more frequent appraisals. [7]
38
Collectivistic societies emphasize conformity to the group. The Japanese
saying “the nail that sticks up gets hammered down” illustrates that being
different from the group is undesirable. In these cultures, disobeying or
disagreeing with one’s group is difficult and people may find it hard to say no
to their colleagues or friends. Instead of saying no, which would be interpreted
as rebellion or at least be considered rude, they may use indirect ways of
disagreeing, such as saying “I have to think about this” or “this would be
difficult.” Such indirect communication prevents the other party from losing
face but may cause misunderstandings in international communications with
cultures that have a more direct style. Collectivist cultures may have a greater
preference for team-based rewards as opposed to individual-based rewards.
For example, in one study, more than 75% of the subjects in Philippines
viewed team-based pay as fair, while less than 50% of the U.S.-based subjects
viewed team-based rewards as fair. [8]
Power Distance
Power distance refers to the degree to which the society views an unequal
distribution of power as acceptable. Simply put, some cultures are more
egalitarian than others. In low power distance cultures, egalitarianism is the
norm. In high power distance cultures, people occupying more powerful
positions such as managers, teachers, or those who are older are viewed as
more powerful and deserving of a higher level of respect. High power distance
cultures are hierarchical cultures where everyone has their place. Powerful
people are supposed to act powerful, while those in inferior positions are
expected to show respect. For example, Thailand is a high power distance
culture and, starting from childhood, people learn to recognize who is
superior, equal, or inferior to them. When passing people who are more
powerful, individuals are expected to bow, and the more powerful the person,
the deeper the bow would be. [9]
Managers in high power distance cultures are
39
treated with a higher degree of respect, which may surprise those in lower
power distance cultures. A Citibank manager in Saudi Arabia was surprised
when employees stood up every time he passed by. [10]
Similarly, in Turkey,
students in elementary and high schools greet their teacher by standing up
every time the teacher walks into the classroom. In these cultures, referring to
a manager or a teacher with their first name would be extremely rude. High
power distance within a culture may easily cause misunderstandings with
those from low power distance societies. For example, the limp handshake
someone from India may give or a job candidate from Chad who is looking at
the floor throughout the interview are in fact showing their respect, but these
behaviors may be interpreted as indicating a lack of confidence or even
disrespect in low power distance cultures.
One of the most important ways in which power distance is manifested in the
workplace is that in high power distance cultures, employees are unlikely to
question the power and authority of their manager, and conformity to the
manager will be expected. Managers in these cultures may be more used to an
authoritarian style with lower levels of participative leadership demonstrated.
People will be more submissive to their superiors and may take orders without
questioning the manager. [11]
In these cultures, people may feel uncomfortable
when they are asked to participate in decision making. For example, peers are
much less likely to be involved in hiring decisions in high power distance
cultures. Instead, these cultures seem to prefer paternalistic leaders—leaders
who are authoritarian but make decisions while showing a high level of
concern toward employees as if they were family members. [12]
Uncertainty Avoidance
Uncertainty avoidance refers to the degree to which people feel threatened by
ambiguous, risky, or unstructured situations. Cultures high in uncertainty
40
avoidance prefer predictable situations and have low tolerance for ambiguity.
Employees in these cultures expect a clear set of instructions and clarity in
expectations. Therefore, there will be a greater level of creating procedures to
deal with problems and writing out expected behaviors in manuals.
Cultures high in uncertainty avoidance prefer to avoid risky situations and
attempt to reduce uncertainty. For example, one study showed that when
hiring new employees, companies in high uncertainty avoidance cultures are
likely to use a larger number of tests, conduct a larger number of interviews,
and use a fixed list of interview questions. [13]
Employment contracts tend to be
more popular in cultures higher in uncertainty avoidance compared to
cultures low in uncertainty avoidance. [14]
The level of change-oriented
leadership seems to be lower in cultures higher in uncertainty avoidance. [15]
Companies operating in high uncertainty avoidance cultures also tend to avoid
risky endeavors such as entering foreign target markets unless the target
market is very large. [16]
Germany is an example of a high uncertainty avoidance culture where people
prefer structure in their lives and rely on rules and procedures to manage
situations. Similarly, Greece is a culture relatively high in uncertainty
avoidance, and Greek employees working in hierarchical and rule-oriented
companies report lower levels of stress. [17]
In contrast, cultures such as Iran
and Russia are lower in uncertainty avoidance, and companies in these
regions do not have rule-oriented cultures. When they create rules, they also
selectively enforce rules and make a number of exceptions to them. In fact,
rules may be viewed as constraining. Uncertainty avoidance may influence the
type of organizations employees are attracted to. Japan’s uncertainty
avoidance is associated with valuing job security, while in uncertainty-
41
avoidant Latin American cultures, many job candidates prefer the stability of
bigger and well-known companies with established career paths.
Masculinity–Femininity
Masculine cultures are cultures that value achievement, competitiveness, and
acquisition of money and other material objects. Japan and Hungary are
examples of masculine cultures. Masculine cultures are also characterized by a
separation of gender roles. In these cultures, men are more likely to be
assertive and competitive compared to women. In
contrast, feminine cultures are cultures that value maintaining good
relationships, caring for the weak, and emphasizing quality of life. In these
cultures, values are not separated by gender, and both women and men share
the values of maintaining good relationships. Sweden and the Netherlands are
examples of feminine cultures. The level of masculinity inherent in the culture
has implications for the behavior of individuals as well as organizations. For
example, in masculine cultures, the ratio of CEO pay to other management-
level employees tends to be higher, indicating that these cultures are more
likely to reward CEOs with higher levels of pay as opposed to other types of
rewards. [18]
The femininity of a culture affects many work practices, such as
the level of work/life balance. In cultures high in femininity such as Norway
and Sweden, work arrangements such as telecommuting seem to be more
popular compared to cultures higher in masculinity like Italy and the United
Kingdom.
OB Toolbox: Prepare Yourself for a Global Career With the globalizing economy, boundaries with respect to careers are also
blurring. How can you prepare yourself for a career that crosses national
boundaries?
42
Learn a language. If you already know that you want to live in China after you
finish school, now may be the time to start learning the language. It is true
that business is often conducted in English, but it is becoming increasingly
ethnocentric to speak only one language while many in the rest of the world
can speak two or more. For example, only 9% of those living in the United
States can speak their native language plus another language fluently, as
opposed to 53% of Europeans. [19]
Plus, even if business is conducted in
English, your adaptation to a different society, making friends, and leading a
satisfying life will be much easier if you can speak the language.
Immerse yourself in different cultures. Visit different cultures. This does not
mean visiting five countries in 5 days. Plan on spending more time in one
locale, and get to know, observe, and understand the culture.
Develop an openness to different experiences. Be open to different cuisines,
different languages, and different norms of working and living. If you feel very
strongly that your way of living and working is the right way, you will have a
hard time adjusting to a different culture.
Develop a strong social support network. Once you arrive in the culture you
will live in, be proactive in making friends. Being connected to people in a
different culture will have an influence on your ability to adjust to living there.
If you are planning on taking family members with you, their level of
readiness will also influence your ability to function in a different culture.
Develop a sense of humor. Adjusting to a different culture is often easier if you
can laugh at yourself and the mistakes you make. If you take every mistake too
personally, your stay will be less enjoyable and more frustrating.
Plan your return. If you have plans to come back and work in your home
country, you will need to plan your return in advance. When people leave
home for a long time, they often adapt to the foreign culture they live in and
may miss many elements of it when they go back home. Your old friends may
have moved on, local employers may not immediately appreciate your
43
overseas experience, and you may even find that cultural aspects of your home
country may have changed in your absence. Be ready for a reverse culture
shock!
Suggestions for Managing Cultural Diversity
With the increasing importance of international business as well as the
culturally diverse domestic workforce, what can organizations do to manage
cultural diversity?
Help Employees Build Cultural Intelligence
Cultural intelligence is a person’s capability to understand how a person’s
cultural background influences one’s behavior. Developing cultural
intelligence seems important, because the days when organizations could
prepare their employees for international work simply by sending them to
long seminars on a particular culture are gone. Presently, international
business is not necessarily conducted between pairs of countries. A successful
domestic manager is not necessarily assigned to work on a long-term
assignment in China. Of course such assignments still happen, but it is more
likely that the employees will continually work with others from diverse
cultural backgrounds. This means employees will not necessarily have to
become experts in one culture. Instead, they should have the ability to work
with people from many diverse backgrounds all at the same time. For these
types of assignments, employees will need to develop an awareness of overall
cultural differences and learn how to recognize cultural principles that are
operating in different situations. In other words, employees will need to be
selected based on cultural sensitivity and understanding and trained to
enhance such qualities. [20]
For example, GlobeSmart by Aperian Global is an
online tool that helps employees learn how to deal with people from around
the world. The process starts by completing a survey about your cultural
44
values, and then these values are compared to those of different cultures. The
tool provides specific advice about interpersonal interactions with these
cultures. [21]
Avoid Ethnocentrism
Ethnocentrism is the belief that one’s own culture is superior to other cultures
one comes across. Ethnocentrism leads organizations to adopt universal
principles when doing business around the globe and may backfire. In this
chapter, we highlighted research findings showing how culture affects
employee expectations of work life such as work–life balance, job security, or
the level of empowerment. Ignoring cultural differences, norms, and local
habits may be costly for businesses and may lead to unmotivated and
dissatisfied employees. Successful global companies modify their management
styles, marketing, and communication campaigns to fit with the culture in
which they are operating. For example, Apple Inc.’s famous PC versus Mac
advertising campaign was reshot in Japan and the United Kingdom using local
actors. The American ads were found to be too aggressive for the Japanese
culture, where direct product comparisons are rare and tend to make people
uncomfortable. The new ads feature more friendly banter and are subtler than
the U.S. ads. For the British market, the advertisers localized the humor. [22]
Listen to Locals
When doing cross-cultural business, locals are a key source of information. To
get timely and accurate feedback, companies will need to open lines of
communication and actively seek feedback. For example, Convergys, a
Cincinnati-based call-center company, built a cafeteria for the employees in
India. During the planning phase, the Indian vice president pointed out that
because Indian food is served hot and employees would expect to receive hot
meals for lunch, building a cafeteria that served only sandwiches would create
45
dissatisfied employees. By opening the lines of communication in the planning
phase of the project, Convergys was alerted to this important cultural
difference in time to change the plans. [23]
Recognize That Culture Changes
Cultures are not static—they evolve over the years. A piece of advice that was
true 5 years ago may no longer hold true. For example, showing sensitivity to
the Indian caste system may be outdated advice for those internationals doing
business in India today.
Do Not Always Assume That Culture Is the Problem
When doing business internationally, failure may occur due to culture as well
as other problems. Attributing all misunderstandings or failures to culture
may enlarge the cultural gap and shift the blame to others. In fact, managing
people who have diverse personalities or functional backgrounds may create
misunderstandings that are not necessarily due to cultural differences. When
marketing people from the United States interact with engineers in India,
misunderstandings may be caused by the differences in perceptions between
marketing and engineering employees. While familiarizing employees about
culture, emphasizing the importance of interpersonal skills regardless of
cultural background will be important.
K E Y T A K E A W A Y
With the increasing prevalence of international business as well as diversification of
the domestic workforce in many countries, understanding how culture affects
organizational behavior is becoming important. Individualism-collectivism, power
distance, uncertainty avoidance, and masculinity–femininity are four key dimensions
in which cultures vary. The position of a culture on these dimensions affects the
46
suitable type of management style, reward systems, employee selection, and ways of
motivating employees.
E X E R C I S E S
1. What is culture? Do countries have uniform national cultures?
2. How would you describe your own home country’s values on the four dimensions of
culture?
3. Reflect on a time when you experienced a different culture or interacted with
someone from a different culture. How did the cultural differences influence your
interaction?
4. How does culture influence the proper leadership style and reward system that
would be suitable for organizations?
5. Imagine that you will be sent to live in a foreign country different from your own in a
month. What are the types of preparations you would benefit from doing?
2.3 The Role of Ethics and National Culture
L E A R N I N G O B J E C T I V E S
1. Consider the role of diversity for ethical behavior.
2. Consider the role of national culture on diversity.
Diversity and Ethics
When managing a diverse group of employees, ensuring the ethicality of
organizational behavior will require special effort. This is because employees
with different backgrounds or demographic traits may vary in their standards
of ethics. For example, research shows that there are some gender differences
when it comes to evaluating the degree of ethicality of hypothetical scenarios,
with women utilizing higher standards. Men and women seem to have similar
47
standards when judging the ethicality of monetary issues but differ on issues
such as the ethicality of breaking organizational rules. Interestingly, gender
differences seem to disappear as people grow older. Age is another
demographic trait that influences the standards of ethics people use, with
older employees being bothered more by unethical behaviors compared to
younger employees. Similarly, one study showed that older respondents found
some questionable negotiation behaviors such as misrepresenting information
and bluffing to be more unethical compared to younger respondents. [1]
In addition to demographic diversity, cultural diversity introduces challenges
to managing ethical behavior, given that cultures differ in the actions they
view as ethical. Cultural differences are particularly important when doing
cross-cultural business. For example, one study compared Russian and
American subjects on their reactions to ethics scenarios. Americans viewed
scenarios such as an auditing company sharing information regarding one
client with another client as more unethical compared to how Russian subjects
viewed the same scenarios. [2]
A study comparing U.S., Korean, and Indian
managers found differences in attitudes toward business ethics, particularly
with Koreans thinking that being ethical was against the goal of being
profitable. Indian and Korean subjects viewed questionable practices such as
software piracy, nepotism, or the sharing of insider information as relatively
more ethical compared to subjects in the United States. At the same time,
Korean and Indian subjects viewed injury to the environment as more
unethical compared to the U.S. subjects. [3]
In other words, the ethical
standards held in different societies may emphasize different behaviors as
ethical or unethical.
When dealing with unethical behavior overseas, companies will need to
consider the ethical context. Having internal reporting mechanisms may help,
48
but research shows that in very high power distant societies, these
mechanisms often go unused. [4]
Even when a multinational company has
ethical standards that are different from local standards, using the
headquarters’ standards in all cross-cultural interactions will not be possible
or suitable. The right action often depends on the specifics of the situation and
a consideration of the local culture. For example, in the 1990s, Levi-Strauss &
Company found that some of its contractors in Bangladesh were using child
labor consisting of children under 14 years old in its factories. One option they
had was to demand that their contractors fire those children immediately. Yet,
when they looked at the situation more closely, they found that it was common
for young children to be employed in factories, and in many cases these
children were the sole breadwinners in the family. Firing these children would
have caused significant hardship for the families and could have pushed the
children into more dangerous working conditions. Therefore, Levi-Strauss
reached an agreement to send the children back to school while continuing to
receive their wages partly from the contractor companies and partly from
Levi-Strauss. The school expenses were met by Levi-Strauss and the children
were promised work when they were older. In short, the diverse ethical
standards of the world’s cultures make it unlikely that one approach can lead
to fair outcomes in all circumstances.
Diversity Around the Globe
Demographic diversity is a fact of life in the United States. The situation is
somewhat different in other parts of the world. Attitudes toward gender, race,
disabilities, or sexual orientation differ around the world, and each country
approaches the topic of diversity differently.
As a case in point, Japan is a relatively homogeneous society that sees the
need to diversify itself. With the increasing age of the population, the country
49
expects to lose 650,000 workers per year. At the same time, the country
famously underutilizes female employees. Overt sexism is rampant, and
stereotypes about female employees as unable to lead are part of the culture.
While there is antidiscrimination legislation and the desire of the Japanese
government to deal with this issue, women are seriously underrepresented in
management. For example, while 25% of all Hewlett-Packard Development
Company managers in the United States are female, in Japan this number is
around 4%. Some companies such as Sanyo Electric Co. Ltd. have female
CEOs, but these companies are generally considered exceptions. Because of
the labor shortage, the country is attracting immigrants from South America,
thereby increasing the level of diversity of the country and increasing
awareness of diversity-related issues. [5]
Attitudes toward concepts such as affirmative action are also culturally
determined. For example, France experiences different employment situations
for employees with different backgrounds. According to one study conducted
by a University of Paris professor in which fake résumés were sent to a large
number of companies, even when all qualifications were the same, candidates
with French-sounding names were three times more likely to get a callback
compared to those with North African–sounding names. However, affirmative
action is viewed as unfair in French society, leaving the situation in the hands
of corporations. Some companies such as PSA Peugeot Citroën started
utilizing human resource management systems in which candidate names are
automatically stripped from résumés before HR professionals personally
investigate them. [6]
In summary, due to differences in the legal environment
as well as cultural context, “managing diversity effectively” may carry a
different meaning across the globe.
K E Y T A K E A W A Y
50
Ethical behavior is affected by the demographic and cultural composition of the
workforce. Studies indicate that men and women, as well as younger and older
employees, differ in the types of behaviors they view as ethical. Different cultures
also hold different ethical standards, which become important when managing a
diverse workforce or doing business within different cultures. Around the globe,
diversity has a different meaning and different overtones. In addition to different
legal frameworks protecting employee classes, the types of stereotypes that exist in
different cultures and whether and how the society tackles prejudice against
different demographic categories vary from region to region.
E X E R C I S E S
1. Do you believe that multinational companies should have an ethics code that they
enforce around the world? Why or why not?
2. How can organizations manage a workforce with diverse personal ethical values?
2.4 Conclusion In conclusion, in this chapter we reviewed the implications of demographic
and cultural diversity for organizational behavior. Management of diversity
effectively promises a number of benefits for companies and may be a
competitive advantage. Yet, challenges such as natural human tendencies to
associate with those similar to us and using stereotypes in decision making
often act as barriers to achieving this goal. By creating a work environment
where people of all origins and traits feel welcome, organizations will make it
possible for all employees to feel engaged with their work and remain
productive members of the organization.
51
2.5 Exercises
E T H I C A L D I L E M M A
You are working for the police department of your city. When hiring employees, the
department uses a physical ability test in which candidates are asked to do 30 push-
ups and 25 sit-ups, as well as climb over a 4-foot wall. When candidates take this
test, it seems that about 80% of the men who take the test actually pass it, while
only 10% of the female candidates pass the test. Do you believe that this is a fair
test? Why or why not? If you are asked to review the employee selection
procedures, would you make any changes to this system? Why or why not?
I N D I V I D U A L E X E R C I S E
A colleague of yours is being sent to India as a manager for a call center. She just told
you that she feels very strongly about the following issues:
Democratic leaders are the best leaders because they create a more satisfied
workforce.
Employees respond best to individual-based pay incentives and bonuses as tools for
motivation.
Employees should receive peer feedback about their performance level so that they
can get a better sense of how well they are performing.
After doing some research on the business environment and national culture in
India, how would you advise your colleague to behave? Should she try to transfer
these three managerial practices to the Indian context? Why or why not?
G R O U P E X E R C I S E
Diversity Dilemmas
Imagine that you are working in the HR department of your company. You come
across the following scenarios in which your input has been sought. Discuss each
scenario and propose an action plan for management.
52
1. Aimee is the mother of a newborn. She is very dedicated to her work but she used to
stay for longer hours at work before she had her baby. Now she tries to schedule her
work so that she leaves around 5:00 p.m. Her immediate manager feels that Aimee is
no longer dedicated or committed to her work and is considering passing her over
for a promotion. Is this decision fair?
2. Jack is a married male, while John is single. Your company has an assignment in a
branch in Mexico that would last a couple of years. Management feels that John
would be better for this assignment because he is single and is free to move. Is this
decision fair?
3. A manager receives a request from an employee to take off a Wednesday for
religious reasons. The manager did not know that this employee was particularly
religious and does not believe that the leave is for religious reasons. The manager
believes that the employee is going to use this day as a personal day off. Should the
manager investigate the situation?
4. A sales employee has painful migraines intermittently during the work day. She
would like to take short naps during the day as a preventative measure and she also
needs a place where she can nap when a migraine occurs. Her immediate manager
feels that this is unfair to the rest of the employees.
5. A department is looking for an entry-level cashier. One of the job applicants is a
cashier with 30 years of experience as a cashier. The department manager feels that
this candidate is overqualified for the job and is likely to be bored and leave the job
in a short time. Instead, they want to pursue a candidate with 6 months of work
experience who seems like a better fit for the position.
For faster progress, companies need to draw on the power of design, rethink their assumptions, and use data to inform decision making.
The call for greater diversity in the boardroom and beyond hasn’t yet yielded significant change. Most efforts progress by inches, but companies that take a new tack to address unconscious bias and build a more inclusive workforce could turn the tide on gender issues. In this interview with McKinsey’s Rik Kirkland, Harvard Kennedy School professor of public policy Iris Bohnet talks about what is working—and what is not—when it comes to building a more equitable workplace. An edited version of her remarks follows.
Interview transcript
[There’s] great work showing that diversity is correlated with business performance. But we’ve also learned that that probably won’t be enough to move the needle. That came as somewhat of a surprise to many of us, who thought that if we can show the business case, things will happen. But clearly more needs to be done.
The failures of diversity training
About $8 billion a year is spent on diversity trainings in the United States alone. Now, I tried very hard to find any evidence I could. I looked not just in the United States but also in Rwanda and other post-conflict countries, where reconciliation is often built on the kind of diversity trainings that we do in our companies, to see how this is working.
Sadly enough, I did not find a single study that found that diversity training in fact leads to more diversity. Now, that’s disappointing, discouraging, but maybe when we unpack it also understandable. The unpacking means that there’s a lot of research that has nothing to do with diversity or gender or biases but is more generally trying to understand how people think, and it has shown that it is actually very hard to change mind-sets.
Focusing on what works for workplace diversity
April 2017
Based on that evidence, maybe we shouldn’t be quite as shocked that diversity training doesn’t have the impact that we were hoping it could have. Because even though you and I might agree now that we will be inclusive tomorrow, it is hard to follow through on those virtuous intentions.
How design can address unconscious bias
What we’re up against often is referred to as unconscious bias. It means that if I think kindergarten teacher, I don’t think man. And if I think engineer, I don’t think woman. Seeing really is believing.
A powerful study demonstrating unconscious bias was actually run with orchestras. In the 1970s, some major US orchestras introduced blind auditions. They had musicians audition behind a curtain and then evaluated their performance. The interesting thing about this design feature, this curtain, is that it was introduced despite the fact that many of the orchestra directors thought that they of course didn’t need curtains—that they of all people only cared about the quality of the music and not what somebody looked like.
It turns out that curtains helped increase the fraction [of women] on these orchestras from about 5 percent in the 1970s to almost 40 percent now. That is the power of design. The curtain is important for me for two reasons. On the one hand, it is a real example showing the power of unconscious bias. But it is also important because it helps us understand that sometimes we have to make it easier for well-meaning people to do the right thing.
What works to promote gender equality
There are things that do work if you design them right. Talking about talent management, for example, we can go through the life of a person once he or she enters an organization. That starts with sourcing talent.
Most organizations would argue that they’d like to benefit from 100 percent of the talent pool. One way to do this is to start with our job advertisements and de-bias the language that we use in them. We have to scrutinize the kinds of descriptions that we use in our job ads. Let’s cast the net widely and use language that’s inclusive. Not every word can be expressed as a gender-neutral word. But what the research suggests is that if you use a very gendered word like assertive, which may be an important characteristic you want to look for, counterbalance it with a word such as cooperative.
We enter more difficult territory as we start to evaluate people. It’s difficult because most of us believe we are very good at it, when in fact the evidence suggests that’s not true. We are very likely to be influenced by what somebody looks like, when that’s actually not a good predictor of performance. We’re influenced by whether we share the same hobby, have the same accent, come from the same country—lots of things that in theory shouldn’t matter.
2
What can you do there? At the first stage of the evaluation process, I would recommend that companies blind themselves to the demographic characteristics of job applicants. That means taking off names. In some countries—such as Germany or Switzerland—age is still included [on applications]. In many countries, you still add a photograph to your job application. All of that should go.
Here we can really learn from the orchestras and try to help our minds focus on the quality of the candidate, not whether somebody looks the part. One example: a start-up, Applied, tested the impact of blinding. It worked with a tech company and had every applicant go through the traditional process. In parallel, every application was reviewed using the Applied process, which included blind evaluations. What this tech company found in the end wasn’t so much gender, racial, or other biases, but rather disciplinary bias. It had thought it was only looking for computer scientists and engineers—a small sample of the general population. Once the company blinded itself to some of those characteristics and relied on job sample tests where people were confronted with some of the tasks they would actually have to do, it started hiring neuroscientists, psychologists, people who could do the work but wouldn’t naturally fall into the category it would hire from.
Changing the default to drive change
One of the early insights in behavioral science was that defaults matter. It really matters where we start our assumptions. We just heard from a company that changed the default in their job ads to part-time work, saying that the default is part time, but you can opt out and work full time if you’d like to.
Telstra is a big telecommunications company in Australia. It changed the default to flexibility. Every job ad now says that flexible work is the assumption. And in its firm culture, the norm is basically to ask, “Why are you in the office today? Couldn’t you work from home?” Already, from Telstra’s data, I know that it increased the likelihood that women would apply dramatically.
The next horizon: People analytics
I’m not arguing that we should leave this up to machines. But I am saying that we should use machines, algorithms, and data much more intelligently together with humans in making those decisions.
This is an important insight. We’ve been throwing money at the problem through diversity- training programs and leadership-training programs, trying to help traditionally disadvantaged groups, including women but also people of color and people with disabilities. That is not the way to go.
3
We have to understand what’s broken and then intervene where the issues are—really tease apart what’s broken, and then try to fix it and use data on what works to inform our decision making. I am quite optimistic that big data analytics and experimentation will move the needle dramatically in the next ten years. But I am mentioning experimentation also to suggest that we don’t have all the answers yet.
Rik Kirkland is the senior managing editor of McKinsey Publishing and is based in McKinsey’s New York office. Iris Bohnet is a professor of public policy at Harvard Kennedy School and directs its Women and Public Policy Program; she is also the author of What Works: Gender Equality by Design (Belknap Press, 2016).
Copyright © 2017 McKinsey & Company. All rights reserved.
4
“If at first you don’t succeed, try, try, try again.” If W. E. Hickson, the British author known for popularizing that familiar proverb in the mid-19th century, were alive today, he might easily be applying it (disparagingly) to the efforts of modern corporations to redesign their organizations.
Recent McKinsey research surveying a large set of global executives suggests that many companies, these days, are in a nearly permanent state of organizational flux. Almost 60 percent of the respondents, for example, told us they had experienced a redesign within the past two years, and an additional 25 percent said they experienced a redesign three or more years ago. A generation or two back, most executives might have experienced some sort of organizational upheaval just a few times over the course of their careers.
One plausible explanation for this new flurry of activity is the accelerating pace of strategic change driven by the disruption of industries. As a result, every time a company switches direction, it alters the organization to deliver the hoped-for results. Rather than small, incremental tweaks of the kind that might have been appropriate in the past, today’s organizations often need regular shake-ups of the Big Bang variety.
Frustratingly, it also appears that the frequency of organizational redesign reflects a high level of disappointment with the outcome. According to McKinsey’s research, less than a quarter of organizational-redesign efforts succeed. Forty-four percent run out
Getting organizational redesign right
Companies will better integrate their people,
processes, and structures by following nine
golden rules.
Steven Aronowitz, Aaron De Smet, and Deirdre McGinty
J U N E 2 0 1 5
2
of steam after getting under way, while a third fail to meet objectives or improve performance after implementation.
The good news is that companies can do better—much better. In this article, we’ll describe what we learned when we compared successful and unsuccessful organizational redesigns and explain some rules of the road for executives seeking to improve the odds. Success doesn’t just mean avoiding the expense, wasted time, and morale-sapping skepticism that invariably accompany botched attempts; in our experience, a well-executed redesign pays off quickly in the form of better-motivated employees, greater decisiveness, and a stronger bottom line.
Why redesign the organization?
Organizational redesign involves the integration of structure, processes, and people to support the implementation of strategy and therefore goes beyond the traditional tinkering with “lines and boxes.” Today, it comprises the processes that people follow, the management of individual performance, the recruitment of talent, and the development of employees’ skills. When the organizational redesign of a company matches its strategic intentions, everyone will be primed to execute and deliver them. The company’s structure, processes, and people will all support the most important outcomes and channel the organization’s efforts into achieving them.
When do executives know that an organization isn’t working well and that they need to consider a redesign? Sometimes the answer is obvious: say, after the announcement of a big new regional-growth initiative or following a merger. Other signs may be less visible—for example, a sense that ideas agreed upon at or near the top of the organization aren’t being translated quickly into actions or that executives spend too much time in meetings. These signs suggest that employees might be unclear about their day-to-day work priorities or that decisions are not being implemented. A successful organizational redesign should better focus the resources of a company on its strategic priorities and other growth areas, reduce costs, and improve decision making and accountability.
3
The case of a consumer-packaged-goods (CPG) company that chose to expand outside its US home base illustrates one typical motivation for a redesign. Under the group’s previous organizational structure, the ostensibly global brand team responsible for marketing was not only located in the United States but had also been rewarded largely on the performance of US operations; it had no systems for monitoring the performance of products elsewhere. To support a new global strategy and to develop truly international brands and products, the company separated US marketing from its global counterpart and put in place a new structure (including changes to the top team), new processes, new systems, and a new approach to performance management. This intensive redesign helped promote international growth, especially in key emerging markets such as Russia (where sales tripled) and China (where they have nearly doubled).
Avoiding the pitfalls
That CPG company got it right—but many others don’t, and the consequences can be profoundly damaging. Leaders who fail to deliver the benefits they promise not only waste precious time but also encourage employees to dismiss or even undermine the redesign effort, because those employees sense that it will run out of steam and be replaced by a new one, with different aims, two to three years down the line.
We believe that companies can learn from the way successful redesigners overcome challenges. By combining the results of our research and the insights we’ve gained from working with multiple companies on these issues, we’ve identified nine golden rules. They cover everything from early alignment, redesign choices, and reporting structures to performance metrics, the nature of effective leadership, and the management of risks.
Individually, each of the rules is helpful. Our research shows, though, that 73 percent of the executives whose companies followed more than six of them felt that the organizational redesign had succeeded. Executives at these companies were six times more likely to “declare victory” than those at companies that adopted just one or two.
4
Following all nine rules in a structured approach yielded an even higher success rate: 86 percent (exhibit).
The rules, it’s important to make clear, are not self-evident. We tested more than 20 common approaches and found that upward of half of them weren’t correlated with success. We expected, for example, that benchmarking other companies and trying to adopt some of their structural choices might be an important ingredient
Our research identified nine golden rules for successful organizational redesign.
Following all the rules in a structured approach yields even higher success rates.
QWeb 2015 Org redesign Exhibit 1 of 1
12
25
57
73
4
4
6
84
71
37
26
100
2
0
No. of rules followed
62
3743–4
>61
1995–6
1–2 527
161
% of redesigns
Met objectives and improved perfomance Met objectives but did not improve performance
Did not meet objectives or stopped/stalled
No. of companies
86 1414
1Figures do not sum to 100%, because of rounding.
Source: 2014 McKinsey survey of organizational redesigns in 1,323 companies
Exhibit
5
of successful redesigns—but there is no evidence from the research that it is. Our rules, incidentally, are broadly relevant for different industries, regions, and company sizes. They also hold true for redesigns prompted by different types of organizational change, including end-to-end restructurings, postmerger integration, or more focused efforts (such as cost cutting or improvements in governance).
1. Focus first on the longer-term strategic aspirations Leaders often spend too much time on the current deficiencies of an organization. It’s easy, of course, to get fixated on what’s wrong today and to be swayed by the vocal (and seemingly urgent) complaints of frustrated teams and their leaders. However, redesigns that merely address the immediate pain points often end up creating a new set of problems. Companies should therefore be clear, at the outset, about what the redesign is intended to achieve and ensure that this aspiration is inextricably linked to strategy. One retail company we know, strongly committed to creating a simple customer experience, stated that its chosen redesign option should provide “market segment– focused managerial roles with clear accountability” for driving growth. The specificity of that strategic test proved much more helpful than simply declaring a wish to “become customer-centric.”
2. Take time to survey the scene Sixty percent of the executives in our survey told us they didn’t spend sufficient time assessing the state of the organization ahead of the redesign. Managers can too easily assume that the current state of affairs is clear and that they know how all employees fit into the organizational chart. The truth is that the data managers use are often inaccurate or out of date. A high-profile international bank, for example, publicly announced it was aiming to eliminate thousands of staff positions through an extensive organizational redesign. However, after starting the process, it discovered to its embarrassment that its earlier information was inaccurate. Tens of thousands of positions, already referenced in the press release, had been inaccurately catalogued, and in many cases employees had already left. This new organizational reality radically changed the scope and numbers targeted in the redesign effort.
6
Knowing the numbers is just part of the story. Leaders must also take time to understand where the lines and boxes are currently drawn, as well as the precise nature of talent and other processes. That helps unearth the root causes of current pain points, thereby mitigating the risk of having to revisit them through a second redesign a couple of years down the road. By comparing this baseline, or starting point, with the company’s strategic aspirations, executives will quickly develop a nuanced understanding of the current organization’s weaknesses and of the strengths they should build on.
3. Be structured about selecting the right blueprint Many companies base their preference for a new structure on untested hypotheses or intuitions. Intuitive decision making can be fine in some situations but involves little pattern recognition, and there is too much at stake to rely on intuition in organizational redesign. Almost four out of five survey respondents who owned up to basing decisions on “gut feel” acknowledged that their chosen blueprint was unsuccessful. In our experience, companies make better choices when they carefully weigh the redesign criteria, challenge biases, and minimize the influence of political agendas.
Interestingly, Fortune magazine found that its Most Admired Companies had little in common when it came to aspects of their organizational design, beyond a flexible operating model.1 This finding is consistent with our experience that off-the-shelf solutions aren’t likely to work. The unique mix of strategy, people, and other assets within a company generally requires an individual answer to things like role definition, decision-making governance, and incentives, albeit one based on a primary dimension of function, geography, or customer segment. The key is to get the right set of leaders reviewing options with an open mind in the light of redesign criteria established by the strategic aspiration.
Take a large public pension system we know. Its leaders convinced themselves that a new organization must be set up along product lines. Challenged to reconsider their approach, they ultimately arrived at a functional model—built around health, pensions, and
1 Mina Kimes, “What admired firms don’t have in common,” Fortune, March 6, 2009, archive.fortune.com.
7
investment—that has served the system well over the past five years and underpinned significant cost savings and the launch of innovative new products.
4. Go beyond lines and boxes A company’s reporting structure is one of the most obvious and controllable aspects of its organization. Many leaders tend to ignore the other structure, process, and people elements that are part of a complete redesign, thereby rearranging the deck chairs but failing to see that the good ship Titanic may still be sinking.
Companies such as Apple and Pixar are well known for going far beyond lines and boxes, taking into account questions such as where employees gather in communal spaces and how the organizational context shapes behavior. One small but fast-growing enterprise- software player we know made some minor changes to senior roles and reporting as part of a recent organizational redesign. But the biggest impact came from changing the performance-management system so that the CEO could see which parts of the company were embracing change and which were doing business as usual.
Surveyed companies that used a more complete set of levers to design their organizations were three times more likely to be successful in their efforts than those that only used a few. The strongest correlation was between successful redesigners and companies that targeted at least two structural-, two process-, and two people-related redesign elements.
5. Be rigorous about drafting in talent One of the most common—and commonly ignored—rules of organizational redesign is to focus on roles first, then on people. This is easier said than done. The temptation is to work the other way around, selecting the seemingly obvious candidates for key positions before those positions are fully defined.
Competition for talent ratchets up anxiety and risk, creating a domino effect, with groups poaching from one another to fill newly created gaps. This is disruptive and distracting. A talent draft that gives all units access to the same people enables companies to fill each level of the new organizational structure in an orderly and
8
transparent way, so that the most capable talent ends up in the most pivotal roles. This approach promotes both the perception and the reality of fairness.
Powerful technology-enabled solutions allow companies to engage hundreds of employees in the redesign effort in real time, while identifying the cost and other implications of possible changes. One web-based tool we’ve seen in action—full disclosure: it’s a McKinsey application called OrgLab—helps leaders to create and populate new organizational structures while tracking the results by cost, spans, and layers. Such tools expand the number of people involved in placing talent, accelerate the pace, and increase the level of rigor and discipline.
6. Identify the necessary mind-set shifts—and change those mind-sets Leaders of organizational-redesign efforts too often see themselves as engineers and see people as cogs to be moved around the organizational machine. Organizations, however, are collections of human beings, with beliefs, emotions, hopes, and fears. Ignoring predictable, and sometimes irrational, reactions is certain to undermine an initiative in the long run. The first step is to identify negative mind-sets and seek to change the way people think about how the organization works. Actions at this stage will likely include communicating a compelling reason for change, role modeling the new mind-sets, putting in place mechanisms that reinforce the case for change and maintain momentum, and building new employee skills and capabilities.
One company in the payments industry—beset by changing consumer habits, technology-led business models, and regulatory pressure—understood the importance of shifting mind-sets as part of its recent redesign. The group’s sales team traditionally worked well with large retailers and banks. But looking ahead, the company knew it would be important to establish a new set of relationships with high-tech hardware and software players. Simply appointing a new boss, changing role descriptions, and drawing up a revised process map wasn’t enough. The company therefore embarked on a program that consciously sought to shift the thinking of its sales experts from “we create value for our customers” to “we create value with our partners.”
9
7. Establish metrics that measure short- and long- term success Nobody would drive a car without a functioning speedometer, yet a surprising number of companies roll out an organizational redesign without any new (or at least specially tailored) performance metrics. Some older ones might be relevant, but usually not the whole set. New metrics, typically focusing on how a changed organization is contributing to performance over the short and long term, are best framed at the aspiration-setting stage. Simple, clear key performance indicators (KPIs) are the way forward.
During the redesign effort of one high-tech manufacturer, it set up a war room where it displayed leading indicators such as orders received, orders shipped, supply-chain performance, and customer complaints. This approach helped the company both to measure the short-term impact of the changes and to spot early warning signs of disruption.
One utility business decided that the key metric for its efficiency- driven redesign was the cost of management labor as a proportion of total expenditures on labor. Early on, the company realized that the root cause of its slow decision-making culture and high cost structure had been the combination of excessive management layers and small spans of control. Reviewing the measurement across business units and at the enterprise level became a key agenda item at monthly leadership meetings.
A leading materials manufacturer introduced a new design built around functional groups, such as R&D, manufacturing, and sales, but was rightly anxious to retain a strong focus on products and product P&Ls. To track performance and avoid siloed thinking, the company’s KPIs focused on pricing, incremental innovation, and resource allocation.
8. Make sure business leaders communicate Any organizational redesign will have a deep and personal impact on employees—it’s likely, after all, to change whom they report to, whom they work with, how work gets done, and even where they work. Impersonal, mass communication about these issues from the corporate center or a program-management office will be far
10
less reassuring than direct and personal messages from the leaders of the business, cascaded through the organization. An interactive cascade (one that allows two-way communication) gives people an opportunity to ask questions and forces top leaders to explain the rationale for change and to spell out the impact of the new design in their own words, highlighting the things that really matter. This can take time and requires planning at an early stage, as well as effort and preparation to make the messages compelling and convincing. When a top team has been talking about a change for weeks or months, it’s all too easy to forget that lower-ranking employees remain in the dark.
One financial-services company encouraged employee buy-in for an organizational redesign by staging a town-hall meeting that was broadcast in real time to all regional offices and featured all its new leaders on a single stage. The virtual gathering gave them an opportunity to demonstrate the extent of their commitment and allowed the CEO to tell her personal story. She shared the moment when she realized that the organization needed a new design and the changes she herself was making to ensure that it was successful. All employees affected by the changes could simultaneously talk to their former managers, their new managers, and the relevant HR representatives.
9. Manage the transitional risks In the rush to implement a new organizational design, many leaders fall into the trap of going live without a plan to manage the risks. Every organizational redesign carries risks such as interruptions to business continuity, employee defections, a lack of personal engagement, and poor implementation. Companies can mitigate the damage by identifying important risks early on and monitoring them well after the redesign goes live. The CPG company mentioned earlier, for example, realized that rolling out its reorganization of sales and marketing ahead of the holiday season might unsettle some of those involved. By waiting, it made the transition with no impact on revenues.
Tracking operational, financial, and commercial metrics during a design transition is helpful, as are “pulse checks” on employee
11
reactions in critical parts of the company. Clear leadership account- ability for developing and executing risk-mitigation plans is so important that this should be built into regular appraisals of managers.
In our experience the most successful organizations combine stable design elements with dynamic elements that change in response to evolving markets and new strategic directions. Corporate redesigns give organizations a rare opportunity to identify the stable backbone and set up those elements ripe for dynamic change. Successful leaders and successful companies take advantage of such changes to
“rebuild the future”—but a landscape littered with failed efforts is a sobering reminder of what’s at stake. Following the nine simple rules described in this article will increase the odds of a happy outcome.
The authors wish to thank McKinsey’s Wouter Aghina, Lili Duan, Monica Murarka, and Kirsten Weerda for their contributions to this article.
Steven Aronowitz is an associate principal in McKinsey’s San Francisco office, Aaron De Smet is a principal in the Houston office, and Deirdre McGinty is an associate principal in the Philadelphia office.
Copyright © 2015 McKinsey & Company. All rights reserved.
- Week 6 Citations
- Organizational Behavior - Chapter 9
- Organizational Behavior - Chapter 10
- individual priming in virtual team decision making
- Individual Priming in Virtual Team Decision-Making
- Abstract
- 1 Introduction
- 2 Theory and Prior Research
- 2.1 Virtual Teams and Decision-Making
- 2.2 Priming
- 3 Study 1: Achievement and Attention Priming
- 3.1 Hypothesis Development
- 3.2 Methodology
- 3.2.1 Participants
- 3.2.2 Task
- 3.2.3 Treatments
- 3.2.4 Dependent Variable
- 3.2.5 Procedures
- 3.3 Results
- 3.4 Discussion
- 4 Study 2: Regret Priming
- 4.1 Hypothesis Development
- 4.2 Methodology
- 4.2.1 Participants
- 4.2.2 Task
- 4.2.3 Treatments
- 4.2.4 Dependent Variable
- 4.2.5 Procedures
- 4.3 Results
- 4.4 Discussion
- 5 Discussion
- 5.1 Comparison to Previous Research
- 5.2 Alternative Explanations of Results
- 5.3 Implications for Future Research
- 5.4 Ethical Consideration
- 6 Conclusion
- Acknowledgments
- References
- Katzenbach why teams matter from the wisdom of teams1
- The Discipline of Teams HBR
- Organizational Behavior - Chapter 15
- Organizational Behavior - Chapter 2
- Focusing-on-what-works-for-workplace-diversity
- Getting organizational redesign right
