500 words solution for a Business course's final group paper (1 topic)

Chapter One Introduction to the Field of Organizational Behaviour 5

Comprehend and Predict Workplace Events Everyone has an inherent drive to make sense of what is going on around them. 1 1 This need is particularly strong in organizations because they are highly complex and ambiguous contexts that have a profound effect on our lives. The field of organiza- tional behaviour uses scientific research to discover systematic relationships, which give us a valuable

foundation for comprehending organizational life. 12 This knowledge satisfies our curiosity about why events occur and reduces our anxiety about circumstances that would otherwise be unexpected and

unexplained. Furthermore, OB knowledge improves our abil ity to predict and anticipate future events so we can get along with others, achieve our goals, and minimize unnecessary career risks.

Adopt More Accurate Personal Theories A frequent misunderstanding is that OB is just com- mon sense. Of course, some OB knowledge is very similar to the theories you have developed through

personal experience. But personal theories are usually not quite a~ precise a~ they need to be. Perhaps they explain and predict some situations, but not others. For example, one sntdy found that when liberal arts snt-

dents and chief executive officers were a~ked to choose the preferred organizational structure in various sint- ations, their common sense answers were typically wrong because they oversimplified well-known theory

and evidence on that topic.13 cy./e discuss organizational structures in Chapter 13.) Throughout this book,

you' ll also discover that OB research ha~ debunked some ideas that people thought were "common sense." Overall, we believe the OB knowledge you will gain by reading this book will help you challenge and refine

your personal theories, and give you more accurate and complete perspectives of organizational events.

Influence Organizational Events Probably the greatest value of OB knowledge is that it helps us get things done in the workplace by influencing organizational events. 14 By definition, organiza- tions are people who work together to accomplish things, so we need a toolkit of knowledge and

skills to work successfully with others. Studies consistently observe that the most important knowl- edge and skills that employers desire in employees relate to the topics we discuss in this book, such as

building teams, motivating co-workers, handling workplace conflicts, making decisions, and changing employee behaviour. No matter what career path you choose, you'll find that OB concepts play an

important role in performing your job and working more effectively within organizations.

Organizational Behaviour Is for Everyone Some organizational behaviour sources discuss this topic as if it is reserved for managers. Effective management does depend on OB concepts and practices, but this book pioneered the broader view that OB is valuable for everyone who works in and

around organizations. Whether you are a software engineer, customer service representative, foreign exchange analyst, or chief executive off icer, you need to understand and apply the many organizational

behaviour topics that are discussed in this book. In fact, OB knowledge is probably more valuable than

ever before because employees increasingly need to be proactive, self-motivated, and able to work effectively with co-workers without management intervention. In the words of one forward-thinking

OB writer more than four decades ago: Everyone is a manager. 15

OB and the Bottom Line Up to this point, our answer to the question "Why study OB?" has focused on how organizational behaviour knowledge benefit~ you a~ an individual. However, OB is also vital to the

organization's survival and success. 16 For instance, the best companies to work for (i.e., companies with the

highest levels of employee satisfaction) enjoy significantly higher financial performance than other busi- nesses within the same industry. Companies with higher levels of employee engagement have higher sales and profitability (see Chapter 5). OB practices are also a~sociated with various indicators of hospital perfor- mance, such a~ lower patient mortality rates and higher patient satisfaction. Other sntdies have consistently

found a positive relationship between the quality of leadership and the company's financial performance.

The bottom-line value of organizational behaviour is also supported by Canadian and international

research into the best predictors of investment portfolio performance. These investigations suggest that leadership, performance-based rewards, employee development, employee attitudes, and other

specific OB characteristics are important "positive screens" for selecting companies with the highest

and most consistent long-term investment gains. For example, a leading Canadian investment analyst

6 Part One Introduction

identified the top five factors to consider when deciding whether to invest in a company. First on his list is whether the company's "management team has great prior experience and a vested interest in their company." 17 Overall, this evidence strongly supports our view that the organizational behaviour theories and practices presented throughout this book make a positive difference to you personally, to

the organization, and ultimately to society.

Contemporary Developments Facing Organizations

L02 Organizations are experiencing unprecedented change. Technological developments, consumer expectations, global competition, and many other factors have substantially altered business strategy and everyday workplace activities. The field of organizational

behaviour plays a vital role in guiding organizations through this continuous ntrbulence. As we will explain in more detail later in this chapter, organizations are deeply affected by the external envi- ronment. Consequently, they need to maintain a good organization-environment fit by anticipating and adjusting to changes in society. Over the next few pages, we introduce four major environmental developments facing organizations: technological change, globalization, emerging employment rela- tionships, and increasing workforce diversity.

Investment firms rely on a long list of variables to determine which compan ies have the best promise as investments. Most factors are financia l, but some of the most important screens are fuzzier organizational behaviour indicators such as skilled leadership and strong performance culture. As an example, Martin Braun, portfolio manager at JCCiark Ltd. in Toronto, prefers bottom-up fundamentals analysis, wh ich includes choosing firms w ith Canada's best executive teams. Not long ago, he saw considerable potential in a small Vancouver-based medical devices company called CRH Medical Corp. "We like the management team a lot," sa id Braun at the time.

CRH Medical CEO Edward Wright was a successful executive in the luxury goods industry (Cartier, Baume & Mercier) before taking the helm of the medical devices company. The firm's board cha irman is renowned for building another successful medical business that was later sold for $1.7 billion. Wright has transformed CRH Medical into a profitable business that experts believe has solid growth potential. Wright was also recently named British Columbia CEO of the Year in the small-medium public company category.18

©Jeff Vinnick

Chapter One Introduction to the Field of Organizational Behaviour 7

TECHNOLOGICAL CHANGE Technological change ha~ always been a disruptive force in organizations, as well a~ in society. 19 Waterwheels, cotton gins, steam engines, microprocessors (such a~ in automated systems and artificial intelligence}, and many other innovations have dramatically boosted productivity, but also displaced employees and rendered obsolete entire occupational groups. Other technologies, such a~ the telegraph, smartphone, and the Internet, improved productivity but al~o altered our relationships and patterns of behaviour with co-workers, client~. and suppliers. Still other technologies have improved health and well-being, such a~ the development of bet- ter medicines and medical equipment, new leisure apparatuses, and environmentally safer materials.

Information technology is one of the most significant forms of technological change in recent times.20 As we discuss in Chapter 9, the introduction of email and other forms of digital messaging have altered communication patterns and power dynamics throughout most workplaces. Social media and other social collaboration technologies are slowly replacing email, and will further reshape how people associate and coordinate with each other. Some OB experts argue that information technology gives employees a stronger voice through direct communication with executives and broader distribu- tion of their opinions to co-workers and beyond.

Information technology has also created challenges, such a~ tethering people to their jobs for longer hours, reducing their attention spans at work, and increasing techno-stress. We discuss these concerns below and in Chapter 4 (workplace stress). At a macro level, information technology has reconfigured entire organizations by integrating suppliers and other external entities into the transformation process. Eventually, technology may render organizations Jess of a place where people work and more of a pro- cess or network where people collaborate across space and time (see Chapter 13). Little wonder that 62 percent of Canadian CEOs and 75 percent of CEOs globally recently agreed that technology will reshape competition in their industry within the next five years.21

• by the NUMBERS

Social Media and Technology Reshape the Workplace22

of 1,000 Canadian adults interviewed believe that workers

would be more productive if they had additional Internet and technology skills.

of 2,186 American hiring and human resource managers

say they use social media sites to research job candidates (up from 52% the previous year and 11% in 2006).

of 9,908 information workers polled across 32 countries say that social

media tools have somewhat or g reatly increased their productivity.

of 2,027 employed American adults say they spend between one and

six hours using social media tools or mobile applications to help get thei r job done.

of more than 400 Canadian employees surveyed believe that they personally need to acquire more digital skills to

guarantee their future employability (compared to 62% of employees surveyed across 33 countries).

8 Part One Introduction

GLOBALIZATION Globaliza tion refers to economic, social, and cultural connectivity with people in other parts of the

world. Organizations globalize when they actively participate in other countries and cultures. Although businesses have traded goods across borders for centuries, the degree of globalization today is unprec- edented because information technology and transportation systems allow a much more intense level of connectivity and interdependence around the planet.23

Globalization offers numerous benefits to organizations in terms of larger markets, lower costs, and greater access to knowledge and innovation. At the same time, there is considerable debate about whether globalization benefits developing nations and whether it bears primary responsibil ity for increasing work intensification, reducing job security, and introducing chal lenges to work-life balance in developed countries.24

The field of organizational behaviour focuses on the effects of global ization on organizations and how to lead and work effectively in this emerging real ity.25 Throughout this book, we will refer to the effects of global ization on teamwork, diversity, culntral values, organizational structure, leader- ship, and other themes. Global ization has brought more complexity and new ways of working to the workplace, It also requires additional knowledge and ski lls that we wi ll discuss in this book, such as emotional intelligence, a global mindset, nonverbal communication, and conflict handling.

EMERGING EMPLOYMENT RELATIONSHIPS Technology, globalization, and several other developments have substantially altered the employment

relationship in most countries. Before the digital age, most employees would finish work after eight or nine hours and could separate their personal time from their employment. Today, they are more likely to be connected to work on a 24n schedule. Globalization increases competitive pressure to work lon- ger and creates a 24-hour schedule because co-workers, suppl iers, and cl ients work in different time

zones. Information technology enables employers and others to ea~ily and quickly communicate with employees beyond their traditional workday.

Little wonder that one of the most important employment issues over the past decade has been work-life balance. Everyone ha~ various roles and associated responsibilities across all aspects of their lives. Work-life balance is an idealized state whereby a person optimizes time and psychologi- cal resources between their work and nonwork roles. Work-life balance is about minimizing confl ict between one's work and nonwork demands.26 Most employees experience too much work-l ife conflict,

usually because they spend too many hours each week performing or thinking about their job, whether at the workplace, at home, or on vacation. This focus on work leaves too little time to fulfi l nonwork needs and obligations. Our discussion of work-related stress (Chapter 4) will examine work-life bal-

ance issues in more detail.

Remote Work/Telework Another employment relationship trend is remote work, whereby employees work occasionally or regularly away from the organization's traditional common work s ite.

One form of remote work involves performing most job duties at cl ient sites throughout the day. Repair technicians and management consultants regularly work at client sites, for example. Longer-term remote work occurs where employees are assigned to partner organizations.

The best-known form of remote work is telework (also called telecommuting), which occurs when employees use information technology to work from home or other nonwork setting one or more work- days per month rather than commute to the office. Almost two-thirds of more than 7,000 Canadian employees recently surveyed say they would like to work remotely at least occasionally, yet Statistics Canada and other surveys estimate that only 7 percent of Canadians actual ly perform at least some of their paid work from home each week. In contrast, almost one-quarter of American employees and

17 percent of employees globally engage in telework.27

Chapter One Introduction to the Field of Organizational Behaviour 9

Is telework benefic ial for employees and organizations? This question continues to be debated because it has advantages, d isadvantages, and several contingencies that moderate its effective- ness.28 One advantage is that employees who work from home some of the time usually experi-

ence better work-life balance because they have more time and somewhat more control to juggle work wi th family obligations. WestJet sales agent Carla Holub, who began working from home some days three years ago, praises this benefit. "It just freed up a good two hours of my personal time being able to work from my home office." Similarly, a study of 25,000 IBM employees found that female telecommuters with children were able to work 40 hours per week, whereas female employees with children who work solely at the office could manage only 30 hours before feeling work-life balance tension. Work-life balance is less likely to improve when telecommuters lack sufficient workspace and privacy at home and have increased family respons ibilities on telecom-

muting days. Job applicants-particularly millennials-identify telework as an attractive job feature, and turn-

over is usually lower among teleworking employees. Research also indicates that teleworkers have higher productivity than other staff, likely because they experience less stress and tend to transfer some former commuting time to work time. Telework also improves productivity by enabling employees to work at times when the weather or natural disasters block access to the office. For example, many

Telus Corp. employees in Calgary remained productive by working from home when floods limited access to their office in that city.

Several companies report that telecommuting has reduced greenhouse gas emissions and office expenses. For instance, health insurer Aetna estimates that its telecommuting employees (3 1 percent of the workforce) annually avoid using two million gallons of gas, thereby reducing carbon diox ide emis- sions by more than 23,000 metric tons. With many employees working from home, Aetna has also been able to reduce its real estate and related costs by between 15 and 25 percent.29

Telecommuting also has several disadvantages or r isksJo Telecommuters frequently report more social isolation, including weaker relationships with co-workers. They also receive less word-of-mouth information, which may have implications for promotional opportunities and workplace relations. "When I'm home, I miss out on going to have coffee with people, and that's when all kinds of informa- tion about employment applications, the ministr ies and the university comes up," says Marcel Swart, a chemist at a university in SpainJ 1 Teams also potential ly suffer from lower cohesion and organiza- tions risk having a weaker culture when most employees work from home for a significant part of their workweek.

Telecommuting success depends on several characteristics of the employee, job, and organiza- tion.32 Employees who work effectively from home typically have higher self-motivation, self- organization, need for autonomy, and information technology ski lls. Those who telecommute most of the time also fulfil their social needs more from sources outside the workplace. Jobs are better suited to telecommuting when the ta~ks do not require resources at the workplace, the work is performed independently from co-workers, and task performance is measurable. Organizations improve telecom-

muting success by rewarding and promoting employees based on their performance rather than their presence in the office (face time). Effective companies also help telecommuters maintain sufficient

cohesion with their team and psychological connectedness with the organization. This occurs by limit- ing the number of telecommuting days, having special meetings or events where al l employees assem- ble at the workplace, and regularly using video communication and other technology that improves

personal relatedness.

Are you a good telecommuter? You can discover how well you would adjust to telework and other forms of remote work by completing this self-assessment in Connect.

_..1

10 Part One Introduction

INCREASING WORKFORCE DIVERSITY CSL Limited is a global enterprise with a culturally diverse workforce. According to the company's diversity statement, "Workforce diversity is essential to CSL's growth and long-term success." The Aus- tralian vaccine and blood plasma products company says that its diversity " encompasses differences in ethnicity/race, gender, age, sexual orientation, religion, physical and mental abi lity, experience and

thinking styles."33

Much of CSL's diversity statement refers to sur face-level diversity-the observable demographic and other overt differences among members of a group, such as their race, ethnicity, gender, age, and physical capabilities.34 Surface-level diversity is increasing in many parts of the world due to more open and Jess discriminatory immigration policies. For instance, 19 percent of Canadians belong to a "visible minority" group, up from 16 percent in 2006, 13 percent in 2001, and just 5 percent in 1981.35

CSL's diversity statement refers not just to demographics, but also to "experience and thinking styles," which refers to deep-level diversity. We can't directly see personal ities, values, attitudes, and skills, but this deep-level diversity is evident from interpretation of what a person says and does. For example, deep-level diversity is revealed when employees describe different perceptions and attitudes about the same situation (see Chapter II) and when they form like-minded informal social groups (see

Chapter 8). Some deep-level diversity is associated with surface-level attributes. For example, studies report

significant differences between men and women in their preferences of conflict-handling styles, ethi- cal principles, and approaches to communicating with other people in various situations] 6 Deep-level diversity also exists across generations. The Canadian workforce is currently almost equally divided into three working-age generations: 39 percent baby boomers (born from 1946 and 1964), 29 percent Generation X (born from 1965 to 1980), and 30 percent millennials (also called Generation Y, born after 1980) ] 7

Wild claims have been made about how much employees differ across these three groups, but more systematic research indicates that generational deep-level diversity does exist to some extent. Also, some generational differences are actual ly due to age, not cohort. For instance, millennials tend to have a stronger need for personal development, advancement, and recognition, whereas baby boomers are more motivated by interesting and meaningful work. Research indicates, however, that as millennials age, their motivation for learning and advancement wi ll wane and their motivation for interesting and meaningful work will increase. 38

So~ Global Connections 1.1:

LEVERAGING THE DIVERSITY DIVIDEND AT CANACCORD GENUITY39

Canaccord Genuity Group Inc. is headquartered in the culturally diverse city of Toronto, but executive vice-president Stuart Rufus still marvels at the benefits of d iversity across the invest- ment firm's 10 global operations. "How people see a situation in New York and d iagnose that situation can be very different than perhaps how they see it in London or they might see it in Melbourne, or Asia," says Rufus.

Diversity can a lso breed conflict, but Rufus suggests that freq uent communication can minimize those issues. "Try to weave in some soft (social) calls so that it 's not always issue driven, so that you start to build a rapport and some trust and understanding with (people with diverse backgrounds]; Rufus advises. "That will allow you to be much more effective when dealing with a much more difficult business issue."

Chapter One Introduction to the Field of Organizational Behaviour

Canaccord Genuity's globally diverse workforce generates a deeper and multidimensional analysis of investment events and trends.

©Ariel Skelley/Biend Images LLC

11

Consequences of Diversity Workforce diversity offers numerous advantages to organiza- tions.40 Teams with high informational diversity-members have different knowledge and skills-tend to be more creative and make better decisions in complex situations compared to teams with Jess informational diversity. A workforce with surface- and deep-level diversity is also more representative of most communities, so companies are better able to recognize and address community needs. "By valuing of a culture of inclusion, we gain additional insights and perspectives that allow us to make the best decisions for our business and customers," explains Donna Johnson, Ma~terCard 's chief diversity officer.41 These and other benefits may explain why companies that win diversity awards have higher financial returns, at least in the short run.42

Diversity also poses challenges in the workplace.43 One problem is that employees with diverse

backgrounds usually take longer to perform effectively together because they experience numerous communication problems and create "faultlines" in informal group dynamics (see Chapter 8). Some forms of diversity also increa~e the risk of dysfunctional conflict, which reduces information sharing and satisfaction with co-workers (see Chapter I I). Research suggests that these problems can offset the advantages of diversity in some situations.

But even with these challenges, companies need to make diversity a priority because surface-level diversity and some forms of deep-level diversity are moral and legal imperatives. Companies that offer an inclusive workplace are, in essence, fulfilling the ethical standard of fairness in their decisions regarding employment and the allocation of rewards. Inclusive workplace practices improve the quality

of hiring and promotion, and increase employee satisfaction and loyalty. Companies that create an inclu- sive workplace also nurture a culture of respect which, in turn, improves cooperation and coordination

among employees.

12 Part One Introduction

Anchors of Organizational Behaviour Knowledge

Technological change, globalization, emerging employment relationships, and increasing workforce diversity are just a few of the societal changes that make organizational behaviour knowledge more useful than ever before. To understand these and other topics, the field of

organizational behaviour relies on a set of basic beliefs or knowledge structures (see Exhibit 1.2). These conceptual anchors represent the principles on which OB knowledge is developed and refined.44

THE SYSTEMATIC RESEARCH ANCHOR A key feature of OB knowledge is that it should be based on systematic research, which typical ly involves forming research questions, systematical ly collecting data, and testing hypotheses against those data.45 The Appendix at the end of this book provides a brief overview of these research methods.

Systematic research investigation supports evidence-based management, which involves making deci- sions and taking actions guided by research evidence. It makes perfect sense that management practice should be founded on the best available systematic knowledge. Yet many of us who study organizations

using systematic methods are amazed at how often corporate leaders and others embrace fads, untested consulting models, and their own pet beliefs without bothering to find out if they actually work!46

Why don't decision makers consistently apply evidence-based management? One reason is that they are bombarded with ideas from consultant reports, popular business books, newspaper articles, and other sources, which makes it difficult to figure out which ones are based on good evidence. A second

reason is that good OB research is necessarily generic; it is rarely described in the context of a specific problem in a specific organization. Decision makers therefore have the difficult task of figuring out which theories are relevant to their unique situation.

A third reason why organizational leaders follow popular management fads that Jack research evi- dence is that the sources of these fads are rewarded for marketing their ideas, not for testing to see if they actually work. Indeed, some management concepts have become popular (some have even found their way into OB textbooks!) because of heavy marketing, not because of any evidence that they are valid. A fourth reason is that human beings are affected by several perceptual errors and decision-making biases, as we will Jearn in Chapter 3 and Chapter 7. For instance, decision makers have a natural ten- dency to look for evidence that supports their pet beliefs and ignore evidence that opposes those bel iefs.

OB expert~ have proposed a few simple suggestions to create a more evidence-based organization.47 First, be skeptical of hype, which is apparent when so-called experts say the idea is "new," "revolutionary,"

EXHIBIT 1.2 Anchors of Organizational Behaviour Knowledge

Systematic research anchor

Multidisciplinary anchor

Multiple levels of analysis anchor

Study organizations using systematic research methods

Import knowledge from other disciplines, not just create its own knowledge

Recognize that the effectiveness of an action may depend on the situation

Understand 0 8 events from three levels of analysis: individual, team. organization

Chapter One Introduction to the Field of Organizational Behaviour

~ ,,,, Debating Point: IS THERE ENOUGH EVIDENCE TO SUPPORT EVIDENCE-BASED MANAGEMENT?

One of the core anchors of organizational behaviour is that knowledge must be built on a solid foundation of scientifically-based research. This evidence-based management approach embraces scientific methods. It also advises corporate leaders to become more aware of evidence-based knowledge, and to use diagnostic tools (such as surveys and checklists) to apply those principles in the workplace.

It seems obvious that we should rely on good evidence rather than bad evidence (or no evidence at all) to make good decisions in the workplace. Yet there is another side to this debate. The question isn't whether good evidence is valuable; it is about the meaning of "good evidence." One concern is that scholars might be advocating an interpretation of good evidence that is far too narrow.48 They typically limit evidence to empirical correlational research, whereas descriptive and qualitative information often provide additional evidence, and occasionally the only feasible evidence. Albert Einstein tried to avoid an empiricist bias by keeping the following message framed on his wall: Not everything that can be counted counts, and not everything that counts can be counted.

Another concern is that managers don't view organizational research as particularly relevant to the issues they face.49 Much university research is derived from cross-sectional surveys that depend on uncontaminated, quantifiable measures. But managers say they need research that is closer to real-world variables and conditions. Unfortunately, only about 2 percent of organi- zational studies are real-world experiments, mainly because these field studies take more time and are usually empirically messy, which may make them more difficult to get published. 5°

A third concern is that systematic elements of organizational research studies (e.g., sample size, measurement reliability, advanced data analysis methods) can mask other potentially serious under1ying faults. Cross-cultural studies, for instance, often use college student samples to repre- sent an entire culture. Lab studies with students assume they replicate workplace conditions, yet ignore important differences with employee characteristics. (Some meta-analyses report substan- tially different results from studies using students versus employees.) These and many other faults may explain why replicated studies often produce different results from the original. And even if the published research is valid, the collective knowledge is likely biased because studies with non- significant results are much less likely to get published. Nonsignificance is usually less glamorous to journal editors, and researchers are less likely to submit papers with nonsignificant findings. 5 1

13

and "proven." In reality, most management ideas are adaptations, evolutionary, and never "proven" (science can disprove, but never prove; i t can only find evidence to support a practice). Second, the

company should embrace collecti ve expertise rather than rely on charismatic stars and management

gurus. Third, stories provide useful illustrations and possibly preliminary evidence of a useful prac- tice, but they should never become the main foundation to support management action. Instead, rely

on more systematic investigation w ith a larger sample. Finally, take a neutral stance toward popular

trends and ideologies. Executives tend to get caught up in what their counterparts at other companies are doing without determining the validity or relevance of those trendy practices to their organization.

THE MULTIDISCIPLINARY ANCHOR Another organizational behaviour anchor recommends that the field should welcome theori es and

knowledge from other disciplines, not just from its own isolated research base. For instance, psycho-

logical research ha~ aided our understanding of individual and interpersonal behaviour. Sociologists have contributed to our knowledge of team dynamics, organizational socialization, organizational

power, and other aspects of the social system. OB knowledge has also benefited from knowledge in

emerging fields such as communications, marketing, and information systems.

14 Part One Introduction

This theory borrowing from other disc iplines is inevitable. Organizations have a central role in society, so they are the subject of many social science endeavours. Furthermore, organizations consist of people who interact with each other, so there is an inherent intersection between OB and most dis- ciplines that study human beings. However, by relying too much on theories developed in other fields,

OB faces the risk of lagging rather than leading in knowledge production. In contrast, OB-bred theories allow researchers to concentrate on the quality and usefulness of the theory, and be the first to under- stand and apply that knowledge. 52

THE CONTINGENCY ANCHOR People and their work environments are complex, and the field of organizational behaviour recognizes this by stating that the effect of one variable on another variable often depends on the characteristics of the situation or people involved. In practice, this means that we can' t count on having the same result in every situation we apply an OB theory. Instead, a particular action may have different consequences under different conditions. 53 For example, earlier in this chapter we said that the success of telecom-

muting depends on specific characteristics of the employee, job, and organization. Contingencies are identified in many OB theories, such as the best leadership style, the best conflict-handling style, and the best organizational structure. Of course, it would be so much simpler if we could rely on "one best way" theories, in which a particular concept or practice has the same results in every situation. OB experts do try to keep theories a~ simple as possible, but the contingency anchor is always on their minds. 54

THE MULTIPLE LEVELS OF ANALYSIS ANCHOR Organizational behaviour recognizes that what goes on in organizations can be placed into three levels of analysis: individual, team (including interpersonal}, and organization. In fact, advanced empirical research currently being conducted carefully identifies the appropriate level of analysis for each vari- able in the study and then measures at that level of analysis. For example, team norms and cohesion are measured as a team variable, not as a characteristic of individuals within each team.

Although OB research and writing pegs each variable within one of these levels of analysis, most variables are understood best by thinking of them from al l three levels of analysis.55 Communication is located in this book as a team (interpersonal) process, for example, but it also includes individual and organizational processes. Therefore, you should try to think about each OB topic at the individual, team, and organizational levels, not at just one of these levels.

Perspectives of Organizational Effectiveness

L04 Apple and Amazon are the two most admired companies in the world, according to Fortune magazine's annual list.56 Yet neither of these firms was on anyone's radar screen

two decades ago. Apple was on life support in the late 1990s, barely clinging to a few percentage points of market share in the computer industry. Amazon started selling books online in 1995, a few months after its founder, Jeff Bezos, took a course from the American Booksellers Asso- ciation on how to start a bookstore! How did Apple and Amazon achieve their incredible success? They have applied some or al l of the four perspectives of organizational effectiveness that we discuss over the next few pages.

Almost all organizational behaviour theories have the implicit or explicit objective of making orga- nizations more effective.57 In fact, organizational effectiveness is considered the "ultimate dependent variable" in organizational behaviour. 58 This means that organizational effectiveness is the outcome that

most OB theories are ultimately trying to achieve. Many theories use different labels-organizational performance, success, goodness, health, competitiveness, excellence-but they are basically present-

ing models and recommendations that help organizations to be more effective. Many years ago, OB experts thought the best indicator of a company's effectiveness was how well

it achieved its stated objectives. According to this definition, Loblaw Companies Limited would be an

Chapter One Introduction to the Field of Organizational Behaviour 15

effective organization if it meets or exceeds its annual sales and profit target~. Today, we know that this

goal perspective might not indicate organizational effectiveness at all . Any leadership team could set corporate goals that are easy to achieve and still be left in the dust by competitors' more aggressive

objectives. Worse still, some goals might aim the organization in the wrong direction. Consider the following

situation at a Canadian airline several years ago: The board gave the new CEO a mandate to reduce

costs and dramatically improve profitability. The CEO accomplished these organizational goals by reducing the training budget and cancelling the purchase of new aircraft. Within a few years (after the CEO had taken a job elsewhere), the company was burdened by higher maintenance costs to keep the

old planes flying safely and was losing customers to airl ines with better-trained staff and more modern fleets. The airline never recovered and was eventually acquired by Air Canada. The CEO achieved the stated goals, but the company was ineffective in the long run.

The best yardstick of organizational effectiveness is a composite of four perspectives: open systems, organizational learning, high-performance work practices, and stakeholders. 59 Organizations are effec- tive when they have a good fit with their external environment, are learning organizations, have effi- cient and adaptive internal subsystems (i.e., high-performance work practices), and satisfy the needs of key stakeholders. Let's examine each of these perspectives in more detail.

OPEN SYSTEMS PERSPECTIVE The open systems perspective of organizational effectiveness is one of the earl iest and most well

entrenched ways of thinking about organizations.60 Indeed, the other major organizational effective- ness perspectives might be considered detailed extensions of the open systems model. This perspec- tive views organizations as complex organisms that "live" within an external environment, rather like the illustration in Exhibit 1.3. The word open describes this permeable relationship, whereas closed systems operate without dependence on or interaction with an external environment.

As open systems, organizations depend on the external environment for resources, including raw materials, job appl icants, financial resources, information, and equipment. The external environment also consists of rules and expectations, such a~ Jaws and cultural norms, that place demands on how organizations should operate. Some environmental resources (e.g., raw materials) are taken in by the organization, transformed into product or services, and then become outputs exported to the external

EXHIBIT 1.3 Open Systems Perspective of Organizations

External Environment External Environment

• Raw materials • Procb:ts/services • Shareholder cividends • Convn111ily support • Waste/pollution • Finandalll!SaJrteS

• Equipment

Feedback

External Environment External Environment

16 Part One Introduction

environment. Other resources (e.g., job applicants, equipment) become subsystems in the transforma-

tion process. Inside the organization are numerous subsystems, such as departments, teams, informal groups,

work processes, technological configurations, and other elements.61 An organization's subsystems are dependent on each other as they collectively transform inputs into outputs. Some outputs (e.g., prod- ucts, services, community support) may be valued by the external environment, whereas other out- puts (e.g., employee layoffs, pollution) are undesirable by-products that may have adverse effects on the environment and the organization's relationship with that environment. Throughout this process, organizations receive feedback from the external environment regarding the value of their outputs, the availability of future inputs, and the appropriateness of the transformation process.

Organization-Environment Fit The open systems perspective states that organizations are effective when they maintain a good "fit" with their external environment.62 Good fit exists when the organization's inputs, processes, and outputs are aligned with the external environment's needs, expec- tations, and resources. Organizations maintain a good environmental fit in three ways:

Ada pt to the environment : Effective organizations closely and continuously monitor the envi-

ronment for emerging conditions that pose a threat or opportunity. Then they reconfigure their internal subsystems to align more closely with that shifting environment. There are many ways

that companies are adaptive (called their dynamic capability), such as by changing the type or

volume of products produced, shifting to different input resources that are more plentiful or

reliable, and designing better production (transformation) processes.

Influence the environment: Effective organizations don't merely respond to emerging conditions; they actively try to influence their environment. For instance, businesses rely on

marketing to increase demand for their products or services. Some firms gain exclusive rights to particular resources (e.g., sole provider of a popular brand) or restrict competitor access to val-

ued resources. Still others lobby for legislation that strengthens their position in the marketplace or try to delay legislation that would disrupt their business activities.

Move to a more favour able environm ent : Sometimes the current environment becomes so

challenging that organizations cannot adapt or influence it enough to survive. For instance, the current environment might have extreme resource scarcity, too many competitors, too little demand for the firm's products, or onerous rules that make the transformation process too expensive. Under these circumstances, organizations often move to a more benevolent environ- ment that can support their future. For example, Target closed its Canadian business after a few years because it underestimated the competition, stumbled on the transformation process (distri- bution and inventory chal lenges), and mismatched consumer expectations (location, pricing).63

Effective Transformation Process In addition to maintaining a good fit with the external environment, effective organizations have a transformation process that does well at converting inputs

to outputs.64 The most common indicator of an effective internal transformation process is it~ effi- ciency. Efficient organizations produce more goods or services with Jess labour, materials, and energy. Another indicator is its adaptability. Organizations need to adapt to their external environment, and this usually includes a transformation process that adapts to new products and sometimes new ways of

making those products. A third indicator of an effective transformation process is innovativeness. Inno- vation involves designing products and work processes that are superior to what competitors can offer.

An important feature of an effective transformation process is how well the internal subsystems coordinate with each other.65 Coordination is one of the most important OB concepts because orga- nizations consist of people working together to achieve collective goals. As companies grow, they develop increasingly complex subsystems, which makes coordination more and more difficult. Com- plexity increases the risk that information gets lost, ideas and resources are hoarded, messages are mis- interpreted, and rewards are distributed unfairly. Subsystems are interconnected, so small work practice

changes in one subsystem may ripple through the organization and undermine the effectiveness of

Chapter One Introduction to the Field of Organizational Behaviour 17

other subsystems. Consequently, organizations rely on coordinating mechanisms to maintain an effi- cient, adaptive, and innovative transformation process (see Chapter 13).

ORGANIZATIONAL LEARNING PERSPECTIVE Jack Welch, the former CEO of General Electric, once advised: "An organization's abi lity to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.'~ Welch wa~ describ- ing the second perspective of organizational effectiveness, called organizational lear ning. This per- spective takes the view that organizations are effective when they find ways to acquire, share, use, and store knowledge. Knowledge is a resource or asset, called in tellectual capita l, which exists in three forms: human capital, structural capital, and relationship capital.67

Hum an ca pital. Human capital refers to the knowledge, skills, and abi lities that employees

carry around in their heads. It is a competitive advantage because employees are essential for

the organization's survival and success, and their talents are difficult to find, to copy, and to

replace with technology68 Human capital is also a huge risk for most organizations because it literal ly leaves the organization every day when employees go home!69

Structural capital. Even if every employee left the organization, some intellectual capital

remains a~ structural capital . It includes the knowledge captured and retained in an organiza- tion's systems and structures, such as the documented work procedures, physical layout of production and office space, and the finished products (which can be reverse engineered to discover how they were made)7 0

Relationship ca pital. Relationship capital is the value derived from an organization's relation- ships with customers, suppliers, and others who provide added mutual value for the organiza- tion. It includes the organization's goodwill, brand image, and combination of relationships that

organizational members have with people outside the organization.71

An organization's intellectual capital develops and is maintained through the four organizational learning processes shown in Exhibit 1.4: acquiring, sharing, using, and storing knowledge.72

EXHIBIT 1.4 Four Organizational Learning Processes

Acquiring Knowledge

• lndividualleamir1& (external) ~ trainin& ~ observW>J

• Environment sc:annifll • Graftin& • Expwimenation

·------+-----~~ • Communication • lndividualleamir1& (intemaQ • Knowted,e tn.nsfer • System.Vpracdceslhabits

Usmg Knowledge

• Sensemakina • Requisite skills • Autonomy • LearninJ orientation

• O"ainin& • ob.servinz

• tnfonnation systemS

18 Part One Introduction

Acquiring Knowledge Acquiring knowledge refers to bringing in knowledge from the external envi- ronment as well a~ through discovery. It occurs daily when employees casually observe changes in the external environment a~ well as when they receive formal training from sources outside the organization.

Knowledge acquisition also occurs through environmental scanning, such as actively monitoring consumer trends, proposed government legislation, and competitor activities. A third method of acquiring knowledge is to hire skilled staff and buy complementary businesses (called grafting). Finally, knowledge acquisition

occurs through experimentation-generating new idea~ and products through creative discovery and testing.

Sharing Knowledge Sharing knowledge refers to distributing knowledge throughout the orga- nization. This mainly occurs through formal and informal communication with co-workers, as well as through various forms of in-house learning (training, observation, etc.). Companies encourage infor- mal communication through their organizational structure, workspace design, corporate culture, and social activities.73 Company intranet~ and digital information repositories, such as Shopify's internal wiki, also support knowledge sharing.

Using Knowledge Knowledge is a competitive advantage only when it is appl ied to improve organizational processes. To use knowledge, employees need a mental map (sense making) so they are aware the knowledge exists and know where to find it in the organization. Knowledge use also requires

employees with sufficient prerequisite knowledge and ski lls. For example, financial analysts need foundation knowledge in mathematics and financial products to use new knowledge on asset valuation methods. Autonomy is another important condition for knowledge use; employees must have enough freedom to try out new ideas. Knowledge use also flourishes where workplace norms strongly support

organizational learning. These beliefs and norms represent a learning orienta tion, which we discuss further on the topics of creativity (Chapter 7) and organizational culture (Chapter 14).

Storing Knowledge Storing knowledge is the process of retaining knowledge for later retrieval. Stored knowledge, often called organizational memory, includes knowledge that employees recall as well as knowledge embedded in the organization's systems and structures.74 Effective organizations also

Chapter One Introduction to the Field of Organizational Behaviour

The phoenix is a mythical bird that rises from the ashes of its previous existence. Yet in the Canadian federal government, Phoenix is the name of a new payroll system that doesn't yet know how to fly. Soon after Phoenix was launched in February 2016, it underpaid, overpaid, or altogether stopped paying 82,000 civil servants. The government eventually provided emergency funds to short-changed staff, but many had to max out their credit cards and borrow from relatives to make ends meet. More than 13,000 employees continued to suffer payroll errors one year later.

Much of the Phoenix debacle is explained by ineffective organizationa l learn ing. The Canadian government's payroll system is highly complex, involving 80,000 pay rules derived from 27 labour union contracts. Yet the government cut costs by providing insufficient tra ining to the 500 civil servants responsible for operating Phoenix. ·we underestimated the amount of time that it would take for all users to become trained and familiar w ith the system," admitted a sen ior government leader involved w ith Phoenix's development. "The learn ing curve just seemed to be much longer than we expected."

The Phoenix project also suffered from loss of organizational memory. Before the new system had been adequately tested, the government attempted to cut costs by laying off hundreds of payroll experts who operated the old system. When Phoenix spectacularly spewed out incorrect paycheques, there was a shortage of people knowledgeable enough about the complex payroll rules to fix the problems. The government scrambled to temporarily rehire many of the laid-off staff. "Pay transformation was compromised as soon as the decision was taken to eliminate the jobs of some 700 compensation staff before we had transitioned to Phoenix," admitted the Canadian government minister responsible for payroll admin istration. "Had we kept those jobs longer, we would not be in the situation we are in today."7s

©Darcey Mclaughlin, 95.9 Sun FM/Post Media

19

retain knowledge in human capital by motivating employees to stay with the company. Furthermore, organizations encourage employees to share what they know so valuable knowledge is held by co-work- ers when an employee does quit or retire. Another strategy is to actively document knowledge when it is created by debriefing teams on details of their knowledge of clients or product development.

One la~t point about the organizational learning perspective: effective organizations not only learn; they also unlearn routines and patterns of behaviour that are no longer appropriate?6 Unlearning removes knowledge that no longer adds value and, in fact, may undermine the organization's effec- tiveness. Some forms of unlearning involve replacing dysfunctional policies, procedures, and routines. Other forms of unlearning era~e attitudes, beliefs, and a~sumptions. For example, BlackBerry (formerly Research in Motion) held strong beliefs and assumptions about phones with physical keypads, which

resulted in their slow response to smartphones and tablets with touchscreen technology. Organizational unlearning is particularly important for organizational change, which we discuss in Chapter 15.

HIGH-PERFORMANCE WORK PRACTICES (HPWP) PERSPECTIVE The open systems perspective states that successful companies are efficient and adaptive at transforming inputs into outputs. However, it does not offer guidance about specific subsystem character istics or orga- nizational practices that make the transformation process more effective. These details are addressed by another perspective of organizational effectiveness, called high-performance work practices (HPWP). The HPWP perspective is founded on the belief that human capital- the knowledge, skills, and abilities that employees possess-is an important source of competitive advantage for organizations77 Motivated and skilled employees offer competitive advantage by transforming inputs to outputs better, by provid- ing better sensitivity to the external environment, and by having better relations with key stakeholders.

The HPWP perspective tries to figure out specific ways to generate the most value from human capital. Researchers have investigated numerous potential high-performance work practices, but we will focus on the four discussed in most studies: e mployee involvement, job autonomy, competency development, and rewards for performance and competency development.78 Each of these four work practices individually improves organizational effectiveness, but studies suggest that they have a stron-

ger effect when bundled together?9

20 Part One Introduction

Over the past forty years, the Brandt Group of Companies has grown from a small manufacturer to become Saskatchewan's largest privately-held company with $ 1.2 billion sales and more than 1,800 employees. Brandt is also rated as one of Canada's 50 best managed firms. Brandt Group chairman Gavin Semple says the secret to business success is applying high-performance work practices so the company has strong human capital. "It always comes back to obtaining, training, and retaining the brightest and the best people,'' advises Semple. "We've been focused on that for several decades, so we want to not only find the best, but we want to develop a culture that results in our employees wanting to come to work, enjoying their work, and being fulfilled at doing their job."80

©David Schaffer/age fotostock

The first two factors-involving employees in decision making and giving them more autonomy over their work activities-strengthen employee motivation as well as improve decisions, organi- zational responsiveness, and commitment to change. In high-performance workplaces, employee involvement and job autonomy often take the form of self-directed teams (see Chapter 8). The third factor, employee competency development, refers to recruiting, selecting, and training so employees are equipped with the relevant skills, knowledge, and other personal characteristics. The fourth high- performance work practice involves linking performance and skill development to various forms of financial and nonfinancial rewards valued by employees.

HPWP practices improve an organization's effectiveness in three ways.81 First, as we mentioned ear- lier, these activities develop employee skills and knowledge (human capital), which directly improve individual behaviour and performance. Second, companies with superior human capital tend to adapt

better to rapidly changing environments. This adaptability occurs because employees are better at per- forming diverse tasks in unfamiliar situations when they are highly skilled and have more freedom to perform their work. A third explanation is that HPWP practices strengthen employee motivation and positive attitudes toward the employer. HPWPs represent the company's investment in its work- force, which motivates employees to reciprocate through greater effort in their jobs and assistance to co-workers.

The HPWP perspective is still developing, but it already reveals important information about spe- cific organizational practices that improve an organization's effectiveness through its employees. Still,

this perspective offers an incomplete picture of organizational effectiveness. The remaining gaps are filled by the stakeholder perspective of organizational effectiveness.

Chapter One Introduction to the Field of Organizational Behaviour 2 1

STAKEHOLDER PERSPECTIVE The open systems perspective says that effective organizations adapt to the external environment. However, it doesn't offer much detail about the external environment. The stakeholder perspective offers more specific information and guidance by focusing on the organization's relationships with stakeholders. Stakeholders include organizations, groups, and other entities that affect, or are affected by, the company's objectives and actions.82 The stakeholder perspective personalizes the open systems perspective; it identifies specific social entities in the external environment as well as employees and others within the organization (the internal environment). This perspective also recognizes that stake-

holder relations are dynamic; they can be negotiated and influenced, not just taken as a fixed condi- tion. In general, the stakeholder perspective states that organizations are more effective when they

understand, manage, and satisfy stakeholder needs and expectations. 83

There are many types of stakeholders, and the Jist is continuously evolving. Consider the key stakeholders identified by CSL Limited in Exhibit 1.5. The Austral ian company and global leader in blood-related products and vaccines pays attention to more than a dozen groups, and likely others that

aren't included in this diagram. Understanding, managing, and satisfying the interests of stakeholders is challenging because they have confl icting interests and organizations Jack sufficient resources to satisfy everyone. Therefore, organizational leaders need to decide how much priority to give to each group.84 Research has identified several factors that influence the prioritization of stakeholders, includ- ing the entity's power and urgency for action, its legitimate claim to organizational resources, how executives perceive the organization's environment, the organization's culture, and the personal values

of the corporate board and CEO.

Values, Ethics, and Corporate Social Responsibility The stakeholder perspective provides valuable details about features of the external environment that are missing from the open system per- spective. Equal ly important, the stakeholder perspective incorporates values, ethics, and corporate social responsibility into the organizational effectiveness equation. In particular, recall that personal values

influence how corporate boards and CEOs allocate organizational resources to stakeholders. 85 Values

EXHIBIT 1.5 CSL Limited's Key Organizational Stakeholders

Patients Customers

~ I

Media

PoiiUclans - makers

OCSL Limited 20 I 6

22 Part One Introduction

are relati vely stable evaluative beliefs that guide our preferences for outcomes or courses of acti on in

a vari ety of si tuations.86 They help us to know what i s r ight or wrong, or good or bad, in the world. Chapter 2 explains how values anchor our beliefs and to some extent motivate our actions.

Al though values exist wi thin indiv iduals, groups of people often hold similar values, so we tend to

ascribe these shared values to the team, department, organization, profession, or entire society. For exam- ple, Chapter 14 discusses the importance and dynamics of organizational cul ture, whi ch includes shared

values across the company. Many firms strive to become values-dri ven organizations, whereby employee

decisions and behaviour are guided mainly by the collective values identified as critical to the organization's

success.87 Consider Vancity Savings. Canada's largest co-operative financial institution and the country's

top ranked corporate citizen has a clear set of dominant values that guide employee decisions and behav-

iour. "At Vancity, our values shape everything we do for our members, our business partners, our employ-

ees, and the environment," reports the company website, under the heading "Values-based banking."88

By focusing on values, the stakeholder perspective also highl ights the importance of ethics and corpo-

rate social responsibility. In fact, the stakeholder perspective emerged out of earlier writing on these topics. Ethics refers to the sntdy of moral principles or values that determine whether actions are right or wrong

and outcomes are good or bad. We rely on our ethical values to determine "the right thing to do." Ethical

behaviour is driven by the moral principles we use to make decisions. These moral principles represent

fundamental values. One recent survey of 7, 700 employed millennials in 29 countries (including 300 in

Canada) reported that 87 percent believe "the success of a business should be measured in terms of more

than just its f inancial performance." However, only 58 percent believe that businesses "behave in an ethical

manner." 89 Chapter 2 discusses the main influences on ethi cal decisions and behaviour in the workplace.

Cor por ate social r esponsibility (CSR) consi sts of organi zati onal acti v ities intended to benefit

society and the environment beyond the f irm's immediate f inancial i nterests or legal obl igati ons.90

I t is the v iew that companies have a contract with society, in which they must serve stakeholders

beyond shareholders and customers. In some situati ons, the interests of the f irm's shareholders should

be secondary to those of other stakeholders91 As part of CSR, many companies have adopted the

triple bottom line phi losophy: They try to support or "earn positive returns" in the economic, social ,

and environmental spheres of sustainabili ty. Firms that adopt the triple bottom l ine aim to survive and

be profitable in the marketpl ace (economic}, but al so to maintain or improve conditions for soc iety

(social) as well a~ the physical environment.92 Companies are parti cularly eager to become "greener," that i s, to minimi ze any negative effect they have on the physical environment.

Global Connections 1.2:

21 DAYS OF Y'ELLO CARE93

MTN Group is the largest mobile telecommunications company in Africa and a leader in corpo- rate social responsibility (CSR). Its award-winning "2 1 Days of Y'ello Care" program involves many of the company's 22,000 employees annually in CSR events that take place during the first three weeks of June. These initiatives focus on improving education throughout the 24 African and Middle Eastern countries where MTN operates.

In recent CSR events, MTN employees installed solar panels (supplied by German firm Mobisol), electrical cables, and batteries to generate off-grid electricity for lighting at ru ral schools. MTN volunteers also installed computers and trained teachers to help instruct computer and other information technology in the classroom.

Chapter One Introduction to the Field of Organizational Behaviour

Mobile telecommunications company MTN Group is a leader in corporate social responsibility (CSR) across Africa and the Middle East through its annual "21 Days of Y'ello Care."

© REUTERS I Alamy Stock Photo

23

Not everyone agrees that organizations need to cater to a wide variety of stakeholders. Many years ago, economist Milton Friedman pronounced that "there is one and only one social responsibil ity of business-to use its resources and engage in activities designed to increase its profits."94 Friedman is highly respected for developing economic theory, but few writers take this extreme view today. Indeed, 82 percent of Canadians believe it is a good idea for companies to support causes. A similar percentage of people across 24 countries believe it is very or somewhat important for their own employers to be responsible to society and the environment.95 The emerging evidence is that companies with a positive CSR reputation tend to have better financial performance, more loyal employees, and better relations with customers, job appl icants, and other stakeholders.96

CONNECTING THE DOTS: AN INTEGRATIVE MODEL OF ORGANIZATIONAL BEHAVIOUR Open systems, organizational learning, high-performance work practices, and stakeholders repre- sent the four perspectives of organizational effectiveness. Organizational effectiveness is the ultimate dependent variable in organizational behaviour, so it is directly or indirectly predicted by al l other OB variables. The relationship between organizational effectiveness and other OB variables is shown in

Exhibit 1.6. This diagram is an integrative road map for the field of organizational behaviour, and for the structure of this book. It is a meta-model of the various OB topics and concepts, each of which has its own explanatory models. For instance, you will learn about employee motivation theories and prac- tices in Chapter 5 and leadership theories and ski lls in Chapter 12. Exhibit 1.6 gives you a bird's-eye view of the book and its various topics, to see how they fit together.

As Exhibit 1.6 illustrates, individual inputs and processes influence individual outcomes, which in turn have a direct effect on the organization's effectiveness. For example, how well organizations trans- form inputs to outputs and satisfy key stakeholders is dependent on how well employees perform their

24 Part One Introduction

EXHIBIT 1.6 An Integrative Model of Organizational Behaviour

Organizational Inputs and Processes

• Organizational structure • Organizational change • Organizational culture • Human resource practices • Organizational technology • Organizational strategy

/ "... Individual Team/Interpersonal

Inputs and Processes Inputs and Processes

• Personality/values/competencies • Team tasks/size/composition • Self-concepVperceptions/mindset • Team developmentltrusVcohesion • Emotions/attitudes • Communication • Motivation • Leadership (team/organization) • Self-leadership • Power/influence/politics

• ConflicVnegotiation

l l Individua l Team/ Interpersona l O utcomes O utcomes

• Behaviour/performance • Team performance • Organizational citizenship • Team decisions • Well-being (low d istress) • Collaboration/mutual support • Decisions/creativity • Social networks

\ / Organizational Outcomes (Effectiveness)

• Open systems frt • Human capital development • Organizational learning (HPWPs)

• Satisfied stakeholders/ethical conduct

jobs and make logical and creative decisions. Individual inputs, processes, and outcomes are identified in the two left-side boxes of our integrative OB model and are the centre of attention in Part 2 of this book. After introducing a model of individual behaviour and results, we will learn about personality and values-two of the most important individual characteristics-and later examine various individual processes, such as self-concept, perceptions, emotions, attitudes, motivation, and self-leadership.

Part 3 of this book direct~ our attention to team and interpersonal inputs, processes, and outcomes. These topics are found in the two boxes on the right side of Exhibit 1.6. The chapter on team dynamics (Chapter 8) offers an integrative model for that specific topic, which shows how team inputs (team composition, size, and other team characteri~cs) influence team processes (team development, cohesion, and others), which then affect team perfonnance and other outcomes. Later chapters in Part 3 examine specific interpersonal and team processes listed in Exhibit 1.6, including communication, power and influence, conflict, and leadership.

Notice in Exhibit 1.6 that team processes and outcomes affect individual processes and outcomes. For instance, an employee's personal well-being is partly affected by the mutual support he or she receives from team members and other co-workers. The opposite is also true; individual processes affect team and interpersonal dynamics in organizations. For example, we will learn that self-concept among individual team members influences the team's cohesion.

The top area of Exhibit 1.6 highlights the macro-level influence of organizational inputs and pro- cesses on both teams and individuals. These organizational-level variables are mainly discussed in Part 4,

Chapter One Introduction to the Field of Organizational Behaviour 25

including organizational structure, organizational culture, and organizational change. However, we will

also refer to human resource practices, information systems, and additional organization-level variables throughout this book where they have a known effect on individual, interpersonal, and team dynamics.

The Journey Begins

This chapter introduces you to the field of organizational behaviour, but it is only the beginning of our journey. Throughout this book, we will challenge you to learn new ways of thinking about how people

work in and around organizations. We begin this process in Chapter 2 by presenting a basic model of indi- vidual behaviour, then introducing over the next few chapters various stable and mercurial characteristics of individuals that relate to elements of the individual behaviour model. Next, this book moves to the team

level of analysis. We examine a model of team effectiveness and specific feantres of high-performance

teams. We also look at decision making and creativity, communication, power and influence, conflict, and leadership. Finally, we shift our focus to the organizational level of analysis, where the topics of orga-

nizational structure, organizational culture, and organizational change are examined in detail.

Chapter Summary

LO 1 Define organizational behaviour and organizations, and discuss the importance of this field of inquiry.

Organizational behaviour is the study of what people think, feel, and do in and around organizations. Organizations are groups of people who work interdependently toward some purpose. 08 theories help us (a) comprehend and predict work events, (b) adopt more accurate personal theories, and (c) influence organiza- tional event~. 08 knowledge is for everyone, not just managers. 08 theories and practices are highly beneficial for an organization's survival and success.

L02 Debate the organizational opportunities and challenges of technological change, globalization, emerging employment relationships, and workforce diversity.

Technological change has improved efficiency, interactivity, and well-being, but it has also been a disruptive force in organizations. Information technology has altered communication patterns and power dynam- ics at work, and has affected our nonwork time, attention span, and techno-stress. Globalization, which refers to various forms of connectivity with people in other parts of the world, has become more intense than ever before because of information technology and transportation systems. It has brought more complex ity and new ways of working to the workplace, requiring additional knowledge and skills. It may be an influence on work intensifica- tion, reduced job security, and lessening work-life balance.

An emerging employment relationship trend is the blurring of work and nonwork time and the associated call for more work-life balance (minimizing conflict between work and nonwork demands). Another employ- ment trend is remote work, particularly telework (also called telecommuting), whereby employees work from home one or more workdays per month rather than commute to the office. Telework potentially benefits employees and employers, but there are also d isadvantages and its effectiveness depends on the employee, job, and organization. An organ ization's workforce has both surface-level diversity (observable demographic and other overt d ifferences in people) and deep-level diversity (differences in personalities, bel iefs, values, and attitudes). Diversity may improve creativity and decision making, and provide better awareness and response to diverse communities. However, diversity also poses challenges, such as dysfunctional conflict and slower team development.

L03 Discuss the anchors on which organizational behaviour knowledge is based. The multidiscipl inary anchor states that the field should develop from knowledge in other d is- ciplines (e.g., psychology, sociology, economics), not just from its own isolated research base.

26 Part One Introduction

The systematic research anchor states that OB knowledge shou ld be developed using sound research methods, which is consis tent with evidence-based management. The contingency anchor states that OB theories gener- ally need to consider that there will be different consequences in different situations. The multiple levels of analysis anchor states that OB topics may be viewed from the individual, team, and organization levels of analysis.

L04 Compare and contrast the four perspectives of organizational effectiveness. The open systems perspective views organizations as complex organisms that "live" within an exter- nal environment. They depend on the external environment for resources, then use organizational

subsystems to transform those resources into output~ that are returned to the environment. Organ izations receive feedback from the external environment to maintain a good "fit" with that environment. Fit occurs by adapting to the environment, influencing the environment, or moving to a more favourable environment. Effective transforma- tion processes are efficient, adaptable, and innovative. The organizational learning perspective states that organi- zations are effective when they find ways to acquire, share, use, and store knowledge. Intellectual capital consists of human capital, structural capital, and relationship capital. Knowledge is retained in the organizational memory; companies also selectively unlearn.

The high-performance work practices (HPWP) perspective identifies a bundle of systems and structures to leverage workforce potential. The most widely identified HPWPs are employee involvement, job autonomy, devel- oping employee competencies, and performance/skill-based rewards. HPWPs improve organizational effective- ness by building human capital, increasing adaptability, and strengthening employee motivation and attitudes. The stakeholder perspective states that organizations are more effective when they understand, manage, and satisfy stakeholder needs and expectations. Leaders manage the interests of diverse stakeholders by relying on their per- sonal and organizational values for guidance. Ethics and corporate social responsibility (CSR) are natural varia- tions of values-ba~ed organ izations. CSR consists of organizational activities intended to benefit society and the environment beyond the firm's immediate financial interests or legal obl igations.

Key Terms corporate social r esponsibility (CSR)

deep-level diversity

ethics evidence-based management

globalization

high-performance work practices (HPWP)

human capital

intellectual capital

learning orientation

open systems

organizational behaviour (0 8 )

organizational effectiveness

organizational learning

organizations

relationship capital

stakeholders

structural capital

surface-level diversity

telework

values

work-life balance

Critical Thinking Questions I. A friend suggests that organ izational behaviour courses are useful only to people in management careers.

Discuss the accuracy of your friend's statement.

2. A young college or university student from Canada is interested in doing international business across China, India, Brazi l, and Russia. Discuss how the knowledge of OB can be useful to the student.

3. Look through the list of chapters in this textbook and discuss how globalization could influence each organi- zational behaviour topic.

4. "Organizational theories should follow the contingency approach." Comment on the accuracy of this statement.

5. What does evidence-based managemenT mean? Describe situations you have heard about in which companies have practiced evidence-based management, as well as situations in which companies have relied on fads that lacked sufficient evidence of their worth.

Chapter One Introduction to the Field of Organizational Behaviour 27

6. After hearing a seminar on organizational learning, a mining company executive argues that this perspective is relevant to software and other knowledge businesses, but it ignores the fact that mining companies cannot rely on knowledge alone to stay in business. They also need physical capital (such as extracting and ore- processing equipment) and land (where the minerals are located). In fact, these two may be more important than what employees carry around in their heads. Evaluate the mining executive's comments.

7. It is said that the CEO and other corporate leaders are keepers of the organization's memory. Please discuss this.

8. Corporate social responsibility is one o f the hottest issues in corporate boardrooms these days, partly because it is becoming increasingly important to employees and other stakeholders. In your opinion, why have stake- holders given CSR more attention recently? Does abiding by CSR standards potentially cause companies to have conflicting objectives with specific stakeholders in some situations?

9. A common refrain an10ng executives is "People are our most important asset." Relate this statement to any two of the four perspectives of organizational effectiveness presented in this chapter. Does d1is statement apply better to some perspectives than to others? Why or why not?

Case Study:

THE FAST-FASHION SUCCESS OF ZARA

by Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada)

Spanish retail fashion juggernaut Zara is the flagship brand of the world's largest clothing retail company (lndi- tex, which also owns Pull & Bear, Stradivarius, and other brands). What is the secret to Zara's success? The answer is that the organization has created organizational systems, structures, and practices that align with the complex meaning of organ izational effectiveness.

In the fashion industry, customer preferences change quickly and have limited predictabili ty. Zara main- tains a close fit with that turbulent environment by experimenting with numerous new s tyles, receiving almost immediate and continuous feedback about which ones are most popular, learning what minor adjustments would make the styles more appealing, and quickly producing and de livering new or revised styles to match current demand. Zara practically invented the notion of "fast fashion," whereby the company responds quickly to customer preferences and fashion trends. Most other retailers instead produce a limited variety of styles , o ffer only two or three batches o f new designs each year, and requ ire up to s ix months for those des igns to show up in stores.

The nucleus of this process is an aircraft hangar-sized room at Zara's headquarters in A Coruiia, Spain. In the centre of the room is a long line of facing desks where regional managers from two dozen countries are in daily contact with each of the company's 6 ,000 stores in 86 countries. Equally important, sales staff are trained to ask customers about why they bought a garment or how a garment could be designed more to their liking. These customer comments are then quickly reported back to headquarters. On both sides of the room are designers and other staff who use this continuous store feedback to revise existing styles and spark ideas for new designs.

Suppose several regional managers receive reports that the new line of women's white jackets is sell ing slowly; however, customers have told sales staff they would buy that style o f jacket in a cream-colour with silkier fabric. Designers receive this information and quickly get to work designing a cream-coloured jacket with the preferred material. Some regional d ifferences exist, of course, but Zara reports that most of its products are in demand globally. Zara produces a large variety o f designs, but very limited stock for each design.Thus, the company can san1ple a wider array o f market preferences whi le minimizing the problem of having too much inventory. In fact, knowing that Zara's products are constantly changing attracts customers back to the stores more often.

Rapid and rich feedback from stores is vital, but Zara also thrives because of its quick response to that feed- back. Most fashion retailers rely on independent manufacturers in distant countries that require several months' lead time to produce a garment. Zara also sources from these low-cost manufacturers to some extent, but half of its garments are made "in proximity" by its own manufacturing faci lities in Spain, Portugal, and Turkey. Nearby manufacturing costs more, but it often takes less than three weeks for a new design from these nearby factories to arrive in stores, which receive new s tock twice weekly.

28 Part One Introduction

Discussion Questions

1. Apply open systems perspective to explain how Zara has been effective in the fast fashion business. What does the open systems perspective suggest might pose future risks to Zara's success?

2. Identify other perspectives of organizational effectiveness that explain Zara's success in more detail.

Source.s: N. Tokatli. "Global Sourcing: Insight' from the Global Clothing Industry- the Case ofZara. a Fast Fashion Retailer." Journal of Economic Geography 8. no. I (2008): 21 - 38: L. Osborne. " High Street Fashion Chain Zara Is Hit by 'Sia>•e Lahour' Outcry," Daily Mail (London. UK), 2013. 25; S.R. Levine. "How Zara Took Customer Focus to New Heights." Credi t Union Times (201 3): 10: C. Nogueir. "How lnditex Rules the Weaves. and Plans to Carry on Doing So." El Pais (Madrid. Spain), 24 April 2013. 4; G. Ruddick. "Spain's Leader in Fast Fashion Has Much to Teach British Store Rivals," Daily Telegraph (London). 15 March 2013,2: "The Cult ofZara." Sunday Independent (Dublin, Ireland) . 10 February 2013. 24.

Case Study:

ANCOL LTD.

by Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada)

Paul Simard wa~ delighted when Ancol Ltd. offered him the job of manager at its Jonquiere, Quebec plant. Simard was happy enough managing a small metal stamping plant with another company, but the headhunter's invita- tion to apply for the plant manager job at one of Canada's leading metal fabrication companies was irresistible. Although the Jonquiere plant was the smallest of Ancol's 15 operations across Canada, the plant manager position was a valuable first step in a promising career.

One of Simard's firs t observations at Ancol's Jonquiere plant was that relations between employees and man- agement were strained. Taking a page from a recent executive seminar he had attended on bu ilding trust in the workplace, Simard ordered the removal of all time clocks from the plant. Instead, the plant would a~sume that employees had put in their full shift. This symbolic gesture, he believed, would establish a new level of credibility and strengthen relations between management and employees at the site.

Initially, the 250 production employees at the Jonquiere plant appreciated their new freedom. They felt respected and saw this gesture as a sign of positive change from the new plant manager. 1\vo months later, how- ever, problems started to appear. A few people began showing up late, leaving early, or taking extended lunch breaks. Although this represented only about 5 percent of the employees, others found the s ituation unfair. More- over, the increa~ed absenteeism levels were beginning to have a noticeable effect on plant productivity. The prob- lem had to be managed.

Simard asked supervisors to observe and record when the employees came or went and to discuss attendance problems with those abusing their privileges. But the supervisors had no previous experience with keeping atten- dance and many Jacked the necessary interpersonal skills to discuss the matter with subordinates. Employees resented the reprimands, so relations with supervisors deteriorated. The additional responsibi lity of keeping track of attendance also made it difficult for supervisors to complete their other responsibi lities. After just a few months, Ancol found it necessary to add another supervisor position and reduce the number of employees assigned to each supervisor.

But the problems did not end there. Without time clocks, the payroll department could not deduct pay for the amount of time that employees were late. Instead, a Jetter of reprimand was placed in the employee's personnel file. However, this required yet more time and additional skills from the supervisors. Employees did not want these letters to become a permanent record, so they filed grievances with their labour union. The number of grievances doubled over six months, which required even more time for both union officials and supervisors to handle these disputes.

Nine months after removing the time clocks, Paul Simard met with union officials, who agreed that it would be better to put the time clocks back in. Employee-management relations had deteriorated below the level when Simard had started. Supervisors were burnt out from overwork. Productivity had dropped due to poorer attendance records and increased administrative workloads.

A couple of months after the time clocks were put back in place, Simard attended an operations meeting at Ancol's headquarters in Toronto. During lunch, Simard described the time clock incident to Liam Jackson,

Chapter One Introduction to the Field of Organizational Behaviour 29

Ancol's plant manager in Northern British Columbia. Jackson looked surprised, then chuckled. Jackson explained that the previous B.C. plant manager had done something like that with s imilar consequences six or seven years earlier. The previous manager had left some time ago, but Jackson heard about the B.C. time clock from a supervi- sor during the manager's retirement party two months ago.

"I guess it's not quite like lightning striking the same place twice," said Simard to Jackson. "But it sure feels like it."

Discussion Questions

I. Discuss the consequences of the time clock re moval on Ancol's effectiveness as an organization using any two of the perspectives of organ izational effectiveness.

2. What changes should occur to minimize the likelihood of these problems in the future?

© 2000 Steven L. McShane

Web Exercise:

DIAGNOSING ORGANIZATIONAL STAKEHOLDERS

Purpose This exercise is designed to help you understand how stakeholders influence organizations as part of the open systems anchor.

Materials Students need to select a company and, prior to class, retrieve and analyze publicly avai lable information over the past year or two about that company. This may include annual reports, which are usually found on the websites o f publicly traded companies. Where possible, student~ should also scan full-text newspaper and magazine databases for articles published over the previous year about the company.

Instructions The instructor may have students work alone or in groups for this activity. Students will select a company and investigate the relevance and influence of various stakeholder groups on the organization. Stakeholders can be identified from annual reports, newspaper articles, website s tatements, and other available sources. Stakeholders should be rank-ordered in terms of their perceived importance to the organization.

Students should be prepared to present or discuss their rank-ordering of the organ ization's stakeholders, includ- ing evidence for this ordering.

Discussion Questions

I. What are the main reasons why certain stakeholders are more important than others for this organization?

2. On the basis of your knowledge of the organ ization's environmental situation, is this rank order of stakeholders in the organization's best interest, or should speci fic other stakeholders be given higher priority?

3. What societal groups, if any, are not mentioned as stakeholders by the organization? Does this lack of

reference to these unmentioned groups make sense?

Class Exercise:

IT ALL MAKES SENSE?

Purpose This exercise is designed to help you understand how organizational behaviour theories can help you refine and improve your personal theories about what goes on in organizations.

Instructions Read each of the statement~ below and determine whether each statement is true or false, in your opinion. The class will consider the answers to each question and discuss the implications for studying organ izational behaviour.

30

~ True ~ TTrue rl:- _!.rue 4 . True

5. True ~ - True

7. True

8. True

9. True

10. True ....__

Part One Introduction

This exercise may also be conducted as a team activity, whereby students answer these questions in teams rather than alone.

- False A happy worker is a productive worker. - False A decision maker•s effectiveness increases with the number of choices or alternatives available to he r/him.

False Organization.'i are more effective when they minimize conflict am ong employees. - False Employees have more power with many close friend'i than with many acquaintances.

False Companies are more successful whe n they have s trong corporate cultures. - False Employees perform better without stress.

False T he best way to c hange people and organizations is by pinpointing the source of their current problems.

False Female leaders involve employees in decisions to a greater degree than do male leaders.

False T he best decisions are made without emotion.

False If employees feel they are paid unfai rly, nothing other than changing their pay will reduce their feelings of

injustice .

Self-Assessment for Chapter 1

SELF-ASSESSMENT NAME

Are you a good te lecommuter?

DESCRIPTION

Telecommuting is an increasingly popular Vlorkplace activity. and it pote ntially offers benefit'i for both companies and telecommute rs. However. some people are

better suited than others to telecomm uting and other forms of remote work. This self-assessment estimates personal characteristics that relate to e mployee success at

telecommuting. thereby providing a rough indication of how well you might adjust to

telecommuting.

( PART TWO J Individual Behaviour and Processes

CHAPTER 2

Individual Behaviour, Personality, and Values

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Describe the four factors that directly influence individual behaviour and performance.

L02 Summarize the five types of individual behaviour in organizations.

L03 Describe personality and discuss how the "Big Five" personality dimensions and four MBTI types relate to individual behaviour in organizations.

L04 Summarize Schwartz's model of individual va lues and discuss the conditions where values influence behaviour.

LOS Describe three ethical principles and discuss three factors that influence ethical behaviour.

L06 Describe five va lues commonly studied across cultures, and discuss the diverse cultures within Canada.

31

32 Part Two Individual Behaviour and Processes

Most companies strive for a safe work environment, but few are as dedicated as Mississauga-based Mother Parkers Tea & Coffee Inc. As one of North America's largest private label coffee producers, Mother Parkers instills safety-oriented behaviour through employee motivation, ability, role clarity, and situational support. "Safety is the core of everything we do here," says Chris Meffen, production manager of Mother Parkers' award-winning ReaiCup operations.

To motivate safe work behaviour, Mother Parkers employees in Mississauga and Ajax, Ontario, and Fort Worth, Texas, are actively involved in testing and selecting new safety-oriented equipment. A special cross-functional committee of employees also conducts "ergo-blitzes" with production staff to uncover ergonomic risks and recommend solutions.

"We wanted to empower the operators to recogn ize hazards in their work area, voice those concerns, and to be a part of the solutions; says Adrian Khan, Mother Parkers' environmental health and safety manager. "When it comes down to it, they are the experts running the machines who know exactly what the hazards are in the workplace; adds Khan, who was recently named Canada's Safety Leader of the Year by Canadian Occupational Safety magazine.

Ability is the second driver of safe work behaviour. Mother Parkers employees are trained on safety procedures before they first enter the production floor. They also learn current developments from community experts at special health and safety day events. Mother Parkers also actively manages a third driver of safe work behaviour: the physical work environment. For example, the company's award-winning state-of-the-art automated production systems include built-in accident prevention features; highly visible floor markers cue employees to stop and look both ways before crossing forklift travel areas; and communication boards display the latest safety improvement statistics as well as key safety information.

Mother Parkers' fourth ingredient for safe work behaviour is clarifying role expectations. Specifically, employees are continuously reminded that safety is paramount. These role perceptions are reiterated through ongoing safety training, employee involvement in ergonomic risk prevention, and the presence of numerous workplace safety cues. In fact, reminding everyone about safety is a daily event. "We begin our production meetings and shift handovers by talking about safety," says production manager Chris Meffen.

Safety-focused role expectations also extend to contractors, all of whom complete a safety training program before their projects begin. "We set expectations and standards with contractors before they come on site on what it means to be on site at Mother Parkers from a health and safety perspective; says Mike Bate, vice-president of human resources.1

M otivating staff to be safety conscious, providing ongoing safety training, establishing clear safety-focused role expectations, and creating a safety-first work environment have contrib- uted to Mother Parkers' ascension as a workplace health and safety role model in Canada. This

chapter begins by introducing the four direct drivers of individual behaviour and performance that Mother Parkers applies to ensure that employees consistently engage in safe work behaviours. Next, we rev iew the five types of individual behaviour that represent the individual-level dependent variables found in most organizational behaviour research. The latter half of this chapter focuses on the two most stable characteristics within individuals, namely their personality and values. We introduce the two models of personality, discuss how personal values influence behaviour, explain the main factors to consider in ethical behaviour, describe the main types of cross-cultural values, and examine similarities and d ifferences in personal values across Canada and with people in the United States.

MARS Model of Individual Behaviour and Performance

For most of the past century, experts have investigated the direct predictors of indi- vidual behaviour and performance.2 One of the earliest formulas was performance = person x situation, where person includes individual characteristics and situa-

tion represents external influences on the individual 's behaviour. Another frequently mentioned

Chapter Two Individual Behaviour, Personality, and Values 33

formula is performance = ability x motivation. 3 Sometimes known as the "skill-and-will" model, th is formula elaborates two specific characteristics within the person that influence indiv idual performance. Some organizational studies use the ability-motivation-opportunity (AMO) model, which refers to the three variables but with a limited interpretation of the situation. Along with ability, motivation, and situation, researchers have more recently identified a fourth key direct predictor of ind ividual behaviour and performance: role perceptions (the individual's expected

role obl igations).4

Exhibit 2 .1 illustrates these four variables-motivation, abi lity, role perceptions, and situational

factors-which are represented by the acronym MARS. 5 All four factors are critical influences on an individual's voluntary behaviour and performance; if any one of them is low in a given situation, the employee will perform the task poorly. For example, motivated salespeople with clear role perceptions and suffic ient resources (situational factors) will not perform their jobs a~ well if they lack sales skills and related knowledge (ability). Motivation, ability, and role perceptions are clustered together in the model because they are located within the person. Situational factors are external to the individual but still affect his or her behaviour and performance.6 The four MARS variables are the direct predictors of employee performance, customer service, co-worker collegiality, ethical behaviour, and all other forms of voluntary behaviour in the workplace. Let's look in more detail at each of the four factors in

the MARS model.

EMPLOYEE MOTIVATION Motivation represents the forces within a person that affect his or her direction, intensity, and per- sistence of voluntary behaviour.7 Direction refers to the path along which people steer their effort. In other words, motivation is goal-directed, not random. People have choices about what they are trying to achieve and at what level of qual ity, quantity, and so forth. They are motivated to arrive at work on time, finish a project a few hours early, or aim for many other targets.

The second element of motivation, cal led intensity, is the amount of effort al located to the goal. Intensity is al l about how much people push themselves to complete a task. Two employees might be motivated to finish their project a few hours early (direction), but only one of them puts forth enough effort (intensity) to achieve this goal. The third element of motivation is persistence, which refers to the length of time that the individual continues to exert effort toward an objective. Employees sustain their effort until they reach their goal or give up beforehand.

To help remember these three elements of motivation, consider the metaphor of driving a car in which the thrust of the engine is your effort. Direction refers to where you steer the car, intensity is how

EXHIBIT 2.1 MARS Model of Indiv id ual Behaviour and Results

Indiv idual characteristics MARS Model

Behaviour and results

• 'll*llllfl- ct · Oiz , ,. ... .... • C I QCixl& ........... •JIIJIIJIIu .. .. SC I Zt

·?I IIII s c 1 Cl

34 Part Two Individual Behaviour and Processes

much you put your foot down on the gas pedal, and persistence is for how long you drive toward your destination. Remember that motivation is a force that exists within individuals; it is not their actual behaviour. Thus, direction, intensity, and persistence are cognitive (thoughts) and emotional conditions that directly cause us to move.

ABILITY Employee abilities also make a d ifference in behaviour and task performance. Ability includes both the natural aptitudes and the learned capabilities required to successfully complete a task. Aptitudes are the natural talents that help employees learn specific tasks more quickly and perform them better. For example, finger dexterity is an aptitude by which individuals learn more quickly and potentially achieve higher performance at picking up and handling small objects with their fingers. Employees with high finger dexterity are not necessarily better than others at first; rather, they usu- ally learn the skill faster and eventually reach a higher level of performance. Learned capabilities are the physical and mental skills and knowledge you have acquired. They tend to wane over time when not in use. Aptitudes and learned capabil it ies (ski lls and knowledge) are the main e lements of a broader concept called competencies, which are characteristics of a person that result in superior performance. 8

The challenge is to match a person's abil ities with the job's requirements because a good match

tends to increase employee performance and well-being. One matching strategy is to select applicants who already demonstrate the required competencies. For example, companies ask applicants to perform work samples, provide references for checking their past performance, and complete various selection

tests. A second strategy is to train employees who lack specific knowledge or skills needed for the job.9

• by the NUMBERS

Mind the MARS Gap on Ability, Role Perceptions, and Situational Factors 10

of 500 Canadian senior executives say that finding skilled workers is

somewhat or very difficult

of more than 13,000 employees surveyed across 34 countries

say the skills gap is a real problem for their employer.

of 2.2 million employees surveyed worldwide strongly agree that they

know what is expected of them at work.

25",.{, of 2,061 U.K. adults surveyed say they receive insufficient training and development

in their existing role.

24~ of more than 400,000 l employees surveyed across 500 organizations worldwide

say that lack of tools is their top source of decreased productivity (second highest to unproductive co-workers).

Chapter Two Individual Behaviour, Personality, and Values 35

The third person-job matching strategy is to redesign the job so that employees are given tasks only within their current abilities. For example, a complex task might be simplified-some aspects of the work are transferred to others-so a new employee performs only tasks that he or she is currently able to perform. As the employee becomes more competent at these tasks, other tasks are added back into

the job.

ROLE PERCEPTIONS Along with motivation and abi lity, employees require accurate role perceptions to perform their jobs well . Role perceptions refer to how clearly people understand the job duties (roles) assigned to or

expected of them. These perceptions range from role clarity to role ambiguity. When 7,000 employees in a global survey were asked what would most improve their performance, "greater clarity about what the organization needs from me" was identified as the most important factor. 11

Role clarity exists in three forms. First, employees have clear role perceptions when they under- stand the specific duties or consequences for which they are accountable. This may seem obvious, but employees are occasionally evaluated on job duties they were never told wa~ within their zone of

responsibility. This Jack of role clarity may be an increasing concern as organizations move away from precisely defined job descriptions to broader work responsibilities.

Second, role clarity exists when employees understand the priority of their various tasks and

performance expectations. This is illustrated in the cla~sic dilemma of prioritizing quantity versus quality, such as how many customers to serve in an hour (quantity) versus how well the employee should serve each customer (quality). Role clarity in the form of task priorities also exists in the dilemma of al locating personal time and resources, such as how much time managers should devote to coaching employees versus meeting with clients . The third form of role perceptions involves under-

standing the preferred behaviours or procedures for accomplishing tasks. Role ambiguity exists when an employee knows two or three ways to perform a task, but misunderstands which of these the com-

pany prefers. Role perceptions are important because they represent how well employees know where to direct

their effort.12 Employees with role clarity perform work more accurately and efficiently whereas those

with role ambiguity waste considerable time and energy by performing the wrong tasks or the right ta~ks in the wrong way. Furthermore, role clarity is essential for coordination with co-workers and other stakeholders. For instance, performers at Canada's Cirque du Solei] depend on each other to perform precise behaviours at exact times, such as catching each other in midair. Role clarity ensures that these expectations are met and the performances are executed safely. Finally, role clarity motivates employees because they have a higher bel ief that their effort will produce the expected outcomes. In other words, people are more confident exerting the required effort when they know what is expected

of them.

SITUATIONAL FACTORS Individual behaviour and performance also depend on the situation, which is any context beyond the employee's immediate control.13 The situation has two main influences on individual behaviour and performance.14 One influence is that the work context constrains or facilitates behaviour and perfor- mance. Employees who are motivated, ski lled, and know their role obligations will nevertheless per- form poorly if they Jack time, budget, physical work facilities, and other resources.

The other influence is that the work environment provides cues to guide and motivate people. Mother Parkers Tea & Coffee uses many cues throughout the production floor to warn employees of safety risks and guide their behaviour to minimize those risks. For example, forklift routes are clearly marked, and painted footprints on both sides show employees where to stop before proceeding to cross. Barriers and warning signs are sin1ational factors that cue employees about moving forkl ifts and other hazards.

36 Part Two Individual Behaviour and Processes

Global Connections 2.1:

ICELAND FOODS TAKES MARS TO SUCCESS

In the U.K.'s highly competitive retail foods market, Iceland Foods Group Ltd. continues to perform well, was recently named the nation's best online supermarket, and is consistently rated as one of the top dozen places to work in the U.K.

The key drivers of Iceland Foods' success are the four variables depicted in the MARS model. Employees are motivated by a living wage (higher than most supermarkets), an inspir- ing CEO, and individual and store-level incentives. "A well-motivated staff is priceless," says Iceland's founder and CEO Malcolm Walker. "That is our secret weapon."

Iceland Foods also boasts some of the highest employee scores on ability (most staff members say they receive all the training they need to do their job well), role clarity (most say they are clear about what is expected of them in their jobs). and situational support (most say managers ensure they have the resources needed to do the job).15

Iceland Foods Group has become one of the most successful food retailers in the United Kingdom through the four variables in the MARS model.

Courtesy of Iceland Foods.

Types of Individual Behaviour

The four elements of the MARS model-moti vation, abil ity, role perceptions, and si tu-

ational factors-affect all voluntary workplace behaviours and performance. There are many varieties of individual behaviour, but most can be organized into the five cat-

egories described over the next few pages: task performance, organizational citizenship behaviours,

counterproducti ve work behaviours, j oining and staying with the organization, and maintaining work

attendance (Exhibit 2.2).

Chapter Two Individual Behaviour, Personality, and Values 37

EXHIBIT 2.2 Five Types of Individual Behaviour in the Workplace

TASK PERFORMANCE Task performance refers to the individual's voluntary goal-directed behaviours that contrib- ute to organizational objectives.16 Most jobs require incumbents to complete several tasks. For example, foreign exchange traders at RBC Capital Markets in Toronto and elsewhere must be able to identify and execute profitable trades, work cooperatively with clients and co-workers, assist in training new staff, and work on special telecommunications equipment without error. All tasks involve various degrees of working with people, data, th ings, and ideas. 17 Foreign exchange trad- ers, for instance, mainly work with data (e.g., performing technical analysis of trends}, people (e.g., sharing information with co-workers and clients), and ideas (interpreting charts and eco- nomic reports).

There are three types of task performance: proficient, adaptive, and proactive.18

Proficient task performance refers to performing the work efficiently and accurately. It involves

accomplishing the a~signed work at or above the expected standards of qual ity, quantity, and other indicators of effectiveness.

Adaptive task performance refers to how well employees modify their thoughts and behav- iour to align with and support a new or changing environment. Essentially, adaptive task performance is about how well employees respond to change in the workplace and in their job duties.

Proactive task performance refers to how well employees take the initiative to anticipate and introduce new work patterns that benefit the organization. Proactive behaviours bring about change in oneself, co-workers, and the workplace to achieve what is perceived to be a better future for the organization.

Employees in almost every job are expected to perform their work proficiently. However, adaptive and proactive task performance are also important when the work is ambiguous. This ambiguity exists in many situations, such as when the cl ient's expectations are unclear, resources to perform the work have uncertain availability, and the methods used to perform the work are rapidly evolving due to

emerging technology.

38 Part Two Individual Behaviour and Processes

ORGANIZATIONAL CITIZENSHIP Employee behaviour extends beyond performing specific tasks. It also includes various forms of coop-

eration and helpfulness to others that support the organization's social and psychological context. 19

These activities are called organizational citizenship behaviours (OCBs). Some OCBs are directed toward individuals, such as assisting co-workers with their work problems, adjusting a~signed work schedules to accommodate co-workers, showing genuine courtesy toward co-workers, and sharing work resources (supplies, technology, staff) with co-workers. Other OCBs represent cooperation and helpfulness toward the organization, such as supporting the company's publ ic image, offering ideas beyond those required for one's own job, attending voluntary functions that support the organization, and keeping up with new developments in the organization.

Early literantre defined OCBs a~ discretionary behaviours (employees don't have to perform them), whereas more recent studies indicate that some OCBs are a job requirement even if they aren't explicitly stated. In fact, OCBs may be as important a~ ta~k performance when managers evaluate employee performance.20

OCBs can have a significant effect on individual, team, and organizational effectiveness.21 Employ- ees who help others have higher task performance because they also receive more support from co- workers. OCBs also increase team performance where members depend on each other. However,

engaging in OCBs can have negative consequences.22 OCBs take time and energy away from perform- ing tasks, so employees who give more attention to OCBs r isk lower career success in companies that reward task performance. Also, employees who frequently perform OCBs tend to have higher work- family confl ict because of the amount of time required for these activities.

COUNTERPRODUCTIVE WORK BEHAVIOURS Organizational behaviour is interested in all workplace behaviours, including dysfunctional activities collectively known as counterprod uctive work behaviours (CWBs). CWBs are voluntary behaviours

that have the potential to directly or indirectly harm the organization or its stakeholders23 This concept includes a wide array of intentional and unintentional behaviours, such as harassing co-workers, creating unnecessary confl ict, deviating from preferred work methods (e.g., shortcuts that undermine work qual ity), being untruthful, steal ing, sabotaging work, and wa~ting resources. CWBs are not minor concerns; research suggests that they can substantially undermine the organization's effectiveness.

JOINING AND STAYING WITH THE ORGANIZATION

Organizations consist of people working together toward common goals, so another critical set of behaviours is joining and staying with the company.24 In spite of the slow economic recovery and high unemployment in several parts of Canada, many companies struggle to find suitable applicants for some types of jobs. A recent large-scale survey reported that 77 percent of Canadian employers have mod- erate to extreme difficulty recruiting talent and 42 percent of business leaders say the skills shortage has resulted in productivity problems in their organization. For instance, B.C. Children's Hospital wa~

recently forced to close two of its eight operating rooms due to a shortage of trained pediatric nurses.25

Even when companies are able to hire qualified staff in the face of shortages, they need to ensure that these employees stay with the company26 Employee turnover removes valuable knowledge, skills, and rela- tionships with co-workers and external stakeholders, all of which take time for new staff to acquire. In later chapters, we identify other problems with employee turnover, such a~ its adverse effect on customer service, team development, and corporate culture strength. Employee turnover does offer some benefits, such a~ removing people with counterproductive work behaviours and opening up positions to new employees with fresh ideas. But overall, turnover tends to have a negative effect on organizational effectiveness.

MAINTAINING WORK ATTENDANCE Along with attracting and retaining employees, organizations need everyone to show up for work at

scheduled times. Statistics Canada reports that Canadian employees miss an average of 8.3 days of scheduled work each year, compared to approximately 6.5 days and 4.5 days per year in the United Kingdom and United States, respectivelyY

Chapter Two Individual Behaviour, Personality, and Values 39

What are the main causes of absenteeism and lateness?28 Employees often point to situational factors, such a~ bad weather, transit strike, personal illness, and family demands (e.g., sick children). These are usu- ally valid explanations, but some people still show up for work because of their strong motivation to attend, whereas others take sick leave at the slightest sign of bad weather or illness. Some absenteeism occurs because employees need to get away from workplace bullying, difficult customers, boring work, and other stressful conditions. Absenteeism is also higher in organizations with generous sick leave because this ben- efit minimizes the financial loss of taking time away from work. Another factor in absenteeism is the per- son's values and personality. Final ly, sntdies report that absenteeism is higher in teams with strong absence norms, meaning that team members tolerate and even expect co-workers to take time off.

Presenteeism Although most companies focus on problems with absenteeism, presenteeism may be more serious in some situations29 Presentee ism occurs when people attend work even though their capacity to work is significantly diminished by illness, fatigue, personal problems, or other factors. These employees tend to be less productive and may reduce the productivity of co-workers. In addition, they may worsen their own health and increase health and safety risks for co-workers. Presenteeism is more common among employees with low job security (such as new and temporary staff), employees who lack sick leave pay or similar financial buffers, and those whose absence would immediately affect many people. Personality also plays a role; some people possess traits that motivate them to show up for work when others would gladly recover at home.30 Personality is a widely cited predictor of most forms of individual behaviour. It is also the most stable personal characteristic, so we introduce this topic next.

Global Connections 2.2:

THE DOCTOR IS ILL ... BUT WILL SEE YOU NOW

Most physicians urge sick patients to stay home, yet few take their own advice. Three-quarters of New Zealand doctors working in hospitals say they went to work while unwell over the previous year. Approximately the same percentage of Swedish doctors recently surveyed admitted that over the previous year they had gone to work one or more times with an illness for which they would have advised patients to stay at home.

"Presenteeism is the elephant in the room that nobody wants to talk or do anything about," suggests Michael Edmond, an executive and physician at the University of Iowa Hospitals & Clinics. It is difficult for medical centres to find a replacement on short notice and many doctors

feel guilty letting down their co-workers and patients.

"There is an unspoken understand- ing that you probably should be on your deathbed if you are calling in sick," says an attending physician at a Phila- delphia hospital where 83 percent of doctors admitted working while sick within the past year. "It inconveniences my colleagues, is complicated to pay back shifts, and makes me look bad to do so."31

Presenteeism is a serious problem among physicians, even though they urge their unwell patients to stay away from work until recovered. ©Shutterstock/pathdoc

40 Part Two Individual Behaviour and Processes

Personality in Organizations

Getting hired at Bridgewater Associates-the world's largest hedge fund-is not a cake- walk. The process begins with applicants watching onl ine videos depicting the culture and daily office life at the Westport, Connecticut, investment firm. Next, they spend two

or three more hours completing four online assessments, including a popular measure of personal ity traits (MBTI). Applicants who pass the online selection process engage in a structured interview over the phone with consultants, who further assess the individual's character. Even after accepting Bridge- water's job offer, new recruits take a final two-hour personality test developed by the company. Bridge- water then uses the application data to produce the new hire's "baseball card" -a compact profile of his or her personality, abilities, culture fit, and performance. Bridgewater employees can view any co- worker's profile on their phone or tablet using the firm's highly secure ba~eball card app.32

The hiring process at Bridgewater Associates is unusual. But one practice the hedge fund ha~ in common with many organizations is it~ attempt to measure each job applicant's personality- the relatively enduring pattern of thoughts, emotions, and behaviours that characterize a person, along with the psychological processes behind those characteristics.33 In essence, personality is the bundle of characteristics that make us similar to or different from other people. We estimate an individual's per- sonality by what he or she says or does, and we infer the person's internal states-including thoughts and emotions-from these observable behaviours.

People engage in a wide range of behaviours in their daily lives, yet close inspection of those actions reveals discernible patterns called personality traits. 34 Traits are broad concepts that al low us to label and understand individual differences. For example, you probably have some friends who are more talkative than others. Some people like to take risks whereas others are risk-averse. Each trait impl ies that there is something within the person, rather than environmental influences alone, that predicts this behavioural tendency. In fact, studies report that an individual's personality traits mea~ured in childhood predict various behaviours and outcomes in adulthood, including educational attainment, employment success, marital relationships, illegal activities, and health-risk behaviours.35

Although people have behavioural tendencies, they do not act the same way in all situations. Such consistency would be considered abnormal because it indicates a person's insensitivity to social norms, reward systems, and other external conditions?6 People vary their behaviour to suit the situation, even if the behaviour is at odds with their personal ity. For example, talkative people remain relatively quiet in a library where "no talking" rules are explicit and strictly enforced. Even there, however, personal ity differences are apparent because talkative people tend to do more chatting in libraries relative to other people in that setting.

PERSONALITY DETERMINANTS: NATURE VERSUS NURTURE Personality is shaped by both nature and nurture, although the relative importance of each continues to be debated and studied.37 Nature refers to our genetic or hereditary origins-the genes that we inherit from our parents. Studies of identical twins reveal that heredity has a very large effect on personality; up to SO percent of variation in behaviour and 30 percent of temperament preferences can be attr ibuted to a person's genetic characteristics. In other words, genetic code not only determines our eye colour, skin tone, and physical shape; it also significantly affects our attitudes, decisions, and behaviour.

Personality is also shaped by nurture--our social ization, life experiences, and other forms of inter- action with the environment. Personality develops and changes mainly from childhood to young adult-

hood, typical ly stabilizing by around age 30. However, some personality changes continue to occur later in life. For instance, a few traits (openness to experience, social vitality) increase through to young adulthood, then decline in later years, whereas other traits (agreeableness, conscientiousness)

tend to increase through to late life. Our personal ity can also change somewhat as a result of our job characteristics over a long time period.38

The main explanation for why personality becomes more stable by adulthood is that we form a clearer and more rigid self-concept. This increasing clarity of "who we are" anchors our behaviour with the help

Chapter Two Individual Behaviour, Pe rsonality, and Values 4 1

of the executivefimction. This is the part of the brain that monitors and regulates goal-directed behaviour to keep it consistent with our self-concept. Our understanding of who we are becomes clearer and more stable with age, which increases the stability and consistency of our personal ity and behaviour.39 We dis-

cuss self-concept in more detail in Chapter 3. The main point here is that personality is not completely determined by heredity; it is also shaped by life experiences, particularly early in a person's life.

Can you identify personality traits from blogging words? You can discover how well you interpret someone's personality in blogs and other writing by completing th is self-assessment in Connect.

FIVE-FACTOR MODEL OF PERSONALITY Hundreds of personality traits (e.g., sociable, anxious, curious, dependable, suspicious, talkative, adventurous) have been described over the years, so experts have tried to organize them into smaller clusters. The most researched and respected clustering of personality traits is the five-factor (Big Five) model (FFM).40 Several decades ago, personality experts identified more than 17,000 words that describe an individual's personal ity. These words were distilled down to five broad personality dimen- sions, each with a cluster of specific traits. Similar results were found in studies of different languages, suggesting that the five-factor model is fairly robust across cultures. These "Big Five" dimensions, represented by the handy acronym CANOE, are outlined in Exhibit 2.3 and described below.

Conscientiousness. Characterizes people who are organized, dependable, goal-focused, thor-

ough, disciplined, methodical, and industr ious. People with low conscientiousness tend to be

careless, disorganized, and Jess thorough.

Agreeableness. Describes people who are trusting, helpful, good-natured, considerate, tolerant, selfless, generous, and flexible. People with low agreeableness tend to be uncooperative and intolerant of others' needs as well as more suspicious and self-focused.

EXHIBIT 2.3 Five-Factor Model Personality Dimensions

Personality People with higher scores on this dimension dimension tend to be more:

Organized, dependable, goal-focused, thorough, disciplined, methodical, industrious

Trusting, helpful, good-natured, considerate, tole rant, selfless, generous, flexible

Anxious, insecure, se lf-conscious, depressed, temperamental

Imaginative, creative, unconventional, curious, nonconforming, autonomous, perceptive

Outgoing, ta lkative , energetic, sociable, assertive

42 Part Two Individual Behaviour and Processes

Neuroticism. Refers to people who tend to be anxious, insecure, self-conscious, depressed, and temperamental. In contrast, people with low neuroticism (high emotional stability) are poised, secure, and calm.

Openness to experience. This dimension is the most complex and has the lea~t agreement among scholars. It generally refers to the extent to which people are imaginative, creative, unconventional, curious, nonconforming, autonomous, and aesthetically perceptive. Those who score low on this dimension tend to be more resistant to change, less open to new ideas, and more conventional and fixed in their ways.

Extr aversion. Describes people who are outgoing, talkative, energetic, sociable, and assertive. The opposite is imroversion, which characterizes those who are quiet, cautious, and less inter- active with others. Extraverts get their energy from the outer world (people and things around them), whereas introverts get their energy from the internal world, such as personal reflection on concepts and ideas. Introverts do not necessarily lack social skills. Rather, they are more inclined to direct their interests to idea~ than to social events. Introverts feel quite comfortable being alone, whereas extraverts are less comfortable without social interaction.

What is your Big Five personality? You can discover your Big Five personality by completing this self-assessment in Connect.

Are you introverted or extraverted? You can discover your level of introversion or extraversion by completing this self-assessment in Connect.

Five-Factor Model and Work Performance Personal ity mainly affects behaviour and per- formance through motivation, specifically by influencing the individual's choice of goals (direction) as well as intensity and persistence of effort toward those goals. Consequently, all of the five-factor model dimensions predict one or more types of employee behaviour and performance to some extent. However, the Big Five dimensions cluster several specific traits, each of which can predict employee performance somewhat differently from others in the cluster. In fact, some experts suggest that per-

formance is better predicted by the specific traits than by the broad Big Five dimensions. Another observation is that the relationship between a personal ity dimension or trait and performance may be nonl inear. People with moderate extraversion perform better in sales jobs than those with high or low extraversion, for example.4 1

Exhibit 2.4 identifies the Big Five personality dimensions that best predict five types of work behav- iour and performance.42 Conscientiousness stands out a~ the best overall personality predictor of pro- ficient ta~k performance for most jobs. More precisely, proficient ta~k performance has the strongest association with the specific conscientiousness traits of industriousness (achievement, self-discipline, purposefulness) and dutifulness. Conscientious employees set higher personal goals for themselves

and are more persistent. They also engage in more organizational citizenship and in less counterpro- ductive work behaviour. Conscientiousness is a weak predictor of adaptive performance (responding to change) and proactive performance (taking initiative toward new work patterns). In fact, two specific conscientiousness traits-orderliness and dependabil ity-tend to suppress adaptivity.

Extraversion is the second best overall personality predictor of proficient task performance, but it is much weaker than conscientiousness. The specific extraversion dimension traits of assertiveness and positive emotionality are the strongest predictors within this dimension. Assertive employees with pos- itive emotionality frame situations as challenges rather than threats, so they have a stronger "can-do" belief. Extraversion also predicts both adaptive and proactive performance, possibly because extraverts are comfortable engaging with their environment. Extraversion is associated with influencing others and being comfortable in social settings, which explains why effective leaders and salespeople tend to be somewhat more extraverted than the general population.

Chapter Two Ind ividual Behaviour, Personality, and Values

EXHIBIT 2.4 Big Five Personality and Work Performance

Type of Performance

Relevant Personality Dimensions

Proficient task performance

• Conscientiousness • Extraversion

Adaptive task performance

• Emotional stability • Extraversion (assertiveness) • Openness to experience

Proactive task performance

• Extraversion (assertiveness) • Openness to experience

43

Type of Performance

Organizational citizenship

Counterproductive work behaviours

Relevant Personality Dimensions

• Conscientiousness • Agreeableness

• Conscientiousness' • Agreeableness·

"Negative relationship.

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Agreeableness is positively associated with organizational citizenship and negatively associated with counterproductive work behaviours.43 The reason is that employees with high agreeableness are motivated to be cooperative, sensitive, flexible, and supportive. Agreeableness does not predict profi- cient or proactive task performance very well, mainly because it is associated with lower motivation to set goals and achieve results. However, agreeableness does predict one's performance as a team mem- ber as well as in customer service jobs.

Openness to experience is a weak predictor of proficient task performance, but it is one of the best personality predictors of adaptive and proactive performance. The main reason is that employees with higher openness scores have more curiosity, imagination, and tolerance of change.44 These traits also explain why openness to experience is associated with successful performance in creative work.

Emotional stability (low neuroticism) is one of the best personality predictors of adaptive perfor- mance.45 Employees with higher emotional stability cope better with the ambiguity and uncertainty of change. In contrast, those with higher neuroticism view change as a threat, so they tend to avoid change and experience more stress when faced with workplace adjustments. These characteristics would sug- gest that emotional stability also predicts proactive performance, but the limited research has reported mixed results. Emotional stability is associated with proficient task performance, organizational cit- izenship, and counterproductive work behaviours, but its influence is neither strong nor consistent

enough to be listed in Exhibit 2.4.

JUNGIAN PERSONALITY THEORY AND THE MYERS-BRIGGS TYPE INDICATOR The five-factor model of personality has the most research support, but it is not the most popular per-

sonality test in organizations. That distinction goes to Jungian personality theory, which is measured through the Myers-Briggs Type Indicator (MBTI) (see Exhibit 2 .5). Nearly a century ago, Swiss

44 Part Two Individual Behaviour and Processes

EXHIBIT 2.5 Jungian and Myers-Briggs Personality Types

Bllst-d 1m data from CPP. Inc .. Mmmlllin View. CA 994043 from lntmduction 1<1 Type lmd Ca"e-rs by Allen L. Hammer.

psychiatrist Carl Jung proposed that personality is primarily represented by the individual's prefer- ences regarding perceiving and judging information.46 Jung explained that the perceiving function- how people prefer to gather information or perceive the world around them-occurs through two competing orientations: sensing (S) and intuition (N). Sensing involves perceiving information directly

through the five senses; it relies on an organized structure to acquire factual and preferably quantita- tive details. In contrast, intuition relies more on insight and subjective experience to see relationships among variables. Sensing types focus on the here and now, whereas intuitive types focus more on future possibilities.

Jung also proposed that judging-how people prefer making decisions based on what they have perceived-consists of two competing processes: thinking (T) and feeling (F). People with a thinking orientation rely on rational cause-effect logic and systematic data collection to make decisions. Those with a strong feeling orientation, on the other hand, give more weight to their emotional responses to the options presented, as well as to how those choices affect others. Jung noted that in addition to the four core processes of sensing, intuition, thinking, and feeling, people d iffer in their level of extravers ion-introvers ion, which was introduced earl ier as one of the Big Five personality traits.

The MBTI measure was developed two decades after Jung published his personality model. Along with measuring the personal ity traits described above, the MBTI instrument assesses people on lung's broader categories of perceiving and judging, which represents one's attitude toward the external world. Those with a perceiving orientation are open, curious, and flexible. They prefer to keep their options

open and to adapt spontaneously to events as they unfold. Judging types prefer order and structure and want to resolve problems quickly.

Chapter Two Individual Behaviour, Personality, and Values 45

As CEO (now executive chair) of Hawaii's Central Pacific Bank, John Dean realized that the executive team needed to work together better to rebuild the bank and its culture. The executives completed the Myers-Briggs Type Indicator with debriefing by executive coaches. The executives shared their results to gain a better understanding of each other's personality, particularly how they perceive things and analyze information. "Knowing this personal information leads to more trust," says Dean, shown in this photo. He has noticed that disagreements are now resolved more easily. "Knowing more about someone's personality can help alleviate some of those problems that crop up when management teams work together." 47

© Tina Yuen/Pocific Business News.

There are several reasons why the MBTI is popular, but it is usually a poor predictor of job per-

formance and is not recommended for employment selection or promotion decisions.48 There are also issues with its measurement. MBTI can potentially identi fy employees who prefer face-to-face versus virrual teamwork, but it does not predict how well a team develops. It also has questionable value in

predicting leadership e ffectiveness. In spite of these limitations, the MBTI is the most widely srudied measure of cognitive style in

management research and is the most popular personality test for career counselling and executive coaching.49 It is even being used by arti ficial intell igence engineers to adapt the behaviour of robots to user preferences . MBTI takes a neutral or balanced approach by recognizing both the strengths and limitations of each personality type in different siruations. In contrast, the Big Five model views people with higher scores as better than those with lower scores on each dimension. As such, the Big Five model may have adopted a restrictive view of personality that is more difficult to apply in coaching and development settings. 5°

Are you a sensing or intuitive type? You can d iscover the extent to wh ich you are a sensing or intuitive type by completing this self-assessment in Connect.

46 Part Two Individual Behaviour and Processes

~ t 'r''

Debating Point:

SHOULD COMPANIES USE PERSONALITY TESTS TO SELECT JOB APPLICANTS?

Personality theory has made significant strides over the past two decades, particularly in demonstrating that specific traits are associated with specific workplace behaviours and out- comes. Various studies have reported that the Big Five dimensions predict overall job perfor- mance, organizational citizenship, leadership, counterproductive work behaviours, tra ining performance, team performance, and a host of other important outcomes. These findings cast a strong vote in favour of personality testing in the workplace.

A few prominent persona lity experts urge caution, however. 5 1 They point out that although traits are associated with workplace behaviour to some extent, there are better predictors of work performance, such as work samples and past performance. Furthermore, depending on how the selection decision applies the test results, personality instruments may unfairly discriminate against specific groups of applicants or employees. 52

A third concern is that selection procedures typically assume that more is better; that is, applicants with the highest scores will perform better than applicants with lower scores. Yet an increasing number of studies indicate that the best candidates might be closer to the mid- dle than the extremes of the range. For instance, job performance apparently increases with conscientiousness, yet employees with very high conscientiousness might be so thorough that they become perfectionists, which can stifle rather than enhance job performance.53

A fourth worry is that most persona lity tests are self-report scales, so applicants might try to fake their answerss• Worse, the test scores might not represent the individual's personal- ity or anything else meaningful because test takers often don't know what personality traits the company is looking for. Studies show that candidates who try to fake "good" persona lity scores change the selection results, but supporters of personality testing offer the counterar- gument that few job applicants try to fake their scores. One major study recently found that most personality dimensions are estimated better by observers than by self-ratings. However, few companies rely on ratings from other people. 55

Va lues in the Workplace

As an award-winning "employer of choice" in the Canadian telecommunications indus-

try, Advantage Tower Ltd. wants the personal values of its employees to be similar to the company's core values. "Staff w ill ask themselves if their values align with the organi-

zation, and if they feel empowered," says Allison Earl, CEO of the Calgary-based wireless tower and

antenna construction and maintenance firm. She explains that employees have a much clearer under- standing of what is expected of them when they understand and bel ieve in the company's values. "We

can accomplish a Jot more with everyone working hard where the goals and values of the company are al igned with the goals and the aspirations of its people," Earl observes.s6

Advantage Tower executi ves recognize that employees pay attention to their personal values when

deciding where to work and what choices they make every day on the job. Values, a concept that

we introduced in Chapter I , are stable, evaluative bel iefs that guide our preferences for outcomes or courses of action in a variety of situations. 57 They are perceptions about what is good or bad, right or

wrong. Values tell us what we "ought" to do. They serve as a moral compass that directs our motiva-

tion and, potentially, our decisions and actions. They also provide justification for past decisions and behaviour.

People arrange values into a hierarchy of preferences, called a value system. Some individuals value new challenges more than they value conformity. Others value generosity more than frugal ity. Each

person's unique value system is developed and reinforced through socialization from parents, religious

Chapter Two Individual Behaviour, Personality, and Values 47

institutions, friends, personal experiences, and the society in which he or she lives. As such, a person's hierarchy of values is stable and long-lasting. For example, one study found that value systems of a sample of adolescents were remarkably similar 20 years later when they were adults.ss

Notice that our description of values has focused on individuals, whereas Advantage Tower CEO Allison Earl also refers to the values of the wireless infrastructure company. In reality, values exist only within individuals-we call them personal values. However, groups of people might hold the same or similar values, so we tend to ascribe these shared values to the team, department, organiza- tion, profession, or entire society. The values shared by people throughout an organization ( orga- nizational values) receive fuller discussion in Chapter 14 because they are a key part of corporate culture. The values shared across a society (cultural values) receive attention in the la~t section of this chapter.

Values and personality traits are related to each other, but the two concepts differ in a few ways. 59

The most noticeable distinction is that values are evaluative; they tell us what we ought to do. Personal- ity traits are descriptive; they are labels referring to what we naturally tend to do. A second distinction is that personality traits have minimal confl ict with each other-you can have high agreeableness as well as high introversion, for example-whereas some values are opposed to other values. For exam- ple, someone who values excitement and challenge would have difficulty also valuing stabil ity and moderation. Third, personality is somewhat more stable than values. The reason is that personality is influenced about equally by heredity and socialization, wherea~ values are influenced more by social- ization than heredity.

TYPES OF VALUES Values come in many forms, and experts on this topic have devoted considerable attention to organiz- ing them into clusters. Long ago, social psychologist Milton Rokeach developed two lists of values, distinguishing means (instrumental values) from end goals (terminal values). Although Rokeach's lists are still mentioned in some organizational behaviour sources, they were replaced by a better model almost two decades ago. The instrumental-terminal values distinction was neither accurate nor useful, and it overlooked values that are now included in the current dominant model.

Today, the dominant model of personal values is one developed and tested by social psycholo- gist Shalom Schwartz and his colleagues60 Schwartz's list of 57 values builds on Rokeach's earlier work but does not distinguish instrumental from terminal values. Instead, research has found that human values are organized into the circular model (c ircumplex) shown in Exhibit 2.6. This model clusters the 57 specific values into 10 broad values categories: un iversalism, benevolence, tradition, conformity, security, power, achievement, hedonism, stimulation, and self-d irection. For example, conformity includes four specific values: politeness, honouring parents, self-disc ipline, and obedience.

These 10 broad values categories are further clustered into four quadrants. One quadrant, called openness to change, refers to the extent to which a person is motivated to pursue innovative ways. This quadrant includes the value categories of self-direction (creativity, independent thought), stimulation (excitement and challenge), and hedonism (pursuit of pleasure, enjoyment, gratification of desires). The opposing quadrant is conservation, which is the extent to which a person is motivated to preserve the status quo. The conservation quadrant includes the value categories of conformity (adherence to social norms and expectations), security (safety and stability), and tradition (moderation and preservation of the status quo).

The third quadrant in Schwartz's circumplex model, called self-enhancement, refers to how much a person is motivated by self-interest. This quadrant includes the values categories of achievement (pursuit of personal success), power (dominance over others), and hedonism (a values category shared with openness to change). The opposite of self-enhancement is self-transcendence, which refers to moti- vation to promote the welfare of others and nature. Self-transcendence includes the value categories of benevolence (concern for others in one's life) and universalism (concern for the welfare of al l people and nature).

48 Part Two Individual Behaviour and Processes

EXHIBIT 2.6 Schwartz's Values Circumplex

Openness t o change

Stimulation

_ •• Hedorism

Self-enhancement

Self-direction

--- __ ....

---

Self-transcendence

Universaism

Conservation

Sources: S.H. Schwartz.. "Unjversals in the Content and Structure of Values: Theoretical Ad\'ances and Empirical Tests in 20 Countries. Ad\'ances in Experimental Social Psychology 25 ( 1992): 1-65: S.H. Schwaru and K. Boehnke. "Evaluating the Structure of Human Values with

Confirmator-y Fac-tor Analysis. Journal of Research in Personality 38. oo. 3 (2004): 23~55.

What are your dominant values? You can discover your value system hiera rchy in Schwartz's model by completing this self-assessment in Connect.

VALUES AND INDIVIDUAL BEHAVIOUR Personal values influence decisions and behaviour in various ways.61 First, values directly motivate our actions by shaping the relative attractiveness (valence) of the choices available. In other words, we experience more positive feelings toward alternatives that are aligned with our most important values. If stimulation is at the top of our values hierarchy, then a job opportunity offering new experiences will appeal to us more than a job opportunity with more predictable and stable work.

Second, values indirectly motivate behaviour by framing our perceptions of reality. Specifically, values influence whether we notice something a~ well as how we interpret it. Our decisions and actions are affected by how we perceive those situations. Third, we are motivated to act consistently with how we define ourselves and want to be viewed by others. If achievement is a key feature of our self-view and publ ic image, then we try to ensure that our behaviour is consistent with that value. The more clearly a behaviour is aligned with a specific value that identifies us, the more motivated we are to engage in that behaviour.

Personal values motivate behaviour to some extent, but several factors weaken that relationship62 One rea~on for this "disconnect" between personal values and individual behaviour is the sin1ation. The MARS

Chapter Two Individual Behaviour, Personality, and Values 4 9

model states that the situation influences behaviour, which sometimes causes people to act contrary to their personal values. For example, individuals with strong self-transcendent values tend to engage in more environmentally friendly behaviours such as recycling, but lack of recycling facilities prevents or severely limits this behaviour. People also deviate from their personal values due to strong counter-motivational

forces. For instance, employees caught in illegal business dealings sometimes attribute their unethical activities to pressure from management to achieve their performance targets at any cost.

Another rea~on why decisions and behaviour are inconsistent with our personal values is that we don't actively think about them much of the time.63 Values are abstract concepts, so their relevance is not obvious in many situations. Furthermore, many decisions and actions occur routinely, so we don't actively evaluate their consistency with our values. We do consciously consider our values in some situations, of course, such as by real izing how much we value security when deciding whether to perform a risky task. However, many daily event~ do not trigger values awareness, so we act without

their guidance. We literally need to be reminded of our values in order for them to guide our decisions and actions.

The effect of values awareness on behaviour was apparent in a study in which students were given a math test and received a payment for each correct answer.64 One group submitted their results to the experimenter for scoring, so they couldn't lie about their results. A second group could lie because they scored the test themselves and told the experimenter their test score. A third group was similar to the sec- ond (they scored their own test), but that test included the following statement, and students were required to sign their name below that statement: "I understand that this short survey falls under (the university's) honour system." The researchers estimated that some students cheated when they scored their own test without the "honour system" statement, wherea~ no one given the "honour system" form lied about their results. The university didn't actually have an official honour statement, but the message made students pay attention to their honesty. In short, people are more likely to apply their values (honesty, in this case) when they are explicitly reminded of those values and see their relevance to the situation.

VALUES CONGRUENCE At the beginning of this section, Advantage Tower CEO Allison Earl emphasized the importance of employing people whose values are aligned with the company's values. The key concept here is values congruence, which refers to how similar a person's values hierarchy is to the values hierarchy of another entity, such a~ the team or organization. An employee's values congruence with team members increases the team's cohesion and performance. Congruence with the organization's values tends to increase the employee's job satisfaction, loyalty, and organizational citizenship. It also tends to reduce stress and turnover. Furthermore, employees are more likely to make decisions that are compatible with organizational expectations when their personal values are congruent with the organization's shared values65

Are organizations the most successful when every employee's personal values al ign with the com- pany's values? Not at all! While a large degree of values congruence is necessary for the reasons just noted, organizations also benefit from some level of incongruence. Employees with diverse values offer different perspectives, which potentially lead to better decision making. Also, too much congru- ence can create a "corporate cult" that potentially undermines creativity, organizational flexibi lity, and

business ethics.

Ethical Values and Behaviour When 1,000 Canadians were asked to identify the most important qualities of an ideal leader, 95 percent chose "honesty." In another recent survey, both Canadian employees and executives placed "integrity" at the top of the list of attributes of an effective cor-

porate leader. And when 195 business leaders across IS countries were asked to identify the most

50 Part Two Individual Behaviour and Processes

Assiniboine Credit Union (ACU) has developed an enviable reputation for corporate social responsibility initiatives, including financial literacy training, community hiring, social purchasing, and social impact financial services. These activities highlight the Winnipeg-based financial institution's values, which have become a magnet for job applicants with like-minded values. "Our values and our promise to be a socially responsible and profitable fi nancial co-operative is exactly why people want to work here and why people seek us out as an employer," explains an ACU executive. "When you can align your personal values w ith the company you're working for, it takes being a great place to work to a whole new level." Values congruence is so important at Assin iboine Credit Union that one of the explicit criteria to be a candidate for ACU's board of directors is "values fit"- understanding and agreeing to the firm's mission and values. 56

©Rawplxel.com/Shutterstock

important leader competencies, "high ethics and moral standards" was the top-rated item from the Jist of74 characteristics.67 These surveys reveal the importance of ethics in the workplace and, in particular,

in the decisions and actions of organizational leaders. Ethics refers to the sntdy of moral principles or values that determine whether actions are r ight or wrong and outcomes are good or bad (see Chapter I). People rely on their ethical values to determine " the right thing to do."

THREE ETHICAL PRINCIPLES To better understand business ethics, we need to consider three distinct types of ethical principles: utilitarianism, individual rights, and distributive justice.68 Your personal values might sway you more toward one principle than the others, but all three should be actively considered to put important ethical

issues to the test.

Utilitarianism. This principle says the only moral obl igation is to seek the greatest good for the greatest number of people. In other words, we should choose the option that provides the high-

est degree of satisfaction to those affected. One problem is that utilitarianism requires a cost- benefit analysis, yet many outcomes aren't mea~urable. Another problem is that uti litarianism

Chapter Two Individual Behaviour, Personality, and Values

focuses ethics only on outcomes, whereas the means of achieving those outcomes may be

considered unethical by other principles.

5 1

Individual rights. This principle says that everyone has the same set of natural rights, such as freedom of speech, freedom of movement, right to physical security, and right to fair trial. The

individual rights principle extends beyond legal rights to human rights that everyone is granted as a moral norm of society. One problem with this principle is that some individual rights may conflict with others. The shareholders' right to be informed about corporate activities may ultimately conflict with an executive's right to privacy, for example.

Distributive justice. This principle says that the benefits and burdens of similar individuals should be the same; otherwise they should be proportional. For example, employees who con- tribute equally in their work should receive similar rewards, whereas those who make a lesser contribution should receive less. A variation of this principle says that inequalities are accept- able when they benefit the least well off in society. The main problem with the distributive justice principle is that it is difficult to agree on who is "similar" and what factors are relevant. We discuss distributive justice further in Chapter 5.

MORAL INTENSITY, MORAL SENSITIVITY, AND SITUATIONAL INFLUENCES

These three ethical principles guide us in our ethical decisions, but three other factors also influence ethical conduct in the workplace: the moral intensity of the issue, the individual's moral sensitivity, and

situational factors.69

Moral Intensity Moral in tensity is the degree to which an issue demands the application of ethical principles. Decisions with high moral intensity have strong ethical implications that usual ly affect many people, so the decision maker needs to carefully apply ethical principles to make the best choice. The moral intensity of a situation is higher when:70

The decision will have substantially good or bad consequences.

Most people view the decision outcomes as good or bad (versus widespread disagreement about whether those outcomes are good or bad).

There is a high probability (rather than low probabi lity) that the good or bad decision conse- quences will occur.

Many people wi ll be affected by the dec is ion and its consequences.

Global Connections 2 .3:

ALCOA EXECUTIVE SETS ETHICAL STANDARD IN RUSSIA

When William O'Rourke became Alcoa Russia's first CEO, he knew that bribery was a serious problem in that country, so he made his position clear to staff: "We don't condone it. We don't participate in it. We are not going to do it. Period." This ethical mandate was soon tested when local police stopped delivery of an $18 million furnace and declared that delivery would resume only after Alcoa paid $25,000 to the local mayor (all figures are in U.S. dollars).

"My bonus was based in large part on making the planned investments happen on time," says O'Rourke. A few Alcoa executives in the United States advised that he should do what- ever it takes to keep the work on schedule, implying that perhaps it would be better to pay the bribe. "Nonetheless," he recalls, "I stood my ground."

(continued)

52 Part Two Individual Behaviour and Processes

(continued)

The new furnace arrived three days later, even though Alcoa refused to pay the bribe. In that first year, O'Rourke spent only $20 million of his $100 million capital budget because he resisted ongoing bribery attempts from various sources. It took more than a year of Alcoa Russia consistently refusing to participate in bribery before those attempts stopped.71

m Aa:DA

William O'Rourke's leadership navigated Alcoa Russia th rough an ethical quagmire of bribery and extortion. © REUTERS/Aiamy Stock Photo

Moral Sensitivity Moral sensitivity (also called ethical sensitivity) is a characteristic of the person, namely his or her ability to detect a moral di lemma and estimate its relative importance. This aware- ness includes both cognitive (logical thinking) and emotional level awareness that something is or could become morally wrong.72 People with high moral sensitivity can more quickly and accurately estimate the moral intensity of the issue. This awareness does not necessarily translate into more ethi- cal behaviour; it just means they are more likely to know when unethical behaviour occurs.

Several factors are associated with a person's moral sensitivity.73 One factor is expertise or knowl-

edge of prescriptive norms and rules. For example, accountants are more morally sensitive regarding specific accounting procedures than are people who lack experience in this profession. A second influ- ence on moral sensitivity is previous experience with specific moral dilemmas. These experiences

likely generate internal cues that trigger awareness of future ethical dilemmas with similar character- istics. Third, employees who are better at empathizing are more sensitive to the needs and situation of others, which makes them more aware of ethical dilemmas involving others. On average, women have higher moral sensitivity compared to men, partly because women tend to have higher empathy.

A fourth reason why some people have higher moral sensitivity than others involves how they define and view themselves (i.e., their self-concept).74 Employees who strongly define themselves by their moral character (cal led their moral identity) are more sensitive to moral dilemmas because they put more energy into maintaining ethical conduct. This active monitoring process relates to the fifth influence on moral sensitivity: mindfulness.75 Mindfulness refers to a person's receptive and impartial attention to and awareness of the present situation as well as to one's own thoughts and emotions in that moment. Mindfulness increases moral sensitivity because it involves actively monitoring the environ- ment as well as being sensitive to our responses to that environment. This vigilance requires effort as well as skill to receptively evaluate our thoughts and emotions.

Chapter Two Individual Behaviour, Personality, and Values 53

Unfortunately, we have a natural tendency to minimize effort, which leads to less mindfulness. For instance, research indicates that we have lower moral sensitivity when observing an organization, team, or individual we believe has high ethical standards.76 We assume the source is unlikely to engage in any misconduct, so we switch from mindfulness to automatic pilot. Even when we notice someone

with supposedly high ethical standards engaging in unusual activity, we are less likely to form an impression that the person's behaviour may be unethical.

Situational Factors Along with moral intensity and moral sensitivity, ethical conduct is influ- enced by the situation in which the conduct occurs77 One of the most frequently identified situational influences for unethical behaviour is pressure from top management. A recent survey of more than 13,000 employees across 13 countries reported that fully one-third observed misconduct and 22 percent experienced pressure to compromise organizational standards. Canada was not included in that study, but in another survey one-third of Canadians strongly or somewhat agreed with this statement: "In my

workplace, delivering results is more important than doing the right thing." Twenty-two percent agreed with the statement: "I feel that I have to compromise my own personal ethics or values to keep my

job."78 Situational factors such as pressure from management do not justify unethical conduct. Rather, we need to be aware of these factors so organizations can reduce their prevalence.

SUPPORTING ETHICAL BEHAVIOUR

Most large and medium-sized organizations in Canada and other developed countries apply one or more strategies to improve ethical conduct. The most common ethics initiative is a code of ethical conduct-a statement about desired practices, rules of conduct, and phi losophy about the organiza- tion's relationship to its stakeholders and the environment79 These codes are supposed to motivate and guide employee behaviour, signal the importance of ethical conduct, and bui ld the firm's trustworthi- ness to stakeholders. However, critics suggest that they do little to reduce unethical conduct.

Another strategy to improve ethical conduct is to train and regularly evaluate employees about their knowledge of proper ethical conduct. Many large firms have annual quizzes to test employee awareness

of company rules and practices on important ethical issues such as giving gifts and receiving sensi- tive information about competitors or governments. In some firms, employees participate in elaborate

games that present increasingly challenging and complex moral dilemmas. A growing ethics practice is a confidential telephone hotline and website, typically operated by

an independent organization, where employees can anonymously report suspicious behaviour. For instance, Halifax-based conglomerate IMP Group has such a hotline for all employees, suppliers, cus- tomers, and other stakeholders. A few very large businesses also employ ombudspersons who receive information confidentially from employees and proactively investigate possible wrongdoing.

Training, hotlines, and related activities improve ethical conduct to some extent, but the most powerful foundation is a set of shared values that reinforces ethical conduct. "A good, ethical system requires more than just signposts pointing employees in the right direction," advises the Canadian Centre for Ethics and Corporate Policy. Instead, ethical conduct occurs through "a set of bel iefs, values, norms and practices that comprise an ethical culture." As we describe in Chapter 14 (organizational culture), an ethical culture is supported by the conduct and vigilance of corporate leaders. By acting with the highest moral standards, leaders not only gain support and trust from followers; they role-model the ethical standards that employees are more likely to follow.80

Va lues Across Cu ltures As the only westerner in a 50-employee winery in China, Emilie Bourgois noticed that

Chinese managers seemed to be more sensitive than European or American bosses about maintaining their authority over employees. "I was surprised to see that taking the initia-

tive most of the time was seen as rude and a~ a failure to respect the executives' authority," says Bour- gois, a public relations professional from Bordeaux, France. "At work, everyone had to perform well in

54 Part Two Individual Behaviour and Processes

their own tasks, but permission was required for anything other than what was expected." The power relationship was also apparent in how Chinese managers interacted with staff. "Western-style bosses tend to develop a closer relationship with employees," Bourgois suggests. "The hierarchy is much more clearly divided in Chinese-dominant companies than it is in foreign ones."81

Emilie Bourgois experienced the often-subtle reality that expectations and values differ around the world. Over the next few pages, we introduce five values that have cross-cultural significance: individualism, collectivism, power distance, uncertainty avoidance, and achievement-nurturing orien- tation. Exhibit 2.7 summarizes these concepts and lists countries that have high, medium, or low scores on these values.

INDIVIDUALISM AND COLLECTIVISM 1\vo seemingly inseparable cross-cultural values are individualism and collectivism. Individualism is the extent to which we value independence and personal uniqueness. Highly individualist people value personal freedom, self-sufficiency, control over their own Jives, and appreciation of the unique qualities that distinguish them from others. Canadians, Americans, Chileans, and South Africans general ly exhibit high individualism, whereas Taiwan and Venezuela are countries with low individualism.82

Collectivism is the extent to which we value our duty to groups to which we belong and to group harmony. Highly collectivist people define themselves by their group memberships, emphasize their personal connection to others in their in-groups, and value the goals and well-being of people within those groups.83 Low collectivism countries include Canada, Japan, and Germany, whereas Israelis and Taiwanese have relatively high collectivism.

Contrary to popular belief, individualism is not the opposite of collectivism. In fact, the two concepts are typically uncorrelated.84 For example, cultures that highly value duty to one's group do not necessari ly

EXHIBIT 2. 7 Five Cross-Cultural Values - VIne s-ple c-trlel .. _ ................................. CIIbua

Individualism High: Canada, United State.,. Chile. South Africa Defines self more by one's uniqueness: personal goals have

Medium: Japan. Denmark priority; decisions have low consider.ttion of effect on others:

low: Taiwan. Venezuela relationships are viewed as more instrumental and fluid.

Collectivism High: lsmel. Taiwan Define.' self more by one's in-group membership: goals of

Medium: India, Denmark self-sacrifice and harmony have priority; behaviour regulated by

low: Canada. United States. Germany. Japan in-group norms: in-group memberships are viewed as stable with

a strong differentiation with out-groups.

Power Distance High: India. Malaysia Reluctant to disagree with or contradict the boss; managers are

Medium: Canada. United States. Japan expected and preferred decision makers: perception of dependence

Low: Denmark, Israel (versus interdependence) with the boss.

Uncertainty High: Belgium, Greece Prefer predictable situations: value stable employment, strict laws. Avoidance Medium: Canada. United States. Norway and low conflict: dislike deviations from normal behaviour.

low: Denmark, Singapore

Achievement High: Austria. Japan Focus on outcomes (versus relationships): decisions based on

Orientation Medium: Canada. United States. Brazil contribution (equity versus equality); low empathy or showing

low: Sweden. Netherlands emotions (versus strong empathy and caring)

Smm:e-s: lndividualism and c.ollectivism de.->eription.s and result,.:; are from Lhe meL<'Hlnalysis reported in D. Oyserman. H. M. Coon. and M. Kemmelmeie r. " ReLhinking lndjvidualism and Collectivism: EvaluaLion of T heoretical As...~umptions and Meta-Analyses." Psychological Bulletin. 128 (2002). pp. 3-72. Tlle o Lher information i.s from

G. Hofstede. Cuhure's Con.sequences. 2d Ed (Thousand Oaks. CA: Sage. 2001).

Chapter Two Individual Behaviour, Personality, and Values 55

give a low priority to personal freedom and uniqueness. Generally, people across all cultures define them- selves by both their uniqueness and their relationship to others. It is an inherent characteristic of every- one's self-concept, which we discuss in the next chapter. Some cultures clearly emphasize uniqueness over group obligations or vice versa, but both have a place in a person's values and self-concept.

Also note that people in Japan have relatively low collectivism. This is contrary to the view stated in many cross-cultural books, which claim that Japan is one of the most collectivist countries on the

planet! There are several explanations for the historical misinterpretation, ranging from problems defining and measuring collectivism to erroneous reporting of early cross-cultural research. Whatever the reasons, studies consistently report that people in Japan tend to have relatively low collectivism and moderate individualism (as indicated in Exhibit 2.7).85

How much do you value individualism and collectivism? You can discover your level of individualism and collectivism by completing this self-assessment in Connect.

POWER DISTANCE Power distance refers to the extent to which people accept unequal distribution of power in a society.86

Individuals with high power distance accept and value unequal power. Those in higher positions expect obedience to authority; those in lower positions are comfortable receiving commands from their supe- riors without consultation or debate. People with high power distance also prefer to resolve differences through formal procedures rather than direct informal discussion. In contrast, people with low power distance expect relatively equal power sharing. They view the relationship with their boss as one of interdependence, not dependence; that is, they believe their boss is also dependent on them, so they

expect power sharing and consultation before decisions affecting them are made. People in India and Malaysia tend to have high power distance, whereas people in Denmark and Israel generally have low power distance. Canadians collectively have medium-low power distance.

What is your level of power distance? You can discover your power distance orientation by completing this self-assessment in Connect.

UNCERTAINTY AVOIDANCE Uncer tainty avoidance is the degree to which people tolerate ambiguity (low uncertainty avoidance) or feel threatened by ambiguity and uncertainty (high uncertainty avoidance). Employees with high uncertainty avoidance value structured situations in which rules of conduct and decision making are

clearly documented. They usually prefer direct rather than indirect or ambiguous communications. Uncertainty avoidance tends to be high in Belgium and Greece and very high in Japan. It is generally low in Denmark and Singapore. Canadians collectively have medium-low uncertainty avoidance.

ACHIEVEMENT-NURTURING ORIENTATION Achievement-nurturing orientation reflects a competitive versus cooperative view of relations with other people.87 People with a high achievement orientation value assertiveness, competitiveness, and material ism. They appreciate people who are tough, and they favour the acquisition of money and material goods. In contrast, people in cultures with low achievement orientation (i.e. high nurntring orientation) emphasize relationships and the well-being of others. They focus on human interaction and caring rather than competition and personal success. People in Sweden, Norway, and the Netherlands score very low on achievement orientation (i.e., high nurturing orientation). In contrast, very high achievement orientation scores have been reported in Japan and Austria. Canada and the United States

place a little above the middle of the range on achievement nurturing orientation.

56 Part Two Individual Behaviour and Processes

Global Connections 2.4:

CROSS-CULTURAL HICCUPS AT BEAM SUNTORY

Japanese alcoholic beverage company Suntory Holdings Ltd. has a few cross-cultural hiccups to go through after acquiring Jim Beam, a bourbon producer in Kentucky. "We have to overcome the huge differences in the Japanese mentality and the American mentality," Suntory CEO Takeshi Niinami advised soon after the acquisition. "It creates misunderstandings."

Niinami (in photo) says he prefers the "blunt but honest" American approach, but that style may conflict with the Japanese preference for modesty, detail, and consensus. Japanese and American employees also have different career aspirations and reward systems. "Beam and Suntory definitely have differences," Niinami acknowledges. "This is not an easy task. But I'm ready for it."88

Since acquiring American bourbon maker Jim Beam, Japan's Suntory Holdings Ltd. has experienced cross-cultural conflicts between its American and Japanese employees. © Bloomberg/Getty Images

CAVEATS ABOUT CROSS-CULTURAL KNOWLEDGE Cross-cultural organizational research has gained considerable attention over the past two decades, likely due to increased globalization and cultural diversity within organizations. Our knowledge of cross-cultural dynamics has blossomed, and many of these findings will be discussed in other chapters, such as leadership, conflict, and influence. However, we also need to raise a few warning flags about cross-cultural knowledge. One problem is that too many studies have relied on small, convenient samples (such as students attending one university) to represent an entire culture. 89 The result is that

many cross-cultural studies draw conclusions that might not general ize to the cultures they intended to represent.

Chapter Two Individual Behaviour, Personality, and Values 57

A second problem is that cross-cultural studies often assume that each country has one culture.90

In reality, many countries (including Canada) have become culturally diverse. As more countries embrace globalization and multicultural ism, it becomes even Jess appropriate to assume that an entire

country has one unified culture. A third concern is that cross-cultural research and writing continues to rely on a major study conducted almost four decades ago of 116,000 IBM employees across dozens of countries. That study helped to ignite subsequent cross-cultural research, but its findings are becoming out of date as values in some cultures have shifted over the years.91

CULTURAL DIVERSITY WITHIN CANADA

Some cross-cultural studies give the impression that Canada is a homogeneous country where people hold identical or very similar values. Of course, anyone who Jives here knows otherwise. Canada is the first country in the world to officially embrace multiculturalism.92 But in addition to the surface- level diversity reflected in multiculturalism, most Canadians may be surprised at how much deep-level diversity also exists within this country.

The best-known deep-level cultural differences are between Canadian anglophones and fran- cophones. At one time, francophones were more rel igious, traditional, and deferential to authority, compared with anglophones. Now, the situation is almost reversed. Relative to anglophones, franco- phones have significantly Jess deference to authority, Jess acceptance of Canada's mil itary activities abroad, and more tolerance and morally permissive views regarding marriage, sexual activity, and nonmarried parenthood.93 At the same time, anglophone and francophone Canadians seem to be con- verging on several values associated with the workplace, secularism, and environmentalism.94

Beyond the francophone-anglophone comparisons, culntral geographers have for several decades anecdotally implied differences in personal values and personality traits across Canadian regions. Rigorous analysis has been limited, but a few sn1dies have recently found that Canadians differ regionally in their political values. For example, egalitarianism (preference for minimal income differences) is significantly higher throughout Atlantic Canada and Quebec than in Alberta. The values of personal responsibility and market liberalism (free market capitalism) are stronger in all three prairie prov- inces than elsewhere in Canada95 Significant differences in the Big Five personal ity traits have been reported across regions of the United States and United Kingdom. There is no comparable research in Canada, but a recent survey suggests that openness to experience and emotional stabil ity are highest in British Columbia and lowest in Quebec.96

Why do Canadians vary in their values and personal ities across regions? One explanation is

that regional institutions-such as local governments, educational systems, and dominant rel igious groups-have a greater influence than do national institutions on social ization practices and resulting personal values. For instance, research suggests that the number of rules and social controls (called

cultural tightness) within a geographic area explains differences in personality and values across the country.97 It is tempting to believe that the physical environment influences a person's values and personality. For instance, research has found that residents of mountainous areas of the United States are, on average, more introverted than residents who Jive near the ocean. However, the physical envi- ronment probably ha~ a limited effect on individual traits and values. Instead, evidence suggests that people migrate to places that are more compatible with their values and self-views98

Canadian versus American Values Canadians increasingly shop at American-owned stores and have close associations with friends and co-workers in the United States. Yet the values held by people in these two countries are more divergent today than a few decades ago. "Canadians may like Americans, speak the same language, and consume more of their fast food and popular culture, but we embrace a different hierarchy of values," writes social policy researcher Michael Adams.99 Another Canadian cultural expert suggests that the 49'h parallel border is more than just an imaginary geo- graphic division; it is a symbol of the widening ideological divide in North America. 100

Canadians and Americans are similar in many ways, but they have also consistently differed over the years on several key values. One difference, reported in several studies, is that Canadians have

significantly higher tolerance or moral permissiveness than do Americans. This is reflected in greater

58 Part Two Individual Behaviour and Processes

acceptance of nontraditional families and of multicultural immigration. Canadians are also more will- ing to allow collective rights over individual rights and are Jess accepting of large wealth differences within society. Another cultural difference is that Canadians are much Jess likely than Americans to be associated with a rel igious institution and to believe that these institutions should influence public policy. Canadians are also much more likely to bel ieve that organizations work better without a single leader. Perhaps the most s ignificant difference in values between the two countries is in beliefs about

patriarchal authority. In the early 1980s, more than 40 percent of Canadians and Americans agreed that the father should be the master of the home. Today, 24 percent of Canadians hold this view, compared

to 4 1 percent of Americans. 101

Chapter Summary

L01 Describe the four factors that dir ectly influence individual behaviour and perfomtance. Four variables-motivation, ability, role perceptions, and situational factors-which are represented by the acronym MARS, directly in fluence individual behaviour and performance. Motivation repre-

sent~ the forces within a person that affect his or her d irection, intensity, and persistence of voluntary behaviour; ability includes both the natural aptitudes and the learned capabi lities required to successfully complete a task; role perceptions are the extent to which people understand the job duties (roles) assigned to them or expected of them; situational factors include conditions beyond the employee's immediate control that constrain or facilitate behaviour and performance.

L02 Summarize the five types of individual behaviour in or ganizations. There are five main types of workplace behaviour. Task performance refers to goal-directed behav- iours under the individual's control that support organ izational objectives. It includes proficiency,

adaptivity, and proactivity. Organizational citizenship behaviours consist of various forms of cooperation and helpfulness to others that support the organization's social and psychological context. Counterproductive work behaviours are voluntary behaviours that have the potential to d irectly or indirectly harm the organization. Joining and staying with the organization refers to becoming and remaining a member of the organization. Maintaining work attendance includes minimizing absenteeism when capable of working and avoiding scheduled work when not fit (i.e., low presenteeism).

L03 Describe personality and discuss how the "Big Five'' personality dimensions and four MBTI types rela te to individual behaviour in organizations.

Personality is the relatively enduring pattern of thoughts, emotions, and behaviours that characterize a person, along with the psychological processes behind those characteristics. Personality is developed through heredity (nature) as well as socialization (nurture). The "Big Five" personality dimensions include conscientious- ness, agreeableness, neuroticism, openness to experience, and extraversion. Conscientiousness and extraversion are the best overall predictors of job performance in most job groups. Extraversion and openness to experience are the best predictors of adaptive and proactive performance. Emotional stability (low neurotic ism) is also associated with better adaptivity. Conscientiousness and agreeableness are the two best personal ity predictors of organiza- tional citizenship and (negatively) of counterproductive work behaviours.

Based on Jungian personality theory, the Myers-Briggs Type Indicator (MBTI) identifies competing orienta- tions for getting energy (extraversion versus introversion), perceiving information (sensing versus intuiting), pro- cessing information and making decisions (thinking versus feeling), and orienting to the external world Gudging versus perceiving). The MBTI improves self-awareness for career development and mutual understanding but is more popular than valid.

L04 Summarize Schwartz's model of individual values and discuss the conditions where values influence behaviour. Values are stable , evaluative beliefs that guide our preferences for outcomes or courses of action in

a variety of s ituations. Compared to personality traits, values are evaluative (rather than descriptive), more likely

Chapter Two Individual Behaviour, Personality, and Values 59

to conflict with each other, and are formed more from socialization than heredity. Schwartz's model organizes 57 values into a circumplex of ten dimensions along two bipolar dimensions: from openness to change to conser- vation and from self-enhancement to self-transcendence. Values influence behaviour in three ways: (I) shaping the attractiveness of choices, (2) framing perceptions of reality, and (3) aligning behaviour with self-concept and sel f-presentation. However, the effect of values on behaviour also depends on whether the situation supports or prevents that behaviour and on how actively we think about values and understand their relevance to the s ituation. Values congruence refers to how similar a person's values hierarchy is to the values hierarchy of another source (organ ization, team, etc.)

LOS Describe three ethical principles and discuss three factors that influence ethical behaviour. Ethics refers to the study of moral principles or values that determine whether actions are right or wrong and outcomes are good or bad. Three ethical principles are utilitarianism (greatest good for

the greatest number), individual right~ (upholding natural rights), and distributive justice (same or proportional benefits and burdens). Ethical behaviour is influenced by the degree to which an issue demands the application of ethical principles (moral intensity), the individual's abil ity to recogn ize the presence and relative importance of an ethical issue (moral sensitivity), and situational forces. Ethical conduct at work is supported by codes of ethical conduct, mechanisms for commun icating ethical violations, the organization's culture, and the leader's behaviour.

LOG Describe five values commonly studied across cultures and discuss the diverse cultures within Canada. Five values commonly studied across cultures are individualism (valuing independence and personal

uniqueness): collectivism (valuing duty to in-groups and to group harmony); power distance (valuing unequal dis- tribution of power); uncertainty avoidance (tolerating or feeling threatened by ambiguity and uncertainty); and achievement-nurturing orientation (valuing competition versus cooperation).

Canada is a multicultural society, but its deep-level diversity extends beyond racial and ethnic groups. Anglo- phones and francophones differ with respect to several values (deference to authority, moral permissiveness, e tc.), but they converge on others. All regions in Canada differ from one another on some values (e.g., egalitarianism and personal responsibility) and personality traits (e.g., openness to experience). Canadians and Americans are s imilar in many ways, but they also have long-standing cultural differences, particularly regarding the values of to lerance, collective rights, secularism, and patriarchal authority.

Key Terms ability achievement-nurturing orientation

agreeableness collectivism

conscientiousness counterproductive work behaviours (CWBs) extraversion

five-factor (Big Five) model (FFM)

individualism mindfulness

moral intensity

moral sensitivity

motivation Myers-Briggs Type Indicator (MBTI)

neuroticism

openness to experience organizational citizenship behaviours (OCBs)

personality

power distance

role perceptions task performance

uncertainty avoidance

Critical Thinking Questions I. A provincial government department has high levels of absenteeism an10ng the office staff. The head of

office administration argues that employees are misusing the organization's s ick leave benefits. However, some of the mostly female staff members have explained that family responsibilities interfere with work. Using the MARS model, as well as your knowledge of absenteeism behaviour, discuss some of the possible rea~ons for absenteeism here and how it might be reduced.

2. It ha~ been said that all employees are motivated. Do you agree with this statement?

60 Part Two Individual Behaviour and Processes

3. Studies report that heredity has a strong influence on an individual's personality. What are the implications of this in organ izational settings?

4. All candidates applying for a management trainee position are given a personality test that measures the five dimensions in the five-factor model. Which personality traits would you consider to be the most important for this type o f job? Explain your answer.

5. Compare and contrast personality with personal values, and identify values categories in Schwartz's values c ircumplex that likely relate to one or more personality dimensions in the five-factor personality model.

6. The CEO and two other executives at an automotive part~ manufacturer were recently fired after being charged with fixing prices on several key automotive parts sold to the auto industry. Executives at competing manu- facturers face the same charges for also participating in this collus ion. Profit margins have come under intense pressure in the industry, which could cause one or more auto parts firms (possibly this company) to go bank- rupt. When the wrongdoing was discovered, most employees involved in product pricing (but not implicated in price fixing) were surprised. The executives were highly respected in their fields of expertise, so many staff members interpreted the unusual pricing decis ions as a new strategy, not an illegal activity. Apply your knowl- edge of personal and ethical values and behaviour to explain why the unethical activity may have occurred.

7. "All decisions are ethical decisions." Comment on this statement, particularly by re ferring to the concepts of moral intensity and moral sensitivity.

8. People in a particular South American country have high power distance and high collectivism. What does this mean, and what are the implications of this information when you (a senior executive) visit employees working for your company in that country?

Case Study:

SNC-LAVALIN GROUP INC.

by Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada) Bribery of foreign public officials, conspiracy to commit fraud and forgery, money laundering, possessing prop- erty obtained by crime, and attempts to secretly smuggle the son of a former dictator into safer countries. Sounds like the plot of a twisted crime novel. Yet these are the charges laid against former executives at SNC-Lavalin (SNCL), one of Canada's largest engineering and construction firms.

The Royal Canadian Mounted Pol ice allege that over a decade or longer, SNCL funnelled more than S 120 million through offshore bank accounts as bribes to secure contracts in Libya. Separately, the World Bank, the African Development Bank, Swiss pol ice, and other entities uncovered evidence that SNCL bribed or attempted to bribe government staff and leaders to win contracts in Africa and Asia. SNCL is also being investigated for unethical activities in contract bidding on a major Canadian project involving a Montreal superhospital. Almost a dozen former SNCL executives, most of whom held senior positions, e ither face charges of criminal activity or are under investigation . The company and its I 00 subsidiaries have been banned for a decade from bidding on World Bank- funded contracts.

The World Bank and other investigators report that in several contracts SNCL processed bribes through an expense line called "project consultancy cost" or PCC. For example, SNCL recently settled a corruption case fi led by the African Development Bank, which had discovered project consultancy cost items representing 7.5 percent of the total contract value of two SNCL road projects in Uganda and Mozambique. The engineering firm has acknowledged that none of these expenses were legitimate. "Everybody used this term, and all know what that means," admit~ SNCL's former director of international projects. "Sometimes it was 'project consultancy cost,' sometimes 'project commerc ial cost,' but [the) real fact is the intention is [a) bribe."

SNCL paid many of the PCC bribes indirectly through employees. One SNCL engineer in Nigeria said he was to ld to use his personal funds to pay a Nigerian official for a "soils investigation." The official had selected the engineering firm for a contract. The engineer was subsequently reimbursed by SNCL through a ficti tious com- pany. When asked why he participated in the kickback scheme, the engineer (who now works in India for another company) replied: "When the boss a~ks, in that part of the world ... what would you do if you were put in my shoes if you were in a remote area o f Nigeria?"

Another way that SNCL executives apparently bribed offic ials wa~ through "agent fees." Re taining a local agent is common and sometimes required for foreign contract~ bids to arrange permit~, imports, and other activi- ties. However, investigators uncovered numerous questionable transfers of large funds from SNCL to banks in Switzerland, the Bahan1as, and other countries.

The largest corruption of the "agent fee" process involved SNCL transferring more than $ 120 million over 10 years to a Swiss bank account controlled by a SNCL executive vice-president working in North Africa and

Chapter Two Individual Behaviour, Personality, and Values 6 1

later at headquarters in Montreal. The executive was subsequently convicted and served jail time in Switzerland for corruption and money laundering regarding these funds, S4 7 million of which he handed over to Swiss authori- ties as part of that conviction. During the Swiss trial, the executive admitted d1at he bribed Saadi Gaddafi, a son of Libya's dictator at that time, for the purpose of having SNCL win five major contracts in Libya. In sepa- rate charges, an RCMP affidavit claims that the same executive masterminded a failed attempt to smuggle Saadi Gaddafi and his family into Mexico. A former SNCL contractor in Canada spent 18 months in a Mexican prison in relation to that mission.

SNCL is suing the executive convicted in Switzerland and others for recovery o f the transferred funds, claim- ing that they were intended as legitimate agent fees. The executive counterclaims that the top brass (below the board level) had arranged or knew these funds were being used for bribery payments and that the executive was following orders. Separate actions by SNCL's CEO at the time lend support to the jailed executive's claims. Specifically, in spite of opposition from the chief financial officer and head of international operations, the CEO authorized undocumented payments totalling $56 million to unknown "agents" in Libya and Bahamas. Quebec's anti-corruption police say the CEO's largest undocumented payment ($22.5 million sent to the Bahamas) was a bribe to win a major Montreal superhospital contract. The CEO resigned when an internal review informed SNCL's board o f the CEO's actions. The board granted the CEO a severance payout, but the severance payments were later stopped when Quebec's anti-corruption police charged the former CEO with fraud.

Another SNCL vice-president now facing several charges also admits to engaging in bribery and related crimes. He explained that SNC-Lavalin had "a corporate culture where it was common practice to do all that was necessary, including the payment of 'commissions' and other benefits to obtain contracts, including in Libya" The second executive also argued that he was under pressure to engage in these illegal activities because the executive above him said "that he had to follow their orders to satisfy their expectations." In fact, a few former SNCL execu- tives have since tried to sue the company for wrongfu l dismissal on the grounds that their illegal activities were required by the company to keep their jobs.

SNCL's board of directors seems to have downplayed personal responsibility for these event~. Very early in the RCMP investigation, SNCL's board received an anonymous internal letter describing the bribery activities, yet the board later admitted that it only "took note" of the allegations, pointing out that they have "received anonymous letters before that have no credibility." And when the extent of wrongdoing at SNCL eventually became public, the board chair said: "Clearly, our board of directors can't govern something that they don' t know about, or prevent something they are not aware of."

Discussion Questions

I. Use the MARS model to discuss the main direct predictors of wrongdoing at SNC-Lavalin.

2. Explain how moral sensitivity and moral intensity apply to the unethical behaviour among several SNC- Lavalin executives and other staff.

3. What steps should SNC-Lavalin and other companies in this s ituation take to minimize these types of corpo- rate wrongdoing?

Sources: J. Castaldo. •'SNC Lavalin•s Missing Millions Mess: Is Ben Aissa Responsible?." Canadian Bw;ine.ts, JuJy 9, 2012: T. McMahon and C. Sorensen. "Boardroom Blunders at SNC-Lav-.Uin." Maclean.•. December 5. 2012. 24; D. Seglins, "SNC- Lavalin International Used Secret Code for ' Bribery' Payments." CBC News, May 15,2013: "SNC-Lavalin Says Former Executive's Illegal Actions Justify Firing." Mac/eans. May 17. 2013; J. Nicol and D. Seglins. "RCMP Moving to Freeze Asset• in Widening SNC-Lavalin Probe." CBC News. May 23. 2013: B. Hutchinson. "The 'Clandestine World' of SNC's Fallen Star," National Post (Toronto). March 19,2015. FP l: D. Hasselback. "SNC-Lavalin Sue.• Former Executives over Alleged Kickbacks in Libya." National Post (foronto). 9 April2015: R. Marowit•. "SNC-Lavalin Settle.• Corruption Case Brought by African Development Bank." Canadian Press, October 2, 2015: "SNC-Lav-.Uin Executi,•e C laims He Was Scapegoat in Gadhafi Bribery Scheme." Global Constructimt Review (London), September 14,2015: R. Marowits. "SNC-Lavalin Still Hoping to Resolve Criminal Charges as Hearing Set for 2018." Canadian Press. February 27. 2016: A. Derfel. "Alleged Bribery Behind MUHC Superhospital Contract: Affidavit Suggests Swiss Police Alerted Canadian Officials." Montreal Gazette. 10 August 2016.

Case Study:

ETHICS DILEMMA VIGNETTES

by Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada)

Purpose This exercise is designed to make you aware of the ethical di lemmas people face in various business s ituations, as well as the competing principles and values that operate in these situations.

62 Part Two Individual Behaviour and Processes

Instructions (Small Class) The instructor will form teams of four or five students. Team members wi ll read each case below and discuss the extent to which the company's action in each case was ethical. Teams should be prepared to justify their evaluation using ethics principles and the perceived moral intensity of each incident.

Instructions (Large Class) Working alone, read each ca~e below and determine the extent to which the company's action in each case was ethical. The instructor will use a show of hands to determine the extent to which students believe the case represents an ethical dilemma (high or low moral intensity) and the extent to which the main people or company in each incident acted ethically.

CASE ONE

A large multinational grocery chain that emphasizes healthy li festyles is recognized as one of the nation's "greenest" companies, has generous employee benefits, and is perennially rated as one o f the best places to work. Employees receive a 20 percent discount on company products. However, those who partic ipate in the company's voluntary "Healthy Discount Incentive Program" receive up to an additional 10 percent discount on their purchases (i.e., up to a total 30 percent discount). These additional discounts are calculated from employ- ees' blood pressure, total cholesterol (or LDL) levels, Body Mass Index (BMJ), and nicotine-free lifestyle. For example, the full additional I 0 percent discount is awarded to those who do not use nicotine products, have 110no or lower blood pressure, have cholesterol levels under 150, and have a BMI o f less than 24. Employees do not receive the additional discount if they use nicotine products, or have any one of the following: blood pressure above 140/90, cholesterol of 195 or higher, or BMI of 30 or higher. In his letter to employees when announcing the plan, the CEO explained that these incentives "encourage our Team Members to be healthier and to lower our healthcare costs."

CASE TWO A 16-year-old hired as an office administrator at a small import services company started posting her thoughts about the job on her Face book site. After her firs t day, she wrote: "first day at work. omg II So dull !!" Two days later, she complained "all i do is shred holepunch n scan paper''' omg!" Two weeks later she added "im so totally bord!! !" These comments were intermixed with the other usual banter about her life . Her Facebook s ite did not mention the name of the company where she worked. Three weeks after being hired, the employee was called into the owner's office, where he fired her for the comments on Facebook, then had her escorted from the building. The owner argues that these comments put the company in a bad light, and her "display o f disrespect and dissatisfac- tion undermined the relationship and made it untenable."

CASE THREE

The waiter at a cafe in a large c ity mixed up Heidi Clarke's meal order with the meal that a male customer at a nearby table had requested. The two strangers discovered the mistake and briefly enjoyed a friendly chat while swapping plates. The male patron departed soon after but accidentally left his new tuxedo jacket behind on his chair. Clarke wanted to meet him again, so she took the jacket home. Following a friend's suggestion, Heidi launched a YouTube video and website, in which she shyly told her story, detailed the jacket's features, and promi- nently displayed a label with the nan1e o f a popular fashion retailer. The website even included photos of Heidi posing in the jacket. The next day, she gave the cafe staff the jacket and a note with her nan1e and phone number. Heidi's YouTube video soon went viral, her website crashed from so many visitors, and a major newspaper and te levision station featured Heidi's quest to find the man with the missing jacket. The incident is a ro mantic reversal of the Cinderella story ... except it was a fake event staged by a marketing company. "Heidi" is an actress and model hired by the marketer to promote the fashion retailer's new line of jackets for men. A partner at the marketing firm justi fied the hoax by saying that "when you've got a very well-established brand you need to do something that's got talkability and intrigue to rea~sess what that brand is about." The marketing executive argued that this was an acceptable marketing event because "nobody's been harmed" and the firm intended to eventually reveal the truth. Indeed, the actress (whose real name is Lily, not Heidi) released a second video acknowledging that the incident was fake and explaining that she's a hopeless romantic who loves a good love story.

CASE FOUR

Computer printer manufacturers usually sell printers at a low margin over cost and generate much more income from subsequent sales of the high-margin ink cartridges required for each printer. One global printer manufacturer now designs its printers so that they work only with ink cartridges made in the san1e region. Ink cartridges pur- chased in Canada will not work with the same printer model sold in Europe, for example. This "region coding" of ink cartridges does not improve performance. Rather, it prevents consumers and grey marke ters from buying the product at a lower price in another region. The company says this policy allows it to maintain stable prices within a region rather than continually changing prices due to currency fluctuations.

Chapter Two Individual Behaviour, Personality, and Values 63

CASE FIVE A large European bank requires all employees to open a bank account with that bank. The bank deposits employee paycheques to those accounts. The bank explains that this is a formal pol icy which all employees agree to at the time of hire. Furthermore, fai lure to have an account with the bank shows disloyalty, which could limit the employee's career advancement opportunities with the bank. Until recently, the bank has reluctantly agreed to deposit paycheques to accounts at other banks for a small percentage of employees. Now, bank executives want to reinforce the policy. They announce that employees have three months to open an account with the bank or face disciplinary action.

Class Exercise:

PERSONAL VALUES EXERCISE

Purpose This exercise is designed to help you understand Schwartz's values model and relate its e lements to your personal values and the values held by others in your class.

Instructions Your instructor will distribute a sheet with 44 words and phrases representing different personal values. Read these words and phrases carefully, then fo llow these steps: I. Pick THREE (3) of these words/phrases that represent the MOST important values to you personal ly. Print

each of the three values on the three yellow-coloured sticky (Post-It) notes provided by your instructor (i.e., print one value on each note). Do not put your name on any sticky notes.

2. From the remaining 4 1 values on the sheet provided by your instructor, pick THREE (3) of these that represent the LEAST important values to you personally. Print each of the three values on three sticky notes of the second colour provided by your instructor (i.e., print one value on each note).

3. The instructor will advise you what to do with the six stick-y notes on which you wrote your most and least important values.

4. The class will engage in a debriefing, using the information created in the third step of this activity.

Self-Assessments for Chapter 2

I SELF-ASSESSMENT NAME DESCRIPTION J Can you identify personality traits Personality influences all a..~pects of our Jives. including the words we use from blogging words? when writing blogs. In fact. some companies now use sophisticated software to

estimate the personality tra.it'i of job applicant'i from the words they use in blogs and other online writing. This self-assessment estimates how well you interpret someone•s personality in blogs and other writing. I

What is your Big Five personal ity? Personality experl'i have organized the dozens of personality trait'i into five main I dimensions. known a'i the five-factor or "Big Five" model. Each dimension

I consists of several specific personality traiL~ that cluste r together. Most scholarly research on personality relies on this model. but it is also useful in everyday life as a relatively easy categorization of personali ties. This self-assessment estimate.'i your personality on the Big Five dimensions.

I Are you introverted or extraverted? One of the most widely studied and discussed personality dimensions is I introversion~extraversion. Introversion char.tcterizes people who tend to be quiet

I shy. and cautious. Extraversion char.tcterizes people who tend to be outgoing. talkative. sociable. and a...,;sertive. This self·as.sessment estimates the extent to

I which you have an introverted or extraverted personality. Are you a sensing or intuitive type? Nearly a century ago. Swiss psychiatrist Carl Jung proposed that personality is

primarily represented by the individual·s preferences regarding perceiving and judging information. Jung explained that perceiving. which involves how people prefer to gather information or perceive the world around them. occurs through two competing orientations: sensing (S) and intuition (N). This self·a.'isessment

I estimate.' your score on this Jungian personality type (SIN). Colllinued

64 Part Two Individual Behaviour and Processes

I SELF-ASSESSMENT NAME --+-D_ES_ CRJPTION _j What are your dominant values? Values are stable. evaluative beliefs that guide our preferences for outcomes or

courses of action in a v-.triety of situations. They are perceptions about what is good or bad. right or wrong. \Ve arrange our personal values into a hier.u-chy of preferences. called a value system. Schwartz's values circumplex organizes the

dozens of personal values into I 0 categories placed in a circle (circumplex). This self-assessment assesses the relative importance to you of the I 0 categories of I values in Schv.'<lrtz•s circumplex model.

How much do you value individual· ism and collectivism?

I What is your level of power distance?

Cross-cultural values have become an important part of organizational life d ue to globalization and an increasingly multicultural workforce. Two of the most commonly studied cross--cultural va1ues are individualism and collectivism. This self-assessment estimate.'i your score on these two cross-cultur.tl values.

Some employees value obedience to authority and are comfortable receiving I commands from their superiors without consultation or debate. Others expect equa1 status and authority with their manager. This power distance orientation varies from one person to the next: it also varies across cultures. This self· assessment e.'itimates your score on this cross--cultural value. I

CHAPTER 3

Perceiving Ourselves and Others in Organizations

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Describe the elements of self-concept and explain how each affects an individual's behaviour and well-being.

L02 Outline the perceptual process and discuss the effects of categorical thinking and mental models in that process.

L03 Discuss how stereotyping, attribut ion, and the self-fulfilling prophecy, halo, false-consensus, primacy, and recency effects influence the perceptual process.

L04 Discuss three ways to improve perceptions, with specific applicat ion to organizational situat ions.

LOS Outline the main features of a global mindset and justify its usefulness to employees and organizations.

6 5

66 Part Two Individual Behaviour and Processes

Julia Nguyen was enthusiastic after being accepted into the computer science program at the University of Waterloo. "I thought it was kind of empowering," she recalls. But her self-confidence withered during her first year with mostly male classmates. "They didn't treat me as an equal," remembers Nguyen, who recently graduated and is now a software engineer in San Francisco. "I felt like whenever they would have technical conversations, they would kind of dumb it down for me, or they assumed I wouldn't know what they were talking about."

Women represent less than 20 percent of employees in core technology roles (computer programming and engineering) in Canada. One reason for the imbalance is that, like Nguyen, women in this field often experience unconscious bias founded on distorted stereotypes. "It's worrying to see just how deeply ingrained gender stereotypes still are," says Ann Pickering, HR director of digital communications company 02. "Working in the tech sector, I see the impact that stereotyping has on our industry every day."

Some women may also avoid information technology because it doesn't fit their self-concept. "The industry has an image problem," acknowledges Gillian Arnold, IT consultant and executive with the British Computer Society. "Every film you see has some overweight, sweaty bloke who is a computer geek- and girls don't identify with that." The lack of female role models adds to this problem. "Think of the key people who everyone looks up to: Bill Gates and Steve Jobs," says Angela Robert, co-founder of Vancouver-based mobile app company Conquer Mobile. "How is that appealing to a woman to be like those guys?"

Another barrier is a lack of female peer support, which potentially undermines women's self- perception in this field. In a recent survey, 74 percent of Canadians agreed that women might feel intimidated about entering the information technology industry because of the lack of women currently in that discipline. "Being in an environment in which you're feeling unsupported because you don't have a lot of girls in computer science around you- you feel like you don't belong," explains Serena Vandersteen, a software developer in Winnipeg. "As much as I try to be confident and try to prove people wrong, every once in a while it gets to you."

Several organizations have taken up the fight against these negative stereotypes and self- doubts. One of the largest in Canada is Ladies Learning Code, a non-profit group that has held almost 1,000 workshops, camps, and other events across the country in which women and girls (through Girls Learning Code) discover that computer programming is creative, fun, and within their abilities. "I want to help break down the stereotypes associated with computer programming and make it accessible for anyone to learn," says Kim MacKay, a Ladies Learning Code instructor in Saskatoon who develops computer software to model the cell structure of crops.'

Companies face two challenges in attracting and keeping women in information technology and related jobs: ( 1) women' s self-concept as information technology experts, and (2) the perceptions they and others have about people in information technology and, speci f ically, about women in these roles. We discuss both of these related topics in this chapter. First, we examine

how people perceive themselves-their sel f-concept-and how that self-perception affects their decisions and behaviour. Next, we focus on perceptions in organizational settings, beginning with

how we select, organize, and interpret information. We also rev iew several specific perceptual

processes, such as stereotyping, attribution, and sel f-fulfi ll ing prophecy. This is followed by dis- cussion of potentially effective ways to improve perceptions. The f inal section of this chapter

reviews the main elements of global mindset, a largely perceptual process valued in this increas-

ingly global ized world.

Self-Concept: How We Perceive Ourselves

Why do so few women enter careers in information technology (IT) and computer sci-

ence in Canada and most other countries? As the opening case study to this chapter suggests, many women have an image of IT that is incompatible w ith their sel f-view.

They also have a lower self-evaluation of their abil i ty to perform well in that field of work. In

fact, one recent study found that 14-year-old girls significantly underestimated their performance

Chapter Three Perceiving Ourselves and Others in Organizations 67

on science and technology tests, whereas boys slightly overrated themselves, even though average

scores are about the same for both genders.2 These barriers to women entering IT reflect core ele- ments of self-concept.

Self-concept refers to an individual's self-bel iefs and self-evaluations.3 It is reflected in the ques- tions "Who am I?" and "How do I feel about myself/" that people ask themselves and that guide their decisions and actions. Whether contemplating a career in information technology or any other occupa- tion, we compare our perceptions of that job with our current (perceived self) and desired (ideal self) images of ourselves. We also evaluate our current and desired abilities to determine whether they make a good fit with that type of work. Our self-concept is defined at three levels: individual, relational, and collective. Specifically, we view ourselves in terms of our personal traits (individual self), connections to friends and co-workers (relational self), and membership in teams, organizations, social groups, and other entities (collective self).4

If::\ How much does work define your self-concept? You can discover the extent to which ~ work is central to your self-concept by completing this self-assessment in Connect.

SELF-CONCEPT COMPLEXITY, CONSISTENCY, AND CLARITY An individual's self-concept can be described by three characteristics: complexity, consistency, and clarity (see Exhibit 3. 1). Complexity refers to the number of distinct and important roles or identities that people perceive about themselves.5 Everyone has multiple self-views because they see themselves in different roles at various times (student, friend, daughter, sports fan, etc.). People are generally moti- vated to increase their complexity (called self-expansion) as they seek out new opportunities and social connections. A person's self-concept becomes more complex, for example, when moving from being an accountant to a manager because he or she has acquired additional roles.

Self-concept complexity isn't defined only by how many identities a person has; it is also defined by the separation of those identities. An individual with several identities might still have low self-concept complexity when those identities are highly interconnected, such as when they are al l work related

EXHIBIT 3.1 Self-Concept Characteristics and Processes

68 Part Two Individual Behaviour and Processes

(manager, engineer, family income earner). Complexity is higher when the multiple identities have a low correlation with each other, such as when they apply to fairly distinct spheres of life.

Although everyone has multiple selves, only some of those identities dominate their attention at any one time.6 A person's various selves are usually domain specific, meaning that a particular self-view (parent, manager, etc.) is more likely to be activated in some settings than in others. People shift their self-concept more easily when the activated self-view is important and compatible with the situation. For instance, as people travel from home to work, they can usually shift their self-view from being a parent to being an executive because each role is important and fits into the home and work contexts, respectively. In contrast, some employees struggle to focus on their occupational self-concept when working from home (telecommuting).

Consistency is the second characteristic of an individual's self-concept. High consistency exists when the individual's identities require similar personality traits, values, and other attributes. Low consistency occurs when some self-views require personal characteristics that conflict with attributes required for other self-views, such as when a safety-conscious engineer also defines himself or herself as a risk-oriented acrobatic snowboarder. Self-concept consistency also depends on how closely the person's identities align with his or her actual attributes. Low consistency exists when an individual's personality and values clash with the type of person he or she tries to become.

Clarity, the third self-concept characteristic, is the degree to which a person's self-concept is clear, confidently defined, and stable? Clarity occurs when we are confident about "who we are," can describe our important identities to others, and provide the same description of ourselves across time. Self-concept clarity increases with age because personality and values become relatively stable by adulthood and people develop better self-awareness through life experiences. Self-concept is also clearer when a person's multiple selves have higher consistency. This makes sense because low con- sistency produces ambiguity about a person's underlying characteristics. For example, someone whose self-view included both cautious engineer and risk-oriented snowboarder would have difficulty defin- ing himself or herself clearly or with much confidence. 8

Effects of Self-Concept Characteristics on Well-Being and Behaviour Psychological well-being tends to be higher among people with fairly distinct multiple selves (complexity) that are well establ ished (clarity) and in harmony with each other and with the individual's personal attr ibutes (consistency).9 Self-concept complexity protects our self-esteem when some roles are threatened or damaged. A complex self is rather like a ship with several compartments that can be sealed off from one another. If one compartment is damaged, the other compartments (other identities) remain intact so the ship remains at1oat. In contrast, people with low complexity, including those whose multiple selves are highly interconnected, suffer severe loss when they experience failure because these events affect a large part of themselves.

People also tend to have better well-being when their multiple selves are in harmony with each other and with the individual's personality and values (consistency). 10 Self-concept complexity helps people adapt, but too much variation causes internal tension and conflict. Well-being also tends to increase with self-concept clarity. People who are unsure of their self-views are more ea~ily influenced by others, experience more stress when making decisions, and feel more threatened by social forces that undermine their self-confidence and self-esteem. 11

Self-concept complexity has both positive and negative influences on individual behaviour and performance. 12 Employees with complex identities tend to have more adaptive decision-making and performance. This likely occurs because multiple selves generate more diverse experiences and role patterns, so these employees can more easily alter their thinking and behaviour to suit new tasks and work environments. A second benefit is that self-concept complexity often produces more diverse social networks, and this network diversity gives employees access to more resources and social sup-

port to perform their jobs. Against these benefits is the problem that highly complex self-concepts require more effort to main-

tain and juggle, which can be stressful. In contra~t. low complexity self-concepts have the advantage of requiring less effort and resources to develop. For example, people who define themselves mainly by

Chapter Three Perceiving Ourselves and Others in Organizations

Helene Joy appeared on several popular television programs, but the lack of job security as an actor motivated her to join her mother's real estate business. "It lasted a week," Joy recalls of her short-lived real estate career. "I realized that acting is what I do, and who I am." The experience helped Joy form a clearer self-concept, which provided a new determination to achieve her ideal self. "I guess I was never really committed till then, and once I did commit, I haven't stopped working." Today, Joy is a lead actor in the popular Canadian TV series Murdoch Mysteries and has received several awards for her acting talent.13

©Collection Christophei/Aiamy Stock Photo

69

their work (low complexity) often perform better due to more investment in ski ll development, work- ing longer hours, and a higher concentration on work. They also have lower absenteeism and turnover.

Self-concept clarity tends to improve performance and is considered vital for leadership roles. 14

Clarity also provides a clearer path forward, which enables people to direct their effort more efficiently toward career objectives. Another benefit is that people with high self-concept clarity feel less threat- ened by interpersonal conflict, so they use more constructive problem-solving behaviours to resolve conflicts. However, those with very high clarity may have role inflexibility, with the result that they

cannot adapt to changing job duties or environmental conditions. In addition to the three self-concept characteristics, Exhibit 3. 1 illustrates four processes that shape

self-concept and motivate a person's decisions and behaviour. Let's look at each of these four "selves": self-enhancement, self-verification, self-evaluation, and social self (social identity).

SELF-ENHANCEMENT A cenntry ago, educational philosopher John Dewey said that "the deepest urge in human nature is the desire to be important."15 Dewey recognized that people are inherently motivated to perceive them- selves (and to be perceived by others) as competent, attractive, lucky, ethical, and important.16 This phenomenon, called self-enhancement, is observed in many ways. Individuals tend to rate themselves above average, believe that they have a better than average probability of success, and attribute their successes to personal motivation or abi lity while blaming the situation when events go badly. People generally don't believe they are above average in all circumstances, however, but only with regard to

things that are important to them and are relatively common rather than rare. 17

70 Part Two Individual Behaviour and Processes

• by the NUMBERS

Self-Enhancement Makes Most of Us above Average!18

of professors at a large American university rated thei r

teaching as above-average compared with others at their university.

of Investment fund managers said they were

above average at their jobs.

of U.S. federal government workers rated their performance

above average compared to co-workers in their unit (only 1% rated their performance below average).

of Swedish student drivers overestimated their

driving competence (13% underestimated their driving competence).

of Canadians rated themselves as healthy (yet 48% of

Canadians lack sufficient physical activity and 54% fall short of healthy eating standards).

of college students said they have above average academic ability

(64% of college students in 1966 said they were above average).

of college students said they have above average leadership

ability (only 41% of college students in 1966 claimed to be above average).

of consumers in a large U.S. survey panel overestimated their

actual credit rating (only 4.6% underestimated their credit rating).

Self-enhancement has both positive and negative consequences in organizational settings!9 On the positive side, individuals tend to experience better mental and physical health and adjustment when they ampl ify their self-concept. Overconfidence also generates a "can do" attitude (which we discuss later) that motivates persistence in difficult or risky ta~ks. On the negative side, self-enhancement causes people to overestimate future returns in investment decisions and engage in unsafe behaviour (such as dangerous driving). It also accounts for executives repeating poor decisions (because they ignore negative feedback), launching misguided corporate diversification strategies, and acquiring excessive corporate debt.

SELF-VERIFICATION Individuals try to confirm and maintain their existing self-concept.20 This process, cal led self- verification, stabilizes an individual 's self-view which, in ntrn, provides an important anchor that guides his or her thoughts and actions. Employees actively communicate their self-concept so co- workers understand it and provide veri fying feedback when observed. For example, you might let co-workers know that you are a very organized person; later, they compliment you on occasions where you have indeed been very organized. Unlike self-enhancement, self-verification includes seeking feedback that is not necessarily flattering (e.g., I'm a numbers person, not a people person). Experts

Chapter Three Perceiving Ourselves and Others in Organizations 7 1

continue to debate whether and under what conditions people prefer information that supports self- enhancement or self-verification.2' In other words, do we prefer compliments rather than accurate critiques about weaknesses that we readily acknowledge? The answer is likely complex; we enjoy compliments, but less so if they are significantly contrary to our self-view.

Self-verification is a~sociated with several OB topics.22 First, it affects the percepn1al process that we describe later in this chapter. Specifically, employees are more likely to remember information that is consistent with their self-concept and nonconsciously screen out information (particularly negative infor- mation) that seems inconsistent with it. Second, people with high self-concept clarity will consciously dismiss feedback that contradicts their self-view. Third, employees are motivated to interact with others who affirm their self-views, and this affects how well they get along with their boss and team members.

SELF-EVALUATION Almost everyone strives to have a positive self-concept, but some people have a more positive evalu- ation of themselves than do others. This self-evaluation is mostly defined by three elements: self- esteem, self-efficacy, and locus of controlY

Self-Esteem Self-esteem-the extent to which people like, respect, and are satisfied with themselves-represents a comprehensive self-evaluation. People have degrees of self-esteem for each of their various roles, such as bel ieving themselves to be a good student, a good driver, and a good parent. From these multiple self-appraisals, people form an overall evaluation of themselves, known as

their global self-esteem. People with high self-esteem are less influenced by others, tend to persist in spite of failure, and have a higher propensity to think logically24

Self-Efficacy Self-efficacy refers to a person's bel ief that he or she can successfully complete a ta~k.25 Those with high self-eff icacy have a "can do" attitude. They bel ieve they possess the energy (motivation), ability, clear expectations (role perceptions}, and resources (situational factors) to per- form the task. In other words, self-efficacy is an individual's perception regarding the MARS model

in a specific situation. Self-efficacy is often task-specific, but it can also be more general ized. People have a general self-efficacy when they believe they can be successful across a variety of situations26

People with higher general self-efficacy have a more positive overall self-evaluation.

How much general self-efficacy do you have? You can discover your level of general self-efficacy by completing this self-assessment in Connect.

Locus of Control Locus of contr ol is defined as a person's general beliefs about the amount of control he or she has over personal life events.27 Individuals with an internal locus of control believe that life events are caused mainly by their personal characteristics (i.e., motivation and abilities). Those with an external locus of control believe events are due mainly to fate, luck, or conditions in the external environment. Locus of control is a generalized bel ief, but this belief varies to some extent with the situ- ation. People with an external locus of control generally bel ieve that life's outcomes are beyond their control, but they also believe they have control over the results of tasks they perform often. An individu- al's locus of control is most apparent in new sin1ations, where their ability to control events is uncertain.

People with an internal locus of control have a more positive self-evaluation. They also tend to per- form better in most employment situations, are more successful in their careers, earn more money, and are better suited for leadership positions. "Internals" are also more satisfied with their jobs, cope better in stressful situations, and are more motivated by performance-based reward systems.28

What is your locus of control? You can discover your general locus of control orientation by completing this self-assessment in Connect.

72 Part Tw o Individual Behaviour and Processes

THE SOCIAL SELF We began this topic by stating that an individual's self-concept exists at three levels: individual, rela- tional, and collective. These three levels recognize two opposing human motivations that influence how people view themselves.29 One motivation is to be distinctive and different from other people. The opposing need is for inclusion and assimilation with other people. The individual self, called personal idemity or imemal self-concept, fulfils the need for distinctiveness because it involves defining our- selves by our personal ity, values, abilities, qualifications, achievements, and other personal attributes. Everyone has a unique combination of personal characteristics, and we embrace this uniqueness to

some degree. For instance, an unusual skill or accomplishment that distinguishes you from your co- workers is part of your personal identity.

The opposing need for inclusion and assimilation with other people is fulfilled through our relational and collective self-concepts.30 Human beings are social animals; we have an inherent drive to be associ- ated with others and to be recognized as part of social communities. Thus, people define themselves to some degree by their interpersonal and collective relationships.31 Social identity (also called external self- concept) is the central theme of social identity theory, which says that we define ourselves by the groups to which we belong or have an emotional attachment. For instance, someone might have a social identity as a Canadian, a Universite Laval alumnus, and an employee at Desjardins Group (see Exhibit 3.2).

Social identity is a complex combination of many memberships arranged in a hierarchy of impor- tance. One factor determining importance is how easily you are identified as a member of the reference group, such as by your gender, age, and ethnicity. A second factor is your minority status in a group. It is difficult to ignore your gender in a class where most other students are the opposite gender, for example. In that context, gender tends to become a stronger defining feature of your social identity than it is in social settings where there are many people of your gender.

The group's status is another important social identity factor because a~sociation with the group makes us feel better about ourselves (i.e., self-enhancement). Medical doctors usually define themselves by their profession because of its high status. Some people describe themselves by where they work ("I work at Google") because their employer has a good reputation. Others never mention where they work because

their employer is noted for poor relations with employees or has a poor reputation in the community? 2

Everyone tries to balance personal and social identities to some degree, but the priority for unique- ness (personal identities) versus relatedness (social identities) differs from one person to the next. People whose self-concepts are heavily defined by social rather than personal identities are more moti- vated to abide by team norms and are more easily influenced by peer pressure. Those who place more

EXHIBIT 3.2 Social Identity Theory Example

Social Identity

--r- Contrasting Groups

Employees at other firms

Citizens/residents of other countries

Graduates of other schools

Chapter Three Perceiving Ourselves and Others in Organizations 73

emphasis on personal identities, on the other hand, speak out more frequently against the majority and are less motivated to follow the team's wishes. Furthermore, expressing disagreement with others is a sign of distinctiveness and can help employees form a clearer self-concept, particularly when that

disagreement is based on differences in personal values33

SELF-CONCEPT AND ORGANIZATIONAL BEHAVIOUR

Self-concept ha~ become a hot topic in the social sciences and is starting to bloom in organizational behaviour research.34 As we noted throughout this section, self-concept influences perceptual and deci- sion processes and biases, employee motivation, team dynamics, leadership development, employee stress, and several other OB topics. So, self-concept will be mentioned several times throughout this book, including in later parts of this chapter.

Perceiving the World around Us

L02 We spend considerable time perceiving ourselves, but most of our perceptual energy is directed toward the outer world. Whether as an information technology specialist, forensic accountant, or senior executive, we need to make sense of our surroundings and to manage

the conditions that challenge the accuracy of those perceptions. Perception is the process of receiving infor- mation about and making sense of the world around us. It includes determining which information to notice, how to categorize this information, and how to interpret it within the framework of our existing knowledge.

The perceptual process generally follows the steps shown in Exhibit 3.3. Perception begins when environmental stimuli are received through our senses. Most stimuli that bombard our senses are

screened out; the rest are organized and interpreted. The process of attending to some information received by our senses and ignoring other information is called selective attention. Selective attention is influenced by characteristics of the person or object being perceived, particularly size, intensity, motion, repetition, and novelty. For example, a smal l, flashing red light on a nurses' work station con- sole is immediately noticed because it is bright (intensity), flashing (motion), a rare event (novelty), and ha~ symbolic meaning that a patient's vital signs are failing. Notice that selective attention is also influenced by the context in which the target is perceived. For instance, the selective attention process

is triggered by things or people who are out of context, such as someone with a foreign accent in a set- ting where most people have a local accent.

EXHIBIT 3.3 Model of the Perceptual Process

Feeling Hearing Seeing Smelling Tasting

~!~ Selective attention and

emotional marker response

Perceptllal orgamzallon and mterpretatioo

Attttudes and behaviour

74 Part Two Individual Behaviour and Processes

Characteristics of the perceiver also influence selective attention, usually without the perceiver's awareness.35 When information is received through the senses, our brain quickly and nonconsciously assesses whether it is relevant or irrelevant to us and then attaches emotional markers (worry, happiness, boredom) to the retained information36 Emotional markers help us to store information in memory; those emotions are later reproduced when recal ling the perceived information. The selective attention process is far from perfect, however. The Greek philosopher Plato acknowledged this imperfection long ago when he wrote that we see reality only a~ shadows reflecting against the rough wall of a cave.37

One selective attention bias is the effect of our assumptions and expectations about ti.lture events. You are more likely to notice a particular co-worker's email among the daily avalanche of messages when you are expecting to receive that email (even more so if it is important). Unfornmately, expectations and assumptions also cause us to screen out potentially important information. In one sntdy, students were a~ked to watch a 30-second video clip in which several people pa~sed around two basketballs. Students who were instructed simply to watch the video clip readily noticed a person dressed in a gorilla suit walking among the players for nine second~ and stopping to thump his or her chest. But when a group of students was asked to count the number of times a particular ba~ketball was passed around, only half noticed the intruding gorilla.38

Another selective attention problem, called confirmation bias, is the nonconscious tendency for people to screen out information that is contrary to their decisions, beliefs, values, and assumptions, while more readily accepting information that confirms those elements.39 When making an important decision, such as investing in a costly project, we tend to pay attention to information that supports that decision, ignore information that questions the wisdom of the decision, and more easily recall the sup- portive than the opposing information. Confirmation bias occurred, for example, in an exercise where student pi lots became unsure of their location. The study found that the pilots, in trying to determine their location, relied on less reliable information that wa~ consistent with their assumptions rather than on more accurate information that was contrary to those assumptions. Confirmation bias is also a well- known perceptual problem that occurs when police detectives and other forensic experts form theories too early in an investigation.40

"It is a capital mistake to theorize before you have all the evidence," warned the mythical detective Sherlock Holmes in A Study in Scarlet. "It biases the judgment." Law enforcement agencies try to follow this advice, but "tunnel vision" misperceptions, or confirmation bias, still occur.

One recent example may have been the false arrest of Frank Cara for the murder of his father in Oshawa, Ontario. Car a lived with his father, but was visiting family members elsewhere on the morning of his father's death. Police quickly concluded that he killed his father either before leaving or after returning from the visit. Several months later, Frank was charged with second-degree murder and spent ten months in jail awaiting trial. The charges were dropped when Frank's lawyer discovered police analysis of his father's pacemaker. The pacemaker data, which police had inexplicably ignored, indicated that his father's death had occurred mid- morning, when Frank was visiting family.

"It 's difficult to come to any sort of conclusion here other than this was tunnel vision," says Frank's lawyer, pointing out that police were "ignoring a key piece in the whole puzzle that meant the other evidence was completely inadeq uate."41

C>Jim Rankin/Toronto Star/

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Chapter Three Perceiving Ourselves and Others in Organizations 75

PERCEPTUAL ORGANIZATION AND INTERPRETATION We pay attention to a tiny fraction of the stimuli received by the senses. Even so, through various per-

ceptual grouping strategies, the human brain further reduces the huge volume and complexity of the information received. Perceptual grouping occurs mostly without our awareness, yet it is the founda-

tion for making sense of things and fulfilling our need for cognitive closure. The most common and far- reaching perceptual grouping process is ca tegor ical thin king-the mostly nonconscious process of organizing people and objects into preconceived categories that are stored in our long-term memory.42

People are usually grouped together based on their observable similarity, such as gender, age, race,

clothing style, and so forth. We discuss this categorization process in the next section on stereotyp- ing. People are also grouped together based on their proximity to each other. If you notice a group of employees working in the same area and know that some of them are marketing staff, you will likely

assume that the others in that group are also marketing staff.

If:::\ How much perceptual structure do you need? You can discover your need for ~ perceptual structure by locating this self-assessment in Connect.

Another form of perceptual grouping is based on the need for cognitive closure. When listening to others discuss what happened at a meeting you didn't attend, your mind fills in unstated details, such as who else was there and where it was held. Percepn1al grouping also occurs when we perceive trends from ambiguous information. Several studies have found that people have a natural tendency to see patterns that, in fact, are random events. For example, people incorrectly believe that a sports player or gambler with a string of wins is more likely to win next time as well.43

The process of "making sense" of the world around us involves interpreting incoming information, not just organizing it. This happens as quickly as selecting and organizing because the previously men- tioned emotional markers are tagged to incoming stimuli, which are essentially quick judgments about whether that information is good or bad for us. How much time does it take to make these quick judg- ments? Recent studies estimate that we make reliable judgments about another individual's trustworthi- ness based on viewing a facial image for as little a~ SO milliseconds (one-twentieth of a second). In fact, our opinion regarding whether we like or trust a person is about the same whether we see the person's face for a minute or a fraction of a second.44 Collectively, these sn1dies reveal that selective attention, per- ceptual organization, and interpretation operate very quickly and to a large extent without our awareness.

Mental Models To achieve our goals with some degree of predictability and sanity, we need road maps of the environments in which we live. These road maps, called mental mod els, are knowledge structures that we develop to describe, explain, and predict the world around us.45 They consist of visual or relational images in our mind, such as what the cla~sroom looks like or what happens when

we submit an assignment late. Mental models partly rely on the process of perceptual grouping to make sense of things; they fill in the missing pieces, including the causal connection among events. For example, you have a mental model about attending a class lecture or seminar, including assump- tions or expectations about where the instructor and students arrange themselves in the room, how they ask and answer questions, and so forth. In other words, we create a mental image of a cla~s in progress.

Mental models play an important role in sense making, yet they also make it difficult to see the world in different ways. For example, accounting professionals tend to see corporate problems from an accounting per- spective, whereas marketing professionals see the same problems from a marketing perspective. Mental models

also block our recognition of new oppommities. How do we change mental models? That's a tough challenge. After all, we develop these knowledge structures from several years of experience and reinforcement.

The most important way to minimize perceptual problems caused by mental models is to be aware of and frequently question them. We also need to be more aware of our assumptions, which are often

based on mental models. Working with people from diverse backgrounds is another way to break out of existing mental models. Colleagues from different cultures and areas of expertise tend to have different mental models, so working with them makes our own assumptions more obvious.

76 Part Two Individual Behaviour and Processes

Specific Perceptual Processes and Problems

Within the general perceptual process are specific subprocesses and associated biases and other errors. In this section, we discuss several of these perceptual processes and biases as well as their impl ications for organizational behaviour, beginning with the

most widely known one: stereotyping.

STEREOTYPING IN ORGANIZATIONS One reason why there are few women in information technology and computer science occupations is that they, along with family and friends, tend to hold an unflattering stereotype of people in this field. Research indicates that both women and men tend to stereotype computer scientists as intellectual geniuses who are socially inept, in relatively poor health, loners, and fanatically addicted to their com- puters, sc ience fiction, and video games.46 Stereotypes typically have a few kernels of truth. Yet, as the opening case study in this chapter illustrates, the stereotype of information technology professionals seems to be far removed from reality. Unfortunately, people have a stereotype of IT professionals that is neither accurate nor desirable for most women.

Stereotyping is the perceptual process in which we a~sign characteristics to an identifiable group and then automatically transfer those features to anyone we believe is a member of that group.47 The assigned characteristics tend to be difficult to observe, such as personality traits and abilities, but they can also include physical characteristics and a host of other qualities. If we learn that someone is a professor, for example, we implicitly assume the person is probably also intelligent, absent-minded, and socially challenged. Stereotypes are formed to some extent from personal experience, but they are mainly provided to us through media images (e.g., movie characters) and other cultural vehicles. Consequently, stereotypes are shared bel iefs across an entire society and sometimes across several cultures, rather than beliefs that differ from one person to the next.

Historically, stereotypes were defined as exaggerations or falsehoods. This is often true, but some

feantres of the stereotype may be more likely to exist among its group members than in the general popu- lation.48 Still, stereotypes embellish or distort the kernels of truth and include other features that are false.

Not long ago, a hundred people congregated along a block of Broadway Avenue and started dancing to the beat of "Party Rock Anthem." Flash mobs aren't unusual in this section of midtown Manhattan, but the group took many observers by surprise because they were accountants from New Jersey. "Most people are like, ' I can't believe these are a bunch of accountants;· recalls partner Jim Bourke of WithumSmith+ Brown, the accounting firm where the flash mob participants are employed. Along w ith celebrating a recent merger, the event chipped away at old stereotypes by showing that accountants know how to have fun. "We play hard, and we work hard as well," said Christina Fessler, a 28-year-old CPA at Withum. "It really can be fun. And I think the era of the suit and tie at work every day is over."49

©Monkey Business Images/ Shutterstock

Chapter Three Perceiving Ourselves and Others in Organizations 77

Why People Stereotype People engage in stereotyping because, as a form of categorical thinking, it is usually a nonconscious "energy-saving" process that simplifies our understanding of the world. It is easier to remember feantres of a stereotype than the constellation of characteristics unique to everyone we meet. A second reason is that we have an innate need to understand and anticipate how others will behave. We don't have much information when first meeting someone, so we rely on stereotypes to till in the miss- ing pieces. The higher the perceiver's need for cognitive closure, the higher their reliance on stereotypes. 50

A third explanation for stereotyping is that it is motivated by the observer's own need for social identity and self-enhancement. Earlier in this chapter we explained that people define themselves by the groups to which they belong or have an emotional attachment. They are also motivated to maintain a positive self-concept. This combination of social identity and self-enhancement leads to the process of categorization, homogenization, and differentiation:51

Categorization. Social identity is a comparative process, and the comparison begins by catego- rizing people into distinct groups. By viewing someone (includi ng yourself ) as a Nova Scotian,

for example, you remove that person's individuality and, instead, see him or her a~ a prototypi-

cal representative of the group called Nova Scotians. This categorization then allows you to

distinguish Nova Scotians from people who live in, say, Ontario or Alberta.

Homogenization. To s implify the comparison process, we tend to think that people with in each g roup are very s imilar to each other. For instance, we think Nova Scotians collec- ti vely have similar attitudes and charac teristics, whereas Ontarians collectively have the ir own set of characteristics. Of course, every individual is un ique, but we often lose sight of this fact when thinking about our social identity and how we compare to people in other social groups.

Differentiation. Along with categorizing and homogenizing people, we tend to assign more favourable characteristics to people in our social identity groups than to people in other groups.52

This differentiation is motivated by self-enhancement because being in a "better" group produces higher self-esteem. Differentiation is often subtle, but it can escalate into a "good guy versus bad guy" contra~! when groups engage in overt conflict with each other. In other words, when out-group members threaten our self-concept, we are particularly motivated (often without our awareness) to assign negative stereotypes to them. Some research suggests that men have stron- ger differentiation biases than do women, but we all differentiate to some extent.

Problems with Stereotyping Everyone engages in stereotyping, but this process distorts perceptions in various ways. One distortion is that stereotypes do not accurately describe every per- son in a social category. The traditional accountant stereotype (boring, cautious, calculating) perhaps describes a few accountants, but it is certainly not characteristic of all, or even most, people in this profession. Nevertheless, once we categorize someone as an accountant, the stereotypic nonobservable features of accountants are transferred to that person, even though we have no evidence that the person

actual ly has those characteristics. A second problem with stereotyping is stereotype threat, a phenomenon whereby members of

a stereotyped group are concerned that they might exhibit a negative feature of the stereotype. This concern and preoccupation adversely affects their behaviour and performance, which often results in displaying the stereotype trait they are trying to avoid. 53 For example, women perform worse on math and science tests when sensitized to the generally false but widely held belief that women underper- form men in these subjects. Test scores among women are also lower when they are a smal l minority in a predominantly male class. Women achieve much higher scores when the gender stereotype or their minority status is not apparent, such as when taking the test with many women in the class.

Almost anyone can be affected by stereotype threat, but studies have particularly observed

it in some minori ty groups and in older people. Stereotype threat occurs because members of a stereotyped group anxiously avoid confi rming the undesi rable trait and try to push the negative image from their mind. These two cognitive activ ities divert energy and attention, which makes it more di fficult to perform the task well. The negative stereotype can also weaken self-efficacy; it is

78 Part Two Individual Behaviour and Processes

challenging to be confide nt in your ability when your group 's stereotype suggests that confide nce is misplaced.

A third proble m with stereotyping is that it lays the foundation for discriminatory attitudes and behaviour. Most of this perceptual bias occurs as unintentional (systemic) discrimination, whereby decision makers rely on stereotypes to establish notions of the " ideal" person in specific roles. A person who doesn't fit the ideal tends to receive a less favourable evaluation than someone who is compat- ible with the occupational stereotype. Systemic discrimination may partly explain why women are more likely than men to leave information technology careers. "Coming up through the technical ranks I have always felt that I had to work twice as hard to get equal recognition as my male counterparts,"

says a female information security special ist at the BBC in London. She points out that her male colleagues treat her as an equal. But their mistakes are usually quickly forgotten, whereas her errors receive more attention because they affirm the (false) stereotype that IT is more difficult for women.54

Unintentional systemic discrimination also affect~ employment opportunities and salaries. Consider the following example: Science faculty from several research-intensive American universities were given the

application materials of an undergraduate sntdent who was purportedly applying for a science laboratory manager job. Half of the faculty reviewed materials from a male applicant; the other half looked at materials from a female applicant. The male and female applicant materials were identical except for the name, yet the

male applicant received significantly higher ratings than the female applicant on competence and hireability. Furthermore, faculty members recommended an average salary of U.S. $30,238 for the male applicant but only $26,507 for the female applicant. Female faculty exhibited as much gender bia~ a~ the male faculty. 55

Worse than syste mic discrimination is intentional discrimination or prejudice, in which people

hold unfounded negative attitudes toward people belonging to a particular stereotyped group.56 Sys- temic d iscrimination is implicit, automatic, and unintentional, whereas intentional discrimination

deliberately puts the target person at an unfair disadvantage. It would be nice to believe that prejudice is disappearing, but unfortunately it still exists. As an example, a Calgary fire captain temporarily assigned to a different station noticed that three female firefighters were employed among the crew, and asked male crew members how they got "stuck with so many (expletives)" at their hall. When asked to clar ify, he repeated the obscenity against women. Initially fired for the remark, the captain was soon reinstated with a brief demotion and suspension. More recently, several hundred female RCMP officers filed a class actio n lawsuit, with evidence that their careers and personal health had suffered from years of gender-based discrimination and sexual harassment. The evidence was so overwhelming that the RCMP Commissioner, Bob Paulson, issued a lengthy public apology. 57

Women represent about 4 5 percent of the Canadian workforce and almost one-third of middle managers. Yet just a few years ago (20 1 0) they comprised only 12 percent of board members on Canadian publicly-traded (TSX) companies. Fortunately, w idespread attention and government initiatives have pushed against systemic discrimination, so women now represent about 20 percent of board members of TSX compan ies. The percentages of women on corporate boards are highest in Norway (46.7 percent), France (34.0 percent), and Sweden (33.6 percent). The lowest female representation on corporate boards occurs in the Middle East (about 1 percent) and Japan (3.5 percent)s 8

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Chapter Three Perceiving Ourselves and Others in Organizations 79

If stereotyping is such a problem, shouldn't we try to avoid this process altogether? Unfortunately,

it's not that simple. Most experts agree that categorical thinki ng (including stereotyping) is an auto- matic and nonconscious process. Special ized training programs can minimize stereotype activation to some extent, but for the most part the process is hardwired in our brain cells.59 Also remember that

stereotyping helps us in several valuable (although fallible) ways described earlier: minimizing mental

effort, filling in missing information, and supporting our social identity. 'The good news is that while it is very difficult to prevent the activation of stereotypes, we can minimize the

application of stereotypic information. In other words, although we automatically categorize people and assign stereotypic traits to them, we can consciously minimize the extent that we rely on that stereotypic

information. Later in this chapter, we identify ways to mi nimize stereotyping and other perceptual bia~s.

ATTRIBUTION THEORY Another widely-discussed percepntal phenomenon in organizational settings is the attr ibution process. 60

Attribution involves forming beliefs about the causes of behaviour or events. Generally, we perceive

whether an observed behaviour or event is caused mainly by characteristics of the person (internal factors) or by the environment (external factors). Internal factors include the person's abi lity or motivation, wherea~

external factors include resources, co-worker support, or luck. If someone doesn't show up for an important

meeting, for instance, we infer either internal attributions (the co-worker is forgetful, lacks motivation, etc.) or external attributions (traffic, a family emergency, etc.) to make sense of the person's absence.

People rely on the three attribution rules--consistency, distinctiveness, and consensus-to decide

whether someone's behaviour and performance are caused mainly by their personal characteristics or by environmental influences (see Exhibit 3.4).61 To help explain how these three attribution rules operate,

imagine a situation where an e mployee is making poor-quality products on a particular machine.

EXHIBIT 3.4 Attribution Theory Rules

Yes (high consistency)

Co nsistency

Did this person act this way in t his

situation in the past?

Yes (high consistency)

i Yes

(low distinctiveness)

D istinctiveness

Does this person act this way in other

situations?

No (high distinctiveness)

No (low consensus)

Consensus

Do other people act this way

in this situation?

Yes (high consensus)

80 Part Two Individual Behaviour and Processes

We would probably conclude that the employee Jacks ski ll or motivation (an internal attribution) if the

employee consistently makes poor-quality products on this machine (high consistency), the employee makes poor-quality products on other machines (low distinctiveness), and other employees make good- quality products on this machine (low consensus).

In contrast, we would conclude that there is something wrong with the machine (an external attribu- tion) if the employee consistently makes poor-quality products on this machine (high consistency), the employee makes good-quality products on other machines (high distinctiveness), and other employees make poor-quality products on this machine (high consensus). Notice that consistency is high for both internal and external attributions. This occurs because low consistency (the person's output qual ity on this machine is sometimes good and sometimes poor) weakens our confidence about whether the source of the problem is the person or the machine.

The attribution process is important because understanding cause-effect relationships enables us to work effectively with others and to assign praise or blame to them62 Suppose a co-worker didn't com- plete his or her task on a team project. You would approach this situation differently if you believed the co-worker was lazy or Jacked sufficient skill (an internal attribution) than if you believed the poor performance was due to Jack of time or resources available to the co-worker (an external attribution). Similarly, our respect for a leader depends on whether we bel ieve his or her actions are due to per- sonal characteristics or the situation. We also react differently to attributions of our own behaviour and performance. Students who make internal attributions about their poor grades, for instance, are more likely to drop out of their programs than if they make external attributions about those grades63

Attribution Errors We are strongly motivated to assign internal or external attributions to some- one's behaviour, but this perceptual process is also susceptible to errors. One such error is self-serving bias-the tendency to attribute our failures to external causes more than internal causes, whi le credit- ing our successes more to internal than external factors.64 Simply put, we take credit for our successes and blame others or the situation for our mistakes. In annual reports, for example, executives mainly refer to their personal qualities as reasons for the company's successes and to competitors, unexpected legislation, and other external factors as reasons for the company's failures. Similarly, a study of entre- preneurs overwhelmingly cited situational causes for their business failure (e.g., funding, the economy) wherea~ they understated personal causes such as Jack of vision and social skills65

Why do people engage in self-serving bia~? Fictional New York crime investigator Philo Vance gave us the answer nearly a century ago when he quipped: "Bad luck is merely a defensive and self-consoling synonym for inefficiency.'>M In other words, self-serving bias is associated with the self-enhancement pro- cess described earlier in this chapter. By pointing to external causes of their own fai lures (e.g., bad luck) and internal causes of their successes, people generate a more positive (and self-consoling) self-concept.

Another widely studied attribution error is fundamenta l attribution error (also called corre- spondence bias), which is the tendency to overemphasize internal causes of another person's behav-

iour and to discount or ignore external causes of their behaviour.67 According to th is perceptual error, we are more likely to attribute a co-worker's late arrival for work to Jack of motivation rather than to situational constraints (such as traffic congestion). The explanation for fundamental attri- bution error is that observers can' t easi ly see the external factors that constrain another person's behaviour. Also, people like to think that human beings (not the s ituation) are the prime sources of their behaviour. However, fundamental attribution error might not be as common or severe as was previously thought. There is evidence, for instance, that people from Asian countries are less likely to engage in th is bias because those cultures emphasize the context of behaviour more than do West- ern cultures6 8 In any case, a rev iew of past studies suggests that fundamental attribution error isn't very noticeable in any society.69

SELF-FULFILLING PROPHECY Self-fulillling prophecy occurs when our expectations about another person cause that person to act in a way that is consistent with those expectations. In other words, our perceptions can influence real ity.

Exhibit 3.5 illustrates the four steps in the self-fulfill ing prophecy process using the example of a

Chapter Three Perceiving Ourselves and Others in Organizations

EXHIBIT 3.5 The Self -Fulfilling Prophecy Cycle

4. Employee's behaviour becomes more consistent with the supervisor's initial

expectations

1. Supervisor forms expectations about the

employee

3. Supervisor's behaviour affects the employee's ability and

motivation (self<onfidence)

2. Supervisor's expectations affect his/her behaviour

toward the employee

8 1

supervisor and a subordinate70 The process begins when the supervisor forms expectations about the employee's future behaviour and performance. These expectations are sometimes inaccurate because first impressions are usually formed from limited information. The supervisor's expectations influence his or her behaviour toward employees. In particular, high-expectancy employees (those expected to do well) receive more emotional support through nonverbal cues (e.g., more smiling and eye contact from the boss), more frequent and valuable feedback and reinforcement, more chal lenging goals, better training, and more opportunities to demonstrate good performance.7 1

The third step in self-fulfill ing prophecy includes two effects of the supervisor's behaviour on the

employee. First, through better training and more practice opportunities, a high-expectancy employee learns more skills and knowledge than does a low-expectancy employee. Second, the high-expec- tancy employee becomes more self-confident, which results in stronger motivation and wi llingness

to set challenging goals.72 In the final step, high-expectancy employees have higher motivation and better skills, resulting in better performance, while the opposite is true of low-expectancy employees.

Self-fulfilling prophecy has been observed in many contexts. In one study, four Israeli Defence

Force combat command course instructors were told that one-third of the incoming trainees had high command potential, one-third had normal potential, and the rest had unknown potential. The trainees had been randomly placed into these categories by the researchers, but the instructors were led to believe that the information they received was accurate. Consistent with self-fulfill ing prophecy, the high-expectancy soldiers performed significantly better by the end of the course than did the trainees in the other groups. They also had more favourable attitudes toward the course and the instructor's leader- ship effectiveness. Other studies have reported that the initial expectations managers and teachers have of their employees and students tend to influence the self-perceptions (particularly self-efficacy) of those individuals and can lead to higher or lower performance. An analysis of dozens of leader inter- vention studies over the years found that self-fulfill ing prophecy is one of the most powerful leadership effects on follower behaviour and performance.73

Contingencies of Self-Fulfilling Prophecy The self-fulfilling prophecy effect is stronger in some situations than in others. It has a stronger effect at the beginning of a relationship, such as when employees are first hired. It is also stronger when several people (rather than just one person) hold the same expectations of the individual. In other words, we might be able to ignore one person's doubts

82 Part Two Individual Behaviour and Processes

about our potential but not the collective doubt~ of several people. The self-fulfilling prophecy effect is also stronger among people with a history of low achievement. These people tend to have lower self- esteem, so they are more easily influenced by others' opinions of them.74

The main lesson from the self-fulfilling prophecy literantre is that leaders need to develop and main- tain a positive, yet realistic, expectation toward all employees. This recommendation is consistent with the emerging philosophy of positive organizational behaviour , which suggests that focusing on the positive rather than negative aspect~ of life will improve organizational success and individual well-being. As an example, communicating hope and optimism is so important that it is identified as one of the critical suc- cess factors for physicians and surgeons.75 Training programs that make leaders aware of the power of positive expectations seem to have minimal effect, however. Instead, generating positive expectations and hope depend on a corporate culture of support and learning. Hiring supervisors who are inherently opti- mistic toward their staff is another way of increa~ing the incidence of positive self-fulfilling prophecies.

OTHER PERCEPTUAL EFFECTS Self-fulfilling prophecy, attribution, and stereotyping are among the most common perceptual pro- cesses and biases in organizational settings, but there are many others. Four additional biases that have received attention in organizational settings are briefly described below.

Halo Effect The halo effect occurs when our general impression of a person, usually based on one prominent characteristic, distorts our perception of other characteristics of that person.76 If a supervi- sor who values punctuality notices that an employee is sometimes late for work, the supervisor might form a negative overal l opinion of the employee and evaluate that person's other traits unfavourably as well. The halo effect is most likely to occur when the manager lacks solid information--or isn't moti- vated enough to seek out information- about the employee's performance on specific tasks. Instead, the manager relies on a general impression of the employee to fi ll in the missing information.

False-Consensus Effect The false-consensus effect (also called similar-to-me effect) occurs when people overestimate the extent to which others have similar beliefs or behaviours to their own.17 Employees who are thinking of quitting their jobs overestimate the percentage of their co-workers who are also think- ing about quitting, for example. There are several explanations for the false-consensus effect. One is that we are comforted by the belief that others are similar to us, particularly regarding less acceptable or divisive behaviour. Put differently, we perceive that "everyone does it" to reinforce our self-concept regarding behaviours that do not have a positive image (e.g., quitting our job, parking illegally, etc.).

A second explanation for the false-consensus effect is that we interact more with people who have simi lar views and behaviours. This frequent interaction causes us to overestimate how common those views and behaviours are in the entire organization or society. Third, as noted earl ier in this chapter, we are more likely to remember information that is consistent with our own views and selectively screen out information that is contrary to our beliefs. Final ly, our social identity process homogenizes people within groups, so we tend to think that everyone in that group has similar opinions and behav- iour, including the false-consensus attitude or behaviour.

Primacy Effect The primacy effect is our tendency to quickly form an opinion of people on the basis of the first information we receive about them.78 It is the notion that first impressions are la~ting impres- sions. This rapid perceptual organization and interpretation occurs because we need to make sense of the given situation and, in particular, to trust others. The problem is that first impressions-particularly negative first impressions-are difficult to change. After categorizing someone, we tend to select subsequent infor- mation that supports our first impression and screen out information that opposes that impression.

Recency Effect The recency effect occurs when the most recent information dominates our percep- tions.79 This perceptual bias is most common when people (especially those with limited experience) are making an evaluation involving complex information. For instance, when auditors digest large volumes of information in forming a judgment about financial documents, the most recent information received prior to rendering their decision tends to get weighted more heavily than information received at the beginning

Chapter Three Perceiving Ourselves and Others in Organizations 83

of the audit. Similarly, when supervisors evaluate the performance of employees over the previous year, the most recent performance information dominates the evaluation because it is the most ea~ily recalled.

Improving Perceptions We can't bypa~s the perceptual process, but we should try to minimize perceptual biases and distortions. Three potentially effective ways to improve perceptions include awareness of perceptual biases, self-awareness, and meaningful interaction.

AWARENESS OF PERCEPTUAL BIASES One of the most obvious and widely practised ways to reduce perceptual bia~es is by knowing that they exist. For example, diversity awareness training tries to minimize discrimination by making people aware of systemic discrimination a~ well a~ prejudices that occur through stereotyping. Tllis training also attempt~ to dispel myths about people from various cultural and demographic groups. Awareness of percepntal bia~es can reduce these bia~es to some extent by making people more mindful of their thoughts and actions. How- ever, awareness training has only a limited effect.80 One problem is that teaching people to reject incorrect ste- reotypes ha~ the unintended effect of reinforcing rather than reducing reliance on those stereotypes. Another problem is that diversity training is ineffective for people with deeply held prejudices against those groups.

Self-fulfilling-prophecy awareness training ha~ also failed to Jive up to expectations.81 This training approach informs managers about the existence of the self-fulfilling prophecy effect and encourages them to develop more positive rather than negative expectations. Unfortunately, research ha~ found that man- agers continue to engage in negative self-fulfilling prophecies after they complete the training program.

Debating Point:

DO WE NEED DIVERSITY TRAINING PROGRAMS?82

Diversity training programs are well-entrenched bastions in the battle against workplace dis- crimination. In most programs, participants are reminded to respect cultural and gender dif- ferences. They also learn common assumptions and biases that people make about other demographic groups. When companies lose discrimination cases, one of their first requirements is to introduce diversity training.

In spite of its good intentions, diversity train ing might not be as useful as one would hope. One concern is that most sessions are mandatory, so employees aren't really com- mitted to their content. Biases and prejudices are deeply anchored, so a half-day lecture and group chat on diversity likely won't change employee perceptions and behaviour. Even if the programs motivate employees to be more tolerant of others and to avoid stereotypes, these good intentions evaporate quickly unless the corporate culture embraces diversity.

Perversely, the mere presence of diversity training may have the opposite effect to its good intentions. There is some evidence that discussing demographic and cultural differ- ences increases rather than decreases stereotyping. Students in one study showed more bias against elderly people after watching a video encouraging them to be less biased against older people! Diversity training programs might also produce defensive or stressful emotions among participants. One program for incoming students at the University of Delaware was can- celled after white students complained it made them feel racist and gay students felt pressured to reveal their sexual orientation.

Studies also report that diversity awareness programs create an illusion of fairness. Dis- advantaged employees in companies with these programs are more likely to believe their employer doesn't engage in unfair discrimination. However, this perception of fa irness makes employees less aware of incidents where the company does engage in unfair discrimination.

84 Part Two Individual Behaviour and Processes

IMPROVING SELF-AWARENESS A more successful way to minimize perceptual biases is by increasing self-awareness.83 We need to

become more aware of our belief.~. values, and attitudes and, from that insight, gain a better understand- ing of biases in our own decisions and behaviour. This self-awareness tends to reduce perceptual biases

by making people more open-minded and nonjudgmental toward others. Self-awareness is equally important in other ways. The emerging concept of authentic leadership emphasizes self-awareness a~ the first step in a person's ability to effectively lead others (see Chapter 12). Essentially, we need to understand our own values, strengths, and biases as a foundation for building a vision and leading others toward that vision.84

But how do we become more self-aware? One approach is to complete formal tests that indicate any implicit biases we might have toward others. The Implicit Association Test (IAT) is one such instru-

ment. Although the accuracy of the IAT is being hotly debated by scholars, it attempts to detect subtle racial, age, gender, disability, and other forms of bias by a~sociating positive and negative words with

specific groups of people.85 For example, one recent study reported that most of the 176,935 people completing the IAT test had a strong science-is-male stereotype, even in subdisciplines where women represent a large percentage of the profession. Most people completing that test a~sociated science with men. Many people are much more cautious about their stereotypes and prejudices after discovering that, for example, their test results show a personal bias against older people or individuals from different ethnic backgrounds.86

Another way to reduce perceptual biases through increased self-awareness is by applying the Johar i Window.87 Developed by psychologists Joseph Luft and Harry Ingram (hence the name "Johari"), this model of self-awareness and mutual understanding divides information about you into four "windows"-open, blind, hidden, and unknown-ba~ed on whether your own values, beliefs, and experiences are known to you and to others (see Exhibit 3.6). The open area includes information about you that is known both to you and to others. The blind area refers to information that is known

to others but not to you. For example, your colleagues might notice that you are self-conscious and awkward when meeting the company chief executive, but you are unaware of this fact. Information known to you but unknown to others is found in the hidden area. Finally, the unknown area includes your values, beliefs, talents, and behaviours that aren't known to you or others.

EXHIBIT 3.6 Johari Window Model of Self -Awareness and Mutual Understanding

Known to ~ others <II s::. 0 s <II 5 Ill

.2 u .!II

Unknown to 0 others

Feedback from others

Known to self

Unknown to self

Sourr:e: Based on J. Luft. Of Human lnterae-tjon. (Palo Alto. CA: National Press Books. I 969)

Chapter Three Perceiving Ourselves and Others in Organizations 8 5

The main objective of the Johari Window is to increase the size of the open area so that both you

and your colleagues are more aware of your underlying beliefs, values, and perceptual bia~es. This is partly accomplished by reducing the hidden area through disclosure-informing others of your personal

characteristics that may influence the work relationship. The open area also increases through feedback from others about your behaviour. Feedback reduces your blind area because, according to recent studies, people near you are good sources of information about many (but not all) of your traits and behaviours.88

Finally, the combination of disclosure and feedback occa~ionally produces revelations about you in the unknown area.

How strong is your perspective taking? You can d iscover your level of pe rspe ctive taking (cognitive empathy) by completing this self-asse ssme nt in Connect.

MEANINGFUL INTERACTION The Johari Window rel ies on direct conversations about ourselves and others, whereas meaning/ill inter- action is a more indirect, yet potentially powerful, approach to improving self-awareness and mutual

understanding.89 Meaningful interaction is any activity in which people engage in valued (meaningful, not trivial) activities . This process is founded on the contact hypothesis, which states that, under spe- cific conditions, people who interact with each other will be less perceptually biased because they have

a more personal understanding of the other person and their group.90 Simply spending time with mem- bers of other groups can improve this understanding to some extent. However, meaningful interaction is

strongest when people work closely and frequently with each other on a shared goal that requires mutual cooperation and reliance. Furthermore, everyone should have equal status in that context, should be

engaged in a meaningful ta~k. and should have positive experiences with each other in those interactions. Meaningful interaction occurs when executives work beside front line staff or when any employee

performs tasks with co-workers from other parts of the organization. However, meaningful interaction events sometimes occur naturally. As an example, several years ago executives at Daishowa-Marube-

ni's Peace River Pulp Division in Alberta were working through difficult discussions with environ-

mentalists . Dur ing those meetings, the river threate ned to flood, so everyone got involved sandbagging the dyke. One Peace River Pulp executive vividly recalls the occasion because he was sandbagging

alongside one of the most active environmental critics. "We both looked at one another and I think we

both real ized we had more in common than we may have thought," he says.91

Understand ing and empathizing with employees is a critica l leadersh ip duty at Scripps Health, one of America's most successful health organizations. •psychological distance is extremely dangerous for leaders,'' says Scripps CEO Chris Van Gorder (shown in this photo). ·when you lose perspective and start to think you're something more than just another member of the team, you undercut any progress you might have been making in building trust and affection between yourself and your workforce."

Van Gorder devotes almost half of his time to interacting with Scripps' 14,000 employees in Southern California through training future leaders, doing weekly rounds, and occasionally working alongside staff in front line roles. ·Roll up your sleeves and get your hands dirty," Van Gorder advises. He learned the value of this meaningful interaction many years ago as vice-president of support services at another hospital. "I didn't know how [the cleaning staff] did their work so I went down and actually started running the floor buffers with them," Van Gorder recalls. He adds that the employees enjoyed watching him as the buffer machine was bucking all over the floor.

Van Gorder also emphasizes that ·~·s important to show your empathy, don't merely feel it. Sometimes leaders mistakenly project a stoic persona, but by not demonstrating empathy leaders come across as cold and uncaring. This creates distance in relationships and undermines connection."92

© ZUMA Press lnc/Aiamy Stock Photo

(continued)

86 Part Two Individual Behaviour and Processes

(continued)

Meaningful interaction reduces dependence on stereotypes because we gain better knowledge about individuals and experience their unique attributes in action. Meaningful interaction also poten- tially improves empathy toward others. Empathy refers to understanding and being sensitive to the feel ings, thoughts, and situations of others.93 People empathize when they visual ize themselves in the other person's place as if they are the other person. This perceptual experience is cognitive, emotional, and experiential. In other words, empathy occurs when we understand the other person's situation,

feel his or her emotions in that context, and to some degree react to those thoughts and feelings a~ the other person does. Empathizing reduces attribution errors by improving our sensitivity to the external causes of another person's performance and behaviour. A supervisor who imagines what it's like to be a single mother, for example, would become more sensitive to the external causes of lateness and other events among such employees. However, trying to empathize with others without spending time

with them might actual ly increase rather than reduce stereotyping and other perceptual biases.94

How strong is your emotional empathy? You can discover your level of emotional empathy by completing this self-assessment in Connect.

Global Mindset: Developing Perceptions across Borders

Rakuten Inc. is Japan's most popular e-commerce website and one of the ten largest Internet companies in the world. The Tokyo-based firm is rapidly expanding beyond Japanese borders, which demands a more global focus. "In the online business, which

easily crosses national boundaries, domestic companies are not our sole rivals," explains Rakuten CEO Hiroshi Mikitani. Therefore, Mikitani recently made Engl ish the company's official in-house

Chapter Three Perceiving Ourselves and Others in Organizations 87

language. Even more importantly, Rakuten is seeking out job applicants with international experience and an outlook to match. "Since we declared our intention to make English our offic ial language, we've had more applicants that clearly have a global mindset," says Mikitani95

Global mindset has become an important attribute of job applicants at Rakuten and other com- panies with international operations. A global mindset refers to an ind ividual's ability to perceive, know about, and process information across cultures. It includes (a) an awareness of, openness to, and respect for other views and practices in the world, (b) the capacity to empathize and act effectively across cultures, (c) the ability to process complex information about novel environ- ments, and (d) the ability to comprehend and reconc ile intercultural matters with multiple levels

of th inking. 96

Let's look at each of these features. First, a global mindset emerges as people develop more of a global than local or parochial frame of reference about their business and its environment. They also have more knowledge and apprec iation of many cultures and do not judge the competence of others by their national or ethnic origins. Second, global mindset includes understanding the men- tal models held by colleagues from other cultures as well as their emotional experiences in a g iven situation. Furthermore, this empathy translates into effective use of words and behaviours that are compatible with the local culture. Third, people with a strong global mindset are able to process and analyze large volumes of information in new and diverse s ituations. Finally, global mindset includes the capabi lity to qu ickly develop useful mental models of situations, particularly at both a local and global level of analysis.

A global mindset offers tremendous value to organizations as well a~ to the employee's career opportunities.97 People who develop a global mindset form better relationships across cultures by understanding and showing respect to distant colleagues and partners. They can sift through huge volumes of ambiguous and novel information transmitted in multinational relationships. They have

a better capacity to form networks and to exchange resources more rapidly across borders. They also develop greater sensitivity and respond more quickly to emerging global opportunities.

DEVELOPING A GLOBAL MINDSET Developing a global mindset involves improving one's perceptions, so the practices described earlier regarding awareness, self-awareness, and meaningful interaction are relevant. As with most percep- tual capabilities, a global mindset begins with self-awareness-understanding one's own beliefs, values, and attitudes. Through self-awareness, people are more open-minded and nonjudgmental when receiving and processing complex information for decision making. In addition, companies develop a global mindset by giving employees opportunities to compare their own mental models with those of co-workers or partners from other regions of the world. For example, employees might participate in online forums about how well a product's design or marketing strategy is received in

Canada versus India or Chile. When companies engage in regular discussions about global competi- tors, suppliers, and other stakeholders, they eventually move the employee's sphere of awareness toward that global level.

A global mindset develops through better knowledge of people and cultures. Some of that knowl- edge is acquired through formal programs, such as d iversity training, but deeper absorption results from immersion in those cultures.98 Just as executives need to experience front line jobs to better understand their customers and employees, employees also need to have meaningful interaction with colleagues from other cultures in their cultural settings. The more people embed themselves in the local environment (such as following local practices, eating local food, and using the local language), the more they tend to understand the perspectives and attitudes of their colleagues in those cultures.

IBM's Corporate Service Corps program is a case in point. Each year about 500 IBMers from

dozens of countries are organized into small teams and dispatched to developing countries. For one month, these diverse teams assist local people on an economic or social development project. "The IBM Corporate Service Corps program combines the tenets of transformational leadership,

88 Part Two Individual Behaviour and Processes

values-based culture, and a global mindset- elements that organizations need to develop and instill in their employees as they aspire to be successful global players," says IBM's Malaysia marketing director, Eric Wong.99

€:ts-o Global Connections 3.1:

DEVELOPING A GLOBAL MINDSET THROUGH IMMERSION100

Jessica Grogan usually audits financial statements for clients in Buffalo, New York. But the EY (formerly called Ernst & Young) employee recently spent one week in Serra do ltajai National Park in Brazil with nine other EY colleagues from North and South America. Their tasks included providing strategic planning to a local eco-friend ly hotel and an environmental consultancy company and helping scientists measure the diversity of birds in the park.

Grogan participated in one of EY's Corporate Responsibility Sabbaticals, which provide immersive volunteer experiences, such as providing pro bono assistance for small businesses in developing countries. "The program helps our professionals grow into better leaders and teammates as they expand their global mindset by immersing themselves in a new culture alongside their colleagues; explains Deborah K. Holmes, EY's Americas director of corporate responsibility.

Jessica Grogan agrees that her experiences in Brazil were transformational. " I think the best thing I brought back was the g lobal mindset I developed," she says. Of particular value was the opportunity to work with EY colleagues and clients from different backgrounds. "Just to get that diversity of thought, diversity of ideas and being able to bring it back, was the most rewarding part."

Professional services firm EY helps its employees develop a global mindset through global mobility programs that immerse participants in an unfamiliar cultu re together with colleagues from diverse backgrounds.

© Ernst & Young LLP

Chapter Three Perceiving Ourselves and Others in Organizations 89

Chapter Summary

L01 Describe the elemen ts of self-concept and explain how each affects an individual's behaviour and well-being.

Self-concept includes an individual"s self-beliefs and self-evaluations. It ha~ three structural characteristics~mplexity, consistency, and clarity-all of which influence employee well-being, behaviour, and performance. People are inherently motivated to promote and protect their self-concept (self-enhancement) and to verify and maintain their ex isting self-concept (self-verification). Self-evaluation consists of self-esteem, sel f-efficacy, and locus of control. Self-concept also consist~ of both personal identity and social identity. Social identity theory explains how people define themselves by the groups to which they belong or have an emotional attachment.

L02 Outline the perceptual p rocess and discuss the effects of categorical thinking and mental models in that process. Perception involves selecting, organizing, and interpreting information to make sense of the world

around us. Perceptual organization applies categorical thinking-the mostly nonconscious process of organizing people and objects into preconceived categories that are stored in our long-term memory. Mental models- knowledge structures that we develop to describe, explain, and predict the world around us-also help us make sense of incoming stimuli.

L03 Discuss how stereotyp ing, attribution, and the self-fulfilling prophecy, halo, false-consensus, p rimacy, and recency effects influence the perceptual process.

Stereotyping occurs when people assign traits to others ba~ed on their membership in a social cate- gory. This assignment economizes mental effort, fills in missing information, and enhances our self-concept, but it also lays the foundation for stereotype threat a~ well as systemic and intentional discrimination. The attribution pro- cess involves deciding whether an observed behaviour or event is caused mainly by the person (internal factors) or the environment (external factors). Attributions are decided by perceived consistency, distinctiveness, and consensus of the behaviour. This process is subject to self-serving bia~ and fundamental attribution error. A self-fulfilling proph- ecy occurs when our expectations about another person cause that person to act in a way that is consistent with those expectations. This effect is stronger when employees first join the work unit, when several people hold these expecta- tions, and when the employee has a history of low achievement. Four other perceptual errors commonly observed in organizations are the halo effect, false-consensus effect, primacy effect, and recency effect.

L04 Discuss three ways to improve perceptions, with specific application to organizational situations.

One way to minimize perceptual biases is to become more aware of their existence. Awareness of these biases makes people more mindful of their thought~ and actions, but this training sometimes reinforces rather than reduces reliance on s tereotypes and tends to be ineffective for people with deeply held prejudices. A second strategy is to become more aware of biases in our own decisions and behaviour. Self-awareness increa~es through formal tests such as the IAT and by applying the Johari Window, which is a process in which others pro- vide feedback to you about your behaviour, and you offer disclosure to them about yourself. The third strategy is meaningful interaction, which applies the contact hypothesis that people who interact will be Jess prejudiced or perceptually bia~ed toward one another. Meaningful interaction is strongest when people work closely and fre- quently with relatively equal status on a shared meaningful task that requires cooperation and reliance on one another. Meaningful interaction may improve empathy, which is a person's understanding and sensitivity to the feelings, thoughts, and s ituations of others.

LOS Outline the main features of a global mindset and justify its usefulness to employees and organizations. A global mindset refers to an individual's abi lity to perceive, know about, and process information

across cultures. This includes (I) an awareness of, openness to, and respect for other views and practices in the world: (2) the capacity to empathize and act effectively across cultures; (3) an ability to process complex informa- tion about novel environments: and (4) the ability to comprehend and reconcile intercultural matters with multiple levels of thinking. A global mindset enables people to develop better cross-cultural relationships, to digest huge volumes of cross-cultural information, and to identify and respond more quickly to emerging g lobal opportunities. Employees develop a global mindset through self-awareness, opportunities to compare their own mental models with people from other cultures, formal cross-cultural training, and immersion in other cultures.

90 Part Two Individual Behaviour and Processes

Key Terms attribu tion process

categorical thinking

confirmation bias

contact hypothesis

empathy

false-consensus effect

fundamental attribution error

global mindset halo efl'ect

J ohari Window

locus of con trol

mental models

percep tion

positive organizational behaviour

p rimacy effect recency efl'ect

selective attention

self-concept

self-eflicacy

self-enhancement

self-fulfi lling prophecy

self-serving bias

self-verification

social identity theory

stereotype th reat

stereotyping

Critical Thinking Questions 1. You are manager of a district that has just hired several recent university and college graduates. Most of these

people are starting their ftrs t fu ll-time job, although most or all have held part-time and summer positions in the past. They have general knowledge of their particular ski ll area (accounting, engineering, marketing, etc.) but know relatively little about specific business practices and developments. Explain how you would nurture the self-concepts of these new hires to strengthen their performance and maintain their psychological well- being. Also explain how you might reconcile the tendency for self-enhancement while preventing the new employees from fom1ing a negative self-evaluation.

2. Do you deftne yourself in terms of the school you attend? Why or why not? What are the implications of your answer for your university or college?

3. A high-performance company has launched a "total focus" initiative that requires all employees to g ive complete attention and dedication to the company's growth and success. In an email to all staff members, the CEO wrote: "We live in a competitive world, and only those businesses whose employees give their total focus to the business will survive. As such, we are offering a generous severance to employees leaving because they can't devote 110 percent to this firm." The company announced that it will invest heavily in employee training and career development, but employees who hold second jobs or have side businesses will be a~ked to leave. Discuss the company's "total focus" initiative and its consequences from the perspective of employee self-concept complexity, consistency, and clarity.

4 . Several years ago, senior executives at Canadian energy company CanOi l wanted to acquire an explora- tion company (HBOG) that was owned by an American energy company, AmOil. Rather than face a hostile takeover and unfavourable tax implications, CanOil 's two top executives met wi th the CEO of Am Oil to d iscuss a friendly exchange of stock to carry out the transaction. Am Oil's chief executive was unaware of CanOil's plans, and as the meeting began, the AmOil executive warned that he was there merely to listen. The CanOi l executives were confident that Am Oil wanted to sell HBOG because energy legis lation at the time made HBOG a poor investment for A mO il. AmO il's CEO remained silent for most o f the meeting, which CanOi l executives interpreted as an implied agreement to proceed to buy AmOil s tock on the market. But when CanOi l launched the stock purchase a month later, AmOil's CEO was both surprised and o utraged . He thought he had given the Can Oil executives the cold shoulder, remain ing silent to show his lack of interest in the deal. The misunderstandi ng nearly bankrupted CanOil because Am Oil reacted by protecting its stock. What perceptual problem(s) likely occurred that led to this misunderstand ing?

5. What mental models do you have about attending a lecture in your program? Are these mental models help- ful? Could any of these mental models hold you back from achieving the full beneftt of the lecture?

Chapter Three Perceiving Ourselves and Others in Organizations 9 1

6. During a diversity management session, a manager suggests that stereotypes are a necessary part of working with others. "I have to make assumptions about what's in the other person's head, and stereotypes help me do that," she explains. "It's better to rely on stereotypes than to enter a working relationship with someone from another culture without any idea of what they believe in!" Discuss the merits of and problems with the manager's statement.

7. Describe how a manager or coach could use the process of self-fulfilling prophecy to enhance an individual 's performance.

8. Self-awareness is increasingly recognized as an important ingredient for effective leadership. Suppose that you are responsible for creating a leadership development progran1 in a government organization. What activities or processes would you introduce to help participants in this progran1 constructively develop better sel f-awareness of their personality, values, and personal biases?

9 . Almost everyone in a college or university business program has developed some degree of global mindset. What events or activities in your life have helped to nurture the g lobal mindset you have devel- oped so far? What actions can you take now, while still attending school, to further develop your g lobal mind set?

Case Study:

HY DAIRIES LTD.

by Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada)

Syd Gi lman read the latest sales figures with a great deal of satisfaction. The vice-president of marketing at Hy Dairies Ltd., a large Canadian milk products manufacturer, was pleased to see that the marketing campaign to improve sagging sales of Hy's gourmet ice cream brand was working. Sales volume and market share of the prod- uct had increa~ed signi ficantly over the past two quarters compared with the previous year.

The improved sales of Hy's gourmet ice crean1 could be credited to Rochelle Beauport, who was assigned to the gourmet ice cream brand last year. Beau port had joined Hy less than two years ago as an assistant brand manager after leaving a s imilar job at a food products firm. She was one of the few nonwhite women in marketing management at Hy Dairies and had a promising career with the company. Gi lman was pleased with Beau port's work and tried to let her know this in the annual performance reviews. He now had an excellent opportunity to reward her by offering her the recently vacated position of marketing research coordinator. Although technically only a lateral transfer with a modest salary increase, the marketing research coordinator job would give Beauport broader experience in some high-profile work, which would enhance her career with Hy Dairies. Few people were aware that Gi lman's own career had been boosted by working as marketing research coordinator at Hy sev- eral years earlier.

Rochelle Beauport had also seen the latest sales figures on Hy's gourmet ice cream and was expecting Gilman's call to set up a meeting that morning. Gilman began the conversation by briefly mentioning the favour- able sales figures, and then explained that he wanted Beauport to take the marketing research coordinator job. Beauport was shocked by the news. She enjoyed brand management and particularly the challenge involved with controlling a product that directly affected the company's profitability. Marketing research coordinator wa~ a technical support position-a "backroom" job--far removed from the company's bottom-line activities. Marketing research was not the route to top management in most organizations, thought Beauport. She had been sidel ined.

After a long si lence, Beauport managed a weak "Thank you, Mr. Gi lman." She wa~ too bewi ldered to protest. She wanted to collect her thoughts and reflect on what she had done wrong. Also, she did not know her boss well enough to be openly critical.

Gilman recogn ized Beauport's surprise, which he naturally a~sumed was her positive response to hearing of this wonderful career opportunity. He, too, had been delighted several years earlier about his temporary transfer to marketing research to round out his marketing experience. "This move will be good for both you and Hy Dair- ies," said Gilman, as he escorted Beauport from his office.

92 Part Two Individual Behaviour and Processes

Beauport was preoccupied with several tasks that afternoon, but was able to consider the day's events that evening. She was one of the top women and few minorities in brand management at Hy Dairies and feared that she was being sidelined because the company didn' t want women or nonwhite people in top management. Her previ- ous employer had made it quite clear that women "couldn't take the heat" in marketing management and tended to place them in technical support positions after a brief term in lower brand management jobs. Obviously, Syd Gilman and Hy Dairies were following the san1e gan1e plan. Gilman's comments that the coordinator job would be good for her was just a nice way of saying that Beauport couldn't go any further in brand management at Hy Dairies.

Beau port now faced the difficult dec is ion of whether to confront Gilman and try to change Hy Dairies' sexist and possibly racist practices or to leave the company.

Discussion Questions

1. Apply your knowledge of stereotyping and self-concept to explain what went wrong here.

2 . What other perceptual error is apparent in this case study?

3. What can organizations do to minimize misperceptions in these types o f situations?

Web Exercise:

DIVERSITY & STEREOTYPING ON DISPLAY IN CORPORATE WEBSITES

Purpose This exerc ise is designed to help you diagnose evidence of diversity and stereotyping in corporate websites.

Materials Students need to complete their research for this activity prior to class, including selecting one or more large or medium-sized public or private organizations and retrieving san1ple images of people from the organization's website.

Instructions The instructor may have students work alone or in groups for this activity. Students will select one or more large or medium-sized public or private organizations. Students will closely exan1ine images in the selected company's website in terms of how women, vis ible minorities, people with disabilities, Indigenous peoples, and older employees and clients are portrayed. Specifically, students should be prepared to discuss and provide details in class regarding: l. The percentage of images showing (i.e., visual representations of) women, vis ible minorities, people with

disabilities, Indigenous peoples, and older employees and clients. Students should also be sensitive to the s ize and placement of these images in the website or documents therein.

2. The roles in which women, visible minorities, people with disabilities, Indigenous peoples, and o lder employees and clients are depicted. For example, are women shown more in traditional or non-traditional occupations and roles in these websites?

3. Pick one or more of the best examples of diversity on display and one s tereotypic image you can find fro m the website to show in class, either in printed form, or as a web link that can be displayed in class.

Self-Assessments for Chapter 3

SELF-ASSESSMENT NAME

How much does work define your self-concept?

DESCRIPTION

Work is part of our lives. Some people view work a.'i central to their identity as individuals. whereas others consider \.\'Ork to be secondary to other life interesL~. This seJf .. a...;sessment estimates the extent to which work is central to your self·concept.

Chapter Three Perceiving Ourselves and Others in Organizations 93

I SELF-ASSESSMENT NAME -=r DESCRIPTION How much general self-efficacy do you have?

What is your locus of control?

How much perceptual structure do you need ?

How strong is your perspective taking (cognitive e mpathy)?

How strong is your emotional empathy?

Self-efficacy refers to a person's belief that he or she ha'i the ability. motivation. and re.'iources to complete a ta.'ik successfully. Although self-efficacy is often situation· specific. people also develop a more gener.tl self-efficacy if they perform tasks in a variety of situations. This self-assessment estimate.'i your gener.tl self-efficacy.

Locus of control is one component of se]f .. ev-.tluation. which is part of an individual's self-concept. It is a person's gener.tl belief about the amount of control he or she ha'i over li fe event'i. This self-assessment estimates the extent to which you have an internal or external locus-of·control.

Some people have a greater need than do others to q uickly or completely "make sense" of things around them. This personal need for perceptual structure relate.'i to selective attention as well as perceptual organization and interpretation. This self-assessment estimates your personal need for perceptual structure.

Empathy refers to a person's understanding of and sensitivity to the feelings. thought,. and situation of others. The "understanding" part of empathy is called perspective taking or cognitive empathy. It refers to a rational understanding of another person's c ircumstances. This self-assessment estimates how well you cognitiveJy understand another person•s situational and individual circumstance.'i.

Empathy refers to a person's understanding of and sensitivity to the feelings. thought'i. and situation of others. The "sensitivity" part of empathy is called emotional empathy. It refers to experiencing the feelings of the other person. This seJf .. assessment estimates how well you are able to experience the emotions or feel ings of another person.

CHAPTER4

Workplace Emotions, Attitudes, and Stress

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Explain how emotions and cognition (conscious reasoning) influence attitudes and behaviour.

L02 Discuss the dynamics of emotional labour and the role of emotional intelligence in the workplace.

L03 Summarize the consequences of job dissatisfact ion as well as strategies to increase organizational

94

(affective) commitment.

L04 Describe the stress experience and review four major stressors.

LOS Identify five ways to manage workplace stress.

Earls Restaurants Ltd. has become a Canadian success story, and its recent expansion into the United States has already produced a boatload of accolades and awards. The Vancouver-based company's innovative menu, upscale casual ambience, and fine-tuned operational systems all play a role in this success. But the most important ingredient is stated in Earls' motto: "Great guest

Chapter Four Workplace Emotions, Attitudes, and Stress 95

experiences begin with great partner experiences." In other words, customers are happier because Earls tries to ensure that its employees (called partners) are happy and have purposeful lives.

"People are the heart of the business and what we want for them is to live large, purposeful lives filled with fun," states Earls' vice-president of people operations Brenda Rigney in a recent case study showcasing how the restaurant chain engages its employees. Or in the words of Earls' president Mo Jess a, "The day only makes sense if it has actually felt like there was some joy involved in it. I think that's what's creating the engagement and fostering the retention in the company."

Keeping employees happy is a challenge in the hectic world of food service, yet Earls has met that challenge in several ways. First, it extensively invests in employee training and personal growth. "We truly have an environment that is so supportive of growth and learn ing," says executive chef Delane Diseko. Regional chef Steve Binning agrees. "I've been working at Earls for 1 5 years ... If I ever wake up and I'm not learning and I'm not challenged and I'm not excited to go to work, then that would be the time to move on, and I haven't found that yet."

Earls also nurtures a supportive family-like work environment. "I felt a strong sense of family that I've never experienced before in an establishment," says one employee who worked for three years at Earls in Vancouver. Social support from peers is particularly valuable in the fast-paced restaurant business. "When it's stressful and you actually have support," observes another employee, "that makes it [better]."

Personal growth and mutual support are so important that Earls embeds these values in its leadership t raining and practices. For example, Earls parachuted a manager who had completed the leadership program into one of its struggling restaurants. In less than one year, employee morale and loyalty more than doubled and customer satisfaction similarly improved (based on company surveys). The positive attitudes were soon followed by higher restaurant sales and profits. "This new [restaurant manager] simply believed in a purpose-driven and fun environment, caring about the partners, the guests, the community, and herself," explains an Earls executive. '

Earls Restaurants Ltd. and many other Canadian organizations are discovering that emotions and attitudes make a difference in individual behaviour and well-being, as well as in an organization's performance and customer service. The field of organizational behaviour has experienced a major shift in thinking about workplace emotions, and this chapter begins by introducing the concept and explaining its relationship to attitudes and behaviour. Next, we consider the dynamics of emotional labour, followed

by the popular topic of emotional intelligence. The specific work attitudes of job satisfaction and organi- zational commitment are then discussed, including their association with various employee behaviours and work performance. The final section looks at work-related stress, including the stress experience, four prominent stressors, individual differences in stress, and ways to combat excessive stress.

Emotions in the Workplace

L01 Emotions influence almost everything we do in the workplace. This is a strong statement, and one that you would rarely have found expressed a dozen years ago among organi- zational behaviour experts. Most 08 theories still assume that a person's thoughts and

actions are governed primarily or exclusively by logical thinking (called cognition).2 Yet groundbreaking neuroscience discoveries have revealed that our perceptions, attitudes, decisions, and behaviour are influ- enced by emotions as well as cognitions.3 In fact, emotions may have the greater influence because they

often occur before cognitive processes and, consequently, influence the latter. By ignoring emotionality, many theories have overlooked a large piece of the puzzle concerning human behaviour in the workplace.

E motions are physiological, behavioural, and psychological episodes experienced toward an object, person, or event that create a state of readiness.4 These "episodes" are very brief events that typically subside or occur in waves lasting from milliseconds to a few minutes. Emotions are directed toward someone or something. For example, we experience j oy, fear, anger, and other emotional episodes when confronted with ta~ks, customers, or a software program we are using. This differs from moods, which are not directed toward anything in particular and tend to be longer-term emotional states.

96 Part Two Individual Behaviour and Processes

Emotions are experiences. They represent changes in our physiological state (e.g., blood pressure, heart rate), psychological state (e.g., thought process), and behaviour (e.g., facial expression).5 Most of these emotional reactions are subtle; they occur wi thout our awareness. This is an important point because the topic of emotions often conjures up images of people "getting emotional." In reality, most emotions are fleeting, low-intensity events that influence our behaviour without our conscious aware- ness.6 Finally, emotions put us in a state of readiness. When we get worried, for example, our heart rate and blood pressure increase to make our body better prepared to engage in fight or flight. Strong emotions trigger our conscious awareness of a threat or opportunity in the external environment.

TYPES OF EMOTIONS People experience many emotions and various combinations of emotions, but al l of them have two common features, illustrated in Exhibit 4. 1.7 One feature is that emotions vary in their level of activa- tion. By definition, emotions put us in a state of readiness and, as we discuss in the next chapter, are the primary source of a person's motivation. Some emotional experiences, such as when we are suddenly surprised, are strong enough to consciously motivate us to act without careful thought. Most emotional experiences are more subtle, but even they activate enough to make us more aware of our environment.

The second feature is that all emotions have an associated valence (called core affect) signalling that the per- ceived object or event should be approached or avoided. In other words, all emotions evaluate the situation as positive or negative, good or bad, helpful or harmful, and so forth. Furthermore, negative emotions tend to gen- erate stronger levels of activation than do positive emotions. 8 Fear and anger, for instance, are more intense experiences than are joy and delight, so they have a stronger effect on our actions. This valence asymmetry likely occurs because negative emotions protect us from harm and are therefore more critical for our survival.

EMOTIONS, ATTITUDES, AND BEHAVIOUR To understand how emotions influence our thoughts and behaviour in the workplace, we first need to know about attitudes. Attitudes represent the cluster of beliefs, a~sessed feel ings, and behavioural intentions

EXHIBIT 4.1 Circumplex Model of Emotions

High Distressed

Fearful

Aroused Astonished

Stimulated

Jittery High activation H9J activation positive emotions negative emotions

Enthusiastic

Elated

Excited

Unhappy Happy Sad r-------+----------l Cheerful

Gloomy Delighted

Tired Drowsy

Low activation

positive emotions Relaxed

Content

Calm

Quiet

Tranquil

Still Low ~--------------------~~---------------------

Negative Evaluat ion Positive

Sources: Adapted from: J. A. Russell. "Core Affect and the Psychological Cons;truction ofEmotjon." Psychological Review I IO.oo. I (2003): 145- 172: M. Yik. J.A. R~.t..:;sell. and lH. Steiger. ' "A 124 Point Circ-umplex Structure of Core Affect." Emotion II. oo. 4 (2011): 705- 31 .

Chapter Four Workplace Emotions, Attitudes, and Stress 97

toward a person, object, or event (called an attitude object)9 Attitudes are judgments, wherea~ emotions are experiences. In other words, attitudes involve evaluations of an attitude object, wherea~ emotions oper- ate as events, usually without our awareness. Attitudes sometimes operate nonconsciously, but most of the time we are aware of and consciously think about our attitudes. Another distinction is that we experience most emotions very briefly, wherea~ our attitude toward someone or something is more stable over time. 10

Until recently, experts believed that attitudes could be understood j ust by the three cognitive com- ponents illustrated on the left side of Exhibit 4.2: beliefs, feelings, and behavioural intentions. Now evidence suggests that a parallel emotional process is also at work, shown on the right side of the

exhibit. 11 Using attitude toward mergers as an example, let's look more closely at this model, beginning with the traditional cognitive perspective of attitudes.

Beliefs Beliefs are your established perceptions about the attitude object-what you believe to be true. For example, you might believe that mergers reduce job security for employees in the merged firms, or that mergers increase the company's competitiveness in this era of global ization. These beliefs are per- ceived facts that you acquire from experience and other forms of learning. Each of these beliefs also ha~ a valence; that is, we have a positive or negative feeling about each belief (e.g., more job security is good).

Feelings Feelings represent your conscious positive or negative evaluations of the attitude object. Some people think mergers are good; others think they are bad. Your like or disl ike of mergers rep- resents your assessed feel ings. According to the traditional cognitive perspective of attitudes (the left side of the model), feelings are calculated from your beliefs about mergers and the associated feelings about those beliefs. Consider the example of your attitude toward mergers. If you believe that mergers typically have negative consequences such as layoff.~ and organizational politics, then you will form

negative feelings toward mergers in general or about a specific planned merger in your organization. Most of the time your beliefs about something or someone affect your feelings, but the reverse some-

times occurs. Specifically, your feelings about something can cause you to change your beliefs regarding

EXHIBIT 4.2 Model of Emotions, Attitudes, and Behaviour

Attitude

Perceived environment

Cognitive process

BehaVIoural intentions

BehaVIour

Emotional process

• * •••• . .. • • ...... Emotional episodes • • .. ••• • • .... . ..

98 Part Two Individual Behaviour and Processes

that target. 12 For example, you might normally enjoy the challenge of hard work, but if you dislike your boss and he or she is known for making people work hard, then your feelings about hard work might become more negative. This effect supports attintde consistency, which we discuss toward the end of this section.

Behavioural Intentions Behavioural intentions represent your motivation to engage in a particular behaviour regarding the attitude object. 13 Upon hearing that the company will merge with another organiza-

tion, you might become motivated to look for a job elsewhere or possibly to complain to management about the merger decision. Your feelings toward mergers motivate your behavioural intentions, and which actions you choose depends on your past experiences, personality, and social norms of appropriate behaviour.

Attitude-Behaviour Contingencies The cognitive model of attintdes (belie(~-feelings-intentions) gives the impression that we can predict behaviour from each element of an individual's attitude. This

is potential ly true, but contingencies at each stage in the model can weaken that predictability. Let's

begin with the bel iefs-feelings link. People with the same beliefs might form quite different feelings toward the attitude object because they have different valences for those bel iefs. Two employees who work for the same boss share the bel ief that their boss makes them work hard. Yet one employee dis-

likes the boss because of a negative valence toward hard work whereas the other employee likes the

boss because of a positive valence toward hard work.

The effect of feel ings on behavioural intentions also depends on contingencies. Two employees might equally dislike their boss, but it isn't easy to predict their behavioural intentions from those

feelings. One employee is motivated to complain to the union or upper management while the other employee is motivated to find a job elsewhere. People with the same feelings toward the attitude object

often develop different behavioural intentions because of their unique experiences, personal values,

self-concept, and other individual differences. Later in this chapter we describe the four main responses

to dissatisfaction and other negative attitudes. Finally, the model indicates that behavioural intentions are the best predictors of a person's behaviour. How-

ever, the strength of this link also depends on other factors, such as the person's ability, situational factors, and

possibly role ambiguity (see the MARS model in Chapter 2). For example, two people might intend to quit

because they dislike their boss, but only one does so because the other employee can't find another job.

HOW EMOTIONS INFLUENCE ATTITUDES AND BEHAVIOUR The cognitive model describes attitude formation and dynamics to some extent, but emotions also have a central role in this process.14 As the r ight side of Exhibit 4.2 illustrates, emotions are usually

initiated by perceptions of the world around us. Our brain tags incoming sensory information with emotional markers based on a quick and imprec ise evaluation of whether that information supports or threatens our innate drives. These markers are not calculated feel ings; they are automatic and non-

conscious emotional responses based on very thin slices of sensory information. 15 The experienced

emotions then influence our feelings about the attitude object. For example, employees at Earls Res- taurants experience positive emotions from fun-oriented and friendly co-workers, ongoing learning opportunities, and supportive bosses, all of which generate positive attitudes toward the company.

To explain this process in more detail, consider once again your attitude toward mergers. You might experience worry, nervousness, or relief upon teaming that your company intends to merge with a com-

petitor. The fuzzy dots on the right side of Exhibit 4.2 illustrate the numerous emotional episodes you

experience upon hearing the merger announcement, subsequently thinking about the merger, discussing the merger with co-workers, and so on. These emotions are transmitted to your brain's cognitive centres,

where they are logical ly analyzed along with other information about the attitude object. 16 Thus, while

you are consciously evaluating whether the merger is good or bad, your emotions are already sending core affect (good-bad) signals, which sway your conscious evaluation. In fact, we often del iberately "lis- ten in" on our emotions to help us consciously decide whether to support or oppose something. 17

The influence of both cognitive reasoning and emotions on attitudes is most apparent when they

disagree with each other. People occasionally experience this mental tug-of-war, sensing that some-

thing isn't right even though they can't think of any logical reason to be concerned. This conflicting

Chapter Fo ur Workplace Emotions, Attitudes, and Stress 99

experience indicates that the person's logical analysis of the situation (left side of Exhibit 4.2) can't identify reasons to support the emotional reaction (right side of Exhibit 4.2).18 Should we pay attention to our emotional response or our logical analysis? This question is not easy to answer, but some studies indicate that while executives are apt to make quick decisions based on their gut feelings (emotional response), the best decisions tend to occur when executives spend time logically evaluating the situa- tion.19 Thus, we should pay attention to both the cognitive and emotional sides of the attitude model,

and hope they agree with each other most of the time!

GENERATING POSITIVE EMOTIONS AT WORK

Recognizing the important role that emotions play in employee attitudes, some companies try to inject more positive experiences in the workplace.20 At Toronto advertising firm Grip Ltd., employees col- laborate in funky spaces, descend to the main entrance via a bright orange sl ide, and watch each other's

commercials in a nightclub-style screening room. Admiral Group, one of the best employers in the United Kingdom and Canada, has a "Ministry of Fun" committee that generates positive emotions through in-office games, afternoon outings, and crazy events, such as painting the boss's face to look like Pudsey bear, the teddy bear mascot of U.K. charity Children in Need. At Quicken Loans, employ-

ees zoom around on scooters and take breaks from their mortgage lending jobs to play Ping-Pong, basketball, and to engage in spontaneous Nerf gun battles. "Some days I felt like I was not working because we had fun," says one employee at the Detroit-based firm. A summer intern who witnessed

a Nerf gun fight as he entered the workplace on his first day agrees. "I never thought that a mortgage lending company could be so fun!"21

Some critics might argue that the organization's main focus should be to create positive emotions through the job itself as well as through natural everyday occurrences, such as polite customers and sup- portive co-workers. Still, most people perform work that produces some negative emotions, and research has found that humour and fun at work-whether natural or contrived--can potentially offset some of the

Corus Entertainment employees enjoy interesting work creating television and radio programs, but the company's Toronto headquarters has measurably increased morale by putting more fun into the workplace. One popular feature is the lakeside sandy beach with cottage-like Muskoka chairs. Another is a slide that transports people down three storeys (shown here). "It's a little break from our days," says Corus post- product ion manager Jaimie Galloro. Even after being in the building for several years, Galloro says "the novelty has not worn off."22

©Adrian Abdool

100 Part Two Individual Behaviour and Processes

negative experiences.23 Overall, corporate leaders need to keep in mind that emotions shape employee attitudes and, as we w ill discuss later, atti tudes int1uence various forms of work-related behaviour.

One last comment about Exhibit 4.2: Notice the arrow from the emotional episodes to behaviour.

It indicates that emotions can directly (without conscious thinking) int1uence a person's behaviour.

This occurs when we jump suddenly if someone sneaks up on us. It also occurs in everyday situations because even low-intensity emotions automatically change our facial expressions. These actions are

not carefully thought out. They are automatic emotional responses that are learned or hardwired by heredity for particular situations.24

Debating Point:

IS HAVING FUN AT WORK REALLY A GOOD IDEA?

"Fun at work" has become such a hot business fad that companies without a "fun" committee are considered insensitive taskmasters. Having fun at work can improve employee attitudes in many situations, but are special fun events really necessary or beneficial?

Some critics vote No! They argue that contrived fun events at work can backfire.25 Some types of fun aren't fun at all to some people. In fact, many employees might be offended by the silliness of some activities contrived by management or a few staff. Others resent having fun forced on them. One expert recently warned, "Once the idea of fun is formally institution- alized from above, it can lead to employees becoming resentful. They feel patronized and condescended, and it breeds anger and frustration." 26

The meaning and value of fun at work might also vary across generations; what works for millennials could backfire for baby boomers and vice versa. Another concern is that fun- focused companies might take their eye off the bottom line. "At the end of the day, you have to make money to stay here," says Mike Pitcher, CEO of LeasePian USA (which does have a "fun" committee). "If work was [all] fun, they'd call it fun."27

COGNITIVE DISSONANCE Imagine that you have just signed a contract for new digital whi teboards to be installed throughout

the company's meeting rooms. The deal was expensive but, after consul ting with several staff, you

concluded the technology would be valuable in this technological age. Yet you felt a twinge of regret soon after signing the contract. This emotional experience is cogni ti ve dissonance, which occurs

when people perceive that their bel iefs, feel ings, and behaviour are incongruent with each other.28 This

inconsistency generates emotions (such as feeling hypocri tical) that motivate the person to create more consistency by changing one or more of the cont1icting elements.

Why did you experience cogni tive dissonance after purchasing the digital whiteboards? Perhaps

you remembered that some staff wanted t1exibi l ity, whereas the whiteboards require special markers and computer software. Or maybe you had a t1eeting reali zation that buying digital whiteboards cost-

ing several times more than tradi tional whiteboards is inconsistent with your personal values and your

company's cul ture of thriftiness. Whatever the reason, the dissonance occurs because your attitude (i t's good to be cost conscious) is inconsistent w ith your behaviour (buying expensive whiteboards). Most

people l ike to think of themselves-and be viewed by others-as rational and logical. Cognitive dis- sonance occurs when our behaviour and bel iefs cont1 ict, which is not so rational.

How do we reduce cogni ti ve di ssonance?29 Reversing the behaviour might work, but many behav- iours can't be undone. In any event, the di ssonance would sti ll exist because you and others know

about the behaviour and that you performed it voluntarily. In our example, it would be too expensi ve

to remove the digital whi teboards after they have been instal led and, in any event, your co-workers

already know that you made thi s purchase and did so willingly.

Chapter Fo ur Workplace Emotions, Attitudes, and Stress 10 1

More often people reduce cognitive dissonance by changing their beliefs and feelings. One dissonance- reducing strategy is to develop more favourable attitudes toward specific features of the decision, such as forming a more positive opinion about the whiteboards' capacity to store whatever is written on them. People are also motivated to discover positive features of the decision they didn't notice earl ier (e.g., the boards can change handwriting into typed text) and to discover subsequent problems with the alternatives they didn't choose (e.g., few traditional boards can be used as projection screens). A third

strategy is more indirect; rather than trying to overlook the high price of the digital whiteboards, you reduce dissonance by emphasizing how your other decisions have been frugal . This framing compen- sates for your expensive whiteboard fling and thereby maintains your self-concept and public image as a thrifty decision maker. Each of these mental acrobatics maintains some degree of consistency between the person's behaviour (buying expensive whiteboards) and attitudes (being thrifty).

EMOTIONS AND PERSONALITY Throughout this section, we have implied that emotional experiences are triggered by workplace expe- riences. This is mostly true, but emotions are also partly determined by an individual's personality.30

Some people experience positive emotions as a natural trait. Individuals with higher emotional stabil- ity and extraverted personal ities (see Chapter 2) tend to experience more positive emotions. Those with higher neuroticism (lower emotional stability) and introverted personalities tend to experience more negative emotions. Positive and negative emotional traits affect a person's attendance, turnover, and long-term work attitudes3 1 Although positive and negative personality traits have some effect, other research concludes that the actual situation in which people work has a noticeably stronger influence on their attitudes and behaviour32

What is your emotional personality? You can discover your emotional trait tendencies by completing this self-assessment in Connect

Managing Emotions at Work Whether as a server at Earls Restaurant~ or a chief executive officer in a large corporation,

people are expected to manage their emotions in the workplace. They must conceal their frustration when serving an irritating customer, display compassion to an ill patient,

and hide their boredom in a long meeting with other executives. These are al l forms of emotional labour -the effort, planning, and control needed to express organizationally desired emotions dur- ing interpersonal transactions.33 Almost everyone is expected to abide by display rules-norms or explicit rules requiring us within our role to display specific emotions and to hide other emotions. Emotional labour demands are higher in jobs requiring a variety of emotions (e.g., anger as well as joy) and more intense emotions (e.g., showing delight rather than smiling weakly), as well as in jobs where interaction with cl ients is frequent and longer. Emotional labour also increases when employees must precisely rather than ca~ual ly abide by the display rules.34 This particularly occurs in the service industries, where employees have frequent face-to-face interaction with cl ients.

EMOTIONAL DISPLAY NORMS ACROSS CULTURES Not long ago, L'Express published a special series of articles about living in Canada, including infor- mation about Canadian pol itics, geography, business opportunities, male-female relationships, immi-

gration procedures, and culture. The Paris-ba~ed magazine also warned that French citizens might experience some culture shock when moving to Canada. One article noted that French managers might find Canadians somewhat more abrupt and less apologetic in their correspondence. Another article com- mented that Canadian waiters provide "hyper-friendly, always smiling" service, which can seem insincere to many Europeans. "It's fun, it's nice, but for us it could be a bit hypocritical," explains Laurence Pivot, who edited the special edition of L' £rpress. "It's too much. It's too friendly."35

102 Part Two Individual Behaviour and Processes

Global Connections 4.1:

LEARNING TO EXPRESS POSITIVE EMOTIONS AT AEROFLOT

Russian culture isn't known for friendly customer service. Yet Aeroflot's service ratings are now the highest among East European airlines and exceed those of several North Ameri- can airlines. The Russian firm accomplished this by training flight attendants to show positive emotions through polite communication as well as smiling and other nonverbal behaviour.

An Aeroflot instructor gently reminds recruits that they must not provide "the silent service of Soviet times. You need to talk to (the passenger]. And you need to smile and smile and smile." The program also encourages trainees to develop a positive attitude. This involves "teaching people to be happy, to enjoy what they are doing and to have a positive outlook," explains one Aeroflot trainee.36

A.3PO<I>"OT ~ PoccuHcKue asuanHHHH ~

Aeroflot has the highest service ratings among European airlines because the Russian carrier trains and motivates employees to express positive emotions during customer interactions.

© REUTERS/Aiamy Stock Photo

The French magazine's advice highlights the fact that norms about displaying or hiding emotions vary considerably across cultures.37 One major study points to Ethiopia, Japan, and Austria (among others) as having cultures that discourage emotional expression. Instead, people are expected to be subdued, have relatively monotonic voice intonation, and avoid physical movement and touching that express emotions. In contrast, cultures in places such as Kuwait, Egypt, Spain, and Russia allow or encourage more vivid displays of emotion and expect people to act more consistently with their emo- tions. In these cultures, people are expected to reveal their thoughts and feelings more honestly, and to be dramatic in their conversational tones and animated in their use of nonverbal behaviours. For

example, 81 percent of Ethiopians and 74 percent of Japanese in the study agreed that it is considered unprofessional to overtly express emotions in their culture, whereas 43 percent of Americans, 33 per-

cent of Italians, and only 19 percent of Spaniards, Cubans, and Egyptians agreed with this statement.38

Chapter Four Workplace Emotions, Attitudes, and Stress 103

EMOTIONAL DISSONANCE Most jobs expect employees to engage in some level of emotional labour, such as displaying cour- tesy to unruly passengers or maintaining civility with co-workers. Employees often need to display emotions that are quite different from the emotions they are actually experiencing at that moment. This incongruity produces an emotional tension called emotional dissonance. Employees often handle these discrepancies by engaging in surface acting; they pretend that they feel the expected emotion even though they actually experience a different emotion.

One problem with surface acting is that it can lead to higher stress and burnout.39 By definition, emo- tional labour requires effort and attention, which consume personal energy. Emotional labour also poten- tially requires people to act contrary to their self-view, which can lead to psychological separation from self. These problems are greater when employees frequently need to display emotions that oppose their genuine emotions. A second problem with surface acting is that pretending to feel particular emotions can be chal- lenging. A genuine emotion automatically activates a complex set of facial muscles and body positions, all of which are difficult to replicate when pretending to have these emotions. Meanwhile, our true emotions tend to reveal themselves a~ subtle gestures, usually without our awareness. More often than not, observers see when we are faking and sense that we are feeling a different emotion to the one we are displaying.40

Employees can somewhat reduce psychological damage caused by surface acting by viewing their acting as a natural part of their role. Flight attendants can remain pleasant to unruly pa~sengers more easily when they define themselves by their customer service skill. By adopting this approach, faki ng does not pose a threat to one's self-view. Instead, it is demonstration of our ski ll and professionalism. The dissonant interactions are accomplishments rather than dreaded chores.4 1 Another strategy is to engage in deep acting rather than surface acting.42 Deep acting involves visualizing reality differently, which then produces emotions more consistent with the required emotions. Faced with an angry pas- senger, a flight attendant might replace hostile emotions with compassion by viewing the passenger's behaviour as a sign of his or her discomfort or anxiety. Deep acting requires considerable emotional intelligence, which we discuss next.

Emotional Intell igence The University of South Florida (USF) College of Medicine discovered from surveys that its graduates required emotional intelligence training to perform their jobs better. "We've created a lot of doctors that are like House," said Stephen Kla~ko (USF's medical college dean at the time), referring to the fictional TV physician with the caustic interpersonal style. Now some USF student~ are a~signed to one of America's top hospitals, where they develop their ability to understand and manage emotions through coaching and role modelling by hospital staff. "You have to have an emotionally intelligent, collaborative, interdisciplin- ary team practicing if you want young trainees to adopt that a~ their model," explains the hospital CE0.43

USF's College of Medicine is among many other organizations in increasingly recognizing that emotional intelligence (EI) improves performance in many types of jobs. Emotional intelligence includes a set of abilities to recognize and regulate one's own emotions as well as the emotions of other people. This defi nition refers to the four main dimensions shown in Exhibit 4.3. 44

Awareness of our own emotions. This is the ability to perceive and understand the meaning of our own emotions. People with higher emotional intell igence have better awareness of their emotions and are better able to make sense of them. They can eavesdrop on their emotional responses to specific situations and use this awareness as conscious information.45

Management of our own emotions. Emotional intelligence includes the ability to manage our own emotions, something that we all do to some extent. We keep disruptive impulses in check. We try not to feel angry or frustrated when events go against us. We try to feel and express joy and happiness toward others when the occasion calls for these emotional displays. We re-energize ourselves later in the workday. Notice that management of our own emotions goes beyond enacting desired emotions in a particular situation. It also includes generating or

104 Part Two Individual Behaviour and Processes

EXHIBIT 4.3 Dimensions of Emotional Intelligence

Abilities

Recognition of Emotions

Regulation of Emotions

Yourself

Awareness of our own emotions

........... of ........

Others

Awareness of others' emotions

Management of others' emotions

Smm:e.s: D. Goleman. "An EI-Ba.->ed Theocy of Performance." in The Emotionally Intelligent Workplace. eeL C. Cherniss aod D. Goleman (San Franci..::co: Jossey-Bas.s. 2001). p. 28: Jordan. Peter l. and Sandra A. Lawrence. "Emotiooal intelligence in teams.: [)e..-elopment and initial vali- dation of the short ver.oion of the Workgroup Emc.iooal lntellig.ence Prufile (WEIP-S)." Journal of Management & Organization IS (2009): 452-469.

suppressing emotions. In other words, the deep acting described earlier requires high levels of the self-regulation component of emotional intelligence. Awareness of others' emotions. This dimension refers to the ability to perceive and understand the emotions of other people.46 It relates to empathy-having an understanding of and sensitivity to the feelings, thoughts, and situations of others (see Chapter 3). This ability includes understanding the other person's situation, experiencing his or her emotions, and knowing his or her needs even though they are unstated. Awareness of others' emotions also includes being organizationally aware, such a~ sensing office politics and the presence of informal social networks.

Management of others' emotions. This dimension ofEI involves managing other people's emotions. This includes consoling people who feel sad, emotionally inspiring your team members to complete a class project on time, getting strangers to feel comfortable working with you, and managing dys- functional emotions among staff who experience conflict with customers or other employees.

The four dimensions of emotional intelligence form a hierarchy.47 Awareness of your own emotions is lowest in that hierarchy because you need that awareness to engage in the higher levels of emo- tional intelligence. You can't manage your own emotions if you don't know what they are (i.e., low self-awareness). Managing other people's emotions is the highest level of EI because this ability requires awareness of your own and others' emotions. To diffuse an angry conflict between two employees, for example, you need to understand the emotions they are experiencing and manage your emotions (and display of emotions).

How well do you recognize and regulate emotions? You can discover your perceived level of emotional intelligence by completing this self-assessment in Connect

EMOTIONAL INTELLIGENCE OUTCOMES AND DEVELOPMENT Does emotional intelligence improve employee performance and well-being? A few OB experts ques- tion the usefulness of the emotional intelligence concept, claiming that there is a Jack of agreement on its definition and that existing concepts, such as personality and general intelligence, can be used

Chapter Four Workplace Emotions, Attitudes, and Stress 10 5

instead.48 However, a consensus is slowly emerging around the meaning of EI, and there is con-

siderable research suggesting that this concept does help us to understand what goes on in social settings.

Most j obs involve social interaction with co-workers or external stakeholders, so employees need

emotional inte lligence to work effectively.49 Studies suggest that people with high EI are more effec- tive team members, perform better in jobs requiring emotional labour, make better decisions involv- ing other people, and maintain a more positive mindset for creative work. EI is also associated with effective leadership because leaders engage in emotional labour (e.g., showing patience to employees even when they might feel frustrated) as well as regulating the emotions of others (e.g., helping staff members feel optimism for the future even though they just lost an important contract). However, emotional intelligence does not improve some forms of perfonnance, such as tasks with minimal

social interaction.50

Given the potential value of emotional intelligence, it's not surprising that some organizations try to mea- sure this ability in job applicants. For instance, the United States Air Force (USAF) considers the emotional

As part of its modernization strategy, the Toronto Police Service wants officers with strong emotional intelligence and empathy. Other police forces in North America have also recognized that emotional intelligence is a critical skill for improved community relations and in de-escalating real-time conflict. For example, the San Diego Police Department recently introduced Effective Interactions, a course in which officers develop emotional intelligence and effective communication skills. Members of the Baltimore Police Department attend a Cognitive Command technique training course, which includes learning to manage emotions.

"If you describe how a good officer anywhere does their job, you're describing what we've come to recognize as emotional intelligence,'' explains San Diego police psychologist Dan Blumberg. "It's someone who understands himself or herself and can understand emotions evoked during the j ob and manage their emotions effectively. They understand the emotions of others and are able to use emotions to create positive encounters."51

©Victor Biro/Aiamy Stock Photo

106 Part Two Individual Behaviour and Processes

intelligence of applicant~ into its elite pararescue jumper training program because high EI trainees are more than twice a~ likely as low EI trainees to complete the costly program. 52 Several organizations have also intro- duced training programs to improve employees' emotional intelligence. 53 For instance, new hires (including

co-op students) at Fidelity Canada take emotional intelligence training along with other soft skills and tech-

nical education. One study reported that training improved emotional intelligence among staff members at a Netherlands residence for people with intellecntal disabilities. The EI program described the concept, gave

participants feedback on their initial EI test scores, used case studies to teach EI dimensions, and provided professional feedback based on videos showing participants meeting with difficult clients. Along with for-

mal training program~, emotional intelligence increa~es with age; it is part of the process called maturity. So far, this chapter has introduced the model of emotions and attitudes, as well as emotional intelli-

gence as the means by which we manage emotions in the workplace. The next two sections look at two

specific attitudes: job satisfaction and organizational commitment. These two attitudes are so impor-

tant in our understanding of workplace behaviour that some experts suggest the two combined should be called "overall job attitude."54

Job Satisfaction

L03 Probably the most studied attitude in organizational behaviour is job satisfaction, a per- son's evaluation of his or her job and work context.55 It is an appraisal of the perceived

job characteristics, work environment, and emotional experiences at work. Satisfied employees have a favourable evaluation of their jobs, ba~ed on their observations and emotional expe-

riences. Job satisfaction is best viewed as a collection of attitudes about different aspects of the job and

work context. You might like your co-workers but be less satisfied with your workload, for instance. How satisfied are employees at work? The answer depends on the person, the workplace, and the

country. Global surveys, such as the one shown in Exhibit 4.4, indicate with some consistency that job satisfaction tends to be highest in the United States, India, and some Nordic countries (such as Norway

and Denmark). In this and several other surveys, Canadians report somewhat above average job satis-

faction. The lowest levels of overall job satisfaction are usual ly recorded in Hungary and some Asian countries (such as Japan and Hong Kong).56

Can we conclude from these surveys that most employees in the United States, India, and Norway

are happy at work? Possibly, but their overall job satisfaction probably isn't as high as these statistics

EXHIBIT 4.4 Job Satisfaction in Selected Countries57 - 90%

Based on RandstOO. Randstad Workmonitor 4th Quarter 2016. Rands;tad Holding nv (Amsterdam: f.>eeember 2016).

Chapter Four Workplace Emotions, Attitudes, and Stress 107

suggest. One problem is that surveys often ask a single direct question, such as: "How satisfied are you with your job?" Many dissatisfied employees are reluctant to reveal their feelings to such a direct ques- tion because this is tantamount to admitting that they made a poor job choice and are not enjoying a large part of their life. The inflated results are evident in the fact that employees tend to report less sat- isfaction when asked about specific aspects of their work. For instance, 79 percent of Canadian federal government employees like their job overal l, yet only 64 percent are satisfied with how interpersonal issues are resolved in their work unit, and only 63 percent would recommend their department or agency as a great place to work.58 Furthermore, several sntdies report that many employees plan to look for work within the next year or would leave their current employer if the r ight opportunity came along. 59

A second problem is that culntral values make it difficult to compare job satisfaction across countries. People in China and Japan, for example, tend to subdue their emotions in public, and there is evidence that they also avoid extreme survey ratings such as "very satisfied." A third problem with job satisfaction

ratings is that job satisfaction changes with economic conditions. Employees with the highest job satis- faction in current surveys tend to be in countries where the economies are chugging along quite well.60

JOB SATISFACTION AND WORK BEHAVIOUR Does job satisfaction influence workplace behaviour? In general, yes! Job satisfaction affects many of the individual behaviours introduced in Chapter 2 (task performance, organizational citizenship, quitting, absenteeism, etc.).61 However, a more precise answer is that the effect of job satisfaction and dissatisfaction on individual behaviour depends on the person and the situation. A useful template for organizing and understanding the consequences of job dissatisfaction is the exit-voice-loyalty-neglect (E VLN) mod el. As the name suggests, the EVLN model identifies four ways that employees respond

to dissatisfaction:62

Exit. Exit includes leaving the organization, transferring to another work unit, or at least trying

to get away from the dissatisfying situation. The traditional theory is that job dissatisfaction builds over time and eventually becomes strong enough to motivate employees to search for

better work opportunities elsewhere. This is likely true to some extent, but more recent thinking

holds that specific "shock events" quickly energize employees to think about and engage in exit behaviour. For example, the emotional reaction you experience to an unfair management

decision or a conflict episode with a co-worker motivates you to look at job ads and speak to

friends about job opportunities where they work. This begins the process of re-al igning your self-concept away from your current employer and toward another company.63

Voice. Voice is any attempt to change, rather than escape from, the dissatisfying situation. Voice can be a constructive response, such as recommending ways for management to improve the

situation, or it can be more confrontational, such as filing formal grievances or forming a coali- tion to oppose a decision.64 In the extreme, some employees might engage in counterproductive behaviours to get attention and force changes in the organization.

Loyalty. In the original version of this model, loyalty was not an outcome of dissatisfaction. Rather, it determined whether people chose exit or voice (i.e., high loyalty resulted in voice; low loyalty produced exit)65 More recent writers describe loyalty as an outcome, but in vari- ous and somewhat unclear ways. Generally, they suggest that "loyalists" are employees who respond to dissatisfaction by patiently waiting-some say they "suffer in silence"-for the problem to work itself out or be resolved by others.66

Neglect. Neglect includes reducing work effort, paying less attention to quality, and increasing absenteeism and lateness. It is generally considered a passive activity that has negative conse- quences for the organization.

Which of the four EVLN alternatives do employees use? It depends on the person and situation.67

The individual's personality, values, and self-concept are important factors. For example, people with a high-conscientiousness personal ity are less likely to engage in neglect and more likely to engage in

108 Part Two Individual Behaviour and Processes

voice. Pa~t experience also influences which EVLN action is applied. Employees who were unsuc-

cessful with voice in the past are more likely to engage in exit or neglect when experiencing job dis- satisfaction in the future. Another factor is loyalty, as it was originally intended in the EVLN model. Specifical ly, employees are more likely to quit when they have low loyalty to the company, and they are more likely to engage in voice when they have high loyalty. Finally, the response to dissatisfaction depends on the situation. Employees are less likely to use the exit option when there are few alternative

job prospects, for example. Dissatisfied employees are more likely to use voice than the other options when they are aware that other employees are dependent on them68

JOB SATISFACTION AND PERFORMANCE Is a happy worker a more productive worker? Clive Schlee thinks so. The CEO of the British deli chain Pret A Manger believes that happy employees result in happier customers and higher sales. "The first thing I look at is whether staff are touching each other-are they smiling, reacting to each other, happy, engaged? I can almost predict sales on body language alone," he says. Secret shoppers scout Pret A Manger outlets each week. If the secret shopper is served by a positive and happy employee behind the counter, all staff members at that location receive a bonus.69

The "happy worker" hypothesis is generally true, according to major reviews of the research on this subject. In other words, there is a moderately positive relationship between job satisfaction and per- formance. Workers tend to be more productive ro some extent when they have more positive attitudes toward their job and workplace.70

Why does job satisfaction affect employee performance only to some extent? One reason is that general attitudes (such as job satisfaction) don't predict specific behaviours very well. As the EVLN model explains, reduced performance (a form of neglect) is only one of four possible responses to dis- satisfaction. A second reason is that some employees have little control over their performance because their work effort is paced by work technology or interdependence with co-workers in the produc- tion process. An assembly-l ine worker, for instance, installs a fixed number of windshields each hour with about the same quality of installation whether he or she has high or low job satisfaction. A third

consideration is that job performance might cause job satisfaction, rather than vice versa?' Higher performers tend to have higher satisfaction because they receive more rewards and recognition than do low-performing employees. This connection between job satisfaction and performance isn't stronger, however, because many organizations do not reward good performance very well .

JOB SATISFACTION AND CUSTOMER SATISFACTION Earls Restaurants Ltd. has surv ived and thrived forover30 years in a highly competitive business. As the opening casestudytothischapterreported, a key ingredient in the Vancouver-basedcompany'ssuccess

is stated in its motto: "Great guest experiences begin with great partner experiences." Throughout the years, Earls' founders and leaders have embraced the idea that customers are more satisfied wi th their d ining experience when the cooks, servers, and other staff (all of whom are called partners at Earls) have pos itive emotions and attitudes regarding the ir jobs and employer. This view is echoed by The Container Store chai rman and CEO Kip Tindell. "We really believe that if you put the employees first, they really and truly will take better care of the customer than anybody else,"

says Tindell.72

Earls Restaurants and The Container Store maintain strong customer service by applying the service profit chain model. This model, which is diagrammed in Exhibit 4 .5, proposes that job satisfaction has a positive effect on customer service, which flows on to shareholder financial returns. The process begins with workplace practices that increase or decrease job satisfaction. Job satisfaction then influ- ences whether employees stay (employee retention) as well as their motivation and behaviour on the job. Retention, motivation, and behaviour affect service quality, which influences the customer's sat- isfaction, perceived value of the service, and tendency to recommend the service to others (referrals). These customer activities influence the company's profitability and growth. The service profit chain

Chapter Four Workplace Emotions, Attitudes, and Stress

Wegmans is America's favourite supermarket. In fact, each year it receives several thousand requests from people in almost every state to build more stores. Wegmans clearly values its customers, but it does so by caring j ust as much for its employees. "What's most important to us

109

is that our employees feel that Wegmans is a great place to work," explains CEO Danny Wegman. "When our people feel cared about and respected, they turn around and make our customers feel that way too." Wegmans invests heavily in train ing each employee, usually promotes from within, and offers scholarships to employees. Through careful selection and leadership, the company also nurtu res a family-like culture. "I have never loved a job more than I do Wegmans,'' enthuses a pharmacy technician near Syracuse, New York. "My co-workers are like a second family."73

©Wegmans Food Markets, Inc.

EXHIBIT 4.5 Service Profit Chain Model

Sources: ll. Heskett. W. E. Sasser. and L A. Schlesinger. The Sen•lce Pmfit Chajn (New York: Free Press) 1997: A. l Rucci S. P. Kirn. and R. T. Qujnn. "The Employee-Customer-Profit Chain At SearS." Harvard Business Review 76 ( I 998): 83-97~ S. P. Brown aod S. K. Lam. '"'A Meta-Analysis of Relatjonships Linkjng Employee Sati..:: faction to Cu..:;tomer Responses." Journal of ReLailing 84. oo. 3 (2008): 243- 255.

model has considerable research support. However, the benefits of job satisfaction do take consider- able time to flow through to the organization's bottom Jine.74

Behind the service profit chain model are two key explanations for why satisfied employees tend to pro- duce happier and more Joyal customers?5 One explanation is that job satisfaction tends to put employees

110 Part Two Individual Behaviour and Processes

in a more positive mood, and people in a good mood more naturally and frequently display friendliness and positive emotions. When employees have good feelings, their display of positive emotions "rubs off' on most (but not all) customers, so customers feel happier and consequently form a positive evaluation of the service experience (i.e., higher service quality). The effect is also mutual; happy customers make employees happier, which can lead to a cycle of positive emotions in the service experience.

The second explanation is that satisfied employees are less likely to quit their jobs, so they have more work experience (i.e., better knowledge and skills) to serve clients. Lower turnover also enables customers to have the same employees serve them on different occasions, providing more consistent service. Some evidence indicates that customers build their loyalty to specific employees, not to the organization, so keeping employee turnover low tends to build customer loyalty.

JOB SATISFACTION AND BUSINESS ETHICS

Before leaving the topic of job satisfaction, we should mention that job satisfaction is also an ethical issue that influences the organization's reputation in the community. People spend a large portion of their time working in organizations, and many societies now expect companies to provide work envi-

ronments that are safe and enjoyable. Indeed, employees in several countries closely monitor ratings of the best companies to work for, an indication that employee satisfaction is a virtue worth considerable

goodwill to employers. The importance of this is apparent when an organization ha~ low job satisfac- tion. The company typically tries to hide this fact, and when morale problems become public, corpo- rate leaders are usually quick to take steps to improve the situation.

Organizational Commitment

Organizational commitment represents the other half (with job satisfaction) of what some experts cal l "overall job attitude." Affective organizational commitm ent is the employee's emotional attachment to, involvement in, and identification with an organization. Affective commitment is a psychological bond whereby one chooses to be dedicated to and responsible for the organization.76 The "strong sense of family" and support for personal growth are two reasons why many employees at Earls Restaurants have strong affective commitment toward the company.

Affective commitment is often distinguished from continuance commitmen t, which is a calcula- tive attachment to the organization. This calculation takes two forms.77 One form occurs where an employee has no alternative employment opportunities (e.g., " I dislike working here but there are no other jobs available.") This condition exists where unemployment is high, employees lack the skills sought by other employers, or the employee's ski lls are so specialized that there is limited demand for them nearby. The other form of continuance commitment occurs when leaving the company would be a significant financial sacrifice (e.g., "I hate this place but I can't afford to quit!"). This perceived sacrifice condition occurs when the company offers high pay, benefits, and other forms of economic

exchange in the employment relationship, or where quitting forfeits a large deferred financial bonus.

~

How committed are you to your school? You can discover your affective commitment as a student at your school by completing this self-assessment in Connect.

CONSEQUENCES OF AFFECTIVE AND CONTINUANCE COMMITMENT

Affective commitment can be a significant competitive advantage. 78 Employees with a strong psychological bond to the organization are less likely to quit their jobs and be absent from work. They also have higher work motivation and organizational citizenship, as well a~ somewhat higher job performance. Affective commitment also improves customer satisfaction because long-tenure employees have better knowledge of work practices and because clients like to do business with the same employees. One concern is that employ- ees with very high loyalty tend to have high conformity, which results in lower creativity. Another problem is

Chapter Fo ur Workplace Emotions, Attitudes, and Stress 1 11

that very high commitment has sometimes been used to excuse or motivate illegal activity in defence of the organization. However, most companies suffer from too little rather than too much employee loyalty.

In contrast to the benefits of affective commitment, employees with high levels of continuance

commitment tend to have lower performance and are less likely to engage in organizational c itizenship behaviours. Furthermore, unionized employees with high continuance commitment are more likely to use formal grievances, whereas employees with high affective commitment engage in more coop- erative problem solving when employee-employer relations sour.79 Although some level of financial connection may be necessary, employers should not rely on continuance commitment to retain staff. Employers should focus on winning employees' hearts (affective commitment) rather than tying them financially to the organization (continuance commitment).

BUILDING ORGANIZATIONAL COMMITMENT There are almost a~ many ways to build affective commitment as there are topics in this textbook, but here are the most frequently mentioned strategies in the literature:

Justice and Support Affective commitment is higher in organizations that fulfil their obligations to employees and abide by humanitarian values, such as fairness, courtesy, forgiveness, and moral integrity. These values relate to the concept of organizational justice, which we discuss in the next chapter. Simi- larly, organizations that support employee well-being tend to cultivate higher levels of loyalty in return.80

Shared Values The definition of affective commitment refers to a person's identification with the organization, and that identification is highest when employees believe their values are congruent with the organization's dominant values. Employees also experience more positive emotions when they agree with the values underlying corporate decisions, which increases their motivation to stay with the organization.81

Trust Trust refers to positive expectations one person has toward another person or group in situ- ations involving risk.82 Trust means putting faith in others. It is also a reciprocal activity: To receive trust, you must demonstrate trust. Employees identify with and feel obliged to work for an organization only when they trust its leaders. This explains why layoffs are one of the greatest blows to affective

commitment. By reducing job security, companies reduce the trust employees have in their employer and the employment relationship.83

Organizational Comprehension Organizational comprehension refers to how well employees understand the organization, including its strategic direction, social dynamics, and physical layout.84

This awareness is a necessary prerequisite to affective commitment because it is difficult to identify with or feel loyal to something that you don't know very well. Furthermore, lack of information pro- duces uncertainty, and the resulting stress can distance employees from that source of uncertainty (i.e., the organization). The practical implication here is to ensure that employees develop a reasonably clear

and complete mental model of the organization. This occurs by giving staff information and opportuni- ties to keep up-to-date about organizational events, interact with co-workers, discover what goes on in different parts of the organization, and learn about the organization's history and future plans. 85

Employee Involvement Employee involvement increases affective commitment by strengthen- ing the employee's psychological ownership and social identity with the organization.86 Employees feel that they are part of the organization when they participate in decisions that guide the organiza- tion' s future (see Chapter 7). Employee involvement also builds loyalty because giving this power is a demonstration of the company's trust in its employees.

Organizational commitment and job satisfaction represent two of the most often studied and dis- cussed attitudes in the workplace. Each is linked to emotional episodes and cognitive judgments about the workplace and one's relationship with the company. Emotions also play an important role in another concept that is on everyone's mind these days: stress. The final section of this chapter provides an overview of work-related stress and how it can be managed.

112 Part Two Individual Behaviour and Processes

Work-Related Stress and Its Management

When asked if they often feel stressed by their work, most employees these days will answer an emphatic Yes! Not only do most people understand the concept; they feel they have plenty of personal experience with it. Stress is most often described as an adaptive

response to a situation that is perceived as chal lenging or threatening to a person's well-being. 87 It is a physiological and psychological condition that prepares us to adapt to hostile or noxious environmental conditions. Our heart rate increases, muscles tighten, breathing speeds up, and perspiration increases. Our body also moves more blood to the brain, releases adrenaline and other hormones, fue ls the system by releasing more glucose and fatty acids, activates processes that sharpen our senses, and conserves resources by shutti ng down our immune response. One school of thought suggests that stress is a nega- tive evaluation of the external environment. However, critics of this cognitive appraisal perspective point out that stress is more accurately described as an emotional experience, which may occur before or after a conscious evaluation of the situation. 88

Whether stress is a complex emotion or a cognitive evaluation of the environment, it has become a perva~ive experience in the dai ly Jives of most people. Stress is typically descr ibed as a negative expe- rience. This is known as distress-the degree of physiological, psychological, and behavioural devia- tion from healthy functioning. However, some level of stress-called eustress-is a necessary part of life because it activates and motivates people to achieve goals, change their environments, and succeed

in life's chal lenges. 89 Our focus is on the causes and management of distress, because it has become a chronic problem in many societies.

GENERAL ADAPTATION SYNDROME The word stress wa~ first used more than 500 years ago to describe the human response to harsh environmen- tal conditions. However, it wasn't until the 1930s that Canadian researcher Hans Selye (often described a~ the father of stress research) first documented the stress experience, called general adapta tion syndrome.

• by t he NUMBERS

Stressed Out, Burnt-Out!90

of 400 Canadian workers surveyed say they are stressed at

work on a day-to-day basis.

of more than 1,000 American workers surveyed say they

are stressed at work on a day-to-day basis.

of all working days lost due to ill health in the U.K. are due to stress.

of 6,700 Americans surveyed say they have purposely changed jobs due to a

stressful work environment.

31",.6 of 1,000 German workers surveyed report that they felt stressed at work the

previous day.

Chapter Four Workplace Emotions, Attitudes, and Stress 1 13

Selye detennined (initially by sntdying rats) that people have a fairly consistent and automatic physiological response to stressful sintations, which helps them to cope with environmental demand~.9 1

The general adaptation syndrome consists of the three stages shown in Exhibit 4.6. The a/ann reaction stage occurs when a threat or chal lenge activates the physiological stress responses that were noted above. The individual's energy level and coping effectiveness decrease in response to the initial shock. The second stage, resistance, activates various biochemical, psychological, and behavioural mecha-

nisms that give the individual more energy and engage coping mechanisms to overcome or remove the source of stress. To focus energy on the source of the stress, the body reduces resources to the immune system during this stage. This explains why people are more likely to catch a cold or some other illness when they experience prolonged stress. People have a limited resistance capacity, and if the source of stress persists, the individual will eventually move into the third stage, exhaustion. Most of us are able to remove the source of stress or remove ourselves from that source before becoming too exhausted. However, people who frequently reach exhaustion have increased risk of long-term physiological and psychological damage.92

How stressed are you? You can discover your perceived general level of stress over the past month by comple ting this self-assessment in Connect.

CONSEQUENCES OF DISTRESS Stress takes its toll on the human body.93 Many people experience tension headaches, muscle pain, and related problems mainly due to muscle contractions from the stress response. High stress levels also contribute to cardiovascular disease, including heart attacks and strokes, and may be associated with some forms of cancer. One major review estimated that more than I 00,000 deaths annually and as much as eight percent of health care costs in the United States are due to the consequences of work-related stress. Stress also produces various psychological consequences, such as job dissatisfaction, moodi- ness, depression, and lower organizational commitment. Furthermore, various behavioural outcomes have been linked to high or persistent stress, including lower job performance, poor decision making, and increased workplace accidents and aggressive behaviour. Most people react to stress through "fight or flight," so, as a form of flight, increased absenteeism is another outcome of stress.94

One particular stress consequence, called job burnout, occurs when people experience emotional exhaustion, cynicism, and reduced feelings of personal accomplishment.95 Emotional exhaustion, the

EXHIBIT 4.6 General Adaptation Syndrome

High

Ability Normal to Cope state

Low

Stage 1 Alarm reaction

Stage 2 Resistance

Time Source: Adapted from H. Selye. The SLress of Life (New Yod:: McGraw-HilL 1956).

Stage 3 Exhaustion

114 Part Two Individual Behaviour and Processes

first stage, is characterized by tiredness, a lack of energy, and a feeling that one's emotional resources are

depleted. This is followed by cynicism (also called depersona/iztaion), which is an indifferent attitude toward work, emotional detachment from clients, a cynical view of the organization, and a tendency to

strictly follow rules and regulations rather than adapt to the needs of others. The final stage of burnout, called reduced personal accomplishment, entails feel ings of diminished confidence in one's ability to perform the job well. In such situations, employees develop a sense of learned helplessness a~ they no

longer bel ieve that their efforts make a difference.

STRESSORS: THE CAUSES OF STRESS

Before identifying ways to manage work-related stress, we must first understand its causes, known as

stressors. Stressors include any environmental conditions that place a physical or emotional demand on a person.96 There are numerous stressors in the workplace and in life in general. We will briefly describe four of the most common work-related stressors: organizational constraints, interpersonal conflict, work overload, and low task control.97

Organizational Constraints Stress research has identified organizational constraints as one of the most pervasive causes of workplace stress.98 This stressor includes lack of equipment, supplies, budget funding, co-worker support, information, and other resources necessary to complete the required work. Most employees experience stress because these constraints interfere with task perfor- mance, which indirectly threatens their rewards, status, and job security. Organizational constraints refer to situational factors, which comprise one of the four direct predictors of individual behaviour and performance (see the MARS model in Chapter 2). It is the only direct influence on individual per- formance that is beyond the employee's immediate control. This lack of control is a powerful stressor because it threatens the individual's fundamental drive to influence his or her external environment.

Interpersonal Conflict Organizations consist of groups of people working interdependently toward some purpose. But even though they share common organizational goals, employees frequently disagree with each other regarding how to achieve those goals as well as how the work and resources should be distributed along that journey. Therefore, conflict is a way of life in organizations. As we wi ll learn in Chapter II , specific conditions and practices enable employees to effectively resolve their differences with few negative emotions. Unfortunately, dysfunctional conflict can easily flare up and, left unchecked, escalate to a level that produces considerable stress and counterproductive work behaviours.

In organizational settings, most interpersonal conflict is caused by structural sources, such as ambigu- ous rules, lack of resources, and conflicting goals between employees or departments. However, workplace conflict also arises when a person's actions are perceived by others as threatening. This fast-growing form of interpersonal conflict, called psychological harassment, includes repeated hostile or unwanted conduct, verbal comments, actions, and gestures that undermine an employee's dignity or psycho-

logical or physical integrity. Psychological harassment defines a broad landscape of behaviours, from threats and bullying to subtle yet persistent forms of incivility.99

Psychological harassment exists in almost every workplace. One global survey of I 6,5 I 7 employees reported that 83 percent of respondent~ in Europe, 65 percent in North and South America, and 55 percent in Asia say they have been physically or emotionally bullied at work.100 Sexual harassment is a specific type of harassment in which a person's employment or job performance is conditional and depends on

unwanted sexual relations and/or the person experiences sexual conduct from others (such a~ posting pornographic material) that unreasonably interferes with work performance or creates an intimidating, hostile, or offensive working environment. 101

Work Overload "We just keep rushing along in a confused state of never having time to do the things that seem to be pressing upon us." Sound familiar? Most Canadians have probably had a similar thought in the past year. But although this comment comes from Canada, it wasn't written in the past year or even in the past decade. It appeared in an article called "Let's Slow Down!" in a Royal Bank of

Chapter Four Workplace Emotions, Attitudes, and Stress 1 15

Canada newsletter in 1949! 102 The fact is, people have been struggling for more than half a century with the pace of life, including the challenges of performing too many tasks and working too many hours.

Work overload is one of the most common workplace stressors. Employees are expected (or believe they are expected) to complete more work with more effort than they can provide within the allotted time. 103 Unfortunately, work overload has consistently worsened over the past few decades. In 1991, approximately 30 percent of Canadians estimated that they worked an average of 45 hours or more per week. Ten years later (200 I), that figure had jumped to more than 45 percent. In the most recent poll (20 I I), 60 percent of Canadians reported working an average of 45 hours or more each week. 104

Why do employees work such long hours? One explanation attributes it to the combined effects of technology and global ization. People increasingly work with co-workers in distant time zones, and their constantly-on communications habits make it diff icult to separate work from personal life. A related

Global Connections 4.2:

CHRONIC WORK OVERLOAD IN CHINA 105

Eva Marti (not her real name) has lived in Beij ing for eight years, but the Swiss-born designer still struggles with the workload expected of her. "What am I doing in here?" she asks at 2 a.m. on her fourth straight night of work. "This kind of overtime would never happen in Switzerland." The average Chinese employee works more than 2,000 hours each year. whereas Swiss workers average less than 1,500 hours.

Long hours due to work overload is a chronic problem for many employees in China, not just for expatriates. One survey found that 70 percent of white-collar workers in downtown Beij ing show signs of overwork. Another study reported that half the anesthesio log ists in China work more than 10 hours each day; nearly 80 percent of them say they feel too tired at work. Chinese newspapers frequently report death from overwork (called guo/aosi in China) among young professionals.

Stress seems to be on the rise in China due to increasing workloads and hours of work.

©blue jean lmagesfGetty Images

116 Part Two Individual Behaviour and Processes

explanation is that employees are under increasing pressure to be productive in a globalized world. A third reason, called the "ideal worker norm," is that professionals expect themselves and others to work longer hours. For many, toiling away far beyond the normal workweek is a badge of honour, a symbol of their superhuman capacity to perform above others. For example, 39 percent of mi llennia! employees in one recent large-scale survey admitted that they work long hours and have a 24n schedule so they look like a "work martyr" to their boss.106

Low Task Control Workplace stress is higher when employees lack control over how and when they perform their ta~ks a~ well as over the pace of work activity. Work is potentially more stressful when it is paced by a machine, involves monitoring equipment, or when the work schedule is controlled by someone else. Low ta~k control is a stressor because employees face high workloads without the ability to adjust the pace of the load to their own energy, attention span, and other resources. Furthermore, the degree to which low ta~k control is a stressor increases with the burden of responsibility the employee must carry.107

Assembly-line workers have low task control, but their stress can be fairly low if their level of responsibil- ity is also low. In contrast, sports coaches are under immense pressure to win games (high responsibility), yet they have little control over what happens on the playing field (low task control).

INDIVIDUAL DIFFERENCES IN STRESS People exposed to the same stressor experience different levels of stress. One contributing factor is the employee's physical health. Regular exercise and a healthy lifestyle produce a larger store of energy to cope with stress. A second variable is the coping strategy employees use to ward off a particular

stressor.108 People sometimes figure out ways to remove the stressor or to minimize its presence. Seek- ing support from others, reframing the stressor in a more positive light, blaming others for the stressor, and denying the stressor's existence are some other coping mechanisms. Some coping strategies work better for specific stressors and some are better across al l stressors.109 Thus, someone who uses a less effective coping mechanism in a particular situation would experience more stress in response to that situation. People have a tendency to rely on one or two coping strategies, and those who rely on gener- ally poor coping strategies (such a~ denying the stressor exists) are going to experience more stress.

Personality is a third rea~on why people experience different levels of stress when faced with the same stressor. 110 Individuals with low neuroticism (high emotional stability) usually experience lower stress levels because, by definition, they are less prone to anxiety, depression, and other negative emo- tions. Extraverts also tend to experience lower stress than do introverts, likely because extraversion includes a degree of positive thinking and extraverts interact with others, which helps buffer the effect of stressors. Those with a positive self-concept-high self-esteem, self-efficacy, and internal locus of control (see Chapter 3)-feel more confident and in control when faced with a stressor. In other words,

they tend to have a stronger sense of optimism.111 Stress also tends to be higher among employees who have an uncontrollable work motivation and who constantly think about work and have low work enjoyment. This condition, known as workaholism (also called work addiction), is characteristic of people with perfectionism (a specific form of very high conscientiousness) and a natural tendency to have negative emotions (related to high neuroticism). 112

Ar e you a workaholic? You can discover the extent to which you are a workaholic by completing this self-assessment in Connect.

MANAGING WORK-RELATED STRESS

Many people deny the existence of their stress until it ha~ serious outcomes. This avoid- ance strategy creates a vicious cycle, because the failure to cope with stress becomes another stressor on top of the one that created the stress in the first place. To prevent this

Chapter Fo ur Workplace Emotions, Attitudes, and Stress 1 17

vicious cycle, employers and employees need to apply one or more of the stress management strategies described below: remove the stressor, withdraw from the stressor, change stress perceptions, control stress consequences, and receive social support.113

Remove the Stressor There are many ways to remove the stressor, but some of the more com- mon actions involve assigning employees to jobs that match their skills and preferences, reducing excessive workplace noise, having a complaint system and taking corrective action against harassment, and giving employees more control over the work process. Another important way that companies can remove stressors is by facilitating better work-life balance. Work-l ife balance initiatives minimize con- flict between the employee's work and nonwork demands. Five of the most common work-l ife balance initiatives are flexible work arrangements, telecommuting, limiting work hours, personal leave, and child care support.114

Flexible work arrangemellls. Work-life balance improves when employees have flexibility in

scheduling their hours and actually use that flexibility. For instance, almost two-thirds of 370

major Canadian companies recently surveyed offer employees flex days or personal days.115 A variation of flexible work arrangements is job sharing, whereby two people share one job. This

reduces the number of hours that each person is required to work and may allow some flexibility

by swapping days each person works.

Telecommuting. Telecommuting (also called teleworking) involves working from home or a site close to home rather than commuting a longer distance to the office every day (see Chapter I). It potentially improves work-life balance by reduc ing or eliminating commuting time and increasing t1exibility to perform nonwork obligations (such as picking up the kids from school). 116 However, teleworking may increase stress for those who crave social interaction and who Jack the space and privacy necessary to work at home.

Limiting work hours. Much work-l ife cont1 ict and resulting stress occur because technology has blurred the line between work and nonwork. Many employees continue to receive emails and text messages from the boss after work hours. Volkswagen and some other companies are

more clearly separating work from nonwork by halting emails posted more than half an hour after the end of the work day. Similarly, France recently passed legislation giving employees the "right to disconnect," meaning that they have a legal right to ignore company messages after hours. 117

Personal/eave. Employers with strong work-l ife values offer extended maternity, paternity, and personal leave for employees to care for a new family member or take advantage of a personal experience. Most countries provide 12 to 16 weeks of paid leave, with some offering one year

or more of fully or partially paid maternity Jeave. 118

Child care support. Many large and medium-sized employers provide on-site or subsidized child care facilities. Child care support reduces stress because employees are less rushed to drop off and pick up children and less worried during the day about how well their chi ldren are

doing.119

Withdraw from the Stressor Removing the stressor may be the ideal solution, but it is often not feasible. An alternative strategy is to permanently or temporarily remove employees from the stressor. Permanent withdrawal occurs when employees are transferred to jobs that are more compat- ible with their abilities and values. Temporarily withdrawing from stressors is the most frequent way

that employees manage stress. Vacations and hol idays are important opportunities for employees to recover from stress and re-energize for future challenges. A smal l number of companies offer paid or unpaid sabbaticals.120 Many firms also provide innovative ways for employees to withdraw from stress- ful work throughout the day, such as games rooms, ice cream cart breaks, nap rooms, and cafeterias that include live piano rec itals.

118 Part Two Individual Behaviour and Processes

Writing software code can be taxing work, but employees at Vigilant Global have ways to temporarily withdraw from these stressors. The Montreal firm that designs software solutions for the finance industry has a games room where employees play table tennis or foosball, enjoy electronic games, or relax w ith an ebook. And for the ultimate withdrawal from stressors, Vigilant Global has a d edicated Zen room with massage chairs and spa-like background music.121

©bbernard/Shutterstock

Change Stress Perceptions How much stress employees experience depends on how they perceive the stressor. 122 Consequently, another way to manage stress is to help employees improve

their self-concept so job challenges are not perceived as threatening. Personal goal setting and self- reinforcement can also reduce the stress that people experience when they enter new work settings. In addition, research suggests that some (but not all) forms of humour can improve optimism and create positive emotions by taking some psychological weight off a stressful s intation. 123

Control Stress Consequences Keeping physically fit and maintaining a healthy lifestyle are effective stress management strategies because they control stress consequences. Good physical fitness reduces the adverse physiological consequences of stress by helping employees moderate their breathing and heart rate, muscle tension, and stomach acid ity. The key variable here is physical fitness, not exercise. Exercise leads to physical fitness, but research suggests that exercise does not reduce stress symptoms among people who are not yet physically fit. 124 Various forms of meditation can potentially reduce anxiety and other symptoms of stress, but their effect on blood pressure and

other physiological symptoms is minimal.125 Well ness programs can help control the consequences of stress. These programs inform employees about the benefits of better nutrition and fitness, regu- lar sleep, and other good health habits. Finally, many large employers offer employee assistance programs (EAPs)-<ounsell ing services that help employees resolve marital, financ ial, or work- related troubles.

Receive Social Support Social support occurs when co-workers, supervisors, family members, friends, and others provide emotional and/or informational support to buffer an individual's stress

Chapter Four Workplace Emotions, Attitudes, and Stress 1 19

experience. For instance, employees whose managers are good at empathizing experience fewer stress symptoms than do employees whose managers are less empathetic. Social support potentially (but not always) improves the person's optimism and self-confidence, because support makes people feel valued and worthy. Social support also provides information to help the person interpret, comprehend, and pos- sibly remove the stressor. For instance, to reduce a new employee's stress, co-workers could describe ways to handle difficult customers. Seeking social support is called a " tend and befriend" response to stress, and research suggests that women often take this route rather than the "fight or fl ight" response mentioned earlier. 126

How do you cope with stressful situations? You can d iscover your preferences among four coping strategies by completing this self-assessment in Connect.

Chapter Summary

L01 Explain how emotions and cognition (conscious reasoning) influence a ttitudes and behaviour. Emotions are physiological, behavioural , and psychological episodes experienced toward an object, person, or event that create a state of readiness. Emotions differ from attitudes, which represent a

cluster of beliefs, feelings, and behavioural intentions toward a person, object, or event. Beliefs are a person's established perceptions about the attitude object. Feelings are positive or negative evaluations of the attitude object. Behavioural intentions represent a motivation to engage in a particular behaviour toward the target.

Attitudes have traditionally been described as a purely rational process in which beliefs predict feelings, which predict behavioural intentions, which predict behaviour. We now know that emotions have an influence on behav- iour that is equal to or greater than that of cognition . This dual process is apparent when we internally experience a conflict between what logically seems good or bad and what we emotional ly feel is good or bad in a s ituation. Emotions also affect behaviour directly. Behaviour sometimes influences our subsequent attitudes through cogni- tive dissonance.

L02 Discuss the dynamics of emotional labour and the role of emotional intelligence in the workplace.

Emotional labour consists of the effort, planning, and control needed to express organizationally desired emotions during interpersonal transactions. It is more common in jobs requiring a variety of emotions and more intense emotions, as well as in jobs where interaction with cl ient~ is frequent and has a long duration. Cul- tures also di ffer on the norms of displaying or concealing a person's true emotions. Emotional dissonance is the psychological tension experienced when the emotions people are required to display are quite different from the emotions they actually experience at that moment. Deep acting can minimize this dissonance, as can the practice of hiring people with a natural tendency to display desired emotions.

Emotional intelligence is the ability to perceive and express emotion, assimilate emotion in thought, under- stand and reason with emotion, and regulate emotion in oneself and others. This concept includes four components arranged in a hierarchy: self-awareness, self-management, awareness of others' emotions, and management of others' emotions. Emotional intelligence can be learned to some extent.

L03 Summar ize the consequences of j ob dissatisfaction, as well as st rategies to increase organiza- tional (a ffective) commitment.

Job satisfaction represents a person's evaluation of his or her job and work context. Four types o f job dissatisfaction consequences are quitting or otherwise getting away from the dissatisfying s ituation (exit), attempt- ing to change the d issatisfying situation (voice), patiently waiting for the problem to sort itself out (loyalty), and reducing work effort and performance (neglect). Job satisfaction has a moderate relationship with job performance and with customer satisfaction. Affective organizational commitment (loyalty) is the employee's emotional attach- ment to, identification with, and involvement in a particular organization. This contrasts with continuance com- mitment, which is a calculative bond with the organization. Compan ies build loyalty through justice and support, shared values, trust, organizational comprehension, and employee involvement.

120 Part Two Individual Behaviour and Processes

L04 Describe the st ress experience and review four major st ressors. Stress is an adaptive response to a situation that is perceived as challenging or threatening to a per- son's well-being. The stress experience, called general adaptation syndrome, involves moving

through three stages: alarm, resistance, and exhaustion. Stressors are the causes o f stress and include any environ- mental conditions that place a physical or emotional demand on a person. Four of the most common workplace stressors are organizational constraints, interpersonal conflict, work overload, and low task control.

LOS Identify five ways to manage workplace s tress. Many interventions are available to manage work-related stress, including removing the stressor, withdrawing from the stressor, changing stress perceptions, controlling stress consequences, and

receiving social support.

Key Terms affective organizational commitment

attitudes

cognitive dissonance

continuance commitmen t

emotional dissonance emotional intelligence (EI)

emotional labour

emotions exit-voice-loyalty-neglect (EVLN) model

general adap tation syndrome

job satisfaction

psychological harassment

ser vice p rofit chain model

stress

stressors

t rust

workaholism

Critical Thinking Questions I. It has al most become a mandatory practice for companies to ensure that employees have fun at work. Many

workplaces now have fully-stocked lounges, gan1es rooms, funky painted walls, and regu lar social events. A few even have a sl ide to travel down to the next floor. However, some experts warn that imposing fun at work can have negative consequences. "Once the idea of fun is forn1ally institutional ized from above, it can lead to employees becoming resentful," warns one critic. "They feel patronized and condescended, and it breeds anger and frustration." Apply the model of emotions, attitudes, and behaviour to explain how fun activities might improve customer satisfaction, as well as how they might result in poorer customer satisfaction.

2. Studies suggest that university and college instructors are frequently required to engage in emotional labour. Identify the situations in which emotional labour is required for this job. In your opinion, is emotional labour more troublesome for college instructors or for call centre staff working at an emergency service?

3. "Emotional intelligence is more important than cognitive intelligence in influencing an individual's success." Do you agree or disagree with this statement? Support your perspective.

4. Recall a traumatic personal event, such as losing a loved one due to an accident or illness, receiving a rejec- tion for an important job or school application, or fai ling an important assignment. Based on what you have learned in this chapter, discuss what has happened to you in terms of your cognitive reasoning, your emo- tional reactions, and your ability to logically deal with these stressfu l situations.

5. "Happy employees lead to happy customers." Explain why this statement tends to be true and identify condi- tions in which it might not be true.

6. In this chapter, we highlighted work-re lated stressors, including organizational constraints (e.g., Jack o f resources), interpersonal conflict (including harassment), work overload, and low task control. Of course, there are many nonwork-related stressors that increasingly come into play. Discuss these and their impact on the work environment.

7. 1\vo college graduates recently joined the same major newspaper as journalists. Both work long hours and have tight deadlines for completing their stories. They are under constant pressure to scout out new leads and be the firs t to report new controversies. One journalist is increasingly fatigued and despondent and has taken

Chapter Four Workplace Emotions, Attitudes, and Stress 121

several days o f sick leave. The other is getting the work done and seems to enjoy the challenges. Use your knowledge of stress to explain why these two journalists are reacting differently to their jobs.

8. A senior official o f a labour union stated: "All stress management does is help people cope with poor man- agement. [Employers) should really be into stress reduction." Discuss the val idity of this statement.

Case Study:

DIANA'S DISAPPOINTMENT: THE PROMOTION STUMBLING BLOCK

by Rosemary Maella r o, University of Dallas

Diana Gillen had an uneasy feeling of apprehension as she arrived at the Cobb Street Grille corporate offices. Today she was meeting with her supervisor, Julie Spencer, and regional director, Tom Miner, to Jearn the outcome of her promotion interview for the district manager position. Diana had been employed by this casual dining res- taurant chain for 12 years and had worked her way up from server to general manager. Based on her track record, she was the obvious choice for the promotion; and her friends assured her that the interview process was merely a formality. Diana was sti ll anxious, though, and feared that the news might not be positive. She knew she was more than qualified for the job, but that didn't guarantee anything these days.

Nine months ago, when Diana interviewed for the last district manager opening, she thought her selection for the job was inevitable. She was shocked when that didn' t happen. Diana was so upset about not getting promoted then that she initially decided not to apply for the current opening. She eventually changed her mind-after all, the company had just named her Restaurant Manager o f the Year and entrusted her with managing it~ flagship loca- tion . Diana thought her chances had to be really good this time.

A multi-unit management position was a desirable move up for any general manager and was a goal to which Diana had aspired since she began working in the industry. When she had not been promoted the last time, Julie explained that her people skills needed to improve. But Diana knew that explanation had little to do with why she hadn't gotten the job-the real reason was corporate pol itics. She heard that the person they hired was some super- star from the outside- a district manager from another restaurant company who supposedly had strong multi-unit management experience and a proven track record o f developing restaurant managers. Despite what she was told , she was convinced that Tom, her regional manager, had been unduly pressured to hire this person, who had been referred by the CEO.

The decision to h ire the outsider may have impressed the CEO, but it enraged Diana. With her successful track record as a restaurant manager for the Cobb Street Grille, she was much more capable, in her opinion, o f overseeing multiple units than someone who was new to the o peration. Besides, district managers had always been promoted internally among the restaurant managers and she was unofficially desig nated as the next person to move up to a distric t position . Tom had h ired the outs ide candidate as a political manoeuvre to put hi mself in a good light with management, even though it meant overlooking a Joyal employee li ke her in the process. Diana had no patience with people who made busi ness decis ions for the wrong reasons. She worked very hard to avoid pol itics- and it especially irritated her when the pol it ical actions of others nega- tively impacted on her.

Diana was ready to be a district manager nine months ago, and thought she was even more quali fied today- provided the decision was based on performance. She ran a tight ship, managing her restaurant completely by the book. She meticulously adhered to polic ies and procedures and rigorously controlled expenses. Her sales were growing, in spite of new competition in the market, and she received relatively few customer complaints. The only number that was a little out of line was the higher turnover an10ng her staff.

Diana was not too concerned about the increa~ing number of terminations, however; there was a perfectly logi- cal explanation for this. It was because she had high standards-for herself and her employees. Any employee who delivered Jess than I 10 percent at all times would be better off finding a job somewhere else. Diana didn't think she should bend the rules for anyone, for whatever reason. A few months ago, for example, she had to fire three otherwise good employees who decided to try a new customer service tactic- a so-called innovation they dreamed up-rather than complying with the established process. As the general manager, it wa~ her responsibility to make sure that the restaurant was managed strictly in accordance with the operations manual and she could not allow deviations. This by-the-book approach to managing had served her well for many years. It had got her promoted

122 Part Two Individual Behaviour and Processes

in the past and she was not about to jinx that now. Losing a few employees now and then- particularly those who had difficulty following the rules- was simply the cost of doing business.

During a recent visit, Julie suggested that Diana might try creating a friendlier work environment because she seemed aloof and interacted with employees somewhat mechanically. Julie even told her that she overheard employees refer to Diana as the "Ice Maiden" behind her back. Diana was surprised that Julie brought this up because her boss rarely criticized her. They had an unspoken agreement: since Diana was so technically competent and always met her financial target~. Julie didn't need to give her much input. Diana was happy to be left alone to run her restaurant without needless advice.

At any rate, Diana rarely paid attention to what employees said about her. She wasn't about to let something as childish as a silly name cause her to modify a successful management strategy. What's more, even though she had recently lost more than the average number of employees due to "personality differences" or "miscommunica- tions" over her directives, her superiors did not seem to mind when she consistently delivered strong bottom line results every month.

As she waited in the conference room for the others, Diana worried that she was not going to get the promotion. Julie had sounded different in the voicemai l message she left to inform her about this meeting, but Diana couldn't put her finger on exactly what it was. She would be very angry if she was passed over again and wondered what excuse they would have this time. Then her mind wandered to how her employees would respond to her if she did not get the promotion. They all knew how much she wanted the job and she cringed to think how embarrassed she would be if she didn' t get it. Her eyes began to mist over at the sheer thought of having to face them if she was not promoted today.

Julie and To m entered the room and the meeting was underway. They told Diana, as kindly as they could , that she would not be promoted at this time; one of her colleagues would become the new district manager. She was incredulous. The individual who got promoted had been with the company only three years- and Diana had trained her! She tried to comprehend how this happened, but it did not make sense. Before any further explanation could be o ffered, she burst into tears and left the room. As she tried in vain to regain her composure, Diana was overcome with crushing disappointment.

Discussion Questions

1. Apply your knowledge of the four emotional intelligence dimensions to discuss the like ly reasons why Diana wasn't offered a promotion .

2 . What skills does Diana need to develop to be promotable in the future? What can the company do to support her developmental efforts?

©Rosemary Maellaro

Case Study:

ROUGH SEAS ON THE LINK650

by Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada)

Professor Suzanne Baxter was preparing for her first cla~s of the semester when Shaun O'Neill knocked lightly on the open door and announced himself: "Hi, Professor, I don't suppose you remember me?" Professor Baxter had large classes, but she did remember that Shaun had been a student in her organizational behaviour class a few years earlier. Shaun had decided to work in the oil industry for a couple of years before returning to school to complete his diploma.

"Welcome back!" Baxter said as she beckoned him into the office. "I heard you were working on an oi l rig in the United Kingdom. How was it?''

"Well, professor," Shaun began, "I had worked two summers in the Texan o il fields and my family's from Ire- land, so I hoped to get a job on the LINK650. It's that new WestOil drilling rig that arrived with so much fanfare in the North Sea fie lds a few years ago. The LINK650 was built by LINK Inc. in Texas. A s tandard practice in this industry is for the rig manufacturer to manage day-to-day rig operations, so employees on the LINK650 are

Chapter Four Workplace Emotions, Attitudes, and Stress 123

managed completely by LINK managers with no involvement from WestOil. We all know that drilling rig jobs are dangerous, but they pay well and offer generous time off. A local newspaper there said that nearly one thousand people lined up to complete job applications for the 50 nontechnical positions available. I was lucky enough to get one of those jobs.

"Everyone hired on the LINK650 was enthusiastic and proud. We were among the chosen few and were really pumped up about working on a new rig that had received so much media attention. I was quite impressed with the recruiters- so were several other hires- because they really seemed to be concerned about our welfare out on the platform. I later discovered that the recruiters came from a consulting firm that spec ializes in hiring people. Come to think of it, we didn't meet a single LINK manager during that process. Maybe things would have been different if some of those LINK supervisors had interviewed us.

"Working on LINK650 was a real shock, even though most of us had some experience working in the oil fields. I'd say that not one of the 50 nontechnical people hired was quite prepared for the brutal jobs on the o il rig. We did the dirtiest jobs in the biting cold wind~ of the North Sea. Still, during the firs t few months most o f us wanted to show the company that we were dedicated to getting the job done. A couple of the new hires quit within a few weeks, but most of the people hired with me really got along well- you know, just like the ideas you mentioned in class. We formed a special bond that helped us through the bad weather and gruelling work.

"The LINK650 supervisors were another matter. They were mean taskmasters who had worked for many years on oil rigs in the Gulf of Mex ico or North Sea. They seemed to re lish the idea of treating their employees the san1e way they had been treated before becoming managers. We put up with their abuse for the ftrs t few months, but things got worse when the LINK650 was shut down twice to correct mechanical problems. These setbacks embar- rassed LINK's management and they put more pressure on the supervisors to get us back on schedule.

"The supervisors started to ignore equipment problems and pushed us to get jobs done more qu ickly without regard to safety procedures. They routinely shouted obscenities at employees in front of others. A couple of my workmates were fired and a couple of others quit their jobs. I almost lost my job one day just because my boss thought I was deliberately working s lowly. He didn't realize-{)r care- that the fittings I was connecting were dan1aged. Several people started finding ways to avoid the supervisors and get as little work done as possible. Many of my co-workers developed back problems. We jokingly called it the 'rigger's backache' because some employees faked their ai lment to leave the rig with paid sick leave.

"Along with having lousy supervisors, we were always kept in the dark about the problems on the rig. Super- visors said that they didn't know anything, which was partly true, but they said we shouldn't be so interested in things that didn't concern us. But the rig's problems, as well as its future contract work, were a major concern to crew members who weren't ready to quit. Their job security depended on the rig's production levels and whether WestOil would sign contracts to drill new holes. Given the rig's problems, most of us were concerned that we would be laid off at any time.

"Everything came to a head when Bob MacKenzie was killed because someone secured a hoist improperly. Not sure if it was mentioned in the papers here, but it was big news around this time last year. A government inquiry concluded that the person responsible wasn't properly trained and that employees were being pushed to finish jobs without safety precautions. Anyway, while the inquiry was going on, several employees decided to unionize the rig. It wasn't long before most employees on LINK650 had s igned union cards. That really shocked LINK's management and the entire o il industry because it was, I think, just the second time that a rig had ever been unionized there.

"Since then, management has been doing everything in its power to get rid o f the union. It sent a 'safety officer' to the rig, although we eventually realized that he was a consultant the company hired to undermine union support. Several managers were sent to special seminars on how to manage a unionized workforce, although one of the topics was how to break the union.

"So you see, professor, I joined LINK as an enthusiastic employee and quit last month with no desire to lift a finger for them. It really bothers me, because I was always told to do your best, no matter how tough the s ituation. It's been quite an experience."

Discussion Questions

I. Identify the various ways that employees expressed their job dissatisfaction on the LINK650.

2. Shaun O'Neill's commitment to the LINK organization dwindled over his two years of employment. Discuss the factors that affected his organizational commitment.

©Copyright. Steven L. McShane. This ca..~e is based on actual events, although names and some information have been changed.

124

Occupation

Bartender

Cashier 1- . .

Dental hygoemst

Insurance adjuster

Lawyer r--:-'- .

Lobr.onan

Postal clerk 1---:-

Regaste red nurse

Social worker 1---..

TelevJsmn announcer

Part Two Individual Behaviour and Processes

Team Exercise:

RANKING JOBS ON THEIR EMOTIONAL LABOUR

Purpose This exercise is designed to help you understand the jobs in which people tend to experience higher or lower degrees o f emotional labour.

Instructions Srep I: Individually rank-order the extent that the jobs listed below require emotional labour. In other words,

assign a " I" to the job you bel ieve requires the most effort, planning, and control to express organizationally desired emotions during interpersonal transactions. Assign a" 10" to the job you bel ieve requires the least amount of emotional labour. Mark your rankings in column I.

Srep 2: The instructor wi ll form teams of four or five members and each team will rank-order the items on the ba~is of consensus (not simply averaging the individual rankings). These results are placed in column 2 .

Srep 3: The instructor will provide expert ranking information. This information should be written in column 3. Then students calculate the differences in columns 4 and 5.

Srep 4: The cla~s wi ll compare the results and discuss the features of jobs with high emotional labour.

Occupational Emotional Labour Scoring Sheet ,-- - -

(I ) (2) (3) (4)

(5) Absolute Individual Team E.' pert difference

Absolute difference r.mking ranking r.mking

ofland3 of2and3

- I- - - - TOTAL

~ Your score Team score- (The Jo"er the score. the better.)

Self-Assessments for Chapter 4

SELF-ASSESSMENT NAME

What is your emotional personality?

How well do you recognize and regulate emotions?

I DESCRIPTION Emotions are influenced by the situation. but also by the individual's own

personality. In particular. people tend to ha\'e a dispositional mood. that is.

I the level and v-.tlence of emotion that they naturally experience due to their personality. This se)f .. assessment estimates your emotional trait tendencies.

Emotional intelligence is an important concept that potentially enables u.s to be more effective with others in the V.'Orkplace and other social settings. Emotional intelligence is best measured as an ability test. However. you can estimate your level of emotional intelligence to some extent by reflecting on events that required your awareness and management of emotions. This instrument assesses your self-perceived emotional intelligence on the four dimensions.

Chapter Four Workplace Emotions, Attitudes, and Stress 125

I SELF-ASSESSMENT NAME

How committed are you to your school?

How stressed are you?

Are you a workaholic?

How do you cope with stressful situations?

I DESCRIPTION Organizational (affective) commitment refers to an individual's emotional

attachment to. involvement in. and identification with an organization. It is mostly discussed in this book a'i an employee's attitude toward the company where he or she works. But affective commitment is also relevant to a student's attitude toward the college or university whe re he or she is taking

courses. This self-assessment estimates your affective organizational commit· ment to your school

Stress is an adaptive response to a situation that is perceived as challenging or threate ning to the person's well-being. It is an increasing concern in today's society. This self-assessment estimates your perceived general level of stress.

Some people have an uncontrollable work motiv-.ttion. constantly think about work. and have low work enjoyment. People with these personal characteristics are called ·workaholics. and they tend to experience high levels of {dis)stre.ss. which can produce long-term health problems. This self· a'isessment estimates the degree to which you have thi s stre.'is· related personal characteristic.

People cope with stress in .several ways. The best coping .str.ttegy usually depends on the .source of stress and other circumstances. However. people also have a natural preference for .some type.'i of coping .strategies over others. This self-asse.'isment identifies the type of coping .str.ttegy you prefer to use in stressful situations.

CHAPTER 5

Foundations of Employee Motivation

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Define employee engagement.

L02 Explain how human drives and emotions influence employee motivat ion.

L03 Summarize Maslow's needs hierarchy, and discuss the employee motivation implications of intrinsic versus extrinsic motivation, learned needs theory, and four-drive theory.

L04 Discuss the expectancy theory model, including its practical implications.

LOS Outline organizational behaviour modification (08 Mod) and social cognitive theory, and explain their relevance to employee mot ivation.

L06 Describe the characteristics of effective goal setting and feedback.

L07 Summarize equity theory and describe ways to improve procedural j ustice.

126

Chapter Five Foundations of Employee Motivation 127

Desjardins Group is a company of superlatives. It is the largest co-operative financial group in Canada (sixth largest in the world), one of the best capitalized banks in North America, Canada's third largest provider of property and casualty insurance, one of the top corporate citizens and socially responsible financial institutions in Canada, and the leader in online and mobile banking in Quebec. The Levis, Quebec, firm is also rated as one of the best places to work in Canada and among the top employers for young people.

To maintain and build on this success, Desjardins Group has a highly motivated workforce. "We've been working hard to offer young employees a stimulating environment, career-and skill-development programs, as well as the latest tools for a rich, varied, and rewarding career with Desjardins," says Marie- Huguette Cormier, Desjardins' executive vice-president of human resources and communications. Helen Lialias, a Desjardins marketing communications advisor in Mississauga, agrees. "They promote innovation and perseverance. That's something that inspires me in my work every day."

Desjardins employees frequently refer to the company's emphasis on work- life balance. But they also appreciate the firm's motivating energy, particularly since recent acquisitions have greatly expanded their career opportunities. " It's definitely among the top employers in terms of positivity and family support, while still being high-performing - so it's kind of cool that way," says Michael Kennedy, senior advisor of strategy and corporate performance in Desjardins' Mississauga office.

Desjardins Group is also improving employee motivation by giving employees more freedom to make decisions in their work. "We're trying to stop [decisions] at the right level and make sure people have the autonomy to do their jobs correctly, without necessarily having to escalate everything," explains Marc-Andre Malboeuf, vice-president at Desjardins' HR Centre of Expertise. Through stimulating work, greater autonomy, skill development and other forms of employee need fulfilment, Desjardins Group is ultimately nurturing a workforce that provides better customer service. "A higher level of employee engagement has a direct impact on higher customer appreciation," says Malboeuf. 1

Desjardins Group has developed a highly engaged workforce by offering intrinsically motivating work, greater job autonomy, opportuni ti es for skill and career development, and flexible work arrangements. These practices generate high levels of employee motivation. Motivation refers to the

forces within a person that affect the direction, intensity, and persistence of voluntary behaviour.2

Moti vated employees are willing to exert a parti cular level of effort (intensity}, for a certain amount of time (persistence), toward a parti cular goal (direction). Moti vation i s one of the four essential drivers

of individual behaviour and performance (see Chapter 2).

The theme of this chapter is employee motivation. We begin by discussing employee engagement, an increasingly popular concept associated with motivation. Next, we explain how dri ves and emotions are the prime movers of employee motivation, and review a~sociated needs-ba~ theories. Our attention then turns

to expectancy theory, a popular cognitive decision model of employee motivation. Organizational behaviour modification and social cogni tive theory are then introduced and linked to expectancy theory. The latter

sections of this chapter outline the key components of goal setting and feedback, and organizational justice.

Employee Engagement

L01 When executives at Desjardins Group and other companies discuss employee moti va- tion, they are just as likely to use the phrase employee engagement. A lthough its defini- tion i s sti ll being debated,3 we define employee engagement as an indi vidual 's emotional

and cogniti ve (logical) motivation, parti cularly a focused, intense, persistent, and purposive effort toward work-related goal s. It is an emotional invol vement in, commitment to, and satisfaction with the

work. Employee engagement also includes a high level of absorption in the work-the experience of

focusing intensely on the task with limited awareness of events beyond i t. Finally, employee engage- ment is often described in terms of self-efficacy-the bel ief that you have the abil ity, role clarity, and

resources to get the job done (see Chapter 3).

Employee engagement is on the minds of many business leaders because of evidence that it predicts employee and work unit performance. For example, Standard Chartered Bank found that branches w ith

128 Part Two Individual Behaviour and Processes

higher employee engagement provide a significantly higher quality of customer service, have 46 percent lower employee turnover, and produce 16 percent higher profit margin growth than branches with lower employee engagement. Another company recently reported that highly engaged teams have more loyal customers (35 percent above average) compared to moderately engaged teams (6 percent above average). It isn't always clear from these studies whether employee engagement makes companies more successful, or whether the company's success makes employees more engaged. However, longitudinal

evidence suggests that employee engagement causes the company outcomes more than vice versa.4

&.s~ Global Connections 5.1:

DHL EXPRESS EMPLOYEES GET ENGAGED

Employee engagement is a key driver of business success at DHL Express, the global cou- rier division of Germany's Deutsche Post. "We definitely see the value in having emotion- ally engaged and motivated employees," says Hennie Heymans, managing director of DHL Express Sub-Saharan Africa. "Engaged employees mean better revenue, profit, customer engagement, and safety."

As one of Africa's top-rated employers, DHL Express builds an engaged workforce through continuous development, such as online learning available to all staff and Made in Africa, an initiative to train and mentor future leaders. "Employees should be encouraged to grow-both personally and professionally-and should be continuously motivated to broaden their hori- zons and fulfil their potential," says Lebo Tseladimitlwa, vice-president of human resources at DHL Express Sub-Saharan Africa.

DHL Express also offers employee recognition awards, competitive pay, and a Certified International Specialist (CIS) program, in which all DHL employees learn how the company operates and the importance of everyone's role. "CIS is not a traditional training platform," says DHL Express Global CEO Ken Allen. "It was designed first and foremost as an engage- ment tool."5

Employee engagement has driven the success of DHL Express in Africa and elsewhere in the world where the courier company does business.

©Naumenko Aleksandr/Shutterstock

Chapter Five Foundations o f Employee Motivation 129

Employee engagement is the most important human resources issue among major Canadian orga- nizations according to a recent major survey. Unfortunately, another recent study revealed that only

27 percent of Canadian employees are highly engaged in their workplace. Furthermore, these engage-

ment scores have barely budged since the dark days of the great financial crisis in 2008.6 A third survey

reported that 14 percent of Canadians are actively disengaged from their work. Actively disengaged employees tend to be disruptive at work, not just disconnected.

This leads to the question: What are the drivers of employee engagement? Goal setting, employee involvement, organizational justice, organizational comprehension (knowing what's going on in the

company}, employee development opportunities, sufficient resources, and an appealing company

vision are some of the more commonly mentioned influences.7 In other words, building an engaged workforce calls on most topics in this book, such as the MARS model (Chapter 2), bui lding affec-

tive commitment (Chapter 4}, motivation practices (this chapter), organizational-level communication

(Chapter 9), and leadership (Chapter I 2).

Employee Drives and Needs To build a more engaged and motivated workforce, we first need to understand where

motivation begins, that is, the motivational "forces" or prime movers of employee behav- iour.8 Our starting point is dr ives (also called primary needs), which we define as hard-

wired characteristics of the brain that attempt to keep us in balance by correcting deficiencies. Recent neuroscience (brain) research has highlighted the central role of emotions in this process. Specifically, drives produce emotions that energize us to act on our environment.9 There is no comprehensive,

agreed-upon Jist of human drives, but research has consistently identified several, including drives for

social interaction, for competence, to comprehend our surroundings, and to defend ourselves against

physiological and psychological harm. 10

Drives are universal and innate, which means that everyone has them and they exist from bir th.

Drives are the starting point of motivation because they generate emotions, which put people in a state

of readiness to act on their environment. Cognition (logical thinking) also plays an important role in motivation, but emotions are the real sources of energy in human behaviour. 11 In fact, both words

(emotion and motivation) originate from the same Latin word, movere, which means "to move." Exhibit 5.1 illustrates how drives and emotions translate into felt needs and behaviour. Drives, and

the emotions produced by these drives, generate human needs. We define needs as goal-directed forces

that people experience. They are the motivational forces of emotions channelled toward specific goals to correct deficiencies or imbalances. As one leading neuroscientist explains: "[D]rives express them-

selves directly in background emotions and we eventually become aware of their existence by means of background feelings."12 In other words, needs are the emotions that we become aware of.

Consider the following example: You arrive at work to discover a stranger sitting at your desk.

Seeing this situation produces emotions (worry, curiosity) that motivate you to act. These emotions

EXHIBIT 5.1 Drives, Needs, and Behaviour

Drives and emotions

Self-concept, social norms, and past experience

Needs Decisions and

behaviour

130 Part Two Individual Behaviour and Processes

are generated from drives, such a~ the drive to defend and drive to comprehend. When strong enough, these emotions motivate you to do something about this s ituation, such as finding out who that person is and possibly seeking reassurance from co-workers that your job is still safe. In this case, you have a need to make sense of what is going on (comprehend), to feel secure, and possibly to correct a sense of

personal violation (defend). Notice that your emotional reactions to seeing the stranger sitting at your desk represent the forces that move you, and that your logical thinking plays an active role in channel-

ling those emotions toward specific goals.

INDIVIDUAL DIFFERENCES IN NEEDS Everyone ha~ the same drives; they are hardwired in us through evolution. However, different people develop different intensities of needs in a particular situation. Exhibit 5.1 explains why this difference occurs. The left side of the model shows that the individual's self-concept (as well as personality and values), social norms, and pa~t experience amplify or suppress emotions, thereby resulting in stronger or weaker needs.13 For example, people who define themselves as very sociable typically experience a need for social interaction after being alone for a while, whereas people who view themselves as Jess sociable would experience a Jess intense need to be with others over that time. These individual differ- ences also explain why needs can be "learned" to some extent. Socialization and reinforcement may increase or decrease a person's need for social interaction, achievement, and so on. We will discuss

learned needs later in the chapter. Individual differences-including self-concept, social norms, and past experience-influence the

motivation process in a second way. They regulate a person's motivated decisions and behaviour, as the

right side of Exhibit 5.1 illustrates. Consider the earlier example of the stranger sitting at your desk. You probably wouldn't walk up to the person and demand that he or she leave; such blunt behaviour is contrary to social norms in most cultures. Employees who view themselves as forthright might approach the stranger directly, whereas those who have a different personality and self-view are more likely to first gather information from co-workers before approaching the individual. In short, your drives (to comprehend, to defend, to bond, etc.) and resulting emotions energize you to act, and your self-concept, social norms, and past experience direct that energy into goal-directed behaviour.

Exhibit 5. 1 provides a useful template for understanding how drives and emotions are the prime sources of employee motivation and how individual characteristics (self-concept, experience, person- alnorms) influence goal-directed behaviour. You will see pieces of this theory when we discuss four- drive theory, expectancy theory, equity theory, and other concepts in this chapter. The next section describes theories that try to explain the dynamics of drives and needs.

Needs and Drives Theories

MASLOW'S NEEDS HIERARCHY THEORY The most widely known theory of human motivation is Maslow's needs hierar chy theory, which was developed by psychologist Abraham Maslow in the 1940s (see

Exhibit 5.2). This model condenses the long Jist of previously studied drives into five basic categories (which Maslow cal led primary needs). 14 Maslow organized these categories into the following hier- archy (from lowest to highest): physiological (need for food, air, water, shelter, etc.), safety (need for security and stability), be/ongingness/love (need for interaction with and affection from others), esteem (need for self-esteem and social esteem/status), and self-actualization (need for self-fulfiment, realiza- tion of one's potential). Along with these five categories, Maslow identified the need to know and the need for aesthetic beauty as two innate drives that do not fit within the hierarchy.

Ma~Jow proposed that human beings are motivated by several primary needs (drives) at the same time, but that the strongest source of motivation is the lowest unsatisfied need. As the person satisfies a lower-level need, the next higher need in the hierarchy becomes the strongest motivator and remains so even if never satisfied. The exception to this need fulfilment process is self-actualization. People have

Chapter Five Foundations of Employee Motivation 131

EXHIBIT 5.2 Maslow's Needs Hierarchy

Need to know

'

Need for beauty

Source: Based on infonnation in A. H. Ma..:;Jow. "A Theory of l-luman Motjvation .... Psyeholog:ical Re\•lew 50 ( 1943). pp. 370--396.

an ongoing need for self-actualization; it is never really fulfilled. Thus, while the bottom four groups are deficiency needs because they become activated when unfulfilled, self-actual ization is known as a growth need because it continues to develop even when satiated.

r tr::::\ How strong are your growth need s? You can discover your growth need strength ~ by completing this self-assessment in Connect.

In spite of its popularity, Maslow's needs hierarchy theory has been dismissed by most motivation experts.15 Other needs hierarchy models have similarly failed to adequately depict human motivation. Studies have concluded that people do not progress through the hierarchy as Maslow's theory predicts. Some people fulfil their esteem needs before their safety needs, for example. Furthermore, Ma~Jow's theory suggests that a person's needs, once fulfilled, remain fulfilled for a long time, whereas need

fulfilment actual ly tends to endure more briefly. But the main problem with needs hierarchy models is that different people have different needs

hierarchies. Some people place social status at the top of their personal hierarchy; others view personal development and growth above social relations or status. These differences exist because personal needs are strongly influenced by self-concept, personal values, and personality. 16 People have different hierarchies of values (see Chapter 2), so they also have parallel differences in their needs hierarchies. If your most important values Jean toward stimulation and self-direction, you probably pay more atten- tion to self-actualization needs. If power and achievement are at the top of your value system, status needs wi ll likely be at the top of your needs hierarchy. Furthermore, a person's values hierarchy can change over time, so his or her needs hierarchy also changes over time.'7

Although needs hierarchy theory has fai led the reality test, Maslow deserves credit for transforming how we think about human motivation in three ways. 18 First, Maslow emphasized that needs should be studied together (holistically) because human behaviour is typically initiated by more than one

132 Part Two Individual Behaviour and Processes

need at the same time. Previously, motivation experts had studied separately each of the dozens of needs and their underlying drives. 19 Second, Maslow recognized that motivation can be shaped by human thoughts (including self-concept, social norms, and past experience), whereas earlier motiva- tion experts focused mainly on how instincts motivate behaviour20 Third, Maslow popularized the

concept of self-actualization, suggesting that people are naturally motivated to reach their potential.21

This positive view of motivation contrasted with previous motivation theories, which focused on need

deficiencies, such as hunger. By emphasizing motivation through growth and personal development rather than through deficiencies, Maslow is considered a pioneer in positive organiztJtiona/ behaviour (see Chapter 3).

INTRINSIC AND EXTRINSIC MOTIVATION By extoll ing the importance of self-actualization, Maslow launched an entirely new way of th inking about human motivation. People experience self-actualization by applying their skills and knowl- edge, observing how their talents achieve meaningful results, and experiencing personal growth

through learning. These are the conditions for intrinsic motivation, which refers to motivation controlled by the ind ividual and experienced from the activity itself.22 Intrinsic motivation occurs when people seek need fulfilment from doing the activity itself, not as a means to some other out- come. They enjoy applying their talents toward a meaningful task and experiencing progress or success in that task.

Employees at Ai rbnb, the San Francisco-based online vacation accommodation company, say they feel intrinsically motivated th rough autonomy and personal growth. "I feel realized, motivated, welcomed every single day," declares an Airbnb employee in Sao Paulo, Brazil. "Lot of autonomy and a great company to work for," reports an employee in the Netherlands. Airbnb's vice-president of engineering Mike Curtis explains the company's approach: "Fundamentally we believe that [employees) having more control over what they work on is more motivating and leads to higher-quality results."23

Airbnb, San Francisco. USA The/ZUMA Press/Newscom

Chapter Five Foundations of Employee Motivation 133

Behaviour is intrinsically motivated when it is anchored in our innate drives for competence and auton- omy24 People feel competent when applying their skills and observing positive, meaningful outcomes from those skills. People feel autonomous when their motivation is self-initiated rather than controlled from an external source. The effect of intrinsic motivation and, in particular, the drives for competence

and autonomy are apparent at Desjardins Group. As the opening case study to this chapter describes, the Canadian financial institution has given staff more freedom to make decisions at their level of the busi-

ness and to further develop their potential through new work a~signment~ and other forms of learning. Intrinsic motivation contrasts with extrinsic motivation, which occurs when people are motivated

for instrumental reasons to receive something that is beyond their personal control. In other words, they direct their effort toward a reward controlled by others that indirectly fulfils a need. Extrinsic sources of motivation exist throughout organizations, and include performance bonuses, recognition awards, and frequent reminders from the boss about work deadlines. These are extrinsic motivators because the outcomes (bonus, award, happy boss) are controlled by others and are not need fulfilments in them- selves. The recognition award is a means to satisfy status needs, for example.

A somewhat less "external" form of extrinsic motivation occurs when people are motivated by inter- nal tension that originates externally. This type of motivation exists when we strive to perform our part of a team project well to avoid being ashamed of letting the team down. The team's potential reaction is the extrinsic motivator, but we generate an internal tension and effort from that external source. A third form of extrinsic motivation occurs when employees internalize the value of the external incentive, such as by providing the best customer service because we support the company's mandate that cus- tomers come first. Notice that the customer example is not intrinsic motivation because need fulfilment comes from living up to the company's values, not from the experience of satisfying customers.

Does Extrinsic Motivation Undermine Intrinsic Motivation? There are two contra~ting hypotheses about how extrinsic and intrinsic motivation work together.25 The additive view suggests that someone performing an intrinsically motivating job becomes even more motivated by also receiv- ing an extrinsic source of motivation for that work. The extrinsic motivator energizes the employee

more than the intrinsic motivator alone. The contrasting hypothesis is that introducing extrinsic sources of motivation will reduce intrinsic motivation. For example, employees who were energized by the work itself will experience less of that intrinsic motivation when they receive extrinsic rewards,

such as a performance bonus. The explanation is that introducing extrinsic motivators diminishes the employee's feeling of autonomy, which is a key source of intrinsic motivation.

Which hypothesis is correct? So far, the research evidence is mixed. 26 Extrinsic motivators may reduce existing intrinsic motivation to some extent and under some conditions, but the effect is often minimal. Extrinsic rewards do not undermine intrinsic motivation when they are unexpected, such as a surprise bonus, when they have low value relative to the intrinsic motivator, and when they are not contingent on specific behaviour (such as receiving a fixed salary). But when employees are engaged in intrinsically motivating work, employers should be careful about the potential unintended effect of undermining that motivation with performance bonuses and other sources of extrinsic motivation27

LEARNED NEEDS THEORY Earl ier in this chapter, we noted that needs are shaped, amplified, or suppressed through self-concept, social norms, and past experience. Maslow observed that individual characteristics influence the

strength of higher-order needs, such as the need to belong. Psychologist David McClelland further investigated the idea that need strength can be altered through social influences. In particular, he rec- ognized that a person's needs can be strengthened or weakened through reinforcement, learning, and social conditions. McClelland examined three " learned" needs: achievement, power, and affiliation.28

Need for Achievement People with a strong need for achievement (nAch) want to accomplish reasonably challenging goals through their own effort. They prefer working alone rather than in teams, and they choose moderately challenging tasks (i.e., neither too ea~y nor impossible to complete). Peo-

ple with high nAch desire unambiguous feedback and recognition for their success. Money is a weak

134 Part Two Individual Behaviour and Processes

motivator, except when it provides feedback and recognition.29 In contrast, employees with low nAch perform better when money is used a~ an incentive. Successful entrepreneurs tend to have a high nAch, possibly because they establ ish chal lenging goals for themselves and thrive on competition.30

Need for Affiliation Need for affiliation (nAfl) refers to a desire to seek approval from others, conform to their wishes and expectations, and avoid confl ict and confrontation. People with strong nAff try to project a favourable image of themselves. They tend to actively support others and try to smooth out workplace conflicts. High nAff employees generally work well in coordinating roles to mediate conflicts and in sales positions where the main task is cultivating long-term relationships. However, they tend to be less effective at allocating scarce resources and making other dec isions that

potentially generate confl ict. Leaders and others in decision-making positions require a relatively low need for affil iation so their choices and actions are not bia~ed by a personal need for approval.31

Need for Power People with a high need for power (nPow) want to exercise control over oth- ers and are concerned about maintaining their leadership position. They frequently rely on persua~ive communication, make more suggestions in meetings, and tend to publicly evaluate situations more

frequently. McClelland proposes that there are two types of nPow. Individuals have personalized power when they enjoy their power for its own sake, use it to advance personal interests, and wear their power as a status symbol. Individuals havesocia/ized power when they desire power as a means to help

others32 McClelland argues that effective leaders should have a high need for socialized rather than personalized power. They must have a high degree of altruism and social responsibility and be con- cerned about the consequences of their own actions on others.

How strong are your learned needs? You can discover the strength of these learned needs in you by completing this self-assessment in Connect.

Changing (Learning) Need Strength Individual needs can be strengthened or weakened (learned), and McClelland developed training programs to change need strength. One program increased achievement motivation by having participants write achievement-oriented stories, prac- tice achievement-oriented behaviours in business games, and meet frequently with a reference group

of other trainees to maintain their new-found achievement motivation.33 These training programs increased achievement motivation by altering participants' self-concept and reinforcing their achieve- ment experiences. When writing an achievement plan, for example, participants were encouraged (and

supported by other participants) to experience the anticipated thri ll of succeeding.

FOUR-DRIVE THEORY One of the central messages of this chapter is that drives generate emotions, which represent the prime movers or sources of motivation for individual behaviour. Most organizational behaviour theories focus

on the cognitive a~pects of human motivation. In contra~t. four-drive theory states that emotions are the source of human motivation and that these emotions are generated through four innate and universal drives.34 These drives are hardwired in our brains and exist in all human beings. They are also independent of one another; there is no hierarchy of drives. Three drives are proactive; that is, they are regularly acti- vated by our perceptions to seek fulfilment. Only one drive (defend) is reactive-it is triggered by threat.

Four-drive theory includes four fundamental drives identified from earl ier psychological, sociologi-

cal, and anthropological research. These drives are:

Drive ro acquire. This is the drive to seek, take, control, and retain objects and personal experi-

ences. It is a variation of the need for achievement, competence, status and self-esteem, and to

some extent self-actualization.35 The drive to acquire also motivates competition.

Drive ro bond. This drive is a variation of the need for belonging and affiliation described by Ma~low and McClelland. It explains why our self-concept is partly defined by associations

Chapter Five Foundations of Employee Motivation 135

with social groups (see Chapter 3). It may also explain why people who lack social contact are more prone to serious health problems.36 The drive to bond motivates people to cooperate and, consequently, is essential for organizations and societies.

Drive to comprehend. This is similar to Maslow's primary need to know. People are inherently curious and need to make sense of their environment and themselves37 They are motivated to discover answers to unknown as well as confl icting ideas. To some degree, the drive to compre-

hend is related to self-actual ization.

Drive to defend. This is the drive to protect ourselves physical ly, psychological ly, and social ly. Probably the first drive to develop, it creates a fight-or-fl ight response when we are confronted with threats to our physical safety, our possessions, our self-concept, our values, and the well-

being of others.

How Drives Influence Motivation and Behaviour Recall from Chapter 3 that the stimuli received through our senses are quickly and nonconsciously tagged with emotional markers.38 Accord- ing to four-drive theory, the four drives determine which emotions are tagged to incoming stimuli. Most of the time, we aren't aware of our emotional experiences because they are subtle and fleeting. However, emotions do become conscious experiences when they are sufficiently strong or when they

significantly conflict with one another. Four-drive theory applies the model described in the previous section. It states that our social

norms, past experience, and personal values direct the motivational force of our emotions to decisions and behaviour that potentially reduce that tension (see Exhibit 5.3). In other words, our mental ski ll set develops behavioural intentions that are acceptable to society, consistent with our own moral compass, and have a high probability of achieving the goal of fulfilling our felt needs.39

Practical Implications of Four-Drive Theory The main recommendation to emerge from four-drive theory is that jobs and workplaces should provide a balanced opportunity for employees to fulfil the four drives.40 There are really two recommendations here. The first is that the best workplaces help employees fulfil all four drives. Employees continual ly seek fulfilment of their innate drives, so successful companies provide sufficient rewards, learning opportunities, social interaction, and so forth, for al l employees.

The second recommendation is that fulfilment of the four drives must be kept in balance; that is, organizations should avoid providing too much or too little opportunity to fulfil each drive. The reason

EXHIBIT 5.3 Four-Drive Theory of Motivation

Personal values

Mental skill set

Past experience

channels &mOtional - forces created by drives

Goal-directed choice and effort

Sourr:e: Based on infonnation in P.R. Lawrence and N. Nohria. Driven: How Human Natw-e Shapes Our Choices (San Franc-isc.o: Jossey-Bass. 2002).

136 Part Two Individual Behaviour and Processes

for this advice is that the four drives counterbalance each other. The drive to bond, which motivates mutual support and cohesion, counterbalances the drive to acquire, which motivates competitiveness. Therefore, an organization that fuels the drive to acquire without the drive to bond may eventually suf- fer from organizational politics and dysfunctional conflict. The drive to comprehend, which motivates investigation of the unknown, counterbalances the drive to defend, which motivates people to avoid the unknown. Change and novelty in the workplace will aid the drive to comprehend, but too much of

it will trigger the drive to defend to such an extent that employees become territorial and resistant to change. Thus, the workplace should offer enough opportunity to keep all four drives in balance. These

recommendations help explain why Desjardins Group, described at the beginning of this chapter, has a highly motivated workforce. It balances high performance with social support and work-l ife balance, for example.

Four-drive theory is based on a deep foundation of neuroscientific, psychological, sociological, and anthropological research. The theory explains why needs vary from one person to the next, but avoids the assumption that everyone has the same needs hierarchy. It is holistic (it relates to al l drives, not just one or two) and humanistic (it acknowledges the role of human thought and social influences, not just instinct). Even so, the theory is far from complete. Most experts would argue that one or two other drives should be included. Furthermore, social norms, personal values, and past experience probably don't represent the full set of individual characteristics that translate emotions into goal-directed effort.

For example, personal ity and self-concept probably also moderate the effect of drives and needs on decisions and behaviour.

Canadians continuously strive to fulfil the four drives identified in four-drive theory. A recent poll of more than 7,000 Canadian employees and job seekers reported that being recognized for doing good work and getting respect from colleagues top their list of everyday needs. "People want to feel valued and they stay where they feel valued," explains a senior executive at Fairmont Hotel and Resorts in Toronto. This view is echoed by an executive at Intercontinental Hotels Group: "Everything you do in the business must make [employees] feel like heroes and heroines and you must acknowledge the huge contribution they make. Everyone says they do this, but very few companies do."4 1

Courtesy of Fairmont Hotels and Resorts.

Chapter Five Foundations o f Employee Motivation 137

Expectancy Theory of Motivation The theories described so far mainly explain what motivates us-the prime movers of

employee motivation-but they don't tell us what we are motivated to do. Four-drive theory recognizes that social norms, personal values, and past experie nce direct our

effort, but it doesn't offer any detail about what goals we choose or where our effort is directed under

various circumstances.

Expectancy th eory offers a more detailed understanding of the logical decisions employees make when directing their effort toward specific behaviour. Essentially, the theory states that work effort is

directed toward behaviours that people believe will produce the most favourable outcomes. It a~sumes that people are rational decision makers who choose where to direct their effort based on the probability of

events or outcomes occurring and the positive or negative valences (expected satisfaction) of those events

or outcomes (see Chapter 7).42 This calculation, illustrated in Exhibit 5.4, states that an individual's level of effort depends on three factors: effort-to-performance (E-to-P) expectancy, performance-to-outcome

(P-to-0 ) expectancy, and outcome valences. Employee motivation is influenced by all three components

of the expectancy theory model. If any component weakens, motivation weakens.

E-ro-P expectancy. This is the individual 's perception that his or her effort will result in a par-

ticular level of performance. In some situations, employees may believe that they can unques-

tionably accomplish the ta~k (a probability of 1.0). In other situations, they expect that even

their highest level of effort will not result in the desired performance level (a probability of 0.0).

In most ca~es, the E-to-P expectancy falls somewhere between these two extremes.

P-to-0 expectancy. This is the perceived probability that a specific behaviour or performance

level will lead to a particular outcome. In extreme cases, employees may bel ieve that accomplish- ing a particular task (performance) will definitely result in a particular outcome (a probability of

1.0}, or they may believe that successful performance will have no effect on this outcome (a prob-

ability of 0.0). More often, the P-to-0 expectancy fal ls somewhere between these two extremes.

Outcome valences. A valence is the anticipated satisfaction or dissatisfaction that an individual feels toward an outcome.43 It ranges from negative to positive. (The actual range doesn' t matter;

it may be from -1 to +I or from - 100 to +100.) Outcomes have a positive valence when they are consistent with our values and satisfy our needs; they have a negative valence when they oppose our values and inhibit need fulfilment.

EXHIBIT 5.4 Expectancy Theo ry of Motivation

Effort

E-to-P Expectancy

Probability that a specific effort level will result in a specifiC

,~

P-to-0 Expectancy

Probability that a specific performance level will result in specifiC outcomes

l Performance

Valence

Anticipated satisfaction from the outcome

Outcome1 Cl Outcome2 Cl Outcome3 Cl

138 Part Two Individual Behaviour and Processes

EXHIBIT 5.5 Practical Applications of Expectancy Theory --lbpecl~......, E ~ P expectancies

P ~ 0 expectancies

Outcome valences

Olljedhe A(llllll .... To increa...;e the e mployee•s belief she/he is Select people with the required skills and knowledge.

capable of performing the job succe.o;sfully Provide required training and clarify job requirement'i.

Provide sufficient time and resources.

Assign simpler or fewer tasks until employees can master

them.

Provide examples of similar employees who have success·

fully performed the task .

Provide coaching to employees who lack self-confidence.

To increase the employee's belief that his/ Measure job performance accurately. her good performance wil1 result in certain Clearly explain the o utcomes that will result from success· (valued) outcomes ful performance.

Describe how the employee's rewards were ba'ied on past

performance.

Provide example.o; of other employees whose good

performance has resulted in higher re·wards.

To increase lhe e mployee•s expected Distribute reward'i that employees value.

value of outcomes resulting from desired Individualize reward'i. performance

Minimize lhe presence of countervalent outcomes.

EXPECTANCY THEORY IN PRACTICE

One of the appeal ing characteristics of expectancy theory is that it provides clear guidelines for increas- ing employee motivation.44 Several practical appl ications of expectancy theory are listed in Exhibit 5.5 and described below.

Increasing E-to-P Expectancies E-to-P expectancies are influenced by the individual's bel ief that he or she can successfully complete the task. Some companies increase this can-do attitude by assuring employees that they have the necessary competencies, clear role perceptions, and resources to reach the desired levels of performance. An important part of this process involves matching employee

abilities to job requirements and clearly communicating the tasks required for the job. Similarly, E-to-P expectancies are learned, so behaviour modelling and supportive feedback typically strengthen the individual's belief that he or she is able to perform the task.

Increasing P-to-0 Expectancies The most obvious ways to improve P-to-0 expectancies are to measure employee performance accurately and distribute more valued rewards to those with higher job performance. P-to-0 expectancies are perceptions, so employees also need to believe that higher perfonnance will result in higher rewards. Furthermore, they need to know how that connection occurs, so leaders should use examples, anecdotes, and public ceremonies to illustrate when behaviour has been rewarded.

Increasing Outcome Valences One s ize does not fit al l when motivating and rewarding peo· pie. The valence of a reward varies from one person to the next because they have different needs. One solution is to individual ize rewards by allowing employees to choose the rewards of greatest value to them. When this isn't possible, companies should ensure that everyone values the reward (i.e., positive valence). Consider the following Canadian story: Top-performing employees in one organization were rewarded with a one-week Caribbean cruise with the company's executive team. Many were likely

Chapter Five Foundations of Employee Motivation

• by the NUMBERS

Performance-to-Outcome Expectancy: The Missing Link45

of 31,000 employees surveyed in 29 countries say they

see a clear link between performance and pay in their organization.

of more than 4,000 employees surveyed in Canada and the United

States say their manager differentiates between high and low performers.

of 1,863 United Kingdom employees surveyed see a clear

link between their pay and performance.

of 181,465 Canadian government employees surveyed agree that

unsatisfactory employee performance is handled effectively in their department.

33° of 421,748 U.S. federal government employees surveyed agree that

differences in performance are recognized in a meaningful way in their work unit.

139

delighted, but at least one top perfonner was aghast at the thought of going on a cruise with senior management. "I don't like schmoozing, I don't like feel ing trapped. Why couldn't they just give me the money?" she complained. In the end, the employee went on the cruise, but spent most of her time working in her stateroom.46 Finally, we need to watch out for countervalent outcomes. For example, if a company offers individual performance bonuses, it should beware of team norms that discourage employees from working above a minimum standard. These norms and associated peer pressure are countervalent outcomes to the bonus.

Overall, expectancy theory is a useful model that explains how people rational ly figure out the best direction, intensity, and persistence of effort. It has been tested in a variety of situations and predicts employee motivation in different cultures.47 One limitation with expectancy theory, however, is that it mainly explains extrinsic motivation; the model's features do not fit easily with intrinsic motivation. Another concern is that the theory ignores emotions as a source of motivation. The valence element of expectancy theory captures some of this emotional process, but only peripherally.48 A third issue is that expectancy theory outlines how expectancies (probability of outcomes) affect motivation, but it doesn't explain how employees develop these expectancies. Two theories that provide this explanation are organizational behaviour modification and social cognitive theory, which we describe next.

O rganizational Behaviour Modification and Social Cognitive Theory

LOS Expectancy theory states that motivation is determined by employee beliefs about expected performance and outcomes. But how do employees learn these expectancy bel iefs? For example, how do they form the impression that a particular work activity is more likely

140 Part Two Individual Behaviour and Processes

EXHIBIT 5.6 A-B-Cs of Organizational Behaviour Modification

Antecedents

What happens before the behaviour

EXAMPLE

Your phone makes a distinctive sound

Behaviour

What the person says or does

You check your phone for a new message

Sourr:es: Adapted from T. K. Connellan. f-low to lmprO\'e Human Performance (New Yod:: Harper & Row. 1978). p. 50: F. Luthan.s and R. Kreitner. Org.anitatjooaJ Behaviour Modifacation and Beyond (Glenview. IL: Scott. Foresman. 1985). pp. 85~8.

to produce a pay increase or promotion whereas other activities have little effect on pay? Two theories- organizational behaviour modification (OB Mod) and social cognitive theory-answer this question by explaining how people learn what to expect from their actions. As such, OB Mod and social cognitive the- ory supplement expectancy theory by explaining how people learn the expectancies that affect motivation.

ORGANIZATIONAL BEHAVIOUR MODIFICATION For most of the first half of the 1900s, the dominant paradigm about managing individual behaviour was behaviourism, which argues that a good theory should rely exclusively on behaviour and the envi-

ronment and ignore nonobservable cognitions and emotions.49 Although behaviourists don't deny the existence of human thoughts and attitudes, they view them as unobservable and, therefore, irrelevant

to scientific study. A variation of this paradigm, called organizational behaviour modif ica tion (08 Mod ), eventually entered organizational studies of motivation and learning. 5°

A-8-Cs of 08 Mod The core elements of OB Mod are depicted in the A-B-C model shown in Exhibit 5.6. Essential ly, OB Mod attempts to change behaviour (B) by managing its antecedents (A) and consequences (C) 5 1 Consequences are events following a particular behaviour that influence its future occurrence. Consequences include receiving words of thanks from co-workers after assist-

ing them, enj oying preferred work schedules after being with the company longer than the average employee, and findi ng useful information on your smartphone after checking for new messages. Con- sequences also include no outcome at al l, such as when no one says anything about how well you have

been serving customers. Antecedents are events preceding the behaviour that inform employees that a particular action will

produce specific consequences. An antecedent could be a sound from your smartphone signalling that a text message ha~ arrived. Or it could be your supervisor's request to complete a specific task by tomor- row. Notice that antecedents do not cause behaviour. The sound from your smartphone doesn't cause you to open the text message. Rather, the sound (antecedent) is a cue signalling that if you look at your phone messages (behaviour), you will find a new message with potentially useful information (consequence).

Contingencies and Schedules of Reinforcement OB Mod identifies four types of conse- quences (cal led the contingencies of reinforcemem)52 Positive reinforcement occurs when the introduc- tion of a consequence increases or maintains the frequency or future probabi lity of a specific behaviour. Receiving praise from co-workers is an example of positive reinforcement because the praise usual ly

maintains or increases your likelihood of helping them in future. Punishmenl occurs when a conse- quence decreases the frequency or future probability of a specific behaviour occurring. Most of us would consider being demoted or criticized by our co-workers as forms of punishment. A third type

Chapter Five Foundations of Employee Motivation 141

of consequence is extinction. Extinction occurs when the target behaviour decrea~es because no con-

sequence follows it. For instance, research suggests that performance tends to decline when managers stop congratulating employees for their good work53

The fourth consequence in OB Mod, cal led negative reinforcement, is often confused with punish- ment. It's actually the opposite; it occurs when the removal or avoidance of a consequence increases or maintains the frequency or future probabil ity of a specific behaviour. It is usually the removal of pun- ishment. For example, managers apply negative reinforcement when they stop criticizing employees whose substandard performance has improved.

Which of these four consequences works best? In most situations, positive reinforcement should follow desired behaviours and extinction (do nothing) should follow undesirable behaviours. Positive reinforce- ment is preferred because it leverages the power of positive organillltional behaviour; focusing on the positive rather than negative aspects of life will improve organizational success and individual well-being

(see Chapter 3). In contra~t. punishment and negative reinforcement generate negative emotions and atti- tudes toward the person (e.g., supervisor) and organization who initiated and later removed the punishment. However, punishment (dismissal, suspension, demotion, etc.) may be necessary for extreme behaviours, such a~ deliberately hurting a co-worker or stealing inventory. Indeed, research suggests that, under some conditions, punishment maintains a sense of fairness among those affected by the employee's indiscretion. 54

Along with the four consequences, OB Mod considers the frequency and timing of these reinforc- ers (called the schedules of reinforcement). 55 The most effective reinforcement schedule for learning new tasks is continuous reinforcement-providing positive reinforcement after every occurrence of the desired behaviour. Aside from learning, the best schedule for motivating employees is a variable ratio schedule in which employee behaviour is reinforced after a variable number of times. Salespeople expe- rience variable ratio reinforcement because they make a successful sale (the reinforcer) after a vary-

ing number of client calls. The variable ratio schedule makes behaviour highly resistant to extinction because the reinforcer is never expected at a particular time or after a fixed number of accomplishments.

Evaluating OB Mod Everyone uses organizational behaviour modification principles in one form or another to motivate others. We thank people for a job well done, are silent when displeased, and sometimes try to punish those who go against our wishes. OB Mod also occurs in various formal pro- grams to reduce absenteeism, improve task performance, encourage safe work behaviours, and have a healthier lifestyle. An innovative and increasingly popular workplace behaviour modification strat-

egy relies on "gamification"-reinforcing behaviour through online games in which employees earn "badges" and compete for top positions on leader boards.56

In spite of its widespread use, organizational behaviour modif ication has a number of limitations. One limitation is "reward inflation," in which the reinforcer is eventual ly considered an entitlement.

~-a Global Connections 5.2:

AIRBALTIC MOTIVATES EMPLOYEE INVOLVEMENT AND LEARNING WITH GAMIFICATION57

AirBaltic recently experimented with gamification using an online platform that motivated employees to learn about current operational activities and provide opinions on those business decisions. The platform, called Forecaster, operated as a type of stock market whereby employees at the Latvian-based airline used virtual money to buy and sell vir- tual shares in specific "projects." Stock markets reinforce and motivate behaviour using organizational behaviour modification principles.

Most projects were near-term forecasts or plans posted by the department responsible for those activit ies. For example, one proj ect was the company's estimated customer

(continued)

142 Part Two Individual Behaviour and Processes

(continued)

©Air Baltic

demand for the airline's bus service the fol- lowing month. Another project tested employee opinions about the commercial success of a new flight destination. Players won virtual money by owning shares in projects that were accurate or otherwise successful. The top four winners each month received prizes.

Almost 30 percent (300 people) of AirBal- tic's sta ff voted (bought and sold virtual shares) and commented on more than 50 projects. The airline also launched an online game to recruit cabin crew and one that motivates customers to do physica l exercise within 24 hours after a flight. "The most engaging setting is a game environ- ment," observes Daiga Ergle (pictured below), the AirBa lt ic executive who is in charge of employee experiences at the air- line. "People are the most engaged when feeling playful."

For this reason, most OB Mod programs must run infrequently and for a short duration. Another con- cern is that the variable ratio schedule of reinforcement tends to create a lottery-style reward system, which might be viewed a~ too erratic for formal rewards and is unpopular to people who dislike gam- bling. Probably the most significant problem is OB Mod's radical view that behaviour is learned only through personal interaction with the environment. 58 This view is no longer accepted; instead, experts recognize that people also learn and are motivated by observing others and inferring possible conse- quences of their actions. This learning process is explained by social cognitive theory.

SOCIAL COGNITIVE THEORY

Social cognitive theory states that much learning occurs by observing and modelling others as well as by anticipating the consequences of our behaviour. 59 Although observation and modelling (imitation) have been studied for many years as sources of motivation and learning, Canadian social scientist Albert Bandura reframed these ideas within a cognitive (internal thoughts) perspective as an alternative to the behaviourist approach. There are several pieces to social cognitive theory, but the three most relevant to employee motivation are learning behaviour consequences, behaviour modelling, and self-regulation.

Learning Behaviour Consequences People learn the consequences of behaviour by observing or hearing about what happened to other people, not just by directly experiencing the consequences.60

Hearing that a co-worker was fired for being rude to a client increases your belief that rude behav-

iour will result in being fired. In the language of expectancy theory, learning behaviour consequences changes a person's perceived P-to-0 probability. Furthermore, people logically anticipate consequences in related situations. For instance, the story about the fired employee might also strengthen your P-to-0 expectancy that being rude toward co-workers and suppliers (not just clients) will get you fired.

Chapter Five Foundations of Employee Motivation 143

Behaviour Modelling Along with observing others, people learn by imitating and practising their behaviours61 Modelling the behaviour of others gives learners direct sensory experience, which helps them to acquire tacit knowledge and ski lls, such as the subtle person-machine interaction while driving a vehicle. Behaviour modell ing also increases self-efficacy (see Chapter 3), because people gain more self-confidence after observing others and performing the task successfully themselves. Self-efficacy particularly improves when observers are similar to the model in age, experience, gender,

and related characteristics.

Self-Regulation An important feantre of social cognitive theory is that human beings set goals and engage in other forms of intentional, purposive action. They establish their own short- and long-term objectives, choose their own standards of achievement, work out a plan of action, consider back-up alter- natives, and have the forethought to anticipate the consequences of their goal-directed behaviour. Fur-

thermore, people self-regulate by engaging in self-reinforcement; they reward and punish themselves for exceeding or falling short of their self-set standards of excellence.62 For example, you might have a goal of completing the rest of this chapter, after which you reward yourself by having a snack. Raiding the refrigerator is a form of self-induced positive reinforcement for completing this reading assignment.

OB Mod and social cognitive theory explain how people learn probabilities of successful perfor- mance (E-to-P expectancies) a~ well a~ probabilities of various outcomes from that performance (P-to-0 expectancies). As such, these theories explain motivation through their relationship with expectancy theory of motivation, described earlier. Elements of these theories also help us to understand other motivation processes. For instance, self-regulation is the cornerstone of motivation through goal set- ting and feedback, which we discuss next.

Goal Setting and Feedback

L06 The City of Toronto's call centre-3 11 Toronto-is a busy place. The centre operates 24 hours per day, 7 days per week, and answers 1.5 million non-emergency calls in

180 languages each year. One of the centre's objectives is to answer 80 percent of those calls within 75 seconds. It currently exceeds that goal (82 percent of calls are answered within 75 sec- onds) with an average talk time of279 seconds. The 31 1 centre also has a target of resolving 70 percent of calls at the first point of contact (i.e., not forwarding the caller elsewhere or call ing back later), and

exceeds this goal by addressing 73.7 percent of calls during the first contact63 Contact centres often have large digital displays that give employees visual feedback in the form of statistics associated with

these key performance indicators. The 31 I Toronto operations and most other contact centres rely on goal setting to motivate employ-

ees and clarify their role perceptions by establ ishing performance objectives. Goal setting potentially improves employee performance in two ways: ( I) by ampl ifying the intensity and persistence of effort; and (2) by giving employees a more precise understanding of their role obl igations so their effort is channelled toward behaviours that will improve work performance. Goal setting is more complex than simply telling someone to "do your best." It requires several specific characteristics.64 One popular acronym-SMARTER-captures these characteristics fairly well.65

What is your goal orientation? You can discover your dominant goal orientation by completing this self-assessment in Connect.

Specific. Goals lead to better performance when they are specific. Specific goals state what needs to be accomplished, how it should be accomplished, and where, when, and with whom

it should be accomplished. Specific goals clarify performance expectations, so employees can

direct their effort more efficiently and reliably.

144 Part Two Individual Behaviour and Processes

Measurable. Goals need to be measurable because motivation occurs when people have some indication of their progress and achievement of those goats. This mea~urement ideal ly includes how much (quantity}, how well (quality), and at what cost the goal was achieved. Be aware, however, that some types of employee performance are difficult to measure, and they risk being neglected in companies preoccupied with quantifiable outcomes.66

Achievable. One of the trickiest aspects of goat setting is developing goats that are sufficiently but not overly chal lenging6 7 Easy goals result in performance that is well below the employee's potential. Yet goats that are too challenging may also lead to reduced effort if employees believe there is a tow probability of accomplishing them (i .e., tow E-to-P expectancy). Recent studies have also found that very diff icult goats increase the probability that employees wi ll engage in unethical behaviour to achieve them.68

Relevant. Goats need to be relevant to the individual's job and within his or her control. For example, a goat to reduce waste materials wi ll have little value if employees don't have much control over waste in the production process.

Time-framed. Goats need a due date. They should specify when the objective should be com- pleted or when it will be assessed for comparison against a standard.

Exciting. Goats tend to be more effective when employees are committed to them, not just

compliant. Challenging goats tend to be more exciting for most (but not all) employees, because achieving a challenging goat is more likely to fulfil a person's growth needs. Goal commitment also increases when employees are involved in goat setting.69

Reviewed. T he motivational value of goat setting depends on employees receiving feedback about reaching those goats70 Effective feedback requires measurement, which we dis-

cussed earlier in this list, but it also includes reflecting on or discussing wi th others your goal progress and accomplishment. Reviewing goal progress and accomplishment helps employees to redirect their effort. It is also a potential source of recogni tion that fulfils growth needs.

CHARACTERISTICS OF EFFECTIVE FEEDBACK Feedback contributes to motivation and performance by clarifying role perceptions, improving

employee skills and knowledge, and strengthening setf-efficacy.71 Effective feedback has many of the same characteristics as effective goal setting. It should be specific, meaning that the information should refer to specific metrics (e.g., sates increased by 5 percent last month). The information should also be relevant; it should relate to behaviour or outcomes wi thin the employee's control. Effective feedback is also timely, that is, the information should be available soon after the behaviour or results occur so that employees see a clear association between their actions and the consequences. Feedback should also be credible. Employees are more likely to accept feedback from trustworthy and believ-

able sources. One other important characteristic of effective feedback is that it should be sufficiently frequent.

How frequent is "suffic iently"? The answer depends on at least two things. One consideration is the employee's knowledge and experience with the task. Employees working on new tasks should receive more frequent feedback because they require more behaviour guidance and reinforcement. Employees who perform fam iliar tasks can receive tess frequent feedback. The second factor is how tong it takes to complete the ta~k (i.e., its cycle time). Less frequent feedback usually occurs in jobs with a tong cycle time (e.g., executives and scientists) because indicators of goat progress and accomplishment in these jobs are tess frequent than in jobs with a short cycle time (e.g., grocery store cashiers).

Feedback through Strengths-Based Coaching Forty years ago, Peter Drucker argued that leaders are more effective when they focus on strengths rather than weaknesses. "The effective execu- tive builds on strengths-their own strengths, the strengths of superiors, colleagues, subordinates; and

Chapter Five Foundations of Employee Motivation

Adobe Systems Incorporated realized that annual performance reviews didn't offer meaningful feedback, so the San Jose, California, software company replaced them with ·check-Ins." With agreed performance expectations, the manager and employee have timely, constructive, and sufficiently frequent check-in sessions. ·we want people to be getting feedback on their performance against those expectations in real time (not just once a year)," says Donna Morris, Adobe's senior v ice-president of People & Places.

Check-ins are constructive future-focused discussions about the employee's individual development, but they sometimes include difficu lt conversations about poor performance. ·secause you're in the moment and you're ta lking about things that are appropriate right then and there, [a check-in) gives you an opportunity to have a much more honest, more candid conversation," observes Eric Cox, Adobe's senior director of Global Strategy and Operations72

©Getty Images/Blend Images

145

on the strength of the situation," wrote the late management guru73 Rox Ltd. is one of many orga- nizations to apply this strengths-based perspective to employee feedback. "It's important to reward and encourage strengths. Instead of looking at weakness, look at area~ for development," says Kyron Keogh, co-founder of the award-winning luxury retail jewellery chain headquartered in Gla~gow, Scotland. "It's vital to ensure that staff stay motivated and upbeat in a sales environment."74

This positive approach to feedback is the essence of strengths-based coaching (also known as appreciative coaching)-maximizing employees' potential by focusing on their strengths rather than weaknesses?5 In strengths-based coaching, employees describe areas of work where they excel or

demonstrate potential. The coach directs this discussion by asking exploratory questions that guide employees to discover ways to build these strengths. Situational barriers, as well as strategies to over- come those barriers, are identified to further support the employee's potential .

Strengths-based coaching is more motivating than traditional performance reviews because employ- ees seek out feedback about their strengths, whereas in the traditional model they either become defen- sive about negative feedback or allow that information to weaken their self-eff icacy. Strengths-based coaching also recognizes that poor performance on some tasks is due more to motivation than abil ity. People can learn new skills throughout the ir working lives, but their weaker performance on some tasks is often due to lower motivation associated with their personality, interests, and preferences. These individual differences become relatively stable fairly early in a person's career.16

In spite of these research observations, most bosses focus their attention on tasks that employees

are performing poorly. After the initial polite compliments, many coaching or performance feedback sessions analyze the employee's weaknesses, including determining what went wrong and what the

146 Part Two Individual Behaviour and Processes

employee needs to do to improve. These inquisitions sometimes strain relations between employees and their bosses or the overall organization. As mentioned, negative feedback can also undermine self- efficacy, thereby making the employee's subsequent performance worse rather than better. By focusing on weaknesses, companies fail to real ize the full potential of the employee's strengths?7

SOURCES OF FEEDBACK Feedback can originate from nonsocial or social sources. Nonsocial sources provide feedback without someone communicating that information. Corporate intranets allow many executives to receive feed-

back instantaneously on their computer or other device, usual ly in the form of graphic output on an executive dashboard. Employees at contact centres view electronic displays showing how many callers are waiting and the average time they have been waiting.

Some companies set up multisource ( 360-degree) feedback that, as the name implies, is information about an employee's performance collected from a full circle of people, including subordinates, peers, supervisors, and customers. Multisource feedback tends to provide more complete and accurate infor- mation than feedback from a supervisor alone. It is particularly useful when the supervisor is unable to observe the employee's behaviour or performance throughout the year. Lower-level employees also feel a greater sense of fairness and open communication when they are able to provide upward feedback about their boss's performance.78 However, multisource feedback can be expensive and time-consuming. It also tends to produce ambiguous and conflicting feedback because responses from different sources are often inconsistent. A third concern is that peers may provide inflated rather than accurate feedback to minimize

interpersonal conflict. A fourth issue is that employees experience a stronger emotional reaction when they receive critical feedback from many people rather than from just one person (such as the boss).

With so many sources of feedback-multisource feedback, executive dashboards, customer surveys, equipment gauges, nonverbal communication from your boss-which one works best under which conditions? The preferred feedback source depends on the purpose of the information. Feedback from nonsocial sources, such as computer printouts or feedback directly from the job, is better when employ-

ees need to learn about goal progress and accomplishment. This is because information from nonsocial sources is considered more accurate than information from social sources. Negative feedback from nonsocial sources is also less damaging to self-esteem. In contrast, social sources tend to delay nega- tive information, leave some of it out, and distort the bad news in a positive way.79 Employees should

Until recently, A&W Canada kitchen staff didn't get much feedback from customers. Only 1 percent of customers completed comment cards, and that feedback wasn't timely. Now A&W Canada customers provide direct feedback in a few seconds using iPad-equipped kiosks near the exit. The cumulative ratings are updated instantly on screens in the kitchen area. On average, 15 percent of customers provide feedback through these kiosks, which were recently introduced throughout the company's 856 restaurants. "It's very motivational," says Nancy Wuttunee, A&W Canada's senior director of operational excellence. "You may not be perfect all the time, but it encourages you to improve all the time." Employees agree, saying they watch the feedback screens "all the time" and enjoy receiving the feedback80

©Chris Mikula/ Ottawa Citizen. Reprinted by permission.

Chapter Five Foundations of Employee Motivation 147

receive some positive feedback from social sources. It feels better to have co-workers say that you are

performing the job well than to discover this from data on an impersonal computer screen.

EVALUATING GOAL SETTING AND FEEDBACK Goal setting represents one of the "tried-and-true" theories in organizational behaviour, so much so

that it is rated by experts as one of the top OB theories in terms of validity and usefulness.81 In part- nership with goal setting, feedback also has an excellent reputation for improving employee motiva-

tion and performance. Putting goal setting into practice can be challenging, however.82 As mentioned earl ier, goal setting tends to focus employees on a narrow subset of measurable performance indicators while ignoring a~pects of job performance that are difficult to measure. The saying "What gets mea- sured, gets done" applies here. Another concern is that very difficult goals may motivate some people

to engage in unethical behaviour to achieve those goals. Difficult goals are also stressful, which can undermine overall job performance.

Yet another problem is that goal setting tends to interfere with the learning process in new, complex jobs. Therefore, setting performance goals is effective in established jobs but should be avoided where an intense learning process is occurring. A final issue is that when goal achievement is tied to financial rewards, many employees are motivated to set easy goals (while making the boss think they are dif- ficult) so that they have a higher probabi lity of receiving the bonus or pay increase. As a former CEO at Ford once quipped: "At Ford, we hire very smart people. They quickly learn how to make relatively

easy goals look difficult!"83

Organizational Justice

When Robert Meggy first introduced a profit sharing plan at Great Little Box Company, he felt that the size of profit sharing bonus should correspond to the person's position and seniority in the organization. "It used to be a program based on seniority and a

number of other variables but there were a number of complaints about that," recalls the CEO of the Vancouver-based corrugated box and point-of-purchase display manufacturer. "Now that it's equal across the board, we don't have that problem." In other words, employees felt that the original bonus distribution system lacked fairness, a condition that Meggy considers vital to a successful company. "I certainly believe in fair pay," says Meggy. "You don't have to be the best paying but you do have to be fair."84

Treating employees fairly is both morally correct and good for employee motivation, loyalty,

and well-being. Yet feelings of injustice occur regularly in the workplace. To minimize these inci- dents, we need to first understand that there are two forms of organizational justice: distributive justice and procedural justice.85 Distributive j ustice refers to perceived fairness in the outcomes we receive compared to our contributions and the outcomes and contributions of others. Proce-

dural j ustice, on the other hand, refers to fairness of the procedures used to decide the d istribution of resources.

At its most basic level, the employment relationship is about employees exchanging their time, skills, and behaviour for pay, fulfi lling work, ski ll development opportunities, and so forth. What is considered "fair" in this exchange relationship varies with each person and situation.86 An equality principle operates when we believe that everyone in the group should receive the same outcomes, such as when everyone gets subsidized meals in the company cafeteria. The need principle is appl ied when we bel ieve that those with the greatest need should receive more outcomes than others with less need. This occurs, for instance, when employees get paid time off to recover from illness. The equity principle decrees that people should be paid in proportion to their contribution. The equity principle is the most common distributive justice rule in organizational settings, so let's look at it in

more detai l.

148 Part Two Individual Behaviour and Processes

Debating Point:

DOES EQUITY MOTIVATE MORE THAN EQUALITY?87

It seems obvious that employees with higher performance, skills or other con- tributions to the organization should receive more generous pay and other rewards. Increas- ing the pay differential (wage dispersion) between high and low contributors should boost employee motivation to achieve a higher standard of performance. It should also increase company performance by motivating the top performers to stay and the bottom performers to leave. A large wage dispersion is also consistent with j ustice and fairness. Differentiating rewards based on employee performance, skills, and other forms of contribution is consistent with the principle of meritocracy. It is also consistent with the ethical principle of j ustice, which states that those who contribute more should receive more in return (Chapter 2). Further- more, performance-based pay is one of the pillars of high performance work practices (see Chapter 1).

But workplaces that have large wage dispersions might not be receiving the performance dividends they expect. Several (but not all) studies have found that sports teams with relatively small pay differences among team members perform better than sport teams with relatively high pay differences. Teams that pay huge salaries or bonuses to stars do not score more points or win more games. Also, turnover among players and managers tends to increase with the size of the wage dispersion. One recent study extended these observations to all industries. Companies that have a higher dispersion of wage increases (larger increases to higher-paid staff) perform worse than companies with an equal dispersion of wage increases. Another study reported that information technology companies with larger salary differences among top management teams had worse shareholder returns and market-to-book value compared to IT companies with less pay inequality.

Why would larger pay ranges undermine rather than enhance employee and organiza- tional performance? One reason is that pay differences produce status differences, which can undermine cooperation among employees. A second reason is that large pay differences might increase (rather than decrease) feelings of injustice. Most people think they are above average, so large pay differences clearly place many employees below their self-evaluations. Also, employees tend to underestimate the contribution of higher-paid co-workers and assume those higher-paid co-workers also receive other rewards (such as preferential treat- ment). In short, lower-paid employees often believe higher-paid employees are overpaid, which reduces the lower-paid workers' motivation and performance.

EQUITY THEORY

Feel ings of equity are explained by equity theory, which says that employees determine feelings of equity by comparing their own outcome/input ratio to the outcome/input ratio of some other person.88

As Exhibit 5.7 illustrates, the outcome/input ratio is the value of the outcomes you receive divided

by the value of the inputs you provide in the exchange relationship. Inputs include such things as skill , effort, reputation, performance, experience, and hours worked. Outcomes are what employees receive from the organization, such as pay, promotions, recognition, interesting jobs, and opportunities to improve one's skills and knowledge.

Equity theory states that we compare our outcome/input ratio with that of a comparison other.89 The comparison other might be another person or group of people in other j obs (e.g., comparing your pay with your boss's pay) or another organization. Some research suggest~ that employees frequently collect information on several referents to form a "generalized" comparison other.90 For the most part, how- ever, the comparison other varies from one person and situation to the next and is not easily identifiable.

The comparison of our own outcome/input ratio with the ratio of someone else results in perceptions of equity, underreward inequity, or overreward inequity. In the equity condition, people believe that their outcome/input ratio is similar to the ratio of the comparison other. In the underreward inequity

Chapter Five Foundations o f Employee Motivation

EXHIBIT 5. 7 Equity Theory Model

Your Outcome/Input Ratio

Your outcomes

• Pay/benefits • Promotions • Recogn1ton • Workspace • Learnmg • lnterestmg job

Your inputs

• Skil • Reputation • Effort • Hours • Performance • Expenence

Compare ow n ratio w ith

other's ratio

Perceptions of equity or

inequity

Comparison Other's Outcome/Input Ratio

Other's outcomes

• Pay/benefits • Promot1ons • Recognition • Woil<space • Learning • Interesting job

Other's inputs

• Skil • Reputation • Effort • Hol!'S • Performance • Experience

149

situation, people believe their outcome/input ratio is lower than the comparison other's ratio. In the overreward inequity condition, people believe their ratio of outcomes/inputs is higher than the com- parison other's ratio.

Inequity and Employee Motivation How do perceptions of equity or inequity affect employee motivation? The answer is illustrated in Exhibit 5.8. When people believe they are under- or overre- warded, they experience negative emotions (called inequity tension).91 As we have pointed out through- out this chapter, emotions are the engines of motivation. In the case of inequity, people are motivated to reduce the emotional tension. Most people have a strong emotional response when they believe a

situation is unfair, and this emotion nags them until they take steps to correct the perceived inequity. There are several ways to try to reduce the inequity tension.92 Let's consider each of these in the

context of underreward inequity. One action is to reduce our inputs so the outcome/ input ratio is simi- Jar to the higher-paid co-worker. Some employees do this by working more slowly, offering fewer sug-

gestions, and engaging in Jess organizational citizenship behaviour. A second action is to increase our outcomes. Some people who think they are underpaid ask for a pay raise. Others make unauthorized

EXHIBIT 5.8 Motivational Effects of Inequity Perceptions

I

Actions that reduce inequity tension

• Change our inputs

• Change our outcanes • Clalge othe!'s inputs • Clalge othe!'s outcanes • Change our pen:eplions • Clalge com]Bison other • leave the field

150 Part Two Individual Behaviour and Processes

use of company resources. A thi rd behavioural response is to increase the comparison other's inputs.

We might subtly ask the better-paid co-worker to do a larger share of the work, for instance. A fourth action is to reduce the comparison other's outcomes. This might occur by ensuring that the co-worker

gets less desirable jobs or working conditions. Another action, although uncommon, i s to ask the com-

pany to reduce the co-worker's pay so it is the same as ours. A fifth action i s perceptual rather than behavioural. I t involves changing our bel iefs about the situ-

ation. For example, you might bel ieve that the co-worker really i s doing more (e.g., working longer hours) for that higher pay. Alternati vely, we might change our perceptions of the value of some out- comes. We might initially believe it is unfai r that a co-worker gets more work-related travel than we

&J~ Global Connections 5.3:

PAY FAIRNESS TROUBLES AT FOXCONN

Foxconn Technology Group received unwanted attention a few years ago for poor working conditions at its plants throughout China. Now some employees are complaining that the Taiwan-based company has unfair pay practices. Foxconn pays lower wages to employees at its factory in Henan province and other provinces with high unemployment But the com- pany temporarily transfers many of these lower-paid workers to higher-wage plants, such as Shenzhen near Hong Kong, for training or to assist with higher workloads at those sites. The low-wage employees from Henan soon discover how much more their Shenzhen co-workers earn, which creates feelings of inequity. "It feels like Henan workers are second-class citizens at Foxconn," complains a Henan employee who was temporarily transferred to the higher- wage Shenzhen factory.93

Foxconn employees temporarily transferred from a low-wage factory to a higher-wage factory soon experienced the tension of underreward inequity. © REUTERS/Aiamy Stock Photo

Chapter Five Foundations of Employee Motivation 15 1

do, but later conclude that this travel is more inconvenient than desirable. A sixth action to reduce the

inequity tension is to change the comparison other. Rather than compare ourselves with the higher-paid co-worker, we might increa~ingly compare ourselves with a friend or neighbour who works in a similar

job. Finally, if the inequity tension is strong enough and can't be reduced through other actions, we might leave the field. This occurs by moving to another department, joining another company, or keep- ing away from the work site where the higher paid co-worker is located.

People who feel overreward inequity would reverse these actions. Some overrewarded employees reduce their feelings of inequity by working harder; others encourage the underrewarded co-worker to work at a more leisurely pace. A common reaction, however, is that the overrewarded employee

changes his or her perceptions to justify the more favourable outcomes, such as bel ieving the assigned work is more difficult or his or her skills are more valuable than the lower-paid co-worker. As Pierre Berton, the popular late Canadian journalist, author, and historian once said: "I was underpaid for the first half of my life. I don't mind being overpaid for the second half."94

How sensitive are you to inequities? You can discover your level of equity sensitivity by completing this self-assessment in Connect.

Evaluating Equity Theory Equity theory is quite successful at predicting various situations involving feelings of workplace injustice.95 However, it isn't so easy to apply in practice because the equity theory model doesn't identify the comparison other and doesn't indicate which inputs or out- comes are most valuable to each employee. The best solution here is for leaders to know their employ-

ees well enough to minimize the risk of inequity feel ings. Open communication is also key, enabling employees to let decision makers know when they believe decisions are unfair. A second problem

is that equity theory accounts for only some of our feelings of fairness or justice in the workplace. Experts now say that procedural justice is at least as important as distributive justice.

PROCEDURAL JUSTICE At the beginning of this section we defined two main forms of organizational justice: distributive and procedural. Procedural justice refers to the fairness of the procedures used to decide the distribution of resources.96 In other words, people evaluate fairness of the distribution of resources (distributive justice) as well as fairness of the conditions determining that distribution and its possible alteration

(procedural justice). There are several ways to improve procedural justice.97 A good way to start is by giving employees

"voice" in the process, that is, encouraging them to present facts and their perspectives on the issue. Voice also provides a "value-expressive" function; employees tend to feel better after having an oppor-

tunity to speak their mind. Procedural justice is also higher when the decision maker is perceived as unbia~ed, relies on complete and accurate information, applies existing policies consistently, and has listened to all sides of the dispute. If employees still feel unfairness in the allocation of resources, these

feelings may dissipate if the company has an appeal process in which the decision is reviewed by a higher level of management.

Finally, people usually feel less injustice when they are given a ful l explanation of the decision and their concerns are treated with respect throughout the complaint process. If employees bel ieve a decision is unfair, refusing to explain how the decision was made could fuel their feelings of inequity. For instance, one Canadian study found that nonwhite nurses who experienced racism tended to file grievances only after experiencing disrespectful treatment in their attempt to resolve the racist situ- ation. Another study reported that employees with repetitive strain injuries were more likely to file workers' compensation claims after experiencing disrespectful behaviour from management. A third study noted that employees have stronger feelings of injustice when the manager ha~ a reputation of treating people unfairly.98

152 Part Two Individual Behaviour and Processes

Consequences of Procedural Injustice Procedural injustice ha~ a strong influence on a per- son's emotions and motivation. E mployees tend to experience anger toward the source of the injustice,

which generates various response behaviours that scholars categorize a~ either withdrawal or aggres-

sion.99 T hese response behaviours are similar to the fight-or-fl ight responses described earlier in the

chapter regarding situations that activate our drive to defend. Research suggests that being treated

unfairly threatens our self-esteem and social status, particularly when others see that we have been

unjustly treated. E mployees retaliate to resto re their self-esteem and reinstate their status and power

in the relationship with the perpetrator of the injustice. E mployees also engage in these counterpro-

ductive behaviours to educate the decision maker, thereby trying to mi ni mize the likelihood of future

injustices.100

Chapter Summary

L01 Define employee engagement. Employee engagement is defined as an individual's emotional and cognitive (rational) motivation, particularly a focused, intense, persistent, and purposive effort toward work-related goals. It is emo-

tional involvement in, commitment to, and satisfaction with the work, as well as a high level of absorption in the work and sense of self-efficacy about performing the work.

L02 Explain how dr ives and emotions influence employee motivation. Motivation consists of the forces within a person that affect his or her direction, intensity, and persistence of voluntary behaviour in the workplace. Drives (also called pri mary needs) are

neural states that energize individuals to correct deficiencies or maintain an internal equilibrium. They gener- a te emotions, which put us in a state of readiness to act. Needs-goal-directed forces that people experience- are shaped by the individual's self-concept (including personality and values), social norms, and past experience.

L03 Summarize Maslow's needs hierarchy, and discuss the employee motivation implications of intrinsic versus extrinsic motivation, lear ned needs theory, and four-drive theor y. Maslow's needs hierarchy groups needs into a hierarchy of five levels and states that the low-

est needs are initially most important but higher needs become more important as the lower ones are satisfied. Although very popular, the theory lacks research support because it wrongly assumes that everyone has the san1e hierarchy. The emerging evidence suggests that needs hierarchies vary from one person to the next according to their personal values.

Intrinsic motivation refers to motivation controlled by the individual and experienced from the activity it~elf, whereas extrinsic motivation occurs when people are motivated to receive something that is beyond their personal control for instrumental rea~ons. Intrinsic motivation is anchored in the innate drives for competence and auton- omy. Some research suggests that extrinsic motivators may reduce existing intrinsic motivation to some extent and under some conditions, but the effect is often minimal.

McClelland's learned needs theory argues that needs can be strengthened through learning. The three needs studied in this respect are need for achievement, need for power, and need for affiliation . Four-drive theory states that everyone has four innate drives-the drives to acquire, bond, comprehend, and defend. These drives activate emotions that people regulate through a skill set that considers social norms, past experience, and personal values. The main recommendation from four-drive theory is to ensure that individual jobs and workplaces provide a bal- anced opportunity to fu lfil the four drives.

L04 Discuss the expectancy theory model, including its practical implications. Expectancy theory states that work effort is determined by the perception that effort will result in a particular level of performance (E-to-P expectancy), the perception that a specific behaviour or

performance level will lead to specific outcomes (P-to-0 expectancy), and the valences that the person feels for

Chapter Five Foundations of Employee Motivation 153

those outcomes. TheE-to-P expectancy increases by improving the employee's ability and confidence to perform the job. The P-to-0 expectancy increases by measuring performance accurately, distributing higher rewards to better performers, and showing employees that rewards are performance-based. Outcome valences increase by finding out what employees want and using these resources as reward~.

LOS Outline organizational behaviour modification (OB Mod) and social cognitive theory, and explain their relevance to employee motivation.

Organizational behaviour modification takes the behaviourist view that the environment teaches people to alter their behaviour so they maximize positive consequences and minimize adverse consequences. Antecedent~ are environmental stimuli that provoke (not necessarily cause) behaviour. Consequences are events following behaviour that influence it~ future occurrence. Consequences include positive reinforcement, punish- ment, negative reinforcement, and extinction. The schedules of reinforcement also influence behaviour.

Social cognitive theory states that much learning and motivation occurs by observing and modelling others as well as by antic ipating the consequences of our behaviour. It suggests that people typically infer (rather than only directly experience) cause-effect relationships, anticipate the consequences of their actions, develop self-efficacy in performing behaviour, exercise personal control over their behaviour, and reflect on their direct experiences. The theory emphasizes self-regulation of individual behaviour, including self-re inforcement, which is the tendency of people to reward and punish themselves as a consequence of their actions.

LOG Describe the characteristics of effective goal setting and feedback. Goal setting is the process o f motivating employees and clarifying their role perceptions by estab- lishing performance objectives. Goals are more effective when they are SMARTER (speci fic,

measurable, achievable, relevant, time-framed, exciting, and reviewed). Effective feedback is specific, relevant, timely, credible, and sufficiently frequent. Strengths-ba~ed coaching (also known as appreciaTive coaching) involves max imizing employee potential by focusing on employee strengths rather than weaknesses. Employees usually prefer nonsocial feedback sources to learn about their progress toward goal accomplishment.

L07 Summarize equity theory and describe ways to improve procedural justice. Organizational justice consist~ of distributive justice (perceived fairness in the outcomes we receive relative to our contributions and the outcomes and contributions of others) and procedural justice

(fairness of the procedures used to decide the distribution of resources). Equity theory ha~ four e lements: outcome/ input ratio, comparison other, equity evaluation, and consequences o f inequity. The theory also explains what people are motivated to do when they feel inequitably treated. Companies need to consider not only equity of the distribution of resources but also fairness in the process of making resource allocation decisions.

Key Terms distributive justice

drives

employee engagement

equity theory

expectancy theory four-drive theory

goal setting

Maslow's needs hierarchy theory need for achievement (nAch)

need for affiliation (nAff)

need for power (nPow)

needs

organizational behaviour modification (OB Mod)

procedural jus tice self-reinforcement

social cognitive theory

strengths-based coaching

Critical Thinking Questions I. Four-drive theory is conceptually different from Ma~low's needs hierarchy in several ways. Describe these

differences. At the same time, needs are ba~ed on drives, so the four drives should paralle l the seven needs that Maslow identified (five in the hierarchy and two additional needs). Map Maslow's needs onto the four drives in four-drive theory.

2. Learned needs theory states that needs can be strengthened or weakened. How might a company strengthen the achievement needs of it~ management team?

154 Part Two Individual Behaviour and Processes

3. Everyone who works as an electronic game developer has extrinsic sources o f motivation, and most also experience some degree of intrinsic motivation. Considering the dynamics of extrinsic and intrinsic motivation, what should companies in this industry do to e nsure that their gan1e developers are highly motivated at work?

4. You just closed a deal with an organizational client, and this helps you in achieving your target that was set for you by the unit. Use expectancy theory to discuss how the events that will follow may increa~e your moti- vation and engagement.

5. Describe a situation in which you used organizational behaviour modification to motivate someone's behav- iour. What spec ifically did you do? What was the result?

6 . Using your knowledge of the characteristics of e ffective goals, establish two meaningfu l goals related to your performance in this class.

7. Most people think they are "worth more" than they are paid. Furthermore, most employees seem to feel that they exhibit better leadership skills and interpersonal skills than others. Plea~e conm1ent on this human tendency.

8. A large organization has hired you as a consultant to identify day-to -day activities for middle managers to minimize distributive and procedural injustice. The company explains that e mployees have complained about distributive injustice because they have different opinions about what is fair (equity, equality, need) and what outcomes and inputs have the greatest value. They also experience procedural injustice due to misperceptions and differing expectations. Given these an1biguities, what would you recommend to middle managers?

Case Study:

PREDICTING HARRY'S WORK EFFORT

by Robert J. Oppenheimer, Concordia University

Purpose This exercise is designed to help you to understand expectancy theory and how its elements affect a person's level of effort toward job performance.'

Instructions This exercise may be completed e id1er individually or in small tean1s of 4 or 5 people. When the individuals (or tean1s) have completed the exercise, the results will be discussed and compared with others in the cla~s.

Read the following interview case. Then calculate whether Harry will engage in high or "just acceptable" performance e ffort under the conditions described. Valence scores range from -1.0 to +1.0. All expectancies are probabilities ranging from 0 (no chance) to 1.0 (definitely will occur). The effort level scores are calculated by multiplying each valence by the appropriate P-to -0 expectancy, summing these results, then multiplying the sum by theE-to-P expectancy.

INTERVIEW WITH HARRY

In terviewer: Hi, Harry. I have been a~ked to talk to you about your job. Do you mind if I a~k you a few questions?

Harry: No, not at all.

In terviewer: Thanks, Harry. What are the things that you would anticipate getting satisfaction from as a result of your job?

Harry: What do you mean?

In terviewer: Well, what is important to you with regard to your job here?

Harry: I guess most important is job security. As a matter of fact, I can't think of anything that is more important to me. I think getting a raise would be nice, and a promotion would be even better.

In terviewer: Anything e lse that you think would be nice to get, or for that matter, that you would want to avoid?

Harry: I certainly would not want my buddies to make fun of me. We're pretty fr iendly, and this is really impor- tant to me.

In terviewer: Anything e lse?

Harry: No, not really. That seems to be it.

In terviewer: How satisfied do you think you would be with each of these?

Harr y: What do you mean?

Interviewer: WeU, as.~ume that somed1ing that you would really like ha~ a value of+ 1.0 and something you would really not like, that is you would want to avoid, ha~ a value of - 1.0, and something you are indifferent about ha~ a value of 0.

Chapter Five Foundations of Employee Motivation 155

Harry: OK. Getting a raise would have a value o f .5; a promotion is more important, so I'd say .7; and having my buddies make fun of me, .9.

In terviewer: But, I thought you didn't want your buddies to make fun of you.

Harr y: I don't In terviewer: But you gave it a value of .9.

Har r y: Oh, I guess it should be -.9.

In terviewer: Ok, I just want to be sure I understand what you're saying. Harry, what do you think the chances are of these things happening?

Harry: That depend~. In terviewer : On what?

Harry: On whether my performance is high or just acceptable.

In terviewer: What if it is high? Harry: I figure I stand about a 50-50 chance of getting a raise and/or a promotion, but I also think that there is a 90 percent chance that my buddies will make fun of me.

In terviewer : What about job security? Harry: I am certain my job is secure here, whether my performance is high or just acceptable. I can't remember the last guy who was doing his job and got fired. But if my pe1formance is just acceptable, my chances of a raise or promotion are about 10 percent However, then the guys will not make fun of me. That I an1 certain about

In terviewer: What is the likelihood of your performance level being high?

Harry: That depends. If I work very hard and put out a high degree of effort, I'd say that my chance of my perfor- mance being high is about90 percent But if I put out a low level o f effort, you know- if I just take it ea~y-then I figure that the chances of my doing an acceptable job is about 80 percent In terviewer: Well, which would you do: put out a low level or a high level of effort?

Harry: With all the questions you asked me, you should be able to tell me.

In terviewer: You may be right ' Harry: Yeah? That's nice. Hey, if you don't have any other questions, I'd like to join the guys for coffee. In terviewer: OK, thanks for your time.

Harry: You're welcome.

Discussion Questions

I . Use the expectancy theory model to predict Harry's motivation to achieve high or ')ust acceptable" perfor- mance in his job. Identify and discuss the factors that influence this motivation.

Developed by Robert J. Oppenhe imer. Ph.D. Professor of Management. Concordia University, Montreal. Canada.

Case Study:

BARRIE SUPER SUBS

By Steven L. McShane, Curtin Unive rsity (Australia ) and University of Victoria (Canada) Barrie Super Subs is one of the larger takeout restaurant~ in the Super Subs chain, which includes 300 locations across Canada. This outlet ha~ a restaurant manager, an assistant manager, and several part-time tean1 leaders. The restaurant manager rarely has time to serve customers, and front line work by managers is discouraged by the head office. The a~sistant manager serves customers for a couple of hours during the busy lunchtime but otherwise a~sists the restaurant manager with purcha~ing, accounts, hiring, and other operations. Most team leaders are col- lege student~ and serve customers alongside other employees, particularly from late afternoon to night closing. Most employees are also students who work part-time; a few are in high school. All regular staff earn minimum pay rates.

Barrie Super Subs has experienced below average profitability over the past 18 months, which ha~ reduced the monthly bonus paid to the restaurant manager and assistant manager. This bonus is calculated by percentage of "wa~tage" (unsold, dan1aged , or unaccounted for food and drinks) re lative to sales; the lower the percentage of wastage, the higher the bonus. Wastage occurs when employees drop or spill food, cut up more toppings than are sold, burn heated subs, prepare an order incorrectly, and eat or give away food without permission. When employees make mistakes, the expense is supposed to come out of their paycheque. Unauthorized eating and giv- ing away food are grounds for immediate dismissal. However, tean1 leaders are reluctant to report any accidental

156 Part Two Individual Behaviour and Processes

or deliberate wastage, even when confronted by the restaurant manager about the store's high wastage over the previous week and month . One team leader who reported several accidental wastage incidents eventually quit after being snubbed by co-workers who attended the same college classes.

Barrie Super Subs gives employees a food allowance if they work continuously for at least four and a half hours. Staff complain that the allowance is meagre and that they are often ineligible for the food allowance because many shifts are only three or four hours. Employees who work these shorter shifts sometimes help themselves to food and drinks when the managers aren' t around, claiming that their hard work justifies the free meal. Some also claim the food is a low company expense and makes up for their small paycheque, relative to what many of their friends earn e lsewhere. Several (but not most) employees give some of their friends generous helpings as well a~ occa~ional free soft drinks and chips. Employees say handing out free food to friend~ makes them more popular with their peers.

Five months ago, the Barrie restaurant's wastage (mainly deliberate wa~tage) had risen to the point where the two managers no longer received a bonus. The restaurant manager reacted by giving the food allowance only to those who work for six or more hours in a single shift. This action excluded even more staff from receiving the food allowance, but it did not d iscourage e mployees from eating or giving away food. However, almost 20 percent of the experienced college staff left for other jobs over the following two months. Many o f those who stayed dis- couraged friends from considering jobs at Super Subs. Morale declined, which dampened the fun atmosphere that had existed to some extent in the past. Relations between e mployees and managers soured further.

With relatively low unemployment, the restaurant manager found it difficult to hire replaceme nts, particularly people with previous work experience of any kind. Te mporary staff shortages required the two managers to spend more time working in food preparation and training new staff. Their increa~ed presence in the restaurant s ignifi- cantly reduced deliberate wastage, but accidental wa~tage increa~ed somewhat a~ the greater number of inexperi- enced staff made more mistakes.

After three months, Barrie Super Subs' manager and assistant manager were confident that the situation had improved, so they spent less time training staff and serving customers. Indeed, they received a moderate bonus after the third month in the store. However, wastage increased again soon after the managers withdrew from daily operations. The experienced employees started eating more food, and the new staff soon joined in this practice. Exa~perated, the restaurant manager took bolder steps. He completely removed the food allowance and threatened to fire any e mployee caught consuming or giving away food.

Wa~tage dropped somewhat over the next month but is now creeping upward again.

Discussion Questions

1. What symptoms in this case suggest that something ha~ gone wrong?

2. What are the main causes of these symptoms?

3. What actions should Barrie Super Subs' managers take to correct these proble ms?

© 201 1 Steven L. McShane. Inspired by an early case written by J.E. Dittrich and R.A. Zawacki.

Class Exercise:

NEEDS PRIORITY EXERCISE

Purpose This class exercise is designed to help you understand employee needs in the workplace.

Instructions (Small Class) Srep 1: The table below lists in alphabetical order 16 characteristics of the job or work environment. Working

alone, use the far-left column to rank-order the importance of these characteristics to you personally. Write in" 1" beside the most important characteristic, "2" for the second most important, and so on through to" 16" for the least important characteristic on this list.

Srep 2: Identify any three of these work attributes that you believe have the largest score differences between Generation Y (millennia!) male and female postsecondary students across Canada (i.e., those born in 1980 or after). Indicate which gender you think identifies that attribute as more important.

Srep 3: Students are as.~igned to teams, where they compare each other's rank-order result~ a~ well a~ perceived gen- der differences in needs. Note reasons for the largest variations in rankings and be prepared to discuss these rea~ns with the entire clas.~. Students should pay close attention to different need~. self-concept~. and various forms of diversity (eth- nicity, profession, age, etc.) within the class to identify possible explanations for any variation of result~ acros.~ student~.

Srep 4: The instructor will provide results of a recent large-scale survey of Canadian Generation Y/millennial postsecondary student~ (i.e., born in 1980 or after). When these results are presented, d iscuss the reasons for any

Chapter Five Foundations of Employee Motivation 157

noticeable differences between the survey and class rankings. Relate the differences to your understanding of the e merging view of employee needs and drives in work settings. For gender differences, discuss reasons why men and women might differ on these work-related attributes.

Instructions (large Class) Srep I and Srep 2: Same as above. Srep 3: T he instructor will ask students, by a show of hands (or use of classroom technology), to identify

their top-ranked attr ibutes as well as the attributes believed to have the greatest gender differences among Gen-Y Canadians.

Srep 4: Same as above.

Personal Ranking of Work-Related Attributes

Attributes of Work (Listed Alphabetically) Your Ranking (I = most important)

C hallenging work

Commitment to social responsibiJity

Good health and benefits plan Good initial salary level

Good people to report to Good people to work with

Good training opportunities/developing new skilJs

Good variety of work

Job security

Opportunities for advancement in position

Opportunities to have a personal impact

Opportunities to have a social impact

Opportunity to travel

Organization is a leader in iL~ field

Strong commitment to employee diversity

Work-life balance

Self-Assessments for Chapter 5

SELF-ASSESSMENT NAME DESCRIPTION

How strong are your Many human needs are called "deficiency .. needs because they become active only when growth needs? unfilled. However. Abr.tham Maslow popularized the idea that people also have "growth

needs." which continue to motivate even when temporarily satiated. Growth need'i are

associated with self-actualization and intrinsic motivation. People v-.try in their growth need strength. which is evident from the type of work they prefer. This self· assessment

'-- - estimates your growth need strength.

- How strong are your Everyone has the same innate drives. but these drives produce different need strengths learned needs? due to each person's socialization and personality. David McClelland particularly

examined three learned needs. two of which are measured in this self-assessment. This

self-assessment estimates the strength of these learned needs in you.

What is your goal Everyone sets goals for themselves. but people differ in the nature of those goals. Some orientation? view goals a.'i challenges that a.'isist learning. Others see goals as demonstrations of one's

competence. StiJJ others view goals as threatening one's image if they are not achieved. This self-assessment estimates your dominant goal orientation.

How sensitive are you to Correcting feelings of inequity is one of the most powerful motivating forces in the inequities? workplace. But people react di fferently to equitable and inequitable situations based on

their equity sensitivity. Equity sensitivity refers to a person's outcome/input preferences

I I and reaction to various outcome/input ratios when compared to other people. This self-

assessment estimates your level of equity sensitivity.

CHAPTER 6

Applied Performance Practices LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Discuss the meaning of money and identify several individual, team, and organizational-level performance-based rewards.

L02 Describe five ways to improve reward effectiveness.

L03 List the advantages and disadvantages of job specialization.

L04 Diagram the j ob characterist ics model and describe three ways to improve employee motivat ion through job design.

LOS Define empowerment and identify strategies that support empowerment.

L06 Describe the five elements of self-leadership and identify specific personal and work environment influences on self-leadership.

158

Chapter Six Applied Performance Practices 159

Every day is an adventure for Neil Barrows. The PCL Construction project manager says he has been highly motivated by his work on the redevelopment of BMO Field (the new home for the Toronto Argonauts football and TFC soccer teams). "We're going to build the entire south roof in one massive section and this 600-ton (545-tonne] crane, along with the 450-ton (410-tonne) crane on the west side, are going to lift that section of roof together in one lift," Barrows enthuses. "[T) here's a certain pride in showing off what we do. There's a tot of lessons to be learned ... It's a once-in-a-lifetime opportunity and I've absolutely enjoyed every minute of it."

Edmonton-based PCL Construction is the largest contractor in Canada and the eighth largest in the United States. It is also one of the top ranked places to work in Canada and throughout the United States, which is partly due to its applied performance practices. Neil Barrows and other PCL employees have jobs enriched with autonomy, continuous learning, and plenty of significance to society. In a recent survey, 96 percent of PCL's 1 500 employees across the United States said the company offered great challenges and 93 percent said that they feel a sense of pride when looking at what they have accomplished.

"The opportunity to learn and grow is unparalleled," says one of PCL's 3000 employees in Canada in an online review forum. "You are given opportunities to do interesting and meaningful work." Another employee explains that PCL employees feel empowered because they can see the importance of their contribution to the company's success: "PCL is a big company with a small company feel, which allows individual contributors to make a big impact in the organization."

PCL also seeks out job applicants who are self-motivated, rather than have managers prod them along. For example, one recent PCL job ad explicitly stated that the company is looking for a "self- starter with the skills to research and complete tasks with limited supervision."

PCL employees are also motivated by a reward system that includes 100 percent employee ownership of the company. As one employee explains: "Being 100 percent employee owned at all levels (CEO to file clerks), everyone is responsible for the success, or failure, of the company. There is a level of commitment that everyone shows towards the company and one another that I have not seen anywhere else; it is an amazing culture I can only attribute to the employee ownership model."1

PCL Construction is one of the Canada's most successful companies because its employees are motivated by enriched jobs, employee ownership rewards, and an empowering work environment. All three topics are discussed in this chapter, along with self-leadership, which is another motivating

factor reported by PCL employees. The chapter begins by examining the meaning of money. This is followed by an overview of financial

reward practices, including the different types of rewards and how to implement rewards effectively. Next,

we look at the dynamics of job design, including specific job design strategies for motivating employees. We then consider the elements of empowerment, as well as conditions that support empowerment. The final part of the chapter explains how employees manage their own performance through self-leadership.

The Meaning of Money in the Workplace Rewarding people with money is one of the oldest applied performance practices, and is certainly the most widespread. At the most basic level, money and other financial rewards represent a form of exchange; employees provide their labour, skill, and knowl-

edge in return for money and benefits from the organization. From this perspective, money and related rewards align employee goals with organizational goals. This concept of economic exchange can be found across cultures. The word for pay in Malaysian and Slovak means "to replace a Joss"; in Hebrew and Swedish it means "making equal."2

However, money is much more than a form of compensation for an employee's contribution to orga- nizational objectives. Money relates to our needs, our emotions, and our self-concept. It is a symbol of achievement and status, a motivator, a source of enhanced or reduced anxiety, and an influence on our propensity to make ethical or risky decisions. It also generates a variety of emotions, some of which are negative (anxiety, depression, anger, helplessness, etc.).3 Furthermore, money influences human thoughts and behaviour nonconsciously to some extent.4 According to one source, "Money is probably

160 Part Two Individual Behaviour and Processes

the most emotional ly meaningful object in contemporary life: only food and sex are its close competi- tors as common carriers of such strong and diverse feelings, significance, and strivings."5

The meaning of money varies considerably from one person to the next. Recent studies depict money as both a "tool" (i.e., money is valued because it is an instrument for acquiring other things of value) and a "drug" (i.e., money is an object of addictive value in itself). A widely studied model of money attitudes suggests that people have a strong "money ethic" or "monetary intell igence" when they bel ieve that money is not evil, that it is a symbol of achievement, respect, and power, and that it should be budgeted carefully. These attintdes toward money influence an individual's ethical conduct, organizational citizenship, and many other behaviours and attitudes.6

""' If:::\ What is your attitude toward money? You can discover your attitude toward money ~ by completing this self-assessment in Connect.

'--- The meaning of money seems to differ between men and women7 Several studies have revealed that

in almost al l societies men attach more importance or value to money than do women. Men are more likely than women to view money as a symbol of power and status as well as the means to autonomy. Women are more likely to view money in terms of things for which it can be exchanged and particu- larly as a symbol of generosity and caring by using it to buy things for others.

The meaning of money also varies across cultures. People in China, Japan, and other countries with high power distance (accept unequal distr ibution of power in a society-see Chapter 2) tend to have a high respect and priority for money, whereas people in countries with a strong egal itarian culture (such as Denmark, Austria, and Israel) are discouraged from openly talking about money or displaying their personal wealth. One study suggests that Swiss culture values saving money whereas Italian culture places more value on spending it.8

The motivational effect of money is much greater than was previously believed, and this effect is due more to its symbolic value than to what it can buy.9 Philosopher John Stuart Mill made this observa- tion almost 150 years ago when he wrote: "The love of money is not only one of the strongest moving forces of human life, but money is, in many cases, desired in and for itself." 10 People who earn higher

pay tend to have higher job performance because the higher paycheque enhances their self-concept evaluation. Others have noted that the symbol ic value of money depends on how it is distributed in the

organization and how many people receive that financial reward. Overall, current organizational behaviour thinking indicates that money is much more than a means

of exchange between employer and employee. It fulfils a variety of needs, influences emotions, and shapes or represents a person's self-concept. These findings are important to remember when the employer is distributing financial rewards in the workplace. Over the next few pages, we look at vari- ous reward practices and how to improve the implementation of performance-based rewards.

Financial Reward Practices Financial rewards come in many forms, which can be organized into the four specific objectives identi- fied in Exhibit 6.1: membership and seniority, job status, competencies, and performance.

MEMBERSHIP- AND SENIORITY-BASED REWARDS Membership-based and seniority-based rewards (sometimes cal led "pay for pulse") represent the larg- est part of most paycheques. Some employee benefits are provided equally to everyone, such as free or subsidized meals during work and fitness centre memberships. Other rewards increa~e with seniority. For example, employees with 10 or more years of service at the Paul Scherrer Institute near Zurich, Switzerland, receive an annual loyalty bonus equal to a half month's salary; those with 20 or more years of service at the natural and engineering sciences research centre receive a bonus equal to a full month's salary.n

EXHIBIT 6 .1

................ Membership/

seniority

Job status

Competencies

Task performance

Chapter Six Applied Performance Practices 161

Reward Objectives, Advantages, and Disadvantages

s-,11 nor.dl ~ ......, ...

Fixed pay May attract applicants Doesn•t directly motivate

Most employee benefiL~ Minimizes stress of insecurity performance

Paid time off Reduces turnover May discour.tge poor performers from leaving

"Golden handcuffs"" may undermine

performance

Promotion-based pay Tries to maintain internal equity Encour.tges hierarchy, which increase Minimizes pay discrimination may increase costs and reduce

Status·ba.o;ed benefits Motivates employee.'i to compete responsiveness

for promotions Reinforces status differences

Motivates job competition and exaggerated job worth

Pay increa...;e ba.<.ied on Improves workforce flexibility Relies on subjective measurement competency Tends to improve quality of competencies

Skill-based pay Motivates career development Skill·based pay plans are expensive

Commissions Motivates task performance May weaken intrinsic motivation

Merit pay AttracL~ perfonnance~oriented May distance reward giver from

Gainsharing applicanL~ receiver

Profit sharing Organizational rewards create an May discour.tge creativity

Share Options ownership culture Tends to address symptoms. not Pay variability may avoid layoffs underlying causes of behaviour

during downturns

These membership- and seniority-ba~ed rewards potentially reduce turnover and attract job applicants (particularly those who desire predictable income). However, they do not directly motivate job performance; on the contrary, they discourage poor performers from seeking work better suited to

their abilities. Instead, the good performers are lured to better-paying jobs. Some of these rewards are also "golden handcuffs" -they discourage employees from quitting because of deferred bonuses or generous benefits that are not available elsewhere. However, golden handcuffs potentially weaken job performance because they generate continuance rather than affective commitment (see Chapter 4).

~ _,., Global Connections 6 .1:

MEGA REWARD FOR TIENS GROUP EMPLOYEES 12

Many companies show a token of appreciation to employees for their loyalty and past perfor- mance. But to celebrate its twentieth year in business, Chinese multinational conglomerate Tiens Group rewarded 6,400 employees (about half of its workforce) with an all-expenses- paid trip to France.

The group boarded 84 commercial planes from China to Paris, stayed in 140 three- and four-star hotels, were given a private tour of the Louvre, and enjoyed an exclusive shopping session at a luxury department store. The entire entourage then travelled by high-speed train

(continued)

162 Part Two Individual Behaviour and Processes

(continued) to the south of France, where they stayed in 4, 760 rooms at high-quality hotels from Monaco to Cannes. Before returning to China, the group boarded 146 tour buses to the resort town of Nice, where they lined up to spell "Tiens' dream is Nice in the Co te d'Azur." The human sentence achieved a Guinness world record.

l iens Group rewarded half of its employees with an all-expenses-paid trip to France. ©PACIFIC PRESSIAiamy Stock Photo

JOB STATUS-BASED REWARDS Almost every organization rewards employees to some extent on the basis of the status or worth of the jobs they occupy. In some parts of the world, companies measure job worth through job evaluation. Most job evaluation methods give higher value to jobs that require more skill and effort, have more responsibility, and have more difficult working conditions.13 The higher worth assigned to a job, the higher the minimum and maximum pay for people in that job. Along with receiving higher pay, employ- ees with more valued jobs sometimes receive larger offices, company-paid vehicles, and other perks.

Job status-based rewards try to improve feelings of fairness by di~tributing more pay to people in higher- valued jobs. These rewards also motivate employees to compete for promotions. However, at a time when com- panies are trying to be more cost-efficient and responsive to the external environment, job status-ba~ rewards potentially do the opposite by encouraging a bureaucratic hierarchy. These reward~ also reinforce a status men- tality, wherea~ Generation X and Generation Y (millennia!) employees expect a more egalitarian workplace. Furthermore, statu~-based pay potentially motivates employees to compete with each other for higher-status jobs and to exaggerate their job duties and hoard resources as ways to increase the worth of their current job.14

COMPETENCY-BASED REWARDS Over the past two decades, many companies have shifted reward priorities from job status to skills, knowledge, and other competencies that lead to superior performance. The most common practices identify a list of competencies relevant across all job groups as well as competencies specific to each broad job group. Employees progress through the pay range within that job group based on how well they demonstrate each of those competencies.15

Skill-based pay plans are a more specific variation of competency-based rewards in which people receive higher pay ba~ed on their mastery of measurable skills.16 High Liner Foods, the Nova Scotia-based

Chapter Six Applied Performance Practices 163

frozen seafood company, assigns pay rates to employees based on the number and difficulty of skills they have mastered. "We're setting our sites up for a skill-based pay system, so as employees learn and demon- strate certain skills, they move into a different pay bracket," explains a High Liner executive.

Competency-based rewards motivate employees to learn new skills. 17 This tends to support a more flexible workforce, increase employee creativity, and allow employees to be more adaptive to new prac- tices in a dynamic environment. Product or service qual ity also tends to improve because employees with multiple skills are more likely to understand the work process and know how to improve it. However, competency-based pay plans have not always worked out as well as promised by their advocates. They are often over-designed, making them difficult to communicate to employees. Furthermore, competency definitions tend to be abstract, which raises questions about fairness when employers are relying on these definitions to award pay increases. Skill-based pay systems measure specific skills, so they are usually more objective. However, they are expensive because employees spend more time learning new tasks. 18

PERFORMANCE-BASED REWARDS Performance-based rewards have existed for more than 4,000 years, since shepherds and other workers dur- ing the Third Dynasty of Ur (located in modern-day Iraq) had strict performance standards and received harsh penalties if their output (number of sheep delivered) fell short of those standards. Hundreds of years later, the most productive weavers in ancient Babylon received higher payment (in food) than co-workers with lower productivity. 19 Today, performance-based rewards exist in many forms across most culnrres. Here is an overview of some of the most popular individual, team, and organizational performance-based rewards.

Individual Rewards Many employees receive individual bonuses or other rewards for accom- plishing a specific task or exceeding annual performance goals. Housekeeping staff in many hotels, for instance, are paid a piece rate-a specific amount earned for each room cleaned.20 Other hotels pay

• by the NUMBERS

Global Variations in Performance-Based Pay21

China

Russia

India

Brazil

Global Average

Germany

CANADA

France

USA

UK

Sweden

Denmark

0 10 20 30 40 50 60

75

70

70 80

164 Part Two Individual Behaviour and Processes

an hourly rate plus a per-room bonus. Real estate agents and other salespeople typically earn commis- sions, in which their pay depends on the sales volume they generate.

Team Rewards Organizations have shifted their focus from individuals to teams, and accompany- ing this transition has been the introduction of more team-ba~ed rewards. Nucor Corp. rel ies heavi ly on team-based rewards. The American steel maker's employees earn bonuses that can exceed half their total pay, determined by how much steel is produced by the team. This team-based bonus system also includes penalties. If employees catch a bad batch of steel before it leaves the mini-mill, they Jose their bonus for that shipment. But if a bad batch makes its way to the customer, the team loses three times its usual bonus.22

Another form of team-based performance reward is the gainsharing plan, which calculates bonuses from the work uni t's cost savings and productiv ity improvement. Whole Foods Mar- ket uses gainsharing to motivate cost savings in its grocery stores. The food retailer assigns a monthly payroll budget to teams operating various departments within a store. If payroll money is unspent at the end of the month, the surplus is div ided among members of that Whole Foods Market team.23 Several American hospitals have cautiously introduced a form of gainsharing whereby physicians and other medical staff in a medical un it (cardiology, orthopaedics, etc.) are collectively rewarded for cost reductions in surgery and patient care. These cost reductions mainly occur through negotiating better prices of materials.24 Gainsharing plans tend to improve team dynamics, knowledge sharing, and pay satisfaction. They also create a reasonably strong link between effort and performance because much of the cost reduction and labour efficiency is within the team's controJ.25

Organizational Rewards Along with individual and team-based rewards, many firms rely on organizational-level rewards to motivate employees. Texas-based Hilcorp Energy Company recently

gave each of its employees U.S. $100,000 for exceeding three challenging targets over five years: doubling the company's value, its oi l field production rate, and its net oi l and gas reserves. This com- panywide incentive followed a "Double Drive" reward five years earl ier in which employees received a new vehicle or $50,000 for surpassing the same targets. Another unique organizational reward is the "economic stability dividend" (also called "growth sharing") negotiated by the provincial government of British Columbia with most of its employees. Government employees receive a smal l negotiated pay increase, but a larger increase wi ll occur if the province's economic growth exceeds the rate projected by an independent paneJ.26

Employee share ownership plans (ESOPs) are organizational rewards that encourage employees to buy company stock, usually at a discounted price. Some companies, such as PCL Construction, are owned entirely by employees. Whether fully or partly owned by employees, the financial reward of ESOPs occurs in the form of dividends and market appreciation of the shares.

Whi le ESOPs involve purchasing company shares, share options give employees the right to pur- chase company shares at a predetermined price up to a fixed expiration date. Here's how share options

work: The company might offer its employees the right to purchase 100 shares at $50 per share at any time between two and six years from now. If the share price is, say, $60 two years later, employees could earn $10 from these options, or they could wait up to six years for the share price to rise further. If the share price never rises above $50 during that time, employees are "out of the money," so they would just Jet the options expire. The intention of share options is to motivate employees to make the company more profitable, thereby raising the company's share price and enabling them to reap the value above the exercise price of the share options.

Another type of organizational-level reward is the profit-sharing plan, in which employees receive a percentage of the previous year's company profits. An interesting application of this reward occurs at Svenska Handelsbanken AB. In years when the Swedish bank is more profitable than the aver- age of competing banks, it transfers one-third of the difference in profits to an employee fund. Every employee receives one share in the fund for each year of service, which can be ca~hed out at 60 years of age (even if they continue working for the bank beyond that age)Y

Chapter Six Applied Performance Practices 165

Lee Valley Tools, the iconic Ottawa-based manufactu rer and retailer of quality woodworking and gardening tools, has a profit-sharing plan that aligns employee behaviour wit h the company's success. Lee Valley distributes 25 percent of its annual profits to its 850 employees, with the CEO receiving the same amount of profit-sharing bonus as the lowest-paid employee. Only employees w ith tess than two years' service receive a smaller payout. Leonard Lee, the late founder of Lee Valley Tools, recognized the motivational value of profit-sharing: "You get tremendous loyalty from employees if they enjoy their work and they are participating in the income," he said. "Our staff know that if they save a box, it saves us a dollar. And they'll get 25 cents out of t hat dollar."28

©Fernando Morales/The Globe and Maii/CP Images

Evaluating Organizational-Level Rewards How effective are organizational-level rewards? Research indicates that ESOPs and share options tend to create an ownership cul- ture in which employees feel al igned with the organization's success.29 There is also some evi- dence that both increase firm performance under some circumstances, but the effects are fairly weak.30 Profit sharing tends to create less ownership culture, yet one major study of 200 Korean manufacturing firms found that it had a stronger influence on productivity than d id ESOPs or share options31 Profi t sharing also has the advantage of automatically adjusting employee com- pensation with the firm's prosperity, thereby reducing the need for layoffs or negotiated pay reduc tions during recess ions.

One reason why organizational rewards don't improve motivation or performance very much is that employees perceive a weak connection between their individual effort and the determinants of those rewards (i.e., corporate profits or share price). Even in small firms, the company's share price or profitabi lity is influenced by economic conditions, competition, and other factors beyond the employee's immediate control. This low individual performance-to-outcome expectancy suppresses the incentive's motivational effect. However, a few studies have found that ESOPs and other organi- zational rewards have a more robust influence on motivation and firm performance when employees are also involved in organizational decisions.32 We discuss employee involvement in the next chap- ter (Chapter 7).

166 Part Two Individual Behaviour and Processes

Improving Reward Effectiveness Performance-based rewards have come under attack over the years for discouraging cre-

ativity, distancing management from employees, distracting employees from the mean- ingfulness of the work itself, and being quick fixes that ignore the true causes of poor

performance. One study even found that very large rewards (relative to the usual income) can result in lower, rather than higher, performance. 33 Although these issues have kernels of truth under specific circumstances, they do not necessarily mean that we should abandon performance-based pay. On the contrary, top-performing companies are more likely to have performance-based (or competency-based) rewards, which is consistent with evidence that these rewards are one of the high-performance work practices (see Chapter 1).34 Reward systems do motivate most employees, but only under the right con- ditions. Here are some of the more important strategies for improving reward effectiveness.

LINK REWARDS TO PERFORMANCE Expectancy theory (Chapter 5) recommends that employees with better performance should be rewarded more than those with poorer performance. Unfortunately, this simple principle seems to be unusually difficult to apply. Several recent surveys report that few employees see a relationship between job performance and the amount of pay they and their co-workers receive. Only 42 percent of employees

globally see a clear link between their job performance and pay. Only 25 percent of Swedish employees and 36 percent of American employees see a pay-performance link. Even employers are doubtful that their pay systems work: only 32 percent of mid-sized Canadian and American employers believe their

formal performance pay system actually differentiates pay based on employee performance.35

How can companies improve the pay-performance linkage? Inconsistencies and bias can be minimized through gainsharing, ESOPs, and other plans that use objective performance measures. Where subjective measures of performance are necessary, companies should rely on multiple sources of information. Companies also need to apply rewards soon after the performance occurs, and in a large-enough dose (such as a bonus rather than a pay increase), so that employees experience positive emotions when they receive the reward.36

ENSURE THAT REWARDS ARE RELEVANT Companies need to align rewards with performance within the employee's control. The more employ- ees see a "l ine of sight" between their daily actions and the reward, the more they are motivated to improve performance. "We cal l it return on controllable a~sets," explains Michael Kneeland, CEO of United Rentals. Bonuses at the world 's largest equipment rental company are determined by how prof- itably United managers take care of assets within their control. Higher-level managers earn bonuses based more on overall fleet performance, whereas branch managers are rewarded more for parts and inventory efficiencies at their local operations. "These are things within their control that they are assessed on," says Kneeland.37 Reward systems also need to correct for situational factors. Salespeople

in one region may have higher sales because the economy is stronger there than elsewhere, so sales bonuses need to be adjusted for such economic factors.

Debating Point:

IS IT TIME TO DITCH THE PERFORMANCE REVIEW?

More than 90 percent of Fortune 500 companies use performance reviews to link rewards to the performance of some or most employees. Advocates argue that these evaluations pro- vide critical documentation, communication, and decisions necessary to reward contributors and remove those who fail to reach the minimum standard. Indeed, it can be difficult to fire

Chapter Six Applied Performance Practices 167

poor performers in some jurisdictions unless the company has systematically documented the employee's shortcomings. Evaluations provide clear feedback about job performance, so employees know where they stand and are motivated to improve. Performance reviews have their fau lts, but supporters say these problems can be overcome by using objective informa- tion (such as goal setting and 360-degree feedback) rather than subjective ratings, being supportive and constructive throughout the review, and providing informal performance feed- back throughout the year.

Several experts-and most emptoyees-disagree.38 In spite of mountains of advice over the years on how to improve performance reviews, this activity seems to inflict damage more than deliver benefits. Apple Inc. trashed its formal performance evaluation process a decade ago. Zappos, Adobe, GE, and dozens of other companies have since followed Apple's lead. Most companies that ditched their performance reviews never brought them back again.

According to various potts and studies, performance reviews are stressful, morale sapping, and dysfunctional events that typically descend into political arenas and paperwork bureau- cracies. Even when managers actively coach employees throughout the year, the annual appraisal meeting places them in the awkward and incompatible rote as an all-powerful and all-knowing evaluator. Another issue is that rating employees. even on several factors. grossly distorts the complexity of performance in most jobs. A single score on customer service, for instance, would hide variations in knowledge, empathy, efficiency, and other elements of ser- vice. "Who am I to tell somebody they're a three out of five?" asks Don Quist, co-founder of Edmonton-based industrial recruiting firm Sixth Sense Resources and engineering firm Hood Group. Quist is so opposed to performance reviews that employees at Hood Group were issued badges with a big "X" through the words "Employee Evaluation."39

Many perceptual biases-halo, recency, primacy, stereotyping, fundamental attribution error-are common in performance reviews and difficult to remove through training. Seem- ingly objective practices such as goat setting and 360-degree feedback are fraught with bias and subjectivity. Various studies have also found that managers across the organization use different criteria to rate employee performance. One study discovered that management's evaluations of 5,000 customer service employees were unrelated to ratings that customers gave those employees. "The managers might as well have been rating the employees' shoe sizes, for all the customers cared," quipped one investigator.40

Is there an alternative to the performance evaluation? One repeated suggestion is to con- duct "performance previews" or "feed forward" events that focus on future goats and advice. Instead of a postmortem dissection of the employee's failings, managers use past perfor- mance as a foundation for development.41 Also, substantial rewards should never be based on performance reviews or similar forms of evaluation. Instead, they should be linked to mea- surable team and organizational levels outcomes and judiciously tied to individual indicators (sates, project completion, etc.), where appropriate.

USE TEAM REWARDS FOR INTERDEPENDENT JOBS Team rewards are better than individual rewards when employees work in highly interdependent jobs because it is difficult to measure individual performance in these situations. Nucor Corp. relies on team-based bonuses for this reason; producing steel is a team effort, so employees earn bonuses ba~ed on team performance. Team rewards also encourage cooperation, which is more important when work is highly interdependent. A third benefit of team rewards is that they tend to support employee prefer- ences for team-based work. One concern, however, is that employees (particularly the most productive employees) in Canada and many other low-collectivism cultures prefer rewards based on their indi- vidual performance rather than team performance.42

ENSURE THAT REWARDS ARE VALUED It seems obvious that rewards work best when they are valued. Yet companies sometimes make false assumptions about what employees want, with unfortunate consequences. For instance, a manager at

168 Part Two Individual Behaviour and Processes

one Canadian finn honoured an employee's 25th year of service by buying her a box of Timbit~ to be shared with other staff. The employee was insulted. She privately complained later to co-workers that she would rather receive nothing than "a piddling box of doughnuts.'"'3 The solution, of course, is to ask employees what they value. Campbell Soup did this several years ago at its Canadian distribution centres. Executives thought the employees would a~k for more money in a special team reward pro- gram. Instead, distribution staff said the most valued reward was a leather jacket with the Campbell Soup logo on the back. The leather jackets cost much less, yet were worth much more than the financial bonus the company had intended to distribute.44

WATCH OUT FOR UNINTENDED CONSEQUENCES Performance-based reward systems sometimes have an unexpected-and undesirable-effect on employee behaviours.45 Consider the following example: A food processing plant discovered that

insect parts were somehow getting into the frozen peas during processing. To solve this serious prob- lem, management decided to reward production staff for any insect parts they found in the peas. The incentive worked! Employees found hundreds of insect parts that they dutifully turned in for the bonus. The problem was that many of these insect pieces came from the employees' backyards, not from the production line.46 Avoiding unintended consequences of rewards isn't easy, but these risks can be mini- mized by carefully thinking through what the rewards will actually motivate people to do and, where

possible, testing the incentives in a pilot project before applying them across the organization. Financial rewards come in many fonns and, a~ mentioned at the outset of this section, they influence

employees in complex ways. But money isn't the only thing that motivates people to j oin an organiza- tion and perfonn effectively. Employees are usually much more engaged in their work through intrinsic rather than extr insic sources of motivation. As we discussed in Chapter 5, intrinsic motivation is con- trolled by the individual and experienced from the activity itself. In other words, companies motivate

employees mainly by designing interesting and challenging jobs, which is the topic we discuss next.

f-u .I') Global Connections 6.2: WHEN REWARDS GO WRONG

For many years, the paycheques of almost all public transit bus drivers in Santiago, Chile, were determined by the number of fare-paying passengers. This incentive motivated the drivers to begin their route on time, take shorter breaks, drive efficiently, and ensure that passengers paid their fare.

But the drivers' reward system also had horrendous unintended consequences. To take on more passengers, bus drivers aggressively raced with competing buses to the next passen- ger waiting area, sometimes cutting off each other and risking the safety of people in nearby vehicles. Drivers reduced time at each stop by speeding off before passengers were safely on board. They also left the bus doors open, resulting in many passenger injuries and fata li- ties. Some drivers drove past waiting areas if there was only one person waiting and com- pletely skipped stops with schoolchildren because those passengers paid only one-third of the regular fare. Studies reported that Santiago's transit buses caused one fata l accident every three days, and that drivers paid per passenger caused twice as many traffic accidents as drivers paid per hour.

Santiago later integrated its public transit system and drivers afterwards earned only hourly pay. Unfortunately, under this reward system drivers were no longer motivated to ensure that passengers pay the fare (about one-third are freeloaders), and some skipped passenger stops altogether when they were behind schedule or at the end of their workday. Santiago recently changed driver pay once again, instituting a combination of fixed pay and bonuses determined by several performance indicators and reduced fare evasion.47

Chapter Six Applied Performance Practices 169

When transit bus drivers in Santiago, Chile, were paid per passenger, they engaged in dangerous driving to transport as many passengers as possible.

©David R. Frazier Photolibrary, lncJAiamy Stock Photo

Job Design Practices

How do you build a better job? That question has challenged organizational behaviour experts as well a~ psychologists, engineers, and economists for a few centuries. Some jobs have very few tasks and usually require very little skill. Other jobs are immensely

complex and require years of experience and learning to ma~ter. From one extreme to the other, jobs have different effects on work efficiency and employee motivation. The ideal, at least from the organi- zation's perspective, is to find the right combination so that work is performed efficiently but employ-

ees are engaged and satisfied.48 This objective requires careful job design-the process of assigning tasks to a job, including the interdependency of those tasks with other jobs. A job is a set of tasks per- formed by one person. To understand this issue more fully, Jet's begin by describing early job design efforts aimed at increa~ing work eff iciency through job special ization.

JOB DESIGN AND WORK EFFICIENCY By any measure, supermarket cashiers have highly repetitive work. One consulting firm estimated that cashiers should be able to scan each item in an average of 4.6 seconds. According to one report, cashiers at five British supermarket chains took between 1.75 and 3.25 seconds to scan each item

from a standardized list of 20 products. Along with scanning, cashiers process the payment, move the divider stick, and (in some stores) bag the checked groceries.49

Supermarket cashiers perform jobs with a high degree of job specialization. Job specialization occurs when the work required to serve a customer-or provide any other product or service-is subdivided into separate jobs a~signed to different people. For instance, supermarkets have separate jobs for checking out

170 Part Two Individual Behaviour and Processes

customers, stocking shelves, preparing fresh foods, and so forth. Except in the smallest family grocery stores, one person would not perform all of these tasks a~ part of one job. Each resulting job includes a narrow subset of ta~ks, usually completed in a short cycle time. Cycle time is the time required to com- plete the ta~k before starting over with another item or client. Supermarket cashiers have a cycle time of about 4 seconds to scan each item before they repeat the activity with the next item. They also have a cycle time for serving each customer, which works out to somewhere between 20 and 40 times per hour

in busy stores. Why would companies divide work into such tiny bits? The simple answer is that job specializa-

tion potentially improves work efficiency. One reason for this higher efficiency is that employees have less variety of tasks to juggle (such as checking out customers versus stocking shelves}, so there is less time lost changing over to a different type of activity. Even when people can change tasks quickly, their mental attention lingers on the previous type of work, which slows down performance on the new ta~k.50 A second reason for increased work efficiency is that employees can become proficient more quickly in specialized jobs. There are fewer physical and mental skills to learn and therefore less time required to train and develop people for high performance. Third, shorter work cycles give employees more frequent practice with the task, so jobs are mastered more quickly. Fourth, specialization tends to increase work efficiency by allowing employees with specific aptitudes or ski lls to be matched more

precisely to the jobs for which they are best suited51

The benefits of job specialization were noted more than 2,300 years ago by the Chinese philosopher Mencius and the Greek phi losopher Plato. Scottish economist Adam Smith wrote 250 years ago about the advantages of job special ization. Smith described a small factory where 10 pin makers collec- tively produced as many as 48,000 pins per day because they performed specialized tasks. One person straightened the metal, another cut it, another sharpened one end of the cut piece, yet another added a white tip to the other end, and so forth. In contrast, Smith explained that if these 10 people worked alone producing complete pins, they would collectively manufacture no more than 200 pins per day. 52

f-u .I') Global Connections 6 .3: JOB SPECIALIZATION AT THE ARSENAL OF VENICE

The Arsenal of Venice intro- duced job specialization in the sixteenth century-200 years before economist Adam Smith famously praised this form of job design. Founded in 11 04 CE, the state-owned shipbuilder in Italy eventually employed up to 4,000 people in specialized jobs (carpenters, iron workers, warehouse supervisors, etc.) to build ships and accessories (e.g., ropes). In 1 570, the Arsenal

had become so efficient through Italy's Arsenal of Venice applied job specialization practices specialization that it built and out- 200 years before Adam Smith popularized this form of job design. fitted 100 ships in two months. ©PAINTJNGIAiamy Stock Photo The organization even had an assembly line along the waterway where workers apportioned food, ammunition, and other sup- plies from specially designed warehouses to the newly-built vessels as they travelled past. 53

Chapter Six Applied Performance Practices 171

SCIENTIFIC MANAGEMENT One of the strongest advocates of job specialization was Frederick Winslow Taylor, an American industrial engineer who introduced the principles of scientific management early in the twentieth century.54 Scientific management consists of a toolkit of activities. Some of these interventions- employee selection, training, goal setting, and work incentives-are common today but were rare until Taylor popularized them. However, scientific management is mainly associated with high levels of job specialization and standardization of tasks to achieve maximum efficiency.

According to Taylor, the most effective companies have detailed procedures and work practices developed by engineers, enforced by supervisors, and executed by employees. Even the supervisor's ta~ks should be divided: One person manages operational efficiency; another manages inspection; and another is the disciplinarian. Taylor and other industrial engineers demonstrated that scientific man- agement significantly improves work efficiency. No doubt, some of the increased productivity can be credited to training, goal setting, and work incentives, but job specialization quickly became popular

in its own right.

PROBLEMS WITH JOB SPECIALIZATION Frederick Winslow Taylor and his contemporaries focused on how job specialization reduces labour "waste" by improving the mechanical efficiency of work (i.e., matching skills, faster learning, Jess switchover time). Yet they didn't seem to notice how this extreme job special ization adversely affects employee attitudes and motivation. Some jobs-such as scanning grocery items-can be so special- ized that they soon become tedious, trivial, and socially isolating. Specialized jobs with very short cycle times often produce higher levels of employee turnover and absenteeism. Companies sometimes have to pay higher wages to attract job applicants to this dissatisfying, narrowly defined work. 55

Job specialization affects output quality, but in two opposing ways. Job incumbents of specialized jobs potentially produce higher qual ity results because, as we mentioned earlier, they master their work faster than do employees in jobs with a wide variety of tasks. This higher proficiency explains why specialist lawyers tend to provide better quality service than do generalist lawyers. 56 But many jobs (such as supermarket cashiers) are specialized to the point that they are highly repetitive and tedious. In these repetitive jobs, the positive effect of higher proficiency is easily offset by the negative effect of lower attentiveness and motivation caused by the tedious work patterns.

Job specialization also undermines work quality by making it difficult for employees to visualize or otherwise understand the overall product or service. By performing a small part of the overal l work, employees have difficulty striving for better quality or even noticing flaws with the work unit's overall output. As one observer of an automobile assembly line reports: "Often [employees] did not know how their jobs related to the total picture. Not knowing, there was no incentive to strive for qual ity-what did quality even mean a~ it related to a bracket whose function you did not understand?"57

Job Design and Work Motivation Frederick Winslow Taylor may have overlooked the motivational potential of jobs, but it

is now the central focus of many job des ign initiatives. Organizational behaviour scholar Frederick Herzberg is credited with shifting the spotlight in the 1950s when he intro-

duced motivator-hygiene theory.58 Motivator-hygiene theory proposes that employees experience job satisfaction when they ful fil growth and esteem needs (cal led motivators) and they experience dis- satisfaction when they have poor working conditions, low job security, and other factors categorized as lower-order needs (called hygienes). Herzberg argued that employees are motivated only by job characteristics, wherea~ the hygiene factors merely prevent dissatisfaction. It might seem obvious to us today that the job itself is a source of motivation, but the concept was radical when Herzberg proposed it several decades ago.

172 Part Two Individual Behaviour and Processes

JOB CHARACTERISTICS MODEL Motivator-hygiene theory has been soundly rejected due to various logical and methodological flaws. Even so, Herzberg generated new thinking about the motivational potential of the job itself59 Out of subsequent research emerged the j ob characteristics model, shown in Exhibit 6.2. The job charac- teristics model identifies five core job dimensions that produce three psychological states. Employees who experience these psychological states tend to have higher levels of internal work motivation (moti- vation from the work itself), job satisfaction (particularly satisfaction with the work itself), and work effectiveness.60

Core Job Characteristics The job characteristics model identifies five core job characteristics. Under the right conditions, employees are more motivated and satisfied when jobs have higher levels

of these characteristics:

Skill variety. SkiU variety refers to the use of different skills and talents to complete a variety of

work activities. For example, sales clerks who normally only serve customers might be assigned

the additional duties of stocking inventory and changing storefront displays.

Task identity. Task identity is the degree to which a job requires completion of a whole or

identifiable piece of work, such as assembl ing an entire broadband modem rather than just soldering in the c ircuitry.

Task significance. Task significance is the degree to which the job affects the organization and/ or larger society. It is an observable characteristic of the job (you can see how it benefits others) as well as a perceptual awareness. For example, Rolls-Royce Engine Services improved task significance among its employees by inviting customers to talk to production staff about the

EXHIBIT 6.2 The Job Characteristics Model

Critical J- Psychological

States

Meaningfulness

Responsibility

Outcomes

Sourr:e: J. R. Hackman and G. Oldham. Work Redesig,n (Reading. MA: Addi .. ::on-Wesley. 1980). p. 00. Used with penniss:ion.

Chapter Six Applied Performance Practices 173

importance of their engine repairs to their company. As one Rolls -Royce executive observed, "[These talks give] employees with relatively repetitive jobs the sense that they 're not just working on a part but rather are key in keeping people safe."61

Autonomy. Jobs with high levels of autonomy provide freedom, independence, and discretion

in schedul ing the work and determining the procedures to be used to complete the work. In autonomous jobs, employees make their own decisions rather than rely on detailed instructions from supervisors or procedure manuals. Autonomy is considered the core motivational element of job design, which is consistent with its central role in intri nsic motivation (see Chapter 5).62

Autonomy is also an important mechanism to reduce stress in some situations (see Chapter 4).

Job feedback. Job feedback is the degree to which employees can tell how well they are doing from direct sensory information from the job itself. Airline pilots can tell how well they land their aircraft, and road crews can see how well they have prepared the roadbed and laid the asphalt.

Critical Psychological States The five core job characteristics affect employee motivation and satisfaction through three critical psychological states, shown in Exhibit 6.2. Ski ll variety, task identity, and task significance directly contr ibute to the job's experienced meaningji1lness-the belief that one's work is worthwhile or important. Autonomy directly contributes to feelings of experienced responsibility- a sense of being personally accountable for the work outcomes. The third critical psy-

chological state is knowledge of results-an awareness of the work outcomes based on information from the job itself.

Individual Differences Job design doesn't increase work motivation for everyone in every sin1ation. Employees must have the required skills and knowledge to master the more chal lenging work.

Accounting professionals serve a v ital role in society, yet they don't perceive this task significance in many of their daily work activities. In contrast, medical doctors easily recognize the task significance of their work when caring for patients by seeing improvements in their patients' health.

To increase task significance awareness, KPMG showed its staff a video documenting the professional services firm's historic contributions to society. Employees were also invited to share stories about how their jobs as auditors have had a positive impact on others. KPMG was overwhelmed w ith 42,000 submissions, some of wh ich were depicted in posters around the organization.

In tess than one year, th is "higher purpose" awareness initiative had substantially reduced employee tu rnover intentions, particularly when the employee's manager spent time discussing KPMG's impact on society. KPMG's ranking on the list of Best 100 Companies to Work For in America jumped 17 places the year after the task significance campaign was launched.6 3

©BRIAN ANTHONY I Ala my Stock Photo

174 Part Two Individual Behaviour and Processes

Otherwise, job design tends to increase stress and reduce job performance. The original model also states that employees will be motivated by the five core job characteristics only when they are satisfied with their work context (e.g., working conditions, job security) and have a high growth need strength. Growth need strength refers to an individual's need for personal growth and development, such as work that offers chal lenge, cognitive stimulation, learning, and independent thought and action.64 However, research findings have been mixed, suggesting that employees might be motivated by job design no matter how they feel about their job context or how high or low they score on growth needs.65

SOCIAL AND INFORMATION PROCESSING JOB CHARACTERISTICS

The job characteristics model overlooks two clusters of job features: social characteristics and infor- mation processing demands66 One social characteristic is the extent to which the job requires employ- ees to interact with other people (co-workers, cl ients, government representatives, etc.). This required social interaction is associated with emotional labour (discussed in Chapter 4), as well as with task in terdependence-the extent to which employees need to share materials, information, or expertise with others in order to perform their jobs (which we discuss in Chapter 8 as an element of team dynamics). A second social characteristic of the job is feedback from others. Earl ier, we said that feed- back from the job itself is motivational. Feedback from cl ients, co-workers, and other social sources is also important, particularly for rapid learning and when the feedback is positive (see Chapter 5).

The other cluster of job characteristics missing from the job characteristics model relates to the infor- nwtion processing demands of the job67 One information processing demand is how predictable the job duties are from one day to the next (called task variability). Employees in jobs with high task variability have nonroutine work patterns; they perform different types of tasks from one day to the next, and don't know which tasks are required until that time. The second information processing demand, called task analyzability, refers to how much the job can be performed using known procedures and rules. Jobs with high task analyz.ability have a ready-made "cookbook" to guide people in those jobs through most deci- sions and actions, whereas jobs with low ta~k analyzability require employee creativity and judgment to

determine the best course of action. Task variability and ta~k analyz.ability are important job characteristics to consider when designing organizational structures, so we discuss both of them further in Chapter 13.

JOB DESIGN PRACTICES THAT MOTIVATE Three main strategies can increase the motivational potential of jobs: job rotation, job enlargement, and job enrichment.

Job Rotation Job rotation is the practice of moving employees from one job to another for the purpose of improving the motivational and physiological conditions of the work. EYE Lighting Inter- national, the American subsidiary of Iwasaki Electric of Japan, practises job rotation. "Every employee

on the factory floor changes positions at least once a day," says EYE Lighting president Tom Salpietra. "The employees Jove it because they don't get bored in their daily job. Ergonomically, it's good for them because they're not doing the same repetitive task day-in and day-out when they come here." Salpietra adds that job rotation gives the company "a tremendous amount of flexibility" when assign- ing work. By performing a variety of jobs, employees also develop a clearer picture of the production process and ways to improve product qual ity.68

EYE Lighting president Tom Salpietra identified the three main benefits of job rotation. First, it minimizes health risks from repetitive strain and heavy lifting because employees use different mus- cles and physical positions in the various jobs. Second, it supports multi-skilling (employees learn several jobs}, which increases workforce flexibility in staffing the production process and in finding replacements for employees on vacation. A third benefit of job rotation is that it potentially reduces the boredom of highly repetitive jobs. Organizational behaviour experts continue to debate whether job rotation real ly is a form of job redesign because the jobs remain the same; they are sti ll highly special- ized. However, job rotation does increase variety throughout the workday, which explains why it likely has some positive effects on employee attitudes.

Chapter Six Applied Performance Practices 175

Job Enlargement Job enlargement adds tasks to an existing job. This might involve combining two or more complete jobs into one or just adding one or two more tasks to an existing job. Either way, skill variety increases because there are more tasks to perform. Video journalist is an example of an enlarged job. As Exhibit 6.3 illustrates, a traditional news team consists of a camera operator, a sound and lighting specialist, and the journalist who writes and presents or narrates the story. By contrast, one video journalist performs al l of these tasks.

Job enlargement significantly improves work efficiency and flexibility. However, research suggests that simply giving employees more tasks won't affect motivation, performance, or job satisfaction. These benefits result only when skill variety is combined with more autonomy and job knowledge. 69

In other words, employees are motivated when they perform a variety of tasks and have the freedom and knowledge to structure their work to achieve the highest satisfaction and performance. These job characteristics are at the heart of job enrichment.

Job Enrichment Job enrichment occurs when employees are given more responsibility for schedul ing, coordinating, and planning their own work.7° For example, customer service employees at American Express go "off-script," meaning that they use their own discretion regarding how long they should spend with a client and what to say to them.71 Previously, employees had to follow strict state- ments and take a fixed time for specific types of customer issues. People who perform enriched jobs tend to have higher job satisfaction and work motivation, along with lower absenteeism and turnover. Productivity is also higher when task identity and job feedback are improved. Product and service quality tend to improve because job enrichment increases the jobholder's perceived responsibility and sense of ownership over the product or service. n

One way to increase job enrichment is by combining highly interdependent tasks into one job. This natural grouping approach is reflected in the video journalist job. Along with being an enlarged job, video journalism is an example of job enrichment because it nan1rally groups ta~ks together to com- plete an entire product (i.e., a news story). By forming natural work units, jobholders have stronger feelings of responsibi lity for an identifiable body of work. They feel a sense of ownership and, there-

fore, tend to increase job quality. Forming natural work units increases task identity and ta~k signifi- cance because employees perform a complete product or service and can more readily see how their work affects others.

A second job enrichment strategy, called establishing client relationships, involves putting employ- ees in direct contact with their clients rather than using another job group or the supervisor as the liaison between the employee and the customer. Establ ishing client relationships increases task sig- nificance because employees see a line-of-sight connection between their work and consequences for customers. By being directly responsible for specific cl ients, employees also have more information

and can make better decisions affecting those cl ients.73

EXHIBIT 6.3 Job Enlargement of Video Journalists

Traditional News Team Video Journalist

Employee 3 Reports SIOIY

• Operates camera • Operates SOII1d • Reports story

176 Part Two Individual Behaviour and Processes

Telus increased job enrichment among its service technicians by establishing direct client relationships. Previously, service technicians at the Vancouver-based telecommunications company performed only the technical tasks, whereas clients communicated only to customer service staff. Now, service technicians are responsible for both technical and customer service activities for their respective assignments. "I'm able to pick up my work and go directly to t he customers," says Telus service technician Sukh Toor. "It's great for me personally, because I have a lot more ownership of the customer relationship."74

©DayOwi/Shutterstock

Forming natural task groups and establishing client relationships are common ways to enrich jobs, but the heart of the job enrichment philosophy is to give employees more autonomy over their work. This basic idea is at the core of one of the most widely c ited-and often misunderstood-practices, known as empowerment.

Empowerment Practices

When companies design enriched jobs, employees who perform those jobs typically say they feel "empowered." In fact, empowerment is a well-known outcome of job enrich- ment, but it is also due to other work conditions as well as employee characteristics.

Empowerment is a psychological experience represented by four dimensions: self-determination, meaning, competence, and impact of the individual's role in the organization.75

Self-determination. Empowered employees feel that they have freedom, independence, and

discretion over their work activities.

Meaning. Employees who feel empowered care about their work and believe that what they do is important.

Competence. Empowered people are confident about their abi lity to perform the work well and have a capacity to grow with new challenges.

Impact. Empowered employees view themselves as active participants in the organization; that is, their decisions and actions have an influence on the company's success.

Chapter Six Applied Performance Practices 177

--Are you empowered as a studen t? You can discover your level of empowerment as a student by completing this self-assessment in Connect.

SUPPORTING EMPOWERMENT Chances are that you have heard leaders say they are "empowering" the workforce. Yet empowerment is a state of mind, so what these executives really mean is that they are changing the work environment to sup- port the feeling of empowerment.76 Numerous individual,job design, and organizational or work-context factors support empowerment.n At the individual level, employees must possess the necessary compe- tencies to be able to perform the work as well as handle the additional decision-making requirements.

Job characteristics clearly influence the degree to which people feel empowered.78 Employees are much more likely to experience self-determination when working in jobs with a high degree of autonomy and minimal bureaucratic control. They have increased meaningfu lness when working in jobs with high levels of task identity and task significance. They develop more self-confidence when working in jobs that allow them to receive feedback about thei r performance and accompl ishments.

Several organizational and work-context factors also influence empowerment.79 Employees experi- ence more empowerment in organizations in which information and other resources are easily acces- sible. Empowerment is also higher in organizations that demonstrate a commitment to employee learning by providing formal training programs and nurturing a learning orientation culture (which encourages informal learning and discovery). Furthermore, empowerment requires corporate leaders to trust employees and be will ing to take the risks that empowerment creates.

With the r ight individuals, job characteristics, and organizational environment, empowerment can substantially improve motivation and performance. For instance, two recent studies reported that res- taurant servers with higher empowerment provide better customer service and engage in more organiza- tional citizenship behaviours (specifically, helping other busy servers with their workload).80 However, organizational and cultural circumstances can limit the extent to which the conditions for empower- ment produce feelings of empowerment. A few studies have observed, for example, that increased

autonomy and discretion do not result in higher feelings of empowerment in high power distance cul- tures because this self-determination conflicts with the norms of high power distance (deferring to the boss's power). Trust in leadership is another important contingency regarding whether employees feel empowered when structural conditions for empowerment are present.81

Global Connections 6 .4:

SVENSKA HANDELSBANKEN'S BRANCH-LEVEL EMPOWERMENT

One of Europe's most successful banks doesn't believe in centralized financial targets, cor- porate incentives, or budgets. Instead, Stockholm-based Svenska Handelsbanken AB gives managers and staff at its 800 branches in 24 countries considerable autonomy to run the local branches as their own businesses. "We put customer satisfaction fi rst, and believe local branches are best-placed to make all customer decisions; says Dermot Jordan, manager of Handelsbanken's branch in Chiswick, U.K. "We are empowered to make these decisions in the branch, free from targets or bonus incentives."

Handelsbanken's branches decide on which customers to attract, how much to lend, what products to advertise, and how many staff to hire. This autonomy provides more personalized banking to clients and, by knowing them better, reduces the bank's risk of loan defaults. Handelsbanken doesn't even have centralized operations for customer calls. "There are no

(continued)

178 Part Two Individual Behaviour and Processes

(continued)

call centres, so customers deal direct(ly) with their account manager face-to-face, via direct line, email, or mobile," explains Sarah Smith, manager of Handelsbanken's branch in Scunthorpe, U.K.

Branch-level empowerment seems to work well. Handelsbanken is the fastest-growing bank in the U.K., has the highest customer satisfaction ratings among banks in Sweden and the U.K., has one of the highest credit ratings among banks worldwide, and was one of the few European banks to weather the great financial crisis unscathed.82

Branch managers and staff at Stockholm-based Svenska Handelsbanken AB feel empowered because they are given considerable autonomy to run the local branches as their own businesses.

© Stuwdamdorp/A iamy Stock Photo

Self-Leadership Practices

What is the most important characteristic that companies look for in their employees? Leadership potential, ability to work in a team, and good communication skills are impor- tant, but the top of the list in a survey of 800 British employers is self-motivation. Dave

Burke, Google's vice-president of engineering for the Android operating system, can identify with these results. "Being laid back is one part of [Google's] culture," says Burke. "The fl ip side is that we are a

very driven company that gets things done. The key to this is employing highly self-motivated people."83

Google, PCL Construction, and many other firms seek out job applicants who are self-starters, self-motivated, and proactive. These are people who engage in self-leadership. They establish the self- direction and self-motivation needed to perform a task without their managers generating that motiva- tion or initiative. 84 Self-leadership includes a toolkit of behavioural activities borrowed from social

cognitive theory and goal setting (see Chapter 5). It also includes constructive thought processes that have been extensively studied in sports psychology.

Chapter Six Applied Performance Practices 179

Self-leadership consists of several processes, and the five main activities are identified in Exhibit 6.4.

These elements generally follow each other in a sequence: personal goal setting, constructive thought patterns, designing natural rewards, self-monitoring, and self-reinforcement.85

PERSONAL GOAL SETTING Self-leadership refers to leading oneself toward objectives, so the process necessarily begins by set- ting goals. These goals are self-determined, rather than assigned by or jointly decided with a super- visor. Research suggests that employees are more motivated and perform better when they set their

own goals, particularly in combination with other self-leadership practices.86 Personal goal setting also requires a high degree of self-awareness, because people need to understand their current behaviour and performance before establ ishing meaningful goals for personal development.

CONSTRUCTIVE THOUGHT PATTERNS Before beginning a task and while performing it, employees engage in two positive (constructive)

thought strategies about that work and its accompl ishment: positive self-talk and mental imagery.

Positive Self-Talk Do you ever talk to yourself? Most of us do, according to a major study of Canadian college students. 87 Self-ta lk refers to any situation in which we talk to ourselves about our own thoughts or actions. The problem is that most self-talk is negative; we criticize much more than

encourage or congratulate ourselves. Negative self-talk undermines our confidence and potential to perform a particular task. In contrast, positive self-talk creates a "can-do" belief and thereby increa~es

motivation by raising our self-efficacy and reducing anxiety about challenging ta~ks.88 We often hear that professional athletes "psyche" themselves up before an important event. They tell themselves that they can achieve their goal and that they have practised enough to reach that goal. They are motivating themselves through self-talk.

Mental Imagery You've probably heard the phrase ''I' ll cross that bridge when I come to it!" Self-

leadership takes the opposite view. It suggests that we need to mentally practise a task and imagine successfully performing it beforehand. This process, known as mental imagery, has two parts. One part involves mental ly practising the task, anticipating obstacles to goal accomplishment, and working out solutions to those obstacles before they occur. By mentally walking through the activities required to accomplish the task, we begin to see problems that may occur. We can then imagine what responses would be best for each contingency.89

Whi le one part of mental imagery helps us to anticipate things that could go wrong, the other part involves visualizing successful completion of the task. You might imagine the experience of com- pleting the task and the positive results that follow, such as being promoted, receiving a prestigious award, or taking time off work. This visualization increases goal commitment and motivates people to complete the task effectively. This is the strategy that Tony Wang appl ies to motivate himself. "Since I am in sales, I think about the reward I get for closing new business-the commission cheque-and the things it will allow me to do that I really enjoy," explains the sales employee. "Or I think about

EXHIBIT 6.4 Elements of Self-Leadership

180 Part Two Individual Behaviour and Processes

the feeling I get when I am successful at something and how it makes me feel good, and use that to get me going."90

DESIGNING NATURAL REWARDS Self-leadership recognizes that employees actively craft their jobs. To varying degrees, they can alter tasks and work relationships to make the work more motivating.91 One way to build natural rewards

into the job is to alter the way a ta~k is accomplished. People often have enough discretion in their jobs to make slight changes to suit their needs and preferences.

SELF-MONITORING Self-monitoring is the process of keeping track at regular intervals of one's progress toward a goal by using natural ly occurring feedback. Self-monitoring significantly improves employee performance, although some types of self-monitoring are better than others.92 Some people can receive feedback from the job itself, such as members of a lawn maintenance crew who can see how they are improving the appearance of their cl ient's property. But many of us are unable to observe our work output so read-

ily. Instead, feedback mechanisms need to be designed. Salespeople might arrange to receive monthly reports on sales levels in their territory. Production staff might have gauges or computer feedback systems installed so they can see how many errors are made on the production line. Research suggests that people who have control over the timing of performance feedback perform their ta~ks better than do those with feedback assigned by others.93

SELF-REINFORCEMENT Self-leadership includes self-reinforcement, which is part of social cognitive theory described in Chapter 5. Self-reinforcement occurs whenever an employee has control over a reinforcer but doesn't "take" the reinforcer unti l completing a self-set goal . A common example is taking a break after reach- ing a predetermined stage of your work. The work break is a self-induced form of positive reinforce-

ment. Self-reinforcement also occurs when you decide to do a more enjoyable task after completing a task that you disl ike. For example, after slogging through a difficult report, you might decide to spend time doing a more pleasant task, such as catching up on industry news by scanning websites. One of the chal lenges with self-reinforcement is the temptation to take the reward before you should. Recent writing has explored situational and emotional strategies to manage these temptations so self- reinforcement remains true to one's original intentions.94

How well do you practise self-leadership? You can discover how well you practise various self-leadership activities by completing this self-assessment in Connect.

EFFECTIVENESS OF SELF-LEADERSHIP

Self-leadership is shaping up to be a valuable applied performance practice in organizational settings. A respectable body of research shows consistent support for most elements of self-leadership.95

Furthermore, self-leadership strategies seem to work just a~ well across cultures.96 Austrian army soldiers who completed a self-leadership training course performed better on physical tests (such as

time taken to complete an obstacle course) and educational tests on subjects they were studying at the time, compared to soldiers who didn't take the course. Employees in a mining operation wore safety

equipment more frequently after engaging in self-set goals and self-monitoring activities. Through mental imagery, supervisors and process engineers in a pulp and paper mill more effectively trans- ferred what they learned in an interpersonal communication skills class back to the job. Stud ies also indicate that constructive thought processes improve individual performance in various sports

Chapter Six Applied Performance Practices 18 1

activities. Indeed, almost al l Olympic ath letes rely on menta l rehearsal and positive self-talk to

achieve their performance goals.97

PERSONAL AND SITUATIONAL PREDICTORS OF SELF-LEADERSHIP

Some research suggests that self-leadership behaviours are more frequently found in people with higher levels of conscientiousness and extraversion. People with a positive self-concept evaluation (i.e., self-esteem, self-efficacy, and internal locus of control) are also more likely to apply self- leadership strategies.98

The work environment influences the extent to which employees engage in self-leadership. Specifi- cally, self-leadership activities flourish when employees have some degree of autonomy, when they believe their boss is empowering rather than controlling, and when there is a high degree of trust between them. Employees are also more likely to engage in self-monitoring in companies that empha- size continuous measurement of performance.99 Overall , self-leadership promises to be an important concept and practice for improving employee motivation and performance.

Do you have a proactive personality? You can d iscover the extent to which you have a proactive personality by completing this self-assessment in Connect.

Chapter Summary

L01 Discuss the meaning of money and identify several individual, team, and organizational-level pe rformance-based rewards.

Money (and other financial rewards) is a fundamental part of the employment relationship, but it also relates to our needs, our emotions, and our self-concept. It is viewed as a symbol of status and prestige, as a source of security, as a source of evil, or as a source of anxiety or feelings of inadequacy.

Organizations reward employees for their membership and seniority, job status, competencies, and perfor- mance. Membership-based rewards may attract job applicants and seniority-based rewards reduce turnover, but these reward objectives tend to discourage turnover among those with the lowest performance. Rewards based on job status try to maintain internal equity and motivate employees to compete for promotions. However, they tend to encourage a bureaucratic hierarchy, support status differences, and motivate employees to compete and hoard resources. Competency-ba~ed rewards are becoming increasingly popular because they encourage skill develop- ment. However, they tend to be subjectively mea~ured and can result in higher costs a~ employees spend more time learning new skills .

Awards and bonuses, commissions, and other individual performance-based rewards have existed for centuries and are widely used. Many companies are shifting to team-based rewards such as gainsharing plans and to organi- zational rewards such as employee share ownership plans (ESOPs), share options, and profit sharing. ESOPs and share options create an ownership culture, but employees often perceive a weak connection between individual performance and the organ izational reward.

L02 Describe five ways to improve r eward effectiveness. Financial rewards have a number of limitations, but reward effectiveness can be improved in several ways. Organizational leaders should ensure that rewards are linked to work performance, rewards

are aligned with performance within the employee's control, tean1 rewards are used where jobs are interdependent, rewards are valued by employees, and reward~ have no unintended consequences.

182 Part Two Individual Behaviour and Processes

L03 List the advan tages and disadvantages of' job specialization. Job design is the process of assigning tasks to a job, including the interdependency of those tasks with other jobs. Job specialization subdivides work into separate jobs for different people. This

increases work efficiency because employees master the tasks quickly, spend less time changing tasks, require less training, and can be matched more closely with the jobs best suited to their skills. However, job specialization may reduce work motivation, create mental health problems, lower product or service quality, and increase costs through discontentment, absenteeism, and turnover.

L04 Diagram the job characteristics model and describe three ways to improve employee motivation through job design.

The job characteristics model is a template for job redesign that specifies core job dimensions, psy- chological states, and individual differences. The five core job dimensions are skill variety, task identity, task significance, autonomy, and job feedback. Jobs also vary in d1eir required social interaction (task interdependence) and information processing characteristics (task variability and analyzability). Contemporary job design strategies try to motivate employees through job rotation, job enlargement, and job enrichment. Organizations introduce job rotation to reduce job boredom, develop a more flexible workforce, and reduce the incidence of repetitive strain injuries. Job enlargement involves increasing the number of tasks within the job. Two ways to enrich jobs are clus- tering tasks into natural groups and establishing client relationships.

LOS Define empowerment and identify strategies that support empowerment. Empowerment is a psychological concept represented by four dimensions: sel f-determination, mean- ing, competence, and impact regarding the individual's role in the organization. Individual character-

istics seem to have a minor influence on empowerment. Job design is a major influence, particularly autonomy, task identity, task significance, and job feedback. Empowerment is also supported at the organizational level through a learning orientation culture, sufficient information and resources, and corporate leaders who trust employees.

L06 Describe the five elements of self-leadership and identify specific personal and work envirmm1ent influences on self-leadership.

Self-leadership is the process of influencing oneself to establ ish the self-direction and self- motivation needed to perform a task. This includes personal goal setting, constructive thought patterns, design- ing natural rewards, self-monitoring, and self-reinforcement. Constructive thought patterns include self-talk and mental imagery. Self- talk occurs in any situation in which a person talks to himself or herself about his or her own thoughts or actions. Mental imagery involves mentally practising a task beforehand and imagining performing it successfully. People with higher levels of conscientiousness, extraversion, and a positive sel f-concept are more likely to apply self-leadership strategies. It also increases in workplaces that support empowerment and have high trust between employees and management.

Key Terms employee share ownership plans (E$0Ps)

empowerment

gainsharing plan

j ob characteristics model

job design

j ob enlargement

job enrichment

job evaluation

j ob specialization

mental imagery

motivator-hygiene theory

profit-sharing plan

scientific management self-leadership

self-talk

share op tions

skill variety

task identity

task significance

Critical Thinking Questions I. As a consultant, you have been asked to recommend either a gainsharing plan or a profit-sharing plan for

employees who work in the four regional distribution and warehousing facilities of a large retail organ ization. Which reward system would you recommend? Explain your answer.

Chapter Six Applie d Performance Practices

2. Which of the performance reward practices-individual, team, or organizational-would work better in improving organizational goals? Please comment with reference to an organization of your choice.

183

3. Kelowna Tire Corporation redesigned its production facilities around a team-based system. However, the company president believes that employees will not be motivated unless they receive incentives based on their individual performance. Give three explanations why Kelowna Tire should introduce team-based rather than individual rewards in this setting.

4 . What can organizations do to increase the effectiveness of financial rewards?

5. Most of us have watched pizzas being made while waiting in a pizzeria. What level of job specialization do you usually notice in these operations? Why does this high or low level of special ization exist? lf some piz- zerias have d ifferent levels o f specialization than others, identify the contingencies that might explain these differences.

6. Can a manager or supervisor "empower" an employee? Discuss fully.

7 . Describe a time when you practised sel f-leadership to successfully perform a task. With reference to each step in the self-leadership process, describe what you did to achieve this success.

8. The c ity manager of a large Canadian municipality wants to reduce supervisory costs by encouraging employees to motivate and manage themselves much of the time. The manager has heard of sel f-leadership, and bel ieves that it may be a key strategy to reduce the number of supervisors in the organization. Discuss the extent to which self-leadership practices an10ng employees would support the c ity manager's objectives. Also, summarize the content of a training module that would improve any one of the self-leadership practices.

Case Study:

YAKKATECH LTD.

by Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada) YakkaTech Ltd. is an information technology services firm employing 1500 people across Canada. YakkaTech has a consulting division, which mainly installs and upgrades enterprise software systems and related hardware on the client's site. YakkaTech also has a customer service divis ion, which consists of four customer contact centres serving clients within each region.

Each customer contact centre consists of a half-dozen departments representing functional specializations (computer systems, intranet infrastructure, storage systems, enterprise software systems, customer bill ing, e tc.). These centres typically have more than two dozen employees in each department. When a client submits a problem to the centre using the online form, the message or call is directed to the department where the issue best applies. The query is g iven a "ticket" number and is assigned to the next avai lable employee in that department. Individual employees are solely responsible for the tickets assigned to them. The employee investigates and corrects the issue, and the ticket is "closed" when the cl ient agrees that the problem has been resolved.

lf the client experiences the same problem again, even a few days later, a new ticket is issued and sent to whichever employee is avai lable to receive the ticket. A client's problems are almost always handled by different employees each time, even when the issue is sent to the same department. Furthermore, when a customer centre department is heavily backlogged, cl ient~ are redirected to the same department at another regional centre where their problem can be addressed more quickly.

At one time, YakkaTech operated more than a dozen small customer contact centres in each c ity because client problems had to be diagnosed and resolved on-site. Today, employees can investigate most software and hardware system faults from the centre through remote monitoring systems, rather than personally visiting the client. Conse- quently, eight years ago YakkaTech amalgamated it~ customer service operations into four large regional centres. Customer service staff work entirely within the centre. When a cl ient vis it is required, the ticket is transferred to an individual or tean1 in the consulting business, who then visits the client.

YakkaTech's customer service business has nearly doubled over the past five years, but with this growth has come increasing numbers of customer complaint~ regarding poor qual ity service. Many say that employees seem indifferent to the client's problems. Others have commented on the s low response to their problems where the issue requires involvement of more than one department. Several clients have also complained that they are contin- ually educating YakkaTech's customer service employees about details of their unique IT systems infrastructure.

Another concern is that until 18 months ago, YakkaTech's voluntary employee turnover rates in the contact cen- tres had risen above the industry average. This increased labour cost~ due to the expense of recruiting new technical staff a~ well as lower productivity o f new employees. According to results of an employee survey two years ago (as well as informal comments since then), many employees feel that their work is monotonous. Some also said that

184 Part Two Individual Behaviour and Processes

they feel disconnected from the consequences of their work. A few also complained about ongoing conflicts with people in other departments and the stress of serving dissatisfied clients.

Eighteen months ago, YakkaTech's executive team decided to raise pay rates for its custo mer service staff to become among the highest in the industry. The assum ption was that the high pay rates would improve morale and reduce turnover, thereby reducing hiring costs and improving productivity. In addition, YakkaTech introduced a vested profit-sharing plan, in which employees received the profit-sharing bonus only if they remained with the company for two years after the bonus was awarded. Employees who quit or were fired for just cause before the vesting period forfeited the bonus.

Employee turnover rates dropped dramatically, so the executive tean1 concluded that custo mer service qual ity and productivity would improve. Instead, customer complaints and productivity remain below expectations and , in some cases, have worsened. Experienced employees continue to complain about the work. There are a few disturbing incidents where employees are careless at solving cl ient problems or do not bother to forward tickets that should have been assigned to another department. Employee referrals (where staff recommend friends to join the company) have become rare events, wherea~ at one time they represented a significant source of qual ified job applicants. Furthermore, a few executives have recently overheard employees say that they would like to work e lsewhere but can't afford to leave YakkaTech.

Discussion Questions

1. What symptom(s) in this case suggest that something has gone wrong?

2 . What are the main causes of these symptoms?

3. What actions should YakkaTech executives take to correct these problems?

©2009 Ste,•en L. McShane

Team Exercise:

IS STUDENT WORK ENRICHED?

Purpose This exercise is designed to help you learn how to mea~ure the motivational potential of jobs and evaluate the extent that jobs should be further enriched.

Instructions (Small Class) Being a student is like a job in several ways. You have tasks to perform, and someone (such as your instructor) oversees your work. Although few people want to be students most of their lives (the pay rate is too low!), it may be interesting to determine how enriched your job is as a student. 1. Students are placed into teams (preferably four or five people).

2 . Working alone, each student completes both sets of measures in this exercise. Then, us ing the gu idelines below, they individually calculate the score for the five core job characteristics as well as the overall motivating-potential score for the job.

3. Members of each tean1 compare their individual results. The group should identify differences of opinion for each core job characteristic. They should also note which core job characteristics have the lowest scores and recommend how these scores could be increa~ed.

4. The entire class will then meet to discuss the result~ of the exercise. The instructor may ask some tean1s to present their comparisons and recommendations for a particular core job characteristic.

Instructions (Large Class) 1. Working alone, each student completes both sets of measures in this exercise. Then, us ing the gu idelines

below, each student individually calculates the score for the five core job characteristics as well as the overall motivating-potential score for the job.

2 . Using a show of hands or classroom technology, students indicate their result~ for each core job characteristic. The instructor will ask for results for several ranges across the scales. Alternatively, students can complete this activity prior to class and submit their result~ through online classroom technology. Later, the instructor will provide feedback to the class showing the collective results (i .e., distribution of results across the range of scores).

3. Where possible, the instructor might ask students with very high or very low results to discuss their views with the class.

Chapter Six Applied Performance Practices 185

- Job Diagnostic Survey

Circle the number on the right that best describes student work. Very

Moderately Very

little much

I. To what extent does student work permit you to decide on your own how 2 3 5 6 7 I 4

to go about doing the work?

2. To what extent does student work involve doing a whole or identifiable I 2 3 4 5 6 7

piece of work~ r.tther than a small portion of the overall work process'?

3. To what extent does student work require you to do many different things, 2 3 5 6 7 I 4

~ing a v-.triety of your skills and talent'i? - 4 . To what extent are the result'i of your work as a student likely to

significantly affect the lives and well-being of other people (e.g .. within I 2 3 4 5 6 7

your school. your family, society)?

5. To what extent does working on student activities provide information 2 3 5 6 7 I 4

_!'bout your performance'? _....__ - _......___ - - - ,.-- - - Circle the number on the right that best describes student work.

Very Uncertain

Very inaccurate accur.tte

6. Being a student requires me to use a number of complex and high-level skills. I 2 3 4 5 6 7

7. Student work is arranged so that I do not have the chance to do an entire piece of 7 6 5 3 2 4 I

work from beginning to end.

8. Doing the work required of studenL~ provides many chances for me to figure out I 2 3 4 5 6 7

how well I am doing.

9. The work students must do is quite simple and repetitive. 7 6 5 4 3 2 I

I 0. The work of a student is the type where a lot of other people can be affected by

how well the work geL~ done. I 2 3 4 5 6 7

I I. Student work denies me any chance to use my persona] initiative or judgment in 7 6 5 4 3 2 I

carrying out the work.

I 2. Student work provides me the chance to completely finish the pieces of work I 2 3 4 5 6 7

I begin.

I 3. Doing student work by iL~elf provides very few clues about whether I am

performing well. 7 6 5 4 3 2 I

I 4. As a student. I have con.sider.tble opportunity for independence and freedom in I 2 3 4 5 6 7

how I do the work.

I 5. The work I perform a~ a student is not very significant or important in the broader 7 I 6 5 4 3 2 I scheme of things.

Source: Adapted from the Job Diagnostic Survey. developed by J. R. Hackman and G. R. Oldham. The authors have released any copyright ownership of Lhis scale (see J. R. Hackman and G. Oldham. Work Redesign (Reading. MA: Addison-Wesley. 1980). p. 275).

Core Job Char.tcteristics

Skill variety (SV)

Task identity (TI)

Task significance (TS)

Calculating the Motivational Potential Score

Scoring Core Job Characteristics: Use the following set of calculations to estimate the motivating· potential score for the job of being a student. Use your answers from the Job Diagnostic Survey that you completed above.

Calculation Core Job Char.tcteristics Calculation

Question 3 + 6 + 9 Autonomy Question I + I I + 14 =

3 3

Question 2 + 7 + 12 - Job feedback Question 5 + 8 + 13 -3 3 Question 4 + 10 + IS

3 -

186 Part Two Individual Behaviour and Processes

Calculating Motivating-Potent ial Score (MPS): Use the following formula and the earlier results to calculate the motivating-potential score. Notice that skill variety, task identity, and task significance are averaged before being multiplied by the score for autonomy and job feedback.

(SV +~I+ TS) x Autonomy x Job Feedback I (==~+~3~~+===)x ___ x ___ = __ _

Self-Assessments for Chapter 6

SELF-ASSESSMENT NAME DESCRIPTION

Money is a fundamental part of the employment relationship. but it is more than just an economic medium of exchange. Money affects

What is your attitude toward money? our needs. our emotions. and our self-concept People hold a variety of attitudes toward money. One widely studied set of attitudes is known as the "money ethic." This self·assessment estimates how

much you budget. respect. and worry about money.

Empowerment is a psychological concept represented by feelings of self-dete rmination. meaning. competence. and impact The empowerment concept applies to people in a variety of s ituations.

Are you e mpowered as a student? not just the workplace. This self·a'isessment. which specifically refers to your position a..'i a s tudent at your college or university. estimates your leve) of empowerment overall and on each of its four

dimensions. - SeJf.Jeadership refers to specific cognitive and behavioural strate-

gies that people apply to themselves to support the self-direction

How well do you practise sel f-leadership? and self-motivation needed to perfonn a task. It recognizes that successful employees mostly regulate their own actions rather than rely on others to motivate them. This self·a..'isessment estimates how much you engage in several se(f .. Jeadership activities. - People differ in how much they try to influence theenvironmenl'i in which they live. Those with a proactive personality take action to change things while less proactive people adapt to the existing situ•

Do you have a proactive personality? ation. Proactive personality is a stable personality char.tcteristic. and is associated with se(f.Jeadership. This self·assessment estimates

I I the extent to which your disposition includes the tendency to take

personal initiative.

( PART THREE J Team Processes CHAPTER 7

Decision Making and Creativity LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Describe the rational choice paradigm of decision making.

L02 Explain why people differ from the rat ional choice paradigm when ident ifying problems/opportunities, evaluating/choosing alternat ives, and evaluat ing decision outcomes.

L03 Discuss the roles of emotions and intuition in decision making.

L04 Describe employee characteristics, workplace conditions, and specific activit ies that support creativity.

LOS Describe the benefits of employee involvement and identify four contingencies that affect the optimal level o f employee involvement.

Target Corporation is the second largest discount retailer in the United States. In January 20 11 the company spotted an opportunity to quickly enter the Canadian market-Hudson's Bay Company was looking fo r a buyer interested in acquiring former Zellers locations. Believing that Walmart was considering making a bid, Target agreed to purchase all former Zellers assets, including store renta l commitments, for $ 1.8 billion. With th is decision, Target began its first venture into a foreign country.

187

188 Part Three Team Processes

The Canadian launch was set for March 2013, with three test stores opening initially, followed shortly after by another 2 1 stores. One month prior to launch, troubling signs were evident as senior level employees gathered at the Mississauga head office to update Target Canada's president distribution problems made it difficult to stock shelves; the checkout system was buggy and had trouble handling transactions; and, worst of all, they were having trouble understanding how the technology and sales system, which was new to the organization, worked. These problems increased the risk that opening on schedule would be met with unfavourable reviews from Canadian consumers.

These troubling signs came at a time when Target Corporation had been riding a wave of momentum. Target was considered a careful and efficient organization with a deep history and admired culture. Sales had continued to grow even during the recession of the late 2000s. Surely these strengths would carry over to the Canadian market.

In the end, things did not work out well. Target Canada filed for creditor protection two years after opening its first store, putting roughly 17,600 people out of work. Target's first foray into an international market ended up costing the corporation billions of dollars and damaging the firm's reputation. 1

The Target Canada debacle reveals the complexities, ambiguities, and importance of decision making in organizations. We will return to the Target Canada story several times throughout this chapter to illustrate key decision making topics.

All businesses, governments, and not-for-profit agencies depend on leaders and employees to fore- see and correctly identify problems, to survey alternative responses and pick the best one based on a variety of stakeholder interests, and to execute those decisions effectively. Decision making is such a vital function for an organization's health that it might be equated with the importance of breathing to

a human being. Indeed, great leaders typically resuscitate organizations by encouraging and teaching employees at al l levels to make decisions more efficiently and effectively.

This chapter examines decision making from three perspectives, or paradigms. We begin with the rational choice paradigm, which has historically (but misguidedly) been viewed as the ideal way to make decisions. Next, we review the rational choice elements from the "imperfect rationality" paradigm-a

set of theories that identify human limitations in the quest for perfectly rational decision making. We then examine the dual rational-emotional paradigm, which recognizes that emotions play a central role (both good and bad) in the decision-making process. The latter part of this chapter focuses on two top- ics that intertwine with decision making: creativity and employee involvement.

Rational Choice Paradigm of Decision Making

Decision making is the process of making choices among alternatives with the intention of moving toward some desired state of affairs2 How should people make decisions in organizations? Most business leaders would say that effective decision making involves

identifying, selecting, and applying the best possible alternative. In other words, the best decisions use pure logic and al l available information to choose the alternative with the highest value-such as high- est expected profitability, customer satisfaction, employee well-being, or some combination of these outcomes. These decisions sometimes involve complex calculations of data to produce a formula that

points to the best choice. In its extreme form, this calculative view of decision making represents the rational choice paradigm,

which has dominated decision-making philosophy in Western societies for most of written history3 About

400 years ago, Descartes and other European philosophers empha~ized that the ability to make logical decisions is one of the most important attributes of human beings. In the 1700s, Scottish philosophers refined the notion that the best choice is the one that offers the greatest satisfaction or "utility."

The rational choice paradigm selects the choice with the highest utility through the calculation of subjective expected utility (SEU).4 Subjective expected util ity is the probabil ity (expectancy) of satis- faction (utility) for each alternative. SEU is the foundation of several organizational behaviour theories,

including the attitude model in Chapter 4 and expectancy theory of motivation in Chapter 5.

Chapter Seven Decision Making and Creativity 189

To understand SEU, consider this example: Suppose that you need to select one suppl ier from among many that offer a particular raw material for your company. Rational ly, you would choose the supplier that will produce the highest overall satisfaction ("utility") for your company. That expected satisfaction depends on the expected satisfaction (util ity) of each outcome as well as the probability ("expected" in subjective expected uti lity) that each supplier will provide that outcome. One outcome might be the timely delivery of raw materials. You might estimate that one suppl ier will consistently deliver the product on time whereas other suppliers have lower probabil ities of timely delivery. Another outcome might be the qual ity of raw materials. Again, you discover that suppl iers differ in their likeli-

hood of providing consistently high quality materials. Multiply the utility of each outcome together with the probability of that outcome occurring, then add those results across al l outcomes to figure out which supplier has the highest overall subjective expected utility. The key point from this example is that all decisions rely to some degree on (a) the expected value of the outcomes (utility) and (b) the probability of those good or bad outcomes occurring (expectancy).

RATIONAL CHOICE DECISION-MAKING PROCESS Along with its reliance on subjective expected utility, the rational choice paradigm assumes that deci- sion makers follow the systematic process illustrated in Exhibit 7 .1.5 The first step is to identify the problem or recognize an opportunity. A problem is a deviation between the current and the desired situation-the gap between "what is" and "what ought to be." This deviation is a symptom of more fundamental causes that need to be corrected6 The "ought to be" refers to goals, and these goals later help to evaluate the selected choice. For instance, if the goal is to answer incoming client calls within 30 seconds, the problem is the gap between that goal and the actual time the cal l centre takes to answer most client calls. An opportunity is a deviation between current expectations and a potentially better situation that was not previously expected. In other words, decision makers real ize that some decisions

may produce results beyond current goals or expectations. The second step involves choosing the best decision process. This step is really a meta-decision-

deciding how to decide-because it refers to choosing among the different approaches and processes to make the decision.7 One meta-decision is whether to solve the problem alone or involve others in the process. Later in this chapter, we' ll examine the contingencies of employee involvement in the

decision. Another meta-decision is whether to assume the decision is programmed or nonprogrammed.

EXHIBIT 7.1 Rational Choice Decision-Making Process

1. Identify

""' problem or ..,.. opportunity

6. Evaluate 2. Choose the best

the selected decision choice Rational

Choice process

t Decision- t Making

5. Implement Process 3. Discover the selected or develop

choice possible choices

~ 4. Select the

choice with the .K

highest value

190 Part Three Team Processes

Programmed decisions follow standard operating procedures; they have been resolved in the past, so

the optimal solution has already been identified and documented. In contrast, nonprogrammed deci- sions require all steps in the decision model because the problems are new, complex, or ill-defined.

Target's decision to enter the Canadian market wa~ a nonprogrammed decision because it was the orga- nization's first time entering a foreign market.

The third step in the rational choice decision-making process is to identify and/or develop a list of possible choices. This usually begins by searching for ready-made solutions, such as practices that have worked well on similar problems. If an acceptable solution cannot be found, then decision makers need to design a custom-made solution or modify an existing one. The fourth step is to select the choice with the highest SEU. This calls for al l possible information about all possible alternatives and their outcomes, but the rational choice paradigm a~sumes this can be accomplished with ease.

The fifth step in the rational choice decision-making process is to implement the selected alterna- tive. Rational choice experts have little to say about this step because they a~sume implementation occurs without any problems. This is followed by the sixth step, evaluating whether the gap has nar- rowed between "what is" and "what ought to be." Ideally, this information should come from system- atic benchmarks so that relevant feedback is objective and easily observed.

PROBLEMS WITH THE RATIONAL CHOICE PARADIGM

The rational choice paradigm seems so logical, yet it is impossible to apply in reality because people are not and cannot be perfectly rational.8 Instead, we need to examine theories that explain why people engage in "imper- fect rationality." Over the next several pages, we re-examine each step in the rational choice decision-making process, but with more detail about what really happens from the lens of imperfect rationality.

Identifying Problems and Opportunities When Albert Einstein was asked how he would save the world in one hour, he replied

that the first 55 minutes should be spent defining the problem and the last 5 minutes solving it.9 Einstein's point was that problem identification is not just the first step in

decision making; it is arguably the most important step. But problems and opportunities are not clearly labelled objects that appear on our desks. Instead, they are conclusions that we form from ambiguous and conflicting information. 10

PROBLEMS WITH PROBLEM IDENTIFICATION The problem identification stage is, itself, fi lled with problems. Below are five of the most widely

recognized concerns. 11

Stakeholder Framing Employees, suppl iers, customers, and other stakeholders present (or hide) information in ways that makes the decision maker see the situation as a problem, opportunity, or

steady sailing. Employees point to external factors rather than their own faults as the cause of produc- tion delays. Suppliers market their new products as unique opportunities and competitor products as problems to be avoided. Stakeholders also offer a concise statement of the s ituation as a problem or otherwise in the hope the decision maker will accept their verdict without further analysis. Decision makers fall prey to these constructed realities because they have a need to simplify the daily bombard- ment of complex and often ambiguous information.

Decisive Leadership Various studies have found that executives are evaluated by their decisive- ness, including how quickly they determine that the situation is a problem, opportunity, or nothing worth their attention. 12 Consequently, many leaders announce problems or opportunities before having

a chance to logically assess the situation. The result is often a misguided effort to solve an ill -defined problem by wasting funds on a poorly identified opportunity.

Solution-Focused Problems When decision makers do recognize that the situation requires a decision, they sometimes describe the problem as a veiled solution.13 For instance, someone might say:

Chapter Seven Decision Making and Creativity 191

"The problem is that we need more control over our suppliers." This isn't a description of the problem;

it is a rephrased statement of a solution to a problem that has not been adequately diagnosed. Decision makers engage in solution-focused problem identification because it provides comforting closure to the otherwise ambiguous and uncertain nature of problems. People with a strong need for cognitive closure (those who feel uncomfortable with ambiguity) are particularly prone to solution-focused problems. Some decision makers take this solution focus a step further by seeing all problems as solutions that have worked well for them in the past, even though they were appl ied under different circumstances.

Perceptual Defence People sometimes fail to become aware of problems because they block out bad news as a coping mechanism. Their brain refuses to recognize information that threatens their self -concept. The tendency to engage in percepntal defence varies from one decision maker to the next. Studies also report that perceptual defence is more common when decis ion makers have limited

options to solve the problem. 14

Mental Models Decision makers are victims of their own problem framing due to existing mental models. Mental models are visual or relational images in our mind of the external world; they fill in information that we don' t immediately see, which helps us understand and navigate in our surround- ing environment (see Chapter 3). Many mental images are also prototypes-they represent models of

~ ""'l Global Connections 7 .1:

A FAMOUS MISSED OPPORTUNITY

Two Stanford PhD students wanted to complete their education, so they decided to sell for $1 mill ion the new search engine they had developed. Excite Inc., a popular search engine company at that time, turned down the search software, explaining that their mental model of successful web portals was in offering med ia, not searching. Executives at other firms had similar mental models, which blinded them from seeing this opportunity. Rather than abandon their search engine creation, the students- Larry Page and Sergey Brin-decided to form a company to realize its potential. They named their company Google. Many years later, Excite co-founder Joe Kraus acknowledged the huge missed opportunity. "Let me j ust say that we were wrong; said Kraus. "I' ll be the first to stand up and say 'whoops.'"15

©AP Photo/Ben MargoVCP Images

19 2 Part Three Team Processes

how things should be. Unfortunately, these mental models can blind us from seeing unique problems or opportunities because they produce a negative evaluation of anything that is dissimilar to the mental model. If an idea doesn' t fit the existing mental model of how things should work, then it is quickly dismissed as unworkable or undesirable.

IDENTIFYING PROBLEMS AND OPPORTUNITIES MORE EFFECTIVELY Recognizing problems and opportunities will always be a challenge, but one way to improve the pro- cess is by becoming aware of the five problem identification biases described above. For example, by recognizing that mental models restrict a person's perspective of the world, decision makers are more motivated to consider other perspectives of real ity. Along with increasing their awareness of problem identification flaws, leaders require considerable willpower to resist the temptation of looking decisive when a more thoughtful examination of the situation is warranted.

A third way to improve problem identification is for leaders to create a norm of "divine discontent," in which they are never satisfied with the status quo, and this aversion to complacency creates a mindset that more actively searches for problems and opportunities. 16 Finally, employees can minimize problem

identification errors by discussing the s in1ation with colleagues. It is much easier to discover blind spots in problem identification when listening to how others perceive the situation. Opportunities also become apparent when outsiders explore this information from their different mental models.

Searching for, Evaluating, and Choosing Alternatives

According to the rational choice paradigm of decision making, people rely on logic to evaluate and choose alternatives. This paradigm a~sumes that decision makers have well-articulated and agreed-

upon organizational goals, that they efficiently and simultaneously process facts about all alternatives and the consequences of those alternatives, and that they choose the alternative with the highest payoff.

Nobel Prize-winning organizational scholar Herbert Simon questioned these assumptions a half century ago. He argued that people engage in bounded rationality because they process limited and imperfect information and rarely select the best choice. 17 Simon and other OB experts demonstrated that how people evaluate and choose alternatives differs from the rational choice paradigm in several ways, as illustrated in Exhibit 7 .2. These differences are so significant that many economists are now shifting from rational choice to bounded rationality assumptions in the ir theories. Let's look at these differences in terms of goals, information processing, and maximization.

PROBLEMS WITH GOALS

The rational choice paradigm assumes that organizational goals are clear and agreed upon. In fact, these conditions are necessary to identify "what ought to be" and, therefore, provide a standard against which each alternative is evaluated. Unfortunately, organizational goals are often ambiguous or in conflict with each other.

PROBLEMS WITH INFORMATION PROCESSING

The rational choice paradigm also makes several assumptions about the human capacity to process information. It assumes that decision makers can process information about all alternatives and their consequences, whereas this is not possible in reality. Instead, people evaluate only a few alternatives and only some of the main outcomes of those alternatives. 18 For example, there may be dozens of com- puter brands to choose from and dozens of features to consider, yet consumers typical ly evaluate only a few brands and a few features.

A related problem is that decision makers typically evaluate alternatives sequentially rather than all at the same time. This sequential evaluation occurs partly because al l alternatives are not usual ly available to the decision maker at the same time. 19 Consequently, as a new alternative comes along, it is immediately compared to an implicit favour ite-an alternative that the decision maker prefers and

Chapter Seven Decision Making and Creativity 193

EXHIBIT 7.2 Rational Choice Assumptions versus Organizational Behaviour Findings about Choosing Alternatives

Rational Choice Paradigm Assumptions

Goals are clear, oompatible, and agreed upon

Decision makers can calculate all a~ernatives and their oulcornes

Decisioo makers evaluale all alternatives simultaneously

Decision makers use absolule standards to evaluate allernatives

Decision makers use factual informalion to choosea~ematives

Decision makers choose the alternative w~h the highest payoff

Observations from Organizational Behaviour

Goals are ambiguous, in conflict and lack full support

Decision makers have l im~ed information processing abil~ ies

Decision makers evaluate allernatives sequentially

Decision makers evaluate alternatives against an implicit favourite

Decision makers process perceptually dislorted information

Decision makers choose the alternative that is good enough (satisficing)

that is used as a comparison with other choices. When choosing a new computer system, for example, people typical ly have an implicit favourite brand or model in their heads that they use to compare with the others. This sequential process of comparing alternatives with an impl icit favourite occurs even when decision makers aren't consciously aware that they are doing this.20

Although the implicit favourite comparison process seems to be hardwired in human decision mak- ing, it often undermines effective decision making because people distort information to favour their implicit favourite over the alternative choices. They tend to ignore problems with the implicit favou- rite and advantages of the alternative. Decision makers also overweight factors on which the implicit favourite is better and underweight areas in which the alternative is superior.2'

Biased Decision Heuristics Subjective expected utility is the cornerstone of rational choice decision making, yet psychologists Amos Tversky and Daniel Kahneman discovered that human beings have bui lt-in decision heuristics that automatically distort either the probability of outcomes or the value (utility) of those outcomes. Three of the most widely studied heuristic biases are anchoring and adjustment, availability, and representativeness:22

Anchoring and adjustment heuristic. The anchoring and adj ustment heuristic states that we are influenced by an initial anchor point and do not sufficiently move away from that point as

new information is provided.23 The anchor point might be an initial offer price, initial opinion

of someone, or initial estimated probability that something will occur. This bias affects the

value we assign to choices and their outcomes. For example, suppose you ask someone whether

the population of Chile is above or below 50 mill ion, then you ask that person to estimate

Chile's population. Next, you ask a second person whether the population of Chile is above

or below 10 mi llion, then you ask him or her to estimate that country 's actual population. If

these two people don't actually know Chile's population, chances are that the first person will

give a much higher population estimate than will the second person. The initial anchor point (50 million versus 10 million) biases their estimate.

Availability heuristic. The availability heuristic is the tendency to estimate the probability of something occurring by how easily we can recal l those events. Unfortunately, how easily we

194 Part Three Team Processes

recall something is due to more than just its frequency (probability).24 For instance, we ea~ily remember emotional events (such as earthquakes and shark attacks), so we overestimate how often these traumatic events occur. We also have an easier time recalling recent events. If the media report several incidents of air pollution, we likely give more pessimistic estimates of air

quality generally than if there have been no recent reports.

Representativeness heuristic. The representativeness heuristic states that we pay more atten- tion to whether something resembles (is representative of) something else than on more precise

statistics about its probability.25 Suppose that one-fifth of the students in your class are in engineering and the others are business majors. Statistically, there is a 20 percent chance that any individual in that class is an engineering student. Yet, if one student looks and acts like a stereotype of an engineer, we tend to believe the person is an engineer even though there is much stronger and more reliable statistical evidence that he/she is a business major. Another form of the representativeness heuristic, known as the clustering illusion, is the tendency to see patterns from a smal l sample of events when those events are, in fact, random. Many basketball fans (and players) believe in the "hot hand," or the notion that a player's chance of making a basket goes up if they have made two or three shots in a row. Research has clearly proven the hot hand to be a myth. A player's chances of making a given shot are determined more by their past performance over numerous games or seasons, called a "base rate," than by a smal l sample of a few minutes. In fact, players are actually Jess likely to make the next shot after a string of baskets because the hot hand myth leads them to take even more difficult shots. Basketball players might want to take OB!

PROBLEMS WITH MAXIMIZATION One of the main assumptions of the rational choice paradigm is that people want t(}-and are able t(}- choose the alternative with the highest payoff (i.e., the highest "uti lity" in subjective expected utility) . Yet rather than aiming for maximization, people engage in satisficing-that is, they choose an alterna- tive that is satisfactory or "good enough."26 People satisfice when they select the first alternative that

exceeds a standard of acceptance for their needs and preferences. Satisficing occurs partly because alter- natives present themselves over time, not al l at once. Consider the Target Canada example that began this chapter. The decision to enter the Canadian market rose to the surface quickly because HBC was searching for a buyer of its Zellers assets. We don't know for certain how the U.S. parent planned to roll out the expansion, but it is safe to assume that 130 stores was more ambitious than those initial plans.

A second reason why people engage in satisficing rather than maximization is that they Jack the capacity and motivation to process the huge volume of information required to identify the best choice. Studies report that people like to have choices, but making decisions when there are many alterna- tives can be cognitively and emotionally draining . Consequently, when exposed to many alternatives, decision makers become cognitive misers by engaging in satisficing_27 They also respond to too many choices by discarding some of them using easily identifiable factors (e.g., colour, size) and by evaluat-

ing alternatives using only a handful of criteria. When presented with a large number of choices, people often choose a decision strategy that is even

Jess cognitively chal lenging than satisficing: They don't make any decision at all! One study reported that many employees put off registering for the company's pension plan when they face dozens of investment options, even though signing up would give them tax benefits, company contributions to that plan, and long-term financial security. The company pension plan registration rate increases dra- matically when employees are given only two or three initial investment options, such as a growth fund, balanced fund, and capital stable investment. The dozens of other investment choices are then

presented after the employee has signed up. 28

EVALUATING OPPORTUNITIES Opportunities are j ust as important a~ problems, but what happens when an opportunity is "discov- ered" is quite different from the process of problem solving. Decision makers do not evaluate several

Chapter Seven Decision Making and Creativity 19 5

alternatives when they find an opportunity; after all, the opportunity is the solution, so why look for others! An opportunity is usually experienced as an exciting and rare revelation, so decision makers tend to develop an emotional attachment to it. Unfortunately, this emotional preference motivates deci- sion makers to apply the opportunity and short-circuit any detailed evaluation of it29

The Role of Emotions and Intuition

L03 EMOTIONS AND MAKING CHOICES Herbert Simon and many other experts have found that people do not evaluate alter- natives nearly as well as is assumed by the rational choice paradigm. However, they

neglected to mention another glaring weakness with rational choice: It completely ignores the effect of emotions in human decision making. Just as both the rational and emotional brain centres alert us to

People avoid making choices in decisions that have too many alternatives. In one study, grocery store customers saw one of two jam-tasting booths. Thirty percent of consumers who v isited the booth displaying six types of jam purchased one of those products. In contrast, only three percent of customers who saw the booth displaying 24 types of jam made a purchase. The larger number of choices discouraged them from making any decision. Other studies of decisions about chocolates, term essays, and pension plan investment options revealed similar results. 30

©BananaStock/PunchStock

196 Part Three Team Processes

problems, they also influence our choice of alternatives.31 Emotions affect the evaluation of alternatives in three ways.

Emotions Form Early Preferences The emotional marker process described in previous chap- ters (Chapters 3 through 5) shapes our preferences for each alternative before we consciously evaluate those alternatives. Our brain very quickly attaches specific emotions to information about each alterna- tive, and our preferred alternative is strongly influenced by those initial emotional markers.32 Of course, logical analysis also influences which alternative we choose, but it requires strong logical evidence to change our initial preferences (initial emotional markers). Yet even logical analysis depends on emo- tions to sway our decision. Specifically, neuroscientific evidence says that information produced from logical analysis is tagged with emotional markers that then motivate us to choose or avoid a particular alternative. Ultimately, emotions, not rational logic, energize us to make the preferred choice. In fact, people with damaged emotional brain centres have difficulty making choices.

~

What is your preferred decision-making style? You can discover your preference for logical or intuitive decision making by locating this self-assessment in Connect.

Emotions Change the Decision Evaluation Process Moods and specific emotions influence the process of evaluating alternatives33 For instance, we pay more attention to details when in a negative mood, possibly because a negative mood signals that there is something wrong that requires attention. When in a positive mood, on the other hand, we pay Jess attention to details and rely on a more programmed deci- sion routine. This phenomenon explains why executive teams in successfi.tl companies are often Jess vigilant about competitors and other environmental threat~.34 Research also suggests that decision makers rely on ste- reotypes and other shortcut~ to speed up the decision process when they experience anger. Anger also makes them more optimistic about the success of risky alternatives, wherea~ the emotion of fear tends to make them Jess optimistic. Overall, emotions shape how we evaluate information, not just which choice we select.

Emotions Serve as Information When We Evaluate Alternatives The third way that emotions influence the evaluation of alternatives is through a process called "emotions as informa- tion." Marketing experts have found that we listen in on our emotions to acquire guidance when mak- ing choices35 This process is similar to having a temporary improvement in emotional intelligence. Most emotional experiences remain below the level of conscious awareness, but people actively try to be more sensitive to these subtle emotions when making a decision.

When buying a new car, for example, you not only logically evaluate each vehicle's features; you also try to gauge your emotions when visualizing what it would be like to own each of the cars on your Jist of choices. Even if you have solid information about the quality of each vehicle on key features (purcha~e price, fi.tel efficiency, maintenance cost~. resale value, etc.), you are swayed by your emotional reaction and actively try to sense that emotional response when thinking about it. Some people pay more attention to these gut feel- ings, and personality tests such a~ the Myers-Briggs Type Indicator (see Chapter 2) identify individuals who listen in on their emotions more than others. 36 But everyone consciously pays attention to their emotions to some degree when choosing alternatives. This phenomenon ties directly into our next topic, intuition.

INTUITION AND MAKING CHOICES Do you have a gut instinct-a feeling inside-when something isn't quite right? Or perhaps a different emotional experience occurs when you sense an opportunity in front of your eyes? These emotional expe- riences potentially (but not necessari ly) indicate your intuition-the ability to know when a problem or oppornmity exists and to select the best course of action without conscious rea~oning?7 Intuition is both an emotional experience and a rapid nonconscious analytic process. As mentioned in the previous section, the gut feelings we experience are emotional signals that have enough intensity to make us consciously aware of them. These signals warn us of impending danger or motivate us to take advantage of an oppor- tunity. Some intuition also directs us to preferred choices relative to other alternatives in the situation.

Chapter Seven Decision Making and Creativity 197

All gut feelings are emotional signals, but not all emotional signals are inntition. The main distinction is that intuition involves rapidly comparing our observations with deeply held patterns learned through experience.38 These "templates of the mind" represent tacit knowledge that has been implicitly acquired over time. They are mental models that help us to understand whether the current situation is good or bad, depending on how well that situation fits our mental model. When a template fits or doesn't fit the current situation, emotions are produced that motivate us to act. Studies have found that chess masters experience emotional signals when they see an opportunity through quick observation of a chessboard. They can't immediately analyze why this opportunity exists, but can do so when given time to think about the situa-

tion. Their intuition signals the opportunity long before this rational analysis takes place. As mentioned, some emotional signals are not intuition, so gut feelings shouldn't always guide our

decisions. The problem is that emotional responses are not always based on well-grounded mental models. Instead, we sometimes compare the current situation to more remote templates, which may or may not be relevant. A new employee might feel confident about relations with a supplier, whereas an experienced employee senses potential problems. The difference is that the new employee relies on templates from other experiences or industries that might not work well in this sintation. Thus, the

extent to which our gut feelings in a situation represent intuition depends on our level of experience in that situation.

So far, we have described intuition as an emotional experience (gut feeling) and a process in which we compare the current situation with well-establ ished templates of the mind. Intuition also relies on action scripts-programmed decision routines that speed up our response to pattern matches or mis - matches.39 Action scripts effectively shorten the decision-making process by jumping from problem

identification to selection of a solution. In other words, action scripting is a form of programmed deci- sion making. Action scripts are generic, so we need to consciously adapt them to the specific situation.

MAKING CHOICES MORE EFFECTIVELY It is very difficult to get around the human limitations of making choices, but a few strategies help to minimize these concerns. One important discovery is that decisions tend to have a higher fai lure rate when leaders are decisive rather than contemplative about the available options. Of course, decisions can also be ineffective when leaders take too long to make a choice, but research indicates that a lack of

logical evaluation of alternatives is a greater concern. By systematically assessing alternatives against relevant factors, decision makers minimize the impl icit favourite and satisficing problems that occur

when they rely on general, subjective judgments. This recommendation does not suggest that we ignore intuition; rather, it suggests that we use it in combination with careful analysis of relevant information.40

A second piece of advice is to remember that decisions are influe nced by both rational and emo- tional processes. With this point in mind, some dec is ion makers del iberately revisit important issues later so that they look at the information in different moods and have allowed time for their initial emotions to subside. For example, if you sense that your team is feeling somewhat too confident when making an important competitive decision, you might decide to have the team members revisit the decision a few days later when they are thinking more critically.

Another strategy is scenario planning, which is a disciplined method for imagining possible futures.41 It typically involves thinking about what would happen if a significant environmental condition changed and

what the organization should do to anticipate and react to such an outcome. Scenario planning is a useful vehicle for choosing the best solutions under possible scenarios long before they occur, because alterna- tive courses of action are evaluated without the pressure and emotions that occur during real emergencies.

Implementing Decisions

Implementing decisions is often skipped over in most writing about the decision-making process. Yet leading business writers emphasize that execution-translating decisions into action-is one of the most important and challenging tasks in the decision-making process.42 For instance, when Bill Utt became CEO of KBR, a Fortune 300 engineering firm, he and his executive team fairly quickly made three strategic decisions that would improve the company's future prospects.Implementing those

198 Part Three Team Processes

decisions, however, took much longer. " I expected that it would take two years to complete the three challenges," says Utt. "One thing I have learned over my career is that it is ea~y to develop a strategy and to find the organization's deficiencies; however, the hard part is in the implementation and having

the focus, determination and stamina to see these successfully through."43 Implementing decisions is mainly about organizational change, which we discuss in Chapter 15, but which also relates to leader- ship (Chapter I 2) and several other topics throughout this book.

Evaluating Decision Outcomes

Contrary to the rational choice paradigm, decision makers aren't completely honest with themselves when evaluating the effectiveness of their decisions. One problem is confirmation bias (also known as post-decisional justification in the context of decision evaluation), which is the "unwitting selectivity in the acquisition and use of evidence."44 When evaluating decisions, people with confirmation bias ignore or downplay the negative features of the selected alternative and overemphasize its positive fea- tures. Confirmation bias gives people an excessively optimistic evaluation of their decisions, but only until they receive very clear and undeniable information to the contrary. Unfortunately, it also inflates the decision maker's initial evaluation of the decision, so reality often comes as a painful shock when objective feedback is finally received.

ESCALATION OF COMMITMENT Another reason why decision makers don't evaluate their decisions very well is due to escalation of commitment-the tendency to repeat an apparently bad decision or allocate more resources to a failing course of action.45 There are plenty of examples of this decision-making problem. For example, the British Columbia Ferry Services ordered the design and construction of three catamaran-style ferries for its route between the city of Vancouver and Vancouver Island. These "PacifiCats" were supposed to travel faster than conventional ferries and cost $210 million "right down to the toilet paper." Not only did costs balloon to nearly $500 million, the ferries were almost unusable due to their damaging wake, maintenance problems, poor manoeuvrability, and high fuel costs. The three ferries were eventually auctioned off for $20 million.

Why are decision makers led deeper and deeper into failing projects? Several explanations have been identified and discussed over the years, but the four main influences are self-justification effect, self-enhancement effect, prospect theory effect, and sunk costs effect.

Self-Justification Effect People engage in behaviours that convey a positive publ ic image of themselves. In decision making, this self-justification typically involves appearing to be rational and competent. People are therefore motivated to demonstrate that their decisions wi ll be successful, and this includes continuing to support those decisions even when there is evidence that they are not hav-

ing the desired outcomes. In contrast, pull ing the plug symbol izes the project's failure and the decision maker's incompetence. This self-justification effect is particularly evident when decision makers are personally identified with the project, have staked their reputations to some extent on the project's suc- cess, and have low self-esteem.46

Self-Enhancement Effect People have a natural tendency to feel good about themselves-to feel luckier, more competent, and more successful than average-regarding things that are important to them (see Chapter 3)47 This self-enhancement supports a positive self-concept, but it also increases the r isk of escalation of commitment. When presented with evidence that a project is in trouble, the

self-enhancement process bia~es our interpretation of the information as a temporary aberration from an otherwise positive trend line. And when we eventually realize that the project isn't going a~ well as planned, we continue to invest in the project because we perceive our probability of rescuing the proj-

ect is above average. Self-justification and self-enhancement often occur together, but they are different mechanisms. Self-justification is a deliberate attempt to maintain a favourable publ ic image, whereas

self-enhancement operates mostly nonconsciously, distorting information so we do not recognize the problem sooner and biasing our probabilities of success so we continue to invest in the losing project.48

Chapter Seven Decision Making and Creativity 199

Prospect Theory Effect Prospect theory effect is the tendency to experience stronger negative emo- tions when losing something of value than positive emotions when gaining something of equal value (called loss aversion). This prospect theory effect motivates us to avoid losses, which typically occurs by taking the

risk of investing more in that losing project. Stopping a project is a certain Joss, which is more painful to most people than the uncertainty of success a~sociated with continuing to fund the project. Given the choice, decision makers choose escalation of commitment, which is the Jess painful option at the time.49 Here, Jet's return to the story of Target's failed venture into Canada. In February 2013 the top management team decided to forge ahead with plans to open 25 stores the following month in spite of warning signs pointing to failure. Why? A major factor discussed at the time wa~ future rental costs on unopened stores 5° Those funtre losses were certain, whereas the more risky move wa~ to take the uncertain path of opening stores according to schedule and potentially damaging consumer perceptions. Prospect theory states that decisions framed a~ losses increase the likelihood of risky behaviour-which is exactly what happened with Target Canada.

Sunk Costs Effect Another disincentive to axing a failing project is sunk costs-the value of resources already invested in the decision51 Rational choice theory states that investing resources should be determined by expected funtre gains and risk, not by the size of earlier resources invested

in the project. Yet people inherently feel motivated to invest more resources in projects that have high sunk costs. A variation of sunk costs is time investment. Time is a resource, so the more time decision makers have devoted to a project, the more motivated they are to continue investing in that project. Finally, sunk costs can take the form of closing costs, that is, the financial or nonfinancial penalties associated with shutting down a project. As with other forms of sunk costs, the higher the closing costs, the more motivated decision makers are to engage in escalation of commitment.

Escalation of commitment is usually framed as poor decision making, but some experts argue that throwing more money into a failing project is sometimes a logical attempt to further understand an ambiguous situation. This strategy is essentially a variation of testing unknown waters. By adding more resources, the decision maker gains new information about the effectiveness of these funds, which provides more feedback about the project's future success. This strategy is particularly common

where the project has high closing costs.52

EVALUATING DECISION OUTCOMES MORE EFFECTIVELY One of the most effective ways to minimize escalation of commitment and confirmation bias is to

ensure that the people who made the original decision are not the same people who later evaluate that decision. This separation of roles minimizes the self-justification effect because the person responsible for evaluating the decision is not connected to the original decision. However, the second person might continue to escalate the project if he or she empathizes with the decision maker, has a similar mindset, or has simi lar attributes, such as age. A second strategy is to publicly establish a preset level at which the decision is abandoned or re-evaluated. This is similar to a stop-loss order in the stock market, whereby the stock is sold if it falls below a certain price. The problem with this solution is that condi- tions are often so complex that it is difficult to identify an appropriate point to abandon a project. 53

A third strategy is to find a source of systematic and clear feedback. 54 At some point, even the

strongest escalation and confirmation bias effects deflate when the evidence highlights the project's failings. A fourth strategy to improve the decision evaluation process is to involve several people in the evaluation. Co-workers continuously monitor each other and might notice problems sooner than

someone working alone on the project.

Creativity

The entire decision-making process described over the preceding pages depends on crea tivity-the development of original ideas that make a socially recognized contribu- tion55 Creativity is at work when imagining opportunities, such as how a company's

expertise might be redirected to untapped markets. Creativity is present when developing alterna- tives, such as figuring out new places to look for existing solutions or working out the design of a

200 Part Three Team Processes

custom-made solution. Creativity also helps us choose alternatives because we need to visualize the

future in different ways and to figure out how each choice might be useful or a liability in those sce- narios. In short, creativity is an essential component of decision making as well as a powerful resource for corporate competitive advantage and individual career development.

The value of creativity in decision making is evident at Google. Google's creative culture includes a natural practice of experimenting with ideas and seeking out different uses of technology. Perhaps most famous is the company's policy of giving engineers 20 percent of their time to develop projects of their choosing. "Almost everything that is interesting which Google does started out as a 20 percent time idea," explains a Google executive. Google News and the photos linked to Google Maps were two projects developed from the 20 percent time rule. 56

-... tr:::\ How well do you engage in d ivergent thinking? You can discover the extent to ~ which you have divergent thinking by locating this self-assessment in Connect.

THE CREATIVE PROCESS

How does creativity occur? That question has puzzled experts for centuries and has been a fascination of Einstein, Poincare, and many other scientists who have reflected on the creativity that contributed to their own important discoveries. More than a century ago, German physicist Hermann von Helmholtz gave a public talk in which he described the process that led to his innovations (including energy physics, instru- ments for examining eyes, and many others). A few decades later, London School of Economics profes- sor Graham Wal las built on Helmholtz's ideas to construct the four-stage model shown in Exhibit 7.3.57

This model remains the most reputable and influential creativity model nearly a century later. The first stage is preparation- the process of investigating the problem or opportunity in many

ways. Preparation involves developing a clear understanding of what you are trying to achieve through

a novel solution and then actively studying information seemingly related to the topic. It is a process of developing knowledge and possibly skills about the issue or object of attention. The second stage, called incubation, is the period of reflective thought. We put the problem aside, but our mind is still working on it in the background.58 The important condition here is to maintain a low-level awareness by frequently revisiting the problem. Incubation does not mean that you forget about the problem or issue.

Incubation assists divergent thinking-reframing the problem in a unique way and generating different approaches to the issue. This contrasts with convergent thinking---calculating the conventionally accepted "right answer" to a logical problem. Divergent thinking breaks us away from existing mental models so that we can apply concept~ or processes from completely different area~ of life. The discovery of Velcro is

EXHIBIT 7.3 The Creative Process Model

• Understand~ ptoblem Ol opportunlly

• lnves.tlgate information that seems relevant to the Issue

• Period of reflective thought

• Nonconsclous or low-level awareness. not direct attention to the Issue

• Active dlvet"gent thin king process

• Sudden awareness of I f'IOWI. although vague and incompk>te. ktea tnteflng one's consdousness

• May Include an Initial period of "frrnge" awareness

Sourr:e: Based on G. Walla..:;. The Art o f Thought (London: Jonathan Cape. 1926. Chap. 4).

• Detailed logical and experimental evaluation of the Illuminated Idea

• Further creatNe thinking

Chapter Seven Decision Making and Creativity 201

a case in point. In the 1940s, Swiss engineer Georges de Mestral had just returned home from a walk with

his dog through the countryside when he noticed that his clothing and the dog's fur were covered in burrs. While struggl ing to remove the barbed seeds, de Mestral engaged in divergent thinking by recognizing that

the adhesion used by burrs could be used to attach other things together. It took another dozen years of hard work, but de Mestral evenntally perfected the hook-and-loop fastener, which he trademarked a~ Velcro. 59

ll/wnination (also called insight), the third stage of creativity, refers to the experience of suddenly

becoming aware of a unique idea.60 Wallas and others also suggest that this stage begins w ith a "fringe" awareness before the idea fully enters our consciousness. Illumination is often visually depicted as a

light bulb, but a better image would be a flash of light or perhaps a briefly flickering candle-these bits of inspiration are fleeting and can be quickly lost if not documented. For this reason, many creative peo-

ple keep a journal or notebook nearby so that they can jot down their ideas before they disappear. Also,

fl ickering ideas don' t keep a particular schedule; they might come to you at any time of day or night. Illumination presents ideas that are usually vague, roughly drawn, and untested. Verification, there-

fore, provides the essential final stage of creativity, whereby we flesh out the illuminated idea~ and

subject them to detailed logical evaluation and experimentation. This stage often calls for further cre- ativity as the ideas evolve into finished products or services. Thus, although verification is labelled the

final stage of creativity, it is really the beginning of a long process of creative decision making toward development of an innovative product or service.

Do you have a creative personality? You can discover the extent to which you have a disposition for creative thinking by locating this self-assessment in Connect.

CHARACTERISTICS OF CREATIVE PEOPLE Everyone is creative, but some people have a higher potential for creativity. Four of the main characteris- tics that give individuals more creative potential are intelligence, persistence, knowledge and experience,

and a cluster of personality traits and values representing independent imagination (see Exhibit 7 .4).

Cognitive and practical intelligence. Creative people have above-average cognitive intel-

ligence to synthesize information, analyze ideas, and apply their ideas61 Like the fictional

sleuth Sherlock Holmes, creative people recognize the significance of smal l bits of information

and are able to connect them in ways that few others can imagine. They also have practical

intelligence-the capacity to evaluate the potential usefulness of their ideas.

EXHIBIT 7.4 Characteristics of Creative People

202 Part Three Team Processes

Persistence. Creative people have persistence, which includes a higher need for achievement, a strong motivation from the ta~k itself, and a moderate or high degree of self-esteem. Persistence is vital because people need this motivation to continue working on and investing in a project in spite of failures and advice from others to quit. In fact, people have a general tendency to dismiss or criti- cize creative ideas, so creative people need persistence to withstand these negative social forces.62

Knowledge and experience. Creative people require a foundation of knowledge and experience to discover or acquire new knowledge.63 However, this expertise is a double-edged sword. As people acquire knowledge and experience about a specific topic, their mental models tend to become more rigid. They are less adaptable to new information or rules about that knowledge domain. Some writers suggest that expertise also increases "mindless behaviour" because exper- tise reduces the tendency to question why things happen.64 To overcome the limitations of exper- tise, some corporate leaders like to hire people from other industries and areas of expertise. For instance, when Geoffrey Ballard, founder of Ballard Power Systems, hired a chemist to develop a better battery, the chemist protested that he didn't know anything about batteries. Ballard replied: "That's fine. I don't want someone who knows batteries. They know what won't work.'.65

Independent imagination. Creative people possess a cluster of personality traits and values that support an independent imagination: high openness to experience, moderately low need for affiliation, and strong values around self-direction and stimulation66 Openness to experience is a Big Five personality dimension representing the extent to which a person is imaginative, curi- ous, sensitive, open-minded, and original (see Chapter 2). Creative people have a moderately low need for affi liation so they are less embarrassed when making mistakes. Self-direction includes the values of creativity and independent thought; stimulation includes the values of excitement and challenge. Together, these values form openness to change-representing the motivation to pursue innovative ways of solving problems (see Chapter 2).

by the NUMBERS

The Creativity Advantage67

of Canadian federal government

employees mostly or strongly agree that innovation is valued in their work unit.

of 600 senior global HR leaders polled

identify creativity as one of the most important leadership qualities over the next five years (top choice, followed by integrity).

of1,461 American managers and consultants polled believe their organization's

management "to some degree" or "definitely" places a premium on people who are creative.

of 1,966 American employees say that innovation/ creativity/out-of-the-box

thinking will prove to be the most useful over the next year.

of 251,507 U.S. federal government employees surveyed agree or strongly

agree that creativity and innovation are rewarded in their organization.

Chapter Seven Decision Making and Creativity 203

ORGANIZATIONAL CONDITIONS SUPPORTING CREATIVITY Intelligence, persistence, expertise, and independent imagination represent a person's creative poten- tial, but the extent to which these characteristics produce more creative output depends on how well the work environment supports the creative process.68 Several job and workplace characteristics have been

identified in the literature as supporting creativity, and different combinations of s in1ations can equal ly support creativity. In short, there isn't one best work environment.69

One of the most important conditions that supports creative practice is that the organization has a learning orientation; that is, leaders recognize that employees make reasonable mistakes as part of the creative process. Motivation from the job itself is another important condition for creativity.70 Employ- ees tend to be more creative when they bel ieve their work benefits the organization and/or larger society (i.e., task significance) and when they have the freedom to pursue novel ideas without bureau- cratic delays (i.e., autonomy). Creativity is about changing things, and change is possible only when employees have the authority to experiment. More generally, jobs encourage creativity when they are

challenging and al igned with the employee's competencies. Along with supporting a learning orientation and intrinsically motivating jobs, companies foster

creativity through open communication and sufficient resources. They also provide a comfortable degree of job security, which explains why creativity suffers during times of downsizing and corporate

restructuring71 Some companies also support creativity by designing non-traditional workspaces, such as unique building plans or unconventional office areas.n Google is one example. The Internet inno- vator has funky offices in several countries that include hammocks, gondola and hive-shaped privacy spaces, sl ides, and brightly painted walls.

To some degree, creativi ty also improves wi th support from leaders and co-workers. One study reported that effective product champions provide enthusiastic support for new ideas. Other studies suggest that co-worker support can improve creativity in some situations, whereas com- petition among co-workers improves creativity in other situations.73 S imi larly, it isn't clear how much pressure should be exerted on employees to produce creative ideas . Extreme time pressures are well-known creativi ty inh ibitors, but lack of pressure doesn't seem to produce the highest creativity ei ther.

ACTIVITIES THAT ENCOURAGE CREATIVITY Hiring people with strong creative potential and providing a work environment that supports creativity are two cornerstones of a creative workplace. The third cornerstone consists of various activities that help employees think more creatively. One set of activities involves redefining the problem. Employees might be encouraged to revisit old projects that have been set aside. After a few months of neglect, these projects might be seen in new ways74 Another strategy involves asking people unfamiliar with the issue (preferably with different expertise) to explore the problem with you. You would state the objectives and give some facts and then let the other person a~k questions to further understand the situation. By verbalizing the problem, listening to questions, and hearing what others think, you are more likely to form new perspectives on the issue?5

A second set of creativity activities, known as associative play, attempts to bring out creativity by

literally engaging in playful activities76 For example, British media giant OMD sends employees to two-day retreats in the countryside, where they play grapefruit croquet, chant like medieval monks, and pretend to be dog collars. "Being creative is a bit like an emotion; we need to be stimulated," explains Harriet Frost, one of OMD's specialists in building creativity. "The same is true for our imagination and its ability to come up with new ideas. You can't just sit in a room and dev ise hun- dreds of ideas."77 Another assoc iative play activity, called morphological analysis, involves listing

different dimensions of a system and the e lements of each dimension and then looking at each com- bination of elements. This encourages people to carefully examine combinations that initially seem nonsensical.

A third set of activities that promote creative thinking falls under the category of cross-pollination.18 Cross-pollination occurs when people from different areas of the organization

204 Part Three Team Processes

Axiom Zen is a Vancouver "innovation studio" with the unusual business model of being a startup w ith the purpose of creating more startups. Founder Roham Gharegozlou left Silicon Valley in 2013 to create Axiom Zen, assembling a team of tech-savvy people with the task of thinking up big ideas. The company doesn't hire for speci fic roles or projects; instead people are free to roam around and j ump into projects where they think they can contribute. With that freedom also comes accountability; employees are required to submit projects to the collective scrutiny of the entire team, a process that can be quite unsettling.

©Axiom Zen

exchange ideas or when new people are brought into an existing team. Mother, the London-based creative agency, has unusual polic ies and working conditions that apply this creative process. The company's 100 or so employees perform their daily work around one monster-size table-a 2.5-metre-wide reinforced-concrete slab that extends 91 metres like a skateboard ramp around the entire floor. Every three weeks, employees are asked to relocate the ir laptop, portable te lephone, and trolley to another area around the table. Why the musical chairs exercise? "It encourages cross-pollination of ideas," explains Stef Calcraft, one of Mother's founding partners. "You have people working on the same problem from different perspectives. It makes problem-solving much more organic."79

Cross-pollination highlights the fact that creativity rarely occurs alone. Some creative people may be individualistic, but most creative ideas are generated through teams and informal social

Chapter Seven Decision Making and Creativity 205

interaction. "This whole th ing about the solitary tortured artist is nonsense I think," says John Col- lee, the screenwriter who penned such films as Happy Feet and Master and Commander. "All the great creative people I know have become great precisely because they know how to get along wi th people and swim around in the communal unconscious."80 This notion of improving creativ- ity through social interaction leads us to the final section of this chapter: employee involvement in dec ision making.

Employee Involvement in Decision Making

HCL Technologies is a multinational IT services firm. When top management found it too cumbersome to weigh in on the hundreds of business plans produced every year they decided to involve employees. A new planning process was introduced where executives

would post their business plans online and up to 15,000 employees would rate and review the plans. The new system yielded richer and more detailed feedback than the traditional approach because the

insights were coming from diverse perspectives across multiple business units.81

Employee involvement (also cal led participative management) refers to the degree to which employees influence how their work is organized and carried out.82 Employee involvement has become a natural process in every organization, but the level of involvement varies with the situation. In some organizations, such as HCL, almost everyone has a high degree of involvement in some corporate-wide decisions during a given year, wherea~ other organizations might give employees only low levels of involvement.83

A low level of involvement occurs where employees are individually asked for specific information but the problem is not described to them. Somewhat higher involvement occurs where the problem is described and employees are asked individually or collectively for information relating to that problem. Moving further up the involvement scale, the problem is described to employees, who are collectively given responsibi lity for developing recommendations. However, the decision maker is not bound to

accept those recommendations. At the highest level of involvement, the entire decision-making process is handed over to employees. They identify the problem, discover alternative solutions, choose the best alternative, and implement that choice. The original decision maker serves only as a facilitator to guide the team's decision process and keep everyone on track.

Debating Point:

SHOULD ORGANIZATIONS PRACTISE DEMOCRACY?

Most organizational experts recommend some degree of employee involvement, but a few go further by proposing that organizations should operate like democracies rather than hierarchi- cal fiefdoms. Organizational democracy consists of the highest form of involvement, whereby employees have real institutionalized control-either directly or through representation-over organizational decisions. In addition, no one in a democratic enterprise holds higher authority except where such power is explicitly granted by the others (such as through employee elec- tion of the company's leaders). Democracy also gives all organizational members protection against arbitrary or unj ust decisions (such as protection against being fired without cause).84

Some readers might view workplace democracy as an extreme way to run an organiza- tion, but advocates point out that it is the principle on which many societies have operated for centuries and most others aspire to. Democratic governance has been established in several high profile and successful companies, such as Semco SA and W. L. Gore & Associ- ates, as well as many employee-owned firms and worker co-operatives. Legislation in several

206 Part Three Team Processes

countries (particularly in continental Europe) requires companies to give employees control over some organizational decisions through works councils or board membership8 5

Advocates point out that, as a form of participation, workplace democracy can improve the quality of organizational decisions and employee commitment to those decisions. Indeed, democ- racy inherently promotes shared leadership (where everyone should be a leader in various ways), which is increasingly recommended for improved decision making and organizational effective- ness. Democratic enterprises might also be more flexible and innovative. Rather than obediently following management's standard operating procedures. employees in democratic organizations have the opportunity- and likely the expectation- to adapt and experiment with new work prac- tices as circumstances change. This form of organization also encourages more organizational learning.86

A final argument is that the democratic enterprise is ethically superior to the traditional hierar- ch ical organization.87 It respects individual rights and dignity, more fully satisfies the standards of ethical conduct, and is more likely than traditional management to adopt the multiple stakeholder approach expected by society. Indeed, some European governments have debated the notion that organizational democracy is a potentially effective way to minimize corporate wrongdoing because it actively monitors top decision makers and continually holds them accountable for their actions.

However, the democratic enterprise model has a number of vocal advocates, but few practi- tioners. There is somewhat more employee involvement in most organizations today than a few decades ago, but it is still far from the democratic ideal. Most firms operate with the traditional model that management retains control and employees have few rights. There may be reasons for this intransigence. One argument against organizational democracy is that employees have a contrac- tual rather than ownership relationship with the organization. Legally (and possibly morally) they have no right to assume citizenship rights or control over the business. A second consideration is that employees might emphasize their own interests to the detriment of other stakeholders. In con- trast, traditional organizations give management an explicit obligation to serve multiple stakeholders to ensure the organization's survival and success.

Another concern is that workplace democracy might dilute accountability. Although moderate levels of employee involvement can improve decision-making quality and commitment, there is a real risk that no one will take responsibility for decisions when everyone has a say in them. In addition, democracy often results in slower decision making, which could lead to a lethargic cor- porate response to changes in the external environment. Finally, the democratic enterprise model presumes that employees want to control their organizations, but some research suggests that employees prefer a more moderate level of workplace involvement For this reason (and others noted above), employee-owned companies often maintain a more traditional hierarchical worker- management relationship. sa

BENEFITS OF EMPLOYEE INVOLVEMENT For the past half century, organizational behaviour experts have advised that employee involvement potentially improves decision-making quality and commitment.89 However, a global study suggests that this message hasn't been received by business leaders. Only 39 percent of employees believe senior leaders in their organization do a good job of involving employees in decisions that affect them and only 38 percent agree that their company acts on those suggestions effectively. Employees believe that their company falls short even on low-level involvement: only 42 percent say their organization does

a good job of soliciting employees' opinions or suggestions.90 As Global Connections 7.2 describes, involving employees in company decisions can result in considerable benefits for both the company and employees.

Employee involvement improves decision making in several ways. To begin with, it improves the identification of problems and opportunities. Employees are, in many respects, the sensors of the organization' s environment. When the organization's activities misalign with customer expectations, employees are usually the first to know. Employee involvement provides a conduit for organizational

Chapter Seven Decision Making and Creativity 207

~ ""1 Global Connections 7 .2:

BRASILATA, THE IDEAS COMPANY

Brasilata has become one of the most innovative and productive manufacturing businesses in Brazil by encouraging employee involvement. Each year, the steel can manufacturer receives more than 1 50,000 ideas-an average of more than 1 50 ideas per employee-on a wide range of themes, from how to improve production efficiency to new product designs. These ideas are so important to the company's success that Brasilata employees are called "inventors," and everyone signs an "innovation contract" that reinforces their commitment to continuous improvement.91

Brasilata has become one of the most innovative and productive manufacturing businesses in Brazil by involving employees in company decisions. ©Minerva Studio/Shutterstock

leaders to be alerted to such problems.92 Employee invol vement can also potentially improve the

number and quality of solutions generated. In a well-managed meeting, team members create syn-

ergy by pool ing their knowledge to form new alternatives. In other words, several people working together can potentially generate more and better solutions than the same people working alone.

A thi rd benefit of employee involvement is that, under specific conditions, it improves the evaluation of

alternati ves. Numerous studies on participative decision making, constructive conflict, and team dynam- ics have found that involvement brings out more diverse perspectives, tests idea~. and provides more valuable knowledge, all of which help the decision maker to select the best alternative.93 A mathematical

theorem introduced in 1785 by the Marquis de Condorcet states that the alternative selected by the team's majority is more likely to be correct than is the al ternative selected by any team member individually.94

Along with improving decision quality, invol vement tends to strengthen employee commitment to

the decision. Rather than viewing themselves as agents of someone else's decision, those who par- ticipate in a decision feel personally responsible for its success. I nvol vement also has positive effects

on employee moti vation, sati sfaction, and turnover. Furthermore, it increases skill var iety, feel ings of

autonomy, and task identity, al l of which increase job enrichment and, potentially, employee motiva- tion. Participation i s also a critical practice in organizational change because employees are more

motivated to implement the decision and less likely to resist changes resul ting from the decision.95

208 Part Three Team Processes

EXHIBIT 7.5 Model of Employee Involvement in Decision Making

Contingencies of Employee Involvement

• Decision structure • Source of decision

knowledge • Decision commitment • Risk of conflict

Outcomes of Employee

Involvement

Better problem identification More/better choices generated More likely to select the best atternative Stronger commitment to the decision

CONTINGENCIES OF EMPLOYEE INVOLVEMENT If employee involvement is so wonderful, why don't leaders leave all decisions to employees? The answer is that the optimal level of employee involvement depends on the situation. The employee involvement model shown in Exhibit 7.5 lists four contingencies: decision structure, source of decision knowledge, decision commitment, and risk of conflict in the decision process.96

Decision structure. At the beginning of this chapter, we learned that some decisions are pro-

grammed, whereas others are nonprogrammed. Programmed decisions are Jess likely to need

employee involvement because the solutions are already worked out from pa~t inc idents. In

other words, the benefits of employee involvement increa~e with the novelty and complexity of

the problem or opportunity.

Source of decision knowledge. Subordinates should be involved in some level of decision mak- ing when the leader Jacks sufficient knowledge and subordinates have additional information to improve decision quality. In many cases, employees are closer to customers and production activities, so they often know where the company can save money, improve product or service quality, and real ize opportunities. This is particularly true for complex decisions where employ- ees are more likely to possess relevant information.

Decision commitment. Participation tends to improve employee commitment to the decision. If employees are unlikely to accept a decision made without their involvement, some level of

participation is usually necessary.

Risk of conflict. 1\vo types of confl ict undermine the benefits of employee involvement. First, if employee goals and norms confl ict with the organization's goals, only a low level of employee involvement is advisable. Second, the degree of involvement depends on whether employees wi ll agree on the preferred solution. If conflict is likely to occur, high involvement (i.e., employees make the decision alone) would be difficult to achieve.

Employee involvement is an important component of the decision-making process. To make the best decisions, we need to involve people who have the most valuable information and who will increase commitment to implement the decision. Employee involvement is a formative stage of team dynam- ics, so it carries many of the benefits and challenges of working in teams. The next chapter provides a

closer look at team dynamics, including processes for making decisions in teams.

Chapter Seven Decision Making and Creativity 209

Chapter Summary

L01 Describe the ra tional choice paradigm of decision making. Decision making is a conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs. The rational choice paradigm relies on

subjective expected utility to identify the best choice. It also follows the logical process of identifying problems and opportunities, choosing the best decision style, developing alternative solutions, choosing the best solution, implementing the selected alternative, and evaluating decision outcomes.

L02 Explain why people differ from the rational choice paradigm when identifying problems/ opportunities, evaluating/choosing alternatives, and evaluating decision outcomes. Stakeholder framing, perceptual defence, mental models, decisive leadership, and solution-focused

problems affect our ability to objectively identify problems and opportunities. We can minimize these challenges by being aware of the human limitations and discussing the situation with colleagues.

Evaluating and choosing alternatives is often challenging because organizational goals are ambiguous or in conflict, human information processing is incomplete and subjective, and people tend to satisfice rather than maximize. Decision makers also short-circu it the evaluation process when faced with an opportunity rather than a problem. People generally make better choices by systematically evaluating alternatives. Sce- nario planning can help to make future decisions without the pressure and emotions that occur during real emergencies.

Confirmation bias and escalation of commitment make it di fficult to accurately evaluate decis ion out- comes. Escalation is mainly caused by the sel f-justification effect, self-enhancement effect, the prospect theory effect, and sunk costs effect. These problems are minimized by separating decision choosers from decision evaluators, establishing a preset level at wh ich the decision is abandoned or re-evaluated, relying on more systematic and clear feedback about the project's success, and involving several people in decis ion making.

L03 Discuss the roles of emotions and in tuition in decision making. Emotions shape our preferences for alternatives and the process we follow to evaluate alternatives. We also listen in to our emotions for gu idance when making decisions. This latter activity relates to

intuition-the ability to know when a problem or opportunity exist~ and to select the best course of action without conscious reasoning. Intuition is both an emotional experience and a rapid unconscious analytic process that involves both pattern matching and action scripts.

L04 Describe employee characteristics, workplace conditions, and specific activities that support creativity.

Creativity is the development of original ideas that make a socially recognized contribution. The four creativity stages are preparation, incubation, insight, and verification. Incubation assists divergent thinking, which involves reframing the problem in a unique way and generating different approaches to the issue.

Four of the main features of creative people are intelligence, persistence, expertise, and independent imagina- tion . Creativity is also strengthened for everyone when the work environment supports a learn ing orientation, the job has high intrinsic motivation, the organization provides a reasonable level of job security, and project leaders provide appropriate goals, time pressure, and resources. Three types of activities that encourage creativity are redefining the problem, associative play, and cross-poll ination.

LOS Describe the benefits of employee involvement and identify four contingencies that affect the optimal level of employee involvement.

Employee involvement refers to the degree that employees influence how their work is organized and carried out. The level of participation may range from an employee providing specific information to man- agement without knowing the problem or issue, to complete involvement in all phases of the decision process. Employee involvement may lead to higher decision quality and commitment, but several contingencies need to be considered, including the decision structure, source of decision knowledge, decision commitment, and risk of conflict.

2 10 Part Three Team Processes

Key Terms anchoring and adjustment heur istic

availability heur istic bounded rationality creativity

decision making divergent thinking

employee involvement

escalation of commitment

implicit favour ite

intuition prospect theory effect

rational choice paradigm

representativeness heuristic satisficing

scenario planning

snbj ective expected utility

Critical Thinking Questions I. A management consultant is hired by a manufacturing firm to determine the best site for it~ next production

facility. The consultant has had several meetings with the company's senior executives regarding the factors to consider when making the recommendation. Discuss the decision-making problems that might prevent the consultant from choosing the best s ite location.

2. You have been asked to personally recommend a new travel agency to handle all airfare, accommodation, and related travel need~ for your organization of 500 staff. One of your colleagues, who is responsible for the company's economic planning, suggests that the best travel agent could be selected mathematically by input- ting the relevant factors for each agency and the weight (importance) of each factor. What decision-making approach is your colleague recommending? Is this recommendation a good idea in this situation? Why or why not?

3. Intuition is both an emotional experience and an unconscious analytic process. One problem, however, is that not all emotions signalling that there is a problem or opportunity represent intuition. Explain how we would know if our "gut feelings" are intuition or not, and if not intuition, suggest what might be causing them.

4. A developer received financial backing for a new business financial centre along a derelict section o f the waterfront, a few miles from the current downtown area of a large European c ity. The idea was to build several high-rise structures, attract large tenants to those sites, and have the c ity extend transportation syste ms out to the new centre. Over the next decade, the developer believed that others would build in the area, thereby attracting the regional or national offices of many financial institutions. Interest from potential ten- ants was much lower than initially predicted and the city did not build transportation systems as quickly as expected. Still, the builder proceeded with the original plans. Only after financial support was curtailed did the developer reconsider the project. Using your knowledge of escalation of commitment, discuss three pos- s ible reasons why the developer was motivated to continue with the project.

5. Ancient Book Company has a problem with new book projects. Even when others are aware that a book is far behind schedule and may engender little public interest, acquisitions editors are reluctant to terminate con- tracts with authors whom they have signed . The result is that editors invest more time with these projects than on more fruitful projects. As a form o f escalation of commitment, describe two methods that Ancient Book

Company can use to minimize this problem.

6. A fresh graduate is offered a job by an employer she admires even before she could start the job search. The student thinks it is an opportunity and jumps on it. Do you think there is an effect of emotions in her decision making?

7. Think of a time when you experienced the creative process. Maybe you woke up with a brill iant (but usually sketchy and incomplete) idea, or you solved a baffling problem while doing something e lse. Describe this incident to your class and explain how the experience followed the creative process.

8. 1\vo characteristics of creative people are that they have relevant experience and are persistent in their quest. Does this mean that people with the most experience and the highest need for achievement are the most cre- ative? Explain your answer.

9. Employee involvement appl ies just as well to the classroom as to the office or factory floor. Explain how student involvement in classroom decis ions typically made by the instructor alone might improve decision qual ity. What potential problems may occur in this process?

Chapter Seven Decision Making and Creativity 2 11

Case Study:

EMPLOYEE INVOLVEMENT CASES

SCENARIO 1: THE PRODUCTIVITY DIVIDEND DECISION As head of the transmission/distribution group (TO group) in the c ity's water agency (a government corpora- tion), you have been asked to reduce cost~ over the next year by a minimum of three percent without undermining service. Your department employs about 300 people who are responsible for constructing and maintaining water lines throughout the city. Although you have an engineering background, the work is complex and involves several professions and trades. Even the TO group's first line supervisors (one or two levels below you in the hierarchy) are not fully knowledgeable of all aspects of the business.

You believe that most employees support or at least accept the city's recent mandate to reduce costs (called the "productivity dividend initiative"). The city leaders have stated that this initiative will not result in any lay- offs this year. However, the labour union representing most nonmanagement staff in the water agency (includ- ing most of your employees) is concerned that the productivity dividend initiative wi ll reduce employment numbers over time and increase employee workloads. Although the TO group is a separate department within the c ity water agency, it affect~ most other work units in the agency. It is possible, for example, that ideas that reduce costs in the TO group might increase costs elsewhere. The T O group employees may be unaware of or care about these repercussions because there is limited interaction with or social bonding with employees in the departments.

SCENARIO 2: THE SUGAR SUBSTITUTE RESEARCH DECISION You are the head of research and development (R&D) for a major beer company. While working on a new beer product, one o f the scientists in your unit seems to have tentatively identified a new chemical compound that ha~ few calories but tastes closer to sugar than current sugar substitutes. The company has no foreseeable need for this product, but it could be patented and licensed to manufacturers in the food industry.

The sugar-substitute discovery is in its preliminary stages and would require considerable time and resources before it would be commercially viable. This means that it would necessarily take some resources away from other projects in the lab. The sugar substitute project is beyond your technical expertise, but some of the R&D lab researchers are familiar with that field of chemistry. As with most such discoveries, it is difficult to determine the amount o f research required to further identify and perfect the sugar substitute. You do not know how much demand is expected for this product. Your department has a decision process for funding projects that are behind schedule. However, there are no rules or precedents about funding projects that would be licensed but not used by the organization.

The company's R&D budget is limited, and other scientists in your work group have recently complained that they require more resources and financial support to get their projects completed. Some of these R&D projects hold promise for future beer sales. You bel ieve that most researchers in the R&D unit are committed to ensuring that the company's interests are achieved.

SCENARIO 3: COAST GUARD CUTTER DECISION You are the captain of a 72-metre Coast Guard cutter with a crew of 16, includ ing officers. Your mission is general at-sea search and rescue. Today at 2:00a.m., while en route to your home port after a routine 28-day patro l, you received word from the nearest Coast Guard station that a small plane had crashed 100 kilometres o ffshore. You obtained all the avail able information concerning the location of the crash, informed your crew of the mission, and set a new course at maximum speed for the scene to commence a search for survivors and wreckage.

You have now been searching for 20 hours. Your search operation has been impaired by increa~ingly rough sea~. and there is evidence of a severe storm building. The atmospherics associated with the deteriorating weather have made communications with the Coast Guard station impossible. A decision must be made shortly about whether to abandon the search and place your vessel on a course that would ride out the storm (thereby protecting the vessel and your crew, but relegating any possible survivors to almost certain death from exposure) or to con- tinue a potentially futile search and the risks it would entail.

Before losing communications, you received an update weather advisory concerning the severity and duration of the storm. Although your crew members are extremely conscientious about their responsibility, you believe that they would be divided on the decision of leaving or staying.

212 Part Three Team Processes

SCENARIO 4: THE SOCIAL MEDIA POLICY DECISION The Industry Initiatives Agency is a group of 120 professionals responsi ble for marketing the province as a good place for companies to operate their business or open new operations. Although you report to the head o f the province's employment and commerce department, your agency is semi-autonomous in its po li- cies and practices from the parent department. One of your highest priorities is to recruit and retain young, well-educated , high-potential employees for this growing agency. During a recent recruiting drive at universi- ties and polytechnics, some potential applicants candidly stated that the provincial government seems o ut of touch with the younger generation, particularly in thei r use o f technology. A few observed that your agency's websi te doesn' t provide much recruitment information, and they couldn't find the department's Facebook or Twitter sites.

These comment~ led to you think about having a social media pol icy in the Industry Initiatives Agency, and particularly whether or to what degree the agency should allow or possibly even encourage its staff to have work- re lated Facebook sites, personal blogs, and 1\vitter sites, and to participate in those sites during work hours. You personally know very little about emerging social media, although many of your direct reports (functional managers and team leaders) have varying degrees of knowledge about them. A few have their own personal Face- book sites and one manager has her own travel blog. Some direct report~ are strongly opposed to social media in the workplace, whereas others are very supportive. However, you believe that all of their views are taken in the agency's bes t interests.

This social media policy decision would be within your mandate; unlike most governments, neither the pro- vincial government nor the employment and commerce department has such a policy or restrictions on any policy that is designed by your agency. However, a few speci fic government departments prohibit Facebook and texting activity during work and, due to concerns about breaches of confidentiality and employer reputation, do not allow employees to mention work-related matters in any social media. Your decision is to develop a policy specifying whether, and to what extent, to allow and encourage agency staff to engage in social network s ite activity during work hours.

Discussion Questions (for all four scenarios)

1. To what extent should your subordinates be involved in this decision? Select one of the following levels o f involvement: • Decide alone. Use your personal knowledge and insight to complete the entire decision process without

conferring with anyone e lse.

• Recei1•e informaTion from individuals. Ask specific individuals for information . They do not make recom- mendations and might not even know what the problem is about

• ConsulT wirh individuals. Describe the problem to selected individuals and seek both their information and recommendations. The final decision is made by you, which may or may not take the advice from others into account

• ConsulT wirh rhe ream. You bring together a tean1 of people (all department staff or a representation of them if the department is large), who are told about the problem and provide their ideas and recommenda- tions. You make the final decis ion, which may or may not reflect the tean1's information.

• Facilirare rhe ream's decision. The entire decision-making process is handed over to a tean1 or committee of subordinates. You serve only as a facilitator to guide the decision process and keep everyone on track. The team identifies the problem, discovers alternative solutions, chooses the best alternative, and imple- ments their choice.

2 . What factors led you to choose this level of employee involvement rather than the others?

3. What problems might occur if less or more involvement occurred in this case (where possible)?

Sources: The Productivity Dividend Decision and The Social Media Policy Decision: e2013 Steven L McShane. The Sugar Substitute Re.•earch Decision: ©2002 Steven L McShane. The Coast guard cutter ca..e is adapted from V. H. Vroom and A. G. Jago. The New leadership: Managing Participation in Organizations (Englewood Cli ffs. NJ: Prentice Hall, 1988). © 1987 V. H. Vroom and A. G. Jago. Used with permission of the authors.

Chapter Seven Decision Making and Creativity

Team Exercise:

WHERE IN THE WORLD ARE WE?

Purpose This exercise is designed to he lp you understand the potential advantages of involving others in decis ions rather than making decisions alone.

213

Materials Students require an unmarked copy of the map of Canada with grid marks (Exhibit I). Students are not allowed to look at any other maps or use any other materials. The instructor will provide a list of communities located somewhere on Exhibit I. The instructor will also provide copies of the answer sheet after student~ have individually and in tean1s estimated the locations of communities.

EXHIBIT 1 Map of Canada

Instructions Srep I: Using the table below, write down the list of communities identified by your instructor. Then, working

alone, estimate the location on Exhibit I of these communities, all of which are in Canada. For example, mark a small "I" on Exhibit I on the spot where you believe the firs t community is located. Mark a small "2" where you think the second community is located , and so on. Plea~e be sure to number each location clearly and with numbers small enough to fit within one grid space.

Srep 2: The instructor wi ll organize students into approximately equal-sized teams (typically five or six people per team). Working with your team members, reach a consensus on the location of each community listed in the table. The instructor might provide teams with a separate copy of this map, or each member can identify the team's numbers using a different coloured pen on their individual maps. The team's decis ion for each location should occur by consensus, not voting or averaging.

Srep 3: The instructor will provide or display an answer sheet, showing the correct locations of the communi- ties. Using this answer sheet, students will count the minimum number of grid squares between the location they individually marked and d1e true location of each community. Write the number o f grid squares in the third column of the table, then add up the total. Next, count the minimum number of grid squares between the location the team marked and the true location o f each community. Write the number o f grid squares in the fourth column of the table, then add up the total.

214 Part Three Team Processes

Srep 4: The instructor will ask for information about the totals and the class will discuss the implication of these results for employee involvement and decision making.

List of Selected Communities in Canada

Number Community Individual distance in grid uniL~ from the

Team distance in grid units from the true location true location

I.

2.

3.

4.

5.

6.

7.

8.

Total: Total:

Copyright ©2002 Steven l. McShane

Self-Assessments for Chapter 7

SELF-ASSESSMENT NAME

What is your preferred decision-making style?

How well do you engage in divergent thinking?

Do you have a creative personality?

DESCRIPTION

Effective decision making is a critical part of most jobs. particularly in professional and executive positions. But people have di fferent decision-making styles. including how much they rely on facL~ and logical analysis or emotional responses and gut instinct. This tool assesses your preference for logical or intuitive decision making.

A key feature of c reativity is divergent thinking- reframing the problem in a unique ·way and generating di fferent approaches to the issue. One v.oay to test divergent thinking is by presenting questions or problems in which the answer requires a different approach or perspective from the usual frame of mind. This se]f .. asse.'isment presents a dozen of these questions.

Everyone is creative to some extent. but some people have personality traits and personal values that give them higher c reative potential. This self-assessment helps you to discover the extent to which you have a c reative personality.

CHAPTER 8

Team Dynamics LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Explain why employees join informal groups and discuss the benefits and limitations of teams.

L02 Outline the team effectiveness model and discuss how task characteristics, team size, and team composit ion influence team effect iveness.

L03 Discuss how shared percept ions among team members, called team states, emerge and influence team effectiveness.

L04 Discuss how team processes, such as taskwork, teamwork, team boundary spanning, and team development determine team effectiveness.

LOS Discuss the characteristics and factors required for the success of self-directed teams and virtual teams.

LOG Identify four constraints on team decision making and discuss the advantages and disadvantages of four structures aimed at improving team decision making.

How can one of Canada's most well-known and successful retail chains, Canadian Tire, survive in the digita l age? By embracing technology and innovation. Believe it or not, Canadian Tire's top two advertising channels are Facebook and Google. After learning that Facebook users spend seven seconds on average watching their video feeds, with two-thirds of them turning off the sound,

2 15

2 16 Part Three Team Processes

Canadian Tire's marketing team cranked out 50 seven-second spots to run on social media- without sound of course.

They also created R&D hubs in places such as Water1oo, Winnipeg, and Calgary. At the heart of these hubs are interdisciplinary teams composed of behavioural scientists, game and virtual-reality developers, and statisticians. These teams have created modest social media apps aimed at specific audiences, such as anglers, and more ambitious mobile interfaces that track store inventory in real time. 1

The Canadian Tire story shows that as the complexity of the modern organization has increa~ed, so has awareness that major projects require teams of people working together to accomplish goals. This trend toward teamwork is, in fact, increasingly common in many industries. More than half of North American organizations polled in one survey use teams to a high or very high extent to conduct day-to-day business. Two decades ago, only 20 percent of executives said they worked in teams.2 Team- work ha~ also become more important in scientific research. A study of almost 20 million research publ ications reported that the percentage of journal articles written by teams rather than individuals has increased substantially over the past five decades. Team-based articles were also subsequently

cited much more often, suggesting that j ournal articles written by teams are superior to articles written by individuals.3

Why are teams becoming so important, and how can organizations strengthen their potential for organizational effectiveness? We find the answers to these and other questions in this chapter on team dynamics. The chapter begins by defining teams and examining the reasons why organizations rely on teams and why people j oin informal groups in organizational settings. A large segment of this chapter examines a model of team effectiveness, which includes team and organizational environment, team design, team processes, and shared perceptions among team members-called team states. We then turn our attention to two specific types of teams: self-directed teams and virtual teams. The final section of

this chapter looks at the challenges and strategies for making better dec isions in teams.

Teams and Informal Groups Teams are groups of two or more people who interact and influence each other, are

mutually accountable for achieving common goals associated with organizational objec- tives, and perceive themselves as a social entity within an organization.4 This definition

has a few important components worth repeating. First, all teams exist to fulfil some purpose, such as

repairing electric power lines, assembling a product, designing a new social welfare program, or making an important decision. Second, team members are held together by their interdependence and need for collaboration to achieve common goals. All teams require some form of communication so that members can coordinate and share common objectives. Third, team members influence each other,

although some members may be more influential than others regarding the team's goals and activities. Finally, a team exists when its members perceive themselves to be a team.

Exhibit 8. 1 briefly identifies various types of teams in organizations along with three distinguishing characteristics: permanence, skill differentiation, and authority differentiation.5 Team permanence refers to how long that type of team usually exists. Although many employees work in teams that exist indefinitely (e.g., departmental teams}, an emerging trend in organizations is the formation of teams that exist very briefly, sometimes only for one eight-hour shift.6 For example, action teams often dis- band after a few days or weeks. The second distinguishing characteristic, skill differentiation, refers to the degree to which individuals bring diverse ski lls and knowledge to the team. Some advisory teams have high ski ll differentiation because companies try to include representatives from most occupational groups in the organization. In contrast, most functional departments consist of employees with very simi lar skills (e.g., sales department staff tend to have s imi lar skills).

Authority differentiation, the third distinguishing characteristic of teams, refers to the degree that decision-making responsibil ity is distributed throughout the team (low differentiation) or is vested in one or a few members of the team. Departmental teams tend to have high authority differentiation

Chapter Eight Team Dynamics 217

EXHIBIT 8 .1 Types of Teams in Organizations

81111 MdlarttJ' .... .,., .,_, ..... ftl I De ... ....... .... ..... Departmental teams Teams that consist of employees who have High Low to medium High

s imilar or complementary skills and are

located in the same unit of a functional

s tructure: usually minimal task inte rde·

pendence because each person works with

employees in other departments.

Production/service/ Typically multiskilled (employees have High Medium to high Medium

leadership teams diverse competencies). team members

collectively produce a common product/

service or make ongoing decis ions.

Self-directed teams Similar to production/service teams High Medium to high Low

except (I) they are organized around work

processes that complete an entire piece

of work requiring several interdependent

tasks. and (2) they have substantial

autonomy over the execution of those tasks

(i.e .• they usually control input,. flow. and

outpuL~ with little or no supervision).

Task force (project) Usually multi skilled. temporary teams Low Medium Medium

teams whose assignment is to solve a problem,

realize an opportunity. or design a product

or service.

Action teams Similar to task forces. these highly skilled Low Medium Low

teams are formed for a short d uration and

given considerable a utonomy to resolve

an urgent problem o r opportunity, such as

solving an emergency or crisis.

Advisory teams Team.'i that provide recommendations to deci· Low to medium Medium to high Medium

sion makers: include committees. advisory

councils, work councils. and review panels:

may be tempor.uy, but often pem1anenl

some ·with frequent rotation of members.

Skunkworks Muhiskilled teams that are usually located Medium Medium to high Medium

away from the organization and are rela·

tively free of its hierarchy: often initiated

by an e ntrepreneurial team leader who bor·

rows people and resources (bootleggi11g) to

design a product or service.

Virtual tean1s Teams whose members operate across Varies Medium to high Medium

space. time, and organizational boundaries

and are linked through information

technologies to achieve o rganizational

tasks; may be a temporary task force or

pennanent service team.

Communities of Teams (but often informal groups) bound Medium Low to medium Low

practice together by shared expertise and passion

for a particular activity or inte rest : main

purpose is to share information: often rely

on information technologies as the main

source of interaction.

218 Part Three Team Processes

because they typically have a formal manager, whereas self-directed teams have low authority differ- entiation because the entire team makes key decisions. The team leader, if there is one, does not have final decision-making authority.

INFORMAL GROUPS This chapter mostly focuses on formal teams, but employees also belong to informal groups. All teams are groups, but many groups do not satisfy our definition of teams. Groups include people assembled together, whether or not they have any interdependence or organizationally focused objective. The friends you meet for lunch are an informal group, but they wouldn't be called a team because they have little or no interdependence (each person could just as easily eat lunch alone) and no organizational ly mandated purpose. Instead, they exist primarily for the benefit of their members. Although the terms are used interchangeably, teams has largely replaced groups in the language of business when referring to employees who work together to complete organizational tasks?

Why do informal groups exist? One reason is that human beings are social animals. Our drive to bond is hardwired through evolutionary development, creating a need to belong to informal groups.8 This is evident by the fact that people invest considerable time and effort forming and maintaining social rela- tionships without any special circumstances or ulterior motives. A second reason why people join infor- mal groups is provided by social identity theory, which states that individuals define themselves by their group affiliations (see Chapter 3). Thus, we join groups-particularly those that are viewed favourably by others and that have values similar to our own-because they shape and reinforce our self-concept.9

A third reason why informal groups exist is that they accompl ish personal objectives that cannot be achieved by individuals working alone. For example, employees will sometimes congregate to oppose organizational changes because this collective effort has more power than individuals who try to bring

about change alone. These informal groups, called coalitions, are discussed in Chapter 10. A fourth explanation for informal groups is that we are comforted by the mere presence of other people and are therefore motivated to be near them in stressful situations. When in danger, people congregate near each other even though doing so serves no protective purpose. Simi larly, employees tend to mingle more often after hearing rumours that the company might be acquired by a competitor. As Chapter 4 explained, this social support minimizes stress by providing emotional and/or informational support to buffer the stress experience. 10

Informal Groups a nd Organizational Outcomes Informal groups are not created to serve organizational objectives. Nevertheless, they have a profound influence on organizations and employ- ees. Informal groups potentially minimize employee stress because, as mentioned above, group mem- bers provide emotional and informational social support. This stress-reducing capability of informal groups improves employee well-being, thereby improving organizational effectiveness. Informal

groups are also the backbone of social networks, which are important sources of trust building, infor- mation sharing, power, influence, and employee well-being in the workplace. 11 Chapter 9 describes

the growing significance of social networking sites like Facebook and Linkedln in encouraging the formation of informal groups and associated communication. Chapter I 0 explains how social networks are a source of influence in organizational settings. Employees with strong informal networks tend to have more power and influence because they receive better information and preferential treatment from others and their talent is more visible to key decision makers.

Advantages and Disadvantages of Teams Why do teams succeed at some organizations and fail at others? The answer to this question has a

long history.'2 Early research on British coal mining in the 1940s, the Japanese economic miracle of the 1970s, and a huge number of investigations since then have revealed that under the right conditions, teams make better decisions, develop better products and services, and create a more

engaged workforce than do employees working alone.13 Similarly, team members can qu ickly share

Chapter Eight Team Dynamics 219

information and coordinate tasks, whereas these processes are slower and prone to more errors intra- ditional departments Jed by supervisors. Teams typically provide superior customer service because they provide more breadth of knowledge and expertise to customers than individual "stars" can offer.

In many situations, people are potentially more motivated when working in teams than when work- ing alone.14 One reason for this motivation is that, as we mentioned in the previous section, employees have a drive to bond and are motivated to fulfil the goals of groups to which they belong. This motiva- tion is stronger when the team is part of the employee's social identity.

Second, people are more motivated in teams because they are accountable to fellow team members, who monitor performance more closely than a traditional supervisor. This is particularly true where the team's performance depends on the worst performer, such as on an assembly line, where how fast the product is a~sembled depends on the speed of the slowest employee. Third, under some circumstances, performance improves when employees work near others because co-workers become benchmarks of comparison. Employees are also motivated to work harder because of apprehension that their perfor- mance will be compared to the performance of others.

THE CHALLENGES OF TEAMS In spite of their many benefits, teams are not always as effective as individuals working alone. 15 The main problem is that teams have additional costs called process losses-resources (including time and energy) expended toward team development and maintenance rather than the task.16 Team mem- bers need time and effort to resolve their disagreements, develop mutual understanding of their goals,

determine the best strategy for accomplishing those goals, negotiate their specific roles, and agree on informal rules of conduct. An employee working alone on a project does not have these disagreements, misunderstandings, divergent viewpoints, or coordination problems with himself or herself (at least, not nearly as much as with other people). Teams may be necessary when the work is so complex it requires knowledge and skills from several people. But for tasks that can be performed alone, process

losses can make teams much Jess effective than a one-person project. Process losses are amplified when more people are added or replace others on the team.17 The new team

members consume time and effort figuring out how to work well with other team members. Performance

also suffers among current team members because they divert attention to accommodating and integrat- ing the newcomer. Process losses increa~e even after new members are integrated because the larger team requires more coordination, more time for conflict resolution, and so forth. The software industry even

ha~ a name for the problems of adding people to a team: Brooks's law says that adding more people to a late software project only makes it later! Although these problems are well known, research ha~ found that managers consistently underestimate the process losses caused by adding more people to an existing team.18

Social Loafing The process losses described above are mainly about coordination, but teams also suffer from motivational process losses. The best-known motivational process Joss is social loafing, which occurs when people exert Jess effort (and usually perform at a lower level) in teams than when

working alone. 19 Social loafing is higher when individual performance is hidden or difficult to dis- tinguish from the performance of others. Individual performance tends to be hidden in very large teams and where the team produces a single output, such as finding a single solution to a customer's problem. There is Jess social loafing when each team member's contribution is more noticeable. This can be achieved by reducing the size of the team, for example, or measuring each team member's performance. "When the group is smaller, there's nowhere to hide," explains Strategic Investment~ & Holdings principal David Zebro. "You have to pull your weight."20

Social loafing is Jess prevalent when the task is interesting, because individuals are more motivated by the work itself to perform their duties. For example, one recent study revealed that student apathy

explains some of the social loafing that occurs in university student teams.21 Social loafing is also Jess common when the team's objective is important, possibly because individuals experience more

pressure from co-workers to perform well . Finally, social loafing occurs Jess frequently among members who value team membership and believe in working toward the team's objectives.

220 Part Three Team Processes

In summary, teams can be very powerful forces for competitive advantage, or they can be much more trouble than they are worth. To understand when teams are better than individuals working alone, we need to more closely examine the conditions that make teams effective or ineffective. The next few sections of this chapter discuss the model of team effectiveness.

A Model of Team Effectiveness Why are some teams effective whi le others fail? To answer this question, we first need to clarify the meaning of team effectiveness. A team is effective when it benefits the organization and its members and survives long enough to accomplish its man-

date.22 First, most teams exist to serve some organizational purpose, so effectiveness is partly mea- sured by the achievement of those objectives. Second, a team's effectiveness relies on the satisfaction and well-being of its members. People join groups to fulfil their personal needs, so effectiveness is partly measured by this need fulfilment. Finally, team effectiveness includes the team's ability to survive long enough to ful fil its purpose. Earlier, we pointed out that very short-lived teams are an emerging trend in organizations. Yet even these "flash teams" could fall apart literally (people refuse to join or stay with the team) or cognitively (members become cognitively and emotionally disen- gaged from the team).

Researchers have developed several models over the years to identify the features or conditions that make some teams more effective than others.23 Exhibit 8.2 integrates the main components of these team effectiveness models. We will closely examine each component over the next several pages. This exhibit is a meta-model because each component (team composition, team cohesion, etc.) includes its own set of theories and models to explain how that component operates.

ORGANIZATIONAL AND TEAM ENVIRONMENT The organizational and team environment represent~ all conditions beyond the team's boundaries that influence its effectiveness. The environment is typically viewed a~ a resource pool that either supports or inhibits the team's ability to function and achieve its objectives2 4 Team members tend to work together more effectively when they receive some team-based rewards, when the organization's leadership is

EXHIBIT 8.2 Team Effectiveness Model

ORGANDTEAM ENVIRONMENT

Rewards Commun,cauon Org Structure

Org Leadership Physical Space

TEAM DESIGN / ~ Task Characteristics

Team Size Team Composltk»n ~

TEAM STATES Norms

Cohesion Team Efficacy

Team Trust

TEAM PROCESS Taskwork Teamwork

Boundary Spanning

TIME AND TEAM DEVELOPMENT

TEAM EFFECTIVEN ESS Accomplish Tasks

Satisfy Member Needs Malnta~n Team Survival

Chapter Eight Team Dynamics 221

supportive of team-oriented work structures (mther than "star" individuals), when the organization's struc- ture a~igns teams distinct clusters of work activity, when information systems support team coordination, and when the physical layout of the team's workspace encourages frequent communication.25

Along with functioning as a resource, the environment also genemtes drivers for change within teams. External competition is an environmental condition that affects team dynamics, such as by increas- ing motivation of team members to work together. Another environmental driver is changing societal expectations, such as higher safety standards, which require teams to alter their norms of behaviour. These external forces for change don't only motivate teams to redesign themselves; they may also be the focus of the team's attention. For instance, teams develop better ways of working together so they provide better customer service.

Team Design Elements Even when it operates in a team-friendly environment, the team's effectiveness will fall short of its potential if the task chamcteristics, team size, team composition, and team roles are poorly designed.

TASK CHARACTERISTICS

One reason for the shift to teamwork is that making decisions and satisfying customers have become increasingly complex. Complex work requires skills and knowledge beyond the competencies of one person. Teams are particularly well suited for complex work that can be divided into more specialized roles, and where the people in those specialized roles require frequent coordination with each other.

Surgical teams have high task interdependence.

©Chris Ryan/age fotostock

222 Part Three Team Processes

Task complexity demands teamwork, but teams also function better when the work is well-structured rather than ambiguous. Assembl ing automobiles consists of well-structured tasks, whereas a team performing a new medical procedure would have novel and Jess-structured work activities. The main benefit of well-structured tasks is that it is easier to coordinate the work among several people. Compared to individuals working alone, teams are more likely to stumble when faced with ambiguous work activities. Performing a new medical procedure would Jack the task structure of assembling cars dozens of times each day, for example. Fortunately, teams can perform ambiguous ta~ks reason- ably well when they have well-structured roles. The medical team members have enough role clarity to generally know what to expect of each other-the surgeon, scrub technic ians, operating room nurses, anesthesiologist, and others-and how to coordinate most work challenges even in these unique situations.26

What team roles do you prefer? You can discover your role preferences in teams by locating this self-assessment in Connect. -

An important ta~k-related influence on team effectiveness is task interdependence-the extent to which team members must share materials, information, or expertise to perform their jobs.27 Apart from complete independence, there are three levels of ta~k interdependence, as illustrated in Exhibit 8.3. The lowest level of interdependence, called pooled interdependence, occurs when an employee or work unit shares a common resource, such a~ machinery, administrative support, or a budget, with other employees or work units. This would occur in a team setting where each member works alone but shares raw mate-

rials or machinery to perform her or his otherwise independent tasks. Interdependence is higher under sequential interdependence, in which the output of one person becomes the direct input for another per- son or unit. Sequential interdependence occurs where team members are organized in an assembly line.

Reciprocal interdependence, in which work output is exchanged back and forth among individu- als, produces the highest degree of interdependence. People who design a new product or service would typically have reciprocal interdependence because their design decisions affect others involved

in the design process. Any decision made by the design engineers would influence the work of the

EXHIBIT 8.3 Levels of Task Interdependence

Pooled interdependence

Sequential interdependence

Reciprocal interdependence

Shared Resource

Chapter Eight Team Dynamics 223

manufacturing engineer and purchasing specialist, and vice versa. Employees with rec iprocal inter- dependence should be organized into teams to facil itate coordination in their interwoven relationship.

As a rule, the higher the level of task interdependence, the greater the need to organize people into teams rather than have them work alone. A team structure improves interpersonal communication and thus results in better coordination. High task interdependence also motivates most people to be part of the team. However, the ruJe that a team should be formed when employees have high interdependence applies when team members have the same task goals, such as serving the same clients or collectively assembl ing the same product. When team members have different goals (such a~ serving different clients) but must depend on other team members to achieve those unique goals, teamwork might create exces- sive conflict. Under these circumstances, the company should try to reduce the level of interdepen- dence or rely on supervision as a buffer or mediator among employees.

TEAM SIZE What is the ideal size for a team? By now you probably understand that the answer to this question depends on the type of team we are talking about. The tasks performed by leadership teams and project teams tend to be complex and knowledge intensive, so increases in team size might capitalize on additional expertise or resources. On the other hand, production teams engage in work that is more routine and standardized, so additional members might add unnecessary coordination requirements.28

Generally, teams should be large enough to provide the necessary competencies and perspectives to perform the work, yet small enough to maintain efficient coordination and meaningful involvement of each member.29 "You need to have a balance between having enough people to do all the things that need to be done, while keeping the team small enough so that it is cohesive and can make decisions effectively and speedily," says Broadcast Australia CEO Jim Hassell, who has also held executive roles at IBM and NBN Corp.30 Small teams (say, fewer than a dozen members) operate effectively because

they have less process loss. Members of smaller teams also tend to feel more engaged because they have more influence on the group's norms and goals and feel more responsible for the team's success and failure. Also, members of smaller teams get to know each other better, which improves mutual trust as well as perceived support, help, and assistance from those team membersY

ShouJd companies have 100-person teams if the task is highly complex? The answer is that a group this large probably isn't a team, even if management calls it one. A team exists when its members interact and

influence each other, are mutually accountable for achieving common goals a~sociated with organizational objectives, and perceive them~elves as a social entity within an organization. It is very difficult for everyone in a 1 00-person work unit to influence each other and experience enough cohesion to perceive themselves as team members. However, such complex tasks can usually be divided into smaller clusters of people.

TEAM COMPOSITION In most workplaces, employees must have more than technical skills; they must also be able and wi lling

to work in a team environment. Some companies go to great lengths to hire people who possess team competencies. The most frequently mentioned characteristics or behaviours of effective team members are depicted in the "Five C's" model illustrated in Exhibit 8.4: cooperating, coordinating, communi- cating, comforting, and conflict resolving. The first three competencies are mainly (but not entirely) ta~k-related, while the last two primarily assist team maintenance:32

Cooperating. Effective team members are willing and able to work together rather than alone.

This includes sharing resources and being sufficiently adaptive or flexible to accommodate the

needs and preferences of other team members, such as reschedul ing use of machinery so that

another team member with a tighter deadline can use it.

Coordinating. Effective team members actively manage the team's work so that it is performed eff iciently and harmoniously. For example, effective team members keep the team on track and help to integrate the work performed by different members. This typically requires that effective team members know the work of other team members, not just their own.

224 Part Three Team Processes

EXHIBIT 8.4 Five C's of Team Member Competency

Cooperating

• Slwe resources

·Accommodate others

Conflict Resolving

·Diagnose conflict sources

· Use best conflict handling style

Comforting

·Show empathy

· Provide psych. comfort

· Build conf idence

Coordinating

·Align work with others

·Keep team on track

Communicating

·Share information freely, efficiently, respectfully

• Listen actively

Sourr:es: Ba..:;ed on information in V. Rou..:;seau. C. Aubt. and A. Savoie. "Teamwork BehaviOr$: A Review and an lnteg.nuion of Frameworks." Small Group Research 37. no. 5 (2006). pp. 54().570: M.L. Loughry. M.W. Ohland. and D. D. Moore. "'Development of a The<Jry-Based A<sessment ofTeam Member Effectiveness.." Educational aod Psychological Mea~urement67. no. 3 (2007). pp. 505-524.

Communicating. Effective team members transmit information freely (rather than hoarding}, efficiently (using the best channel and language), and respectfully (minimizing arousal of nega- tive emotions).33 They also listen actively to co-workers.

Comforting. Effective team members help co-workers to maintain a positive and healthy psychological state. They show empathy, provide psychological comfort, and build co-worker

feelings of confidence and self-worth.

Conflict resolving. Confl ict is inevitable in social settings, so effective team members have the skills and motivation to resolve disagreements among team members. This requires effective use of various conflict-handling styles as well as diagnostic skills to identify and resolve the

structural sources of conflict

Which employees tend to have these team competencies? Top of the Jist are those with high con- scientiousness and extraversion personality traits, as well as high emotional intell igence. Furthermore, the old saying, "One bad apple spoils the barrel" seems to apply to teams; one team member who Jacks these teamwork competencies may undermine the dynamics of the entire team.34

Team Diversity Diversity, another important dimension of team composition, has both positive and negative effects on teams35 The main advantage of diverse teams is that they make better decisions

than do homogeneous teams in some situations. One reason is that people from different backgrounds tend to see a problem or opportunity from different angles. Team members have different mental mod- els, so they are more likely to identify viable solutions to diff icult problems. A second reason is that diverse team members have a broader pool of technical competencies.

Along with potentially better decision making, diverse teams provide better representation of the team's constituents, such as other departments or cl ie nts from simi larly diverse backgrounds. This rep- resentation not only brings different viewpoints to the decision; it also gives stakeholders a belief that they have a voice in that decision process. As we learned in Chapter 5, voice is an important ingredient

Chapter Eight Team Dynamics 225

in procedural justice, so constituents feel the decision is fairer when the decision-making team includes members with simi lar surface or deep-level diversity to their own.

Against these advantages are a number of challenges created by team eli versity. Employees with diverse backgrounds take longer to become a high-performing team. This partly occurs because bond- ing is slower among people who are different from each other, especial ly when teams have deep-level diversity (i.e., different belief.~ and values). Diverse teams are susceptible to "fault lines"-hypothetical dividing lines that may split a team into subgroups along gender, ethnic, professional, or other dimen- sions.36 These fault lines hinder team effectiveness by reducing the motivation to communicate and coordinate with team members on the other side of the hypothetical divisions. In contrast, members of teams with minimal diversity experience higher satisfaction, less conflict, and better interpersonal relations. Consequently, homogeneous teams tend to be more effective on tasks requiring a high degree of cooperation and coordination, such a~ emergency response teams.

Team Roles An important part of the team process is forming and reinforcing team roles. A role is a set of behaviours that people are expected to perform because they hold certain positions in a team and organization.37 In a team setting, some roles help the team achieve its goals; other roles maintain relationships within the team. Some team roles are formal ly assigned to specific people. For example, team leaders are usual ly expected to initiate discussion, ensure that everyone has an opportunity to present his or her views, and help the team reach agreement on the issues discussed.

Team members are assigned specific roles within their formal job responsibilities. Yet team members also assume informal roles that suit their personality and values as well as the wishes of other team members. These informal roles, which are negotiated throughout the team development process, range from supporting others to initiating new ideas. Informal team roles are shared, but many are eventual ly associated with one or two people on the team.38

Roles can also be discussed among team members and allocated, even temporari ly, based on ski lls, background, personality, and personal preferences. In fact, research shows that teams perform optimal ly when team members discuss, adopt, and enact different roles39. Examples of roles that can be adopted by team members are shown in Exhibit 8.5.

EXHIBIT 8.5 Process-Based Team Roles

..... DelalpCIIa Organizer A team member who act'i to structure what the team is doing. An Organizer also keeps tr.tck of accom·

plishments and how the team is progressing relative to goals and timelines.

Doer A team member who wiiJingly takes on work and geL~ things done. A Doer can be counted on to complete work. meet deadlines. and take on ta'ik:s to ensure the team's success. This person should focus on goal

accomplishment.

Challenger A team member who wilJ push the team to explore all aspects of a s ituation and to conside r a1te rnative a..'i.sumptions. explanations, and solutions. A Challenger o ften asks "why" and is comfortable deba ting and

c ritiquing. Think o f this role as the team•s devil's advocate .

ln n<wator A tean1 member who regularly generates new and creative ideas. s trategies. and approaches for how the

tean1 can handle various s ituations and challenges. An Innovator often offers original and imaginative

suggestions.

Team Builder A tean1 member who helps establish norms, supports decisions. and maintains a positive work atmosphe re within the team. A Team Builder calms me mbers when they are s tressed, and motivates them when they

are down.

Connector A tean1 member who helps bridge and connect the team with people. g roups. or other stakeholders out~ide of the tean1. Think of Connectors as "boundary spanners." who ensure good working relationships

between the team and "out~iders."

Adapt~dfrom Matlrieu. J. E .. Tmmenbaum. S. 1.. Kuk~11ber;ger. M. R .. Dmuhach . J. S.. & Alli~-er. G. M. (201 5). Team role experience and ori~nta· titm: A mea..:;ure and tests of con..:;truct validity. Gmup & O~>tmi:Atimr Mmw~-ement. 40(1) . 6-34.

226 Part Three Team Processes

Transactive Memory A transactive memory system describes how task-relevant knowledge is distrib- uted within a team and the collective awareness of who knows what. To illustrate, consider the example of a group of business students working on a sustainability ca~e competition. A ca~e competition requires a visu- ally arresting slide deck, engaging speakers, and a well-rounded, thorough presentation. Having one person with sound sustainability knowledge is a must, but what about the rest of the team? One person could bring in knowledge of finance and quantitative ability, another could bring his/her marketing background to use the sustainability-centric recommendation as a branding tool, while another might possess knowledge of strategy and use that to tell the entire story in a meaningful way. Clearly defined and complementary strengths make for a much stronger team, but unless team members know who ha~ what skill, those skills might get wasted and lead to process losses. Thus, the idea behind the transactive memory concept is for teams to not only organize around complementary skills, but to devote time and energy toward understand- ing how those skills are distributed. This is important because research shows that teams with more well- developed transactive memory systems outperform teams with less well-developed systems.40

Team States

The third set of elements in the team effectiveness model, collectively known as team states, includes team norms, cohesion, team efficacy, and trust. These elements represent motivational or cognitive characteristics of the team that continuously evolve.

TEAM NORMS Norms are the informal rules and shared expectations that groups establish to regulate the behaviour of their members. Norms apply only to behaviour, not to private thoughts or feel ings. Furthermore, norms exist only for behaviours that are important to the team.41 Norms are enforced in various ways. Co-workers grimace if we are late for a meeting, or they make sarcastic comments if we don't have our part of the project completed on time. Norms are also directly reinforced through praise from high-status members, more access to valued resources, or other rewards available to the team. But team members often conform to prevailing norms without direct reinforcement or punishment because they identify with the group and want to align their behaviour with the team's expectations. The more closely the person's social identity is connected to the group, the more the individual is motivated to avoid negative sanctions from that group.42

How Team Norms Develop When teams form, norms develop because people need to anticipate or predict how others will act. Even subtle event~ during the team's formation, such as how team members initially greet each other and where they sit in the first meetings, can initiate norms that are later difficult to change. Norms also form a~ team members discover behaviours that help them function more effec- tively (such a~ the need to respond quickly to email).43 In particular, a critical event in the team's history can trigger formation of a norm or sharpen a previously vague one. A third influence on team norms are the experiences and values that members bring to the team. If members of a new team value work-l ife balance, norms are likely to develop that discourage long hours and work overload.44

Preventing and Changing Dysfunctional Team Norms Team norms often become deeply anchored, so the best way to avoid norms that undermine organizational success or employee well-being is to establish desirable norms when the team is first formed. One way to do this is to clearly state desirable norms when the team is created. Another approach is to select people with appropriate values. If organizational leaders want their teams to have strong safety norms, they should hire people who already value safety and who clearly identify the importance of safety when the team is formed.

The suggestions so far refer to new teams, but how can organizational leaders maintain desirable norms in older teams? One solution comes from a study showing that leaders often have the capacity to alter exist- ing norms.45 By speaking up or actively coaching the team, they can often subdue dysfunctional norms while developing useful norms. A second suggestion is to introduce team-based rewards that counter

Chapter Eight Team Dynamics 227

dysfunctional nonns. However, studies report that employees might continue to adhere to a dysfunctional team nonn (such a~ limiting output) even though this behaviour reduces their paycheque. Finally, if dys- functional norms are deeply ingrained and the above solutions don't work, it may be necessary to disband the group and replace it with people having more favourable norms.

TEAM COHESION Team cohesion refers to the degree of attraction people feel toward the team and their motivation to remain members. It is a characteristic of the team, including the extent to which its members are attracted to the team, are committed to the team's goals or tasks, and feel a collective sense of team pride.46 Thus, team cohesion is an emotional experience, not just a calculation of whether to stay or leave the team. It exists when team members make the team part of their social identity. Team cohesion is associated with team development because team members develop a team identity as part of the team development process.

Influences on Team Cohesion Several factors influence team cohesion, but the six described here seem to be the most important: member similarity, team size, member interaction, difficult entry, team success, and external competition or challenges. For the most part, these factors reflect the indi- vidual's social identity with the group and bel iefs about how team membership will fulfil personal needs.

Member similarity. Social scientists have long known that people are attracted to others who are

similar to them.47 This similarity-attraction effect occurs because we assume that people who

look like us and have similar backgrounds are more trustworthy and are more likely to accept

us. We also expect to have fewer negative experiences, such as conflicts and violations of our

expectations and bel iefs. Thus, teams have higher cohesion or become cohesive more quickly

when members are similar to each other. In contra~!, it is more difficult and takes longer for

teams with diverse members to become cohesive. This difficulty depends on the form of diver-

sity, however. Teams consisting of people from different j ob groups seem to gel together just as

well as teams of people from the same job.48

Team size. Smaller teams tend to have more cohesion than larger teams because it is easier for a few people to agree on goals and coordinate work activities. However, smal l teams have Jess cohesion when they Jack enough members to perform the required tasks.

Member interaction. Teams tend to have more cohesion when team members interact with each

other fairly regularly. This occurs when team members perform highly interdependent tasks and work in the same physical area.

Somewhat difficult entry. Teams tend to have more cohesion when entry to the team is restricted. The more el ite the team, the more prestige it confers on its members, and the more they tend to value their membership in the unit. At the same time, research suggests that severe initiations can weaken team cohesion because of the adverse effects of humiliation, even for those who successfully endure the initiation.49

Team success. Team cohesion increases with the team's level of success because people are attracted to groups that fulfil their needs and goals. 5° Furthermore, individuals are more likely

to attach their social identity to successful teams than to those with a string of fai lures.s'

External competition and challenges. Team cohesion tends to increase when members face external competition or a valued objective that is challenging. This might include a threat from an external competitor or friendly competition from other teams. Employees value their mem- bership on the team because of its ability to overcome the threat or competition and as a form of social support. However, cohesion can dissipate when external threats are severe because these threats are stressful and cause teams to make Jess effective decisions.52

Consequences of Team Cohesion Teams with higher cohesion tend to perform better than those with low cohesion.53 In fact, the team's existence depends on a minimal level of cohesion because it motivates team members to remain members and to help the team achieve its mutual ly

228 Part Three Team Processes

agreed objectives. Members of high-cohesion teams spe nd more time together, share information more frequently, and are more satisfied with each other. They provide each other with better social support in stressful situations and work to minimize dysfunctional confl ict. 54 When confl ict does arise, high- cohesion team members tend to resolve their differences swiftly and effectively.

However, at least two contingencies make the cohesion- performance relationship somewhat more complex. First, team cohesion has Jess effect on team performance when the team has low task interde- pendence. 55 High cohesion motivates employees to coordinate and cooperate with other team members,

Lululemon, a yoga-inspired athletics apparel retailer founded in Vancouver, is a Canadian success story. It has over 300 corporate-owned stores and more than 2800 employees in Canada, the USA, the United Kingdom, Austra lia, New Zealand, and Singapore. In 2015 the retailer earned $2.1 billion in net revenue. Lululemon is known for its distinctive corporate ethos, which nurtures employee health, loya lty, and team engagement. Lululemon describes its employees as passionate and motivated people "who are driven to succeed and share our purpose of 'elevating the world from mediocrity to greatness."' Employees are hired only after an extensive vetting process, based on their ability to embody the corporate culture of happy and healthy transformation. Lululemon fosters team cohesion among its workers through several unique strategies aimed at promoting self-actualization. Lululemon seeks to inspire staff by encouraging workers to engage in goal setting using vision boards, circu lating self-help literature and books, and pursuing a lifestyle of yoga and fitness by provid ing yoga stud io benefits and self-empowerment training. Store managers have the authority to implement local initiatives to motivate employees, and store employees, who are called "educators," are urged to participate in community-based sports and grassroots wellness campaigns as brand ambassadors. A core corporate philosophy is that employees need to invest in themselves to build healthy relationships in order to advance personally and professionally. The company routinely promotes team bonding through fitness activities and group goal-setting eventss6

©mubus 7/Shutterstock

Chapter Eight Team Dynamics

EXHIBIT 8.6 Effect o f Team Cohesion on Task Performance

Team norms support

company goals

Team norms conflict with

company goals

low

Moderately high task

performance

l ow task performance

Team cohesiveness

229

High

but people don't need to cooperate or coordinate as much when little of their work depends on other team members (low task interdependence). So the motivational effect of high cohesion is less relevant in teams with low interdependence.

Second, the effect of cohesion on team performance depends on whether the team's norms are compatible with or opposed to the organizational objectives57 As Exhibit 8.6 illustrates, teams with high cohesion perform better when their norms are aligned with the organization's objectives, whereas higher cohesion can potentially reduce team performance when norms are counterproductive. This effect occurs because cohesion motivates employees to perform at a level more consistent with team norms. If a team's norm tolerates or encourages absenteeism, employees will be more motivated to take unjustified sick leave. If the team's norm discourages absenteeism, employees are more motivated to avoid taking sick leave.

One last comment about team cohesion and performance: Recall earlier in this section we said that team performance (success) increases cohesion, whereas we are now saying that team cohesion causes team performance. Both statements are correct, but there is some evidence that team performance has a stronger effect on cohesion than vice versa. In other words, a team's performance will likely affect its cohesion, whereas a team's cohesion has less of an effect on its performance 5 8

Are you a team player? You can discover your preferences about teamwork by locating this self-assessment in Connect.

TEAM EFFICACY Have you ever been part of a team where everyone bel ieved the team was highly likely to succeed? If so, you were in a team with high team efficacy, which is the shared perception among team members about the team's overall level of capabil ity. A vast amount of research has shown that teams with high levels of efficacy outperform teams with low levels of efficacy, especially when task interdependence

is high.59 When a team has high efficacy, members are more likely to set ambitious goals, put forth

230 Part Three Team Processes

greater effort, persist longer when faced with challenging obstacles, and view negative feedback as an

opportunity rather than a challenge. On the other hand, teams characterized by low team efficacy are more likely to experience apathy,

uncertainty, and a lack of direction. Research ha~ shown that the dysfunctional characteristics associated

with low efficacy include heightened anxiety,60 greater social loafing,61 and less vigilance in decision- making processes62 Researchers have also found a link between team efficacy and the extent to which

individual team members engage in the behaviours described in the team competency model presented earlier in the chapter. For example, in teams with high efficacy, individual team members are more

likely to display coordination and cooperative type behaviours6 3

Considering how important team efficacy is to overal l team performance, it is worthwhile to con- sider where this perception comes from and how it can be developed. In general, teams have higher

levels of efficacy when individual team members are more confident about their own team-specific

skills, when the team is composed of members who have knowledge about the team's task, and when team members show visible teamwork behaviours, such as contributing to the ta~k and managing rela-

tionship dynamics.64 Having a leader who uses a more participative versus controlling style can also

increase team efficacy.65

TEAM TRUST

Any relationship-including the relationship among team members-depends on a certain degree of trust. Trust refers to positive expectations one person has toward another person in s ituations involv-

ing risk (see Chapter 4).66 Trust is ultimately perceptual, in which we trust others based on our bel iefs

about their ability, integrity, and benevolence. It also has an emotional component, because you experi- ence positive feelings toward those you trust.67 Trust is built on three foundations: calculus, knowledge,

and identification (see Exhibit 8.7).68

Calculus-based trust. This foundation represents a logical calculation that other team members

wi ll act appropriately because they face sanctions if their actions violate reasonable expecta-

tions.69 It offers the lowest potential trust and is easily broken by a violation of expectations.

Some scholars suggest that calculus-based trust is not trust at all. Instead, it might be trust in the

system rather than in the other person. In any event, calculus-based trust alone cannot sustain a

team's relationship because it relies on deterrence.

Knowledge-based trust. This form of trust is based on the predictability of another team member's behaviour. This predictability refers only to "positive expectations"-as the definition of trust

EXHIBIT 8.7 Three Foundations of Trust in Teams

Potential level of

Trust

High

low

Type of t rust

Identification- based trust

Knowledge- based trust

Calculus- based trust

Description

• Based on common mental models and values • Increases with person's social identity with team

• Based on predictability and co~etence • Fairly robust

• Based on deterrence • Fragile and limited potential because dependent

on punishment

Chapter Eight Team Dynamics 231

states-because you would not trust someone who tends to engage in harmful or dysfunctional behaviour. Knowledge-based trust includes our confidence in the other person's abi lity or com- petence, such as the confidence that exists when we trust a physician70 Knowledge-based trust

offers a higher potential level of trust than calculus-based trust and it is more stable because it develops over time.

Identification-based trust. This foundation is based on mutual understanding and an emotional bond among team members. It occurs when team members think, feel, and act like each other. High-performance teams exhibit this level of trust because they share the same values and mental models. Identi fication-based trust is potentially the strongest and most robust of all three types of trust. The individual's self-concept is based partly on membership in the team and he or she bel ieves the members' values significantly overlap, so any transgressions by other team members are quickly forgiven. People are more reluctant to acknowledge a violation of this

high-level trust because it strikes at the heart of their self-concept.

Dynamics of Team Trust Employees typically join a team with a moderate or high level-not a low Jevel~f trust in their new co-workers? ' The main explanation for the initially high trust (called swift trust) in organizational settings is that people usually believe fellow team members are reasonably competent (knowledge-based trust) and they tend to develop some degree of social identity with the team (identification-based trust). Even when working with strangers, most of us display some level of trust, if only because it supports our self-concept of being a good person. However, trust is fragile in new relationships because it is based on a~sumptions rather than well-established experience. Consequently, studies report that trust tends to decrease rather than increa~e over time. This is unfortunate, because employees become Jess forgiving and less cooperative toward others as their level of trust decreases, and this undermines team and organizational effectiveness. n

How trusting are you? You can d iscover your trust propensity by locating this self-assessment in Connect.

Team Processes

L04 The next set of elements in the team effectiveness model, collectively known as team processes, refers to the interactions and activities that occur within a team as it works toward its goal . Traditionally, researchers have looked at the team's internal dynamics,

such as task coordination and interpersonal relationships, to describe team process. However, there is growing recognition that team interactions with external parties also determine how well a team performs. For this reason we wi ll describe both internal and external team processes. We will also describe the element of time or, in other words, how teams develop.

INTERNAL TEAM PROCESSES Internal team processes have historically been categorized as either teamwork or taskwork. Teamwork behaviour has been described a~ activities that are devoted to enhancing the quality of the interactions, interdependencies, cooperation, and coordination of teams.73 During interactions between team mem- bers, teamwork behaviour takes the form of overt actions and verbal statements that contribute to the coordination demands of the team's task?4 For example, a team member would be engaging in team- work behaviour when they steer their fellow team members toward on-topic conversations, suggest setting time deadlines for completing tasks, or attempt to resolve a conflict within the group.

On the other hand, taskwork behaviour has been described a~ team members' efforts that are devoted to understanding the task requirements, discovering the "rules" by which the tasks are to be performed,

232 Part Three Team Processes

establishing the patterns of interaction with equipment, exchanging ta~k-related information, develop- ing team solutions to problems, and so forth. Thus, ta~kwork represents the technical performance of the team's task, whereas teamwork behaviours are used to direct, align, and monitor ta~kwork75 To illustrate, the ta~kwork of a surgical team includes the tasks carried out to complete a surgical proce- dure, such as patient preparation, use of anesthesia, and suturing incisions. On the other hand, teamwork behaviours in a surgical team might include individual activities such as the identification of goals, sug- gestions for improving coordination, and efforts to resolve conflict, all of which help to ensure that the patient is effectively prepared for surgery, anesthesia is appropriately administered, and incisions are properly sutured. To perform well, a team needs to excel at both types of internal process.

EXTERNAL TEAM PROCESSES Processes that occur between team members matter a great deal, but teams must also interact with people and groups who exist beyond the team's boundary. Team boundary spanning refers to team

actions that establish or enhance linkages and manage interactions with parties in the external environ- ment.76 In their classic study of product development teams, Ancona and Caldwell ( 1992) classified external activities into different types and showed how these types impact overall team performance.

They described the first type as ambassador activities because these activities encompassed such behaviours as protecting the team from outside pressure, persuading others to support the team, and lobbying for resources. The amba~sador function tends to focus on the team's ability to mould and shape the beliefs of external constintents. Scholars often refer to amba~sador activities as vertical boundary spanning because these activities frequently involve communicating with those higher in the organization's hierarchy, such as corporate or division managers.n

The second type of boundary activity was labelled task coordination. This type represents interactions

aimed at coordinating technical or design issues. Some examples include discussing design problems with others, obtaining feedback on the product design, and coordinating and negotiating with outsiders. In contrast to ambassador activities, task coordination activities show higher levels of communication laterally through the organization. Thus, they are often referred to a~ horizontal boundary spanning. As predictors of performance, ambassador and task coordinator activity were both positively related78

A third type of boundary spanning, called scouting activity, is described a~ a general scanning for ideas and information about the competition, the market, or the technology; thus, scouting activity is mostly

directed at obtaining information from sources external to the organization. Although it would seem that scouting activity should be helpful, research ha~ shown instead that prolonged scouting can actually harm team performance because it detracts from internal team processes.

TEAM DEVELOPMENT Our model of team effectiveness also includes a longitudinal dimension, signifying that things like team processes and team states are not stable over time. For example, researchers have discovered that per- ceptions of team efficacy measured shortly after a team is created do correlate with team performance. However, team efficacy measured closer to the midpoint of a team's task is a much stronger predictor of team performance than efficacy measured earlier.79 What is known about the changes teams experi- ence over time? Team members must get to know and trust each other, understand and agree on their respective roles, discover appropriate and inappropriate behaviours, and learn how to coordinate with each other. The longer team members work together, the better they develop common or complementary mental models, mutual understanding, and effective performance routines to complete the work.

Two popular models that capture team development activities are shown in Exhibit 8.8.80 The first shows teams moving systematically from one stage to the next, while the da~hed lines illustrate that

teams might fall back to an earlier stage of development as new members join or other conditions disrupt the team's maturity. Forming, the first stage of team development, is a period of testing and orientation in which members learn about each other and evaluate the benefits and costs of continued membership. People tend to be pol ite, will defer to authority, and try to find out what is expected of

them and how they wi ll fit into the team. The storming stage is marked by interpersonal conflict as

Chapter Eight Team Dynamics 233

EXHIBIT 8.8 Models of Team Development

The Five-Stage Model

Forming • 01scover expectations ·Test bot11danes of behaviour

The Punctuated Equilibrium Model

Time Midpoint Time

members become more proactive and compete for various team roles. Members try to establish norms of appropriate behaviour and performance standards.

During the nanning stage, the team develops its first real sense of cohesion as roles are established and a consensus forms around group objectives and a common or complementary team-based mental model. By the peiforming stage, team members have learned to efficiently coordinate and resolve conflicts. In high- performance teams, members are highly cooperative, have a high level of trust in each other, are commit- ted to group objectives, and identify with the team. Finally, the adjourning stage occurs when the team is about to disband. Team members shift their attention away from task orientation to a relationship focus.

The second model of team development focuses more directly on how teams pay attention to time and deadlines. This model, known a~ the punctuated equilibrium model, states that teams working under strict deadlines experience three important phases: the initial meeting, a midpoint transition, and the period close to the endpoint. 81 Each of these pha~es is connected by a period of inertia in which major changes to the team's task and direction are unlikely to occur. For example, a sn1dent team working on a project with a deadline would experience the first phase in their initial meetings. Here, they might agree on how to allo- cate workload and discuss overall goals for the project. After a period of inertia in which work progresses smoothly, the team experiences a spike in activity around the midpoint. If the team manages team pro- cess effectively at the midpoint, they set themselves up for another period of relative inertia leading to a

234 Part Three Team Processes

positive endpoint. However, without questioning their approach at the midpoint they set themselves up for tension and conflict as work progresses to the endpoint. The most important practical lesson from these models of team development is that teams need to carefully attend to the issue of time pacing.82

Developing Team Identities and Mental Models Although these models depict team development fairly well, they are not a perfect representation of the process. For instance, some teams remain in a particular stage longer than others and sometimes regress back to earlier stages of develop- ment. The models also ma~k two sets of processes that are the essence of team development: developing team identity; and developing team mental models and coordinating routines. 83

Developing team idenlity. Team development is apparent when its members shift from viewing the team as something "out there" to something that is part of themselves. In other words, team development occurs when employees take ownership of the team's success and make the team part of their social identity.84

Developing team menial models and coordinating routines. Team development includes developing habitual routines with team members and forming shared or complementary mental models.85 Team mental models are visual or relational mental images that are shared by team members, such as what good customer service looks like. A meta-analysis supports the view that teams are more effective when their members share common mental models of the work.86

Accelerating Team Development through Team Building Team building consists of formal activities intended to improve the development and functioning of a work team.87 To a large extent, team building attempts to speed up the team development process. This process may be applied to new teams, but it is more commonly introduced for existing teams that have regressed to earl ier stages of team development due to membership turnover or loss of focus.

Some team-building interventions are task-focused. They clarify the team's performance goals, increase the team's motivation to accomplish these goals, and establish a mechanism for systematic feedback on the team's goal performance. A second type of team building tries to improve the team's problem-solving skills. A third category clarifies and reconstructs each member's perceptions of her or his role as well as the role expectations that member has of other team members. Role definition team building also helps the team to develop shared mental models--common internal representations of the external world, such a~ how to interact with clients, maintain machinery, and engage in meetings. Research sntdies indicate that team processes and performance depend on how well team members share common or complementary mental models about how they should work together.88 A fourth-and likely the most common-type of team building is aimed at helping team members learn more about each other, build trust in each other, and develop ways to manage conflict within the team. Popular interventions such as wilderness team activities, paintball wars, and obstacle-course challenges are typically offered to build trust.

Do team building interventions improve team development and effectiveness? The most effective team building seems to be those in which employees receive training on specific team competencies, such a~ coordinating, conflict resolving, and communicating89 However, many team-building activities are less suc- cessfi.tl.90 One problem is that team building interventions are used as general solutions to general team problems. A better approach is to begin with a sound diagnosis of the team's health and then select team- building interventions that address specific weaknesses.91 Another problem is that team building is appl ied as a one-shot medical inoculation that every team should receive when it is formed. In truth, team building is an ongoing process, not a three-day jump start.92 Finally, we must remember that team building occurs on the job, not just on an obstacle course or in a national park. Organizations should encourage team members to reflect on their work experiences and to experiment with just-in-time learning for team development.

The team effectiveness model is a useful template for understanding how teams work-and don't work- in organizations. With this knowledge in mind, let's briefly investigate two types of teams that have emerged over the pa~t couple of decades to become important in organizations: self-directed teams and virntal teams.93

Chapter Eight Team Dynamics 235

Self-Directed Teams

Self-directed teams (SOTs) are cross-functional groups that are organized around work processes, complete an entire piece of work requiring several interdependent ta~ks, and have substantial autonomy over the execution of those tasks.94 This definition captures

two distinct features of SOTs. First, these teams complete an entire piece of work requiring several inter-

dependent tasks. This type of work arrangement clusters the team members together while minimiz- ing interdependence and interaction with employees outside the team. The result is a close-knit group of employees who depend on each other to accomplish their individual tasks. The second distinctive feature of SOTs is that they have substantial autonomy over the execution of their tasks. In particular, these teams plan, organize, and control work activities with little or no direct involvement of a higher- status supervisor.

Self-directed teams are found in several industries, ranging from petrochemical plants to air- craft parts manufacturing. Most of the top-rated manufacturing firms in North America appar- ently rely on SOTs.95 Indeed, self-directed teams have become such a popular way to organize employees in manufacturing, services, and government work that many companies don' t reali ze they have them. The popularity of SOTs is consistent with research ind icating that they poten- tially increase both productivity and job satisfaction96 For instance, one study found that car dealersh ip service shops that organize employees into SOTs are s ignificantly more profitable than shops where employees work without a team structure. Another study reported that both short- and

long-term measures of customer satisfaction increased after street cleaners in a German ci ty were organized into SOTs.

SUCCESS FACTORS FOR SELF-DIRECTED TEAMS The successful implementation of self-directed teams depends on several factors.97 SOTs should be responsible for an entire work process, such as making an entire product or providing a service. This structure keeps each team sufficiently independent from other teams, yet it demands a relatively high

degree of interdependence among employees within the team98 SOTs should also have sufficient autonomy to organize and coordinate their work. Autonomy al lows them to respond more quickly

and effectively to cl ient and stakeholder demands. It also motivates team members through feelings of empowerment. Final ly, SOTs are more successful when the work site and technology support coor- dination and communication among team members and increase job enrichment.99 Too often, man- agement calls a group of employees a "team," yet the work layout, assembly-l ine structure, and other

technologies isolate the employees from each other.

Virtual Teams Virtual teams are teams whose members operate across space, time, and organizational bound- aries and are linked through information technologies to achieve organizational tasks.100 Virtual teams d iffer from traditional teams in two ways: (I) They are not usually co-located (do not work in the same physical area), and (2) due to their Jack of co-location, members of virtual teams depend primarily on information technologies rather than face-to-face interaction to communicate and coordinate their work effort. Teams have degrees of virtuality. Team virtuali ty increases wi th

the geographic dispersion of team members, percentage of members who work apart, and percent- age of time that members work apart. For example, a team has low virtuality when all of its mem- bers live in the same ci ty and only one or two members work from home each day. High virtuali ty exists when team members are spread around the world and only a couple of members have ever met in person.

236 Part Three Team Processes

Debating Point:

ARE VIRTUAL TEAMS MORE TROUBLE THAN THEY'RE WORTH?

Virtua l teams were rare before the Internet. Today, they are almost as commonplace as face- to-face teams. Virtual teams are increasingly possible because more of us are employed in knowledge work rather than physical production. Furthermore, information technologies make it easier to communicate instantaneously w ith co-workers around the globe. To some extent, virtual teams have even become "cool." It is almost a badge of honour to say that you are a member of a far-flung team of people from several continents.

But whether they are stylish or commonplace, virtual teams seem to be increasingly necessary for an organization's competitive advantage. This chapter points out that we need virtual teams to effectively engage in organizational learning. Knowledge has become the currency of organizational success, and globalization has ensured that such knowledge is scattered around the world. In short, organizations are at a disadvantage unless they make good use of virtual teams.

How could anyone claim that virtual teams aren't worth the effort, particularly when orga- nizational learn ing is one of the four pillars of organizational effectiveness (see Chapter 1)? Well, actually, there are a few arguments against them. For the most part, critics don't deny the potential value of sharing knowledge through virtual teams. Rather, they have added up the negative features and concluded that they outweigh the benefits. In fact, when ch ief infor- mation officers were asked to identify the top challenges of globalization, 70 percent listed managing virtual teams as the top concern (see OB by the Numbers later in this section).101

One persistent problem with virtual teams is that they lack the richness offace-to·-face com- munication. We'll provide more detail about this important matter in Chapter 9, but the vital takeaway is that no information technology to date has facilitated the volume and variety of information transmitted among people located in the same room. This is one reason Toyota, PSA Peugeot Citroen, and other companies arrange for teams to meet in the same physical space. They can exchange information in larger volumes. much faster, and more accurately, compared with the clumsy methods currently available to virtual teams. Multiperson video chat is getting more like face-to-face discussion, but it requires considerable bandwidth and still falls short on communication richness.

Another problem with virtual teams is that people trust others more easily when they are nearby.102 Various studies have reported that virtual team members either have lower trust compared with co-located team members, or their trust is much more frag ile. In fact, experts offer one main recommendation to increase trust among virtual team members-have them spend time together as co-located teams.

A third drawback with virtual teams is that the farther away people are located, the more they differ in experiences, beliefs, culture, and expectations. These differences can be advantageous for some decisions, of course, but they can also be a curse for team development and perfor- mance. "Everyone must have the same picture of what success looks like," advises Rick Maurer. a North American leadership consultant. "Without that laser-like focus, it is too easy for people in Bangalore to develop a different picture of success than the picture held by their colleagues in Brussels. Now multiply that by a couple more locations and you've got a mess."103

Here's one more reason why companies should think twice before relying on virtual teams: People seem to have less influence or control over distant than over co-located co-workers. A team member who stops by your cubicle to ask how your part of the report is coming along has much more effect than an impersonal-or even a flaming-email from afar.

Perhaps that is why surveys reveal less satisfaction with virtual team members than co- located team members.104 One study reported that distant colleagues received two to three times as many complaints as co-located colleagues about working half-heartedly (or not at all) on shared projects, falling behind on projects, not making deadlines, failing to warn about missing deadlines, making changes without warn ing, and providing misleading information. When asked how long it takes to resolve these problems, more than half of the respondents indicated a few days for co-located team members, whereas most estimated a few weeks or longer for distant team members.

Chapter Eight Team Dynamics 237

Virtual teams have become commonplace in most organizations. 1\vo-thirds of human resource managers estimate that reliance on virtual teams will grow rapidly over the next few years.105 In global companies such a~ IBM, almost everyone in knowledge work is part of a virtual team. One reason vir- tual teams have become so widespread is that information technologies have made it easier than ever before to communicate and coordinate with people at a distance.106 The shift from production-based to knowledge-based work is a second reason why virtual teamwork is fea~ible. It isn't yet possible to make a physical product when team members are located apart, but most of us are now in jobs that mainly process knowledge.

Information technologies and knowledge-based work make vir tual teams possible, but organiza- tional learning and globalization are two reasons why they are increasingly necessary. In Chapter I, we learned that organizational learning is one of four perspectives of organizational effectiveness. Virtual teams represent a natural part of the organizational learning process because they encourage employees to share and use knowledge where geography limits more direct forms of collaboration. Globalization makes virtual teams increasingly necessary because employees are spread around the planet rather than around one building or city. Thus, global businesses depend on vir tual teamwork to leverage the

potential of their employees .

• by the NUMBERS

More Virtual Teams, More Virtual Challenges 107

of managers polled in large North American companies say that their firm's reliance on virtual teams will grow in importance over the next three years.

of North American chief information officers polled of indicate t hat managing virtual teams is a very important globalization challenge (highest rated issue on the I ist).

of managers say that it is somewhat or very important that all members of their department work from the same location.

SUCCESS FACTORS FOR VIRTUAL TEAMS Virtual teams face all the challenges of traditional teams, as well as the issues arising from time and distance. These chal lenges increase with the team's virtuality, particularly when it exists for only a short time.108 Fortunately, OB research has identified the following strategies to minimize most virtual team problems. 109 First, virtual team members require more than the team competencies described

earl ier in this chapter. They also require good communication technology skills, strong self-leadership skills to motivate and guide their behaviour without peers or bosses nearby, and higher emotional intelligence so that they can decipher the feelings of other team members from email and other limited communication media.

Second, virtual teams should have a toolkit of communication channels (email, vir tual whiteboards, video conferencing, etc.) as well a~ the freedom to choose the channels that work best for them. This may sound obvious, but unfortunately senior management tends to impose technology on virtual teams, often based on advice from external consultants, and expects team members to use the same commu- nication technology throughout their work. In contrast, research suggests that communication channels gain and Jose importance over time, depending on the task and level of trust.

238 Part Three Team Processes

Third, virtual teams need plenty of structure. In one recent review of effective virtual teams, many of the principles for successful virtual teams related mostly to creating these structures, such as clear operational objectives, documented work processes, and agreed upon roles and responsibilities.110

The final recommendation is that virtual-team members should meet face-to-face fairly early in the team development process. This idea may seem contradictory to the entire notion of virtual teams, but so far, no technology has replaced face-to-face interaction for high-level bonding and mutual understanding.11 1

Team Decision Making Self-directed teams, virtual teams, and practically all other groups are expected to make decisions. Under certain conditions, teams are more effective than individuals at identi- fying problems, choosing alternatives, and evaluating their decisions. To leverage these

benefits, however, we first need to understand the constraints on effective team decision making. Then, we look at specific team structures that try to overcome these constraints.

CONSTRAINTS ON TEAM DECISION MAKING Anyone who has spent enough time in the workplace can recite several ways in which teams stumble in decision making. The five most common problems are time constraints, evaluation apprehension, pressure to conform, overconfidence and information sharing.

Time Constraints A time-related constraint in most team structures is that only one person can speak at a time.112 This problem, known as p roduction blocking, undermines idea generation in a few ways. First, team members need to listen in on the conversation to find an opportune time to speak up, but this monitoring makes it difficult for them to concentrate on their own ideas. Second, ideas are fleeting, so the longer they wait to speak up, the more likely their flickering ideas will die out. Third,

team members might remember their fleeting thoughts by concentrating on them, but this causes them to pay Jess attention to the conversation. By ignoring what others are saying, team members miss other potentially good idea~.

Evaluation Apprehension Team members are often reluctant to mention idea~ that may seem silly because they believe (often correctly) that other team members are silently evaluating them. 113 This evaluation a pprehension is based on the individual 's desire to create a favourable self-presentation and need to protect self-esteem. It is most common when meetings are attended by people with different levels of status or expertise or when members formally evaluate each other's performance throughout the year (as in 360-degree feedback). Creative ideas often sound bizarre or illogical when first presented, so

evaluation apprehension tend~ to discourage employees from mentioning them in front of co-workers.

Pressure to Conform Team cohesion leads employees to conform to the team's norms. This control keeps the group organized around common goals, but it may also cause team members to sup- press their dissenting opinions, particularly when a strong team norm is related to the issue. When someone does state a point of view that violates the majority opinion, other members might punish the violator or try to persuade him or her that the opinion is incorrect. Conformity can also be subtle. To some extent, we depend on the opinions that others hold to validate our own views. If co-workers don't agree with us, we begin to question our own opinions even without overt peer pressure.

Overconfidence (Inflated Team Efficacy) Earlier in the chapter we described team efficacy and stated that in most sin1ations it is better for a team to have higher rather than low levels. When mak- ing an important decision, however, teams sometimes become overconfident and develop a false sense of invulnerability. 114 In other words, the team's efficacy far exceeds reality regarding its competencies and the favourableness of the situation. Overconfident teams are Jess vigilant when making decisions,

Chapter Eight Team Dynamics 239

partly because they have more positive than negative emotions and moods during these events. They

also engage in Jess discussion (task conflict) and are Jess likely to seek out or accept information located outside the team, both of which undermine the quality of team decisions.

Why do teams become overconfident? The main reason is a track record of past successes combined

with the perception that success is caused by team capabi lity rather than chance. The strategies for suc- cess going forward may be different than the strategies that Jed to success in the pa~t. and overconfident teams are more likely to persist with obsolete strategies. Team efficacy is further inflated by the mutu- ally reinforcing beliefs of the team. We develop a clearly and higher opinion of the team when other

team members echo that opinion.

Information Sharing Problem Teams have the potential to make better decisions than indi- viduals because they have access to more diverse information, knowledge, and perspectives. Mem-

bers who possess unique information should contribute that information to assist the group in making a superior choice, right? In practice, this doesn't generally work. Research shows that information already he ld by a majority of group members before team discussion holds greater weight in deter- mining a final choice than does information held by a minority of members, regardless of the validity of the information.115 In other words, the importance of a given fact does not determine whether that fact contributes to a group's dec ision as much as the number of members aware of that fact prior to

the meeting.

IMPROVING CREATIVE DECISION MAKING IN TEAMS Team decision making is fraught with problems, but several solutions also emerge from these bad- news studies. Team members need to be confident in their decision making but not so confident that they collectively feel invulnerable. This calls for team norms that encourage critical thinking as well as team membership with sufficient diversity. Checks and balances need to be in place to prevent one

or two people from dominating the discussion. The team should also be large enough to possess the collective knowledge to resolve the problem yet small enough that the team doesn't consume too much time or restrict individual input.

Along with these general recommendations, OB studies have identified five team structures that

encourage creativity in a team setting: brainstorming, brainwriting, electronic brainstorming, nominal group technique, and allocation of roles. These structures emphasize idea creation (the central focus of creativity), but some also include team selection of alternatives.

Brainstorming Brainstorming is a team event where participants try to think up as many idea~ as possible. The process was introduced by advertising executive Alex Osborn in 1939 and has four simple rules to maximize the number and quality of ideas presented: ( I) Speak freely-describe even the crazi- est idea~; (2) don't criticize others or their ideas; (3) provide as many ideas a~ possible-the quality of ideas increa~es with the quantity of ideas; and (4) build on the idea~ that others have presented. These

rules are supposed to encourage divergent thinking while minimizing evaluation apprehension and other team dynamics problems.116

Numerous Jab sn1dies have concluded that brainstorming doesn't produce a~ many ideas as indi- viduals working alone. Production blocking and evaluation apprehension are identified as the main

culprits. 117 These findings are perplexing because some of the most successful creative agencies and design firms say that brainstorming is a helpful tool. 118 The leaders of these companies might be mis- taken, but a more likely explanation is found in their advice that brainstorming takes considerable skill and experience with a trained facilitator in a collaborative learning orientation culture. These condi- tions are missing from most Jab studies, which are short-term events with inexperienced undergraduate students who barely know each other. Also, brainstorming sessions are intended to produce creative ideas, whereas Jab studies tend to measure the number of ideas. 119

Brainstorming likely improves team creativity, but it does have limitations. First, even with people who

are trained and experienced, brainstorming suffers from production blocking. Great ideas are forgotten

240 Part Three Team Processes

while team members listen to each other's ideas, and sparks of insight are forfeited if team members do not listen to each other's idea~. A second problem, called fixation or conformity effect, is that hearing another person's ideas tends to restrict the variety of ideas that we subsequently think about.

In brainstorming, participants are asked to openly describe their idea~. but the first few verbal descrip- tions might cause participants to limit their thinking to ideas similar to those first suggestions rather than other categories of ideas. However, neuroscience sntdies report that people think more creatively when exposed to moderately creative (but not wildly nonsensical) ideas generated by other people.120

Brainwriting Brainwriting is a variation of brainstorming that minimizes the problem of produc- tion blocking by removing conversation during idea generation.121 There are many forms of brainwrit- ing, but they all have the common feature that individuals write down their idea~ rather than verbal ly describe them. In one version, participants write their ideas on cards and place them in the centre of the table. At any time, participants can pick up one or more cards from the centre to spark their think- ing or further bui ld (piggyback) on those ideas. In another variation, each person writes one idea on a card, then passes the card to the person on their right. The receiving person writes a new idea on a second card, both cards are sent to the next person, and the process is repeated. The limited research on

brainwriting suggests that it produces more and better qual ity ideas than brainstorming due to the lack of production blocking.

Electronic Brainstorming Electronic brainstorming is similar to brainwriting but uses com- puter technology rather than handwritten cards to document and share ideas. After receiving the ques- tion or issue, participants enter their ideas using special computer software. The ideas are distributed

anonymously to other participants, who are encouraged to piggyback on those ideas. Team members eventually vote electronically on the idea~ presented. Face-to-face discussion usually follows. Elec- tronic brainstorming can be quite effective at generating creative ideas with minimal production block- ing, evaluation apprehension, or conformity problems. 122 It can be superior to brainwriting because idea~ are generated anonymously and they are viewed by other participants more easily. Despite these numerous advantages, electronic brainstorming tends to be too structured and technology-bound.

Nominal Group Technique Nominal group technique is another variation of brainwriting that adds a verbal element to the process.123 The activity is called "nominal" because participants are a group in name only during two of the three steps. After the problem is described, team members silently and independently write down as many solutions as they can. In the second stage, participants describe their solutions to the other team members, usually in a round robin format. As with brain- storming, there is no criticism or debate, although members are encouraged to a~k for clarification of the ideas presented. In the third stage, participants silently and independently rank-order or vote on each proposed solution. Nominal group technique has been applied in numerous laboratory and real-world settings, such as identify ing ways to improve tourism in various countries. 124 This method

tends to generate a higher number of ideas and better-quality idea~ than do traditional interacting and possibly brainstorming groups. 125 However, production blocking and evaluation apprehension still occur to some extent. Training improves this structured approach to team decision making. 126

Assign Team Roles Earlier in the chapter we described some different roles team members can adopt while working together. These roles are especially important when making decisions because they help overcome some of the constraints described above. For example, when one team member agrees

to take on the role of Chal/enget; they assume responsibility for things like poking holes in assumptions and critiquing solutions. Another team member, adopting the role of Innovator, might focus the group on generating multiple alternatives, inquiring about unique information, and encouraging productive dis- sent. Temporarily adopting roles can free people from the scourge of conformity and evaluation appre- hension, but it is important to point out that role adoption shouldn't be permanent. Switching roles from

meeting to meeting is a good way to overcome stereotyping and keep the team focused on the process.

Chapter Eight Team Dynamics

Chapter Summary

L01 Explain why employees join informal groups and discuss the benefits and limitations of teams.

24 1

Teams are groups of two or more people who interact and influence each other, are mutually accountable for achieving common goals associated with organizational objectives, and perceive themselves as a social entity within an organization. All teams are groups, because they consist of people with a unifying relation- ship; not all groups are teams, because some groups do not exist to serve organizational objectives.

People join informal groups (and are motivated to be on formal tean1s) for four rea~ons: ( I) They have an innate drive to bond, (2) group membership is an inherent ingredient in a person's self-concept, (3) some personal goals are accomplished better in groups, and (4) individuals are comforted in stressful situations by the mere presence of other people. Tean1s have become popular because they tend to make better decisions, support the knowledge management process, and provide superior customer service. Teams are not always as effective as individuals working alone. Process losses and social loafing drag down tean1 performance.

L02 Outline the team effectiveness model and discuss how task characteristics, team size, and team composition influence team effectiveness.

Team effectiveness includes the team's ability to achieve its objectives, fulfil d1e needs of its mem- bers, and maintain its survival. The model of team effectiveness considers the team and organizational environ- ment, team design, and team processes. Three tean1 design e lements are task characteristics, team size, and team composition. Tean1s tend to be better suited for s ituations in which the work is complex yet tasks are well struc- tured and have high task interdependence. Teams should be large enough to perform the work yet small enough for efficient coordination and meaningful involvement. Effective tean1s are composed of people with the competen- c ies and motivation to perform tasks in a team environment. Team member diversity has advantages and disadvan- tages for team performance.

L03 Discuss bow shared percep tions among team members, called team states, emerge and influence team effectiveness.

Team states represent motivational or cognitive characteristics of the tean1 that continuously evolve and which tend to be shared between tean1 members. Exan1ples include tean1 norms, cohesion, tean1 efficacy, and trust. Each of these e lements influences team performance, but can also be changed by feedback about team per- formance. For example, a tean1 that receives negative performance feedback might experience a drop in both cohe- sion and team efficacy.

L04 Discuss bow team processes, such as taskwork, teamwork, team boundary spanning, and team development determine team effectiveness. As teams work together they can focus on elements of the task (referred to as taskwork) or ele-

ments of the team's internal dynamics or relationships (called teamwork behaviour). Together, these processes determine how well the team manages its internal environment. On the other hand, teams also face opportuni- ties to interact and build relationships with people or groups in the external environment. These processes are called boundary spanning. In addition, teams develop through the stages of form ing, storming, norming, per- form ing, and eventually adjourn ing. Within these stages are two distinct team development processes: develop- ing team identity, and developing tean1 mental models and coordinating routines. Team development can be accelerated through team building-any formal activity intended to improve the development and function ing of a work team.

LOS Discuss the characteristics and factors required for the success of self-directed teams and virtual teams.

Self-directed tean1s (SOTs) complete an entire piece of work requiring several interdependent tasks, and they have substantial autonomy over the execution of their tasks. Members of virtual teams operate across space, time, and organizational boundaries and are linked through information technologies to achieve organiza- tional tasks. Virtual teams are more effective when the team members have certain competencies, the team has the freedom to choose the preferred communication channels, and the members meet face-to-face fairly early in the team development process.

24 2 Part Three Team Processes

LOG Identify four const raints on team decision making and discuss the advantages and disadvan- tages of fou r s tructur es aimed at improving team decision making.

Team decisions are impeded by time constraints, evaluation apprehension, conformity to peer pres- sure, and overconfidence. Four structures potentially improve decision making in team settings: brainstorming, brainwriting, electronic brainstorming, and nominal group technique.

Key Terms brainstorming

brainwriting

Brooks's Jaw

electronic brainstorming

evaluation apprehension

nominal group technique

nornts

process losses

production blocking

role

self-directed teams (SOTs)

social loafing

task interdependence

taskwork behaviour

team boundary spanning

team building

team cohesion

team efficacy

teams teamwork behaviour

virtual teams

Critical Thinking Questions I. Informal groups exist in almost every form of social organization. What types o f informal groups exist in your

classroom? Why are students motivated to belong to these informal groups?

2. The late management guru Peter Drucker once said: "The now-fashionable team in which everybody works with everybody on everything from the beginning rapidly is becoming a disappointment." Discuss three prob- lems associated with teams.

3. You have been put in charge of a cross-functional task force that will develop enhanced Internet banking services for retai l customers. The tean1 includes representatives from marketing, information services, cus- to mer service, and accounting, all of whom wi ll move to the san1e location at headquarters for three months. Describe the behaviours you might observe during each stage of the team's development.

4. You have just been transferred from the Montreal office to the Vancouver office of your company, a national sales organ ization o f electrical products for developers and contractors. In Montreal, team members regularly called customers after a sale to ask whether the products arrived on time and whether they are satisfied. But when you move to the Vancouver office, no one seems to make these follow-up calls. A recently hired co- worker explains that other co-workers d iscouraged her from making those calls. Later, another co-worker sug- gests that your follow-up calls are making everyone else look lazy. Give three possible reasons why the norms in Vancouver might be different from those in the Montreal office, even though the custo mers, products, sales commissions, and other characteristics of the workplace are almost identical.

5. A software engineer in Canada needs to coordinate with four tean1 members in geographically dispersed areas of the world . What tean1 challenges might the team experience and how will they affect the team design element~?

6. You have been assigned to a class project with five other student~. none of whom you have met before, and some of whom come from different countries. To what extent would team cohesion improve your team's per- formance on this project? What actions would you recommend to build team cohesion among student team members in this situation?

Suppose that you were put in charge of a virtual tean1 whose members are located in different cities around the world. What tactics could you use to build and maintain team trust and performance, as well as minimize the decline in trust and performance that often occurs in tean1s?

You are responsible for convening a major event in which senior offic ials fro m several state governments will try to come to an agreement on environmental issues. It is well known that some officials posture so that they appear superior, whereas others are highly motivated to solve the environmental problems that cross adjacent states. What tean1 decision-making problems are likely to be apparent in this government forum, and what actions can you take to minimize these problems?

Chapter Eight Team Dynamics 24 3

The chie f marketing officer of Sawgrass Widgets wants marketing and sales staff to identify new uses for its products. Which of the four team structures for creative decision making would you recommend? Describe and justify this process to Sawgrass's chief marketing officer.

Case Study:

ARBRECORP LTEE

by Steven L. McShan e, Curtin University (Australia ) and University of Victoria (Canada ), and David Lebeter

ArbreCorp Ltee is a sawmill operation in Quebec that is owned by a major forest products company but operates independently of the parent company. It was built 30 years ago, and completely updated with new machinery five years ago. ArbreCorp receives raw Jogs from the area for cutting and planing into building-grade lumber, mostly two-by-four and two-by-six pieces of standard lengths. Higher grade Jogs leave ArbreCorp's sawmill department in finished form and are sent directly to the packaging department. The remaining 40 percent of sawmill output are cuts from lower grade logs, requiring further work by the plan ing department.

ArbreCorp has one general manager, 16 supervisors and support staff, and 180 unionized employees. The union- ized employees are paid an hourly rate specified in the collective agreeme nt, wherea~ management and support staff are paid a monthly salary. The mill is divided into six operating departments: boom, sawmill, planer, packaging, shipping, and maintenance. The sawmill, boom, and packaging departments operate a morning shift starting at 6:00 a.m. and an afternoon shift starting at 2:00 p.m. Employees in these departments rotate shifts every two weeks. The planer and shipping departments operate only morning shifts. Maintenance e mployees work the night shift (starting at 10:00 p.m.).

Each department, except for packaging, ha~ a supervisor on every work shift. The planer supervisor is respon- s ible for the packaging department on the morning shift, and the sawmill supervisor is responsible for t11e packaging department on the afternoon shift. However, the packaging operation is housed in a separate building from the other departments, so supervisors seldom vis it the packaging department. This is particularly true for the after- noon shift, because the sawmill supervisor is the furthest distance from the packaging building.

PACKAGING QUALITY Ninety percent of ArbreCorp's product is sold on the international market through Boismarche Ltee, a large mar- keting agency. Boismarche represents all forest products mills owned by ArbreCorp 's parent company a~ well as several other clients in the region. The market for building-grade lumber is very price competitive, because there are numerous mills selling a relatively undifferentiated product. However, some differentiation does occur in product packaging and presentation. Buyers will look closely at the packaging when deciding whether to buy from ArbreCorp or another mill.

To encourage its clients to package their product~ better, Boismarche sponsors a monthly package quality award. The marketing agency samples and rates it~ clients' packages dai ly, and the sawmill with the highest score at the end of the month is awarded a framed certificate of excellence. Package quality is a combination of how the lumber is piled (e.g., defects turned in), where the bands and dunnage are placed, how neatly the s tencil and seal are applied, the stenci l's accuracy, and how neatly and tightly the plastic wrap is attached .

ArbreCorp has won Boismarche's packaging quality award several times over the pa~t five years and received high ratings in the months that it didn't win. However, the mill's ratings have started to decline over the pa~t year or two, and several clients have complained about the appearance of the finished product. A few large customers switched to competitors' lumber, saying that the decision was based on t11e substandard appearance of ArbreCorp's packaging when it arrived in their lumberyard.

BOTILENECK IN PACKAGING The planer and sawmilling department~ have significantly increased productivity over the pa~t couple of years. The sawmill operation recently set a new productivity record on a s ingle day. The planer operation has increased productivity to the point where last year it reduced operations to just one (rather than two) shifts per day. These productivity improvements are due to better operator training, fewer machine breakdowns, and better selection of raw Jogs. (Sawmill cuts from high-quality Jogs usually do not require planing work.)

Productivity levels in the boom, shipping, and maintenance departments have remained constant. However, the packaging department has recorded decreasing productivity over the past couple of years, with the result that a large backlog of finished product is typically stockpiled outside the packaging building. The morning shift of the packaging department is unable to keep up with the combined production of the sawmill and planer depart- ments, so the unpackaged output is left for the afternoon shift. Unfortunately, the afternoon shift packages even

244 Part Three Team Processes

less product than the morning shift, so the backlog continues to build . The backlog adds to ArbreCorp's inventory costs and increases the risk of damaged stock.

ArbreCorp has added Saturday overtime shifts as well as extra hours before and after the regular shifts for the packaging department employees to process this backlog. La~t month, the packaging department employed 10 percent of the workforce but accounted for 85 percent of the overtime. This is frustrating to ArbreCorp's management, because time and motion studies recently confirmed that the packaging department is capable of processing all of the daily sawmill and planer production without overtime. With employees earning one and a half times or double their regular pay on overtime, ArbreCorp's cost competitiveness suffers.

Employees and supervisors at ArbreCorp are aware that people in the packaging department tend to extend lunch by 10 minutes and coffee breaks by five minutes. They also typical ly leave work a few minutes before the end of a shift. This abuse has worsened recently, particularly on the afternoon shift. Employees who are temporarily assigned to the packaging department also seem to participate in this time Joss pattern after a few days. Although they are punctual and productive in other departments, these temporary employees soon adopt the packaging crew's informal schedule when assigned to that department.

Discussion Questions

I. What symptom(s) in this case suggest that something has gone wrong?

2. What are the main causes of these symptoms?

3. What actions should executives take to correct these problems?

©Copyright. 1995 Steven L McShane and David Lebeter. This case is based on actual evenL~. but names and some characteris· tics have been changed to maintain anonymity.

Tea m Exercise:

TEAM TOWER POWER

Purpose This exercise is designed to help you understand tean1 roles, team development, and other issues in the development and maintenance of effective teams.

Materials The instructor will provide enough LEGO"' pieces or similar materials for each tean1 to complete the assigned task. All teams should have identical (or very s imilar) amounts and types of pieces. The instructor will need a measuring tape and stopwatch. Students may use writing materials during the design stage (see Instructions). The instructor will distribute a "Team Objectives Sheet" and "Tower Specifications Effectiveness Sheet" to all tean1s.

Instructions The instructor will divide the class into teams. Depending on class size and space availabil ity, teams may have between four and seven members, but all should be approximately equal size.

Each team has 20 minutes to design a tower that uses only the materials provided, is freestanding, and provides an optimal return on investment. Team members may wish to draw their tower on paper or a flip chart to facilitate the tower's design. Tean1s are free to practise building their tower during this stage. Preferably, each team will have a secluded space so that the design can be created private ly. During this stage, each tean1 wi ll complete the Team Objectives Sheet distributed by the instructor. This sheet requires the Tower Specifications Effectiveness Sheet, also distributed by the instructor.

Each tean1 will show the instructor that it has completed its Tean1 Objectives Sheet. Then, with all teams in the same room, the instructor will announce the start of the construction phase. The time allowed for construction will be closely monitored, and the instructor will occasionally call out the time elapsed (particularly if there is no clock in the room).

Each team will advise the instructor as soon as it has completed its tower. The team will write down the time e lapsed, as determined by the instructor. The tean1 also may be a~ked to assist the instructor by counting the num- ber o f blocks used and measuring the height of the tower. This in formation gets added to the Tean1 Objectives Sheet. Then the team calculates its profit.

After presenting the results, the class will discuss the team dynamics elements that contribute to team effec- tiveness. Tean1 members will discuss their strategy, division of labour (team roles), expertise within the team, and other elements of team dynamics.

Source: Sever.tl published and online sources describe variations of this exercise, but there is no known origin to this activity.

Chapter Eight Team Dynamics 245

Self-Assessments for Chapter 8

SELF-ASSESSMENT NAME

What team roles do you prefer?

Are you a team player?

How trusting are you?

DESCRIPTION

All teams depend on their members to fill various roles. Some roles area assigned through formal jobs. but many team roles are distributed informally. Informal roles are often claimed by team members \.\ilose personality and values are compatible with those

roles. This assessment identifies the types of roles you prefer in team meetings and activities.

Some people would like to work in teams for almost every aspect of their V.'Ork. whereas other people would like to keep as far away from teams as possible. Most of u.s fal1 somewhere in between. This se(f .. asse.~sment estimates how much you e njoy working in teams.

Some people have a tendency to trust others. even if they have never met them before, whereas others take a long time to develop a comfortable level of trust. This propensity to trust is due to each individual's personality. values. and socialization experiences. This

self·asse.~sment evaluates your general propensity to trust others.

CHAPTER 9

Communicating in Organizations

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Explain why communicat ion is important in organizations and discuss four influences on effective communication encoding and decoding.

L02 Compare and contrast the advantages of and problems with electronic mail, other verbal communication media, and nonverbal communicat ion.

L03 Explain how social acceptance and media richness influence the preferred communication channel.

L04 Discuss various barriers (noise) to effect ive communication, including cross-cultural and gender-based differences in communication.

LOS Explain how to get your message across more effectively, and summarize the elements of active listening.

L06 Summarize effective communication strategies in organizational hierarchies, and review the role and relevance of the organizational grapevine.

246

Chapter Nine Communicating in Organizations 247

OuickContractors.com is a Guelph, Ontario-based company that connects retailers with contractors willing to deliver and assemble products for their customers. In 2016 they were in the middle of a significant growth spurt. The company had expanded from a small upstart and had dozens of employees, a database of 1500 contractors and such industry giants as Lowe's, Home Depot, and Canadian Tire as clients. From 2009 to 2014, sales increased by 4,184 percent.

This rapid success created logistical problems, especially on the communications side. "We had enquiries coming in from our contractors and our retailers, and we had information coming in from Twitter, Facebook, and lnstagram," explains Trevor Bouchard, the company's president and CEO. "Our business has a multitude of touch points-we have a software component; we have to coordinate contractors; we have invoices and accounting-and we were trying to reconcile all of that with different systems." With various types of messages coming in from different platforms (phone, email, social media posts, live chats), it was becoming increasingly difficult to keep track of who was saying what and to whom. "We had people answering live chats while answering the phones," Bouchard recalls. "It wasn't an effective way to handle our communications. That's when I realized, 'OK, we need to start unifying these different channels into one.'"

Bouchard had heard about unified communications (UC), and he was intrigued. The more he learned, the more curious he became. Unified communications refers to the integration of workplace communication tools, such as a platform that integrates instant messaging and file sharing. Many UC platforms provide a single interface that can be used across multiple devices to receive and share information. After Googling UC implementations and asking around at industry events, Bouchard had plenty of information but no clear idea about how to proceed. So he put some thought into what would make UC successful at his business. Given the volume and variety of employees who would be using a UC platform at OuickContractors.com, he realized it was paramount to choose an option with an intuitive interface. "I thought if I could figure it out-and I don't have formal technical training-it would be fairly intuitive for the rest of our staff, the ones actually using it." 1

A s the QuickContractors.com example demonstrates, modern organizations sometimes struggle to manage and use technology. When Facebook and other social media sites gained popularity, many businesses blocked employee access and banned their use, claiming social media encouraged time wasting and became portals for distributing intellectual property. This perspective has rapidly and

dramatically changed. Currently, many companies are adopting social media as a cornerstone of their

communication strategy and seek to capital i ze on the fact that their employees tweet, blog, comment, post, pin, snap, and stream. Businesses have begun to recognize that internal communications to pro-

mote their brands within the company are as important as external marketing because employees who

network and share can be the l inchpin to the success of a brand carnpaign.2 Businesses have discovered that new social media channels offer signi ficant potential for information sharing and social bonding,

and that the workforce increasingly uses and expects their organizations to provide these communica-

tion channels. In fact, the populari ty of Facebook's recently launched "Workplace"-a mobile and web application for companies to keep employees connected using the original Facebook platform

and features-may eclipse the use of email in certain industries. Despite the vast array of social media

and technological developments, we may still be at the beginning of this revolution. Each new method of social interaction creates fascinating changes in how people communicate with each other in the

workplace.

Communication refers to the process by which information is transmi tted and understood between two or more people. We emphasize the word "understood" because transmi tting the sender's intended

meaning is the essence of good communication. This chapter begins by discussing the importance of effective communication, outl ining the communication process model , and discussing factors that

improve communication coding and decoding. Next, we identify types of communication channels,

including emai l and social media sites, followed by factors to consider when choosing a communica- tion medium. This chapter then identifies barriers to effecti ve communication. The latter part of this

chapter offers an overview of ways to communicate in organizational hierarchies and offers insight

about the pervasive organizational grapevine.

24 8 Part Three Team Processes

The Importance of Communication

Effective communication is vital to all organizations, so much so that no company could

exist without it. The reason? Recal l from Chapter I that organizations are defined as groups of people who work interdependently toward some purpose. People work interde-

pendently only when they can communicate with each other. Although organizations rely on a variety of coordinating mechanisms (which we discuss in Chapter 13), frequent, timely, and accurate commu- nication remains the primary means through which employees and work units effectively synchronize

their work.3 Chester Barnard, a telecommunications CEO and a respected pioneer in organizational behaviour theory, made this observation back in 1938: "An organization comes into being when there are persons able to communicate with each other."4

In addition to coordination, communication plays a central role in organizational learning. It is the means through which knowledge enters the organization and is distributed to employees.s A third func- tion of communication is decision making. Imagine the chal lenge of making a decision without any information about the decision context, the alternatives available, the likely outcomes of those options,

or the extent to which the decision is achieving its objectives. All of these ingredients require com- munication from co-workers as well as from stakeholders in the external environment. For example, airline cockpit crews make much better decisions-and thereby cause far fewer accidents-when the captain encourages the crew to openly share information.6

Consider how a new digitized radio communication system launched in Alberta helped police, fire- fighters, and emergency medical services during the Fort McMurray wildfire crisis in 2016. Previ- ously, each of these first responders had their own separate communication system, making it difficult

for them to coordinate efforts. During the devastating onslaught of the wildfires in Fort McMurray, one of Canada's largest natural disasters, emergency personnel used the new Alberta First Responders Radio Communications System, which allowed over 30 departments in multiple emergency agencies to speak directly with each other as the city wa~ being evacuated. The new communications system was

credited with literally saving Jives because it facilitated the different agencies to come together quickly and effectively.7

A fourth function of communication is to change behaviour. 8 When communicating to others, we are often trying to alter their beliefs and feelings and, ultimately, their behaviour. This influence pro- cess might be passive, such as by merely describing the situation more clearly and fully, or it might be a deliberate attempt to change someone's thoughts and actions. We discuss the topic of persuasion later in this chapter, and further in Chapter 10.

Fifth, communication supports employee well-being.9 Informationally, communication con- veys knowledge that helps employees to better manage their work environment. For instance, research shows that new employees adjust much better to the organization when co-workers com- municate subtle nuggets of wisdom, such as how to avoid office polit ics, complete work proce- dures correctly, f ind useful resources, handle d ifficul t customers, and so on. 10 Emotionally, the communication experience itself is a soothing balm. Indeed, people are less susceptible to colds, cardiovascular d isease, and other physical and mental illnesses when they have regular social interaction.11 In essence, people have an inherent drive to bond, to validate their self-worth, and to maintain their social identity. Communication is the means through which these drives and needs

are fulfilled. Finally, reflect on the following question: Does the manner in which we speak influence our suc-

cess? Research does, in fact, provide substantial support for the link between speech styles and subse- quent status attainment. When we say speech styles, we mean things like hesitation (e.g., "well," "urn"), hedges (e.g., "kinda," "sort of'), disclaimers (e.g., "This may be a bad idea, but .. . "), and formal addresses (e.g., "No, sir"). People who speak a~sertively, by avoiding these tentative speech styles, are

judged by observers as more likely to be promoted and supported by superiors. These effects also work in negotiation-people who use a~sertive speech are judged to be more competent and cooperative by negotiation counterpart~. 12

Chapter Nine Communicating in Organizations 24 9

A Model of Communication To understand the key interpersonal features of effective communication, Jet's examine the model pre- sented in Exhibit 9.1, which provides a useful "conduit" metaphor for thinking about the communica- tion process.13 According to this model, communication flows through channels between the sender and receiver. The sender forms a message and encodes it into words, gesn1res, voice intonations, and

other symbols or signs. Next, the encoded message is transmitted to the intended receiver through one or more communication channels (media). The receiver senses the incoming message and decodes it

into something meaningful. Ideally, the decoded meaning is what the sender had intended. In most situations, the sender looks for evidence that the other person has received and understood

the transmitted message. This feedback may be a formal acknowledgment, such as "Yes, I know what you mean," or indirect evidence from the receiver's subsequent actions. Notice that feedback repeats the communication process. Intended feedback is encoded, transmitted, received, and decoded from the receiver to the sender of the original message. This model recognizes that communication is not a free-flowing conduit. Rather, the transmission of meaning from one person to another is hampered by noise-the psychological, social, and structural barriers that distort and obscure the sender's intended message. If any part of the communication process is distorted or broken, the sender and receiver will not have a common understanding of the message.

INFLUENCES ON EFFECTIVE ENCODING AND DECODING According to the communication process model, effective communication depends on the ability of sender and receiver to efficiently and accurately encode and decode information. How well this encoding-<lecoding process works depends on whether the sender and receiver have similar code- books, the sender's proficiency at encoding the message to the audience, the sender and receiver's motivation and ability to transmit messages through that particular communication channel, and their common mental models of the communication context. 14

Consider for example the grave health risks that can arise because of gaps in encoding and decoding information when there is a language discordance between a patient and clinician. In 20 II, 20.6 percent of

the total population in Canada wa~ foreign-born, the highest proportion among the G8 countries. Census

EXHIBIT 9.1 The Communication P rocess Model

Transmit message

Transmit feedback

Receiver

250 Part Three Team Processes

figures indicate that over 200 mother tongue languages are spoken in Canadian homes. Given the ethno- cultural diversity of Canada, health care institutions across the country are grappling with the problems that arise due to communication barriers between patient and practitioner when one or both do not speak

English or French as their first language. To try to ameliorate this sintation, a network of Toronto hospitals and community health care agencies introduced telephone interpretation services in 170 languages, includ- ing indigenous languages, which involve a three-way conversation between the patient, practitioner, and an interpreter on the phone call. Serious communication breakdowns also occur when health care practi- tioners cannot converse with deaf patients. In 1997, the Supreme Court of Canada ruled that the British Columbia health care system violated the Canadian Charter of Rights and Freedoms by failing to provide

sign language interpreters when necessary to ensure effective communication in medical services. 15

Similar Codebooks During communication, the sender and receiver rely on internal "code- books," which are dictionaries of symbols, language, gestures, idioms, and other tools used to convey information. With similar codebooks, the communication participants can encode and decode more accurately because they assign the same or similar meaning to the transmitted symbols and signs. Communication efficiency also improves because there is less need for redundancy (repeating the message in different ways) and less need for confirmation feedback ("So, are you saying that . .. ?").

Message Encoding Proficiency Even with the same codebooks, some people are better than others at communicating the message because, through experience, they have learned which words and

gestures transmit the message best to that audience. Suppose that you will be speaking to several dif- ferent employee groups about the company's new product development plans. With each new session, you are likely to learn which words, symbols, voice intonations, and other features of the presentation wi ll transmit more persuasively. Through experience, you fine-tune the presentation so the audience receives your message more efficiently and effectively.

Communication Channel Motivation and Ability The encoding-decoding process depends on the sender's and receiver's motivation and ability to use the selected communication channel. Some people prefer face-to-face conversations, whereas others would rather prepare or receive written docu- mentation. Some people are skilled at communicating through texts, tweets, or illustrative memes, whereas others are more effective at writing detailed reports. So, even if both parties have the same

codebooks and are ski lled at using those codebooks for a particular message, message encoding and decoding can be hampered by a communication channel that the sender, receiver, or both dislike or in which they lack proficiency. 16

Shared Mental Models of the Communication Context Mental models are internal rep- resentations of the external world that allow us to visual ize e lements of a setting and relationships among those elements (see Chapter 3). A sender and receiver with shared mental models of the com- munication context have similar images and expectations regarding the location, time, layout, and other

contextual features of the information. These shared mental models potential ly increa~e the accuracy of the message content and reduce the need for communication about that context. Notice that shared mental models of the communication context differs from a shared codebook. Codebooks are symbols used to convey message content, whereas mental models are knowledge structures of the communi- cation setting. For example, a Russian cosmonaut and Canadian astronaut might have shared mental models about the layout and features of the international space station (communication context}, yet they experience poor communication because of language differences (i.e., different codebooks).

Communication Channels

L02 A central feature of the communication model is the channel or medium through which information is transmitted. There are two main types of channels: verbal and nonver- bal. Verbal communication uses words, so it includes both spoken and written channels.

Chapter Nine Communicating in Organizations 2 5 1

Nonverbal communication is any part of communication that does not use words. Spoken and written communication are both verbal (i.e., they both use words), but they are quite different from each other and have different strengths and weaknesses in communication effectiveness, which we discuss later in this section. Also, written communication has traditionally been much slower than spoken com- munication at transmitting messages, although email, tweets, and other Internet-based communication channels have significantly improved written communication efficiency.

INTERNET-BASED COMMUNICATION In the early 1960s, with funding from the US Department of Defense, university researchers began dis-

cussing how to collaborate better by connecting their computers through a network. Their rough vision of connected computers became a reality in 1969 as the Advanced Research Projects Agency Network (ARPANET). ARPANET initial ly had only a dozen or so connections and was very expensive and slow by today's standards, but nevertheless it marked the birth of the Internet. Two years later a com- puter engineer developing ARPANET sent the first electronic mai l (email) message between different computers on a network. By 1973, most communication on ARPANET was through email. ARPANET was mostly restricted to US Department of Defense-funded research centres, so in 1979 two graduate students at Duke University developed a publ ic network system, called Usenet. Usenet al lowed people to post information that could be retrieved by anyone else on the network, making it the first public computer-mediated social network.17

We have come a long way since the early days of ARPANET and Usenet. Texting, instant messag- ing, and social media barely existed in organizations a dozen years ago; however, as noted in the intro- duction to this chapter, such electronic forms of communication have crossed over from ubiquitous personal usage to prominence in the workplace. Emai l, for instance, remains the medium of choice in most workplaces.18 Email messages can be written, edited, and transmitted quickly. Information can be effortlessly appended and conveyed to many people. Email is also asynchronous (messages are sent and received at different times), so there is no need to coordinate a communication session. With advances in computer search technology, email software has also become an eff icient filing cabinet.19

A 2014 survey by the Pew Research Center found that 24 percent of employees who have used social media at work did so to make or support professional connections, 20 percent used it to get infor- mation that solves problems at work, and 12 percent used it to ask work-related questions of people outside their organization. Overall , 37 percent of the employees used social media frequently for work- related tasks.20

Email tends to be the preferred medium for sending well-defined information for decision making. It is also central for coordinating work, although text messaging and tweets might overtake emai l for this objective. When email was introduced in the workplace more than two decades ago, it tended to increase the volume of communication and significantly altered the flow of that information within

groups and throughout the organization.21 Specifically, it reduced some face-to-face and telephone communication but increased communication with people further up the hierarchy. Some social and organizational status differences still exist with emaiJ,22 but they are somewhat Jess apparent than in face-to-face communication. By hiding age, race, and other features, emai l reduces stereotype biases. However, it also tends to increase reliance on stereotypes when we are already aware of the other per- son's personal characteristics.23

PROBLEMS WITH EMAIL In spite of the wonders of email, anyone who has used this communication medium knows that it has

it~ limitations. Here are the top four complaints:

Poor Medium for Communicating Emotions People rely on facial expressions and other nonverbal cues to interpret the emotional meaning of words; email lacks this parallel communication channel. Indeed, people consistently and significantly overestimate the degree to which they under-

stand the emotional tone of emai l messages.24 Email recipients invariably inject their own emotional

252 Part Three Team Processes

perspective into interpreting the message text and resort to other emai l-specific cues, such as speed of reply, length of text, degree of formality, and whether or not there is a greeting in order to deduce the emotional tone of the message.25 Research indicates that due to the absence of emotional cues in email communication recipients of email routinely "perceive email as more intensely negative than senders intend."26 To mitigate th is problem, senders often try to clarify the emotional tone of their messages by using expressive language ("Wonderful to hear from you!"), highlighting phra~es in boldface or quotation marks, and inserting graphic faces (called emoticons or "smileys") represent- ing the desired emotion. Recent studies suggest that wri ters are getting better at using these emotion markers. Sti ll, they do not replace the full complexity of real fac ial expressions, voice intonation, and hand movements27

In 2010, Lymbix, an Ontario technology startup, launched an app called Tonecheck. Tonecheck scans emails for tone and emotional impact. The app works like a spell-checker, alerting the writer to

possible negativity in the email text and suggesting edits for a more positive communication. The New York Times Magazine's annual "Year in Ideas" issue for 2010 featured Tonecheck and quoted Josh Merchant, co-founder of Lymbix, explaining that the company planned to enhance the app to "allow clients to prevent employees from sending emails that violate their 'tone policy."'28

Employees experience significant stress and a resultant loss of productivity because of email over- load, and this has led some large corporations to adopt email-free zones and some governments to promote rules to protect workers from email excess. Loblaw Companies Ltd. and Ferrari are two orga- nizations that have attempted to tackle email overload in recent years. Liz Margles, vice-president of

\\

Founded in 2007, the mandate of the Information Overload Research Group (IORG) is to understand the effects of information excess in society and to research solutions, including best practices and technologies. The IORG is a nonprofit organization made up of communications and information industry practitioners, academic researchers, and consultants ded icated to "reducing information pollution."29

©tofumax/Shutterstock

Chapter Nine Communicating in Organizations 253

communications for food giant Loblaws, described her initial reaction to the company's No Emai l Wednesdays as shock and skepticism. However, she soon began to feel "unburdened" by the rule. Positive effects of escaping from the constant barrage of emails included being able to participate in conversations with her colleagues and engage in more deep thinking?0

After a survey revealed that one out of four employees at the organization were overwhelmed and stressed, management at Edelman Toronto, a leading Canadian public relations and communications firm, decided that significant changes needed to be implemented. The "highest impact" modifica- tion was a policy directing employees to refrain from sending emails between 7 p.m. and 7 a.m. and on weekends, except in absolute emergencies] I Similarly, in 2013, Ferrari made headlines when it

instituted a policy ordering employees to drastically reduce the number of internal emails in favour of engaging in more dialogue with co-workers. In its press release, Ferrari stated that

each Ferrari employee will only be able to send the same email to three people in-house. The inju- dicious sending of emails with dozens of recipients often on subjects with no relevance to most of

the latter is one of the main causes of time wastage and inefficiency in the average working day in business. Ferrari has therefore decided to nip the problem in the bud by issuing a very clear and simple instruction to its employees: talk to each other more and write lessn

Governments have also picked up on this trend. In an effort to prevent worker burnout, Germany's labour ministry introduced official rules prohibiting its managers from emailing ministry employees outside of worker hours unless in exceptional circumstances. Going a step further, France is the first country in the world to pass legislation requiring employers with more than SO workers to create a policy stipulating hours when staff should not send or answer work emails. T he requirement, which came into force on January I, 2017, is known as the "Right to Disconnect" law.

Reduces Politeness and Respect Email messages are often less diplomatic than written let- ters. Indeed, the term "flaming" has entered our language to describe email and other electronic mes- sages that convey strong negative emotions to the receiver. As mentioned earl ier, people who receive

email contribute to this impression because they tend to infer a more negative or neutral interpretation of the email than was intended by the sender.33 Even so, email flame wars occur mostly because send- ers are more likely to send disparaging messages by emai l than other communication channels. One reason is that individuals can send email messages before their emotions subside, whereas the sender of a traditional memo or letter would have time for sober second thoughts. A second reason is that email ha~ low social presence (it is impersonal); people are more likely to use impersonal channels to communicate messages that they would never say in face-to-face conversation. Fortunately, research has found that flaming decreases as teams move to later stages of development and when explicit norms and rules of communication are establ ished.34 However, with increa~ed use of email, personal contact in the workplace, for example greetings or chatting in the hallway, has decrea~ed, even when employees are within close physical proximity.35 Diminished social interactions at work may present negative implications for the amount of collegiality, personal support, or even loyalty employees expe- rience in their workplace?6

Poor Medium for Ambiguous, Complex, and Novel Situations Email is usually satis- factory for well -defined situations, such as giving basic instructions or presenting a meeting agenda, but it can be cumbersome and dysfunctional in ambiguous, complex, and novel situations. As we wi ll describe later in this section, these circumstances require communication channels that transmit a larger volume of information with more rapid feedback. In other words, when the issue gets messy,

stop emailing and start talking, preferably face-to-face.

Contributes to Information Overload Email contributes to information overload.37 Approxi- mately 20 trillion emails (excluding 70 tri llion spam emails) are now transmitted annually around the

world, up from j ust 1.1 tr illion in 1998. The email glut occurs partly because messages are created and copied to many people without much effort.

254 Part Three Team Processes

WORKPLACE COMMUNICATION THROUGH SOCIAL MEDIA Although email dominates most workplace communication, it may eventually be overtaken by emerging forms of social media. Social media are Internet- or mobile-based channels that allow users to generate and interactively share information. The better-known social media include Facebook, Linkedln, Twitter, Wikipedia, YouThbe, Instagram, Vine, Reddit, Snapchat, Meerkat, and Flickr, but there are many others.

Unl ike traditional websites that merely "push" information from the creator to the audience, social media are more conversational and reciprocally interactive between sender and receiver, resulting in a sense of community.38 Social media typically enable users to develop a public identity through the social media content. Social media are "social" because they encourage formation of communities through links, interactive conversations, and for some platforms such a~ wikis, common space for col- laborative content development. The audience can become participants in the conversation by contrib- uting feedback and by linking someone else's content to their own social media spaces.

One recent model suggests that social media serve several functions: presenting the individual's identity, enabling conversations, sharing information, sensing the presence of others in the virtual space, maintaining relationships, revealing reputation or status, and supporting communities (see Exhibit 9.2).39 For instance, Facebook has a strong emphasis on maintaining relationships but relatively low emphasis on sharing infor- mation or forming communities (groups). Wikis, on the other hand, focus on sharing information or form- ing communities but have much lower empha~is on presenting the user's identity or reputation.

A few sn1dies conclude (with caution) that social media offer considerable versatility and potential in the workplace.40 Even so, companies have been reluctant to introduce these communication tools, mainly because they lack knowledge, staff/resources, and technical support to put them into practice.41 Indeed, a common practice is to simply ban employee access to social media (usually after discovering excess employee activity on Facebook) without thinking through the potential of this type of communication channel.

Many companies prefer their employees spend time interacting with colleagues and accessing cor- porate information instead of surfing personal social media sites. The benefits can include employees spending less time disengaging with the organization, while increasing their understanding and con- nection with the company and their colleagues. For example, Servus Credit Union adopted elements of social media when it introduced a comprehensive employee portal called The Village. Servus Credit Union, a member-owned, community-based financial institution, has 100 locations in Alberta and is the third largest credit union in Canada. Its employee portal amalgamates disparate information from

EXHIBIT 9.2 Functions of Communicating Through Social Media

Wikis

G G;C\8 LJ

ConversationGs Reputation

Groups

Facebook

Sourr:e: Based on J. H. Kiettmann. K. Hennkens. I. P. McCArthy. and B. S. Silvest.re. (20 I I). Social media? Get serious! UnderStandjng the func-tional buiJdjng blocks of social media. Business Horizons. Vol. 54. No. 3. pp. 241-51 .

Chapter Nine Communicating in Organizations 255

various local branch portals and multiple websites. The portal also incorporates social media features, such as employee profi les where the employee can post their picture and bio, as well social media tools, such as "l ike" type features, where employees can rate their experience and feedback regarding

the portal's search engine. The Vi llage also includes a place where employees can post items for sale and photo galleries for social events. According to Habanero Consulting, the Canadian firm who cre- ated the portal, the " integration of social features better connects end-users with content."42

NONVERBAL COMMUNICATION Nonverbal communication includes facial gestures, voice intonation, physical distance, and even silence. This communication channel is necessary where noise or physical distance prevents effective verbal exchanges and the need for immediate feedback precludes written communication. But even in quiet face-to-face meetings, most information is communicated nonverbally. Rather like a parallel con- versation, nonverbal cues signal subtle information to both parties, such as by reinforcing their interest in the verbal conversation or demonstrating their relative status in the relationship.43

Nonverbal communication differs from verbal (i.e., written and spoken) communication in a couple of ways. First, it is Jess rule-bound than verbal communication. We receive considerable formal train- ing on how to understand spoken words, but very little on how to understand the nonverbal signals that accompany those words. Consequently, nonverbal cues are generally more ambiguous and susceptible to misinterpretation. At the same time, many facial expressions (such as smiling) are hardwired and universal, thereby providing the only rel iable means of communicating across cultures .

.....,,_,._ ... __ ,_ ... - ::..-u::.:::--....... - ,._ .... e--.~

Servus Credit Union introduced an employee portal called The Village to create a single source for information across the organization.

Courtesy of Servus Credit Union

256 Part Three Team Processes

The other difference between verbal and nonverbal communication is that the former is typical ly conscious, whereas most nonverbal communication is automatic and nonconscious. We normal ly plan the words we say or write, but we rarely plan every blink, smile, or other gesture during a conversa- tion. Indeed, as we just mentioned, many of these facial expressions communicate the same meaning across cultures because they are hardwired nonconscious responses to human emotions.44 For example, pleasant emotions cause the brain centre to widen the mouth, whereas negative emotions produce con- stricted facial expressions (squinting eyes, pursed lips, etc.).

Emotional Contagion One of the most fasc inating aspects of nonverbal communication is emotional contagion, which is the automatic process of "catching" or sharing another person's emo- tions by mimicking that person's facial expressions and other nonverbal behaviour. Human beings have brain receptors that cause them to mirror what they observe. In other words, to some degree our brain causes us to act as though we are the person we are watching.45

Consider what happens when you see a co-worker accidentally bang his or her head against a filing cabinet. Chances are, you wince and put your hand on your own head as if you had hit the cabinet. Similarly, while listening to someone describe a positive event, you tend to smile and exhibit other emotional displays of happiness. While some of our nonverbal communication is planned, emotional contagion represents noncon- scious behaviour-we automatically mimic and synchronize our nonverbal behaviours with other people.46

• by the NUMBERS

Top Ten Body Language Mistakes in Job lnterviews47

Failure to make eye contact

Weak handshake

Failure to smile

Crossing your arms over your chest

Playing with something on the table

Playing with your hair or touching your face

Fidgeting too much in your seat

Bad posture

Using too many hand gestures

Handshake that is too strong

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Percentage of employers surveyed in the United Kingdom who reported the biggest body language turnoffs in job interviews. Similar results were found in a U.S. survey one year earlier.

Chapter Nine Communicating in Organizations 257

Emotional contagion influences communication and social relationships in three ways.48 First, mimicry provides continuous feedback, communicating that we understand and empathize with the sender. To consider the significance of this, imagine employees remaining expressionless after watch- ing a co-worker bang his or her head! The lack of paral lel behaviour conveys an absence of understand-

ing or caring. A second function is that mimicking the nonverbal behaviours of other people seems to be a way of receiving emotional meaning from those people. If a co-worker is angry with a client, your tendency to frown and show anger whi le listening helps you to experience that emotion more fully. In other words, we receive meaning by expressing the sender's emotions as well as by listening to the sender's words.

The third function of emotional contagion is to fulfil the drive to bond that we mentioned earl ier in this chapter and introduced in Chapter 5. Bonding develops through each person's awareness of a collective sentiment. Through nonverbal expressions of emotional contagion, people see others share

the same emotions that they feel. This strengthens relations among team members as well as between leaders and followers by providing evidence of their similarity.

Choosing the Best Communication Channel

L03 Which communication channel is most appropriate in a particular situation? Two impor- tant sets of factors to consider are (a) social acceptance and (b) media richness.

SOCIAL ACCEPTANCE Social acceptance refers to how well the communication medium is approved and supported by the organization, teams, and individuals involved in the exchange.49 One factor in social acceptance is

organizational, team, and cultural norms regarding the use of specific communication channels. Norms partly explain why face-to-face meetings are daily events among staff in some firms, whereas computer- based video conferencing (such a~ Skype) and 1\vitter are the media of choice in other organizations. Studies report that national culture plays an important role in preferences for specific communication channels. 5° For instance, when communicating with people further up the hierarchy, Koreans are much less likely than Americans to use emai l because this medium is less respectful of the superior's status. Other research has found that the preference for emai l depends on the culture's emphasis on context, time, and space in social relationships.

A second social acceptance factor is individual preferences for specific communication chan- nels51 You may have noticed that some co-workers ignore (or rarely check) voicemail, yet they quickly respond to text messages or tweets. These preferences are due to personality traits as well as previous experience and reinforcement with particular channels.

A third social acceptance factor is the symbolic meaning of a channel.52 Some communication channels are viewed as impersonal whereas others are more personal; some are considered professional wherea~ others are casual; some are seen as "cool" whereas others are old-fashioned. For instance, phone calls and other synchronous communication channels convey a greater sense of urgency than do text messages and other a~ynchronous channels. The importance of a channel's symbol ic meaning is perhaps most apparent in stories about managers who use emails or text messages to inform employees that they are fired or laid off. These communication events make headlines because email and text mes- sages are considered inappropriate (too impersonal) for transmission of that particular information 53

MEDIA RICHNESS Along with social acceptance, people need to determine the best level of media richness for their mes- sage. Media richness refers to the medium's data-carrying capacity-the volume and variety of infor- mation that can be transmitted during a specific time. 54 Exhibit 9.3 illustrates various communication channels arranged in a hierarchy of r ichness, with face-to-face interaction at the top and lean data-only reports at the bottom. A communication channel has high richness when it is able to convey multiple

258 Part Three Team Processes

EXHIBIT 9.3 Media Richness Hierarchy

Rich medium

Communication Channel Richness

Lean medium

Overloaded zone (medium provides too much

data-carrying capacity}

Oversimplified zone (medium provides too little

data-canying capacity}

Routine/ clear

Communication Environment Nonroutine/ ambiguous

Sourr:e: Based on R. Lengel and R. Daf1. '1lle Selection of Communication Media as an E.xecuti\•e Skill." Academy of Management Executive 2. no. 3 (Augu..:;t 1988). p. 226: R. L daft and R. H. Lengel. " Information Richness: A New Approach to Managerial Behavior and Organizalion Design." Research in Organizalional Behavior. 1984. p. 199.

cues (such as both verbal and nonverbal information), allows timely feedback from receiver to sender, allows the sender to customize the message to the receiver, and makes use of complex symbols (such as words and phrases with multiple meanings).

Face-to-face communication is at the top of media richness because it al lows us to communicate both verbally and nonverbally at the same time, to receive feedback almost immediately from the

receiver, to quickly adj ust our message and style, and to use complex language such as metaphors and idioms (e.g., "spilling the beans").

According to media richness theory, rich media are better than Jean media when the communi-

cation situation is nonroutine and ambiguous. In nonroutine situations (such as an unexpected and unusual emergency), the sender and receiver have little common experience, so they need to transmit a large volume of information with immediate feedback. Lean media work well in routine situations

because the sender and receiver have common expectations through shared mental models. Ambigu- ous situations also require rich media because the parties must share large amounts of information with immediate feedback to resolve multiple and confl icting interpretations of their observations and experiences.ss Choosing the wrong medium reduces communication effectiveness. When the situation is routine or clear, using a rich medium-such as holding a special meeting-would seem like a waste of time. On the other hand, if a unique and ambiguous issue is handled through email or another Jean medium, then issues take longer to resolve and misunderstandings are more likely to occur.

Exceptions to Media Richness Theory Research generally supports media richness theory for traditional channels (face-to-face, written memos, etc.). However, the model doesn't fit real ity nearly as well when electronic communication channels are studied.56 Three factors seem to explain why electronic channels may have more media richness than the theory proposes:

Ability to multi-communicate. It is usually difficult (as well as rude) to communicate face-to-

face with someone whi le simultaneously transmitting messages to someone else using another medium. Most information technologies, on the other hand, require Jess social etiquette and

Chapter Nine Communicating in Organizations 259

attention, so employees can easily engage in two or more communication events at the same

time. In other words, they can multi-communicate.57 For example, people routinely scan Web

pages whi le carrying on telephone conversations. Some write text messages to a client while

simultaneously listening to a discussion at a large meeting. People multitask less efficiently

than they think they do, but some are good enough that they likely exchange as much informa-

tion through two or more lean electronic media as through one high media richness channel.

Communication proficiency. Earlier in this chapter we explained that communication effective- ness is partially determined by the sender's competency and motivation with the communica- tion channel. People with higher proficiency can "push" more information through the channel, thereby increasing the channel's information n ow. Experienced smartphone users, for instance,

can whip through messages in a flash, whereas new users struggle to type notes and organize incoming messages. In contrast, there is less variation in the ability to communicate through casual conversation and other natural channels because most of us develop good levels of profi- ciency throughout life and possibly through hardwired evolutionary development. 58

Social presence effects. Channels with high media richness tend to have more social presence, that is, the participants experience a stronger physical presence of each other_s9 However, high social presence also sensitizes both parties to their relative status and self-presentation, which can

distort or divert attention away from the message.6° Face-to-face communication has very high media richness, yet its high social presence can disrupt the efficient now of information through that medium. During a personal meeting with the company's CEO, for example, you might con- centrate more on how you come across than on what the CEO is saying to you. In other words, the benefits of media richness channels may be offset by social presence distractions, wherea~ lean media have much less social presence to distract or distort the transmitted information.

COMMUNICATION CHANNELS AND PERSUASION Some communication channels are more effective than others for persuasion; that is, using facts,

logical arguments, and emotional appeals to change another person's beliefs and attitudes, usually for the purpose of changing the person's behaviour. (For an expanded discussion of persuasion, see Chapter 10.) Studies support the long-held view that spoken communication, particularly face-to- face interaction, is more persuasive than emails, websites, and other forms of written communication. There are three main reasons for this persuasive effect.6 1 First, spoken communication is typically accompanied by nonverbal communication. People are persuaded more when they receive both emo-

tional and logical messages, and the combination of spoken with nonverbal communication provides this dual punch. A lengthy pause, raised voice tone, and (in face-to-face interaction) an imated hand

gestures can amplify the emotional tone of the message, thereby s ignalling the vitality of the issue. A second rea~on why conversations are more persuasive is that spoken communication offers the

sender high-qual ity immediate feedback about whether the receiver understands and accepts the mes- sage (i.e., is being persuaded). This feedback allows the sender to adjust the content and emotional tone

of the message more quickly than with written communication. A third reason is that people are per- suaded more under conditions of high social presence than low social presence. The sender can more easily monitor the receiver's listening in face-to-face conversations (high social presence), so listeners are more motivated to pay attention and consider the sender's ideas. When people receive persuasion attempts through a website, emai l, or other source of written communication, on the other hand, they

experience a higher degree of anonymity and psychological distance from the persuader. These condi- tions reduce the motivation to think about and accept the persuasive message.

Although spoken communication tends to be more persuasive, written communication can also

persuade others to some extent. Written messages have the advantage of presenting more technical detail than can occur through conversation. This factual information is valuable when the issue is important to the receiver. Also, people experience a moderate degree of social presence in written

communication when they are exchanging messages with close a~sociates, so messages from friends and co-workers can be persuasive.

260 Part Three Team Processes

Communication Barriers (Noise)

In spite of the best intentions of sender and receiver to communicate, several barriers (called "noise" earl ier in Exhibit 9.1) inhibit the effective exchange of information. As author George Bernard Shaw once wrote, "The greatest problem with communication is

the illusion that it has been accomplished." One barrier is the imperfect perceptual process of both sender and receiver. As receivers, we don't listen as well as senders assume, and our needs and expectations influence what signals get noticed and ignored. We aren't any better as senders, either. Some studies

suggest that we have difficulty stepping out of our own perspectives and stepping into the perspectives of others, so we overestimate how well other people understand the message we are communicating62

Language issues can be huge sources of communication noise because sender and receiver might not have the same codebook. They might not speak the same language, or might have different mean- ings for particular words and phrases. The Engl ish language (among others) also has built-in ambigui- ties that cause misunderstandings. Consider the question "Can you close the door?" You might assume the sender is asking whether shutting the door is permitted. However, the question might be asking whether you are physically able to shut the door or whether the door is designed such that it can be shut. In fact, this question might not be a question at all; the person could be politely directing you to

shut the door.63

The ambiguity of language isn't always dysfunctional noise.64 Corporate leaders sometimes delib- erately use obscure language to reflect the ambiguity of the topic or to avoid unwanted emotional responses produced from more specific words. They might use metaphors to represent an abstract vision of the company's future, or use obtuse phra~es such as "rightsizing" and "restructuring" to

obscure the underlying message that people would be fired or laid off. One study reported that people rely on more ambiguous language when communicating with people who have different values and beliefs. In these situations, ambiguity minimizes the risk of conflict.65

Jargon-special ized words and phra~es for specific occupations or groups-is usually designed to improve communication efficiency. However, it is a source of communication noise when transmitted to people who do not possess the jargon codebook. Furthermore, people who use jargon excessively put themselves in an unflattering light. For example, former Home Depot and Chrysler CEO Robert Nardell i announced at one news conference: "I'm blessed to have individuals with me who can take areas of responsibil ity and do vertical dives to real ly get the granularity and make sure that we're coupling horizontally across those functions so that we have a pure line of sight toward the customer." Business journalists weren't impressed, even if they did figure out what Nardelli meant66

Another source of noise in the communication process is the tendency to filter messages. Filtering may involve deleting or delaying negative information or using Jess harsh words so the message sounds more favourable. 67 Fi ltering is Jess likely to occur when corporate leaders create a "culture of candour." This culture develops when leaders themselves communicate truthfully, seek out diverse sources for information, and protect and reward those who speak openly and truthfully.68

INFORMATION OVERLOAD Start with a daily avalanche of emai l, then add in cell phone calls, text messages, PDF file downloads, web pages, hard copy documents, some tweets, blogs, wikis, and other sources of incoming informa- tion. Together, you have created a perfect recipe for information overload.69 As Exhibit 9.4 illustrates, information overload occurs whenever the job's information load exceeds the individual's capacity to

get through it. Employees have a certain information processing capacity-the amount of information that they are able to process in a fixed unit of time. At the same time, jobs have a varying information load-the amount of information to be processed per unit of time. Information overload creates noise in the communication system because information gets overlooked or misinterpreted when people can't process it fa~t enough. The result is poorer quality decisions as well as higher stress.70

Information overload problems can be minimized by increa~ing our information processing capacity, reducing the job's information load, or through a combination of both. Studies suggest that employees

Chapter Nine Communicating in Organizations

EXHIBIT 9.4 Dynamics of Information Overload

"tJ .. .5! c 0

~ E .e .E

Episodes of information overload

Time

Employee's information processing

capacity

!

261

often increase their information processing capacity by temporarily reading faster, scanning through documents more efficiently, and removing distractions that slow information processing speed. Time management also increases information processing capacity. When information overload is temporary,

information processing capacity can increase by the employee working longer hours. Information load can be reduced by buffering, omitting, and summarizing. Buffering involves having incoming com- munication filtered, usually by an assistant. Omitting occurs when we decide to overlook messages, such as using software rules to redirect emails from distribution lists to folders that we never look at. An example of summarizing would be where we read executive summaries rather than the full report.

Cross-Cultura l and Gender Communication

Increasing global ization and cultural diversity have brought more cross-cultural communication issues71 Voice intonation is one form of cross-cultural communication barrier. How loudly, deeply, and quickly people speak varies across cultures, and these voice intonations send secondary messages

that have different meaning in different cultures. As mentioned earlier, language is an obvious cross-culntral communications challenge. Words are

easily misunderstood in verbal communication, either because the receiver has a limited vocabulary or the sender's accent distorts the usual sound of some words. In one cross-cultural seminar, for example, participants at German electronics company Siemens were reminded that a French co-worker might call an event a "catastrophe" as a casual exaggeration, whereas someone in Germany usual ly interprets this word literally as an earth-shaking event. Similarly, KPMG staff from the United Kingdom some- times referred to another person's suggestions as "interesting" and had to clarify to their German col-

leagues that " interesting" might not be complimenting the idea.72

Communication also includes silence, but its use and meaning varies from one culmre to another.73 One study estimated that s ilence and pauses represented 30 percent of conversation time between Japanese doctors and patients, compared to only eight percent of the time between American doctors and patients. Why is there more silence in Japanese conversations? One reason is that inter- personal harmony and saving face are more important in Japanese culture, and silence is a way of

disagreeing without upsetting that harmony or offending the other person.74 In addition, silence sym- bolizes respect and indicates that the listener is thoughtfully contemplating what has just been said.75

262 Part Three Team Processes

Empathy is very important in Japan, and this shared understanding is demonstrated without using words. In contrast, most people in the United States and many other cultures view silence as a lack of communication and often interpret long breaks a~ a sign of disagreement.

Conversational overlaps also send different messages in different cultures. Japanese people usual ly stop talking when they are interrupted, whereas talking over the other person's speech is more common in Brazil , France, and some other countries. The difference in communication behaviour is, again, due to interpretations. Talking whi le someone is speaking to you is considered quite rude in Japan, whereas Brazilians and French are more likely to interpret interruptions as signifying the person's interest and involvement in the conversation.

NONVERBAL DIFFERENCES ACROSS CULTURES

Nonverbal communication represents another potential area for misunderstanding across cultures. Many nonconscious or involuntary nonverbal cues (such as smiling) have the same meaning around the world, but deliberate gestures often have different interpretations. For example, most of us shake our head from side to side to say "No," but a variation of head shaking means "I understand" to many people in India. Filipinos raise their eyebrows to give an aff irmative answer, yet Arabs interpret this expression (along with cl icking one's tongue) as a negative response. Most Americans are taught to maintain eye contact with the speaker to show interest and respect, wherea~ some First Nations peoples learn at an early age

to show respect by looking down when an older or more senior person is talking to them.76

~-") Global Connections 9.1:

POLITELY WAITING FOR SOME SILENCE77

Miho Aizu has attended many meetings where partic ipants communicated in English. Until recently, the manager at Accenture in Japan thought she communicated well in those sessions. But in a recent training program conducted by the g lobal professional services firm, Aizu learned that Japanese cultural norms held back her involvement in cross-cu ltural business conversat ions. One such prob lem was that she tends to be too polite in wait ing for others to finish talking. " I was told I needed to jump into d iscussions rather than wait until everyone had said what they wanted to say," says Aizu. Manag- ers from North America, South America, the Middle East, and most o f Europe se ldom allow silence to occur, so Aizu and o ther Japanese partic ipants are often left out of the conversat ion.

Aizu also realized that her involvement is held back by the Japanese tendency to be overly self-conscious about imperfect language skills. "During the team discussions, there were many things I wanted to say, but I felt I had to brush up my English language and presentation skills," A izu admits. In contrast, Accenture managers from many other non-English countries speak up in spite of their broken English.

In Japan, speaking well and waiting for others to finish are signs of respect and cu ltural refinement But in meetings with managers across most other cultures, th is lack of communi- cation sends a d ifferent message. "There are many people who come to me and say they don't know what Japanese people are thinking," says Accenture Japan president Chikamoto Hodo. "Our people (at Accenture) are more talkative than most Japanese, but they still have a difficu lt time communicating with foreigners."

Accenture wants to develop leaders who can communicate effectively across its g lobal operations, so it has developed special programs that coach its managers to engage in better conversations with colleagues and cl ients across cultures. While Accenture partic i- pants in other countries learn about Japanese communicat ion practices, A izu and o ther

Chapter Nine Communicating in Organizations 263

Accenture staff in Japan are coached to become more active communicators. "After various training programs, I am more able to say what I need to say, without worrying too much about the exact words," says Satoshi Tanaka, senior manager of human resources at Accenture Japan.

©Dave and Les Jacobs/Blend Images/Getty Images RF

GENDER DIFFERENCES IN COMMUNICATION Men and women have similar communication practices, but there are subtle distinctions that can occa-

sionally lead to misunderstanding and conflict (see Exhibit 9.5)78 0ne distinction is that men are more likely than women to view conversations as negotiations of relative status and power. They assert their power by directly giving advice to others (e.g., "You should do the following") and using combative language. There is also evidence that men dominate the talk time in conversations with women, as well

a~ interrupt more and adjust their speaking style less than do women. Men engage in more "report talk," in which the primary function of the conversation is imper-

sonal and efficient information exchange. Women also do report talk, particularly when conversing with men, but conversations among women have a higher incidence of relationship building through "rapport talk." Women make more use of indirect requests ("Do you think you should ... "), apol- ogize more often, and seek advice from others more quickly than do men. Finally, research fairly consistently indicates that women are more sensitive than men to nonverbal cues in face-to-face meet- ings.79 Together, these conditions can create communication conflicts. Women who describe problems get frustrated that men offer advice rather than rapport, wherea~ men become frustrated because they can't understand why women don't appreciate their advice.

Gender differences are also emerging in the use of social media to communicate.80 Specif ically, women are more likely to vis it social networking sites like Facebook and Twitter, spend more time online, and cl ick on more web pages than their male counterparts. Women are also more active

participants in photo sharing websites. Globally, women are outpacing men in signing up for Twitter accounts and are more active Twitter users. Their reasons for using this communication channel also d iffer. Women tend to use Twil!er as a conversational rather than functional medium. Overall , women spend an average of 24.8 hours per month online, whereas men spend 22.9 hours

per month online. 81

264 Part Three Team Processes

EXHIBIT 9.5 Gender Differences in Communication

When Men Communicate When Women Communicate

1. Report talk- giving advice, assert power 1. Rapport talk- relationship building

2. Give adVice directly 2. Give advice indirectly

3. Dominant conversation style 3. Flexible conversation style

4. Apologize less often 4. Apologize more often

5. Less sensitive to nonverbal cues 5. More sensitive to nonverbal cues

©Blue Jean Images I Alamy Stock Photo

Improving Interpersonal Communication

LOS Effective interpersonal communication depends on the sender's ability to get the mes- sage across and the receiver's performance as an active listener. In this section, we out- line these two essential features of effective interpersonal communication.

GETTING YOUR MESSAGE ACROSS This chapter began with the statement that effective communication occurs when the other person receives and understands the message. This is more difficult to accomplish than most people bel ieve. To get your message across to the other person, you first need to empathize with the receiver, such a~ by being sensi- tive to words that may be ambiguous or trigger the wrong emotional response. Second, be sure that you repeat the message, such as by rephrasing the key points a couple of times. Third, your message competes with other messages and noise, so find a time when the receiver is Jess likely to be distracted by these other matters. Finally, if you are communicating bad news or criticism, focus on the problem, not the person.

ACTIVE LISTENING

General Electric Company (GE) revised its famous leadership development program to become more aligned with the cultural diversity of its employees and emerging leaders. One discovery in pa~t programs was that American managers were good at talking, but didn't always give the same priority to active listening. GE "now majors people on listening," says Susan Peters, GE's chief learning officer. "It's something we have to really work on, to equal the playing field between our American leaders and our non-American Jeaders."82

Almost 2,000 years ago, the Greek philosopher Epictetus wrote: "Nature gave us one tongue, but two ears, so we may listen twice as much as we speak."83 GE and other companies are increasingly applying this sage advice to leadership development. Active listening is a process of actively sensing the sender's signals, evaluating them accurately, and responding appropriately. These three components of listening-sensing, evaluating, and responding-reflect the listener's side of the communication

Chapter Nine Communicating in Organizations 265

EXHIBIT 9.6 Active Listening Process and Strategies

model described at the beginning of this chapter. Listeners receive the sender's signals, decode them as intended, and provide appropriate and timely feedback to the sender (see Exhibit 9.6). During the

conversation, active listeners constantly cycle through sensing, evaluating, and responding and engage in various activities to improve these processes.84

Sensing. Sensing is the process of receiving signals from the sender and paying attention to them. Active listeners improve sensing in three ways. First, they postpone evaluation by not

forming an opinion until the speaker has finished. Second, they avoid interrupting the speaker's

conversation. Third, they remain motivated to listen to the speaker.

Evaluating. This component of listening includes understanding the message meaning, evaluat- ing the message, and remembering the message. To improve their evaluation of the conversa- tion, active listeners empathize with the speaker-they try to understand and be sensitive to the speaker's feelings, thoughts, and situation. Evaluation also improves by organizing the speaker's ideas during the communication episode.

Responding. This third component of listening involves providing feedback to the sender, which motivates and directs the speaker's communication. Active listeners accomplish this by main- taining sufficient eye contact and sending back channel signals (e.g., "I see"), both of which show interest. They also respond by clarifying the message-rephrasing the speaker's ideas at appropriate breaks ("So you're saying that .. . ?").

Are you an active listener? You can discover how effectively you practise the skills of active listening by locating this self-assessment in Connect.

Improving Communication throughout the Hierarchy

L06 So far, we have focused on micro-level issues in the communication process, namely, sending and receiving information between two employees or the informal exchanges of information across several people. But in this era where knowledge is a competi-

tive advantage, corporate leaders also need to maintain an open flow of communication up, down,

266 Part Three Team Processes

and across the entire organization. In this section, we discuss three organization-wide communica- tion strategies: workspace design, web-based communication, and direct communication with top management.

WORKSPACE DESIGN Workplace layout can have a significant impact on promoting or detracting from posi tive corporate culture. To boost information sharing, improve internal communication, and create a more sociable work environment, many companies are redesigning the workspace and employee territorial prac- tices in that space.85 The location and design of hallways, offices, cubicles, and communal areas (cafeterias, elevators) all shape whom we speak to as well as the frequency of that communication. Al though open space arrangements increase the amount of face-to-face communication, they also produce more noise, distractions, potential loss of privacy and productivity, as well as, possibly, greater absenteeism due to illness.86 A Danish survey of 2,403 people who worked in office settings compared absenteeism from work based on office space configuration. After adj usting for factors that could impact illness, such as age, body mass index, etc., the study found that workers sharing an open-plan office space had 62 percent more sick days compared to employees who had their own enclosed office space. 87

Whi le there is a mounting backlash against open-plan offices, some continue to claim that open workspaces increase collaboration and are necessary to stimulate creative brainstorming among team members. Concerns about noise are also rebutted by the assertion that employees naturally lower their speaking volume in open layouts and white noise technology blocks out most voices. Also, sound masking and acoustic comfort have become important design elements of the modern workplace. Sti ll, the chal lenge is to increase social interaction without these stressors. The new generation of workspace

design seems to take a hybrid approach of mixed private and open space.88

Rogers, a Canadian telecom and media giant and employer of over 27,000 people in Canada, intro- duced a new approach to workspace at its Toronto head office. Rogers mandated that the design of the downtown office should foster collaboration and communication. Rogers introduced a philosophy called "Sharespace," which offers employees greater flexibi lity between quiet, private zones and inter- active areas for team-building. The workspace allows for "hoteling," where employees book work-

stations or meeting rooms, as opposed to being assigned dedicated individual offices. The building contains booths and link cells (soundproof rooms with doors) for private meetings or phone calls.

Each room has a touchpad at the entrance so that employees can access a real-time booking system to determine room availability. Rogers' head office includes a library, cafes, breakout and meeting rooms, boardrooms, open concept work desks, telecommuter workstations, a nap room, religious observance

room, and an outdoor patio. The new design has clearly defined spaces to promote social gathering and sharing of ideas, and private spaces for concentration and confidentiality. Guy Laurence, former CEO of Vodafone UK and former CEO of Rogers, has stated that "conventional offices are dead" because the traditional rules of "attendance and proximity" are no longer necessary for meetings.89

Another workspace strategy is to cloister employees into team spaces, but also encourage suffi- cient interaction with people from other teams. Pixar Animation Studios constructed its campus in

Emeryvi lle, California with these princ iples in mind. The bui ldings encourage communication among team members. At the same time, the campus encourages happenstance interactions with people on other teams. Pixar executives cal l this the "bathroom effect," because team members must leave their isolated pods to fetch their mail, have lunch, or visit the restroom.90

INTERNET-BASED ORGANIZATIONAL COMMUNICATION

Internal communication is a significant concern, particularly for large and complex organizations where everyone needs to be confident that they have access to the same timely, accurate information. For decades, employees received official company news through hard copy newsletters and magazines. Some firms still use these communication devices, but most have supplemented or replaced them com- pletely with web-based sources of information. The traditional company magazine is now typical ly

Chapter Nine Communicating in Organizations 267

published on web pages, communicated via video or streaming format, or distributed in PDF format.

The advantage of these e-zines is that company news can be prepared and distr ibuted quickly. Employees are increasingly skeptical of information that has been screened and packaged by man-

agement, so a few companies such as IBM are encouraging employees to post their own news on internal blogs and wikis. Wikis are collaborative Web spaces where anyone in a group can write, edit, or remove material from the website. Wikipedia, the popular online encyclopedia, is a ma~sive public example of a wiki. IBM's WikiCentral now hosts more than 20,000 wiki projects involving 100,000 employees. The accuracy of wikis depends on the qual ity of participants, but IBM experts say that errors are quickly identified by IBM's online community. Another concern is that wikis have failed to gain employee support, likely because wiki involvement takes time and the company does not reward or recognize those who provide this time to wiki development.9 1

BC Hydro designs communication technology to enhance employee interaction.

As Canada's third largest electrical utility, BC Hydro services over 94 percent of British Columbia's population using 30 hydroelectric facilities and three natural gas power plants. The number of employees, the expansive geographica l area it covers, and the size of its operations posed a significant problem for BC Hydro w ith respect to the creating and sharing of ideas.

John Atwater, BC Hydro's intra net manager, described the communication problem as causing "a lot of unproductive knowledge" due to the fact that staff were duplicating each other's efforts because of the inefficient exchange of accurate and timely information. Recognizing that work is "inherently social,'' Atwater explains that BC Hydro searched for a communication technology that would encourage broad collective knowledge, the dist ribution of documents, and notifications of events w ithout time lags, whi le supporting the human side of teamwork.

To promote effective communication, BC Hydro implemented an extra net site to help employees and experts connect more seamlessly. The extra net platform facilitates the sharing of ideas, knowledge of new technologies, and best practices in real time on users' computers or mobile devices. The extranei supports team collaboration by allowing participants to log on to each other's sites, post and watch how-to videos, tag items, leave comments and ask questions, and share information through discussion threads, links, newsfeeds, and resources. One manager describes the extranei as "vital" to the job because "our office spans the entire province" and "it takes everything that we had written down or in our heads and puts it into a visual, easy to manage platform."92

©John Lehmann/The Globe and MailfCP Images

268 Part Three Team Processes

DIRECT COMMUNICATION WITH TOP MANAGEMENT Many believe that senior executives need to meet directly with employees and other stakeholders to improve morale as well as transmit and receive information more fully and meaningfully. Town hal l meetings are mostly top-down communications, but nevertheless, the CEO's presentation is much more credible and personal than a video recording or written memo, and employees do have the oppor-

tunity to a~k questions. Another strategy is for executives to hold round-table forums to hear opinions from representative staff about various issues. At the departmental level, some companies hold daily or weekly "huddles"-brief stand-up meetings in which staff and their manager discuss goals and hear

good news stories. A less formal approach to direct communication is management by walking around (MBWA).

Coined by people at Hewlett-Packard four decades ago, this is essentially the practice in which

senior executives get out of their offices and casually chat with employees on a daily or regular basis. Brian Scudamore, founder and CEO of 1-800-Got-Junk?, takes MBWA one step further. "I don't have my own office, and I very often move around to different departments for a day at a time," says Scudamore. 93

These direct communication strategies potentially minimize filtering because executives listen directly to employees. They also help executives acquire a deeper and quicker understanding of internal

Tony Hsieh likes to tweet. Even as CEO of Zappos, one of the world's largest online retailers, Hsieh discovered that tweeting is a powerful way to connect with his staff and the wider community. "What I found was that people really appreciated the openness and honesty (of tweets), and that led people to feel more of a personal connection with Zappos and me," Hsieh wrote in one of his blogs. Tweeting is so important at Zappos that new employees receive training on how to use the technology and are free to tweet to t he public. But if tweeting the top boss seems too impersonal, Hsieh has the ultimate open-door policy. His desk is located in an open office setting in an area called "the jungle" (complete with fake vines hanging from the ceiling) where anyone can speak with him.94

©Brad Swonet2/Redux

Chapter Nine Communicating in Organizations 269

organizational problems. A thi rd benefit of direct communication is that employees might have more

empathy for decisions made further up the corporate hierarchy.

Communicating through the Grapevine

Organizational leaders may try their best to quickly communicate breaking news to employees through

emai ls, tweets, and other direct formal channels, but employees still rely to some extent on the corpo- rate grapevine. The grapevine is an unstructured and informal network founded on social relationships rather than organizational charts or job descriptions. What do employees think about the grapevine?

Surveys of employees in two firms-one in Florida, the other in California-found that almost al l employees use the grapevine, but very few of them prefer this source of information. The Californian

survey also reported that only one-third of employees believe grapevine information i s credible. In

other words, employees turn to the grapevine when they have few other options.95

GRAPEVINE CHARACTERISTICS

Research conducted several decades ago reported that the grapevine transmi ts information very rapidly

in all directions throughout the organization. The typical pattern is a cluster chain, whereby a few people actively transmi t rumours to many others. The grapevine works through informal social networks,

so it is more acti ve where employees have similar backgrounds and are able to communicate easily.

Many rumours seem to have at least a kernel of truth, possibly because they are transmi tted through media-rich communication channels (e.g., face-to-face) and employees are motivated to communicate

effectively. Nevertheless, the grapevine distorts information by deleting fine detai ls and exaggerating

key points of the story. 96

Some of these characteristics might still be true, but the grapevine has almost certainly changed a~

email, social networking sites, and Twitter have replaced the tradi tional water cooler as sources of gos- sip. For example, several Facebook sites are unofficially themed around specific companies, allowing

employees and customers to vent their complaints about the organization. Along w ith al tering the

speed and network of corporate grapevines, the Internet has expanded these networks around the globe, not just around the next cubicle.

Debating Point:

SHOULD MANAGEMENT USE THE GRAPEVINE TO COMMUNICATE TO EMPLOYEES?

The grapevine has been the curse of management since modern-day organizations were invented. News flows with stealth-like efficiency below the surface, making it difficult to tell where information is travelling, what is being said to whom, or who is responsible for any mis- information. Although employees naturally flock to the grapevine for knowledge and social comfort in difficult times, its messages can be so distorted that they sometimes produce more stress than they alleviate.lt is absurd to imagine management trying to systematically transmit important information-or any news whatsoever- through this uncontrollable, quirky commu- nication channel.

But some communication experts are taking a second look at the grapevine, viewing it more as a resource than a nemesis. Their inspiration comes from marketing, where viral and word-of-mouth marketing have become hot topics.97 Viral and word-of-mouth marketing occur when information seeded to a few people is transmitted to others based on patterns of friendship. In other words, information is passed along to others at the whim of those who first receive that information. Within organizations, this process is essentially the grapevine

(continuecf)

270 Part Three Team Processes

(continued)

at work. Employees transmit information to other people within their sphere of everyday interaction.

The grapevine might seem to transmit information in strange and unreliable ways, but there are two contrary arguments. First, the grapevine channel is becoming more robust and reliable, thanks to social media and other emerging forms of electronic communication. These media have produced a stronger scaffolding than ever before, which potentially makes the grapevine more useful for transmitting information.

The second argument is that the grapevine tends to be more persuasive than trad itional communication channels from management to employees. The grapevine is based on social networks, which we discuss in the next chapter. Social networks are an important source of organizational power because they are built on trust, and trust increases acceptance of information sent through those networks. Consequently, the grapevine tends to be far more persuasive than other communication channels.

The power of the grapevine as a communication tool was recently illustrated when Novo Nordisk tried to change the image of its regulatory affairs staff.98 The European pharmaceuti- cal company made limited progress after a year of using traditional communication channels. "We had posters, meetings, competitions, and everything else you would expect," recalls communication adviser Jakob Wolter. "By the end of it, we'd achieved something- a general awareness among our people- but very little else."

So Novo Nordisk took another route. During the half-yearly gathering of all employees, nine regulatory staff were given wax-sealed confidentia l envelopes that assigned them to one of three "secret societies." Between conference sessions, these employees met with the managing director, who assigned their manifesto, including a mandate and budget. They were also told to keep their mission secret, saying to inquisitive co-workers, "I can't tell you."

"The [rumour] mill started right there that day," says Wolter. "People were already wonder- ing what on earth was going on." The societies were allowed to recruit more employees, which they did in subsequent months. Many employees throughout Novo Nordisk became intrigued, spreading their opinions and news to others. Meanwhile, empowered to improve their image and work processes, members of the three secret societies introduced several initiatives that brought about improvements.

GRAPEVINE BENEFITS AND LIMITATIONS Should the grapevine be encouraged, tolerated, or quashed? The difficulty in answering this question is that the grapevine has both benefits and limitations.99 One benefit, as was mentioned earlier, is that

employees rely on the grapevine when information is not available through formal channels. It is also the main conduit through which organizational stories and other symbols of the organization's culture are communicated. A third benefit of the grapevine is that this social interaction rel ieves anxiety. This explains why rumour mills are most active during times of uncertainty. 100 Finally, the grapevine is associated with the drive to bond. Being a recipient of gossip is a sign of inclusion, according to evolu- tionary psychologists. Trying to quash the grapevine is, in some respects, an attempt to undermine the natural human drive for social interaction. 101

While the grapevine offers these benefits, it is not a preferred communication medium. Grapevine

information is sometimes so distorted that it escalates rather than reduces employee anxiety. Further- more, employees develop more negative attitudes toward the organization when management is slower than the grapevine in communicating information. What should corporate leaders do with the grape- vine? The best advice seems to be to listen to the grapevine as a signal of employee anxiety, then cor-

rect the cause of this anxiety. Some companies also listen to the grapevine and step in to correct blatant errors and fabrications. Most important, corporate leaders need to view the grapevine as a competitor,

and meet this challenge by directly informing employees of news before it spreads throughout the grapevine.

Chapter Nine Communicating in Organizations

Chapter Summary

L01 Explain why communication is importan t in organiza tions and discuss four inflneuces on effective communication encoding and decoding.

271

Communication refers to the process by which information is transmitted and understood between two or more people. Communication supports work coordination, organizational learning, decision making, changing others' behaviour, and employee well-being. The communication process involves forming, encoding, and transmitting the intended message to a receiver, who then decodes the message and provides feedback to the sender. Effective communication occurs when the sender's thoughts are transmitted to and understood by the intended receiver. The effectiveness of this process depends on whether the sender and receiver have s imilar code- books, the sender's proficiency at encoding that message to the audience, the sender's and receiver's motivation and ability to transmit messages through that particular communication channel, and their common mental models of the communication context.

L02 Compare and contrast the advantages of and problems with elect ronic mail, other verbal communication media, and nonverbal communication.

The two main types of communication channels are verbal and nonverbal. Various forms of Internet-based communication are widely used in organizations, with email the most popular. Although efficient and a useful fi ling cabinet, email is relatively poor at communicating emotions; it tends to reduce pol iteness and respect; it is an inefficient medium for communicating in an1biguous, complex, and novel s ituations; and it con- tributes to information overload. Social media provide an emerging set of communication channels which are Internet- or mobile-based and allow users to generate and interactively share information. Social media are more conversational and reciprocally interactive than traditional channels. They are "social" by encouraging collabora- tion and the formation of virtual communities. Nonverbal communication includes facial gestures, voice intona- tion, physical distance, and even si lence. Unlike verbal communication, nonverbal communication is less rule-bound and is mostly automatic and nonconscious. Some nonverbal communication is automatic through a process called emotional contagion.

L03 Explain how social acceptance and media richness influence the preferred communication channel.

The most appropriate communication medium partly depends on its social acceptance and media richness. Social acceptance refers to how well the communication medium is approved and supported by the orga- nization, teams, and individuals. This contingency includes organization and tean1 norms, individual preferences for specific communication channels, and the symbolic meaning of a channel. A communication medium should also be chosen for its data-carrying capacity (media richness). Nonroutine and ambiguous situations require rich media. However, technology-based lean media might be almost as effective as rich media for transferring informa- tion. This particularly occurs where users can multi-communicate and have high profic iency with that technology, and where social d istractions o f high media richness channels reduce the efficient processing of information through those channels. These contingencies are also considered when selecting the best channels for persuasion.

L04 Discuss various barriers (noise) to effective communica tion, including cross-cultural and gender-based differences in communication.

Several barriers create noise in the communication process. People misinterpret messages because of misaligned code books due to different languages, jargon, and use of ambiguous phrases. Filtering messages and information overload are two other communication barriers. These problems are often amplified in cross-cultural settings where the above problems occur along with differences in meaning of nonverbal cues, silence, and conver- sational overlaps. There are also some communication differences between men and women, such as the tendency for men to exert status and engage in report talk in conversations, and for women to use more rapport talk and be more sensitive than men to nonverbal cues.

LOS Explain how to get your message across more effectively, and summarize the elements of active lis tening.

To get a message across, the sender must learn to empathize with the receiver, repeat the message, choose an appropriate time for the conversation, and be descriptive rather than evaluative. Listening includes sens- ing, evaluating, and responding. Active listeners support these processes by postponing evaluation, avoiding inter- ruptions, maintaining interest, empathizing, organizing information, showing interest, and clarifying the message.

272 Part Three Team Processes

L06 Summarize effective communication strategies in organizational hierarchies, and review the role and relevance of the organizational grapevine.

Some compan ies try to encourage communication through workspace design, as well as through Internet-based communication channels. Some executives also meet directly with employees, such as through man· agement by walking around (MBWA) and town-hall meetings, to faci litate communication across the organization.

In any organization, employees re ly on the grapevine, particularly during times of uncertainty. The grapevine is an unstructured and informal network founded on social relationships rather than organizational charts or job descriptions. Although early research identified several unique features o f the grapevine, some of these features may be changing as the Internet plays an increasing role in grapevine communication.

Key Terms communication

emotional contagion grapevine

information overload

management by walking around (MBWA)

media richness

persuasion

wikis

Critical Thinking Questions I. You have been hired as a consultant to improve communication between engineering and marketing staff in a

large high-technology company. Use the communication model and the four ways to im prove that process to devise strategies to improve communication effectiveness an10ng employees between these two work unit~.

2. "An organization comes into being when people cao communicate with each other.'' Discuss the benefit~ and limitations of communicating with emails among team members.

3. Senior management at a consumer goods company wants you to investigate the fea~ibi lity of using a virtual reality platform (such as Second Life) for monthly online meetings involving its three dozen sales managers located in several c ities and countries. Use the social acceptance and media richness factors described in this chapter to identify information you need to consider when conducting this evaluation.

4. Wikis are collaborative websites where anyone in the group can post, edit, or delete any information. Where might this communication technology be most useful in organizations?

5. Under what conditions, if any, do you think it is appropriate to use email to notifY an employee that he or she has been laid off or ftred? Why is email usually considered an inappropriate channel to convey this information?

6. Suppose that you are part of a virtual team and must persuade other teao1 members on an important matter (such as switching suppliers or altering the project deadline). Assuming that you cannot visit these people in person, what can you do to maximize your persuasiveness?

7. Explain why men and women are sometimes frustrated with each other's communication behaviours.

8. In your opinion, has the introduction of emai l and other information technologies increased or decreased the amount of information flowing through the corporate grapevine? Explain your answer.

Case Study:

COMMUNICATING WITH THE MILLENNIALS

by Steven L. McShane, Curtin University (Australia) and University of' Victoria (Canada) The millennials (including Generation Y) have arrived in the workplace, and they are bringing new ways to com· municate. Surveys report that cell phones (particularly smartphones) have become the medium of choice an10ng millennials. Almost all (97 percent) o f millennials in the United States with cell phones send text messages, 84 percent access the Internet, and 73 percent send or receive email using their cell phones. In contrast, among cell

Chapter Nine Communicating in Organizations 273

phone owners over 50 years old, less than two-thirds send text messages, only about one-third access the Internet, and only about one-third send or receive emails using their phones.

Millennia[ communication also relies much more on social media. Almost 90 percent of millennials regularly visit Facebook, Linkedln, or other social networking sites, whereas only about half of Americans over 50 visit these sites. Thirty percent o f millennials use Twitter, compared to less than I 0 percent of people over 50.

These statistics send a clear message: Millennials prefer d ifferent communication channels (cell phones, soc ial media) and d ifferent communication s tyles (i.e., short , informal messages) than those dictated by most organizations. These gaps between corporate and personal communication preferences not only produce dysfunctional confl ict and frustration; they also undermine the company's abi lity to attract future talent. "[Millennials) will judge companies on the social media practices and policies, which includes how compa- nies uti lize social media in their operations, the ir digital awareness, and any restrictions imposed on employ- ees' access and usage of social med ia during work time," warns Barry Thomas, director of Cook Medical Asia-Pacific.

Most companies aren't hearing the message. They continue to block social networking, text messaging, and other channels preferred by millennials. Some firms argue these practices are workplace intrusions that undermine productivity. Others justify blocking communication through these channels due to security risks.

Whether these arguments are valid remains uncertain, but a growing chorus of experts are advising that com- pan ies need to adapt to the communication styles of millennials rather than reject them outright. Furthermore, companies need to make better use of the communication skills that millennials bring to the workplace

"A new employee who comes in with the ability to manage a network of 1000 Facebook friends every day. That's a fabulous skill in, let's say, a sales organization," says Ross Smid1, director of engineering at Microsoft Inc. The problem, he suggests, is that many companies don't know how to leverage that communication potential. "It's likely that the organ ization has no idea, parlicularly because the organization is generally going to be run by boomer, Gen X managers, who aren't savvy Facebook users. But the Gen Y or millennia[ employee coming in certainly knows how to do that."

Smith believes the solution is to give millennials more freedom to try out new communication practices. " lf the senior leaders or the organization can develop a culture of high trust, then the individual's going to be free to experiment and suggest new things and try new ways of doing things and uncover how Facebook skills map to a sales organ ization."

St. Luke's Medical Center in Boise, Idaho, is a case in point. Hospital leaders discovered that the younger medical staff were texting each other with medical orders and patient updates. Texting is one of the preferred communication methods among these physic ians and nurses, and it is much more efficient than the hospital's formal practice of phoning and paging people. But texting through public networks lacks security (it could be hacked by outsiders) and violates industry regulations. Another hospital would have banned the practice with- out further thought, but St. Luke's contracted an IT company instead to set up a secure texting system for the hospital.

"''ve heard [officials of) other organizations say, 'We can't do that,"' says Jennifer Mensik, St. Luke's admin- istrator of nursing and patient care services. "But when people are trying to do the best they can for the patient, they're going to try to find a workaround. That should be an alert to some of the older generation that this is a good idea. Let's not stop it. Let's figure out how we can do it legally and correctly."

Although companies need to adapt to millennia[ communication preferences, the reverse is also true. Millen- nials need to spruce up their ski lls using older technologies. For instance, advertising sales at Metro Guide Pub- lishing in Halifax, Nova Scotia, were down, and publisher Patty Baxter noticed that the office lacked the buzz of sales calls. The problem, she realized, was that most of Metro Guide's new generation of employees were emailing clients rather than selling advertising by telephone.

Baxter explains that email doesn't work in business deals, where personal rapport and quick understanding of the client's needs are critical. "You're not selling if you're just asking a question and getting an answer back," she says. Baxter also suggests that phone calls tend to result in fewer communication errors, citing a recent incident in which a sales employee misinterpreted a client's email about a possible advertising sale. Metro Guide sales staff now receive on-the-job coaching with phone-use consultant Mary Jane Copps, who observes that millennia[ employees (as well as others) often suffer from phone phobia. "It's a lack of confidence that they'll be able to say the right words in the right order in the right amount of time," she explains.

Discussion Questions

I. Take a poll o f your class. At school or work, how many regu larly (e.g., dai ly or every few days) send or receive information (not entertainment) by (a) using emai l, (b) sending and reading instant messages or tweets, (c) sending and receiving cell phone text messages, (d) reading/writing blogs, (e) v isiting/ authori ng social media s ites (e.g., Facebook, Instagram), or (f) watching/creating onl ine videos (e.g., YouTube)?

274 Part Three Team Processes

2. Even within this generation, there are different preferences for communication media. After conducting the poll, ask students who don't regu larly use one or more o f these methods why they don't like that particular communication medium. Ask those who very often use these sources to give their points of view.

3. Companies have been slow and reluctant to adopt social media channels, cell phone text messaging, and s imi- lar forms o f communication. If you were a senior manager, how would you introduce these communication technologies in the workplace to share information and knowledge more effectively?

Sources: Hughes. Mark. "Fishing for Reliable Staff in Gen Y Waters." China Daily, I 2 October 2012: Putre. Laura. "A Clash of Age.,." Hospitals & Health Networks. March 2013.40-44: Hofschneider. Anita. "Bosses Say 'Pick up the Phone'." Wall Street Journal. 28 August 2013: Brenner. Joanna. and Aaron Smith. "72 percent of Online Adull' Are Social Networking Site Users." In Internet & American Life Project. Washington. DC: Pew Research Center. 2013: Robison. Wesley. "How Microsoft Builds Trust in the Workplace." psfk. 27 September 2013: Duggan. Maeve. "Cell Phone Activitie.' 2013." In Internet & Ameri· can Life Project. Washington, DC: Pew Re.,earch Center, 2013.

Team Exercise:

PRACTISING ACTIVE LISTENING

By Ena Chadha, Schulich School of' Business

Purpose This activity illustrates the multi-faceted nature of active listening and the challenges of listening with an open mind to someone who disagrees with you.

Act ivity Structure This communication exercise takes about 25 minutes, fo llowed by a debrief discussion about the challenges of active listening. Students should begin by finding a partner (preferably someone they do not know) for a two-round communication activity. Pairs should be seated next to each other.

Round I - The first person should s peak for 3 minutes about a casual, easy to relate personal topic (for example, maintaining work/school balance, budgeting, difficulty getting time to exercise or problems with housemates). The partner should try their best to listen and to refrain from asking questions. After the first person f inishes speaking, the second person should take a turn speaking for 3 minutes about the same or a si milar personal topic . Again, the listening person must try their best to listen and abstain from asking questions.

Round 2 - After both people have spoken about a personal topic, the instructor wi ll ask them to select a societal topic currently popular in the news (for example, affirmative action, mandatory voting, universal pharma-care). One person should be designated in favour of the topic and the second person designated against the topic (regard- less of true belief.~) . Ask the first person to speak for 3 minutes about the points they believe in favour of the topic . Af ter the first student finishes s peaking, the second student should take a turn speaking for 3 minutes about the points they believe against the topic.

Debrief The instructor will provide specific questions for discussing the important lessons that ste m from this activity.

Ena Chadha, LL.B. and LL.M .. Sessional Lecturer Schulich School of Business

Self-Assessments for Chapter 9

SELF-ASSESSMENT NAME DESCRIPTION

Listening is a critical component o f communication. But most people put more effort into how well they communicate as a sender than how well they

Are you an active listener? liste n as a receiver. Active listening is a skill that can be learned. so the fi rst step is to know which components of active listening require further

I development This assessment is designed to assess your strengths and weaknesses on v-.trious dimensions of active listening.

CHAPTER 10

Power and Influence in the Workplace

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Describe the dependence model of power and describe the five sources of power in organizat ions.

L02 Discuss the four contingencies of power.

L03 Explain how people and work units gain power through social networks.

L04 Describe eight types of influence tactics, three consequences of influencing others, and three contingencies to consider when choosing an influence tactic.

LOS Identify the organizat ional conditions and personal characteristics that support organizational politics, as well as ways to minimize organizational polit ics.

275

276 Part Three Team Processes

In 2015, the University of British Columbia (UBC) marked its 100th anniversary with the abrupt departure of its newly appointed president, Arvind Gupta, the first person of colour to hold such a leadership position at this $2.1 billion per year publicly funded institution.' Gupta was selected by a 22-person committee after a two-year global search. After serving only one year of his five-year term, Gupta resigned under a cloud of secrecy amid rumours of turmoil, low morale, and vexed relations within the university's top governance.

The resignation unleashed a controversy involVing allegations of undue influence and intimidation by Joe Montalbano, the chair of the university's board of governors, and concerns over Gupta's poor performance and problematic communications. UniVersity documents revealed that Montalbano and the board criticized Gupta for a dMsive leadership style and lack of strategic management skills during his tenure as president. Reports abou1 the rift between Gupta and Montalbano were fraught with innuendo of a power struggle, conflicting visions for transformation of the university and even secret meetings within the top level of the university's administration. One female UBC professor who was critical of the board's handling of the situation publicly blogged that Gupta lost "the masculinity contest among leadership at UBC." She later alleged that Montalbano, after publication of her blog, threatened her academic freedom.

The university retained retired British Columbia Supreme Court j ustice Lynn Smith to investigate the circumstances surrounding the allegations of interference with academic freedom. Although Smith's report cleared Montalbano of the charge of personally impeding academic freedom, the report found that there was a "serious failure on the part of the senior leadership of UBC" and that relatively small mistakes by those in powerful roles "can lead to a failure of the larger system."2

While this UBC story may read as an isolated example of power wrangling among embattled administrators trying to secure the upper hand during a turbulent transition, Canadian researcher Julie Cafley has identified a systemic pattern. According to Cafley, in the decade leading up to 2015, 18 presidents of Canadian univers ities either resigned or were fired before the end of their terms. Cafley notes that in order to secure their position at the top of the university hierarchy, leaders are compelled to "give up power to stakeholders" and must always be carefully negotiating "their support to promote change." Cafley's research indicates that mistrust, miscommunication, and misalignment of power led to the downfalls of the university leaders. 3

A s this opening story illustrates, power and influence are closely entangled with the actions of leaders fiand followers. Each competing version of the events at UBC claims that those on the opposing side abused power by trying to sideline and silence them. This might seem to paint UBC as an institution mired in organizational politics and vulnerable to abuse of power, but all organizations faces similar challenges to some degree. The UBC story demonstrates the multiple facets of power, including how legitimate power is subject to public scrutiny, the sway of referent power to gamer greater power, how visible dis- plays of coercive power can constrain people, and how information can be a formidable source of power. Although this story illustrates the dark side of power and influence, these concepts are equally relevant to ethical conduct and organizational performance. In fact, some OB experts point out that power and influ- ence are inherent in all organizations. They play a role in every business and in every decision and action.

This chapter unfolds as follows: First, we define power and present a basic model depicting the dynamics of power in organizational settings. The chapter then discusses the five bases of power, as well as information as a power base. Next, we look at the contingencies necessary to translate those sources into meaningful power. Our attention then ntrns to social networks and how they provide power to members through social capital. The latter part of this chapter examines the various types of influence in organizational settings, a~ well as the contingencies of effective influence strategies. The final section of this chapter looks at sintations in which influence becomes organizational pol itics, as well as ways of minimizing dysfunctional pol itics.

The Meaning of Power

LO 1 Power is the capacity of a person, team, or organization to influence others.4 There are a few important feantres of this defmition. First, power is not the act of changing someone's attitudes or behaviour; it is only the potential to do so. People frequently have power they

Chapter Ten Power and Influence in the Workplace 277

do not use; they might not even know they have power. Second, power is ba~ed on the target's perception

that the power holder controls (i.e., possesses, ha~ access to, or regulates) a valuable resource that can help

them achieve their goals5 People might generate power by convincing others that they control something of value, whether or not they acntally control that resource. However, power is not a personal feeling. You

might feel powerful or think you have power over others, but this is not power unless others believe you have that capacity. The perception that others have power is also formed from the power holder's behaviour

as someone who is not swayed by authority or concerned about abiding by social norms. For instance, one study found that people are perceived as more powerfitl just because of behaviours, such as putting their feet

on a table.6 Take, for example, a~ a counter to the traditional "power suit," the rock star style and flowing long blonde hair of legendary Bay Street trader Michael Wekerle.7 Wekerle, a famous Canadian financier, is

known for projecting an image of power by wearing flashy three-piece suit~ and sungla~ses all day and night. Third, power involves asymmetric (unequal) dependence of one party on another party.8 This depen-

dent relationship is illustrated in Exhibit 10.1. The broken line from Person B to Person B's goal shows that he or she believes Person A controls a resource that can help or hinder Person B in achieving that

goal. Person A-the power holder in this illustration-might have power over Person B by controlling a

desired job assignment, useful information, rewards, or even the privilege of being associated with him or her! For example, if you believe a co-worker has expertise (the resource) that would substantially help

you to write a better report (your goal), then that co-worker ha~ some power over you because you value

that expertise a~ a means to achieve your goal. Whatever the resource is, Person B perceives a depen- dence on Person A (the power holder) to provide the resource so Person B can reach his or her goal.

Although dependence is a key element of power relationships, we use the phrase "asymmetric

dependence" because the less powerfitl party still has some degree of power-called countervailing power-over the power holder. In Exhibit I 0. 1, Person A dominates the power relationship, but Person

B has enough countervailing power to keep Person A in the exchange relationship and to impact how the power is used. For example, although managers have power over subordinates in many ways (e.g., controlling job security, preferred work assignments), employees have countervailing power by

possessing skills and knowledge to keep production humming and customers happy, something that management can't accomplish alone.

Finally, the power relationship depends on some minimum level of trust. Trust indicates a level of

expectation that the more powerful party will deliver the resource. For example, you trust your employer to give you a paycheque at the end of each pay period. Even those in extremely dependent sintations will

usually walk away from the relationship if they lack a minimum level of trust in the more powerful party.

EXHIBIT 10.1 Dependence in the Power Relationship

Person A is perceived as controlling resources that help or hinder Person B's goal achievement

Person B's Goal

278 Part Three Team Processes

Let's look at this power dependence model in the employee-manager relationship. You depend

on your boss for supporting your continued employment, satisfactory work arrangements, and other valued resources. At the same time, your manager depends on you to complete required tasks and to work effectively with others in the completion of their work. Managers (and the companies they repre- sent) typical ly have more power, whereas employees have weaker countervai ling power. But this is not always the case. Sometimes employees can have the stronger power base in the relationship, for exam- ple, when workers belong to a powerful union. Notice that the strength of your power in the employee- manager relationship doesn't depend on your actual control over valued resources; it depends on the perceptions that your boss and others have about this resource control. Finally, trust is an essential ingredient in this relationship. Even with strong power, the employee-manager relationship comes apart when one party no longer sufficiently trusts the other.

The dependence model reveals only the core features of power dynamics between people and work

units in organizations. We also need to Jearn about the specific sources of power and contingencies that allow that power to be applied effectively as influence. As Exhibit 10.2 illustrates, power is derived from five sources: legitimate, reward, coercive, expert, and referent. The model also identifies four contingen- cies of power: the employee's or department's substitutability, centrality, discretion, and visibility. Over the next few pages, we will discuss each of these sources and contingencies of power in the context of

organizations.

Sources of Power in Organizations A half-century ago, social scientists John French and Bertrand Raven identified five sources of power

found in organizations. Although variations of this Jist have been proposed over the years, the original Jist remains surprisingly intact.9 Three sources of power- legitimate, reward, and coercive-originate mostly (but not completely) from the power holder's formal position or informal role. In other words,

EXHIBIT 10.2 Sources and Contingencies of Power

Sources of Power

legitimate

Reward

Coerdve

Expert

Referent

Contingencies of Power

Substitutability

Centrality

Discretion

Visibility

Chapter Ten Power and Influence in the Workplace 279

the person is granted these sources of power formally by the organization or informally by co-workers. Two other sources of power--expert and referent--originate mainly from the power holder's own characteristics; in other words, people carry these power bases around with them. However, even per- sonal sources of power do not reside solely within the person because they depend on how others perceive them. Raven subsequently proposed information power as an additional source of power. We present information power as forms of legitimate and expert power rather than as a distinct power ba~e.

LEGITIMATE POWER

Legitimate power is an agreement among organizational members that people in certain roles can request a set of behaviours from others. This perceived right or obl igation originates from formal job descriptions as well as informal rules of conduct. The most obvious example of legitimate power is a manager's right to tell employees what tasks to perform, who to work with, what office resources they can use, and so forth. Employees follow the boss's requests because there is mutual agreement that employees will follow a range of directives from people in these positions of authority. Employees defer to this authority whether or not they will be rewarded or punished for complying with those requests.

Notice that legitimate power has restrictions; it only gives the power holder the right to ask for a range of behaviours from others. This range-known as the "zone of indifference"-is the set of behaviours that individuals are will ing to engage in at the other person's request.10 Although most employees accept the boss's right to deny them access to Facebook during company time, some might draw the line when the boss asks them to work several hours beyond the regular workday. There are also occasions where employees actively oppose the boss's actions.

The size of the zone of indifference (and, consequently, the magnitude of legitimate power) increases with the level of trust in the power holder. Some values and personality traits also make people more obedient to authority. Those who value conformity and tradition and also have high power distance (i.e., they accept an unequal distribution of power) tend to have higher deference to authority. The organiza- tion's culture represent~ another influence on the willingness of employees to follow orders. A 3M scientist, for example, might continue to work on a project after being told by superiors to stop because the 3M cul- ture supports an entrepreneurial spirit, which includes ignoring your boss's authority from time to time.11

Managers are not the only people with legitimate power in organizations. Employees also have legit- imate power over their bosses and co-workers through legal and administrative rights as well as infor-

mal norms.12 For example, an organization might give employees the right to request information or training that is required for their j ob. Laws give employees the right to refuse work in unsafe conditions. More subtle forms of legitimate power also exist. Human beings have a norm of reciprocity-a feeling of obligation to help someone who has helped you.13 If a co-worker previously helped you handle a difficult cl ient, that co-worker has power because you feel an obligation to help the co-worker on something of similar value in the future. The norm of reciprocity is a form of legitimate power because it is an informal rule of conduct that we are expected to follow.

Legitimate Power through Information Control A particularly potent form of legitimate power occurs where people have the right to control the information that others receive. 14 These information gatekeepers gain power in two ways. First, information is a resource, so those who need that information

are dependent on the gatekeeper to provide that resource. For example, the maps department of a mining company has incredible power when other departments are dependent on it to deliver maps required for exploration projects.

Second, information gatekeepers gain power by selectively distributing information so those receiving the information perceive the sin1ation differently. 15 Executives depend on middle managers and employees to provide an accurate picture of the company's operations. Yet, a~ we learned in the previous chapter on

communication, information is often filtered as it flows up the hierarchy. Middle managers and employees filter information so it puts them in a more positive light and to steer the executive team toward one decision rather than another. In other words, these information gatekeepers can potentially influence

executive decisions by framing their real ity through selective distribution of information.

280 Part Three Team Processes

Sa-o Global Connections 1 0.1: WILLINGNESS TO OBEY AUTHORITY

A French television program recently revealed how far people are willing to go to follow orders. As a variation of the now infamous 1960s experiments conducted by Stanley Milgram, 80 con- testants administered electric shocks whenever a volunteer (an actor who didn't receive the shocks at all) answered a question incorrectly. Shocks increased in 20-volt increments, from 20 volts for the first mistake through to 460 volts. Contestants often hesitated after hearing the volunteer screaming for them to stop but continued the shocks after the host reminded them of their duty. Only 16 of the 80 contestants refused to administer the strongest shocks.16

SHOCK GENERATOR • •• DYSON INSTRUmT C

WAL THAN NASS. OUTPUT: I~ VOLTS· ••

The power of authority. ©Collection Christophei/Aiamy Stock Photo

REWARD POWER Reward power is derived from the person's ability to control the al location of rewards valued by others and to remove negative sanctions (i.e., negative reinforcement). Managers have formal authority that gives them power over the distribution of organizational rewards such as pay, promotions, time off, vacation schedules, and work assignments. Employees also have reward power over their bosses through their feedback and ratings in 360-degree feedback systems. These ratings affect supervisors' promotions and other rewards, so supervisors tend to behave differently toward employees after 360-degree feedback is introduced.

COERCIVE POWER

Coercive power is the abi lity to apply punishment. For many of us, the first thought is of a manager threatening an employee wi th dismissal. Yet employees can also wield coercive power. Although the term "coercive" seems to imply penalizing duress, coercive power can materialize in both a direct or

Chapter Ten Power and Influence in the Workplace 281

indirect form and, while perceived by the recipient a~ negative pressure, may not always be exercised with an adverse intent. Examples of negative coercive power occur when employees are sarcastic toward co-workers or threaten to ostracize them if they fail to conform to team norms.17 Some organizations rely on peer-based pressure to control co-worker behaviour in a team setting. For example, Mount Sinai Hospital, a large, internationally recognized acute care hospital located in downtown Toronto, uses a formal peer performance review for providing feedback to nursing leadership staff. All nursing leadership staff are required to complete an annual peer review and as part of the process must obtain two colleagues to serve as peer rev iewers. While most peer review systems are confidential, Mount Sinai 's peer performance review encourages verbal feedback in a face-to-face meeting. As such, we can see this process utilizes a systematic indirect form of coercive power appl ied by peers to influence work performance.

EXPERT POWER

For the most part, legitimate, reward, and coercive power originate from the individual's position.18 Expert power, on the other hand, originates mainly from within the power holder. It is an individual's or work unit's capacity to influence others by possessing knowledge or skills valued by others.

One important form of expert power is the perceived ability to manage uncertainties in the business

environment. Organizations are more effective when they operate in predictable environment~. so they value people who can cope with turbulence in consumer trends, societal changes, unstable supply lines, and so forth. Expertise can help companies cope with uncertainty in three ways: through prevention,

foreca~ting, and absorption. These coping strategies are arranged in a hierarchy of importance, with prevention being the most powerfuJ='9

Prevention. The most effective strategy is to prevent environmental changes from occurring.

For example, financial experts acquire power by preventing the organization from experiencing

a cash shortage or defaulting on loans.

Forecasting. The next best strategy is to predict environmental changes or variations. In this respect, trendspotters and other marketing specialists gain power by predicting changes in consumer preferences.

Absorption. People and work units also gain power by absorbing or neutralizing the impact of environmental shifts as they occur. An example is the ability of maintenance crews to come to the rescue when machines break down.

Many people respond to expertise just as they respond to authority-hey mindlessly follow the guidance of these experts.20 In one classic study, for example, a researcher posing as a hospital physician telephoned on-duty nurses to prescribe a specific dosage of medicine to a hospitalized patient. None of the nurses knew the person calling, and hospital policy forbade them from accepting treatment by telephone (i.e., they Jacked legitimate power). Furthermore, the medication was unauthorized and the prescription was twice the maximum daily dose. Yet, almost all 22 nurses who received the telephone call followed the "doctor's" orders until stopped by researchers21

This doctor-nurse study is a few decades old, but the power of expertise remains just as strong today,

sometimes with tragic consequences. The Canadian justice system in the early 2000s discovered that one of its "star" expert witnesses-a forensic child pathology expert-had provided inaccurate cause- of-death evaluations in at least 20 cases, a dozen of which resulted in wrongful or highly questionable criminal convictions. The pathologist's reputation as a renowned authority was the main reason why his often-weak evidence wa~ accepted without question. "Experts in a courtroom-we give great deference to experts," admits a Canadian defence lawyer familiar with the situation22

REFERENT POWER

People have referent power when others identify with them, like them, or otherwise respect them. As with expert power, referent power originates within the power holder. It is largely a function of the

282 Part Three Team Processes

person's interpersonal skills and tends to develop slowly. Referent power is also associated with charisma.

Experts have difficulty agreeing on the meaning of charisma, but it is most often described as a form of interpersonal attraction whereby followers ascribe almost magical powers to the charismatic indi- vidual23 Many have written about the power of political magnetism as seen in charismatic leaders such as Barack Obama, Justin Trudeau, and his late father, Pierre Elliot Trudeau, all of whom have been noted for their charm and influence24

Some writers describe charisma is a special "gift" or trait within the charismatic person, while oth- ers say it is mainly in the eyes of the beholder. However, al l agree that charisma produces a high degree of trust, respect, and devotion toward the charismatic individual.

Aspiring entrepreneurs often appear on the highly popular CBC show Dragons' Den to pitch their idea to a specific Dragon investor because of that Dragon's particular domain expertise. For example, contestant Steve Morrier, creator of artisan cocktail mixes, appeared on the 1Oth season of Dragons' Den, asking for $50 000 for 30% of his Ottawa business. Split Tree Cocktails. Morrier hoped to catch the interest of Dragon Manjit Min has. the co-founder and owner of Minhas Breweries, Distillery and Wineries. He wanted to tap into the mogul's extensive beverage production knowledge and experience. Min has' Calgary-based brewing company produces more than 120 alcoholic beverages that ship all across Canada, the U.S., and 16 other countries25

Although two other Dragon investors presented generous bids, including a lucrative proposal from merchant banker Michael Wekerle ($150 000 for a 50% stake, with the equity return ing to Morrier after five years) and a 'full-ask' offer from franchisor titan Jim Treliving, Morrier wanted a deal w ith Minhas to gain access to her beverage industry marketing, manufacturing, and distribution expertise. This strategic partnership proved valuable for Morrier when, in a matter of few months, Min has facilitated glass bottling of the Split Tree mixes and scaled up an extension of the product line. Morrier reports that in less than a year Split Tree Cocktails quintupled its sales and that, ultimately, he did not give up any equity in his company because he pays a royalty to Minhas26 The takeaway lesson, as one writer summariz ing Morrier's experience advises, is to "pick domain expertise over dollars and you'll get more than an investment"27

©CBC

Chapter Ten Power and Influence in the Workplace 283

Contingencies of Power Let's say that you have expert power because of your ability to forecast and possibly even prevent dramatic changes in the organization's environment. Does this expertise mean that you are influential? Not necessarily. As was illustrated earlier in Exhibit 10.2, sources of

power generate power only under certain conditions. Four important contingencies of power that affect the degree to which power can be invoked or used are substitutability, central ity, visibility, and discretion.28

SUBSTITUTABILITY Substituta bility refers to the availabil ity of alternatives. Power is strongest when someone has a monopoly over a valued resource. Conversely, power decrea~es as the number of alternative sources of

the critical resource increases. If you-and no one else-has expertise across the organization on an important issue, you will be more powerful than if several people in your company possess this valued knowledge. Conversely, power decreases as the number of alternative sources of the critical resource increases. Substitutability refers not only to other sources that offer the resource, but also to substitu- tions for the resource itself. For instance, labour unions are weakened when companies introduce tech- nologies that replace the need for their union members. Technology is a substitute for employees and, consequently, reduces union power.

Nonsubstitutability is strengthened by controlling access to the resource. Professions and labour unions gain power by controlling knowledge, ta~ks, or labour to perform important activities. For instance, the medical profession is powerful because it controls who can perform specific medical procedures. Labour unions that dominate an industry effectively control access to labour needed to perform key j obs. Employees become nonsubstinltable when they possess knowledge (such a~ operating equipment or serving clients) that is not documented or readi ly available to others. Nonsubstitutability also occurs when people differ- entiate their resource from the alternatives. Some people claim that consultants use this tactic. They take skills and knowledge that many other consulting firms can provide and wrap them into a package (with the latest buzz words, of course) so that it looks like a service that no one else can offer.

CENTRALITY Centrality refers to the power holder's importance based on the degree and nature of interdependence with others.29 Centrality increases with the number of people dependent on you as well as how quickly and severely they are affected by that dependence. Think about your own central ity for a moment: If you decided not to show up for work tomorrow, how many people would have diff iculty performing their jobs because of your absence? How soon after they arrive at work would these co-workers notice that

you are missing and have to adj ust their tasks and work schedule as a result? If you have high central- ity, most people in the organization would be adversely affected by your absence, and they would be affected quickly.

The extent to which central ity leverages power is apparent in well-timed labour union str ikes, such as the New York City transit strike during the busy Christmas shopping season in 2005. The illegal three-day work stoppage clogged roads and caused half of city workers to miss or arrive very late for work. "[The Metropolitan Transit Authority] told us we got no power, but we got power," said one striking transit worker. "We got the power to stop the city."30 This example reveals that various contingencies of power can work in tandem to concentrate power. In this situation, we see that since New Yorkers rely on public transit more than some urban dwellers, substitutability and centrality converge to enhance power for the union.

VISIBILITY Lucy Shadbolt and her team members work from home and other remote locations for most of the workweek. While the manager of British Gas New Energy enjoys this freedom, she also knows that worki ng remotely can be a career liability due to the lack of visibility. "When I go into the office, where

284 Part Three Team Processes

we hot-desk, I have to make an effort to position myself near my boss," says Shadbolt. "You need to consciously bui ld relationships when you don't have those water-cooler moments naturally occurring."31

Shadbolt recognizes that power does not flow to unknown people in the organization. Instead, employees gain power when their talents remain in the forefront of the minds of their boss, co-workers, and others. In other words, power increases with your visibility. One way to increase visibility is to take people-oriented jobs and work on projects that require frequent interaction with senior executives. "You can take visibility in steps," advises an executive at a pharmaceutical firm. "You can start by making yourself visible in a small group, such as a staff meeting. Then when you're comfortable with that, seek out larger arenas.'m

Debating Point:

HOW MUCH POWER DO CEOS REALLY POSSESS?

It seems reasonable to assume that chief executive officers wield enormous power. They have legitimate power by virtue of their position at the top of the organizational hierarchy. They also have tremendous reward and coercive power because they direct budgets and other resources toward or away from various individuals and work units. Refusing to go along with the CEO's wishes can be an unfortunate career decision. Some CEOs also gain referent power because their lofty position creates an aura of reverence. Even in this era of equality and low power dis- tance, most employees further down the organization are in awe when the top executive visits.

CEO power is equally apparent through various contingencies. Top executives are almost always visible; some amplify that visibility when they become synonymous with the compa- ny's brand.33 CEOs also have high centrality. Few strategic decisions are put into motion unless the top dog is on board. CEOs are supposed to have replacements-in-waiting (to make them substitutable), yet more than a few don't take enough time to mentor an heir-apparent. Some CEOs create an image of being too unique to be replicated.

These points make it evident that CEOs have considerable power . .. except that many CEOs and a few experts don't agree.34 New CEOs quickly discover that they no longer have expertise over a specific area of the company or subject matter. Instead, they oversee the entire organization and its vast external environment-a domain so broad that CEOs neces- sarily become jacks-of-all-trades and masters-of-none. Consequently, more than any other position, the CEO depends on the expertise of others to get things done. CEOs don't even have much knowledge about what goes on in the organization. Reliable sources of information become more guarded when communicating to the top dog; employees further down the hier- archy carefully filter information so the CEO hears more of the good and less of the bad news.

The biggest Achilles heel for CEO power is that their discretion is much more restricted than most people realize. To begin with, CEOs are ra rely at the top of the power pyramid. Instead, they report to the company board, which can reject their proposals and fire them for acting contra ry to the board's wishes. The board's power over the CEO is particularly strong when the company has one or two dominant shareholders. But CEOs have been fired by the board even when the company's ownership is dispersed and the CEO is the company's founder! At one time, some CEOs had more power by serving as the board's chair and per- sonally selecting board members. Today, corporate governance rules and laws have curtailed this practice, resulting in more power for the board and less power for the CE0.35

The CEO's discretion is also held in check by the power of various groups within the organiza- tion. One such group is the CEO's own executive team. These executives constantly monitor their boss because their careers and reputation are affected by his or her actions, and some of them are eager to fill the top job themselves.36 Similarly, the actions of hospita l CEOs are restricted to some extent by the interests and preferences of physicians associated with the hospital.

One cross-cultural study found that the CEO's discretion is limited in countries where laws offer greater rights to many stakeholders (rather than just shareholders) and give employees more protection from dismissal and other company actions. The study also reported that the

Chapter Ten Power and Influence in the Workplace 285

CEO's discretion is limited in cultures with high uncertainty avoidance, because these social values require executives to take measured rather than bold steps toward change.37

You might think that CEOs have one remaining form of discretion: They can sti ll overrule their vice-presidents. Technically they can, but one group of experts points out that doing so has nasty repercussions. It triggers resentment and sends morale into a tailspin. Worse, this action motivates direct reports to seek out the CEO's involvement much earlier, which over- whelms the CEO's schedule and leaves less time for other priorities. A related observation is that CEOs are the official voice of the organization, so they have much less discretion about what they can say in public or in private conversations.

Finally, though it seems safe to claim that CEOs have high centrality, a few executives see their situation differently. "I am the least important person in this building," cla ims Mike Brown, CEO of Provena United Samaritans Medical Center in Illinois. "This place would run without me for weeks, but the most important groups here are the people taking care of the patients."38

Employees also gain visibi lity by being, quite literally, visible. Some people (such as Lucy Shadbolt, introduced earlier) strategically locate themselves in more visible work areas, such as those closest to the boss or where other employees frequently pass by. People often use public symbols as subtle (and not-so-subtle) cues to make their power sources known to others. Many professionals display their educational diplomas and awards on office walls to remind visitors of their expertise. Medical profes- sionals wear white coats with a stethoscope around their neck to symbolize their legitimate and expert

power in hospital settings. Other people play the game of "face time"-spending more time at work and showing that they are working productively.

DISCRETION The freedom to exercise judgment-to make decisions without referring to a specific rule or receiving permission from someone else-is another important contingency of power in organizations.39

Consider the plight of first-line supervisors. It may seem they have legitimate, reward, and coercive power over employees, but this power is often curtailed by specific rules.40 Take, for example, the Tim Hortons employee whose employment was terminated by "three managers" after offering a single 16-cent Timbit to a baby in spite of the store's pol icy prohibiting giving away free food.4 1 Head officer later reinstated the employee. This example illustrates the various power dynamics of discretion.

We see that the store managers punished an employee for exercising her discretion in good faith, but contrary to company policy; wherea~ head office exercised its discretion to overrule the authority of the managers, likely due to public relations pressure.

Research indicates that managerial discretion varies considerably across industries, and that manag- ers with an internal locus of control are viewed as more powerful because they don't act like they Jack discretion in their job.42

In summary, power decreases with more substitutability alternatives and power increa~es with higher levels of the contingency factors of centrality, discretion, and visibility.

The Power of Social Networks

L03 "It's not what you know, but who you know that counts!" This often-heard statement reflects the idea that employees get ahead not just by developing their competencies, but by locating themselves within social networks-social strucntres of individuals or social

units (e.g., departments, organizations) that are connected to each other through one or more forms of interdependence.43 Some networks are held together due to common interests, such as when employees who exercise over their lunch hours spend more time together. Other networks form around common status, expertise, kinship, or physical proximity. For instance, employees are more likely to form networks with co-workers who have common educational backgrounds and occupational interests.44

286 Part Three Team Processes

Social networks exist everywhere because people have a drive to bond. However, there are cultural differences in the norms of active network involvement. Several writers suggest that social networking is more of a central life activity in Asian cultures that emphasize guanxi, a Chinese term referring to an individual's network of social connections. Guanxi is an expressive activity because being part of a close-knit network of family and fr iends reinforces one's self-concept. Guanxi is also an instrumental activity because it is a strategy for receiving favours and opportunities from others. People across al l cultures rely on social networks for both expressive and instrumental purposes, but these activities seem to be somewhat more explicit in Confucian cultures.45

tr:::\ Do you have a guanxi orientation? You can assess how well you nurture ~ interpersonal connections by locating this self-assessment in Connect.

SOCIAL CAPITAL AND SOURCES OF POWER Social networks generate power through social capital- the goodwill and resulting resources shared among members in a social network.46 Social networks produce trust, support, sympathy, forgiveness, and similar forms of goodwill among network members, and this goodwill motivates and enables net- work members to share resources with each other.47

Social networks offer a variety of resources, each of which potentially enhances the power of its members. Probably the best-known resource is information from other network members, which improves the individual's expert power.48 The goodwill of social capital opens communication pipelines among those within the network. Network members receive valuable knowledge more easily and more quickly from fellow network members than do people outside that network.49 With better information access and timeliness, members have more power because their expertise is a scarce resource; it is not widely available to people outside the network.

Increased visibility is a second contributor to a person's power through social networks. When asked to recommend someone for valued positions, other network members more readily think of you than people outside the network. Simi larly, they are more likely to mention your name when asked to identify people with expertise in your areas of knowledge. A third resource from social networks is increased referent power. People tend to gain referent power through networking because members of the network identify with or at least have greater trust in each other. Referent power is also apparent by the fact that reciprocity increases among network members as they become more embedded in the network. 5°

Networks can also help with salary negotiations. In one study, a group of researchers examined data from over 3,000 salary negotiations in a high-tech company over a 10-year period. As expected, they found that job appl icants who were rac ial minorities negotiated lower salaries than those who were majority members. However, they found that this effect was dramatically reduced when they controlled for the number of social ties a person had. In this case, a social tie refers to whether someone knows an existing employee of the company. The implication, then, is that networking has the potential to benefit everyone, but especial ly those who are visible minorities. 51

A common misperception is that social networks are free spirits that cannot be orchestrated by corporate leaders. In reality, company structures and practices can shape these networks to some extent. 52 But even if organizational leaders don't try to manage social networks, they need to be aware of them. Indeed, people gain power in organizations by knowing what the social networks around them look like. 53 "You look at an org chart within a company and you see the distribution of power that should be," says a senior marketing executive at Thomson Reuters. "You look at the dynamics in the social networks [to] see the distribution of power that is. It reflects where information is flowing-who is really driving things."54

GAINING POWER THROUGH SOCIAL NETWORKS How do individuals (and teams and organizations) gain the most social capital from social networks? To answer this question, we need to consider the number, depth, variety, and central ity of connections that people have in their networks.

Chapter Ten Power and Influence in the Workplace

Socia~network analysis at a major oil and gas company

Before

• • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • •• • • • • • •••• • • •••• • • • • • • • • • • • • • • •• • • • • • •••• • • • •• • • • • • • • • • • •

Angola • Brazil • Canada

After

• • • • • ~ .. • • • •

Nigeria

• • ••• • • • • • • • • • •

• • • • • • • • • • • • • • • • • • • .. •

• • •

Saudi Arabia

• • • • • • • • • • • • ••••••• • • •••• • • • • • • • • • • • •

• United Kingdom

Operations staff at a global oil and gas company were not using the best available production methods because they didn't share best practices with their peers in other countries or with the company's technical experts (see left of d iagram above). Instead, employees shared information mainly with local co-workers and technical staff who they already knew well. The company's solution was to transfer some field staff to teams in other regions. These transfers eventually formed and strengthened network relationships across borders (see right of d iagram), which dramatically improved knowledge sharing and social capital. Within a year, productivity increased by 10 percent and costs due to poor quality fell by two-thirdsss

Exhibit from "Organizing for an emerging world", July 2012, McKinsey Quarterly, www.mckinsey.com/ insights /mcklnsey_quarterly. McKinsey & Company. Reprinted by permission.

287

Strong Ties, Weak Ties, Many Ties The volume of infonnation, favours, and other social capital that people receive from networks usually increases with the number of people connected to them. Some people have an amazing capacity to maintain their connectivity with many people, and emerging communication technologies (Twitter, Facebook, Linkedin, etc.) have further amplified this capacity to maintain these numerous connections. 56 At the same time, the more people you know, the Jess time and energy you have to form "strong ties." Strong ties are close-knit relationships, which are evident from how often we interact with people, how much we share resources with them, and whether we have mul- tiple or single-purpose relationships with them (e.g., friend, co-worker, sports partner). The main advan- tages of having strong ties are that they offer resources more quickly and sometimes more plentifully than are available in weak ties (i.e., acquaintances).

Some minimal connection strength is necessary to remain in any social network, but strong connec- tions aren't necessarily the most valuable ties. Instead, having weak ties (i.e., being merely acquaintances) with people from diverse networks can be more valuable than having strong ties (i.e., having close friend- ships) with people in similar networks. 57 Why is this so? Close ties~ur close-knit circle of friends- tend to be similar to us, and similar people tend to have the same information and connections that we already have. 58 Weak ties, on the other hand, are acquaintances who are usually different from us and therefore offer resources we do not possess. Furthermore, by serving as a "bridge" across several unre- lated networks, we receive unique resources from each network rather than more of the same resources. In addition, sometimes rules and regulations preclude individuals gaining an advantage from close social connections; for example, several Canadian jurisdictions al low employers to have anti-nepotism policies prohibiting employment of family members.

288 Part Three Team Processes

The value of weak ties is most apparent in job hunting and career development. 59 People with diverse networks tend to be more successful job seekers because they have a wider net to catch new job opportunities. In contrast, people who belong to similar overlapping networks tend to receive fewer leads, many of which they already knew about. As careers increasingly require more movement across many organizations and industries, you need to establish connections with people across a diverse range of industries, professions, and other spheres of life.

Social Network Centrality Earl ier in this chapter, we explained that centrality is an important contingency of power. This contingency also applies to social networks.60 The more central ly a person (or team or organization) is located in the network, the more social capital and therefore more power he or she acquires. Centrality is one's importance in the network. Three factors determine your cen- trality in a social network. One factor is your "betweenness," which literally refers to how much you are located between others in the network. In Exhibit 10.3, Person A has high betweenness central ity because he or she is a gatekeeper who controls the flow of information to and from many other people in the network. Person G has less betweenness, whereas Person F and several other network members in the diagram have no betweenness. The more betweenness you have, the more you control the distri-

bution of information and other resources to people on either side of you. A second factor in centrality is the number or percentage of connections you have to others in the

network (called "degree centrality"). Recall that the more people connected to you, the more resources (information, favours, etc.) will be available. The number of connections also increases central ity because you are more vis ible to other members of the network. Although being a member of a network gives you access to resources in that network, having a direct connection to people makes that resource

sharing more fluid. A third factor in centrality is the "closeness" of the relationship with others in the network. High

closeness occurs when a member has shorter, more direct, and efficient paths or connections with others in the network. For example, Person A has fairly high closeness centrality because he/she has direct paths to most of the network, and many of these paths are short (implying efficient and high

EXHIBIT 10.3 Centrality in Social Networks

Person A has high betweenness, closeness, and degree (number) centrality

Person F has low

Chapter Ten Power and Influence in the Workplace 289

quality communication links). Your centrality increases with the closeness with others because they

are affected more quickly and significantly by you. One last observation is that Exhibit 10.3 illustrates two clusters of people in the network. The gap

between these two clusters is called a structural hole.61 Notice that Person A provides the main bridge

across this structural hole (connecting to Hand K in the other cluster). This bridging role gives Person A additional power in the network. By bridging this gap, Person A becomes a broker-someone who con- nects two independent networks and controls information flow between them. Research shows that the more brokering relationships you have, the more likely you are to get early promotions and higher pay.

The Dark Side of Social Networks Social networks are natural elements of al l organizations, yet they can create a formidable barrier to those who are not actively connected to them.62 Women are often excluded from formal and informal business networking opportunities because they do not participate in, or are perceived to be unsuitable for, certain male-dominated social activities. This especial ly occurs in male-dominated industries. For example, in 2014, the Human Rights Tribunal of Ontario determined that Systemgroup Consulting Inc., a Mississauga-based business technology services firm, discriminated against a female employee because of her gender when the company spon- sored a "men only" ski event for the company's male sales executives and male clients. The female employee, a business development director, raised concerns of discriminatory treatment when she dis- covered that her male peers and male clients were invited to the customer appreciation event hosted by

the company. The tribunal ruled that the company retal iated against the female business director when it fired her after she complained that the men-only event was inappropriate. The tribunal stated that the company undercut the female business director's "ability to compete on the same playing field as her male peers," and "perpetuated the belief that supporting women sales professionals in interacting with clients is less valuable or important than supporting male sales professionals.'.o3 The tribunal awarded

the female employee six months' Joss of income and $ 18,000 damages for injury to human dignity.64

Empirical research conftrms that the effect of social networks can constrain the opportunities and advancement of women to corporate board memberships.65 Several years ago, executives at Deloitte Touche Tohmatsu discovered that inaccessibility to powerful social networks partly explained why many junior female employees left the global accounting and consulting firm before reaching partnership level. The organization now relies on mentoring, formal women's network groups, and measurement of career progress to ensure that female staff members have the same career development opportunities as their male colleagues.66 Recently, Air Canada, one of Canada's largest employers, with over 40 percent female managers, hosted two "Women in Aviation" events to facilitate discussions regarding career manage- ment and, in particular, to encourage female personnel to establish internal networks67

CIBC, one of Canada's oldest banking institutions, recognized the power and importance of social networks for career advancement. To help remove barriers to leadership, strengthen inclusion, and establ ish professional connections, the erne supports nine different internal "Affinity Networks." The Affinity Networks are employee-led groups that bring together employees of similar backgrounds (e.g., Indigenous, LGBTQ, South Asian, etc.), in order to provide informal advice, help career devel- opment, and foster client engagement. The newest Affinity Network group, called the " International Professionals Network," is focused on new immigrants because executives at CIBC real ized that, while

the bank wa~ hiring new immigrants, it was not doing enough to support newcomer retention and prog- ress. The newcomers network has developed a program to "cultivate peer support and bui ld inclusion from within," which includes seminars "on cross-cultural awareness and business communication to address the unsaid rules and norms for networking and social cues in the North American context."68

Consequences of Power How does power affect the power holder? The answer depends to some extent on the type of power.69 When people feel empowered (high self-determination, meaning, competence, and impact), they believe they have power over themselves and freedom from being influenced by others. Empowerment tends to increase

290 Part Three Team Processes

motivation, job satisfaction, organizational commitment, and job performance. However, thi s feeling of

being in control and free from others' authority al so increases automatic rather than mindful thinking. In particular, people who feel powerful usually are more l ikely to rely on stereotypes, have difficulty empa-

thi zing, and general ly have less accurate perceptions compared with people with less power70

The other type of power is one in which an individual has power over others, such as the legitimate, reward, and coercive power that managers have over employees in the workplace. This type of power

produces a sense of duty or responsibil ity for the people over whom power is held. Consequently, people who have power over others tend to be more mindful of their acti ons and engage in less stereotyping.

How do you influence co-workers and other peers? You can discover the types of influence you might employ and your preference for various tactics by locating this self-assessment on Connect.

Influencing Others

So far, thi s chapter has focused on the sources and contingencies of power as well as

power derived from social networks. But power is only the capacity to influence others.

It represents the potential to change someone's attitudes and behaviour. Influence, on the other hand, refers to any behaviour that attempts to alter someone's attitudes or behaviour7 1 Influ-

ence is power in motion. It appl ies one or more sources of power to get people to alter their beliefs,

feelings, and activities. Consequently, our interest in the remainder of thi s chapter is on how people use power to influence others.

Influence tactics are woven throughout the social fabric of all organizations. This is because influ-

ence is an essential process through which people coordinate their efforts and act in concert to achieve organizational objectives. Indeed, influence is central to the definition of leadership. Influence operates

down, across, and up the corporate hierarchy. Executives ensure that subordinates complete required tasks. Employees influence co-workers to help them with their job assignments. And a~ Global Connections 10.1

describes, upward influence tactics-better known as managing your boss-are important for your

personal career success and achievement of the organization's objectives.

Global Connections 1 0.2:

THE ART AND SCIENCE OF MANAGING YOUR 805572

lain McMath doesn't like to have an avalanche of information hinder his executive decision process. " I do things based on intuition, so when I meet with my financial director I only need a one-page summary; says the managing director of services firm Sodexo Motivation Solutions Ltd. in Surrey, U.K. Unfortunately, it took a while before the financial d irector figured out McMath's preferences. She was coming to the meetings "with a file of 600 pages; McMath recalls. " I would then get frustrated because she gave me too much information, and she would get frustrated because she thought I didn't understand the importance of the data."

McMath's financial director eventually adjusted her behaviour to fit her boss's preferences. This alignment not only reduced conflict and frustration; it helped the financial director to man- age her boss by creating a more favourable impression. Managing your boss is the process of improving the relationship with your manager for the benefit of each other and the organization. It includes developing bases of power that enable you to infl uence the manager to achieve

Chapter Ten Power and Influence in the Workplace 291

Managing your boss is an important form of influence in organizations. "It is crucial to understand how to manage your manager; says an executive at British department store chain John Lewis.

©Chris Ryan/AGE Fotostock

organizational objectives. Most executives say it is a key factor in career success. "It is crucial to understand how to manage your manager," says Tracey Andrews, manager of learning and development at British department store cha in John Lewis. "Start by getting to know how your manager thinks and works and what his/her priorities are."

Along with aligning your behaviour with the manager's preferred style, managing your boss involves becoming a va luable resource by making your manager's job easier. Th is begins by performing your own job well. "Managing your manager is all about going that extra step," advises Chris Barber, who leads a team of 12 people as director of a photography stu- dio in Warwickshire, U.K. "It doesn't mean manipulating people ... it's about doing your job well and helping your manager to get the best results."

Managing your boss also requires some impression management. For example, you need to "be a 'problem solver' rather than a 'problem pyromaniac'," says John Shetcliffe, managing director at John Shetcliffe Marketing in Hertfordshire, U.K. Problem pyromaniacs turn every- thing into problems for the boss to fix, whereas problem solvers offer the boss solutions when problems arise. Shetcliffe recommends a related impression management strategy for man- aging your boss: "Don't supply just bad news; announce good news too. Otherwise, little by little you become the bad news!"

292 Part Three Team Processes

TYPES OF INFLUENCE TACTICS Organizational behaviour researchers have devoted considerable attention to the various types of

influence tactics found in organizational setti ngs. They do not agree on a definitive list, but the most commonly discussed influence tactics are identified in Exhibit 10.4 and described over the next few pages73 The first five are known as "hard" influence tactics because they force behaviour change through position power (legitimate, reward, and coercion). The latter three-persuasion, impression management, and exchange-are cal led "soft" tactics because they rely more on personal sources of power (referent, expert) and appeal to the target person's attitudes and needs.

Silent Authority The si lent application of authority occurs where someone complies with a request because of the requester's legitimate power as well as the target person's role expectations.74 This deference occurs when you comply with your boss's request to complete a particular ta~k. If the task

is within your job scope and your boss has the r ight to make this request, then this influence strategy operates without negotiation, threats, persua~ion, or other tactics. Silent authority is the most common form of influence in high power distance cultures7 5

Assertiveness Assertiveness might be called "vocal authority" because it involves actively applying legitimate and coercive power to influence others. This includes persistently reminding the target of his or her obl igations, frequently checking the target's work, confronting the target, and using threats of sanctions to force compliance.

Information Control Earlier in this chapter we explained that people with central ity in social networks have the power to control information. This power translates into influence when the power

holder selectively distributes information such that it reframes the situation and causes others to change their attitudes and/or behaviour. Controlling information might include withholding information that is more critical or favourable, or by distributing information to some people but not to others. According to one major survey, almost half of employees believe co-workers keep others in the dark about work

• by the NUMBERS

Bullying Bosses by the Numbers76

of 16,517 workers polled worldwide say they have been bullied

at work.

of British employees polled say they had broken down in tears

as a result of cruel taunts from bosses.

24% of 5,600 American employees say they have been yelled at by their

boss in front of co-workers.

of 800 Canadian human resource professionals polled

believe that managers bul lying/intimidating employees is a significant problem in today's workplace.

25% of900American phanmacists surveyed say that

management has used intimidation to get them to achieve performance targets.

Chapter Ten Power and Influence in the Workplace 293

EXHIBIT 10.4 Types of Influence Tactics in Organizations

....._.,'hdlc Daalll ..

Silent authority Influencing behaviour through legitimate power without explicitly referring to that power base

Assertiveness Actively applying legitimate and coercive power by applying pressure or threat'i

Information control Explicitly manipulating someone else's access to information for the purpose of changing their

attitudes and/or behaviour

Coalition fonnation Forming a group that attempts to influence others by pooling the resources and power of its members

Upward appeal Gaini ng support from one or more people with higher authority or expertise

Persuasion Using logical arguments. f.tctual evidence. and emotional appeals to convince people of the

value of a request

Impression management Actively shaping through self-presentation and other means the perceptions and attitudes that

(including ingratiation) others have of us. which includes ingratiation {refers to the influencer's attempt to be more liked

by the targeted person or group)

Exchange Promis ing benefit'i or resource.'i in exchange for the larget person's compliance

issues if it helps their own cause. Another study found that CEOs influence their board of directors by

selectively feeding and withholding information?7

Coalition Formation When people lack sufficient power alone to influence others in the organiza- tion, they might form a coalition of people who support the proposed change. A coalition is influential in three ways.78 First, it pools the power and resources of many people, so the coalition potentially has

more influence than any number of people operating alone. Second, the coalition's mere existence can be a source of power by symbolizing the legitimacy of the issue. In other words, a coal ition creates a sense that the issue deserves attention because it has broad support. Third, coalitions tap into the power

of the social identity process introduced in Chapter 3. A coalition is an informal group that advocates a new set of norms and behaviours. If the coalition ha~ a broad-based membership (i.e., its members come from various parts of the organization}, then other employees are more likely to identify with that

group and, consequently, accept the ideas the coalition is proposing.

Upward Appeal Upward appeal involves calling upon higher authority or expertise, or symbolically relying on these sources to support the influencer's position. It occurs when someone says "The boss likely agrees with me on this matter; let's find out!" Upward appeal also occurs when relying on the authority of the fmn's policies or values. By reminding others that your request is consistent with the organization's overarching goals, you are implying support from senior executives without formally involving them.

Persuasion Persuasion, which we discussed in Chapter 9, is one of the most effective influence strategies for career success. The ability to present facts, logical arguments, and emotional appeals to change another person's attitudes and behaviour is not just an acceptable way to influence others; in many societies, it is a noble art and a quality of effective leaders. The effectiveness of persuasion as an influence tactic depends on characteristics of the persuader, message content, communication medium, and the audience being persuaded (see Exhibit 10.5)79 People are more persuasive when listeners believe they have expertise and credibility, when the persuader does not seem to profit from the persua- sion attempt, and when the persuader states a few points against the position.

The message is more important than the messenger when the issue is important to the audience. Persuasive message content acknowledges several points of view so the audience does not feel cornered by the speaker. The message should also be limited to a few strong arguments, which are repeated a few times, but not too frequently. The message should use emotional appeals (such as graphically showing the unfortunate consequences of a bad decision), but only in combination with logical arguments and specific recommendations to overcome the threat. Final ly, message content is more persuasive when

294 Part Three Team Processes

-- EXHIBIT 10.5 Elements of Persuasion

....--- Pel Ill a-.1 C'llllnlrtatlll t/6Jilledhe ... IIIII

Persuader characteristics Expertise

Credibility

No apparent profit motive

Appears somewhat neutral (acl<nowledges benefil' of the opposing view)

Message content Multiple viewpoinl' (not exclusi,•ely supporting the supported option)

Limited to a few strong arguments {not many argument'i)

Repeats argument'i, but not excessively

Uses emotional appeals in combination with logical argument'i

Offers specific solutions to overcome the stated problems

Inoculation effect- audience warned of counterarguments that opposition will present

Communication medium Media-rich channels are usually more persuasive

Audience characteristics Persuasion is LESS effective when the audience:

has higher self·esteem

has higher intelligence

has a self·concept tied to an opposing position

the audience is warned about opposing arguments. This inoculation effect causes listeners to gener- ate counterarguments to the anticipated persuasion attempts, which makes the opponent's subsequent persuasion attempts less effective.80

Two other considerations when persuading people are the medium of communication and character- istics of the audience. Generally, persuasion works best in face-to-face conversations and through other

media-rich communication channels. The personal nature of face-to-face communication increases the persuader's credibility, and the richness of this channel provides faster feedback that the influence strategy is working. With respect to audience characteristics, it is more difficult to persuade people

who have high self-esteem and intelligence, as well as a self-concept that is strongly tied to the oppos- ing viewpoint.81

Impression Management (Including Ingratiation) Silent authority, assertiveness, infonnation control, coalitions, and upward appeals are somewhat (or very!) forceful ways to influence other people. In contrast, a very "soft" influence tactic is impression management-actively shaping the perceptions

and attitudes that others have of us.82 Impression management mostly occurs through self-presentation. We craft our public images to create various fonns, such as being important, vulnerable, threatening, or pleasant. For the most part, employees routinely engage in pleasant impression management behaviours to satisfy the basic norms of social behaviour, such as the way they dress and how they behave toward

colleagues and customers. Recent research regarding the benefits of certain workplace behaviours, such a~ treating co-workers

with respect and courtesy, found that people who were viewed as conducting themselves in a civil manner were specifically sought out for work advice and were more likely to be considered as leaders by their peers. 83 According to lead civil ity researcher Christine Porath, the more an individual was regarded as acting in a civil manner within the organization, the more likely they were perceived as competent: "Across the board, I've found that civi lity pays. It enhances your influence and performance-and is positively associated with being perceived as a leader."84

Impression management is a common strategy for people trying to get ahead in the workplace. In fact, career professionals encourage people to develop a personal ''brand"; that is, to form and display an

Chapter Ten Power and Influence in the Workplace 295

(accurate) impression of your distinctive competitive advantage.85 Furthermore, people who master

the art of personal branding rely on impression management through distinctive personal characteris- tics. PricewaterhouseCoopers LLP is one the largest professional services firms in the world. Selected for several years in a row as one of Canada's Top Employers for Young People (a competition run in

conjunction with The Globe and Mail), PricewaterhouseCoopers LLP encourages students to build their unique brand in order to stand out in competitive recruitment processes. In its "Building Your

Brand" handbook, the company strongly advises that young people ensure their online reputation is positive and professional and that students claim their name on Twitter, Facebook, Linkedin, Tumblr,

and YouThbe, in addition to buying the ir domain name. It further suggests that, whi le students should always be professionally attired and well-groomed, displaying "some flair with a bright tie or unique piece of jewelry" can enhance personal branding. 86

Scott McGillivray, Canadian television star and executive producer of the popular HGTV series Income Property, is famous for his plaid shirts. McGillivray was a University of Guelph business student when he purchased his first rental property. Twenty years later, he has owned and renovated hundreds of properties in Canada and the U.S., been featured in one of People magazine's Sexiest Man Alive issues, and created and starred in eleven seasons of Income Property, for which he has twice won the Canadian Screen Award for Best Lifestyle Program. In his award-w inning show, McGillivray leads ord inary homeowners through renovations to incorporate rental suites into their homes in order to help pay down their mortgages and increase home value. After an embarrassing episode in the first season when he wore a solid bright yellow shirt selected by a TV stylist, McGillivray decided that he would be in charge of his personal brand and would portray only his authentic self on his shows. McGillivray recognized that people crave consistency and felt that sticking with his plaid shirts was the best way of communicating his brand. As a result, McGillivray's powerhouse brand is tied to his signature style, the casual button-down plaid shirt. McGillivray describes the plaid shirt as representative of his personal brand as a hard-working, roll-up-your- sleeves type of guy. 87

Photo by Richard Sibbald

296 Part Three Team Processes

One sub-category of impression management is ingratiation, which is any attempt to increase liking by, or perceived similarity to, some targeted person.88 Ingratiation comes in several flavours. Employees might flatter their boss in front of others, demonstrate that they have similar attintdes as their boss

(e.g., agreeing with the boss's proposal), and ask their boss for advice. Ingratiation is one of the more

effective influence tactics at boosting a person's career success (i .e., performance appraisal feedback, sal- aries, and promotions).89 However, people who engage in high levels of ingratiation are less (not more)

influential and less likely to get promoted.90 Why the opposite effect? Those who engage in too much ingratiation are viewed as insincere and self-serving. The terms "apple polishing" and "brown-nosing"

are applied to those who ingratiate to excess or in ways that suggest selfish motives for the ingratiation.

Exchange Exchange activities involve the promise of benefits or resources in exchange for the tar- get person's compliance with your request. Negotiation is an integral part of exchange influence activi-

ties. For instance, you might negotiate with your boss for a day off in return for working a less desirable shift at a future date. Exchange also includes applying the norm of reciprocity that we described earlier, such as by reminding the target of past benefits or favours with the expectation that the target will now

make up for that debt. Earlier in this chapter, we explained how people gain power through social net- works. They also use norms of reciprocity to influence others in the network. Active networkers build

up "exchange credits" by helping colleagues in the short-term for reciprocal benefits in the long term.

CONSEQUENCES AND CONTINGENCIES OF INFLUENCE TACTICS Faced with a variety of influence strategies, you are probably asking: Which ones are best? The best way to answer this question is to describe the three ways people react when others try to influence them: resis-

tance, compliance, or commitment (see Exhibit 10.6).91 Resistance occurs when people or work units oppose the behaviour desired by the influencer. At the extreme, they refuse to engage in the behaviour. However, there are degrees of resistance, such a~ when people perform the required duties yet demonstrate

their continued opposition by performing the tasks poorly or continuing to complain about the imposed work. Compliance occurs when people are motivated to implement the influencer's request for purely

EXHIBIT 10.6 Consequences of Hard and Soft Influence Tactics

Soft Influe nce

Tactics

Ha rd Influe nce

Tactics

Chapter Ten Power and Influence in the Workplace 297

instrumental rea~ons. Without external sources to prompt the desired behaviour, compliance would not occur. Furthermore, compliance usually involves engaging in the behaviour with no more effort than is required. Commitmefll is the strongest outcome of influence, whereby people identify with the influencer's request and are highly motivated to implement it even when extrinsic sources of motivation are not present.

Generally, people react more favourably to "soft" tactics than to "hard" tactics. Soft influence tactics rely on personal sources of power (expert and referent power}, which tend to build commitment to the influencer's request. In contrast, hard tactics rely on position power (legitimate, reward, and coercion}, so they tend to produce compl iance or, worse, resistance. Hard tactics also tend to undermine trust, which can hurt future relationships.

Apart from the general preference for soft rather than hard tactics, the most appropriate influence strategy depends on a few contingencies. One obvious contingency is which sources of power are stron- gest. Those with expertise tend to have more influence using persua~ion, whereas those with a strong

legitimate power base are usually more successful applying silent authority.92 A second contingency is whether the person being influenced is higher, lower, or at the same level in the organization. As an example, employees may face adverse career consequences by being too assertive with their boss. Meanwhile,

supervisors who engage in ingratiation and impression management tend to Jose the respect of their staff. Finally, the most appropriate influence tactic depends on personal, organizational, and cultural

values93 People with a strong power orientation might feel more comfortable using assertiveness, whereas those who value conformity might feel more comfortable with upward appeals. At an organizational level, firms with a competitive culntre might foment more use of information control and coalition formation,

whereas companies with a learning orientation would likely encourage more influence through persuasion. The preferred influence tactics also vary across societal culntres. Research indicates that ingratiation is much more common among managers in Canada than in Hong Kong, possibly because this tactic disrupts the more distant roles that managers and employees expect in high power distance culntres.

Organizational Politics

You might have noticed that organizational pol itics has not been mentioned yet, even though some of the practices or examples described over the past few pages are usually considered political tactics. The phrase was carefully avoided because, for the most part,

organizational politics is in the eye of the beholder. You might perceive a co-worker's attempt to influ- ence the boss as acceptable behaviour for the good of the organization, whereas someone else might perceive the co-worker's tactic as brazen organizational pol itics.

This perceptual issue explains why OB experts increasingly discuss influence tactics as behaviours and organizational politics as perceptions.94 The influence tactics described earlier are perceived as organizational politics when they seem to be self-serving behaviours at the expense of others and pos-

sibly contrary to the interests of the entire organization. Of course, some tactics are so blatantly selfish and counterproductive that almost everyone correctly sees them as organizational politics. In other situations, however, a person's behaviour might be viewed as political or in the organization's best interest, depending on your point of view.

Employees who experience negative organizational politics have lower job satisfaction, organi- zational commitment, organizational citizenship, and task performance, as well as higher levels of work-related stress and motivation to leave the organization. According Christine Porath and Christine Pearson, leading researchers on the topic of toxic work environments, workplace incivil ity, including organizational political behaviours, such as taking credit for another's work, talking behind someone's back, and paying little attention to an expressed opinion, has proliferated over the last two decades. Their survey across 17 industries and 14,000 CEOs, managers, and employees found that 48 percent of respondents who were exposed to incivility intentionally decreased work effort because of rudeness in the workplace and office politics.95

"A pol itically charged work environment can hinder productivity, erode trust, and lead to morale and retention issues," says Renan Silva, a corporate project management office specialist at Serasa

298 Part Three Team Processes

Experian, a credit bureau in Sao Paulo, Brazil.96 And because political tactics serve individuals rather than organizations, they potentially divert resources away from the organization's effective functioning and potentially threaten its survival.

The vacation roster is a scarce resource, and resource scarcity brings out the worst office politics. One recent poll reported that 13 percent of British employees refused to tell others when they would take their vacations, so co-workers wouldn't book the same dates. Another 7 percent said they protected their vacation plans by lying to co-workers about those plans. Five percent were even more Machiavellian; they strategically booked vacation dates that scuttled the preferred holiday times of a disliked co-worker. "I know this is true," says an employee from Newport, Wales, who was not part of the survey. "I had a colleague who knew my holiday habits and would go in on January 2nd and book every week that he knew I habitually had for holidays because he knew my wife's holidays were fixed and could not be changed. He didn't really need those days; he did it out of spite."97

C>Ciaran Griffin/Photodisc/Getty Images

How politically charged is your school? You can d iscover the level of organizational politics in your school by locating this self-assessment in Connect.

Chapter Ten Power and Influence in the Workplace 299

MINIMIZING ORGANIZATIONAL POLITICS Researchers have identified several conditions that support organizational politics, so we can identify

corresponding strategies to keep pol itical activities to a minimum.98 First, organizational politics is triggered by scarce resources in the workplace. When budgets are slashed, people rely on pol itical tac- tics to safeguard their resources and maintain the status quo. Although it is not easy to maintain or add resources, sometimes this action may be Jess costly than the consequences of organizational politics.

Second, organizational politics is suppressed when resource allocation decisions are clear and sim- pl ified. Political tactics are fuelled by ambiguous, complex, or nonexistent formal rules because those tactics help people get what they want when decisions Jack structural guidelines. Third, organizational change tends to bring out more organizational pol itics, mainly because change creates ambiguity and threatens the employee's power and other valued resources.99 Consequently, leaders need to apply

the organizational change strategies that we describe in Chapter 15, particularly through communication, learning, and involvement. Research has found that employees who are kept informed of what is going on in the organization and who are involved in organizational decisions are Jess likely to observe orga-

nizational politics. Finally, political behaviour is more common in work units and organizations where it is tolerated

and reinforced. Some companies seem to nurture self-serving behaviour through reward systems and by demonstrating it in the behaviours of organizational leaders. To minimize pol itical norms, the orga- nization needs to diagnose and alter systems and role modelling that support self-serving behaviour. They should support organizational values that oppose political tactics, such as altruism and customer

focus. One of the most important strategies is for leaders to become role models of organizational citi- zenship rather than symbols of successful organizational pol iticians.

Personal Characteristics Several personal characteristics affect a person's motivation to engage in self-serving behaviour. 100 This includes a strong need for personal as opposed to socialized power. Those with a need for personal power seek power for its own sake and try to acquire more power. Some individuals have strong Machiavellian values. Machiavellianism is named after Niccoli:> Machiavelli, the 16th-century Italian philosopher who wrote The Prince, a famous treatise about political behaviour. Peo- ple with high Machiavellian values are comfortable with getting more than they deserve, and they believe that deceit is a nantral and acceptable way to achieve this goal. They seldom trust co-workers and tend to use cruder influence tactics, such as bypassing one's boss or being assertive, to get their own way. 101

How Machiavellian are you? You can discover how much you value the political tactics emphasized by Machiavelli by locating this self-assessment in Connect.

Chapter Summary

LO 1 Describe the dependence model of power and describe the five sources of power in org~tnizations. Power is the capacity to influence others. It ex ists when one party perceives that he or she is dependent on the other for something of value. However, the dependent person must also have countervailing power-some power over the dominant party---4o maintain the relationship, and

the parties must have some level of trust. There are five power bases. Legitimate power is an agreement among organizational members that people in

certain roles can request certain behaviours of others. This power has restrictions represented by the target

300 Part Three Team Processes

person's zone of indifference. It also includes the norm of reciprocity (a feeling of obl igation to help someone who has helped you) as well as control over the flow of information to others. Reward power is derived from the abi lity to contro l the allocation of rewards valued by others and to remove negative sanctions. Coercive power is the abi lity to apply punishment. Expert power is the capacity to influence others by possessing knowledge or skills that they value. An important form of expert power is the (perceived) ability to manage uncertainties in the business environment. People have referent power when others identify with them, like them, or otherwise respect them.

L02 Discuss the four contingencies of power. Four contingencies determine whether these power bases translate into real power. Individuals and work units are more powerful when they are non-substitutable, that is, there is a Jack of alternatives. Employees, work units, and organizations reduce substitutabil ity by controlling

tasks, knowledge, and labour, and by di fferentiating themselves from competitors. A second contingency is central ity. People have more power when they have high central ity, that is, the number of people affected is large and people are quickly affected by their actions. The third contingency, visibility, refers to the idea that power increases to the extent that a person's or work unit's competencies are known to others. Discretion, the fourth contingency of power, refers to the freedom to exercise judgment. Power increases when people have freedom to use their power.

L03 Explain how people and work units gain power through social networks. Social networks are social structures of individuals or social units (e.g., departments, organiza- tions) that are connected to each other through one or more forms of interdependence. People receive power in social networks through social capital, which is the goodwi ll and resulting

resources shared an10ng members in a social network. Three main resources from social networks are information, visibility, and referent power.

Employees gain social capital through their relationship in the social network. Social capital tends to increase with the number of network ties. Strong ties (close-knit relationships) can also increase social capital because these connections offer more resources and offer them more quickly. However, having weak ties with people from diverse networks can be more valuable than having strong ties with people in similar networks. Weak ties provide more resources that we do not already possess. Another influence on social capital is the person's centrality in the network. Network centrality is determined in several ways, including the extent to which you are located between others in the network (betweenness), how many direct ties you have (degree), and the closeness of these ties. People also gain power by bridging structural holes- linking two or more clus- ters of people in a network .

L04 Describe eight types of influence tactics, three consequences of influencing others, and three contingencies to consider when choosing an influence tactic. Influence refers to any behaviour that attempts to alter someone's attitudes or behaviour. The most widely studied influence tactics are silent authority, assertiveness, information control, coalition

formation, upward appeal , impression management, persuasion, and exchange. "Soft" influence tactics such as friendly persuasion and subtle ingratiation are more acceptable than "hard" tactics such as upward appeal and assertiveness. However, the most appropriate influence tactic also depend~ on the influencer's power base; whether the person being influenced is higher, lower, or at the same level in the organization; and personal, organizational, and cultural values regarding influence behaviour.

LOS Identify the organizational conditions and personal characteristics that support organizational politics, as well as ways to minimize organizational politics.

Organizational politics refers to influence tactics that others perceive to be self-serving behaviours at the expense of others and sometimes contrary to the interests of the organization. It is more

common when an1biguous decisions allocate scarce resources and when the organization tolerates or rewards political behaviour. Individuals with a high need for personal power and strong Machiavellian values have a higher propensity to use political tactics. Organizational politics can be minimized by providing clear rules for resource allocation, establishing a free flow of information, using education and involvement during organizational change, supporting team norms and a corporate culture that discourage dysfunctional politics, and having leaders who role model organizational citizenship rather than pol itical savvy.

Chapter Ten Power and Influence in the Workplace

Key Terms cent rality

charisma coalition

countervailing power

impression management influence

inoculation effect

legitimate power Machiavellian values

norm of reciprocity

organizational politics power

referent power

social capital social networks

structural hole

substitutability upward appeal

Critical Thinking Questions

301

I. What role does countervai ling power play in the power relationship? Give an example of your own encounter with countervai ling power at school or work.

2. Until recently, a mining company's data resided in the department that was responsible for that information. Property data were on the computers in land administration, hydrocarbon data were in the well administration group, maps were found in the map department, and so on. The executive team concluded that this arrange- ment was dysfunctional , so the CEO announced that all information wou ld be placed on a central server system so it is widely accessible. lf someone needs a colour map, for example, he or she can retrieve it from the central server without going through the map department. Rather than welcome the change, employees in several departments complained, offering several arguments why other groups shou ld not have direct access to their data files. Some departments tried to opt out of the centralized server syste m. Using the model of sources and contingencies of power, explain why some groups opposed the central server model of data access.

3. You have just been hired as a brand manager of toothpaste for a large consumer products company. Your job mainly involves encouraging the advertising and production groups to promote and manufacture your product more effectively. These department~ aren't under your direct authority, although company procedures indicate that they must complete certain tasks requested by brand managers. Describe the sources of power you can use to ensure that the advertising and production departments will help you make and sell toothpaste more effectively.

4. How does social networking increase a person's power? What social networking strategies could you initiate now to potentially enhance your future career success?

5. List the eight influence tactics described in this chapter in terms of how they are used by students to influence their university instructors. Which influence tactic is applied most often? Which is applied least often, in your opinion? To what extent is each influence tactic considered legitimate behaviour or organizational politics?

6. Consider a situation where there is a s ingle female member in a team of six and she is generally excluded from informal gatherings of the tean1. What kind of influence tactics can she use to make up for this limitation?

7. In the mid-1990s, the CEO of Apple Computer invited the late Steve Jobs (who was not associated with the company at the time) to serve as a special adviser and raise morale among Apple employees and customers. While doing this, Jobs spent more time advising the CEO on how to cut costs, redraw the organization chart, and hire new people. Before long, most of the top people at Apple were Jobs' colleagues, who began to systematically evaluate and weed out teams of Apple employees. While publicly supporting Apple's CEO, Jobs privately criticized him and, in a show of non-confidence, sold 1.5 million shares of Apple stock he had received . This action caught the attention of Apple's board of d irectors, who soon after decided to replace the CEO with Steve Jobs. The CEO claimed Jobs was a conniving back-stabber who used political tactics to get his way. Others suggest that Apple would be out of business today if he hadn' t taken over the company. In your opinion, were Steve Jobs' actions examples of organizational politics? Justify your answer.

8. This book frequently emphasizes that successful companies engage in organizational learning. How do political tactics interfere with organizational learning objectives?

302 Part Three Team Processes

Case Study:

RESONUS CORPORATION

by Steven L. McShane, Curtin University (Australia) and University of Victoria (Canada). Based on an ear lier case writt en by J ohn A. Seeger.

Frank Choy is normally a quiet person, but his patience has already worn thin by interdepartmental battles. Choy joined Resonus Corporation, a hearing aid designer and manufacturer, eight months ago as director of engineer- ing. Production of the latest product has been delayed by two months and Choy·s engineering services department (ESD)-which prepares final manufacturing specifications-is taking the heat as the main culprit for these delays. Similar delays have been occurring at Resonus for the past few years. The previous engineering director was fired after 18 months; the director before him quit after about d1e san1e an10unt of time.

Bill Hunt, CEO of Resonus for the past 15 years, responded to these problems by urging everyone to remain c ivil. ' 'I'm sure we can resolve these differences if we just learn to get along better," he said, whenever a dispute broke out. Hunt disliked firing anyone, but felt the previous engineering director was too confrontational. "I spent too much time smoothing out arguments when he was here," Hunt thought to himsel f soon after Choy was hired . "Frank (Choy), on the other hand, seems to fi t into our culture o f collegiality."

Hunt was groomed by the company's founder and took great pride in preserving the organization's family spirit. He also discouraged bureaucracy, bel ieving that Resonus operated best through informal relationships among its managers. Most Resonus executives were similarly informal, except Jacqui Blanc, the production director, who insisted on s trict guidelines. Hunt tolerated Blanc's formal style because soon after joining Reso- nus five years ago, she discovered and cleaned up fraudulent activity involving two production managers and a few suppliers.

The organizational chart shows that Frank Choy oversees two departments: ESD and research. In reality, "Doc" Kalandry, the research director, informally reports direcdy to the CEO (Hunt) and has never considered the direc- tor o f engineering as his boss. Hunt actively support~ this informal reporting re lationship because of Doc's special status in the organization. "Doc Kalandry is a living genius," Hunt told Choy soon after he joined the firm. "With Doc at the helm of research, this company wi ll continue to lead the field in innovation." Hunt's fi rst job at Resonus was in the research group and Choy suspected that Hunt still favoured that group.

Everyone at Resonus seems to love Doc's successfu l products, his quirky style, and his over-the-top enthusi- asm, but some of Choy's ESD staff are also privately concerned. Says one engineer: "Doc is like a happy puppy when he gets a new product idea. He delights in the discovery, but also won't let go of it. He also gets Hunt too enthusiastic. But Doc's too optimistic; we've had hundred~ of production change orders already this year. If I were in Frank's shoes, I'd put my foot down on all this new development."

Soon after joining Resonus, Choy realized that ESD employees get most of the blame and little of the credit for their work. When production staff find a design fault, they direcdy contact the research design engineer who developed the technology rather than the ESD group who prepare the specifications. Research engineers willingly work with production because they don't want to let go of their project. "The designers seem to feel they're losing something when one of us (ESD) tries to help," Choy explains.

Meanwhile, production supervisors regularly critique ESD staff whereas they tend to accept explanations from the higher-status research department engineers. "Production routinely complains about every little specification error, many of which are due to design changes made by the research group," says one frustrated ES D technician. "Many of us have more than 15 years· experience in this work. We shouldn't have to prove our ability all the time, but we spend as much time defending ourselves as we do getting the job done."

Choy·s latest troubles occurred when Doc excitedly told Hunt about new nano-processor technology that he wanted to install in the forthcoming high-end hearing aid product. As with most of Doc's previous last-minute revis ions, Hunt endorsed this change and asked Choy and Blanc (the production director) to show their commit- ment, even though production was scheduled to begin in less than three weeks. Choy wanted to protest, knowing that his department would have to tackle unexpected incompatibil ity design errors. Instead, he quiedy agreed to Hunt's request to avoid acting like his predecessor and facing s imilar consequences (getting fired). Blanc curtly stated that her group was ready if Choy's ESD unit could get accurate production spec ifications ready on time and if the sales director would stop making wild delivery promises to customers.

When Doc's revised design specs arrived more than a week later, Choy's group discovered numerous incom- patibilities that had to be corrected. Even though several ESD staff were a~ signed to 12-hour days on the revis ions, the final production specifications weren't ready until a couple o f days after the deadline. Production returned these specs two days later, noting a few e lements that required revision because they were too cosdy or difficult to manufacture in their current form. By that time, the production director had to give priority to other jobs and move the new hearing aid product further down the queue. This meant that manufacturing of the new product was

Chapter Ten Power and Influence in the Workplace 303

delayed by at least two months. The sales director was furious and implied that Frank Choy's incompetence was to blame for this catastrophe.

Discussion Questions

I. What sources and contingencies o f power existed among the executives and departments at Resonus?

2 . What influence tactics were evident in this case study? Would you define any of these influence activities as organizational politics? Why or why not?

3. Suppose you are a consultant invited to propose a solution to the problems facing this organization's product delays. What would you recommend, particularly regarding power dynamics among the executives and

departments?

By Steven L McShane. based on an earlier case written by John A. Seeger.

Team Exercise:

DECIPHERING THE (SOCIAL) NETWORK

Purpose This exercise is designed to help student~ interpret social network maps, including their implications for organizational effectiveness.

Materials The instructor will distribute several social network diagrams to each student.

Instructions (Smaller classes) The instructor will organize students into teams (typically four to seven people, depending on class size). Teams will examine each social network diagran1 to answer the following questions:

I. What aspects o f this diagram suggest that the network is not operating as e ffectively as possible?

2. Which people in this network seem to be most powerful? Least powerfu l? What information or features of the diagram lead you to this conclusion?

3. If you were responsible for this group o f people, how would you change this situation to improve their e ffectiveness?

After teams have diagnosed each social network map, the class will debrief by hearing each team 's assessments and recommendations.

Instructions (Larger classes) This activity is also possible in large classes by projecting each social network diagram on a screen and giving students a minute or two to exan1ine the diagram. The instructor can then ask specific questions to the class, such as pointing to a speci fic individual in the network and asking whether he/she has high or low power, what level of centrality is apparent, and whether the individual's connections are mainly strong or weak ties. The instructor might also ask which quadrant on the map indicates the most concern and then allow individual students to provide their explanation why.

Self-Assessments for Chapter 10

----~-4 DESCRIPTION Do you have a guanxi orientation?

I_

Connections and social networks are important. no matter where you do business around the world. These interpersonal relationships are called guanxi in China. where they are very important due to Confucian values and the unique history of that country. This self· a..~sessment estimates the degree to which you display traditional gumu·i values.

----'-

304 Part Three Team Processes

I SELF-ASSESSMENT NAME

How do you in fluence co-workers and other peers?

How politically charged is your school?

How Machiavell ian are you?

DESCRIPTION

Working wilh others in organizations is an ongoing process of

coordination and cooperation. Part of that dynamic is changing our attitudes and behaviour as well as motivating others to change their

attitudes and behaviour. In other words. everyone engages in influ·

ence tactic.."' to get things done. T he re are many \\'a)'S to influence

other people. some of which work better than others. depending on the s ituation. Use this tool to assess the types of influence you

might employ and your preference for various tactics.

Every organization has some degree of organizational politics. Depending on behavioural norms and organizational culture.

employees in some companies actively use influence tactics to get

their own way for personal gain. In other workplaces. employees who engage in organizational politics are q uickly reminded to avoid these tactics. or are eventually asked to work somewhere e lse.

StudenL~ can usually sense the level of organizational politics at the college where they are taking courses. This tool assesses the level

of organizational politics at your school.

One of the best-known individual differences in organizational politics is Machiavellianism. named after the 16th-century Italian

philosophe r who wrote a famous treatise about political behaviour (The Prince). Machiavellian employees take a perspective of situations and other people that motiv-.ues them to apply influence

tactics more for personal gain. Although few people want to be viewed as Machiavellian. measures s uggest that most of us a pply

these tactics to some extent This self-assessment measures how

much you value the politica1 tactics emphasized by Machiavelli.

CHAPTER 11

Conflict and Negotiation in the Workplace

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Define conflict and debate its positive and negative consequences in the workplace.

L02 Distinguish task from relationship conflict and describe three strategies to minimize relationship conflict during task conflict episodes.

L03 Diagram the conflict process model and describe six structural sources of conflict in organizations.

L04 Outl ine the five confl ict handling styles and discuss the circumstances in which each would be most appropriate.

LOS Apply the six st ructural approaches to conflict management and describe the three types of third-party dispute resolution.

LOG Describe distributive and integrative negotiations and outline strategies skilled negotiators use to cla im value and create value.

Google uses th1rd part1es to help resolve online disputes.

C MONKEY BUSINESS • LBR/&ge fo tostock

305

306 Part Three Team Processes

eBay is one of the world's best known auction sites, connecting buyers and sellers located all over the world. In most cases. the transactions proceed without a problem. Occasionally, however, disputes arise and create conflict between the two involved parties. In order to increase perceptions of trust among consumers. eBay has created a wide range of dispute-resolution options available to parties who experience problems and have their claims for restitution rejected.

One option is for parties to rely on a dispute-resolution provider known as SquareTrade. Square Trade usually follows a two-stage process. beginning with a web-based negotiation between the parties and ending with a human mediator if the negotiation process fails. The conversation between the parties and the mediator is facilitated by the mediator using a web interface. This allows parties to participate at different times.

Using a web-based method appears to be more effective than trad itional methods using free- text complaining and demanding. Why? SquareTrade's portal provides more structure, relying on forms that clarify and highlight areas of disagreement and possible solutions. Keeping the parties focused on solutions appears to reduce the amount of negative communication. reducing anger and hostility between the parties. 1

The opening story about eBay illustrates that having systems in place to deal proactively with conflict is an effective business strategy. This chapter investigates the dynamics of conflict in organizational settings. It begins by defining conflict and discussing the age-old question: Is conflict good or bad? Next, we look at the conflict process and examine in detail the main factors that cause or ampl ify

conflict. The five styles of handling confl ict are then described, including important contingencies of conflict handling as well as gender and cross-cultural differences. Next, we look at the role of managers and others in third-party conflict resolution. The final section of this chapter reviews key issues in

negotiating conflict resolution.

The Meaning and Consequences of Conflict

One of the fact~ of life is that organizations are continuously adapting to their external envi- ronment and introducing better ways to transform resources into outputs (see Chapter 1 ). There is no clear road map on how companies should change, and employees and other

stakeholders rarely agree completely on the direction or form of these adjustments. Employees have dif- ferent personal and work goals, which lead them to prefer different directions for the organization to take.

These differences in goals and viewpoints, along with a few other key factors described in this chapter, lead to conflict. Conflict is a process in which one party perceives that its interests are being opposed or negatively affected by another party.2 It may occur when one party obstructs another's

goals in some way, or just from one party 's perception that the other party is going to do so. Confl ict is ultimately based on perceptions; it exists whenever one party believes that another might obstruct its efforts, whether or not the other party actually intends to do so.

IS CONFLICT GOOD OR BAD? One of the oldest debates in organizational behaviour is whether conflict is good or bad-or, more recently, what forms of conflict are good or bad-for organizations.3 The dominant view over most of this time has been that conflict is dysfunctional.4 At the turn of the 20th century, European administra- tive theorists Henri Fayol and Max Weber emphasized that organizations work best through harmoni- ous relations. Elton Mayo, who founded Harvard University's human relations school and is considered one of the founders of organizational behaviour, was convinced that employee-management confl ict undermines organizational effectiveness. These and other critics warn that even moderately low levels of disagreement tatter the fabric of workplace relations and sap energy away from productive activi- ties. Disagreement with one's supervisor, for example, wastes productive time, violates the hierarchy of command, and questions the efficient assignment of authority (where managers make the decis ions and employees follow them).

Chapter Eleven Conflict and Negotiation in the Workplace 307

EXHIBIT 11.1: Consequences of Workplace Conflict

NeplheCa IIPI n 1 ...._CD Ill I n 1

Uses otherwise productive time Better decision making:

less information sharing o test'i logic of argument'i

Higher stress. dissatisfaction. and turnover o questions assumptions

Increases organizational politics More responsive to changing environment

\Vaste.'i resources Stronger team cohesion (conflict between the team and

\Veakens team cohesion {conflict among team members) out'iide opponents)

Al though the "conflict-is-bad" perspective is now considered too simplisti c, workplace conflict can

indeed have negative consequences under some circumstances (see Exhibit 11.1 ).5 Conflict has been criti-

cized for consuming otherwise productive time. For instance, almost one-third of the 5000 employees recently surveyed across nine countries reported that they are frequently or always dealing with workplace

conflict. More than half of the employees in Germany complained that cont1ict was consuming their

workday6 According to a Conference Board of Canada report, "unmanaged or unresolved cont1ict con- tributes to employee absenteeism that cost the Canadian economy an estimated $ 16. 1 billion in 20 12."7

Conflict can undermine job performance in other ways.8 Conflict i s often stressful , which consumes

personal energy and distracts employees from their work. Conflict discourages people engaged in the dis- pute from sharing resources and coordinating with each other. It can reduce job satisfaction, resul ting

in higher turnover and lower customer service. Conflict fuels organizational poli tics, such as motivating

employees to find ways to undermine the credibi li ty of their opponents. Decision making suffers because people are Jess motivated to communicate valuable information. Ironically, wi th Jess com-

munication, the feuding parties are more likely to escalate their disagreement because each side rel ies increasingly on distorted perceptions and stereotypes of the other party. Final ly, cont1ict among team

members may undermine team cohesion and performance. As Connection I I I describes, airlines and

customers alike suffer when t1ight crew members don' t get along.

~ "'l Global Connections 11.1:

HIGH COST OF ON-BOARD CONFLICTS

Airline customers suffer enough when experiencing or observing on-board conflicts with other passengers, but these are usually minor inconveniences compared to situations when flight crew members can't get along with each other. Consider the following events.

An American Airlines flight returned to the gate almost as soon as it began to taxi toward its takeoff runway because, in the airline's words, "there was a disagreement between two flight attendants." One flight attendant was using her cell phone during pre-departure prepa- rations for the New York-to-Washington commuter flight. Her activities apparently prompted her colleague to announce over the intercom that everyone needed to turn off their phones and electronic devices, "including the other flight attendant." That comment led to a scuffle between the two crew members, which was serious enough that the pilots decided to cancel the flight. Passengers had to wait four hours for a new crew to arrive.

Exactly one week later, a United Airlines flight bound for Chicago returned to Raleigh- Durham International Airport in North Carolina shortly after takeoff because of confl ict between two flight attendants. The cause of the tiff seemed almost trivial. "One flight atten- dant had crossed their leg and accidentally brushed the other person," explained a

(continued)

308 Part Three Team Processes

(continued)

spokesperson at the airport after the flight had returned. Although apparently unintentional, the other flight attendant interpreted the incident as a provocation because relations between the two were already fragile. "It appears there was a disagreement before that that became elevated," the spokesperson said. Passengers had to wait three hours for an alter- native flight and United Airlines faced the costs of an abandoned flight, compensation for travellers with missed connections, possible overtime for the replacement crew, and loss of customer service reputation.

Conflict among airline crew members can be costly for airlines and ruin their customer service reputation.

©lzabela Habur/E+/Getty Images

Pilots probably also have disagreements, but few are noticed and fewer still lead to flight delays. Cockpit conflict, however, may have indirectly contributed to the cancellation of a Qan- tas flight from Dallas to Sydney, Australia. The flight operations managers reportedly decided to cancel the flight because thunderstorms had delayed the departure and the pilots were already close to exceeding their maximum work hours. However, the captain and second officer were later suspended when the managers learned the pilots had an argument regarding take- off calculations to enter into the computer system while preparing for departure. The airline had to fly in replacement pilots, resulting in an 18-hour delay.9

Benefits of Conflict In the 1920s, when most organizational scholars viewed conflict as inher- ently dysfunctional, educational philosopher and psychologist John Dewey praised its benefits : "Con-

fl ict is the gadfly of thought. It stirs us to observation and memory. It instigates to invention. It shocks us out of sheep-l ike passivity, and sets us at noting and contriving." 10 Three years later, pol itical sci- ence and management theorist Mary Parker Follett s imilarly remarked that the "friction" of conflict

should be put to use rather than treated as an unwanted consequence of differences.11

Chapter Eleven Conflict and Negotiation in the Workplace 30 9

But it wasn' t until the 1970s that conflict management experts began to embrace the "optimal con- flict" perspective.12 According to this view, organizations are most effective when employees expe- rience some level of conflict, but become less effective with high levels of conflict. 13 What are the benefits of confl ict? As Dewey stated, confl ict energizes people to debate issues and evaluate alter- natives more thoroughly. They probe and test each other's way of thinking to better understand the underlying issues that need to be addressed. This discussion and debate tests the logic of arguments and encourages participants to re-examine their basic assumptions about the problem and its possible solutions. It prevents individuals and teams from making inferior decisions and potentially helps them to develop more sound and creative solutions.14

A second potential benefit is that moderate levels of confl ict prevent an organization from becoming nonresponsive to its external environment. As mentioned, differences of opinion encourage employees

to engage in active thinking, and this often involves ongoing questioning and vigi lance about how the organization can be more closely aligned with its customers, suppliers, and other stakeholders.15 A third benefit of conflict occurs when team members have a dispute or competition with external sources. This form of conflict represents an external chal lenge which, as was noted in Chapter 8, potentially increases cohesion within the team. People are more motivated to work together when faced with an external threat, such as conflict with people outside the team.

The Emerging V iew: Task and Relationship Conflict Although many writers sti ll refer to the "optimal conflict" perspective, an emerging

school of thought is that there are two types of confl ict with opposing consequences: ta~k confl ict and relationship conflict.16 Task conflict (also called constructive conflict)

occurs when people focus their discussion around the issue (i.e., the "task") while showing respect for people with other points of view. This type of confl ict debates the merits and limitations of different positions so ideas and recommendations can be clarified, redesigned, and tested for logical soundness. By keeping the debate focused on the issue, participants calmly re-examine their assumptions and beliefs without having hostile emotions triggered by their drive to defend their self-concept. A subset of task confl ict is process conflict, which entails disagreement about how tasks should be performed and who should perform the various roles and duties. Research indicates that task conflict tends to produce the beneficial outcomes that we described earlier, particularly better decision making.17 At the same time, there is likely an upper limit to the intensity of any disagreement, above which it would be difficult to remain constructive.

In contrast to ta~k conflict, relationship conflict focuses on interpersonal differences between or among the adversaries. The parties refer to "personality clashes" and other interpersonal incompatibilities rather

than to legitimate differences of opinion regarding tasks or decisions. Relationship conflict involves one party questioning or critiquing personal characteristics of the other person. As such, it attempts (or is per- ceived to attempt) to undermine another person's competence. These personal attacks threaten self-esteem and oppose self-enhancement and self-verification processes (see Chapter 3). Consequently, they usu-

ally trigger defence mechanisms and a competitive orientation between the parties. Relationship conflict also reduces mutual trust because it emphasizes interpersonal differences that shred identification with the other person.18 Relationship conflict escalates more easily than task conflict because the adversaries become less motivated to communicate and share information, making it more difficult for them to dis- cover common ground and ultimately resolve the conflict. Instead, they rely more on distorted perceptions and stereotypes which, a~ we noted earlier, tends to further intensify the conflict.

Separating Task from Relationship Conflict If there are two types of conflict, then the obvious advice is to encourage task conflict and minimize relationship confl ict. This recommendation sounds good in theory, but separating these two types of conflict isn't easy. Research indicates that we

3 10 Part Three Team Processes

Team decision making at Amazon.com is not a casual social gathering. "There's an incredible amount of challenging the other person ... You want to have absolute certainty about what you are saying," admits a former senior market researcher at the online retailer. In fact, one of Amazon's principles states that leaders should "respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting." Amazon executive Tony Galbato explains that "it would certain ly be much easier and socially cohesive to just compromise and not debate, but that may lead to the wrong decision." Some observers and employees say that Amazon's decision making approach fuels relationship conflict, not just task conflict. Others counter that relationship conflict is discouraged, pointing out that "respectfully challenge• means focusing on the problem, not the person. "We debate politely and respectfully, and you are given constructive feedback to course-correct if you are rude or disrespectful," says a middle management engineer.19

© Caiaimage/Giow Images

experience some degree of relationship confl ict whenever we are engaged in constructive debate.20 No matter how diplomatically someone questions our ideas and actions, they potentially trigger our drive to defend our ideas, our sense of competence, and our public image. The stronger the level of debate and the more the issue is tied to our self-concept, the higher the chance that the task confl ict will evolve into (or mix with) relationship confl ict.

Fortunately, three factors or conditions, and their concomitant strategies, potentially minimize the

level of relationship confl ict that occurs during task conflict episodes.21

Emotional intelligence and emotional stability. Relationship conflict is less likely to occur, or is less likely to escalate, when team members have high levels of emotional intelligence and its

associated personality characteristic: emotional stability.22 Employees with higher emotional

intelligence and stability are better able to regulate their emotions during debate, which reduces the risk of escalating perceptions of interpersonal hostility. They are also more likely to view a

co-worker's emotional reaction as valuable information about that person's needs and expecta-

tions, rather than as a personal attack.

Jeff Weiner, CEO of Linkedln, has written that one of the most important leadership qual ities, one that is "invaluable when it comes to relating to others, particularly in tense work situations"

Chapter Eleven Conflict and Negotiation in t he Workplace 311

is compassion and the capacity to "see things clearly through another person's perspective." Weiner believes that most people have a tendency to see things solely through their own world view. He suggests that when faced with a disagreement in the workplace, it is helpful to stop and consider "why the other person has reached the conclusion that they have. For instance, what in their background has Jed them to take that position? Do they have the appropriate expe- rience to be making optimal decisions? Are they fearful of a particular outcome that may not be obvious at surface level?" Weiner recommends that, in addition to personally reflecting on these matters, asking these questions of the other person can transform a challenging situation into a "truly collaborative experience.'m

Cohesive team. Relationship confl ict is suppressed whe n the confl ict occurs within a highly cohesive team. The lo nger people work together, get to know each other, and develop mutual trust, the more latitude they give to each other to show emotions without being

personally offended. This might explain why task confl ict is more effective in top manage- ment teams than in teams of more j unior staff.24 Strong cohesion also allows each person to know about and anticipate the behav iours and emotions of their teammates. Another benefit

is that cohesio n produces a stronger social identity with the group, so team members are motivated to avoid escalating relat ionship conflict during otherwise emotionally turbulent discussions.

Supportive team norms. Various team norms can hold relationship conflict at bay during ta~k-focused debate. When team norms encourage openness, for instance, team members Jearn to appreciate

honest dialogue without personally reacting to any emotional display during disagreement~.25 Other norms might discourage team members from displaying negative emotions toward co-workers. Team norms also encourage tactics that diffuse relationship conflict when it first appears. For instance, research has found that some teams with low relationship conflict use humour to maintain positive group emotions which off.~et negative feelings team members might develop toward some co- workers during debate.

Conflict Process Model Now that we have outlined the history and current knowledge about conflict and its outcomes, Jet's look at the model of the confl ict process, shown in Exhibit I 1.2. This model begins with the sources of conflict, which we will describe in

EXHIBIT 11.2 Model of the Conflict Process

Sources of Conflict

Incompatible goals Differentiation Interdependence -+ Scarce resources Ambiguous rules Poor communication

escalation

Conflict

Outcomes

Positive • Better decisions • Responsive organization • T earn cohesion Negative • Stressllow morale • Turnover • Politics • Lower performance • Distorted information

312 Part Three Team Processes

the next section. At some point, the sources of conflict lead one or both parties to perceive that confl ict exists. They become aware that one party's statements and actions are incompatible with their own goals. These perceptions usually interact with emotions experienced about the con- fl ict.26 Conflict perceptions and emotions manifest themselves in actual confl ict-the dec is ions and behaviours of one party toward the other. These conflict episodes may range from subtle non- verbal behaviours to heated aggression. Particularly when experiencing high levels of conflict- generated emotions, people have difficulty finding the words and expressions to communicate effectively without further irritating the relationship27 Conflic t is also manifested by the style each s ide uses to resolve it. Some people tend to avoid the conflict whereas others try to dominate those wi th opposing views.

Exhibit I I .2 shows arrows looping back from manifest conflict to confl ict perceptions and emo- tions. These arrows illustrate that the conflict process is really a series of episodes that potential ly cycle into conflict escalation28 It doesn' t take much to start this confl ict cycle-just an inappropriate comment, a misunderstanding, or action that lacks diplomacy. These behaviours cause the other party to perceive that conflict exists. Even if the first party did not intend to demonstrate conflict, the second party's response may create that perception.

Structura l Sources of Conflict in Organizations

The conflict model start~ with the sources of confl ict, so we need to understand these sources to effec- tively diagnose conflict episodes and subsequently resolve the confl ict or occasional ly to generate conflict where it is lacking. The six main conditions that cause conflict in organizational settings are incompatible goals, differentiation, interdependence, scarce resources, ambiguous rules, and commu- nication problems .

• by the NUMBERS

Do lntergenerational Differences Increase or Decrease Prod uctivity?29

Thailand

United States

Hungary

GLOBAL New Zealand

Canada

Malaysia

India

Germany

-50% -40%

lntergenerational differences make the workplace less productive

lntergenerational differences make the workplace more productive

Chapter Eleven Conflict and Negotiation in the Workplace 3 13

INCOMPATIBLE GOALS Goal incompatibility occurs when the goals of one person or department seem to interfere with

another person's or department's objectives.3° For example, the production department strives for cost efficiency by scheduling long production runs whereas the sales team emphasizes customer serv ice by delivering the cl ient's product as quickly as possible. If the company runs out of a par- ticular product, the production team would prefer to have clients wait until the next production run. This infuriates sales representatives who would rather change production quickly to satisfy customer

demand. Whi le the above example reflects a situation of competing priorities, conflicts can also manifest due

to differences about how to achieve a goal. Two people or departments may agree on a common goal (e.g., serving customers better), but have different bel iefs about how to attain that goal (e.g., standard-

izing employee behaviour versus giving employees autonomy in customer interactions). Although the dispute relates to a goal, the actual root of the conflict is different viewpoints, known as "differentia- tion," which is discussed next.

DIFFERENTIATION

Differentiation can be a significant source of conflict because it usual ly represents differences among people and work units regarding their training, values, beliefs, and experiences. Intergenerational con- flicts occur because younger and older employees have different needs, different expectations, and different workplace practices, which sometimes produce conflicting preferences and actions. Recent

studies suggest that these intergenerational differences occur because people develop social identities around technological developments and other pivotal social events that are unique to their era3 1

Differentiation also produces the classic tension between employees from two companies brought together through a merger.32 Even when people from both companies want the integrated organization to succeed, they may fight over the "right way" to do things because of their unique experiences and the distinct

corporate culntres in the separate companies. This form of conflict emerged when CenturyLink acquired Qwest, creating the third largest telecommunications company in the United States. The two companies were headquartered in different parts of the country. 'Their languages were different, their food was different, answers were different. We talked fa~t and interrupted, and they talked slow and were polite," recalls a senior Qwest executive. "If we said up, they said down. If we said yes, they said no. If we said go, they said stop." The result wa~ "unnecessary misunderstandings" as executives tried to integrate the two companies33

Some predicted this form of culture clash when Bank of Nova Scotia (Scotiabank), a 180-year-old Canadian financial institution, acquired ING Direct, a 17-year-old digital-only bank.34 The two banks were entirely different: Scotiabank was an established "pillar of Canada's banking establ ishment" and ING was known for its "scrappy upstart" image. ING employees identified strongly with their bank's quirky persona as a "virtual anti-bank."35 A condition of Scotiabank's to the purchase was that ING had to change its name, which led to wholesale rebranding.36 Although ING is now called Tangerine,

former ING CEO Peter Aceto describes Scotiabank as having been committed to keeping the banks' separate identities and preserving ING's distinctive culture. Consequently, in this example, differentia- tion wa~ a key element of the success of both institutions.

Differentiation conflict can also manifest due to incongruent values. Take, for example, the dilemma that the City of Saskatoon struggled with when its tax a~sessment staff attended at certain properties to conduct visual evaluations. On occasion, city staff had to enter rel igious buildings for the purposes of tax a~sessment and a particular religion's tenets required everyone to remove footwear prior to entering

the building. City staff were caught in a bind because, according to the city's health and safety regula- tions, staff were required to wear steel-toed boots when conducting their assessment. The conflict clearly arose from competing values: the right to health and safety versus the right to religion. Jodi Fick-Dryka, diversity coordinator for the City of Saskatoon, explains that "a mutually agreeable solution to wear

314 Part Three Team Processes

disposable boot covers" resolved the dispute37 Differentiation due to competing values can often result in extremely difficult conflict because the roots of the dispute arise out of deeply held personal views.

INTERDEPENDENCE Confl ict tends to increase with the level of task interdependence. Task interdependence refers to the extent to which employees must share materials, information, or expertise to perform their jobs (see

Chapter 8). This interdependence includes sharing common resources, exchanging work or clients back and forth, and receiving outcomes (such as rewards) that are partly determined by the performance of

others38 Higher interdependence increa~es the risk of conflict because there is a greater chance that each side will disrupt or interfere with the other side's goals.39

Other than complete independence, employees tend to have the lowest risk of conflict when work- ing with others in a pooled interdependence relationship. Pooled interdependence occurs where indi- viduals operate independently except for rel iance on a common resource or authority. The potential for confl ict is higher in sequential interdependence work relationships, such as an assembly line. The

highest risk of confl ict tends to occur in reciprocal interdependence situations. With reciprocal inter- dependence, employees have high mutual dependence on each other and, consequently, have a higher probabi lity of interfering with each other's work and personal goals.

SCARCE RESOURCES Resource scarcity generates confl ict because each person or unit requiring the same resource necessar- ily undermines others who also need that resource to fulfil their goals. Most labour strikes, for instance, occur because there aren't enough financial and other resources for employees and company owners to each receive the outcomes they seek, such as higher pay (employees) and higher investment returns (shareholders). Budget deliberations within organizations also produce conflict because there aren't enough funds to satisfy the goals of each work unit. The more resources one group receives, the fewer resources another stakeholder wi ll receive. Fortunately, these interests aren't perfectly opposing in

complex negotiations, but limited resources are typically a major source of friction.

AMBIGUOUS RULES Ambiguous--or nonexistent-rules breed conflict. This occurs because uncertainty increases the risk that one party intends to interfere with the other party's goals. Ambiguity also encourages political tactics and, in some cases, employees enter a free-for-all battle to win decisions in their favour. This

explains why conflict is more common during mergers and acquisitions. Employees from both compa- nies have conflicting practices and values, and few rules have developed to minimize the manoeuvring for power and resources.40 When clear rules exist, on the other hand, employees know what to expect

from each other and have agreed to abide by those rules.

COMMUNICATION PROBLEMS Confl ict often occurs due to the Jack of opportunity, ability, or motivation to communicate effectively. Let's look at each of these causes. First, when two parties Jack the opportunity to communicate, each tends to rely more on stereotypes to understand the other party in the confl ict. Unfortunately, stereo-

types are sufficiently subjective that emotions can negatively distort the meaning of an opponent's actions, thereby escalating perceptions of confl ict. Second, some people Jack the necessary skills to communicate in a diplomatic, nonconfrontational manner. When one party communicates its disagree- ment arrogantly, opponents are more likely to heighten their perception of the conflict. This may lead the other party to reciprocate with a similar response, which further escalates the confl ict.41

A third problem is that relationship conflict is uncomfortable, so people are Jess motivated to com- municate with others in a disagreement. Unfortunately, Jess communication can further escalate the conflict because each side has Jess accurate information about the other side's intentions. To fill in the

missing pieces, they rely on distorted images and stereotypes of the other party. Perceptions are further distorted because people in conflict situations tend to engage in more differentiation with those who

Chapter Eleven Conflict and Negotiation in the Workplace 3 15

are different from them (see Chapter 3). This differentiation creates a more positive self-concept and a

more negative image of the opponent. We begin to see competitors less favourably so our self-concept remains positive during these uncertain times.42

Interpersonal Conflict Handl ing Styles

L04 The six structural conditions described in the previous section lead to conflict percep- tions and emotions which, in turn, motivate people to take some sort of action to address the conflict. Along with her pioneering view that some conflict is beneficial, Mary

Parker Follett suggested there are different conflict handling styles. Confl ict management experts subsequently expanded and refined this taxonomy of conflict handling styles, with most of them adapting variations of the five-category model shown in Exhibit 11.3 and described below. This model recog- nizes that how people approach a conflict situation depends on the relative importance they place on maximizing outcomes for themselves and maximizing outcomes for the other party.43

Problem solving. Problem solving tries to find a solution that is beneficial for both parties. This is known as the win-win orientation because people using this style bel ieve the resources

at stake are expandable rather than fixed if the parties work together to find a creative solution.

Information sharing is an important feantre of this style because both parties collaborate to identify common ground and potential solutions that satisfy everyone involved.

What is your preferred conflict handling style? You can d iscover your preferred way of handling conflict by locating this self-assessment in Connect.

EXHIBIT 11.3 Interpersonal Conflict Handling Styles 44

Asse rtiveness (motivation to satisfy one's own interests)

High

Low

Forcing

Avoiding

Low

Compromising

Cooperativeness (motivation to satisfy

other party's interests)

Proble m solving

Yielding

High

316 Part Three Team Processes

Forcing. Forcing tries to win the conflict at the other's expense. People who use this style typically have a win- lose orientation-they believe the parties are drawing from a fixed pie, so the more one party receives, the Jess the other party will receive. Consequently, this style relies on some of the "hard" influence tactics described in Chapter 10, particularly assertiveness, to get one's own way.

Avoiding. Avoiding tries to smooth over or evade conflict situations altogether. A common avoidance strategy is to minimize interaction with certain co-workers. For instance, 67 percent of employees in one large global survey said they go out of their way to avoid seeing co-workers with whom they have a disagreement. A smaller number (14 percent) have missed a day of work to avoid workplace conflict.45 A second avoidance strategy is to steer clear of the sensitive topic when interacting with the other person in the conflict. These examples indicate that avoid- ance does not necessarily mean that we have a low concern for both one's own and the other party's interest. Instead, we might be very concerned about the issue but believe that avoidance is the best solution, at least for the short term.46

Yielding. Yielding involves giving in completely to the other side's wishes, or at least cooperating with little or no attention to your own interests. This style involves making unilateral concessions and unconditional promises, as well as offering help with no expectation of reciprocal help.

Compromising. Compromising involves looking for a position in which your losses are offset by equally valued gains. It involves matching the other party's concessions, making conditional prom- ises or threats, and actively searching for a middle ground between the interest~ of the two parties.

CHOOSING THE BEST CONFLICT HANDLING STYLE Chances are that you have a preferred conflict handling style. You might typically engage in avoiding or yielding because disagreement makes you feel uncomfortable and is contrary to your self-view a~ someone who likes to get along with everyone. Or perhaps you prefer the compromising and forcing

EXHIBIT 11.4 Conflict Handling Style Contingencies and Problems ~

~ ........ SIJie l'lllenedSIJieW... ~ .......... SIJie

Problem solving Interest' are not perfectly opposing Involves sharing information that

(i.e., not pure win- lose) the other party might use to their

Parties have ttust. openness. and time to share advantage

information

The issues are complex

Forcing You have a deep conviction about your posi· Highest risk of relationshi p conflict

tion {e.g., believe other person's behaviour is May damage long· term relations. unethical) reducing future problem solving

Dispute requires a quick solution success

The other party would take advantage of more

cooperative strategies

Avoiding Conflict has become too emotionally charged Doesn't usuaJly resolve the conflict

Cost of trying to resolve the conflict May increa...;e other party's

outweighs the benefits frustr.ttion

Yielding Other party ha.' substantially more power Increases other party's expectations

Issue is much Jess important to you than to in future conflict episodes

the other party

The value and logic of your position isn't as

clear as the other party•s

Compromising Parties have equal power Sub·optimal solution where mutual

Time pressure to resolve the conflict gains are possible

Parties Jack trust/openness for problem solving

Chapter Eleven Conflict and Negotiation in the Workplace 3 17

strategies because they reflect your strong need for achievement and to control your environment. Peo- ple usually gravitate toward one or two confl ict handling styles that match their personality, personal and cultural values, and past experience.47 However, the best style depends on the situation, so we need to understand and develop the capacity to use each style when it's called for.48

Exhibit 11.4 summarizes the main contingencies and problems associated with using each confl ict handling style. Problem solving has long been identified a~ the preferred conflict handling style wher- ever possible because dialogue and clever thinking help people to break out of the limited boundaries of their opposing alternatives to find an integrated solution where both parties gain value. In addition, the problem solving style tends to improve long-term relationships, reduce stress, and minimize emotional defensiveness and other indications of relationship conflict.49

However, problem solving a~sumes there are opportunities for mutual gains, such as when the cont1ict is complex with multiple elements. If the conflict is simple and perfectly opposing (each party wants more of a single fixed pie), then this style will waste time and increase frustration. The problem solving approach also takes more time and requires a fairly high degree of trust, because there is a risk that the other party will take advantage of the information you have openly shared. As one study recently found, the problem solving style is more stressful when people experience strong feel ings of confl ict, likely because these negative emotions undermine trust in the other party.50

The conflict avoidance style is often ineffective because it doesn't resolve the conflict and may increase the other party's frustration. However, avoiding may be the best strategy where conflict has become emotionally charged or where conflict resolution would cost more than the benefits it would provide. 51 The forcing style is usually inappropriate because it commonly generates relationship con- flict more quickly or intensely than other conflict handling styles. However, forcing may be necessary where you know you are correct (e.g., the other party 's position is unethical or based on obviously flawed logic), the dispute requires a quick solution, or the other party would take advantage of a more

cooperative conflict handling style. The yielding style may be appropriate when the other party has substantially more power, the issue

is not as important to you as to the other party, and you aren't confident that your position ha~ the best value or logical consistency. 52 On the other hand, yielding behaviours may give the other side unreal-

istical ly high expectations, thereby motivating them to seek more from you in the future. In the long run, yielding may produce more conflict than resolution. "Raised voices, red faces, and table thump- ing is a far less dysfunctional way of challenging each other than withdrawal, passivity, and sullen acceptance," argues one conflict management consultant. "It doesn't mean that people agree with you:

they just take their misgivings underground and spread them throughout the organization, which ha~ a corrosive effect."53

The compromising style may be best when there is little hope for mutual gain through problem solving, both parties have equal power, and both are under time pressure to settle their differences. However, we rarely know whether the parties have perfectly opposing interests, making compromise

more appropriate than problem solving. Therefore, entering a conflict with the compromising style may cause the parties to overlook better solutions because they have not attempted to share enough information and creatively look for win-win alternatives.

CULTURAL AND GENDER DIFFERENCES IN CONFLICT HANDLING STYLES

Cultural differences are more than just a source of conflict. They also influence the preferred confl ict handling style. 54 Some research suggests that people from collectivist cultures-where group goals are valued more than individual goals-are motivated to maintain harmonious relations and, consequently, are more likely than those from low collectivism cultures to manage disagreements through avoid- ance or problem solving. However, this view may be somewhat simplistic. Collectivism motivates harmony within the group but not necessarily with people outside the group. Indeed, research indicates that managers in some collectivist cultures are more likely to publicly shame those whose actions oppose their own. 55 Cultural values and norms influence the conflict handling style used most often

3 18 Part Three Team Processes

in a society, but they also represent an important contingency when outsiders choose the preferred conflict handling approach. For example, people who frequently use the confl ict avoidance style might have more problems in cultures where the forcing style is common.

According to some scholars, men and women tend to rely on different conflict handling styles.56

They suggest that, compared to men, women pay more attention to the relationship between the parties. Consequently, women tend to adopt a compromising or problem solving style in business settings and are more willing to compromise to protect the relationship. Compared to men, they are also slightly more likely to use the avoiding style. Men tend to be more competitive and take a short-term orienta- tion to the relationship. In low collectivism cultures, men are more likely than women to use the forc- ing approach to confl ict handl ing. We must be cautious about these observations, however, because differences between men and women on preferred conflict handling styles are fairly small.

Structura l Approaches to Conflict Management

LOS Confl ict handling styles describe how we approach the other party in a conflict situa- tion. But confl ict management also involves altering the underlying structural causes of potential conflict. The main structural approaches are emphasizing superordinate goals,

reducing differentiation, improving communication and mun1al understanding, reducing interdepen- dence, increasing resources, and clarifying rules and procedures.

EMPHASIZING SUPERORDINATE GOALS One of the oldest recommendations for resolving conflict is to refocus the parties' attention around superordinate goals and away from the conflicting subordinate goals. 57 Superor dina te goals are

goals that the conflicting employees or departments value and whose attainment requires the joint resources and effort of those parties. 58 These goals are called superordinate because they

are highe r-order aspirations, such as the organization' s strategic objec tives, rather than objec- ti ves specific to the individual or work unit. Research indicates that the most effective executive teams frame the ir dec is ions as superordinate goals that rise above each executive's departmental

or d iv isional goals. Similarly, one recent study reported that leaders reduce confl ict through an inspirational vision that unifies employees and makes them less preoccupied with their subord i- nate goal differences. 59

Suppose that marketing staff want a new product released quickly, whereas engineers want more time to test and add new features. Leaders can potentially reduce this interdepartmental confl ict by

reminding both groups of the company's mission to serve customers, or by pointing out that com- petitors currently threaten the company's leadership in the industry. By increasing commitment to corporate-wide goals (customer focus, competitiveness}, engineering and marketing employees pay less attention to their competing departmental-level goals, which reduces their perceived confl ict with

co-workers. Superordinate goals also potentially reduce the problem of differentiation because they establish feelings of a shared social identity (work for the same company).60

REDUCING DIFFERENTIATION Another way to minimize dysfunctional confl ict is to reduce the differences that generate conflict. As people develop common experiences and beliefs, they become more motivated to coordinate activities and resolve their disputes through constructive discussion.61

One company that real izes this is L'Oreal Canada. Their workforce is diverse: I ,200 employees rep- resent 61 nationalities; 42 percent of employees are women; and employees are spread across the three main generations-baby boomers (25 percent), Generation X (33 percent}, and Generation Y (42 percent). These different forms of diversity have been immensely beneficial to the company. "From diversity stems stimulating, rich debates that propel our teams to think forward and encourage innovation," says Marie-Josee Lamothe, L'Oreal Canada's chief marketing officer and chief communications officer.

Chapter Eleven Conflict and Negotiation in the Workplace

l'Oreal Canada employees (from left) Ashley Bancroft. Christian Bouchard, and Wendy Stewart say the company's Valorizing lntergenerational Differences training has helped them to leverage the company's creative potential by minimizing dysfunctional conflict and improving relations with co-workers.

©Post Media

3 19

But rich debates can easily deteriorate into dysfunctional battles when participants fai l to keep their differences in perspective. L'Oreal Canada's executives anticipated this risk several years ago as its workforce demography began shifting to a balance across the three generations. The generations differed in their needs and expectations, which company leaders understood might lead to dysfunctional intergenerational confl ict. "We realized we could be faced with an interesting problem," recalls Marjo- laine Rom pre, L' Oreal Canada's director of learning and development. "We called it Generation Shock."

Rather than have that generation shock turn into dysfunctional conflict, L'Oreal Canada introduced a full-day seminar, called Valorizing Intergenerational Differences, which aims to help employees across all generations understand and value each other's perceptions, values, and expectations. In one

part of the program, for example, employees sit together in their generational cohorts and a~k questions to employees in the other cohorts. "Each group is interested and surprised to see what's important to the other group," says Rompre.

Participants say the program leverages the company's creative potential by minimizing dysfunc- tional confl ict and improving relations with co-workers. "The Valorizing Intergenerational Differences

training really helped me to understand where people from each generation are coming from," says key account manager Ashley Bancroft, shown left in the photo below with national accounts directors Christian Bouchard and Wendy Stewart. It has also helped L'Oreal Canada to become one of the best places to work in Canada, including one of the country's best diversity employers.62

IMPROVING COMMUNICATION AND MUTUAL UNDERSTANDING A third way to resolve dysfunctional conflict is to give the conflicting parties more opportunities to com- municate and understand each other. This recommendation applies two principles and practices intro- duced in Chapter 3: the Johari Window model and meaningful interaction. Although both were previously described as ways to improve self-awareness, they are equally valuable to improve other-awareness.

320 Part Three Team Processes

In the Johari Window process, individuals disclose more about themselves so others have a better understanding of the underlying causes of their behaviour. L'Oreal Canada's intergenerational seminar appl ied a variation of the Johari Window. The cosmetic company's program includes an activity in which each generational cohort answers questions from the other cohorts about what is important to them (such as security, performance, and collaboration). A variation of Johari Window also occurs in "lunch and Jearn" sessions, where employees in one functional area describe work and its challenges to co-workers in other areas. Houston-based Brookstone Construction introduced these information meet- ings which helped to reduce frustrations between its field and office staff.63

Meaningful interaction potentially improves mutual understanding through the contact hypothesis, which says that we develop a more person-specific and accurate understanding of others by interacting with and working closely with them.64 For example, more than 18,000 employees and managers at the various companies of System Capital Management participated in the "Let's Make Ukraine Clean"

campaign. In addition to improving the environment-each person picked up an average of about 100 kg (200 Jbs) of garbage-this volunteering opportunity improved relations among management and employees at the leading financial and industrial group65

Although communication and mutual understanding can work well, there are two important warn- ings. First, these interventions should be applied only where differentiation is sufficiently low or after

differentiation ha~ been reduced. If perceived differentiation remains high, attempts to manage con- flict through dialogue might escalate rather than reduce relationship conflict. The reason is that when forced to interact with people who we bel ieve are quite different and in conflict with us, we tend to select information that reinforces that view.66 The second warning is that people in collectivist and high power distance cultures are Jess comfortable with the practice of resolving differences through direct and open communication.67 Remember, people in collectivist cultures prefer an avoidance confl ict

handling style because it is the most consistent with harmony and face saving. Direct communication is a high-risk strategy because it ea~ily threatens the need to save face and maintain harmony.

REDUCING INTERDEPENDENCE Confl ict occurs where people are dependent on each other, so another way to reduce dysfunctional conflict is to minimize the level of interdependence between the parties. Three ways to reduce inter-

dependence among employees and work units are to create buffers, use integrators, and combine j obs.

Create buffers. A buffer is any mechanism that loosens the coupling between two or more people

or work units. This decoupling reduces the potential for conflict because the buffer reduces the

effect of one party on the other. Building up inventories between people in an assembly line

would be a buffer, for example, because each employee is less dependent in the short term on

the previous person along that line.

Use integrators. Integrators are employees who coordinate the activities of work units toward the

completion of a common task. For example, an individual might be responsible for coordinating the efforts of the research, production, advertising, and marketing departments in launching a new product line. In some respects, integrators are human buffers; they reduce the frequency of direct interaction among work units that have diverse goals and perspectives. Integrators rarely have direct authority over the departments they integrate, so they must rely on referent power and persuasion to manage conflict and accomplish the work.

Combine jobs. Combiningjobs is both a form of job enrichment and a way to reduce ta~k interde- pendence. Consider a toa~ter assembly system where one person inserts the heating element, another add~ the sides, and so on. By combining these tasks so that each person assembles an entire toaster, the employees now have a pooled rather than sequential form of ta~k interdependence and the

likelihood of dysfunctional conflict is reduced.

INCREASING RESOURCES An obvious way to reduce conflict caused by resource scarcity is to increase the amount of resources available. Corporate decision makers might quickly dismiss this solution because of the costs involved.

Chapter Eleven Conflict and Negotiation in the Workplace

EXHIBIT 11.5 Types of Third-Party Intervention

Level of process control

High

low low

Level of decision control

321

High

However, they need to carefully compare these costs with the costs of dysfunctional confl ict arising out of resource scarcity.

CLARIFYING RULES AND PROCEDURES Confl icts that arise from ambiguous rules can be minimized by establishing clear rules and procedures. For example, if two departments are fighting over the use of a new laboratory, a schedule might be establ ished which al locates the lab exclusively to each team at certain times of the day or week.

Third-Party Conflict Resolution

Most of this chapter has focused on people directly involved in a conflict, yet many disputes among employees and departments are resolved with the assistance of a manager. Third -par ty conflict resolution is any attempt by a relatively neutral person to help the parties resolve their differences. There are three main third-party dispute resolution activities: arbitration, inquisition, and mediation. These interventions can be classified by their level of control over the process and control over the decision (see Exhibit 11.5).68

Arbitration. Arbitrators have high control over the final decision, but low control over the

process. Executives engage in this strategy by following previously agreed rules of due process,

listening to arguments from the disputing employees, and making a binding decision. Arbitration

is applied as the final stage of grievances by unionized employees in many countries, but it is

also becoming more common in nonunion confl icts.

Inquisition. Inquisitors control al l discussion about the conflict. Like arbitrators, they have high decision control because they choose the form of conflict resolution. However, they also have high process control because they choose which information to examine and how to examine it, and they generally decide how the conflict resolution process will be handled.

Mediation. Mediators have high control over the intervention process. In fact, their main purpose is to manage the process and context of interaction between the disputing parties. However, the parties make the final decision about how to resolve their differences. Thus, mediators have little or no control over the conflict resolution decision.69 Some mediation can involve a mediator with expert knowledge who shares information and opinion regarding industry standards and potential outcomes. Many organizations, such as Shell Canada, TO Canada Trust, and Royal Bank of Canada, have internal ombudspersons to investigate and mediate employment conflicts.

322 Part Three Team Processes

Mediation-arbitration. Often referred to as "med-arb," this is an alternate hybrid dispute resolution process. While it promotes an opportunity for the parties to first attempt mediation with the selected arbitrator facilitating negotiations, it also allows the arbitrator to shift into

an adjudicative mode in order to make a determination based on the parties' arguments. The downside of this process is that while parties control the flow of information for negotiation purposes, deciding what they choose to reveal in mediation, parties during arbitration may feel compelled to answer corollary questions that arise from the previously disclosed information. A positive a~pect of med-arb is that parties enter the process with certainty that the dispute will

be resolved either as a settlement in the mediation stage or a~ part of the binding decision made by the arbitrator. Most collective agreement contracts include a provision that labour disputes

between management and employees wi ll be subject to med-arb.

CHOOSING THE BEST THIRD-PARTY INTERVENTION STRATEGY Team leaders, executives, and co-workers regularly intervene in workplace disputes. Sometimes they adopt a mediator role; other times they serve as arbitrators. Occasionally, they begin with one approach then switch to another. However, research suggests that people in positions of authority (e.g., managers) usually adopt an inquisitional approach whereby they dominate the intervention process a~ well as

make a binding decision.70

Managers tend to rely on the inquisition approach because it is consistent with the decision-oriented nature of managerial jobs, gives them control over the conflict process and outcome, and tends to resolve disputes efficiently. However, inquisition is usually the Jea~t effective third-party confl ict resolution method in organizational settings71 One problem is that leaders who take an inquisitional role tend to collect limited information about the problem, so their imposed decision may produce an ineffective solution to the conflict. Another problem is that employees often view inquisitional procedures and outcomes a~ unfair because they have little control over this approach. In particular, the inquisitional approach potentially violates several practices required to support procedural justice (see Chapter 5). As a result of these types of concerns, organizations have begun to appreciate the need for managers to receive negotiation and mediation training to help hone effective workplace conflict management skills.

Which third-party intervention is most appropriate in organizations? The answer partly depends on the situation, such as the type of dispute, the relationship between the manager and employees, and cultural values such a~ power distance.72 Also, any third-party approach has more favourable results when it applies the procedural justice practices described in Chapter 5.73 But generally speaking, for everyday disagree- ments between two employees, the mediation approach is usually best because it is Jess formal and gives employees more responsibility for resolving their own disputes. Having a neutral third party helps estab-

lish an appropriate context for conflict resolution. Although not as efficient as other strategies, mediation potentially offers the highest level of employee satisfaction with the conflict process and outcomes.14 When employees cannot resolve their differences through mediation, arbitration seems to work best because the

predetermined rules of evidence and other processes create a higher sense of procedural fairness.75 Arbitra- tion is also preferred where the organization's goals should take priority over individual goals.

Resolving Conflict Through Negotiation

It is often said that people negotiate al l the time. We negotiate things like the coordination of ta~ks on team projects, who will do the dishes, what movie we will see, and how to

resolve a disagreement following an argument. As you can see, negotiation is not an obscure practice reserved for labour and management heads when hammering out a collective agreement. Negotiation refers to dec is ion-making situations in which two or more interdependent parties attempt to reach agreement. We negotiate whenever we cannot achieve our objectives single-handedly.76

Negotiation skills are essential because they help us meet our goals, reduce conflict, and bui ld collab- orative relationships.n Before we describe the strategies and tactics used by successful negotiators, it is necessary to understand the distinction between distributive and integrative negotiations.

Chapter Eleven Conflict and Negotiation in the Workplace 323

DISTRIBUTIVE VERSUS INTEGRATIVE NEGOTIATIONS Negotiation situations vary according to the interdependence of people's goals and the structure of the situation in which they are going to negotiate. When the goals of two or more people run in completely opposed directions, this is also known as a zero-sum or distr ibu tive situation . In distributive situations negotiators are motivated to win the competition, beat the other party, or gain the largest piece of the fixed resource that they can. To achieve these objectives, negotiators usually employ win-lose strate- gies and tactics. This approach to negotiation-called distributive bargaining-accepts the fact that there can only be one winner given the situation and pursues a course of action to be that winner. The purpose of the negotiation is to claim value-that is, to do whatever is necessary to claim the reward, gain the lion's share, or acquire the largest piece possible.78 An example of this type of negotiation is purchasing a used car when the only negotiable issue is price or buying a used refrigerator at a yard sale.

In contra~t. when parties' goals are linked so that one person's goal achievement helps others to achieve their goals, it is a mutual-gain situation, also known as a non-zero-sum or integrative situation, where there is a positive correlation between the goal attainments of both parties. If one person is a great music composer and the other is a great writer of lyrics, they can create a wonderful musical hit together. The music and words may be good separately, but fantastic together. To the degree that one person achieves his or her goal, the other's goals are not necessarily blocked, and may in fact be signifi-

cantly enhanced. The distinction between distributive and integrative negotiations is important because the strucntre of the interdependence shapes the strategies and tactics a negotiator should employ.

PREPARING TO NEGOTIATE Experienced negotiators often point to preparation as one of the most important factors contributing to positive outcomes. Although few people would disagree with the benefits of preparation, most have no idea what it is they should do to prepare. Regardless of the type of negotiation situation, all negotiators should consider their goals, the best alternative to a negotiated agreement (BATNA), and their limits.

Prepare and Set Goals Always ask yourself what it is you hope to accomplish before beginning a negotiation. But don't just focus on quantitative indicators, such a~ the starting salary for a new job. Ask yourself about your overall interests, or the reasons underlying the positions you might take. For exam- ple, is salary the only thing that matters when you are starting a new job? Probably not. Looking more broadly at the situation might show that you want to work in a place that al lows you to use the skills you have been trained on, to work on tasks that are interesting, or to live close to family. These kinds of things tap into your interests and values. By considering all these issues in advance, you minimize the likelihood that you will narrowly focus on just one issue in the negotiation; this is especial ly important when the addition of other issues could have turned a distributive negotiation into an integrative one.

Know Your BATNA To determine whether the opponent's offers are favourable, negotiators need to understand what outcome they might achieve through some other means (such as negotiating with some- one else). This comparison is called the best alternative to a negotiated agreement (BATNA). BATNA estimates your power in the negotiation because it represents the estimated cost of walking away from the relationship. If others are willing to negotiate with you for the product or service you need, then you have a high BATNA and considerable power in the negotiation because it would not cost you much to walk away from the current negotiation. Cla~sic advice for people buying a new home is to "fall in Jove with two houses, not just one." Seriously considering a second house means you are less likely to overpay for the one that is your most preferred option. A common problem in negotiations, however, is that people tend to overestimate their BATNA; that is, they wrongly believe there are plenty of other ways to achieve

their objective other than through this negotiation or they underestimate other parties' BATNA.

Know Your Limits In addition to goals and BATNA, you should also consider the point at which you are indifferent to a negotiated outcome. This point, sometimes called a resistance point, helps you decide whether or not you should cal l off a negotiation. If you are a seller, your resistance point is the

324 Part Three Team Processes

Debating Point:

IS CREATING VALUE SUCH A GOOD NEGOTIATION STRATEGY?79

One of the bedrock principles of conflict management and negotiation is that the parties need to adopt a problem-solving approach. In negotiation, this win-win perspective is called creating value: discovering ways to achieve mutually satisfactory outcomes for both parties. Creating value is important for several reasons. First, creating value produces more trust. Some experts suggest that trust is vital in negotiations, because it enables each side to move forward with concessions and points of agreement.

Second, creating value involves sharing information, including a better understanding of each other's needs, so the parties can reach an optimal solution. This solution needs to deter- mine the relative value that each side assigns to aspects of the issues or items negotiated. By identifying which items are more important to one party than the other, the resources can be divided up in a way that gains the most value for both sides.

Experts agree with these and other benefits of creating value, but some also warn that this scholarly picture isn't always as rosy in real life. The most potent problem with creating value is that it requires the parties to share information. This sharing is fine if you know the other party will reveal any mutual gains and discoveries from the information-sharing process, but this revelation doesn't always occur. Instead, Side B might discover something of value that could give it more of what it wants while making Side A think it has gained at great loss to Side B.

Consider the following true example: Back in the days of the Modei-T, the supplier of the car's door handles asked Ford for a 5 percent price increase. Ford initially balked, but then agreed to the higher price if the supplier would reconfigure the bolt holes in the lids of the wooden crates used to deliver the door handles. The supplier was both perplexed and delighted; it didn't cost anything to make the change, but what was the value to Ford? As it turns out, Modei-T floorboards were made of wood, and Ford staff had figured out how to modify the supplier's crate lids as floorboards.

In this incident, Ford might have told the curious supplier why it was willing to pay this higher price, but this doesn't always occur. Sometimes, one side falsely believes the other side is making a significant sacrifice when, in fact, that other side has received considerable gains. If these gains had been revealed, the supplier might have asked for even more!

Another concern is that it is sometimes difficult for each party to distinguish creating value from yielding-that is, giving the other party what they want. In an attempt to show collaboration, you give one concession here, another there, and so forth. Eventually, your position lacks nego- tiation options, because most of the concession space has been given away, while the other party has given very little. Creating value is inherently in tension with gaining value, because you must always keep your own interests equal to or greater than the interests of the other party.

least you will accept in exchange for what you are selling. If you are the buyer, your resistance point is the most you are willing to pay for an item. The reason you should think about this in advance is that too

many people, especially those who don't even consider their limits, shift the way they view their bottom line in the face of a competitive offer from a counterpart. It is best to avoid this unless the evidence you

receive clearly indicates that your limits may be unreasonable.

DISTRIBUTIVE STRATEGIES THAT WORK

To succeed in a distributive negotiation, it is helpful to understand the concept of the bargaining zone, which is defined as the space between each party's resistance point.80 Exhibit 11.6 displays one possible

bargaining zone situation for a purely win-lose situation. As this model illustrates, the parties typically establish three main negotiating points. The initial offer point is the opening offer to the other party,

Chapter Eleven Conflict and Negotiation in the Workplace

EXHIBIT 11.6 Bargaining Zone Model of Negotiations

Your initial point

Your target point

Bargaining Zone

Opponent's resistance

point

Your resistance

point

Opponent's target point

Opponenrs initial offer point

325

the target point is the real istic goal or expectation for a final agreement, and the resistance point was defined above-it's the least a party is willing to accept or the most they are willing to offer. It is impor- tant to remember that if the resistance point~ of the two parties overlap, as they do in Exhibit 11.6, then

any deal that falls within the bargaining zone is a good deal because each side has done better than their resistance point. Therefore, they are both better off.

Most people, however, would prefer to reach a deal closer to their target point than their resistance point-and this is what we mean when we say that each side will try to claim as much value as possible. In a purely distributive situation, there are a few strategies that are known to lead to more value claiming.

Manage First Offers and Concessions Do you prefer to make the first offer in a negotiation or wait to hear what the other side offers first? Most people say they prefer to wait (about 80 percent in our experience}, and are surprised to learn that if you are prepared and have a realistic sense about the

structure of the bargaining zone, it is best to make the opening offer. The reason stems from research on the concept of anchoring and adjustment. First offers set "anchors," which tend to be highly influen- tial in determining subsequent offer and concession-making behaviour. As we explained in Chapter 7, people tend to adjust their expectations around the initial point (or anchor), so if your initial request is high, opponents might move more quickly toward their resistance point along the bargaining zone.81 It may even cause opponents to lower their resistance point.

After the first offer, negotiators need to make concessions.82 Concessions serve at least three impor- tant purposes: ( 1) they enable the parties to move toward the area of potential agreement, (2) they symbolize each party's motivation to bargain in good faith, and (3) they tell the other party of the relative importance of the negotiation items. However, concessions need to be clearly labelled as such and should be accompanied by an expectation that the other party wi ll reciprocate. They should also be offered in installments because people experience more positive emotions from receiving a few smaller concessions than from one large concession.83 Generally, the best strategy is to be moderately tough and to concede just enough to communicate sincerity and commitment to resolve the confl ict.84

Manage Time Negotiators make more concessions as the deadline gets closer.85 This can be a liabil- ity if you are under time pressure, or it can be an advantage if the other party alone is under time pressure. Negotiators with more power in the relationship sometimes apply time pressure through an "exploding offer" whereby they give their opponent a very short time to accept their offer.86 These time-limited offers are frequently found in consumer sales ("On sale today only!") and in some job offers. They pro- duce time pressure, which can motivate the other party to accept the offer and forfeit the opportunity to explore their BATNA. Another time factor is that the more time someone has invested in the negotiation,

326 Part Three Team Processes

the more committed they become to ensuring an agreement is reached. This commitment increases the tendency to make additional concessions not originally planned so that the negotiations do not fail.

INTEGRATIVE STRATEGIES THAT WORK Many negotiation situations are not zero-sum, winner-take-al l problems. In fact, most situations that appear distributive on the surface can be turned into an integrative situation by adding one or more issues to the mix. This is comforting for people who do not enjoy the competitive nature of distributive negotiations. The hallmark of success in an integrative situation is the reconciling of differences that exist between parties. These differences can include things like variation in preferences across the issues, difference in risk perceptions, and differences in time pressure. Value gets created when the parties agree to deals in which they exchange high priority issues for low priority issues, and vice versa. For example, when a manager is trying to hire a new employee they might discover that the most important issues to the job candidate, in order of importance, are salary, start date, and coverage of moving expenses. If the manager is in a rush and need~ someone to start right away, they might value start date over both salary and moving expenses. Therefore, a deal that creates value is one where the employee agrees to start ear- lier and in exchange for this concession they get a slight bump in salary (or moving expenses coverage). A critical point here is that this sin1ation is not zero-sum. Both sides could treat it as such, split all the issues down the middle, and thus leave value sitting on the table. Instead, they are better off to try and understand the interests underlying their counterpart's positions and create value by searching for differ- ences. As this example also shows, the behaviours that lead to success in a distributive situation often lead to suboptimal deals in an integrative situation. What then, are the strategies required to create value?

Gather Information Information is the cornerstone of effective value creation87 Therefore, skilled negotiators heed the advice of the late management guru Stephen Covey: "Seek first to understand, then to be understood.'.ss This means that we should present our case only after spending more time listening closely to the other party and asking for detail~. It is particularly important to look beyond the opponent's stated justi- fications to the unstated motivation for their claims. Probing questions (such as asking "why'') and listening intently can reveal better solutions for both parties. Nonverbal communication can also convey important information about the other party's priorities. Negotiating in teams can also aid the information gathering process because some team members will hear information that others have ignored. Gleaning insight about the other party's interest can facilitate more creative problem solving and help you reframe the issues.

Discover Priorities through Offers and Concessions Some types of offers and concessions are better than others at creating value. The key objective is to discover and signal which issues are more and Jess important to each side. Suppose that you have been a~ked to "second" (temporarily transfer) some of your best staff to projects in another division, wherea~ you need these people on site for other a~signment~ and to coach junior staff. Through problem solving negotiation, you discover that the other division doesn't need those staff at their site; rather the division head mainly needs some guarantee that these people will be avail- able when required. The result is that your division keeps the staff (important to you) while the other division has some guarantee these people will be available at specific times for their projects (important to them).

One way to figure out the relative importance of the issues to each party is to make multi-issue offers rather than discussing one issue at a time.89 You might offer a client a specific price, delivery date, and guarantee period, for example. The other party's counteroffer to multiple items signals which are more and which are less important to them. Your subsequent concessions similarly signal how important each issue is to your group.

Build the Relationship Trust is critical for the problem solving style of conflict handl ing as well as in the value creation objective of negotiations.90 How do you build trust in negotiations? One approach is to discover common backgrounds and interests, such as places you have lived, favourite hobbies and sports teams, and so forth. If there are substantial differences between the parties (age, gender, etc.), consider having team members that more closely match the backgrounds of the other party. First impressions are also important. Recall from earlier chapters in this book that people attach

Chapter Eleven Conflict and Negotiation in the Workplace 327

emotions to incoming stimuli in a fraction of a second. Therefore, you need to be sensitive to your nonverbal cues, appearance, and initial statements.

Signalling that we are trustworthy also helps strengthen the relationship. We can do this by dem- onstrating that we are reliable and will keep our promises as well a~ by identifying shared goals and values. Trustworthiness also increases by developing a shared understanding of the negotiation pro- cess, including its norms and expectations about speed and timing.91 Finally, relationship building demands emotional intell igence92 This includes managing the emotions you display to the other party, particularly avoiding an image of superiority, aggressiveness, or insensitivity. Emotional intelligence also involves managing the other party 's emotions. We can use well-placed flattery, humour, and other

methods to keep everyone in a good mood and to break unnecessary tension.93

EXPERT VERSUS AVERAGE NEGOTIATORS

Are there certain behaviours that expert negotiators exhibit differently than other people? In a classic study conducted in the U.K., researchers selected a group of more than 50 expert negotiators and com- pared them to a similar-sized group of "average" negotiators. After watching both groups whi le they negotiated actual deals, it was clear that experts do in fact behave differently from average negotiators. A surprise finding was that experts do not actually spend more time preparing than most other people; instead, they differed substantial ly on how they planned and what they planned for. Expert negotiators spent a great deal more energy considering the things we mentioned earlier: goals, their BATNA, and their resistance point. Average negotiators rarely did so, and even if they did, the level of detail for each element was cursory at best.94

The researchers also examined differences between the two groups in terms of the face-to-face interactions while negotiating. These differences are summarized in Exhibit 11.7. What are the things experts do less? First, expert negotiators tend to use fewer irritators, which are words or phrases that have no persua~ive value and tend to irritate one's counterpart. One of the most frequently used irrita- tors is the phrase "generous offer" to describe one's proposal. Second, expert negotiators make fewer

counterproposals than average negotiators-instead, they spent more time clarifying and understand- ing a proposal before putting another offer on the table. Third, an expert is less likely to get into a defend-and-attack spiral, whereby both sides use heated or emotion-laden comments in a back-and-

forth manner. An average negotiator is over three times more likely to engage in such behaviour. And finally, experts spend much more face-to-face time ensuring that they understand their counterpart's perspective. In doing so, they will use phrases such as, "So do I understand .. . " and "If I understand

EXHIBIT 11.7: Differences between Expert and Average Negotiators

~ .......... Eqleft Nfei!Cieti 1 A-. Nfei!Cieti 1 Use of irritators 2.3 per hour I 0.8 per hour

"This is a generous offer. . ••

"\Ve're willing to be reasonable . . ••

Use of counterproposals 1.7 per hour 3.1 per hour

Defend/auack spirals I . 9% of comment'i 6.3% of commenL•

"You can't blame us . . "

" It's not our fault . . . "

Testing understanding and summarizing 17.2% of all behaviours 8.3% of all behaviours

"So do I under.aand . . . "

" "If I understand you correctly . ..

Asking questions 21.3% of all behaviours 9.6% of all behaviours

Giving information about internal thought'i {feelings. concerns) 12.1 % of all behaviours 7.8% of all behaviours

Number of rea'ions to support an argument I .8 on average 3.0 on aver.tge

328 Part Three Team Processes

you correctly . . . ". These behaviours send a signal to a counterpart that they are being understood and listened to, both of which increase trust.

There are also behaviours that experts tend to exhibit more than average negotiators. The research- ers discovered that experts ask more than twice as many questions. This makes sense because informa-

tion gathering is central to value creation, and there is plenty of research supporting the argument that naive negotiators tend to approach most negotiations with a distributive mentality (even when the situ-

ation is integrative). Expert negotiators were also more likely to use communication patterns in which they gave clues about how they were thinking about alternatives. For example, a skilled negotiator might say something like, ''!' m uncertain how to react to what you've just said. I have some concerns about the meaning of two aspects of the offer. Can you help me resolve this?"

Finally, imagine a situation where your counterpart has made a claim or an offer and you intend to respond with reasons against their argument. How many reasons should you cite? Most people think that more is better here-and that is consistent with the trend between experts and average negotiators. In fact, experts tend to focus on only one or two counterarguments rather than presenting a laundry list. They do so because the greater the number of reasons, the more likely their overall argument will be diluted. So, keep it short, focused, and simple. You' ll be more effective that way.

Chapter Summary

LO 1 Define conflict and debate its positive and negative consequences in tbe workplace. Conflict is the process in which one party perceives that its interests are being opposed or negatively affected by another party. The earliest view of conflict wa~ that it was dysfunctional for organiza-

tions. Even today, we recognize that cont1ict sometimes or to some degree consumes productive time, increa~es stress and job d issatisfaction, discourages coordination and resource sharing, undermines customer service, fuels organizational politics, and erodes team cohesion. But conflict can also be beneficial. It is known to motivate more active thinking about problems and possible solutions, encourage more active monitoring of the organization in its environment, and improve team cohesion (where the conflict source is external).

L02 Distinguish task from rela tionship conflict and describe three strategies to minimize rela tion- ship conflict during task conflict episodes.

Ta~k conflict occurs when people focus their discussion around the issue while showing respect for people with other points of view. Relationship conflict exists when people view each other, rather than the issue, as the source o f conflict. It is apparent when people attack each other's credibility and display aggression toward the other party. It is difficult to separate ta~k from relationship conflict. However, three strategies or conditions that minimize re lationship conflict during constructive debate are: (I ) emotional intelligence of the participants, (2) team cohesion, and (3) supportive tean1 norms.

L03 Diagram the conflict p rocess model and describe six structural sources of conflict in organizations.

The conflict process model begins with the six structural sources of conflict: incompatible goals, differentiation (different values and beliefs), interdependence, scarce resources, ambiguous rules, and communi- cation problems. These sources lead one or more parties to perceive a conflict and to experience confl ict emotions. This, in turn, produces manifest conflict, such as behaviours toward the other side. The conflict process often escalates through a series of episodes.

L04 Outline the five conflict handling styles and discuss the circumstances in which each would be most appropriate.

There are five known conflict handling styles: problem solving, forcing, avoiding, yie lding, and compromising. People who use problem solving have a win-win orientation. Others, particularly forcing, assume a win-lose orientation. In general , people gravitate toward one or two preferred conflict handling styles that match their personality, personal and cultural values, and pa~t experience.

Chapter Eleven Conflict and Negotiation in t he Workplace 329

The best style depends on the s ituation. Problem solving is best when interests are not perfectly opposing, the parties trust each other, and the issues are complex. Forcing works best when you strongly bel ieve in your posi- tion, the dispute requires quick action, and the other party would take advantage of a cooperative style. Avoidance is preferred when the conflict has become emotional or the cost of resolution is higher than its benefits. Yielding works well when the other party has substantially more power, the issue is less important to you, and you are not confident in the logical soundness of your position. Compromising is preferred when the parties have equal power, they are under time pressure, and they Jack trust.

LOS Apply the six s tructural approaches to conflict managemen t and describe the three types of third -party dispu te resolution.

Structural approaches to conflict management include emphasizing superordinate goals, reducing differentiation, improving communication and understanding, reducing interdependence, increasing resources, and clarifying rules and procedures.

Third-party conflict resolution is any attempt by a relatively neutral person to help the parties resolve their differ- ences. The three main forms of third-party dispute resolution are mediation, arbitration, and inquisition. Managers tend to use an inquisition approach, although mediation and arbitration are more appropriate, depending on d1e situation.

LOG Describe dist ributive and integrative negotiations and outline s trategies skilled negotiators use to claim value and create value.

Negotiation refers to decision-making s ituations in which two or more interdependent parties attempt to reach agreement. When negotiator goals run in opposite directions they find themselves in a distributive s ituation, and when their goals are not fully incompatible they are in an integrative s ituation. Effective distributive strategies include making ambitious opening offers and managing the concession-making process. ln an integra- tive situation, value can be created by gathering information, sharing information, a~king questions to understand a counterpart's perspective, and building the relationship.

Key Terms best alternative to a negotia ted agreement (BATNA)

conflict

distributive s itua tion

integ rative situa tion

negotiation

relationship conflict

superordinate goals

task conflict

third -party co nflict resolution

win- lose orienta tion

win- win orienta tion

Critical Thinking Questions I. Distinguish task conflict from relationship conflict and explain how to apply the former with minimal levels

of the latter.

2. The CEO of Creative Toys Inc. read about cooperation in Japanese companies and vowed to bring this same philosophy to his company. His goal is to avoid all conflict, so that employees will work cooperatively and be happier at Creative Toys. Discuss the merits and limitations o f the CEO's pol icy.

3. Cont1ict an10ng managers emerged soon after a French company acquired a Swedish firm. The Swedes perceived the French management a~ hierarchical and arrogant, whereas the French thought the Swedes were naive, cautious, and Jacking an achievement orientation. Identify the source(s) of cont1ict that best explain this cont1ict, and describe ways to reduce dysfunctional conflict in this situation.

4. You have just been transferred from one unit of the organization to another unit. On the last day of work in the firs t unit, your current manager calls your new manager informing her that you are a tough candidate and that you possess an attitude. The would-be manager calls you, providing you with the information, and expresses apprehension. How would you resolve this conflict?

5. You are a special assistant to the commander-in-chief of a peacekeeping mission to a war-torn part of the world. The unit consists o f a few thousand peacekeeping troops from the Canada, France, India, and four other countries. The troops will work together for approximately one year. What strategies would you recom- mend to improve mutual understanding and minimize conflict among these troops?

330 Part Three Team Processes

6. The chief operating officer (COO) has noticed that production e mployees in the company's Mex ican manu- facturing operations are unhappy with some of the production engineering decis ions made by engineers in the company's headquarters in Toronto. At the same time, the engineers complain that production employees aren't applying their engineering specifications correctly and don't understand why those specifications were put in place. The COO believes that the best way to resolve this conflict is to have a frank and open discus- s ion between some of the engineers and employees representing the Mexican production crew. This open dialogue approach worked well recently among managers in the company's Toronto headquarters, so it should work equally well between the engineers and production staff. Based on your knowledge of communication and mutual understanding as a way to resolve conflict, discuss the COO's proposal.

7 . Describe the inquisitional approach to resolve disputes between employees or work units. Discuss its appro- priateness in organizational settings, including the suitability of its use with a multigenerational workforce.

8. Jane has just been appointed as purchasing manager of Tacoma Technologies Inc. The previous purchasing manager, who recently retired , was known for his "winner-take-all" approach to suppliers. He continually fought for more discounts and was skeptical about any special deals that suppliers would propose. A few suppliers refused to do bus iness with Tacoma Technologies, but senior management was confident that the former purchas ing manager's approach minimized the company's costs. Jane wants to try a more collabora- tive approach for working with suppliers. Will her approach work? How should she adopt a more collabora- tive approach in future negotiations with suppliers?

9 . You are a new program manager with responsibility for significant funding and external relations, and because o f downsizing issues in your area, you have lost two valuable employees (actually 1.5, because the second person is on half time now: she used to be your manager and you trained under her). You have been in the new job approx imately two weeks: however, you have been in the unit for more than a year and have seen how systems are managed from your manager's perspective. You now have her job. Out of the blue, a senior person (not in your area) comes to you and says he is taking most of your space. He doesn't ask your permis- s ion, nor does he seem the least bit concerned with your response. What do you do?

Case Study:

CAR WARS AT WOLFSBURG

by Steven L. McShane, Curtin University (Australia) and University of' Victoria (Canada)

Over the past 15 years, Volkswagen Group (VW) acquired several fie fdoms- Audi, Lan1borghini, Bentley, Bugatti, Skoda, SEAT - that jealously guarded their brand and continuously rebelled against sharing knowledge. One mem- ber of VW's supervisory board (the German equivalent of a board of directors) commented that managing the company is "like trying to ride a chariot with four or five horses, each of which pulls in a different direction."

Then Porsche AG e ntered the fray. The luxury sports car company, which rel ies on VW for some of its produc- tion work, began acquiring stock in VW and eventually achieved a controlling interest. Porsche CEO Wendel in Wiedeking was aware of VW's internal rivalries. "If you mix the Porsche guys with the Audi guys and the VW guys you will have trouble," says Wiedeking. "Each is proud to belong to his own company."

Yet Wiedeking stirred up a different type of conflict as Porsche tightened its grip over VW's supervisory board. Through an unswerving drive for efficient production and astute marketing, Wiedeking and his executive team had transformed Porsche into the world's most profitable and prestigious car company. Wiedeking wanted to apply those practices at VW by closing down inefficient operations and money-losing car lines.

"Wiedeking is a Porsche CEO from another corporate culture," says German auto analyst Christoph Stoermer. "He's out to maxi mize profits by cutting costs. And he snubbed everyone, telling off VW management, interfer- ing with their way of doing business." Ferdinand Dudenhoeffer, director of Germany's Center for Automotive Research (CAR), agrees. "Porsche is very successful in being Jean and profitable. It's not going to be harmonious."

Particularly offended by Wiedeking's plans was VW chairman Ferdinand Piech, who had a different vis ion of Europe's largest automaker. Piech, whose grandfather developed the VW Beetle, placed more emphasis on spec- tacular engineering than exceptional profit~ . For example, he supported the money-losing Bugatti brand, which VW acquired several years ago when Piech was CEO. More recently, Piech chan1pioned the Phaeton, VW's luxury car that broke new ground in innovation (it boastsiOO patents) but has not been a commercial success.

Wiedeking, on the other hand, believed that VW could be more profitable if it stopped produc ing the Phaeton and Bugatti. "P iech sees his vision endangered by Wiedeking," says Dudenhoeffer. "Wiedeking said that there are

Chapter Eleven Conflict and Negotiation in t he Workplace 331

no holy cows at VW, no more Phaetons, no more Bugattis." These ideas made Piech's blood boil. "Anyone who says that VW should pull the Phaeton doesn' t understand the world," grumbled Piech, explaining that luxury cars represent the only segment with double-digit growth .

There is an unusual twist in the confl ict involving Piech, Wiedeking, and Porsche. Piech is a member of the Porsche family. He is a cousin of Porsche chairman Wolfgang Porsche and owns a 10 percent share o f the Porsche company. Piech began his career at Porsche and became its chie f engineer before moving to Audi and later VW Furthermore, in what many consider a blatant conflict o f interest, Piech supported Porsche's initial investment in VW But when Piech's and Wiedeking's plans ended up on a collision course, that initial friendly investment in the partnership turned into all-out corporate war. "There was always a cea~efire between Piech and the Porsches, but now it's war," claims auto analyst Ferdinand Dudenhoeffer. "This is like 'Dallas' and ' Dynasty' in Wolfsburg (the c ity where VW has its headquarters). No company in the world is so self-absorbed with its problems."

Postscript Ironically, Porsche CEO Wendelin Wiedeking's plans backfired. Porsche had borrowed heavily to acquire its controlling interest in VW while maintaining its own business operations. Some estimate that Porsche had loans of more than US$14 bill ion. Furthermore, VW shares increased substantially during the takeover process, so Porsche owed massive taxes for the increased "paper profits" of the shares it owned. The timing couldn't have been worse. The great financial crisis hit the world, which cut Porsche sales and dried up funds, making it difficult for Porsche to pay interest on its loans and to renew loans that were coming due. In effect, it was on the brink of bankruptcy. In addition, a unique Jaw allowed one German state (Lower Saxony), which had a 20 percent ownership in VW, to veto any important decisions in the company, including Porsche's control of VW.

Ultimately, Porsche agreed to give up its controlling interest in VW. Instead, it sold some of its business to VW and the Qatar government and, ultimately, agreed to be acquired by VW (rather than vice versa). Wiedeking lost his job as Porsche CEO, whereas Ferdinand Piech (as chairman of VW's supervisory board) would effectively be head of both automakers. Complicated legal and financial matters delayed the complete acquisition, but VW did complete its takeover of Porsche.

Discussion Questions

I. Identify and discuss the sources of conflict between Porsche and Volkswagen executives.

2. Describe the cont1ict handling styles used by Wendel in Wiedeking and Ferdinand Piech. Were they appropri-

ate in this s ituation?

The facts of this case were pieced together by Steven L. McShane from the following sources: M. Landler. "Twist in the Intrigue at VW May Help Chief Keep His Job." New Yor* Times. 2 I April 2006. 5: R. Hutton. "Porsche Ready to Swallow VW," Autocar. 7 November 2007: "German Carmaker Family Feud Plays out in VW Boardroom." Dewsche \Velie. I 8 September 2008; D. Hawranek. ''Clans. Executives Sharpen Knives Backstage at Porsche and VW," Spiegel Online, I I March 2008: N.D. Schwartz. "Porsche Takes a Controlling Interest in VW." New York Times. I 7 September 2008: D. Hawranek. ''Gennan Cannaker Narrowly Averts Bankruptcy." Spiegel Online, 25 May 2009: C. Dougherty, "Porsche Chief Pays Full Price for his Overreach." /11/emarional Hemld Tribune. 24 July. 2009. I: BryanL Adam. "VW-Porsche merger ends years of wrangle.,." Financial Time.' {London). 5 July. 2012.

Class Exercise:

THE CONTINGENCIES OF CONFLICT HANDLING

By Gerard A. Callanan and David F. Perri, Wes t Chester University of Pennsylvania

Purpose This exercise is designed to help you understand the contingencies of applying conflict handling styles in organ izational settings.

Instructions Srep I : Partic ipants will read each of the five scenarios presented below and select the most appropriate

response from among the five alternatives. Each scenario has a correct response for that situation. Srep 2 (Oprional): The instructor may ask each student to complete the Conflict Handling Scale self-assessment

or a similar instrument. This instrument will provide an estimate of your preferred cont1ict handling style.

33 2 Part Three Team Processes

Srep 3: As a class, participants g ive their feedback on the responses to each o f the scenarios, with the instructor guiding discussion on the contextual factors embodied in each scenario. For each scenario, the class should identify the response selected by the majority. In addition, participants will discuss how they decided on the choices they

made and the contextual factors they took into account in making their selections. Srep 4: Student~ will compare their responses to the five scenarios with their results from the conflict handling self-

a~sessment. Discussion will focus on d1e extent to which each person's preferred conflict handling style influenced their alternatives in this activity, and the implications of this style preference for managing conflict in organizations.

SCENARI0#1

Setting You are a manager of a division in the accounting department of a large Canadian bank. Nine exempt- level analysts and six nonexempt clerical staff report to you. Recently, one of your analyst~, Jane Wilson, ha~ sought the bank's approval for tuition reimbursement for the cost of an evening MBA program special izing in organizational behaviour. The bank normally encourages e mployees to seek advanced degrees on a part-time ba~is. Indeed, through your encouragement, nearly all of the members of your staff are pursuing additional schoolwork. You consult the bank's pol icy manual and discover that two approvals are necessary for reimbursement-yours and that of the manager of training and development, Kathy Gordon. Further, the manual states that approval for reimbursement will only be granted if the coursework is "reasonably job related." Ba~ed on your review of the matter, you decide to approve Jane's request for reimbursement. However, Kathy Gordon reject~ it outright by claiming that coursework in organ izational behaviour is not re lated to an accounting analyst position. She states that the bank will only reimburse the analyst for a degree in either accounting or finance. In your opinion, however, the interpersonal skills and insights to be gained from a degree in organizational behaviour are job related and can also benefit the e mployee in future a~signment~. The analyst job requires interaction with a variety of individuals at different levels in the organization, and it is important that interpersonal and communication skills be strong.

After further discussion it becomes clear that you and Kathy Gordon have opposite views on the matter. Since both of you are at the same organization level and have equal status, it appears that you are at an impasse. Although the goal of reimbursement is important, you are faced with other pressing demands on your time. In addition, the conflict ha~ diverted the attention of your work group away from its primary responsibilities. Because the school term is about to begin, it is essential that you and Kathy Gordon reach a timely agreement to enable Jane to pursue her coursework.

Action Alternatives for Scenario #1 Please indicate your firs t ( I) and second (2) choices from an10ng the following alternatives by writing the appropriate number in the space provided.

Action Alternative Ranking ( I st & 2nd)

I. You go aJong with Kathy Gordon's view and advise Jane \Vilson to select either accounting or finance as a major for her MBA.

2. You decide to withdr.tw from the situation completely and te lJ Jane to work it out with Kathy Gordon on her own.

3. You decide to take the matter to those in higher management levels and argue forcefully for your point of view. You do

everything in your power to ensure that a decision wil1 be made in your favour.

4 . You decide to meet Kathy Gordon halfway in order to reach an agreement. You advise Jane to pursue her MBA in

~ccounting or finance, but also recommend she minor in organizational behaviour by taking e lectives in that field.

5. You decide to work more closely with Kathy Gordon by attempting to get a clear as well as flexible policy written that reflects both of your views. Of course, this will require a significant amount of your time.

SCENARI0#2

Setting You are the vice-president of a relatively large division (80 employees) in a medium-s ized consumer products company. Due to the recent turnover of minority staff, your division ha~ fallen behind in meeting the company's goal for Equal Employment Opportunity (EEO) hiring. Because o f a scarcity of qualified minority candidates, it appears that you may fall further behind in achieving stated EEO goals.

Although you are aware of the problem, you believe that the low level of minority hiring is due to increa~ed attrition in minority staff as well as the Jack of viable replacement candidates. However, the EEO officer believes that your hiring criteria are too stringent, resulting in the rejection of minority candidates with the basic qualifica- tions to do the job. You support the goals and principles of EEO; however, you are concerned that the hiring of Jess-qualified candidates wi ll weaken the performance of your divis ion. The EEO officer believes that your failure to hire minority e mployees is dan1aging to the company in the short term because corporate goals wi ll not be met, and in the long term because it will restrict the pool of minority candidates available for upward mobil ity. Both of you regard your concerns a~ important. Further, you recognize that both of you have the company's best interests in mind and that you have a mutual interest in resolving the conflict.

Action Alternatives for Scenario #2 Please indicate your ftrs t ( I) and second (2) choices from an10ng the following alternatives by writing the appropriate number in the space provided.

Chapter Eleven Conflict and Negotiation in t he Workplace 333

--Action Ahernative Ranking ( 1s t & 2nd) I.

2.

3.

4.

5.

You conclude that the whole problem is too complex an issue for you to handle right now. You put it on the "back burner ..

and decide to reconsider the problem at a later date.

You believe that your view outweighs the perspective of the EEO officer. You decide to argue your position more vigorously

and hope that your stance will sway the EEO officer to agree with your view.

You decide to accept the EEO officer's view. You agree to use less s tringent selection criteria and thereby hire more minority

employees.

You give in to the EEO officer somewhat by agreeing to rela..'\ your standards a little biL This ·would allow slightly more minority hiring (but not enough to satisfy the EEO goal) and could cause a small reduction in the overall performance of your eli vision.

You try and reach a consensus that addresses each of your concerns. You agree to work harder at hiring more minority

applicants and request that the EEO officer agree to help find the most qualified minority candidates available.

SCENARI0#3

Setting You are the manager in charge of the financial reporting section of a large insurance company. It is the responsibil ity o f your group to make periodic written and oral reports to senior management regarding the company's financial performance. The company's senior management has come to rely on your quick and accurate dissemination of financial data as a way to make vital decisions in a timely fashion . This has given you a relatively high degree o f organizational influence. You rely on various operating departments to supply you with financial information according to a pre-established reporting schedule.

I

In two days, you must make your quarterly presentation to the company's board of directors. However, the claims department has failed to supply you with several key pieces of information that are critical to your pre- sentation . You check the reporting schedule and realize that you should have had the information two days ago. When you call Bill Jones, the claims department manager, he informs you that he cannot possibly have the data to you within the next two days. He states that other pressing work has a higher priority. Although you explain the critical need for this data, he is unwill ing to change his position. You believe that your presentation is vital to the company's wel fare and explain this to Bill Jones. Although Bill has less status than you, he has been known to take advantage of individuals who are unwilling or unable to push their point of view. With your presentation less than two days away, it is critical that you receive information from the claims department within the next 24 hours.

Action Alternatives for Scenario #3 Please indicate your firs t ( I) and second (2) choices from an10ng the following alternatives by writing the appropriate number in the space provided.

r-- Action Ahernative Ranking ( 1s t & 2nd)

I.

2.

3.

4.

15.

Accept the explanation from Bill l one.' and try to get by without the figures by using your best judgment as to what they

would be.

Tell Bill Jones that unless you have the data from his department on your desk by tomorrow morning. you will be forced to

go over his head to compel him to give you the numbers.

Meet Bill Jones halfway by agreeing to receive part of the needed figures and using your own judgment on the othe rs.

T ry to get your presentation postponed until a later date. if possible.

Forget about the short•te rm need for information and try to achieve a longer· te rm solution. such as adj usting the reporting

schedule to better accommodate your mut-ual needs.

SCENARI0#4

Setting You are the production manager of a medium-sized building products company. You control a production line that runs on a three-shift basis. Recently, Ted Smith, the materials handling manager, requested you to accept a different packaging of the raw materials for the production process than what has been customary. He states that new machinery he has installed makes it much easier to provide the material in 45-kilogranl sacks instead of the 22-kilogram bags that you currently receive. Ted further explains that the provision of the material in the 22-kilogram bags would put an immense strain on his operation, and he therefore has a critical need for you to accept the change. You know that accepting materials in the new packaging will cause some minor disruption in your production process, but should not cause long-term problems for any of the three shifts. However, you are a little annoyed by the proposed change because Ted did not consult with you before he installed the new equipment. In the past, you and he have been open in your communication. You do

not think that this fai lure to consult you represents a change in your re lationship. Because you work closely with Ted, it is essential that you maintain the harmonious and stable working rela-

tionship that you have built over the pa~t few years. In addition, you may need some help from him in the future, s ince you already know that your operation wi ll have special material require ments in about two months. You also know that Ted has influence at higher levels of the organization.

334 Part Three Team Processes

Action Alternatives for Scenario # 4 Please indicate your first ( 1) and second (2) choices from among the following alternatives by writing the appropriate number in the space provided.

Action Alternative Ranking (I st & 2nd)

I. Agree to accept the raw mate rial in the different fonnal. 1- . . . . . . . -

2. Refuse to accept the matena1 m the new fonnat because Jt would cause a dJsrupL1on m your operat:ton.

3.

4.

5.

Propose a solution where you accept material in the new fonnat d uring the first shift but not d uring the second and third.

Tell Ted Smith that you do not wish to dea1 with the issue at this time. but that you will consider his request and get back to

him at a later date.

You decide to teJI Ted Smith of your concern regarding his failure to consult with you before installing new equipment. You

inform him that you wish to find longer term solutions to the confl ict between you .

SCENARIO # S

Setting You are e mployed as supervisor of the compensation and benefits section in the human resources department o f a medium-sized pharmaceutical company. Your staff of three clerks is responsible for maintaining contacts with the various benefits providers and answering related questions from the company's e mployees. Your section shares support staff, word processing, and copier resources with the training and development section of the department. Recently, a disagreement has arisen between you and Beth Hanson, the training and development supervisor, over when the support staff should take their lunches. Beth would like the support staff to take their lunches an hour later to coincide with the time most of her people go to lunch. You know that the support staff does not want to change their lunch times. Further, the c urrent time is more convenient for your staff.

At this time, you are hard-pressed to deal with the situation. You have an important meeting with the provider of dental insurance in two days. It is critical that you are well prepared for this meeting, and these other tasks are

a distraction.

Actio n Alterna t ives for Scenario #5 Please indicate your first (I) and second (2) choices from among the following alternatives by writing the appropriate number in the space provided .

Action Alternative Ranking ( 1st & 2nd)

I. Take some time over the next day and propose a solution whereby the support staff takes their lunch at the earlier time three

days a week and at the later time two days a week.

2. Te ll Beth Hanson you will deal with the matter in a few days, after you have addressed the more pressing issues.

3. Let Beth Hanson have her way by agreeing to a later lunch hour for the support staff.

4. A at out tell Beth Hanson that you will not agree to a change in the support staffs lunchtime.

5. Devote more time to the issue. Attempt to achieve a broad-ba...;ed consensus with Beth Hanson that meel'i her need'i as well as

yours and those of the support s taff.

Source: G. A. Callanan and D. F. Perri. ''Teaching Conflict Management Using a Scenario-Based Approach," Journal of Education for Business. 81 (Jan/ Feb2006), pp. 131- 139.

Self-Assessments for Chapter 11

SELF-ASSESSMENT NAME

What is your preferred conflict handling style?

DESCRIPTION

There are five main conflict· handling styles that people use in response to conflict s ituations. \Ve are usually most comfortable using one or two of these styles based on our personality. values. sel f-concept. and past experience. This asse..~sment helps you see what a pproach you tend to take when dealing with conflict.

CHAPTER 12

Leadership in Organizational Settings

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Define leadership and shared leadership.

L02 Describe the four elements of transformational leadership and explain why they are important for organizational change.

L03 Compare managerial leadership with transformational leadership, and describe the features of task-oriented, people-oriented, and servant leadership.

L04 Discuss the elements of path-goal theory, Fiedler's contingency model, and leadership subst itutes.

LOS Describe the two components of the implicit leadership perspective.

LOG Identify eight personal attributes associated with effective leaders and describe authentic leadership.

L07 Discuss cultural and gender similarities and differences in leadership.

335

336 Part Three Team Processes

Toronto startup company Dayforce had developed world-class workforce management software (employee scheduling, forecasting, etc.) but lacked an established market presence. Founder and CEO David Ossip saw an opportunity to partner with Minneapolis-based Ceridian, a well-established global organization in payroll systems that needed new products and services. Ceridian acquired Dayforce one year after the partnership began, and Ossip was installed as CEO of the overall company less than one year after the acquisition.

When Ossip first arrived at Ceridian's offices, he realized the company needed a leader-led transformation. "My take-home after a hard look at Ceridian was that the organization had to reinvent its culture in order to drive proper employee engagement, in turn improving our customer engagement scores and market share," Ossip recalls. Employees weren't enthusiastic about Ceridian's future and lacked trust in its senior managers, most of whom were sequestered far away on the executive floor.

Ossip developed a more appealing vision for Ceridian's employees. "Our worldwide focus became something more than just paying people correctly," Ossip explains. "At Ceridian, our brand promise is 'Makes Work Life Better'-we believe that our solutions and our people make work life better for employees everywhere, in any role within their organization." Ossip travelled to Ceridian's offices worldwide to discuss and demonstrate his personal commitment to the company's new vision and values. "Essentially it came down to a lot of communication, a lot of town halls, and a lot of interaction with everyone inside Ceridian, and that's what I did."

Ossip disbanded the executive floor and introduced a coaching program to help managers communicate the company's vision more effectively to employees. A new team of executives was carefully selected who believed in the company's vision and values. As a result, employees gained trust in management because management's words and actions matched the firm's vision and values.

"When employees are able to see their leadership live by the values that guide them, it helps to establish a sense of organizational trust and credibility," says Ossip, who was recently recognized as the leader with the highest employee ratings on Glassdoor. This view is echoed by Ceridian employees. "Having worked in other companies prior to Ceridian, I can only appreciate the leadership team that is consistently walking the talk, seeking feedback and doing something with the feedback," says a Ceridian employee in Montreal. 1

The transformation of Ceridian illustrates how David Ossip and other leaders make a difference in an organization's survival and success. This opening case study also highlights specific leadership topics, such as vision, role modelling, and the leader's personal attributes of leadership integrity and

self-concept. Leadership is one of the most researched and discussed topics in the field of organiza- tional behaviour2 Google returns a whopping 533 mi llion web pages where leadership is mentioned. Google Scholar lists 287,000 journal articles and books with leader or leadership in the title. Amazon lists more than 31,000 books in the English language with leadership in the title. The number of books or documents with the words leader or leadership added to the U.S. Library of Congress catalogue over the past decade was four times more than two decades earl ier and 48 times more than during the first decade of the 1900s.

The topic of leadership receives so much attention because we are captivated by the capacity of some individuals to influence and motivate beyond normal expectations a large collective of people. This chapter explores leadership from four perspectives: transformational, managerial, implicit, and personal attributes] Although some of these perspectives are currently more popular than others, each helps us to more fully understand the complex issue of leadership. The final section of this chapter looks at cross-cultural and gender issues in organizational leadership. But first, we learn about the meaning of leadership as well a~ shared leadership.

What Is Leadership?

L01 Several years ago, dozens of leadership experts from around the world reached a con- sensus that leadership is about influencing, motivating, and enabling others to con- tribute toward the effectiveness and success of the organizations of which they are

Chapter Twelve Leadership in Organizational Settings 337

members.4 This definition has two key components. First, leaders motivate others through persua- sion and other influence tactics. They use their communication skills, rewards, and other resources to energize the collective toward the achievement of challenging objectives. Second, leaders are enablers. They allocate resources, alter work relationships, minimize external d isruptions, and establish other work environment changes that make it easier for employees to ach ieve organiza- tional objectives.

SHARED LEADERSHIP

Organizational behaviour experts have long argued that leadership is not about specific positions in the organizational hierarchy. Formal leaders are responsible for " leading" others, but companies are far more effective when everyone assumes leadership responsibi lities in various ways and at various times. This emerging view, called shared leadership, is based on the idea that leadership is a role, not a posi- tion51t doesn't belong to just one individual in the work unit. Instead, employees lead each other as the occasion arises. Shared leadership exists when employees champion the introduction of new technolo-

gies and products6 It also exists when employees engage in organizational citizenship behaviours that improve the performance and well-be ing of co-workers and the overall team.

Shared leadership typically supplements formal leadership; that is, employees lead along with the formal manager, rather than as a replacement for that manager. However, W. L. Gore & Associates, Semco SA, Valve Corporation, and a few other unique companies rely almost completely on shared

At EllisDon, leaders aren't just people in management jobs. The Misslssauga-based construction giant believes that leadership extends to every employee in the organization. "Everyone is a leader, everyone is accountable to each other. and everyone is involved In the success of the company as whole; explains EllisDon CEO Geoff Smith (shown here). "It's a leadership philosophy throughout our company.• EllisDon supports shared leadership by setting objectives and then giving employees a high degree of autonomy to achieve them. "Get good people, give them the authority, give them the support, and then get out of their way; Smith advises. ·so you create leaders around you."7

©Fernando Morales/The Globe and MailfCP Images

338 Part Three Team Processes

leadership because they don't have any formal managers on the organizational chart.8 ln fact, when Gore employees are asked "Are you a leader?" in annual surveys, more than SO percent of them answer "Yes."

The idea of shared leadership is quickly gaining popularity in the business community. Sergio Marchionne, the Canadian-Italian CEO of Fiat and Chrysler, says: "We've abandoned the Great Man model of leadership that long characterized Fiat and have created a culture where everyone is expected to lead.9 John Gardner, the former White House cabinet member who introduced Medicare, wrote almost three decades ago that organizations depend on employees across al l levels of the organization to seek out opportunities and solutions rather than rely on formal leaders to do so.10

Shared leadership flourishes in organizations where the formal leaders are willing to delegate power and encourage employees to take initiative and risks without fear of failure (i.e., a learning orientation culture). Shared leadership also calls for a collaborative rather than internally competitive culture because employees succeed in shared leadership roles only when their co-workers support them in these roles. Fur- thermore, shared leadership lacks formal authority, so it operates best when employees learn to influence others through their enthusiasm, logical analysis, and involvement of co-workers in their idea or vision.

Transformational Leadership Perspective

Most leadership concepts and practices can be organized into four perspectives: transfor- mational, managerial, implicit, and personal attributes. By far the most popular leader- ship perspective today-and arguably the most important in the domain of leadership-is

transformational leadership. Transformational leadership views leaders as change agents. They create, communicate, and model a shared vision for the team or organization. They encourage experimentation so employees find a better path to the future. Through these and other activities, transformational leaders also build commitment in followers to strive for that vision. There are several models of transformational leadership, but four elements are common throughout most of them and represent the core concepts of this leadership perspective. These four elements are: develop and communicate a strategic vision, model the vision, encourage experimentation, and build commitment to the vision (see Exhibit 12.1 ).11

EXHIBIT 12.1 Elements of Transformational Leadership

Leadership

Chapter Twelve Leadership in Organizational Settings 339

DEVELOP AND COMMUNICATE A STRATEGIC V ISION The heart of transformational leadership is a strategic vision. 12 A vision is a positive representation of a future state that energizes and unifies employees. 13 Sometimes this vision is created by the leader; at other times, it is formed by employees or other stakeholders and then adopted and championed by the formal leader. The opening case study to this chapter described how David Ossip ha~ Jed Cerid- ian's success through a vision of making work life better for employees everywhere, rather than selling payroll and employee scheduling software as a service. Will iam Rogers, CEO of British radio station group UKRD, emphasizes that one of the key features of successful leaders is their "clarity of vision, so people can say: 'I know where we're going, what this journey is about, what our noble cause is.' For us, it's not just running a radio group and commercial success-it's about changing people's Jives,

impacting on communities."14

An effective strategic vision has several identifiable features. 15 It refers to an ideal ized future with a higher purpose. This purpose is associated with personal values that directly or indirectly fulfil the needs of multiple stakeholders. A values-based vision is also meaningful and appeal ing to employees, which energizes them to strive for that ideal. Another reason why a strategic vision motivates employ- ees is because it is a distant goal that is both challenging and abstract. A vision is challenging because it requires substantial transformation, such as new work practices and belief systems.

A strategic vision is necessarily abstract for two reasons. One reason is that it ha~n't yet been expe- rienced (at least, not in this company or industry), so it isn' t possible to detail exactly what the vision looks like. The other reason is that an abstract description enables the vision to remain stable over time,

yet is sufficiently flexible to accommodate operational adj ustments in a shifting external environment.

• by the NUMBERS

Not Quite Leading with Vision 16

of 32,000 employees surveyed globally say their company's

leaders communicate a clear and compell ing v ision of the future.

of 1,200 Canadian employees surveyed strongly or somewhat

agree that senior management in their organization communicates a clear v ision.

of more than 40,000 employees surveyed in 300 global organizations

say they know their company's v ision, mission, and values.

of1,061 American employees surveyed say they don't get

(understand) their company's vision or have never seen it.

of 168,000 employees surveyed across 30 countries say

they either do not believe in their employer's mission/purpose (vision) or don't understand it.

340 Part Three Team Processes

For example, Ceridian's vision to make work life better does not refer to specific goals such as expand-

ing the product range or launching the service into new markets. Instead, it describes the broader noble cause of improving the work life of customers, their employees, and other stakeholders.

Another feature of an effective vision is that it is unifying. It is a superordinate objective that bonds employees together and aligns their personal values with the organization's values. In fact, a successful vision is really a shared vision, because employees collectively define themselves by this a~pirational

image of the future as part of their identification with the organization.

Communicate the Vision A strategic vision's effectiveness depends on how leaders convey it to others. 17 Transformational leaders generate meaning and motivation in followers by relying on sym- bols, metaphors, stories, and other vehicles that transcend plain language. 18 Metaphors and related communication tools "frame" the vis ion, meaning that they guide or construct the listener's mental model of the situation. For example, leaders at Da Vita refer to the company as a village and employees (called teammates) as citizens of that village who "cross the bridge," which symbolizes that they make a commitment to the company. "The words we use, while simple in nature, are packed with meaning," explains an executive at Da Vita, the largest dialysis treatment group in the United States. 19

Borrowing images from other experiences creates a richer understanding of the abstract vision. These communication tools also generate desired emotions, which motivate people to pursue the vision. For instance, when George Cohen, the ebull ient CEO of McDonald's Canada, faced the dif- ficult challenge of opening McDonald 's restaurants in Moscow, he frequently reminded his team mem- bers that they were establishing "hamburger diplomacy."20

Transformational leaders also convey the vision using verbal and nonverbal communication practices that show humility, sincerity, and a level of passion that reflects their personal belief in the vision and their optimism that employees can succeed. They strengthen team-orientation and employee self-efficacy by referring to the team's strengths and potential. By focusing on shared experiences and the central role of employees in achievement of the vision, transformational leaders suppress leader-follower differences, deflect attention from themselves, and avoid any image of superiority over

the team.21

MODEL THE VISION Transformational leaders not only talk about a vision; they enact it. They "walk the talk" by stepping outside the executive suite and doing things that symbol ize the vision22 Leaders model the vision through significant events such a~ visiting customers, moving their off ices closer to (or further from)

employees, and holding ceremonies to symbolize significant change. However, they also enact the vision by ensuring that the more mundane daily activities-meeting agendas, dress codes, executive schedules-are consistent with the vision and its underlying values.

Modelling the vision is important because it legitimizes and demonstrates what the vision looks

like in practice. Modelling is also important because it builds employee trust in the leader. The greater the consistency between the leader's words and actions, the more employees will believe in and be motivated to follow the leader. As Ceridian CEO David Ossip, profiled at the beginning of this chapter, explains, "When employees are able to see their leadership live by the values that guide them, it helps to establish a sense of organizational trust and credibility." These views are echoed by Mike Perl is, presi- dent and chief executive officer of Forbes Media. "Great leaders walk the talk," says Perl is. "They lead by example. There isn't anything they ask people to do they 're not wi lling to do themselves."23 Consis- tent with these comments, surveys report that "leading by example" is the most important attr ibute of effective leaders and is one of the most important characteristics of a company's culture.24

ENCOURAGE EXPERIMENTATION Transformational leadership is about change, and central to any change is discovering new behaviours

and practices that are better al igned with the desired vision. Transformational leaders support this journey by encouraging employees to question current practices and to experiment with new ways that

Chapter Twelve Leadership in Organizational Settings 34 1

are potentially more consistent with the vis ion's future state .25 In other words, transformational leaders

support a learning orientation (see Chapter 7). They encourage employees to continuously question the way things are currently done, actively experiment with new ideas and practices, and view reasonable

mistakes as a natural part of the learning process. 26

BUILD COMMITMENT TOWARD THE VISION Transforming a vision into reality requires employee commitment, and transformational leaders build this commitment in several waysP Their words, symbols, and stories build a contagious enthusiasm that energizes people to adopt the vision as their own. Leaders demonstrate a "can do" attitude by

enacting and behaving consistently with their vis ion. This persistence and consistency reflect an image

Vancouver's reputation as one of the world's most livable ci ties is due in large part to the transformational leadership of the late Art Ph illips and other members of his civic party in the early 19 70s. "The improvements in quality of life, living downtown, waterfront walks, and protecting neighbourhoods are all the results of Art Phillips' leadership," says Gordon Campbell, who has served as both British Columbia's premier and Vancouver's mayor. Current B.C. premier Christy Clark applauds Phillips as "a transformational leader who helped make one of Canada's great cities the envy of the world."

Phillips was one of Canada's most successful investment analysts when he was drawn into civic politics by city plans to create an American-style concrete jungle in Vancouver's downtown. "He felt Vancouver was at a crucial turning point, headed in the wrong direction," recalls Carole Taylor, Phillips' wife and a distinguished journalist and politician. "Art could see what had to be done to create the fut ure."

"Instead of being dead at night, we wanted the downtown core to be more European, a place to live and enjoy," said Phillips two decades later about this v ision of Vancouver's future. "It was all about doing things differently. It was about bringing people in, not throwing them out, and making the city a place to enjoy, where people wanted to live." With this vision in mind, Phillips was elected to city council and later became mayor. Over the following years, Phillips and his civic party transformed Vancouver into the enviable urban environment it is today28

0 George OiackNancouver Sun

34 2 Part Three Team Processes

of honesty, trust, and integrity. By encouraging experimentation, leaders involve employees in the change process so it is a collective activity. Leaders also build commitment through rewards, recogni- tion, and celebrations as employees pass milestones along the road to the desired vision.

TRANSFORMATIONAL LEADERSHIP AND CHARISMA Some experts believe that charisma is an element of transformational leadership. They describe charis- matic leadership either as an essential ingredient of transformational leadership or as transformational leadership in its highest form of excellence.29 However, the emerging view, which this book adopts, is that charisma is distinct from transformational leadership. Charisma is a personal trait or relational quality that provides referent power over followers, whereas transformational leadership is a set of behaviours that engage followers toward a better future. 30

Transformational leadership motivates followers through behaviours that persuade and earn trust, whereas charismatic leadership motivates followers directly through the leader's inherent referent power. For instance, communicating an inspiring vision is a transformational leadership behaviour that motivates followers to strive for that vision. This motivational effect exists separately from the leader's charismatic appeal. If the leader is highly charismatic, however, his or her charisma will amplify follower motivation.

Being charismatic is not inherently good or bad, but several research studies have concluded that charismatic leaders can produce negative consequencesY One concern with charismatic leadership is that it tends to produce dependent followers. Transformational leadership has the opposite effect-it builds follower empowerment, which tends to reduce dependence on the leader.

Another concern is that leaders who possess the gift of charisma may become intoxicated by this power, which leads to a greater focus on self-interest than on the common good. "Charisma becomes the undoing of leaders," warned Peter Drucker many years ago. "It makes them inflexible, convinced of their own infallibility, unable to change.'o32 The late management guru witnessed the destructive effects of charismatic political leaders in Europe a century ago and foresaw that this personal or relational char- acteristic would create similar problems for organizations. The main point here is that transformational leaders are not necessarily charismatic, and charismatic leaders are not necessarily transformational.

What are your transformational leadership tendencies? You can discover your level of transformational leadership on each dimension by completing this self-assessment in Connect.

EVALUATING THE TRANSFORMATIONAL LEADERSHIP PERSPECTIVE Transformational leaders do make a difference.33 Subordinates are more satisfied and have higher affec- tive organizational commitment under transformational leaders. They also perform their jobs better, engage in more organizational citizenship behaviours, and make better or more creative decisions. One study of Canadian bank branches reported that organizational commitment and financial performance increased where the branch manager completed a transformational leadership training program.34

Transformational leadership is currently the most popular leadership perspective, but it faces a munber of challenges.35 One problem is that some models engage in circular logic. They define and mea~ttre transfor- mational leadership by it~ effects on employees (e.g., inspire employees), then (not surprisingly) report that this leadership is effective because it inspires employees. Instead, transformational leadership needs to be defined purely a~ a set of behaviours that people use to lead others through the change process. A second con- cern is that some transformational leadership theories combine leader behaviours with the leader's personal characteristics. For instance, transformational leaders are described as visionary, imaginative, sensitive, and thoughtful, yet these personal characteristics are really predictors of transformational leadership behaviours.

A third concern is that transformational leadership is usually described a~ a universal concept, that is, it should be appl ied in all situations. Only a few studies have investigated whether this form of

Chapter Twelve Leadership in Organizational Settings 34 3

leadership is more valuable in some situations than others.36 For instance, transformational leadership

is probably more appropriate when organizations need to continuously adapt to a rapidly changing external environment than when the environment is stable. Preliminary evidence suggests that the transformational leadership perspective is relevant across cultures. However, there may be specific ele- ments of transformational leadership, such as the way visions are communicated and modelled, that are more appropriate in North America than in other cultures.

Managerial Leadership Perspective

Leaders don't spend all (or even most) of their time transforming the organization or work

unit. They also engage in managerial leadershi~aily activities that support and guide the performance and well-being of individual employees and the work unit toward current

objectives and practices. Leadership experts recognize that leading (transformational leadership) differs from managing (managerial leadership)37 Although the distinction between these two perspectives remains somewhat fuzzy, each cluster has a reasonably clear set of activities and a strong research foundation.

One distinction between these two perspectives is that managerial leadership a~sumes the organiza- tion's (or department's) objectives are stable and aligned with the external environment.38 It focuses on continuously developing or maintaining the effectiveness of employees and work units toward those establ ished objectives and practices. In contrast, transformational leadership assumes the organization is misal igned with its environment and therefore needs to change its direction. This distinction is cap- tured in the often-cited statement: "Managers are people who do things right and leaders are people who do the right thing."39 Managers "do things right'' (practise managerial leadership behaviours) by enabling employees to perform established goals more effectively. Leaders "do the right thing" (prac-

tise transformational leadership behaviours) by changing the organization or work unit so its objectives are aligned more closely with the external environment.

A second distinction is that managerial leadership is more micro-focused and concrete, because it relates to the specific performance and well-being objectives of individual employees and the immedi- ate work unit. Transformational leadership is more macro-focused and abstract. It is directed toward an abstract strategic vision for an entire organization, department, or team.

TRANSFORMATIONAL AND MANAGERIAL LEADERSHIP INTERDEPENDENCE Although transformational and managerial leadership are discussed as two leadership perspectives, they are better described as interdependent perspectives.40 In other words, transformational leadership and managerial leadership depend on each other. Transformational leadership identifies, communicates,

and bui lds commitment to a better future for the organization or work unit. But these transformational leadership behaviours are not enough for organizational success. That success also requires managerial leadership to translate the abstract vision into more specific operational behaviours and practices, and to

continuously improve employee performance and well-being in the pursuit of that funtre ideal. Managerial leadership also depends on transformational leadership to set the right direction. Otherwise,

managers might produce operational excellence toward goals that are misaligned with the organization's long-term survival. For instance, the leaders at Dell Inc. relied on managerial excellence to produce low- cost computers, yet the company subsequently suffered because the external environment shifted toward higher-priced, innovative products.41 Excellent managerial leadership wa~ not enough to make Dell suc-

cessful. The company also needed transformational leadership to develop a vision that aligned the com- pany's products more closely with the changing marketplace and inspired employees toward that vision.

As you might expect, senior executives require more transformational leadership behaviour than do managers further down the hierarchy, likely because transformational leadership requires more discretion to enable macro-level change. However, managerial and transformational leadership are

344 Part Three Team Processes

EXHIBIT 12.2 Task- and People-Oriented Leadership Styles

laden-IIIIIIDrll ted ........ .. laden-pellllll Drl l I ll ........ . .

A'isign work and clarify responsibilities Show interest in others as people

Set goals and deadline.< Listen to employees

Evaluate and provide feedback on work quality Make the workplace more pleasant

E.<tablish well-defined be.<l work procedures Show appreciation to employees for their performance contribution

Plan future work activities Are considerate of employee need'i

not embodied in different people or positions in the organization. Every manager needs to apply both transformational and managerial leadership behaviours to varying degrees. Indeed, even front line

nonmanagement employees who engage in shared leadership may be managerial (helping co-workers through a difficult project) or transformational (championing a more customer-friendly culture in the work unit).

TASK-ORIENTED AND PEOPLE-ORIENTED LEADERSHIP Managerial leadership research began in the 1940s when several universities launched intensive inves- tigations to answer the question, "What behaviours make leaders effective?" They studied first-line

supervisors by a~king subordinates to rate their bosses on many behaviours. These independent research teams essentially produced the same two clusters of leadership behaviour from literally thousands of items (Exhibit 12.2).42

One cluster, called task-oriented leadership, includes behaviours that define and structure work roles. Task-oriented leaders assign employees to specific tasks, set goals and deadlines, clarify work duties and procedures, define work procedures, and plan work activities. The other cluster

represents people-oriented leadership. This cluster includes behaviours such as listening to employ- ees for their opinions and ideas, creating a pleasant physical work environment, showing interest

in staff, complimenting and recognizing employees for their effort, and showing consideration of employee needs.

These early studies tried to find out whether effective managers are more task-oriented or more people-oriented. This proved to be a difficult question to answer because each style has its advantages and disadvantages. In fact, evidence suggests that effective leaders rely on both styles, but in different ways.43 When leaders apply high levels of people-oriented leadership behaviour, their employees tend to have more positive attitudes a~ well as lower absenteeism, grievances, stress, and turnover. For instance, one recent study reported that followers have fewer stress symptoms when leaders show empathy toward employees.44 When leaders apply task-oriented leadership behaviours, their employees

tend to have higher job performance. Not surprisingly, employees generally prefer people-oriented bosses and they form negative attitudes toward bosses who are mostly task-oriented. However, task-

oriented leadership is also appreciated to some degree. For example, one Canadian study reported that university students value task-oriented instructors because they provide students with clear objectives and well-prepared lectures that abide by the course objectives.45

SERVANT LEADERSHIP Servant leadership is an extension or variation of the people-oriented leadership because it defines leadership as serving others. In particular, servant leaders assist others in their need fulfi llment, personal development, and growth.46 Servant leaders ask, "How can I help you?" rather than expect employees to serve them. Servant leaders have been described as selfless, egalitarian, humble, nurtur- ing, empathetic, and ethical coaches. The main objective of servant leadership is to help followers and other stakeholders fulfil their needs and potential, particularly "to become healthier, wiser, freer, more autonomous, more likely themselves to become servants.'.47

Chapter Twelve Leadership in Organizational Settings 345

Kevin Junor has demonstrated exceptional leadership as a Canadian Forces officer and more recently as Deputy Superintendent for Compliance in Ontario's correctional services. "Kevin is a blessed leader in every sense of the word," says former Canadian Forces Chief of the Defence Staff, General Rick Hillier.

Junor suggests that his leadership philosophy is to serve others, rather than to have them serve him. "Now that I'm in a position of privilege, my role is to be a 'servant leader,' a servant for the person at the bottom," says Junor. "It's putting myself out so that daily my team and everyone who works w ith me feels respected and feels valued. It's not about people serving Kevin but how can I serve you." He extends this view to his leadership of inmates at correctional centres. "My job is not to look at an individual and speak down to them but to take care of the individual while they are in my custody."

Junor's servant leadership style developed from his late mother's philosophy of life, his own religious beliefs, and from the Canadian milita ry's principle that officers have a duty to serve their soldiers. Junor has received several awards for his accomplishments and leadership, and he responds to these honours in classic servant leader style. "I see myself as a simple g uy," he says. "So the fact the community looked at me like that, it was a very humbling experience."48

© Colin Mcconnell/Toronto Star/Getty Images

Servant leadership research suffers from ambiguous and conflicting definitions, but writers agree on a few feanrres.49 First, servant leaders have a natural desire or "calling'' to serve others. This natural desire is a deep commitment to the growth of others for that purpose alone. It goes beyond the leader's role obligation to help others and is not merely an instrument to achieve company objectives. Second, servant leaders maintain a relationship with others that is htunble, egalitarian, and accepting. Servant leaders do not view leadership as a position of power. Rather, they serve without drawing attention to themselves, without evoking superior status, and without being judgmental about others or defensive of criticisms received. Third, servant lead- ers anchor their decisions and actions in ethical principles and practices. They think about and apply moral values, and are not swayed by social presstrres or expectations to deviate from those values. In this respect, servant leadership relies heavily on the idea of authentic leadership that we discuss later in this chapter.

Servant leadership was introduced four decades ago and ha~ since had a steady following over the years, particularly among practitioners and religious leaders. Scholarly interest in this topic has bloomed recently, but the concept still faces a number of conceptual hurdles. 50 Although servant leadership writers general ly agree on the three features we described above, many have included other characteristics that might confound the concept with its predictors and outcomes. Sti ll, the notion that leaders should be servants has considerable currency and for many centuries has been embedded

346 Part Three Team Processes

in the principles of major religions. One study also found that companies have higher performance (return on assets) when their chief executive officer exhibits servant leadership behaviours.51

Path-Goal and Other Managerial Leadership Theories

PATH-GOAL LEADERSHIP THEORY

The servant leadership model implies that leaders should be servants in all circumstances. However, the broader literature on ta~k-oriented and people-oriented leadership has con-

cluded that the best style is contingent on the situation.52 This " it depends" view is more consistent with the contingency anchor of organizational behaviour discussed in Chapter I . In other words, the most appropriate leadership style depends on the characteristics of the employees, work setting, the leader-follower relationship, and other factors.

Path-goal leadership theory is the dominant model that applies this contingency approach to manage- rial leadership. It recognizes that leadership is an important influence in the expectancy theory of motivation (Chapter 5) and its underlying formula of rational decision making (Chapter 7).53 Specifically, path-goal theory states that effective leaders choose one or more leadership styles to influence employee expecta- tions (their preferred path) regarding achievement of desired results (their work-related goals), as well as their perceived satisfaction with those results (outcome valences). Leaders clarify the link between employee behaviours and outcomes, influence the value of those outcomes, create a work environment that supports goal accomplishment, and so forth. 54

Path-Goal Leadership Styles Exhibit 12.3 presents the path-goal theory of leadership. This model highlights four leadership styles and several contingency factors leading to three indicators of leader effectiveness. The four leadership styles are:55

Directive. Directive leadership is the same as ta~k-oriented leadership, described earl ier.

This leadership style includes behaviours that provide a psychological structure for subordinates.

Within this style are the activities of clarifying performance goals, the means to reach those

goals, and the standards against which performance will be judged. Directive leadership also

includes judicious use of rewards and disciplinary actions.

Supportive. Supportive leadership is the same as people-oriented leadership, described ear- lier. This style provides psychological support for subordinates. The leader is friendly and

EXHIBIT 12.3 Path-Goal Leadership Theory

Leader Behaviours

• Directive • Supportive • Participative • Achievement-oriented

Employee Contingencies

• Skills/experience • Locus of control

1

Environmental Contingencies

Task structure Team dynamics

Chapter Twelve Leadership in Organizational Settings 347

approachable, makes the work more pleasant, treats employees with respect, and shows concern

for the status, needs, and well-being of employees.

Participative. Participative leadership behaviours encourage and facilitate employee involvement in decisions beyond their normal work activities. The leader consults with his or her staff,

asks for their suggestions, and carefully ret1ects on employee views before making a decision. Participative leadership relates to involving employees in decisions (see Chapter 7).

Achievement-orienled. This leadership style includes behaviours that encourage employees to

reach their peak performance. The leader sets challenging goals, expects employees to perform at their highest level, continuously seeks improvement in employee performance, and shows

a high degree of confidence that employees will assume responsibility and accomplish chal-

lenging goals. Achievement-oriented leadership applies goal-setting theory as well as positive

expectations in self-fulfi lling prophecy.

What is your preferred managerial leadership style? You can d iscover which of the two most commonly studied dimensions of managerial leadership you prefer by completing this self-assessment in Connect.

The path-goal model contends that effective leaders are capable of selecting the most appropriate behavioural style (or styles) for each situation. Leaders often use two or more styles at the same time,

if these styles are appropriate for the circumstances.

Path-Goal Theory Contingencies As a contingency theory, path-goal theory states that each of the four leadership styles will be effective in some situations but not in others. The path-goal leader- ship model specifies two sets of situational variables that moderate the relationship between a leader's

style and effectiveness: (I) employee characteristics and (2) characteristics of the employee's work environment. Several contingencies have already been studied within the path-goal framework, and the

model is open for more variables in the future.56 However, only four contingencies are reviewed here.

Skill and experience. A combination of directive and supportive leadership is best for employees

who are (or perceive themselves to be) inexperienced and unskilled. 57 Directive leadership involves

providing information about how to accomplish the task, wherea~ supportive leadership offers sup-

port to cope with the uncertainties of unfamiliar work situations. Directive leadership is detrimental

when employees are skilled and experienced because it introduces too much supervisory control.

Locus of control. People with an internal locus of control believe that they have control over

their work environment (see Chapter 3). Consequently, these employees prefer participative

and achievement-oriented leadership styles and may become frustrated with a directive style. In contrast, people with an external locus of control believe that their performance is due more

to luck and fate, so they tend to be more satisfied with directive and supportive leadership.

Task structure. Leaders should adopt the directive style when the task is nonroutine, because this

style minimizes role ambiguity that tends to occur in complex work situations (particularly for inexperienced employees).58 The directive style is ineffective when employees have routine and

simple tasks because the manager's guidance serves no purpose and may be viewed as unnecessarily

micromanaging. Employees in highly routine and simple jobs may require supportive leadership to help them cope with the tedious nature of the work and lack of control over the pace of work.

Participative leadership is preferred for employees performing nonroutine tasks because the lack of

rules and procedures gives them more discretion to achieve challenging goals. The participative style is ineffective for employees in routine tasks because it tends to lack t1exibility to vary work activities.

Team dynamics. Cohesive teams with performance-oriented norms act as a substitute for

most leader interventions. High team cohesion substitutes for supportive leadership, whereas

performance-oriented team norms substitute for directive and possibly achievement-oriented

34 8 Part Three Team Processes

leadership. Thus, when team cohesion is low, leaders should use the supportive style. Leaders should apply a directive style to counteract team norms that oppose the team's formal objectives. For example, the team leader may need to exert authority if team members have developed a norm to "take it easy" rather than get a proj ect completed on time.

Global Connections 12.1:

APPLYING THE BEST LEADERSHIP STYLES AT SITBACK SOLUTIONS59

Since its inception a decade ago, website and UX developer Sitback Solutions has enjoyed 16 percent annual growth and incredibly low turnover among its 37 employees. One of the rnain reasons why employees are so happy and productive at the award-winning Sydney, Australia, firm is that CEO Chris McHugh and founder Paul Armstrong apply the right leadership styles.

McHugh (holding the cake in the photo below) explains that they avoid directive leadership micromanaging because that style doesn't work well with skilled and experienced employ- ees. "We've employed really senior competent people and if you do that then you don't need to manage them, as much you just need to give them the right tools to deliver their best work," McHugh says.

Careen Redman, Sitback Solution's Head of People and Culture, explains further: "Great people want to work with other great people! That's why we take our hiring so seriously! It's not just about technical skills; it's about personality, values, and the individual's potential to develop and grow within the Sitback culture."

McHugh and Armstrong also apply plenty of supportive leadership. "Our industry is fast- paced, often 'churning and burning' its employees to reach a short-term solution," admits founder Paul Armstrong. "We're d ifferent because we realize the cost of employees leaving is huge." In fact, "nurturing" is one of the company's core values. Along with provid ing psycho- logical support, Armstrong introduced spa days, flexible hours, free food, and rules that allow employees to bring their furry friends (dogs) to work.

Both the founder and CEO of Sydney, Australia, website and UX developer Sitback Solutions apply the best leadership styles for the characteristics of the employee and situation, which partly explains why the company has received several awards for its happy and productive employees.

©Sitback Solutions

Chapter Twelve Leadership in Organizational Settings 349

Evaluating Path- Goal Theory Path-goal theory has received more research support than other

managerial leadership models. In fact, one study reported that path-goal theory explained more about effective leadership than did the transformational leadership model.60 This stronger effect is likely because most managers spend more of their time engaging in managerial rather than transformational Jeadership.61

Support for the path-goal model is far from ideal, however. A few contingencies (e.g., ta~k struc-

ture) have limited research support. Other contingencies and leadership styles in the path-goal leader- ship model haven't been investigated at aJJ.62 Another concern is that as path-goal theory expands, the model may become too complex for practical use. Few people would be able to remember all the

contingencies and the appropriate leadership styles for those contingencies. Another limitation of path-goal theory is its assumption that effective leaders can adapt their behav-

iours and styles to the immediate situation. In reality, leaders typical ly have a preferred style. It takes

considerable effort for leaders to choose and enact different styles to match the situation. In spite of these limitations, path-goal theory remains a relatively robust theory of managerial leadership.

OTHER MANAGERIAL LEADERSHIP THEORIES Several other managerial leadership theories have developed over the years. Some overlap with the path-goal model's leadership styles, but most use simpler and more abstract contingencies. We will

briefly mention only two here because of their popularity and historical significance to the field.

Situational Leadership Theory One of the most popular managerial leadership theories among practitioners is the s ituational leadership theory (SLT), developed by Paul Hersey and Ken Blanchard.63 SLT suggests that effective leaders vary their style with the ability and motivation (or commitment) of followers. The most recent version uses four labels to describe followers, such as "enthusiastic beginner" (low ability, high motivation).

The situational leadership model also identifies four leadership styles-telling, selling, participat- ing, and delegating-that Hersey and Blanchard distinguish by the amount of task-oriented and people- oriented behaviour provided. For example, "telling" is a high task-oriented and low people-oriented leadership style. The situational leadership model has four quadrants, with each quadrant showing the

leadership style that is most appropriate under different circumstances. In spite of its popularity, the situational leadership model lacks validity.64 Studies have found empirical

support for only one part of the model, namely, that leaders should use "tell ing'' (i.e., task-oriented style) when employees Jack motivation and ability. This relationship is also documented in path-goal theory. The model's elegant simplicity is attractive and entertaining, but most parts don't represent reality very well.

Fiedler's Contingency Model Fiedler 's contingency model, developed by Fred Fiedler and

his associates, is the earliest contingency theory of managerial Jeadership65 According to this model, leader effectiveness depends on whether the person's nan1ral leadership style is appropriately matched to the situation. The theory examines two leadership styles that essentially correspond to the previously described people-oriented and task-oriented styles. Unfortunately, Fiedler's model relies on a question- naire that does not measure either leadership style very well.

Fiedler's model suggests that the best leadership style depends on the level of situational control, that is, the degree of power and influence that the leader possesses in a particular situation. Situational control is affected by three factors in the following order of importance: leader-member relations, ta~k structure, and position power66 Leader-member relations refers to how much employees trust and respect the leader and are will ing to follow his or her guidance. Task structure refers to the clar- ity or ambiguity of operating procedures. Position power is the extent to which the leader possesses legitimate, reward, and coercive power over subordinates. These three contingencies form the eight possible combinations of situationfavourab/eness from the leader's viewpoint. Good leader-member relations, high task structure, and strong position power create the most favourable situation for the

leader because he or she has the most power and influence under these conditions.

350 Part Three Team Processes

Fiedler's theory Jacks research support, mainly due to t1aws with its leadership-style scale, its limited focus on only two leadership styles, and its creation of a single contingency variable (leader-member relations) based on an unexplainable arrangement of three situational factors in a hierarchy.67 However, Fiedler's model makes two lasting contributions to leadership knowledge. One contribution is that it recognizes the importance of the leader's power in determining the best leadership style. Leader power is not explicit in other managerial leadership models.

Second, contrary to the assumptions of most leadership theories, Fiedler argues that leaders might not be able to change their style easily to fit the situation. Instead, they tend to rely mainly on one style that is most consistent with their personality and values. Leaders with high agreeableness personal ity and benevolence values tend to prefer supportive leadership, for example, whereas leaders with high conscientiousness personality and achievement values feel more comfortable with the directive style of Jeadership.68 More recent scholars have also proposed that leadership styles are "hardwired" more than

most contingency leadership theories assume.69 Leaders might be able to alter their style temporarily, but they tend to rely mainly on one style that is most consistent with their personal ity and values.

LEADERSHIP SUBSTITUTES So far, we have looked at managerial leadership theories that recommend using different leadership styles in various situations. But one theory, called leadership substitutes, identifies conditions that either limit the leader's ability to influence subordinates or make a particular leadership style unneces- sary. The literature identifies several conditions that possibly substintte for task-oriented or people- oriented leadership. Task-oriented leadership might be Jess important when performance-based reward

systems keep employees directed toward organizational goals. Similarly, increasing employee skill and experience might reduce the need for task-oriented leadership. This proposition is consistent with path- goal leadership theory, which states that directive leadership is unnecessary-and may be detrimental-

when employees are ski lled or experienced?0

Some research suggests that effective leaders help team members Jearn to lead themselves through leadership substitutes; in other words, co-workers substitute for leadership in high-involvement team structures.71 Co-workers instruct new employees, thereby providing directive leadership. They also provide social support, which reduces stress among fellow employees. Teams with norms that support

organizational goals may substitute for achievement-oriented leadership, because employees encour- age (or pressure) co-workers to stretch their performance Jevels.72

The leadership substitutes model has intuitive appeal, but the evidence so far is mixed. Some stud- ies show that a few substinttes do replace the need for task- or people-oriented leadership, but others do not. Leadership substitutes are difficult to study, but the limited support suggests that leadership substitutes don't replace the need for real leaders in most situations.73

Implicit Leadership Perspective

The transformational and managerial leadership perspectives make the basic assumption that leaders "make a difference"; that is, leaders significantly influence the performance of their departments and organizations. However, a third leadership perspective, called

implicit leadership theory, explains that followers' perceptions also play a role in a leader's effective- ness. The implic it leadership perspective has two components: leader prototypes and the romance or attribution of leadership?4

PROTOTYPES OF EFFECTIVE LEADERS One aspect of implicit leadership theory states that everyone has leadership prototypes-preconceived beliefs about the features and behaviours of effective leaders75 These prototypes, which develop through socialization within the fami ly and society, shape the follower's expectations and accep- tance of others a~ leaders, and this in turn affect~ their will ingness to remain a~ a follower. Leadership

Chapter Twelve Leadership in Organizational Settings 351

prototypes not only support a person's role a~ leader; they also influence follower perceptions of the leader's effectiveness. In other words, people are more likely to bel ieve a leader is effective when he or she looks like and acts consistently with their prototype of a leader76

Why does this prototype comparison process occur? People want to trust their leader before they are willing to serve as followers, yet the leader's actual effectiveness usually isn't known for several months or possibly years. The prototype comparison process is a quick (although faulty) way of esti- mating the leader's effectiveness.

THE ROMANCE OF LEADERSHIP Along with relying on implicit prototypes of effective leaders, followers tend to distort their percep- tion of the leader's influence on the organization's success. This "romance of leadership" effect exists because people in most culntres want to believe that leaders make a difference.

There are two ba~ic reasons why people inflate their perceptions of the leader's influence over the environment.71 First, leadership is a useful way for us to simplify life events. It is easier to explain

organizational successes and failures in terms of the leader's abi lity than by analyzing a complex array of other forces. Second, there is a strong tendency in Canada and other Western culntres to believe that life events are generated more from people than from uncontrollable natural forces.78 This illusion of control is satisfied by the belief that events result from the rational actions of leaders. In other words, employees feel better believing that leaders make a difference, so they actively look for evidence that this is so.

Do leaders make a difference? You can discover your Romance of Leadership score by completing this self-assessment in Connect.

One way that followers support their perceptions that leaders make a difference is through funda- mental attribution error (see Chapter 3). Research has found that (at least in Western cultures) leaders are given credit or blame for the company's success or fai lure because employees do not readily see

the external forces that also influence these events. Leaders reinforce this belief by taking credit for organizational successes79

The implicit leadership perspective provides valuable guidance to improve leadership acceptance.

It highl ights the fact that leadership is a perception of followers as much as the actual behaviours and formal roles of people calling themselves leaders. Potential leaders must be sensitive to this fact, understand what followers expect, and act accordingly. Individuals who do not naturally fit leadership prototypes need to provide more direct evidence of their effectiveness as leaders.

Personal Attributes Perspective of Leadership

Since the beginning of recorded c ivilization, people have been interested in the personal

characteristics that distinguish great leaders from the rest of us.80 However, a ground- breaking review in the late 1940s concluded that none of the traits studied up to that

point could be a~sociated with successful leaders. This conclusion was revised a decade later to suggest that a few traits are assoc iated with effective leaders.81 These findings caused many scholars to give up their search for the personal characteristics of effective leaders.

Over the pa~t two decades, leadership experts have returned to the notion that effective leaders pos-

sess specific personal attributes.82 Most of the scholarly studies long ago on leadership were plagued by methodological problems, lack of theoretical foundation, and inconsistent definitions of leadership. The emerging research has largely addressed these problems, with the result that several attributes are now consistently identified with effective leadership or leader emergence. The main leadership attri- butes are listed in Exhibit 12.4 and described below.83

352 Part Three Team Processes

EXHIBIT 12.4 Attributes of Effective Leaders

I d .............. Demll l ... Personality Effective leaders have higher extraversion (outgoing. talkative, sociable. and

assertive) and conscientiousness (careful. dependable. and self·disciplined).

Self-concept Effective leaders have strong self·beliefs and a positive self-evaluation about their

own leadership skills and ability to achieve objectives.

Leadership motivation Effective leaders have a need for socialized power (not personalized power) to

accomplish team or organizational goals.

Drive Effective leaders have an inner motivation to pursue goals.

Integrity Effective leaders have strong mora] principles, which are demonstr.tted through truthfulness and consistency of words with deeds.

Knowledge of the business Effective leaders have tacit and explicit knowledge about thecompany•s environ·

ment enabling them to make more intuitive decisions.

Cognitive and practical intelligence Effective leaders have above-average cognitive ability to process information

(cognitive intelligence) and ability to solve real-world problems by adapting to. shaping. or selecting appropriate environments (pr.tctical intelJigence).

Emotional intelligence Effective leaders have the ability to recognize and regulate their own emotions and

the emotions of others.

Personality. Most of the Big Five personality dimensions (see Chapter 2) are associated with

effective leadership.84 However, the strongest predictors are high levels of extraversion (outgoing,

talkative, sociable, and assertive) and conscientiousness (careful, dependable, and self-

disciplined). With high extraversion, effective leaders are comfortable having an influential role

in social settings. With higher conscientiousness, effective leaders set higher goals for them-

selves (and others), are organized, and have a strong sense of duty to fulfil work obligations.

Selj~concept. Successful leaders have a complex, internally consistent, and clear self-concept

as a leader (see Chapter 3). This "leader identity" also includes a positive self-evaluation,

including high self-esteem, self-efficacy, and internal locus of control.85 While many people in

leadership positions default to daily managerial leadership and define themselves as managers, effective leaders view themselves as both transformational and managerial, and are confident

with both of these self-views.86

Leadership motivation. Effective leaders are motivated to lead others. They have a strong need for

socialized power, meaning that they want power to lead others in accomplishing organizational

objectives and similar good deeds. This contrasts with a need for personalized power, which is the desire to have power for personal gain or for the thrill one might experience from wielding power over others (see Chapter 5).87 Leadership motivation is also necessary because, even in

organizations where co-workers support each other, leaders are in contests for positions further up the hierarchy. Effective leaders thrive rather than wither in the face of this competition.88

Drive. Related to their high conscientiousness, extraversion, and self-evaluation, successful

leaders have a moderately high need for achievement (see Chapter 5). This drive represents the

inner motivation that leaders possess to pursue their goals and encourage others to move for- ward with theirs. Drive inspires inquisitiveness, an action orientation, and measured boldness to

take the organization or team into uncharted waters.

Integrity. Integrity involves having strong moral principles, which supports the tendency to be

truthful and to be consistent in words and deeds. Leaders have a high moral capacity to judge dilemmas using sound values and to act accordingly. Notice that integrity is ultimately based on the leader's values, which provide an anchor for consistency. According to numerous surveys in

Canada and globally, people identify integrity and honesty as the most important characteristics

Chapter Twelve Leadership in Organizational Settings 353

of effective leaders. Unfortunately, surveys also report that many employees don't believe their leaders have integrity and, consequently, don't trust those leaders.89

Knowledge of the business. Effective leaders understand the business environment in which they operate, including subtle indications of emerging trends. Knowledge of the business also includes a solid gra~p of how their organization works effectively.

Cognitive and practical intelligence. Leaders have above-average cognitive ability to process enormous amounts of information. Leaders aren't necessarily geniuses; rather, they have a

Global Connections 12.2:

LEADERSHIP ATTRIBUTES FUEL EASYJET'S SUCCESS

Dame Carolyn McCall and her executive team have transformed easyJet from an unreliable discount carrier with poor customer service into one of the world's most successful airlines. The British CEO emphasizes that successful leaders need to have an inspiring vision, but also integrity, clear self-concept, and leadership motivation. "Leaders need to be open and acces- sible, have a clear vision and the confidence to take decisions even if they're difficult ones," she advises. "You need to be comfortable with yourself to be confident."

McCall also observes that effective leaders need to understand and manage emotions. "Emotional intelligence is important for leadership," McCall advises. Ian Davies, easyJet's director of engineering, says McCall's success as a leader is partly due to her high emotional intelligence, whether in tough negotiations or friendly interpersonal conversations. "Everyone says it, but she really does have that great knack of making you believe you are the most important person in the world when she's speaking to you," he says.

easyJet CEO Carolyn McCall Identifies several leadership attributes in herself and others that have guided the airline's successful turnaround.

©dpa picture alliance archive/Aiamy Stock Photo

354 Part Three Team Processes

superior ability to analyze a variety of complex alternatives and opportunities. Furthermore, lead-

ers have practical intelligence. This means that they can think through the relevance and applica- tion of ideas in real-world settings. Practical intelligence is particularly evident where problems are poorly defined, information is missing, and more than one solution may be plausible.90

Emotional intelligence. Effective leaders have a high level of emotional intelligence.91 They are able to recognize and regulate emotions in themselves and in other people (see Chapter 4). For example, effective leaders can tell when their conversations are having the intended emotional

effect on employees. They are also able to recognize and change their own emotional state to suit the situation, such as feeling optimistic and determined in spite of recent business setbacks.

AUTHENTIC LEADERSHIP A few paragraphs ago, we said that successful leaders have a complex, internal ly consistent, and clear self-concept as a leader, and that they have a strong positive self-evaluation. These characteristics lay the foundation for authentic leadership, which refers to how well leaders are aware of, feel comfort- able with, and act consistently with their values, personality, and self-concept.92 Authenticity is mainly about knowing yourself and being yourself (see Exhibit 12.5). Leaders learn more about their personal- ity, values, thoughts, and habits by reflecting on various situations and personal experiences.

Leaders also improve self-awareness by receiving feedback from trusted people inside and outside the organization. For example, after a meeting or interview, Geoff Molson asks for feedback from employees and other stakeholders who observed him. "I ask how I did, and what I did wrong," says the CEO of Montreal-ba~ed CH Group (which owns the Montreal Canadiens hockey team). Molson acknowledges that people initially give only positive feedback, but they offer more constructive advice when he asks for specifics. "You learn from getting feedback, and I take that very seriously."93 Both self-reflection and receptivity to feedback require high levels of emotional intelligence.

As people learn more about themselves, they gain a greater understanding of their inner purpose which, in turn, generates a long-term passion for achieving something worthwhile for the organization

or society. Some leadership experts suggest that this inner purpose emerges from a life story, typical ly initiated by a transformative event or experience earlier in life.94

Amiee Chan refers to one such transformative incident many years before she became CEO of

Vancouver-based satell ite technology company Norsat International Inc. As a co-op engineering stu- dent, Chan was given the tedious task of replacing one circuit in each of 400 orange boxes. "When my supervisor noticed I was getting bored, he began describing the purpose of the device, which was a res- cue beacon," she recalls. The supervisor then told Chan how one of those beacons had recently saved lives on a family-owned fishing vessel off the Alaska coast. A sudden storm had capsized the boat, but search and rescue teams were able to save the family within a few hours because of the rescue beacon. "This [story] forever stamped into my mind the value of what we do here, and I'm just as passionate about developing communications technology today as I was back then," says Chan.95

Authentic leadership is more than self-awareness; it also involves behaving in ways that are consistent

with that self-concept rather than pretending to be someone else. It is difficult enough to lead others as

EXHIBIT 12.5 Authentic Leadership

Know yourself

Engage in seK·reflection

R&eive feedback from trusted sources

Understand your life story

Be yourself

Develop your own style

Apply your values

Maintain a positive core self·evaluation

Chapter Twelve Leadership in Organizational Settings 355

your natural self; to lead others while pretending to be someone else is nearly impossible. To be them- selves, great leaders regulate their decisions and behaviour in several ways. First, they develop their own style and, where appropriate, move into positions where that style is most effective. Although effective leaders adapt their behaviour to the situation to some extent, they invariably understand and

rely on decision methods and interpersonal styles that feel most comfortable to them. Second, effective leaders continually think about and consistently apply their stable hierarchy of

personal values to those decisions and behaviours. Leaders face many pressures and temptations, such as achieving short-term share price targets at the cost of long-term profitability. Experts note that authentic leaders demonstrate self-discipline by remaining anchored to their values. Third, leaders maintain consistency around their self-concept by having a strong, positive core self-evaluation. They have high self-esteem and self-efficacy as well as an internal locus of control (Chapter 3).

Debating Point:

SHOULD LEADERS REALLY BE AUTHENTIC ALL THE TIME?

According to popular business books and several scholarly articles, authentic leadership is one of the core attributes of effective leaders. Authentic leaders know themselves and act in accordance with that self-concept. They live their personal values and find a leadership style that best matches their personality. Furthermore, authentic leaders have a sense of purpose, often developed through a crisis or similar "crucible" event in their lives.

It makes sense that leaders should be authentic. After all, as singer Liza Minnelli has often said, "I would rather be a first-rate version of myself than a second-rate version of anybody else."96 In other words, leaders fare better by acting out their natural beliefs and tendencies than by acting like someone else. Furthermore. authenticity results in consistency, which is a foundation of trust. So, by being authentic, leaders are more likely to be trusted by followers.9 7

But should leaders always be themselves and act consistently with their beliefs and per- sonality? Not necessarily, according to a few experts. The concept of authentic leadership seems to be at odds with well-established research showing that people are evaluated as more effective leaders when they have a high rather than low self-monitoring personality.98

High "self-monitors" quickly understand their social environment and easily adapt their behaviour to that environment. In other words, high self-monitors change their behaviour to suit what others expect from them. In contrast, low self-monitors behave consistently with their personality and self-concept. They do not change their beliefs, style, or behaviours across social contexts. On the contrary, they feel much more content w ith high congruence between who they are and what they do, even when their natural style does not fit the situation.

Employees prefer an adaptive (i.e., high self-monitoring) leader because they have precon- ceived prototypes of how leaders should act (implicit leadership theory, which we discussed earlier in this chapter).99 Authentic leaders are more likely to violate those prototypical expec- tations and, consequently, to be viewed as less leader-like. The message from this is that leadership is a role that its incumbents are required to perform rather than being free to completely "act naturally." Ironically, while applauding the virtues of authentic leadership, the late leadership expert Warren Bennis acknowledged that " leadership is a performance art." His point was that leaders function best when they act naturally in the leadership role, but the reality of any performance is that people can never be fully themselves. 100

Furthermore, while being yourself is authentic, it may convey an image of inflexibility and insensitivity. 101 This problem was apparent to one management professor and consultant when working recently with a client. The executive's staff followed a work process that was comfort- able to the executive but not to many of her employees. When asked to consider adopting a process that was easier for her staff, the executive replied, "Look. This is j ust how I work." The w was being authentic, but the inflexibility undermined employee performance and morale. 102

356 Part Three Team Processes

LEADERSHIP ATTRIBUTES PERSPECTIVE LIMITATIONS AND PRACTICAL IMPLICATIONS Personality, experience, self-concept, and other personal characteristics potential ly contribute to a leader's effectiveness. Still, the leadership attributes perspective has a few limitations. 103 First, it assumes that all effective leaders have the same personal characteristics that are equal ly important in all situations. This is probably a false assumption; leadership is far too complex to have a universal list of traits that apply to every condition. Some attributes might not be important al l the time. Second, alternative combinations of attributes may be equally successful; two people with different sets of per- sonal characteristics might be equally good leaders. Third, the attribute perspective views leadership as something within a person, yet experts emphasize that leadership is relational. People are effective leaders because of their favourable relationships with followers, so effective leaders cannot be identi- fied without considering the qual ity of these relationships. 104

Also remember from our discussion earl ier in this chapter that, in the short term, followers tend to define others as effective or ineffective leaders based on their personal characteristics rather than whether the leader actual ly makes a difference to the organization's success. People who exhibit self- confidence, extraversion, and other traits are cal led leaders because they fit the widely held prototype of an effective leader. Alternatively, if someone is successful, observers might a~sign several nonob- servable personal characteristics to him or her, such as intell igence, confidence, and drive. In short, the link between personal characteristics and effective leadership is muddied by several perceptual

distortions. One important final point: The attribute perspective of leadership does not necessari ly imply that

leadership is a talent acquired at birth. On the contrary, attributes indicate only leadership potential, not leadership performance. People with these characteristics become effective leaders only after they have developed and mastered the necessary leadership behaviours through experience. However, even those with fewer leadership attributes may become very effective leaders by more fully developing their potential.

Cross-Cultural and Gender Issues in Leadership

L07 Along with the four perspectives of leadership presented throughout this chapter, cul- tural values and practices affect what leaders do. Culture shapes the leader's values and norms, which influence his or her decisions and actions. Cultural values also shape the

expectations that followers have of their leaders. An executive who acts inconsistently with cultural expectations is more likely to be perceived as an ineffective leader. Furthermore, leaders who deviate from those values may experience various forms of influence to get them to conform to the leadership norms and expectations of society. Thus, differences in leadership practices across cultures are partly explained by implicit leadership theory, which was described earlier this chapter.

Over the past several years, 150 researchers from dozens of countries have worked together on Proj- ect GLOBE (Global Leadership and Organizational Behaviour Effectiveness) to identify the effects of cultural values on leadership. 105 The project organized countries into I 0 regional clusters, of which Canada, the United States, Great Britain, and similar countries are grouped into the "Anglo" cluster. The results of this massive investigation suggest that some features of leadership are universal and some differ across cultures. Specifically, the GLOBE project reports that "charismatic visionary" is a universal ly recognized concept and that middle managers around the world believe that it is character- istic of effective leaders. Charismatic visionary represents a cluster of concepts, including visionary thinking, inspirational effectiveness, performance orientation, integrity, and decisiveness. 106

In contrast, participative leadership is perceived as characteristic of effective leadership in low power distance cultures but Jess so in high power distance cultures. For instance, one study reported that Mexi- can employees expect managers to make decisions affecting their work. Mexico is a high power distance culture, so followers expect leaders to apply their authority rather than delegate their power most of the time. 107 In summary, some features of leadership are universal and some differ across cultures.

Chapter Twelve Leadership in Organizational Settings 357

GENDER AND LEADERSHIP Studies in work settings have generally found that male and female leaders do not differ in their levels

of task-oriented or people-oriented leadership. The main explanation is that real-world jobs require similar behaviour from male and female job incumbents. 108 However, women do adopt a participative

leadership style more readily than their male counterparts. One possible reason is that, compared to boys, girls are often raised to be more egalitarian and Jess status-oriented, which is consistent with being participative. There is also some evidence that, compared to men, women have somewhat better interpersonal skills, and this translates into their relatively greater use of the participative leadership style. A third explanation is that employees, on the basis of their own gender stereotypes, expect female leaders to be more participative, so female leaders comply with follower expectations to some extent.

Surveys report that women are rated higher than men on the emerging leadership qualities of coach- ing, teamwork, and empowering employees. 109 Yet research also suggests that women are evaluated negatively when they try to apply the full range of leadership styles, particularly more directive and autocratic approaches. Thus, women may be well suited to contemporary leadership roles, yet they

often continue to face limitations of leadership through the gender stereotypes and prototypes of leaders that are held by followers. 110 Overall, both male and female leaders must be sensitive to the fact that followers have expectations about how leaders should act. Leaders who deviate from those expectations may discover that followers evaluate them more harshly.

Chapter Summary

LO 1 Define leadership and shared leadership. Leadership is defined as the ability to in fluence, motivate, and enable others to contribute toward the effectiveness and success of the organizations of which they are members. Leaders use in fluence

to motivate followers and arrange the work environment so they do the job more effectively. Shared leadership views leadership as a role rather than a formal position, so employees throughout the organization act informally as leaders as the occasion arises. These s ituations include serving as champions for speci fic idea~ or changes as well as filling leadership roles where it is needed.

L02 Describe the four clemen ts of transformational leadership and explain why they arc importan t for organizational change.

Transformational leadership begins with a strategic vision, which is a positive representation of a future state that energizes and unifies employees. A vision is a d istant values-based goal that is abstract and mean- ingfu l to employees. Transformational leaders effectively communicate the vision by framing it around values, showing s incerity and passion toward the vision, and using symbols, metaphors, and other vehicles that contribute richer meaning to the vision. Transformational leaders model the vision (walk the talk) and encourage employees to experiment with new behaviours and practices that are potentially more consistent with the vision's future state. They also build employee commitment to the vis ion through the above activities as well as by celebrating mile- stones to the vision. Charismatic leadership is distinct from transformational leadership; the former is based on personal attributes and tends make followers dependent on the leader, wherea~ the latter consists of a set of behav- iours and tends to empower followers.

L03 Compare managerial leadership with t ransformational leadership, and desc ribe the features of task-oriented, people-orien ted, and servant leadership.

Managerial leadership includes the dai ly activities that support and guide the performance and well- being o f individual employees and the work unit toward current objectives and practices. Transformational and managerial leadership are dependent on each other, but d iffer in their assumptions o f stability versus change and their micro versus macro focus.

Task-oriented behaviours include assigning employees to specific tasks, clarifying their work duties and proce- dures, ensuring they follow company rules, and pushing them to reach their performance capacity. People-oriented

358 Part Three Team Processes

behaviours include showing mutual trust and respect for subordinates, demonstrating a genuine concern for their needs, and having a desire to look out for their welfare.

Servant leadership defines leadership as serving others toward their need fulfilment and personal development and growth. Servant leaders have a natural desire or "call ing" to serve others. They maintain a relationship with others that is humble, egal itarian, and accepting. Servant leaders also anchor their decisions and actions in ethical principles and practices.

L04 Discuss the elements of path-goal theory, Fiedler's con tingency model, and leadership substitutes.

Path-goal theory of leadership takes the view that effective managerial leadership involves diagnos- ing the situation and using the most appropriate style for the situation. The core model identifies four leadership styles-directive, supportive, participative, and achievement-oriented-and several contingencies relating to the characteristics of the employee and of the situation.

1\vo other contingency leadership theories include the s ituational leadership theory and Fiedler's contingency theory. Neither of these theories has much research support. However, a lasting element of Fiedler's theory is the idea that leaders have natural styles and, consequently, companies need to change the leaders' environments to suit their style. Leadership substitutes theory identifies contingencies that either limit the leader's ability to influence subordinates or make a particular leadership style unnecessary.

LOS Describe the two components of the implicit leadership perspective. According to the implicit leadership perspective, people have leadership prototypes, which they use to evaluate the leader's effectiveness. Furthermore, people form a romance of leadership; they want

to believe that leaders make a difference, so they engage in fundamental attribution error and other perceptual distortions to support this belief in the leader's impact.

L06 Iden tify eigh t personal a ttributes associa ted with effective leaders and describe authentic leadership. The leadership attributes perspective identifies the characteristics of effective leaders. Recent writing

suggests that leaders have specific personality characteristics, positive self-concept, drive, integrity, leadership moti- vation, knowledge of the business, cognitive and practical intelligence, and emotional intelligence. Authentic leader- ship refers to how well leaders are aware of, feel comfortable with, and act consistently with their self-concept. This concept consists mainly of two parts: sel f-awareness and engaging in behaviour that is consistent with one's sel f-concept.

L07 Discuss cultural and gender similarities and differences in leadership. Cultural values also influence the leader's personal values, which in turn influence his or her lead- ership practices. Women generally do not differ from men in their degree of people-oriented or

task-oriented leadership. However, female leaders more often adopt a participative style. Research also suggests that people evaluate female leaders on the basis of gender stereotypes, which may result in higher or lower ratings.

Key Terms authen tic leadership

Fiedler's contingency model

implicit leadership theory

leadership

leadership substitu tes

managerial leadership

path-goalleadership theory

servan t leadership

shared leadership

situational leadership theory (SLT)

t ransformational leadership

Critical Thinking Questions I. Why is it important for top executives to value and support shared leadership?

2. Transformational leadership is the most popular perspective of leadership. However, it is far from perfect. Discuss the limitations of transformational leadership.

Chapter Twelve Leadership in Organizational Settings 359

3. This chapter distinguished charismatic leadership from transformational leadership. Yet charisma is identified by most employees and managers as a characteristic of e ffective leaders. Why is charisma commonly related to leadership? In your opinion, are the best leaders charismatic? Why or why not?

4 . Consider your favourite teacher. What people-oriented and task-oriented leadership behaviours did he or she use effectively? In general, do you think student~ prefer an instructor who is more people-oriented or task- oriented? Explain your preference.

5. Your e mployees are skilled and experienced customer service representatives who perform nonroutine tasks, such as solving unique customer problems or meeting special needs with the company's equipment. Use path- goal theory to identify the most appropriate leadership style(s) you should use in this s ituation. Be sure to fully explain your answer, and discuss why other styles are inappropriate.

6 . Identify a current political leader (e.g., prime minister, premier, mayor) and his or her recent accomplish- ments. Now, using the implicit leadership perspective, think of ways that these accomplishments o f the leader may be overstated. In other words, explain why they may be due to factors other than the leader.

7 . Find two newspaper ads for management or executive positions. What leadership attributes are mentioned in these ads? lf you were on the selection panel, what methods would you use to identify these personal attri- butes in job applicants?

8. How do you think emotional, cognitive, and practical intell igence influence authentic leadership?

9 . You hear two people debating the merits of women as leaders. One person claims that women make bet- ter leaders than do men because women are more sensitive to their employees' needs and involve them in

organizational decisions. The other person counters that although these leadership styles may be increas ingly important, most women have trouble gaining acceptance as leaders when they face tough s ituations in which a more autocratic style is required . Discuss the accuracy of the comments made in this discussion.

Case Study:

A WINDOW ON LIFE

by Steven L. McShane, Cu rtin University (Australia) and University of Victoria (Canad a)

For Gilles LaCroix, there is nothing quite as beautiful as a handcrafted wood-framed window. LaCroix's passion for windows goes back to his youth in St. Jean, Quebec, where he was taught how to make residential windows by an elderly carpenter. He learned about the characteristics of good wood, the preferred tools to use, and how to choose the best g lass from local suppliers. LaCroix apprenticed with the carpenter in his small workshop and, when the carpenter retired, was given the opportunity to operate the business himself.

LaCroix hired hi~ own apprentice as he built up business in the local area. His small operation soon expanded a~ the quality of windows built by LaCroix Industries Ltd. becan1e better known. Within e ight years, the company employed nearly 25 people and the business had moved to larger facilities to accommodate the increa~ed demand from southern Quebec. In these early years, LaCroix spent most of his time in the production shop, teaching new apprentices the unique skills that he had mastered and applauding the journeyme n for the ir accomplishments. He often repeated the idea that LaCroix products had to be of the highest quality because they gave families a "window on life."

After 15 years, LaCroix Industries e mployed over 200 people. A profit-sharing program was introduced to give e mployees a financial reward for their contribution to the organization's success. Due to the company's expan- s ion, headquarters had to be moved to another area of town, but the founder never lost touch with the workforce. Although new apprentices were now taught entirely by the master carpenters and other craftspeople, LaCroix would still chat with plant and office e mployees several times each week.

When a second work shift was added, LaCroix would show up during the evening break with coffee and boxes of doughnuts and discuss how the business was doing and how it had become so successful through quality work- manship. Production employees enjoyed the times when he would gather them together to announce new con- tracts with developers from Montreal and Toronto. After each announcement, LaCroix would thank everyone for making the business a success. They knew that LaCroix quality had become a standard of excellence in window manufacturing across Canada.

It seemed that almost every time he visited, LaCroix would repeat the now well-known phrase that LaCroix prod- ucts had to be of the highest quality because they provided a window on life to so many families. Employees never grew tired of hearing this from the company founder. However, the phrase gained extra meaning when LaCroix began showing his employees photos of fantilies looking through windows made by LaCroix Industries. At first, LaCroix would personally visit developers and homeowners with a camera in hand. Later, as the "window on li fe"

360 Part Three Team Processes

photos became known by developers and custo mers, people would send in photos of their own families looking through e legant front windows made by LaCroix Industries. The company's marketing staff began us ing this idea, as well as LaCroix's famous phrase, in their advertising. After one such marketing campaign , hundreds o f photos were sent in by satis fied customers. Production and office employees took time after work to write personal letters of thanks to those who had submitted photos.

As the company's age reached the quarter-century mark, LaCroix, now in his mid-fifties, realized that the orga- nization's success and survival depended on expansion into the United States. After consulting with employees, LaCroix made the difficult decision to sell a majority share to Build-All Products, Inc., a conglomerate with inter- national marketing expertise in building products. As part of the agreement, Build-All brought in a vice-president to oversee production operations while LaCroix spent more time meeting with developers around North America. LaCroix would retum to the plant and office at every opportunity, but often this wa~ possible only once a month.

Rather than visiting the production plant, 1 an Vlodoski, the new production vice-president, would rarely leave his office in the company's downtown headquarters. Instead, production orders were sent to supervisors by me moran- dum. Although product quality had been a priority throughout the company's history, less attention had been paid to inventory controls. Vlodoski introduced strict inventory guidelines and outlined procedures on using supplies for each shift Goals were established for supervisors to meet specific inventory targets. Whereas employees previously could have tossed out several pieces of warped wood, they would now have to justify this action, usually in writing.

Vlodoski also announced new procedures for purcha~ing production supplies. LaCroix Industries had highly trained purcha~ing staff who worked closely with senior craftspeople when selecting suppliers, but Vlodoski wanted to bring in Build-All's procedures. The new purcha~ing methods removed production leaders from the decision pro- cess and, in some cases, resulted in trade-off.~ that LaCroix's employees would not have made earlier. A few employ- ees quit during this time, saying that they did not feel comfortable about producing a window that would not stand the test of time. However, unemployment was high in St. Jean, so most staff me mbers remained with the company.

After one year, inventory expenses had decreased by approximately I 0 percent, but the number of defective win- dows retumed by developers and wholesalers had increa~ed markedly. Plant employees had known that the number of defective windows would increa~e a~ they had used somewhat lower-quality materials to reduce inventory costs. However, they heard almost no news about the seriousness of the problem until Vlodoski sent a memo to all produc- tion staff saying that quality must be maintained. During the latter part of the first year under Vlodoski, a few employ- ees had the opportunity to personally a~k LaCroix about the changes and express their concems. LaCroix apologized, saying due to his travels to new regions he had nOI heard about the problems, and that he would look into the matter.

Exactly 18 months after Build-All had become majority shareholder of LaCroix Industries, LaCroix called together five of the original staff in the plant The company founder looked pale and shaken as he said that Build- All's actions were inconsistent with his vision of the company and , for the first time in his career, he did not know what to do. Build-All was not pleased with the arrangement either. Although LaCroix windows still enjoyed a healthy market share and were competitive for the value, the company did not quite provide the minimum 18 per- cent return on equity that the conglomerate expected. LaCro ix asked his long-time companions for advice.

Discussion Questions

I. Identify the symptoms indicating that problems exist at LaCroix Industries, Ltd.

2 . Use one or more leadership theories to analyze the underlying causes of the current problems at LaCroix Industries. What other organizational behaviour theories might also help to explain some of the problems?

3. What should Gilles LaCroix do in this situation?

©Copyright 2000. Steven L McShane.

Team Exercise:

LEADERSHIP DIAGNOSTIC ANALYSIS

Purpose To help students learn about the different path-goal leadership styles and when to apply each style.

Instructions Srep I : Students individually write down two incidents in which someone had been an effective manager or

leader over them. The leader and situation might be from work, a sports teant, a student work group, or any other setting where leadership might e merge. For example, students might describe how their supervisor in a summer

Chapter Twelve Leadership in Organizational Settings 361

job pushed them to reach higher performance goals than they would have done otherwise. Each incident should state the actual behaviours that the leader used , not just general statements (e.g., "My boss sat down with me and we agreed on specific targets and deadlines, then he said several times over the next few weeks that I was capable of reaching those goals.") Each incident requires only two or three sentences to answer.

Srep 2: After everyone has written their two incident~. the instructor will form small groups (typically between 4 or 5 students). Each tean1 will answer the fo llowing questions for each incident presented in that tean1:

I. Which path-goal theory leadership style(s)-<lirective, supportive, participative, or achievement-oriented-did the leader apply in this incident?

2. Ask the person who wrote the incident about the conditions that made this leadership style (or these styles, if more than one was used) appropriate in this situation. The tean1 should list these contingency factors clearly and , where possible, connect them to the contingencies described in path-goal theory. (Note: the team might identify path-goal leadership contingencies that are not described in the book. These, too, should be noted and discussed.)

Srep 3: After the teams have diagnosed the incidents, each team will describe to the entire class the most inter- esting incidents as well as it~ diagnosis of that incident. Other teams wi ll critique the diagnosis. Any leadership contingencies not mentioned in the textbook should also be presented and discussed.

Self-Assessments for Chapter 12

SELF-ASSESSMENT NAME

What are your transformational leadership tendencies?

What is your preferred managerial leadership style?

Do leaders make a difference?

DESCRIPTION

Transformational leadership is about leading change toward a better future. This popular leadership perspective includes several dimen· sions. representing specific seL~ of behaviours. This instrument estimates your level of tran.sfonnational leadership and iL~ specific elements.

Managerial leadership refers to behaviours that improve employee performance and well-being in the current situation. These objec· lives require a v-.u-iety of managerial leadership styles in different situations. This self-assessment estimates your preferred leadership style on the two most commonly studied dimensions of managerial leadership.

People have different views about the extent to which leaders influence the organization's success. Those with a high romance of leadership attribute the causes of organizationaJ evenL~ much more to iL'i leaders and much less to the economy. competition. and other factors beyond the leader's short-term control. This self·a.'ise.'isment estimates your romance of leadership score.

( PART FOUR J Organizational Processes

CHAPTER 13

Designing Organizational Structures

LEARN ING OBJECTIVES

After reading this chapter, you should be able to:

LO 1 Describe three types of coordination in organizat ional st ructures.

L02 Discuss the role and effects of span of control, centralization, and formalization, and relate these elements to organic and mechanist ic organizational structures.

L03 Identify and evaluate six types of departmentalization.

L04 Explain how the external environment, organizational size, technology, and strategy are relevant when designing an organizat ional structure.

36 2

~ ClJ ,...._ ,...._ -. a. ([) Q) Vl ... (JJ

t -· lD -· :? :? 2 0-! Q· Q

Samsung ElectroniCS IS rely1ng on a less hierarchical and more decentralized orgamzat1onal structure to 1mprove employee creat1v1ty, adaptability, and compet1t1veness.

C Sam sung Electronics

Samsung Electronics is one of the world's largest technology companies, yet the South Korean maker of smartphones, tablets, televisions, and home appliances, wants to be as nimble as a high-tech startup. The magic ingredient for this transformation is a new organizational structure. "Samsung will stay away from top-down structures and build bottom-up structures, while the company will put more focus on improving efficiency by introducing programs to self-motivate employees; the company explains.

Chapter Thirteen Designing Organizational Structures 363

This transformation, called "Start-up Sam sung; will be challenging because the conglomerate's existing organizational structure is almost the opposite of what most startups look like. As with most large Korean firms, Samsung has had a tall, rigid hierarchy With power centralized at the top of the organization. This authoritarian, mechanistic structure included seven well-defined status titles below the executive level, ranging from an entry-level employee through to division manager. Until recently, everyone addressed each other by their rank rather than personal name. For example, when Tyler Kim joined Samsung's Korean operations, his co-workers referred to him as Mr. Manager Kim (chaekimnim). "It was a bit awkward at first," recalls Kim, who was called by his personal name in his previous job in the United States.

Samsung's new organizational structure has a flatter hierarchy with only four career levels. Employees no longer address each other by their rank. Instead, they use the suffix "nim," which is a highly respectful variation of Mr./Ms. They can also use a polite reference to the co-worker's senior or junior position ("seonbae" and "hubae").

Previously, Samsung employees tended to follow orders without question and communicated with other departments mainly through their manager. Employees also routinely wrote ''fancy reports" to management and attended endless manager-dominated meetings. Under the new structure, employees are expected to speak up about new ideas and to use the company's internal communications portal to coordinate informally and spontaneously with co-workers elsewhere in the company. Formal reports to the boss and meetings are now discouraged. "Samsung's top management plans to kill unnecessary internal meetings and require executives to end the rigidity of internal reporting systems," says Samsung's statement about the changes.

Samsung's new structure will take time to become established across the organization, but the company has been experimenting with a flatter, more organic structure over the past few years. It introduced an in-house incubator called Creative Lab (also called C-Lab), where about 350 engineers take up to a year away from their regular jobs to develop unique ideas. Projects that show promise are assigned additional staff (designers, marketers, etc.) without any direct management control. " In other d ivisions at Samsung, all decisions are made by top managers," explains one engineer. "At C-Lab, it feels like you are running your own company."1

Samsung Electronics is trying to improve employee creati vi ty, adaptabil ity, and competiti veness by introducing a new organizational structure. Organizational structure refers to the divi sion of labour a~ well as the patterns of coordination, communication, workf1ow, and formal power that direct

organizational activities. Structure formally dictates what activities receive the most attention as well

as financial , power, and information resources. For example, Samsung's new structure will devolve

more power and resources to front-line engineers and managers. It will al so refocus attention on perfor-

mance rather than status and will enable employees to coordinate with each other more fluidly through

informal communication rather than through the formal ity of their manager. The topic of organizational structure typical ly conjures up images of an organizational chart. Orga-

ni zational structure includes these reporting relationships, but it al so includes other features that relate

to work standards and rules, team dynamics, power relationships, information flow, and job design. The organization's structure is an important instrument in an executi ve's toolkit for organizational

change because it establ ishes new communication patterns and al igns employee behaviour with the

corporate vision. Indeed, one recent global survey of 7,000 business and human resources leaders in 130 countries (including several hundred in Canada) reported that organizational design wa~ their

firm's most important trend or priority to improve human capi tal (leadership and corporate culture

were second and third most important, respecti vely)2

The Toronto Transit Commission (TTC) is a case in point. A few years ago, the TIC's customer ser-

vice advisory panel identified creation of a chief customer service officer position a~ the top priority for improving the organization's troubled customer service reputation. The TIC followed this advice, which

immediately gave customer service a much higher priori ty in the organization. The chief customer officer-

who i s now also the deputy CEO-reports directly to the CEO and, as a member of the executive team, makes other top TIC executives continuously aware of customers in corporate decisions.3

This chapter begins by introducing the two fundamental processes in organizational structure: divi-

sion of labour and coordination. This is followed by a detailed investigation of the four main elements

364 Part Four Organizational Processes

of organizational structure: span of control, central ization, formalization, and departmentalization. The

latter part of this chapter examines the contingencies of organizational design, including external envi- ronment, organizational size, technology, and strategy.

Division of Labour and Coordination All organizational structures include two fundamental requirements: the division of

labour into distinct tasks and the coordination of that labour so employees are able to accomplish common goals.4 Organizations are groups of people who work interdepen-

dently toward some purpose. To effectively accomplish this common purpose, most work is divided into manageable chunks, particularly when there are many different tasks required to complete the work. Organizations also introduce various coordinating mechanisms to ensure that everyone is work- ing in concert toward the common purpose.

DIVISION OF LABOUR Division of labour refers to the subdivision of work into separate jobs assigned to different people. Sub- divided work leads to job specialization, because each job now includes a narrow subset of the tasks nec-

essary to complete the product or service. Samsung divides it~ employees into thousands of specific jobs to more effectively design, manufacntre, and market new products. As companies get larger, this horizon- tal division of labour is usually accompanied by vertical division of labour. Some people are assigned the ta~k of supervising employees, others are responsible for managing those supervisors, and so on.

Why do companies divide the work into several jobs? As we described in Chapter 6, job specializa- tion increases work efficiency.5 Job incumbents can master their ta~ks quickly because work cycles are shorter. Less time is wasted changing from one task to another. Training costs are reduced because employees require fewer physical and mental skills to accomplish the assigned work. Finally, job spe- cialization makes it easier to match people with specific aptitudes or skills to the jobs for which they are best suited. It is almost impossible for one person working alone to design, manufacture, and sell a new smartphone; instead, this enterprise requires hundreds of people with diverse knowledge and ski lls.

COORDINATING WORK ACTIVITIES When people divide work among themselves, they require coordinating mechanisms to ensure that everyone works in concert. In fact, the extent to which work can be effectively divided among several people and work units depends on how well the divided work can be coordinated. When an organiza- tion divides work beyond its capacity to coordinate that work, individual effort is wasted due to mis- alignment, duplication, and mistiming of tasks. Coordination also tends to become more expensive and difficult as the division of labour increases. Therefore, companies specialize jobs only to the point

where it isn't too costly or challenging to coordinate the people in those jobs.6

Every organization-from the two-person corner convenience store to the largest corporate entity- uses one or more of the following coordinating mechanisms:7 informal communication, formal hierar- chy, and standardization (see Exhibit 13.1). These forms of coordination align the work of staff within the same department as well as across work units. These coordinating mechanisms are also critical when several organizations work together, such as in joint ventures and humanitarian aid programs.8

Coordination through Informal Communication All organizations rely on informal com- munication as a coordinating mechanism. This process includes sharing information on mutual tasks as well as forming common mental models so that employees synchronize work activities using the same

mental road map.9 Informal communication is vital in non-routine and ambiguous situations because employees need to exchange a large volume of information through face-to-face communication and other media-rich channels. Samsung's new structure encourages more informal communication because much of the work among engineers relates to novel ideas, which are non-routine and ambiguous.

Chapter Thirteen Designing Organizational Structures 365

EXHIBIT 13.1 Coordinating Mechanisms in Organizations

Form or coordinatioo Description Subtypes/strategies

Informal communication Sharing information on mutual tasks; forming Direct communication common mental models to synchronize work Liaison roles activities

Integrator roles

TemporMy teams

Formal hierarchy Assigning legitimate power to individuals. who Direct supervision then use this power to direct work processes Fonnal communication channels and a] locate resources

Standardization Creating routine patterns of behaviour or Standardized skills output Standardized processes

Standardized output

Soun:es: Based on information in J. Galbru.ith. Designing Complex Org.aniuttion..:; (Re.adjng. MA: Addison4 Wes.ley. 1973). pp. 8-19: H. Minttberg. The Structuring of Organizations (Englewood Cliffs.. NJ: Prentice Hall. I 979). chap. I: D. A. Nadler and M. L. Tushman. Competing by [)resisn: The Power of (Xganizational Architecture (New York Oxford UniverSity Press. 1997). Chap. 6.

Although coordination through informal communication is easiest in small firms, information tech- nologies have further enabled this coordinating mechanism at Samsung and in other large organiza- tions.10 Companies employing thousands of people also support informal communication by keeping

each production site small . Magna International, the Canadian global auto-parts manufacturer, keeps many of its plants to a maximum size of around 200 employees. Magna's leaders bel ieve that employ- ees have difficulty remembering each other's names in plants that are any larger, a situation that makes

informal communication more difficult as a coordinating mechanism.11

Larger organizations also encourage coordination through informal communication by assigning liaison roles to employees, who are expected to communicate and share information with co-workers in other work units. Where coordination is required among several work units, companies create iflle-

grator roles. These people are responsible for coordinating a work process by encouraging employees in each work unit to share information and informally coordinate work activities. Integrators do not have authority over the people involved in that process, so they must rely on persuasion and commit- ment. Brand managers for luxury perfumes have integrator roles because they ensure that the work of fragrance developers, bottle designers, advertising creatives, production, and other groups are aligned with the brand's image and meaning.12

Another way that larger organizations encourage coordination through informal communication is by organizing employees from several departments into temporary teams. Temporary cross-functional teams g ive employees more authority and opportun ity to coordinate through informal communi- cation. This process is now common in vehicle design, which Toyota pioneered more than three

decades ago. As design engineers work on product specifications, team members from production engineering, manufacturing, marketing, purchasing, and other departments provide immediate feed- back as well as begin their contribution to the process. Without the informal coordination available

through teams, the preliminary car design would pass from one department to the next-a much slower process.13

Coordination through Formal Hierarchy Informal communication is the most flexible form of coordination, but it can become chaotic a~ the number of employees increases. Consequently, as

organizations grow, a second coordinating mechanism gains importance: formal hierarchy. 14 Hierarchy assigns legitimate power to individuals, who then use this power to direct work processes and allocate resources. In other words, work is coordinated through direct supervision-the chain of command. For

instance, Canadian Tire stores have managers and assistant managers who are responsible for ensuring that employees are properly trained, perform their respective tasks, and coordinate effectively with

other staff.

366 Part Four Organizational Processes

• by the NUMBERS

Coordination through Micromanagement15

of 450 American employees surveyed say they have worked

for a micromanager in their careers.

of 434 American human resource professionals polled identify

micromanaging as a major complaint or concern that younger employees have about older managers.

31",{, of 97,000 employees surveyed in 30 countries describe their company's

leadership as oppressive or authoritative.

18% of 300 Canadian human resource managers surveyed say that

micromanaging employees has the most negative effect on employee morale (second only to lack of open, honest communication).

A century ago, management scholars applauded the formal hierarchy as the best coordinating mech- anism for large organizations. They argued that organizations are most effective when managers exer- cise their authority and employees receive orders from only one supervisor. The chain of command-in which information flows across work units only through supervisors and managers-wa~ viewed as the

backbone of organizational strength. Although still important, formal hierarchy is much Jess popular today. One problem, which Sam-

sung is trying to minimize with its new structure, is that hierarchical organizations are not as agile for coordination in complex and novel s in1ations. Formal communication through the chain of command is rarely as fast or accurate as informal communication directly among employees. Another concern with formal hierarchy is that managers are able to closely supervise only a limited number of employees. As the business grows, the number of supervisors and layers of management must increase, resulting in a costly bureaucracy. A third problem is that today 's workforce demands more autonomy over work and more involvement in company decisions. Coordination through formal hierarchy tends to limit employee autonomy and involvement, which increases employee complaints of being "micromanaged."

Coordination through Standardization Standardization, the third means of coordination, involves creating routine patterns of behaviour or output. This coordinating mechanism takes three distinct forms:

Standardized processes. Quality and consistency of a product or service can often be improved by standardizing work activities through job descriptions and procedures.16 For example, flow

charts represent a standardized process coordinating mechanism. This coordinating mechanism

works best when the task is routine (such as ma~s production) or simple (such as stocking

shelves), but it is Jess effective in nonroutine and complex work such a~ product design (which

occurs among employees in Samsung's C-Lab).

Standardized outputs. This form of standardization involves ensuring that individuals and work units have clearly defined goals and output measures (e.g., customer satisfaction, production efficiency). For instance, to coordinate the work of salespeople, companies assign sales targets rather than specific behaviours.

Chapter Thirteen Designing Organizational Structures 367

Standardized skills. When work activities are too complex to standardize through processes or output~. companies often coordinate work effort by extensively training employees or hiring people who have learned precise role behaviours from educational programs. Samsung and other technology companies rely on coordination through standardized skills. They carefully hire people for their edu- cation, training, and past experience in software engineering and other disciplines so they can perform tasks without continuous supervision, precise job descriptions, or exacting work process guidelines. Training is also a form of standardization through skills. Many companies have in-house training programs where employees Jearn how to perform ta~ks consistent with company expectations.

Division of labour and coordination of work represent the two fundamental ingredients of all organiza- tions. But how work is divided, which coordinating mechanisms are emphasized, who makes decisions, and other issues are related to the four elements of organizational structure that we discuss over the next two sections of this chapter.

Elements of Organizational Structure

L02 Every organizational structure consists of four element~. This section discusses three of them: span of control, centralization, and formalization. The fourth element-<lepartrnentalization- is presented in the next section.

SPAN OF CONTROL Chief executive officers of large corporations are probably much busier today managing their direct reports than they were two or three decades ago. In the 1980s, CEOs of the largest companies had an average of five people (typically vice-presidents) reporting directly to them. By the end of the 1990s, this span of control increased to an average of 6.5 direct reports. Today, CEOs of the largest North American firms have an average of I 0 direct reports, double the number a few decades earlier. This increase reflects the fact that most large companies are far more complex today. They operate in many markets, have more variety of products, and employ people with a broader array of technical special - ties. Each type of variation demands top level attention, so CEOs have more vice-president~ than ever before reporting directly to them. In other words, they have a wider span of control. 17

Span of control (also called span of management) refers to the number of people directly reporting to the next level in the hierarchy. A narrow span of control exists when very few people report directly to a manager, whereas a wide span exists when a manager ha~ many direct reports.18 A century ago, French engineer and management scholar Henri Fayol strongly recommended a relatively narrow span of control, typically no more than 20 employees per supervisor and six supervisors per manager. Fayol championed formal hierarchy as the primary coordinating mechanism, so he bel ieved that supervi- sors should closely monitor and coach employees. His views were similar to those of Napoleon, who declared that senior military leaders should have no more than five officers directly reporting to them. These prescriptions were based on the belief that managers simply could not monitor and control any more subordinates closely enough. 19

Today, we know better. The best-performing manufacturing plants currently have an average of 38 production employees per supervisor (see Exhibit 13.2).20 What's the secret here? Did Fayol, Napoleon, and others miscalculate the optimal span of control? The answer is that those sympathetic to hierarchical control believed that employees should perform the physical tasks, whereas supervisors and other management personnel should make the decisions and monitor employees to make sure they performed their tasks. In contra~!. the best-performi ng manufacturing operations today rely on self- directed teams, so direct supervision (formal hierarchy) is supplemented with other coordinating mech- anisms. Self-directed teams coordinate mainly through informal communication and various forms of standardization (i.e., training and processes), so formal hierarchy plays more of a supporting role.

Managers can often accommodate a wider span of control because staff members are self-managing and coordinate mainly through standardized skills. For example, more than two dozen employees,

368 Part Four Organizational Processes

EXHIBIT 13.2 Recommended, Actual, Estimated, and Enforced Spans of Control21

Bowling Green U (Actual: 2015) ~ Napoleon (Max.: 1815) iiiiiiil! Oregon (Actual: 2011) Fayol (Max. Mgt: 1916)

Portland (Actual: 2013) Google (Min.: 2014)

Phoenix (Actual: 2011) Toronto (Actual: 2012)

U.S. Companies (Est: 2014) Iowa State (Actual: 2011) Texas State (Law: 2003)

Toronto Transit (Actual: 2015) Iowa State (Goal: 2012)

Fayol (Max. nonmgt: 1916) us Postal Service (Goal nonmgt: 2013)

Fedex (Actual: 2008) Tom Peters (Min.: 1988)

Best U.S. Plants (Survey: 2000) 0 10 20 30 40

Note: Data represe~ the average number of djrect report..:; per manager. "Max." i...:: the maximum Spans of contrOl recommended by NapOleon Bonaparte and Henri Fayol. "'Min ... is the mjnimwn Span of contrOl applied to team..:; by Goog.Je and recommended by Tom Peter$. "'E."l." i...:; the estimated lherag:e span of (:()ntrOI across all major U.S. companies.. ac:<.xXtling to consulting finn Deloiue. "Goal" refers to the Span of contrOl target.:: that the U.S. Poi>tal Service and State of Iowa are trying to achieve. (USPS currently exceeds its gool ) The State of Texas number i...:; the Span of contrOl mandated by law. The Best U.S. Plants number i...:; the 3:\'erag.e Spa.n of control in Ameriean manufacturing faci lities identified by Industry We-ek magazine a..:; the rtl0$1 effective. "'Actual" refers to the Span..:; of contrOl reported in the cities of Phoenix. Portland. and Toronto. the pubJjc sen•ice of the U.S. states of Oregon and Iowa. BowJjng Green UnjverS:ily. the Toronto Trans..it Commiss:ioo. and Fed.Ex Corporatioo in the years indicated The Ci1y of Toronto number excludes r uefighter.> :md parks.. which have unusually high spans of conLrOI. When these Wlits are included. Toronto's Span of conLrOI i...:; 163.

ranging from project specialists to sales support staff, report directly to Amy Geiger, director of sales

operations at Sunrise Identity. "Amy is a big proponent of Jetting her employees be self-led," says one of Geiger's direct reports at the Bellevue, Washington, marketing and merchandising agency. "She is

against micromanaging and wants her employees to grow from their own learned experiences."22

A second factor influencing the best span of control is whether employees perfonn routine ta~ks. A wider span of control is possible when employees perform routine jobs, because they require Jess

direction or advice from supervisors. A narrow span of control is necessary when employees perform novel or complex tasks, because these employees tend to require more supervisory decisions and coach-

ing. This principle is illustrated in a survey of property and ca~ualty insurers. The average span of control in commercial-policy processing departments is around 15 employees per supervisor, whereas the span of control is 6.1 in claims service and 5.5 in commercial underwriting. Staff members in the latter two

departments perfonn more technical work, so they have more novel and complex tasks, which requires

more supervisor involvement. Commercial-policy processing, on the other hand, is like production work. Tasks are routine and have few exceptions, so managers have Jess coordinating with each employee.23

A third influence on span of control is the degree of interdependence among employees within the department or team.24 General ly, a narrow span of control is necessary for highly interdependent jobs because employees tend to experience more conflict with each other, which requires more of a

manager's time to resolve. Also, employees are less clear on their personal work perfonnance in highly

interdependent tasks, so supervisors spend more time providing coaching and feedback.

Tall versus Flat Structures Span of control is interconnected with organizational size (number of employees) and the number of layers in the organizational hierarchy. Consider two companies with the same number of employees. If Company A ha~ a wider span of control (more direct reports per manager) than Company B, then Company A necessarily ha~ fewer layers of management (i.e., a flatter

Chapter Thirteen Designing Organizational Structures 369

Global Connections 13.1:

BBC FURTHER FLATTENS THE HIERARCHY

The British Broadcasting Corporation (BBC) has one of the lowest overhead costs among public- sector and regulated companies in the U.K. Overhead (management and administration) represents less than 8 percent of total costs. Yet, with declining television license fee income, the BBC is further reducing management numbers and flattening the corporate hierarchy. "In some places there are currently 10 layers of people and management and this will be cut to a maximum of seven in the future," advises BBC Director-General Tony Hall.

Lord Hall warns that, in addition to being a source of overhead costs, hierarchy "slows down decision making." He suggests that reducing management layers will improve the BBC because the organization excels with "as few barriers as possible to creativity, allowing people, teams and ideas to come together to do their best work. It is not one which allows bureaucracy, layers, and box-ticking to get in the way25

The British Broadcasting Corporation is reducing the number of management levels to reduce costs, improve employee creativity, and allow more nimble decision making. ©Vibrant Pictures/Aiamy Stock Photo

structure). The reason for this relationship is that a company with a wider span of control ha~ more employees per supervisor, more supervisors for each middle manager, and so on. This larger number of direct reports, compared to a company with a narrower span of control, is possible only by removing layers of management.

The interconnection of span of control, organizational size (number of employees), and number of management layers ha~ important implications for companies. As organizations grow, they typically employ more people, which means they must widen the span of control, build a taller hierarchy, or both.

370 Part Four Organizational Processes

Most companies end up building taller structures because they rely on direct supervision to some extent as a coordinating mechanism and there are limits to how many people each manager can coordinate.

Unfortunately, building a tal ler hierarchy (more layers of management) creates problems. One concern is that executives in tall structures tend to receive lower-quality and less timely information. People tend to filter, distort, and simpl ify information before it is passed to higher levels in the hier- archy because they are motivated to frame the information in a positive light or to summarize it more efficiently. In contrast, information receives less manipulation in flat hierarchies, and is often received much more quickly than in tall hierarchies. "Any new idea condemned to struggle upward through mul- tiple levels of r igidly hierarchical, r isk averse management is an idea that won't see dayl ight ... unti l it's too late," warns Sergio Marchionne, the Canadian-Ital ian CEO of Fiat Chrysler Automobiles.26

A second problem is that taller structures have higher overhead costs. With more managers per employee, tall hierarchies necessarily have more people administering the company, thereby reducing the percentage of staff who are actually making the product or providing the service. A third issue with tall hierarchies is that employees usually feel less empowered and engaged in their work. Hierarchies are power strucntres, so more levels of hierarchy tend to draw away power from people at the bottom of that hierarchy. Indeed, the size of the hierarchy itself tends to focus power around managers rather than employees. r7

These problems have prompted companies to remove one or more levels in the organizational hier- archy.28 KenGen had more than 15 layers of hierarchy a few years ago. Today, the 1,500 employees

at Kenya's leading electricity generation company are organized in a hierarchy with only six layers. Sandvik also "delayered," reducing its hierarchy from 13 layers between the CEO and the most junior employee to only seven layers.29 Although flattening the hierarchy has advantages, critics warn that it

can also lead to problems.

~ Debating Point: *uP SHOULD ORGANIZATIONS CUT BACK MIDDLE MANAGEMENT? Business leaders face the ongoing challenge of preventing their organization from balloon- ing into a fat bureaucracy with too many layers of middle managers. Indeed, it has become a mantra for incoming CEOs to gallantly state they will "delayer" or "flatten" the corporate hierarchy, usually as part of a larger mandate to "empower" the workforce.

As we describe in this chapter, there are several valid arguments for minimizing the corpo- rate hierarchy, particularly by cutting back middle management. As companies employ more managers, they increase overhead costs and have a lower percentage of people actually gen- erating revenue by making products or providing services. A taller hierarchy also undermines effective communication between the top executive team and front-line staff- who are usually the first to receive valuable knowledge about the external environment. Middle managers have a tendency to distort, simplify, and filter information as it passes from them to higher authorities in the company. A third reason for cutting back middle management is that they absorb organizational power. As companies add more layers, they remove more power that might have been assigned directly to front-line employees. In other words, tall hierarchies potentially undermine employee empowerment.

These concerns seem logical, but slashing the hierarchy can have several unexpected con- sequences that outweigh any benefits. In fact, a growing chorus of management experts warns that cutting out too much middle management has several negative long-term consequences.30

Critics of delayering point out that all companies need managers to translate corporate strategy into coherent daily operations. "Middle managers are the link between your mission and execution; advises a senior hospital executive. "They turn our strategy into action and get everyone on the same page."31 Furthermore, managers are needed to make quick decisions, coach employees, and help resolve conflicts. These valuable functions are underserved when the span of control becomes too wide.

Chapter Thirteen Designing Organizational Structures 371

Delayering increases the number of direct reports per manager and thus significantly increases management workload and corresponding levels of stress. Managers partly reduce the workload by learning to give subordinates more autonomy rather than micromanaging them. However, this role adjustment itself is stressful (same responsibility, but less authority or control). Companies often increase the span of control beyond the point at which many managers are capable of coaching or leading their direct reports.

A third concern is that delayering results in fewer managerial jobs, so companies have less manoeuvrability to develop managerial skills. Promotions are also riskier because they involve a larger jump in responsibility in flatter, compared to taller, hierarchies. Furthermore, having fewer pro- motion opportunities means that managers experience more career plateauing, which reduces their motivation and loyalty. Chopping back managerial career structures also sends a signal that manag- ers are no longer valued. "Delayering has had an adverse effect on morale, productivity and per- formance; argues a senior government executive. "Disenfranchising middle management creates negative perceptions and lower commitment to the organization with consequent reluctance to accept responsibility."32

CENTRALIZATION AND DECENTRALIZATION Centralization means that formal decision-making authority is held by a small group of people, typi- cally those at the top of the organizational hierarchy. Most organi zations begin with centralized struc- tures, as the founder makes most of the decisions and tries to direct the business toward his or her vision.

As organi zations grow, however, they diversify and their environments become more complex. Senior executi ves aren't able to process all the decisions that significantly influence the business. Conse-

quently, larger organizations typically decentralize; that is, they disperse decision authority and power

throughout the organization. The optimal level of centralization or decentralization depend~ on several contingencies that we will

examine later in this chapter. However, different degrees of decentralization can occur simultaneously in

different part~ of an organization. For instance, 7 -Eleven centralizes decisions about information technology and supplier purchasing to improve buying power, increa~ cost efficiencies, and minimize complexity across

the organization. Yet it decentralizes local inventory decisions to store managers because they have the best

information about their customers and can respond quickly to local market needs. "We could never predict a bus load of football players on a Friday night, but the store manager can," explains a 7 -Eleven executive.33

FORMALIZATION Formalization is the degree to which organi zations standardize behaviour through rules, procedures, formal training, and related mechanisms?4 ln other words, companies become more formal ized as they increasingly rely on various forms of standardization to coordinate work. McDonald's Restaurants and

most other efficient fa~t-food chains typically have a high degree of formal ization because they rely

on standardization of work processes as a coordinating mechanism. Employees have precisely defined roles, right down to how much mustard should be dispensed, how many pickles should be appl ied, and

how long each hamburger should be cooked.

Older companies tend to be more formal i zed because work acti viti es become routinized, making them easier to document into standardized practi ces. Larger companies also tend to have more for-

mal ization because direct supervi sion and informal communication among employees do not operate

as easily when large numbers of people are involved. External influences, such as government safety legislation and strict accounting rules, also encourage formal ization.

Formalization may increase efficiency and compliance, but it can also create problems.35 Rules and

procedures reduce organizational flexibili ty, so employees follow prescribed behaviours even when the situation clearly calls for a customized response. High levels of formalization tend to undermine orga-

nizational learning and creativity. Some work rules become so convoluted that organizational efficiency

would decl ine i f they were actually followed as prescribed. Formalizati on is al so a source of job

372 Part Four Organizational Processes

dissatisfaction and work stress. Finally, rules and procedures have been known to take on a life of their

own in some organizations. They become the focus of attention rather than the organization's ultimate

objectives of producing a product or service and serving its dominant stakeholders.

MECHANISTIC VERSUS ORGANIC STRUCTURES We discussed span of control, centralization, and formal ization together because they cluster around

two broader organizational forms: mechanistic and organic structures (see Exhibit 13.3).36 A mecha-

nistic structure is characterized by a narrow span of control and high degree of formalization and cen- tralization. Mechanistic structures have many rules and procedures, limited decision making at lower

levels, tal l hierarchies of people in specialized roles, and vertical rather than horizontal communication

flows. Tasks are rigidly defined and are altered only when sanctioned by higher authorities. Although now changing its structure, Samsung has traditionally had a mechanistic structure, which is apparent

by the Korean firm 's central ized decision making, clearly-defined job descriptions, and work activities

heavily guided by established rules and procedures. Companies with an organic structure have the opposite characteristics. They operate with a wide span

of control, decentralized decision making, and little formalization. Ta~ks are fluid, adj usting to new situa-

tions and organizational needs. In extremely organic organizations, decision making is decentralized down

to teams and individuals, and employees have enough autonomy to adapt their job duties to fit the situation. As a general rule, mechanistic structures operate better in stable environments because they rely on effi-

ciency and routine behaviours. Organic structures work better in rapidly changing (i.e., dynamic) environment~

because they are more flexible and responsive to the changes. Organic strucnrres are also more compatible

with organizational teaming and high-performance workplaces because they emphasize information sharing and an empowered workforce rather than hierarchy and stants37 However, the effectiveness of organic struc-

tures depends on how weU employees have developed their roles and expertise.38 Without these conditions,

employees are unable to coordinate effectively with each other, resulting in errors and gross inefficiencies.

Which organizational structure do you prefer? You can discover which organizational structure is most comfortable for you by completing this self-assessment in Connect.

EXHIBIT 13.3 Contrasting Mechanistic and Organic Organizat ional Structures

Mechanistic Structure

Narrow span of control

High centralization

High formalization

left: ComsLock lmages/Alamy: Tight: Steven P. Lynch/McGraw-Hill Companies

Organic Structure

Wide span of control

High decentralization

low formalization

Chapter Thirteen Designing Organizational Structures 373

Forms of Departmentalization

Span of control, centralization, and formalization are important elements of organiza- tional structure, but most people think about organizational charts when the discussion of organizational structure arises. The organizational chart represents the fourth element

in the structuring of organizations, called departmentaliztaion. Departmentalization specifies how employees and their activities are grouped together. It is a fundamental strategy for coordinating orga- nizational activities because it influences organizational behaviour in the followi ng ways:39

Departmentalization establishes the chain of command-the system of common supervision

among positions and units within the organization. It frames the membership of formal work teams and typically determines which positions and units must share resources. Thus, depart-

mentalization establ ishes interdependencies among employees and subunits.

Departmentalization focuses people around common mental models or ways of thinking, such as serving clients, developing products, or supporting a particular skill set. This focus is typically

anchored around the common budgets and mea~ures of performance assigned to employees within each departmental unit.

Departmentalization encourages specific people and work units to coordinate through informal communication. With common supervision and resources, members within each configuration typi- cally work near each other, so they can use frequent and informal interaction to get the work done.

There are almost as many organizational charts as there are businesses, but the s ix most common pure types of departmentalization are simple, functional, divisional, team-based, matrix, and network.

SIMPLE STRUCTURE

Most companies begin with a simple structure. 40 They employ only a few people and typically offer only one distinct product or service. There is minimal hierarchy-usually just employees reporting to the owners. Employees perform broadly defined roles because there are insufficient economies of scale

to assign them to specialized j obs. The simple structure is highly flexible and minimizes the walls that form between work units in other structures. However, the s imple structure usually depends on the owner's direct supervision to coordinate work activities, so it is very difficult to operate as the com-

pany grows and becomes more complex.

FUNCTIONAL STRUCTURE As organizations grow, they typically shift from a simple structure to a functional structure. Even after they adopt more complex organizational structures (which we discuss later), they wi ll have a functional

structure at some level of the hierarchy. A functional structure organizes employees around specific knowledge or other resources (see Exhibit 13.4). Employees with marketing expertise are grouped into

EXHIBIT 13.4 A Functional Organizational Structure

Chief Executive

Design Administration Marketing

374 Part Four Organizational Processes

Chapman's Ice Cream Limited had a classic simple organizational structu re when David and Penny Chapman started their business back in 1973. The couple and four employees performed all t he work in a century-old creamery located in the village of Markdale, Ontario. ·we did everything," recalls company president Penny Chapman (centre in photo with David at right and son Ashley with several employees). "We made the mixes, built the packages. we worked in cold storage .. . David went out on the road to do sales."

Chapman's grew quickly by offering unique ice cream flavours. The work was eventually divided into more specialized tasks and a functional structure emerged around production, marketing, research, and other d epartments. Today, Chapman's is Canada's largest independent ice cream manufacturer, employing 500 people and producing more than 200 products on 20 production lines. The company is also a global award winner for innovation in ice cream products. 41

Courtesy of David Chapman's Ice Cream

a marketing unit, those with production skills are located in manufacturing, engineers are found in product development, and so on. Organizations with functional structures are typical ly central ized to coordinate their activities effectively.

Evaluating the Functional Structure The functional strucntre creates specialized pools of tal- ent that typically serve everyone in the organization. Pooling talent into one group improves economies of scale compared to dispersing functional specialists over different parts of the organization. The func- tional structure also increa~es employee identity with the specialization or profession. Direct supervision is easier in functional structures because managers oversee people with common issues and expertise.42

The functional structure also has limitations.43 Grouping employees around their ski lls tends to focus attention on those ski lls and related professional needs rather than on the company's product, ser- vice, or client needs. Unless people are rotated through several functional unit~ over time, they might not develop a broader understanding of the business. Compared with other structures, the functional structure usually produces more dysfunctional conflict and poorer coordination in serving clients or developing products. These problems occur because employees need to work with co-workers in other

departments to complete organizational tasks, yet they have different subgoals and mental models about how to perform the work effectively. Together, these problems require substantial formal con-

trols and coordination when people are organized around functions.

DIVISIONAL STRUCTURE The divisional structure (sometimes cal led the multidivisional or M-form strucntre) groups employees around geographic areas, outputs (products or services), or clients. Exhibit 13.5 illustrates these three

Chapter Thirteen Designing O rgan izational Structures 375

variations of divisional structure.44 The geographic divisional structure organizes employees around distinct regions of the country or world. Exhibit 13.5 (a) illustrates a simpl ified version of the geo- graphic divisional structure adopted by Kone, the Finland-ba~ed global elevator and escalator company. The product/service divisional structure organizes employees around distinct outputs. Exhibit 13.5 (b) illustrates the four product divisions at Danone, the France-based global food company. The client divisional structure organizes employees around specific customer groups. Exhibit 13.5 (c) illustrates a

customer-focused divis ional structure similar to one adopted by the Bank of Montrea1.45

Which form of divisional structure should large organizations adopt? The answer depends mainly on the primary source of environmental diversity or uncertainty.46 Suppose an organization has one type of product sold to people across the country. If customers have different needs across regions, or if provin- cial governments impose different regulations on the product, then a geographic structure would be best to be more vigilant of this diversity. On the other hand, if the company sells several types of products across the country and customer preferences and government regulations are s imi lar everywhere, then a product structure would likely work best.

Kone, the global elevator and escalator company, is organized mainly around geographic regions, likely because regulations and sales channels vary much more by region than by product. McDonald's is organized into several geographic divisions (high growth, established, franchised) and is further organized by specific countries or zones within each of these divisions. This geographic organization makes sense because even though it makes the same Big Mac throughout the world, McDonald's has more fish products in Hong Kong and more vegetarian products in India, in line with traditional diets

EXHIBIT 13.5 Three Types of Divisional Structure

(a) Geographic Div isional Structure

Americas Greater China

(b) Product Divisional Structure

Fresh Dairy Products

(c) Client Divisional Structure

Chief Executive Officer

Asia-Pacific

Chief Executive Officer

Central & North Europe

Waters Early Life Nutrition

Medical Nutrition

Chief Executive Officer

Africa

Not~: Diagram (a) shows a global geographic djvi...:;ional structure similar to Kone CorpOration: diagram (b) depict..:; the four product djvi...:;ions of Danone: diagram (e) is similar to the customer-focused srructme at the Bank of Mont.real.

376 Part Four Organizational Processes

in those countries. Danone has dozens of country managers to anticipate and respond to cultural differ- ences. However, the French dairy products maker places product groups (waters, dairy, medical, early life) at the top of its organizational structure, possibly because marketing and manufacturing activities vary much more across product divisions than across regions.

Many companies are moving away from structures that organize people around geographic clus- ters.47 One reason is that clients can purchase products online and communicate with businesses from

almost anywhere in the world, so local representation is becoming less important. Reduced geographic variation is another reason for the shift away from geographic structures; freer trade has reduced gov- ernment intervention, and consumer preferences for many products and services are becoming more similar (converging) around the world. The third reason is that large companies increasingly have global business customers who demand one global point of purchase, not one in every country or region.