Management V

Pancho Wis

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218 PART 4 | Leading

10 Leadership

After studying Chapter 10, you will be able to

LO1 Explain how a good vision helps you be a better leader.

LO2 Discuss the similarities and differences between leading and managing.

LO3 Identify sources of power in organizations.

LO4 Know the three traditional approaches to understanding leadership.

LO5 Understand the important contemporary perspectives on leadership.

LO6 Identify types of opportunities to be a leader in an organization.

Learning Objectives

part four

chapter

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eople get excited about the topic of leadership.

They want to know what makes a great leader.

Executives at all levels in all industries are also

interested in this question. They believe the answer will bring

improved organizational performance and personal career

success. They hope to acquire the skills that will transform an

“average” manager into a true leader.

One such leader is Marc Nager, an influential and charis-

matic figure in the entrepreneurial startup community. As the

CEO of UpGlobal, Nager has been the driving force behind

the nonprofit’s increasingly popular Startup Weekend aimed

at “furthering human welfare through entrepreneurship.” The

how-to-start-your-own-business weekend events have been

held more than 1,000 times in 400 cities in 100 countries. To

date, these events have resulted in the creation of approxi-

mately 8,500 startup ventures. 1

Of course you don’t have to form a movement to acquire

leadership skills. According to one source, “Leadership seems

to be the marshaling of skills possessed by a majority but used

by a minority. But it’s something that can be learned by anyone,

taught to everyone, denied to no one.” 2

What is leadership? To start, a leader is one who influences

others to attain goals. The greater the number of followers, the

greater the influence. And the more successful the attainment

of worthy goals, the more evident the leadership. But we must

“People buy into the leader before they buy into the vision.”

— John C. Maxwell

explore beyond this bare definition to capture the excitement

and intrigue that devoted followers and students of leadership

feel when they see a great leader in action, to understand what

organizational leaders really do, and to learn what it really takes

to become an outstanding leader.

Outstanding leaders combine good strategic substance and

effective interpersonal processes to formulate and implement

strategies that produce results and sustainable competitive advan-

tage. 3 They may launch enterprises, build organization cultures,

win wars, or otherwise change the course of events. 4 They are

strategists who seize opportunities others overlook, but “they are

also passionately concerned with detail—all the small, fundamen-

tal realities that can make or mar the grandest of plans.” 5

What do people want from their leaders? Broadly speaking, they want help in achieving their goals. 6 Besides pay and pro- motions, these goals include support for personal development; clearing obstacles to high-level performance; and treatment that is respectful, fair, and ethical. Leaders serve people best by helping them develop their own initiative and good judgment, enabling them to grow, and helping them become better con- tributors. People want the kinds of things you will read about in this chapter and in other chapters of this book.

219

LISTEN & LEARN ONLINE

YOUNG MANAGERS

Speak Out “ When I come to work, I try and lead by example. So if there are qualities I want to see in my employees, I want to exhibit them myself. ”

— Brian Min , Kitchen Manager

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220 PART 4 | Leading

What do organizations need? Organizations need people at all levels to be leaders. Leaders throughout the organization are needed to do the things that their people want but also to help create and implement strategic direction. Organizations place people in formal leadership roles so that they will achieve the organization’s goals.

These two perspectives—what people want and what organizations need—are neatly combined in a set of five key behaviors identified by James Kouzes and Barry Posner, two well-known authors and consultants. 7 The best leaders, say Kouzes and Posner, do five things:

1. Challenge the process —They challenge conventional beliefs and practices, and they create change.

2. Inspire a shared vision —They appeal to people’s values and moti- vate them to care about an important mission.

3. Enable others to act —They give people access to information and give them the power to perform to their full potential.

4. Model the way —They don’t just tell people what to do; they are living examples of the ideals they believe in.

5. Encourage the heart —They show appreciation, provide rewards, and use various approaches to motivate people in positive ways.

You will read about these and other aspects of leadership in this chapter. The topics we discuss not only will help you become a better leader but also will give you benchmarks for assessing the competence and fairness with which your boss manages you.

1 | VISION Tony Hsieh, CEO of Zappos, believes the right vision “inspires employees to want to do things beyond expectations.” 9 Until a few years ago, vision was not a word that managers uttered.

But today having a vision for the future and communicating that vision to others are known to be essential components of great leadership. “If there is no vision, there is no business,” maintains entrepreneur Mark Leslie. 10 Joe Nevin, an MIS director, described leaders as “painters of the vision and archi- tects of the journey.” 11 Practicing businesspeople are not alone in this belief; academic research shows that a clear vision and communication of that vision lead to higher growth in entre- preneurial firms. 12

A vision is a mental image of a possible and desirable future state of the organization. It expresses the leader’s ambi- tions for the organization. 13 A leader can create a vision that describes high performance aspirations, the nature of corpo- rate or business strategy, or even the kind of workplace worth building. The best visions are both ideal and unique. 14 If a vision conveys an ideal, it communicates a standard of excel- lence and a clear choice of positive values. If the vision is also unique, it communicates and inspires pride in being different from other organizations. The choice of language is important; the words should express realism and optimism, an action ori- entation, and resolution and confidence that the vision will be attained. 15

Visions can be small or large and can exist throughout all organizational levels. The important points are that (1) a vision is necessary for effective leadership; (2) a person or team can develop a vision for any job, work unit, or organization; and (3) many people, including managers who do not develop into strong leaders, fail to develop a clear vision—instead they focus on performing or surviving day by day.

Put another way, leaders must know what they want. 16 And other people must understand what that is. The leader must be able to articulate the vision, clearly and often. Other people throughout the organization should understand the vision and be able to state it clearly themselves. That’s a start. But the vision means nothing until the leader and followers take action to turn the vision into reality. 17

Back in 1981, Narayana “N.R.” Murthy quit his job and along with six colleagues (and just $250) decided to build

LO1 Explain how a good vision helps you be a better leader

A recent survey asked Millennials (those born after 1983) from 26 countries to identify societal challenges over which they felt business could exert the most influence: 8 Did You

Know?

38%

27%

24%

11% Education, skills and training

Stabilize national economies

Cyber security

Other

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CHAPTER 10 | Leadership 221

a company from scratch. Not just any company—N.R.’s vision was to create “India’s most respected company.” Fast-forward to today. The firm, Infosys, has evolved into a global leader of IT and consulting services with 160,000 employees in 30 countries and revenues of $8.25 billion. N.R. recently reflected on how transformative one’s vision can be: “Posterity will not excuse you if you did not dream big. You owe it to your customers, your colleagues, your investors, and the society. Every major civilization, every great advance in science and technology, and every great company is built on a big dream.” 18

A metaphor reinforces the important concept of vision. 19

Putting a jigsaw puzzle together is much easier if you have the picture on the box cover in front of you. Without the picture, or vision, the lack of direction is likely to result in frustration and failure. That is what communicating a vision is all about: making clear where you are heading.

Not just any vision will do. Visions can be inappropriate, and even fail, for a variety of reasons: 20

• An inappropriate vision may reflect only the leader’s personal needs. Such a vision may be unethical or may fail to gain accep- tance by the market or by those who must implement it.

• Related to the first reason, an inappropriate vision may ignore stakeholder needs.

“Leadership is the capacity to translate vision into reality.” — Warren G. Bennis

vision a mental image of a possible and desirable future state of the organization

● Like with a jigsaw puzzle, a clear picture or vision of what needs to be accomplished provides direction and purpose.

• Although effective leaders main- tain confidence and persevere despite obstacles, the facts may dictate that the vision must change. You will learn more about change and how to manage it later.

Where do visions come from? 21 Leaders should be sensi- tive to emerging opportunities, develop the right capabilities or worldviews, and not be overly invested in the status quo. You also can capitalize on networks of insightful individuals who have ideas about the future. Some visions are accidental; a company may stumble into an opportunity, and the leader may get credit for foresight. Some leaders and companies launch many new initiatives and, through trial and error, hit occasional home runs. If the company learns from these successes, the “vision” emerges.

After a powerful tornado smashed through his town of Greensburg, Kansas, city administrator Steve Hewitt emerged from his basement to discover that the storm had destroyed the homes of most of the town’s 1,400 residents. It also wiped out

Greensburg’s hospital, fire station, elementary and high schools, water tower, and business district. Hewitt immediately contacted employees and assessed the extent of the damage. He found a safe place for his family to stay and then turned his full attention to rescue and recovery.

First, Hewitt dealt with the emergency at hand, directing the search and rescue, and then the cleanup, by crews of city work- ers and volunteers operating out of tents. Even as these activi- ties continued, Hewitt began making decisions about the future. Determined to rebuild, he saw an opportunity in the town’s tragic circumstances.

Hewitt envisioned a town that would model an energy-efficient and sustainable lifestyle. He persuaded the city council to pass a resolution that all new municipal buildings meet the stiff LEED platinum certification for “green” buildings, awarded by the U.S. Green Building Council’s Leadership in Energy and Environmental Design, for major energy savings. Hewitt communicated his vision in radio broadcasts and flyers handed out at emergency check- points. He educated the community about the practical advan- tages of rebuilding homes to meet LEED standards, persuading many home owners and store owners to adopt the standards them- selves. He developed plans for wind farms to supply electricity to the town. Besides inspiring the locals, these efforts drew publicity and donations, including an ecofriendly playground. 22

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222 PART 4 | Leading

people, and monitoring activities; leadership goes beyond these functions by inspiring people to attain the vision. Great lead- ers keep people focused on moving the organization toward its ideal future, motivating them to overcome any obstacles.

Good leadership, unfortunately, is all too rare. Managers may focus on the activities that earn them praise and rewards, such as actions that cause a rise in the company’s stock price, rather than making tough ethical decisions or investing in long- term results. Some new managers, learning that “quick wins” will help them establish their credibility as leaders, push a pet project while neglecting the impact on the very people they were assigned to lead. This approach backfires because employ- ees distrust this type of manager and lose any commitment they might have had to the team’s long-term success. Successful leaders, in contrast, enlist the team in scoring collective quick wins that result from working together toward a shared vision. 24

It is important to be clear that management and leadership are both vitally important. To highlight the need for more lead- ership is not to minimize the importance of management or managers. But leadership involves unique processes that are distinguishable from basic management processes. 25 Also, the requirement for different processes does not necessarily call for separate people. The same individual may manage and lead effectively—or may not.

2 | LEADING AND MANAGING

Effective managers are not necessarily true leaders. Many administrators, supervisors, and even top executives perform their responsibilities successfully without being great leaders. But these positions afford an opportunity for leadership. The ability to lead effectively, then, sets the excellent managers apart from the average ones.

2.1 | Comparing Leaders and Managers

Management must deal with the ongoing, day-to-day complex- ities of organizations, but true leadership includes effectively orchestrating important change. 23 While managing requires planning and budgeting routines, leading includes setting the direction—creating a vision—for the firm. Management requires structuring the organization, staffing it with capable

● An aerial view of the destruction caused by a tornado in Greensburg, KS, on May 5, 2007. During the rebuilding planning phase, tornado survivor and city administrator Steve Hewitt convinced city council members to pass a resolution that would require all new municipal buildings to be “green” and energy efficient.

LO2 Discuss the similarities and differences between leading and managing

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CHAPTER 10 | Leadership 223

commitment to the orga- nization and to a person or purpose—an idea, a product— other than themselves or their own interests. They master skills that are useful to their organizations, and they hold performance standards that are higher than required. Effective followers may not get the glory, but they know their con- tributions to the organization are valuable. And as they make those contributions, they study leaders in preparation for their own leadership roles. 32

3 | POWER AND LEADERSHIP

Central to effective leadership is power —the ability to influ- ence other people. In organizations, this influence often means the ability to get things done or accomplish one’s goals despite resistance from others.

One of the earliest and still most useful approaches to understanding power, offered by French and Raven, suggests that leaders have the five important potential sources of power shown in Exhibit 10.1 : 33

1. Legitimate power —A leader with legitimate power has the right, or the authority, to tell others what to do; employees are obligated to comply with legitimate orders. For example, a supervisor tells an employee to update the company’s website, and the employee updates the web- site because he has to obey the boss’s authority. In contrast, when a staff person lacks the authority to give an order to a line manager, the staff person has no legitimate power over the manager. As you might guess, managers have more legitimate power over their direct reports than they do over their peers, bosses, and others inside or outside their organizations. 34

Some people dislike the idea of distinguishing between management and leadership, maintaining that it is artificial or derogatory toward the managers and the management processes that make organizations run. Perhaps a more useful distinction is between supervisory and strategic leadership: 26

• Supervisory leadership is behavior that provides guidance, support, and corrective feedback for day-to-day activities.

• Strategic leadership gives purpose and meaning to organizations by anticipating and envisioning a viable future for the organization and working with others to initiate changes that create such a future. 27

Coach John Thompson III could be called a strategic leader. Formerly the head coach of the Princeton men’s basketball team, Thompson is in his seventh season as head coach of Georgetown University’s team. He has successfully revitalized Georgetown’s faltering program. He knows how to develop discipline among his players and how to train them to choose their shots carefully and play a decisive game. And because he grew up on the Georgetown campus, watching his father coach, his sense of loyalty to the institu- tion is ingrained. Georgetown University president John J. DeGioia credits Thompson for having successful experience plus “outstand- ing leadership and communication skills and . . . a deep commit- ment to the Georgetown tradition of academic excellence, integrity in competition, and basketball success.” Proof of Thompson’s lead- ership prowess can be seen from his overall record of 219-92 and conference record of 101–57 since coming to Georgetown. 28

2.2 | Good Leaders Need Good Followers

Organizations succeed or fail not only because of how well they are led but also because of how well followers follow. Just as man- agers are not necessarily good leaders, employees are not always good followers. As one leadership scholar puts it, “Executives are given subordinates; they have to earn followers.” 29 But it’s also true that good followers help produce good leaders.

As a manager, you will be asked to play the roles of both leader and follower. As you lead the people who report to you, you will report to your boss. You will be a member of some teams and committees, and you may head others. While the leadership roles get the glamour and therefore are the coveted roles, followers must perform their responsibilities conscientiously. Good followership is not merely obeying or ders, although some bosses may view it that way. The most effective follow- ers can think independently while remain- ing active ly committed to organizational goals. 30 Robert Townsend, who led a leg- endary turnaround at Avis, says the most important characteristic of a follower may be the willingness to tell the truth. 31

Effective followers also distinguish themselves by their enthusiasm and

supervisory leadership behavior that provides guidance, support, and corrective feedback for day-to-day activities

strategic leadership behavior that gives purpose and meaning to organizations, envisioning and creating a positive future

power the ability to influence others

LO3 Identify sources of power in organizations

Source of Power Example of How Source of Power Is Used in Organizations

Legitimate Your supervisor asks you to work an extra shift and you comply.

Reward The manager gives you a large bonus for exceptional performance.

Coercive The sales director assigns you to the least profitable accounts.

Referent Your boss is a really great person, so you’re willing to work hard for her.

Expert The marketing team leader is very experienced, so you listen to him.

Source: Adapted from J. R. P. French and B. Raven, “The Bases of Social Power,” in Studies in Social Power, ed. D. Cartwright (Ann Arbor, MI: Institute for Social Research, 1959).

Exhibit 10.1 Sources of power in organizations

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224 PART 4 | Leading

legitimate, coercive, and reward power than do middle- and higher-level managers. 35 But although it is easy to assume that the most powerful bosses are those who have high legiti- mate power and control major rewards and punishments, it is important not to underestimate the more “personal” sources like expert and referent power. 37

4 | TRADITIONAL APPROACHES TO UNDERSTANDING LEADERSHIP There are three traditional approaches to study-

ing leadership: the trait approach, the behavioral approach, and the sit-

uational approach.

4.1 | Certain Traits May Set Leaders Apart

The trait approach is the oldest leadership perspective; it focuses on individual lead- ers and tries to determine the personal characteristics (traits)

that great leaders share. What set Mahatma Gandhi, Margaret

Thatcher, Theodore Roosevelt, and Martin Luther King Jr. apart

from the crowd? The trait approach assumes the existence of a leadership personality and that leaders are born, not made.

From 1904 to 1948, research- ers conducted more than 100 leadership trait studies. 38 At the end of that period, man- agement scholars concluded that no particular set of traits is necessary for a person to become a successful leader. Enthusiasm for the trait approach diminished, but

some research on traits continued. By the mid-1970s, a more balanced view emerged: although no traits ensure leadership

wishes to receive those rewards. For example, a manager works hard to achieve her performance goals and get a positive per- formance review and a big pay raise from her boss. In contrast, if company policy dictates that everyone receive the same salary increase, a leader’s reward power decreases, because he or she is unable to give higher raises.

3. Coercive power —A leader with coercive power has control over punishments; people comply to avoid those punishments. For instance, a manager implements an absenteeism policy that administers disciplinary actions to offend- ing employees. A manager has less coercive power if, say, a union contract limits her ability to punish.

4. Referent power —A leader with referent power has personal characteristics that appeal to others; people comply because of admiration, personal lik- ing, a desire for approval, or a desire to be like the leader. For example, young, ambitious manag- ers emulate the work habits and personal style of a successful, charismatic executive. An executive who is incompetent, disliked, and com- mands little respect has little ref- erent power.

5. Expert power —A leader who has expert power has certain exper- tise or knowledge; people comply because they believe in, can learn from, or can otherwise gain from that expertise. For example, a sales manager gives his salespeople some tips on how to close a deal. The salespeople then alter their sales techniques because they respect the manager’s expertise. However, this manager may lack expert power in other areas, such as finance, so his salespeople may ignore his advice concerning financial matters.

People who are in a posi- tion that gives them the right to tell others what to do, who can reward and punish, who are well liked and admired, and who have expertise on which other people can draw will be powerful members of the organization. All of these sources of power are poten- tially important. In general, lower-level managers have less

LO4 Know the three traditional approaches to understanding leadership

trait approach a leadership perspective that attempts to determine the personal characteristics that great leaders share

● Fortune’s 2013 Business Person of the Year, Elon Musk is making history. Since co-founding PayPal, he has achieved unprecedented success with Tesla Motors (an all-electric auto manufacturer) and Space Exploration Technologies (SpaceX). Next, Musk wants to build a “hyperloop” ultra-high- speed train between Los Angeles and San Francisco. 36

2. Reward power —The leader who has reward power influ- ences others because she controls valued rewards; peo- ple comply with the leader’s

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CHAPTER 10 | Leadership 225

2. Leadership motivation. Great leaders want to lead. So it helps to be extraverted —extraversion is consistently related to leader- ship emergence and leadership effectiveness. 42 Also important is a high need for power, a preference to be in leadership rather than follower positions. 43 A high power need induces people to try influencing others and sustains interest and satisfaction in the leadership process. When the power need is exercised in moral and socially constructive ways, leaders inspire more trust, respect, and commitment to their vision.

3. Integrity. Integrity is the correspondence between actions and words. Honesty and credibility, in addition to being desirable char- acteristics in their own right, are especially important for leaders because these traits inspire trust in others.

4. Self-confidence. Self-confidence is important because the leadership role is challenging, and setbacks are inevitable. A self-confident leader overcomes obstacles, makes decisions despite uncertainty, and instills confidence in others. Of course you don’t want to overdo this; arrogance and cockiness have triggered more than one leader’s downfall.

5. Knowledge of the business. Effective leaders have a high level of knowledge about their industries, companies, and technical mat- ters. Leaders must have the intelligence to interpret vast quantities of information. Advanced degrees are useful in a career, but ulti- mately they are less important than acquired expertise in matters relevant to the organization. 44

While the best business leaders from China, India, and the United States exhibit many of these traits, their leadership styles are often heavily influenced by their cultures. Some American CEOs have been criticized for being more concerned about short-term finan- cial and stock performance than long-term growth and internal employee management issues. For example, when CEOs announce a major layoff, there is usually a short-term bounce in their firms’ stock prices. Longer-term consequences of drastic workforce reductions often include lower employee morale, high volun- tary turnover of valued employees, and reduced organizational performance.

In contrast, many Indian business leaders focus less on short- term financial metrics and more on long-term growth and per- formance, and on maintaining stable employment. According to Rajesh Hukku, founder of financial services software firm i-flex Solutions (acquired by Oracle), “. . . Indian leaders do not ascribe to the ‘hire and fire policy’ which is prevalent in the U.S. Indian leaders look at their people as long-term assets . . . “and” . . . it

success, certain characteristics are potentially useful. The current perspective is that some personality characteristics— many of which a person need not be born with but can strive to acquire—do distinguish effective leaders from other people: 39

1. Drive. Drive refers to a set of characteristics that reflect a high level of effort, including high need for achievement, constant striv- ing for improvement, ambition, energy, tenacity (persistence in the face of obstacles), and initiative. In several countries, the achieve- ment needs of top executives have been shown to be related to the growth rates of their organizations. 40 But the need to achieve can be a drawback if leaders focus on personal achievement and get so involved with the work that they do not delegate enough author- ity and responsibility. Also, while need for achievement predicts organizational effectiveness in entrepreneurial firms, it does not predict success for division heads in larger and more bureaucratic firms. 41

Traditional Thinking Leaders are born, not made.

The Best Managers Today Seek leadership experiences to develop their business knowledge, self-confidence, and leadership skills.

● Shown here in 1982, Margaret Thatcher served as prime minister of the United Kingdom from 1979–1990. Known as the “Iron Lady,” Thatcher is the only woman to have held that position.

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226 PART 4 | Leading

the extent to which leaders invite employee participation in decision making.

Task Performance and Group Maintenance Leadership requires getting the job done. Task performance behaviors are the leader’s efforts to ensure that the work unit or organi- zation reaches its goals. This dimension is variously referred to as concern for production, directive leadership, initiating

is about taking a longer-term view versus a quarter-by-quarter view.” This difference in leadership style is partly explained by the fact that laid-off workers lack a safety net (unemployment or Social Security system) in India.

Like their American and Indian counterparts, Chinese busi- ness leaders exhibit cultural tendencies common to their country. For example, Chinese leaders engage in guanxi, which is loosely defined as friendship with the expectation that favors will be continually exchanged (“who you know, not what you know”). While relationship building is important for American leaders, Chinese leaders tend to rely more heavily on the norm of reci- procity. Also, Chinese leaders operate from a position of national pride, careful to maintain their country’s honor and reputa- tion. Many seek and are comfortable exerting personal power. Ren Zhengfei, known as the “Telecom Titan,” is founder and head of telecom equipment maker Huawei. A global firm with 87,500 employees, Huawei’s goal is to build a culture with an aggressive “wolf spirit” in order to compete against global giants Alcatel-Lucent, Ericsson, and Nokia Siemens. Zhengfei follows a no-nonsense military style of leadership and asks each new Chinese employee who joins his firm to take an oath on “Duty, Honor, Company, and Country.”

What is the bottom line? Leaders from different cultures share many traits but also exhibit attitudes, behaviors, and beliefs that have been shaped by their unique cultures. 46

Finally, there is one personal skill that may be the most important: the ability to perceive the needs and goals of others and to adjust one’s personal leadership approach accordingly. 47 Effective leaders do not rely on one leadership style; rather, they are capable of using different styles as the situation warrants. 48 This quality is the cornerstone of the situational approaches to leadership, which we will discuss shortly.

4.2 | Certain Behaviors May Make Leaders Effective

The behavioral approach to leadership tries to identify what good leaders do. Should leaders focus on getting the job done or on keeping their followers happy? Should they make decisions autocratically or democratically? The behav- ioral approach downplays personal characteristics in favor of the actual behaviors that leaders exhibit. Studies of lead- ership behavior have considered the degree to which leaders emphasize task performance versus group maintenance and

“ If you set out to be liked, you would be prepared to compromise on anything at any time, and you would

achieve nothing. ”45 — Margaret Thatcher

● Effective leaders need to exhibit both task performance and group maintenance behaviors.

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CHAPTER 10 | Leadership 227

structure, or closeness of supervision. It includes a focus on work speed, quality and accuracy, quantity of output, and fol- lowing the rules. 49 This type of leader behavior improves leader job performance and group and organizational performance. 50

In exhibiting group maintenance behaviors , leaders take action to ensure the satisfaction of group members, develop and maintain harmonious work relationships, and preserve the group’s social stability. This dimension is sometimes referred to as concern for people, supportive leadership, or consideration. It includes a focus on people’s feelings and comfort, appreciation of them, and stress reduction. 51 This type of leader behavior has a strong positive impact on follower satisfaction and motivation and also on leader effectiveness. 52

What specific behaviors do performance- and maintenance- oriented leadership imply? To help answer this question, assume you have been asked to rate your boss on these two dimensions. If a leadership study were conducted in your organization, you would be asked to fill out a questionnaire in which you answer questions like those listed in Exhibit 10.2 .

Leader–member exchange (LMX) theory highlights the importance of leader behaviors not just toward the group as a whole but toward individuals on a personal basis. 53 The focus in the original formulation, which has since been expanded, is primarily on the leader behaviors historically considered group maintenance. 54 According to LMX theory, and as supported by research evidence, maintenance behaviors such as trust, open communication, mutual respect, mutual obligation, and mutual loyalty form the cornerstone of relationships that are satisfying and perhaps more productive. 55

Remember, though, the potential for cross-cultural differ- ences. Maintenance behaviors are important everywhere, but the specific behaviors can differ from one culture to another. For example, in the United States, maintenance behaviors include dealing with people face-to-face; in Japan, written memos are preferred over giving directions in person, thus avoiding confrontation and permitting face-saving in the event of disagreement. 57

“The reality is that leaders must, on the spur of the moment, be able to react rapidly and grasp opportunities.” 56

— Anne Mulcahy , Former CEO of Xerox

behavioral approach a leadership perspective that attempts to identify what good leaders do—that is, what behaviors they exhibit

task performance behaviors actions taken to ensure that the work group or organization reaches its goals

group maintenance behaviors actions taken to ensure the satisfaction of group members, develop and maintain harmonious work relationships, and preserve the social stability of the group

leader–member exchange (LMX) theory highlights the importance of leader behaviors not just toward the group as a whole but toward individuals on a personal basis

If your boss exhibits task performance leadership behaviors, then…

Be detailed and specific when providing verbal updates and written reports about the project.

Follow instructions and when there is a change to the original plan, clear it with your boss.

Expect your boss to closely monitor your work. Be responsive and don’t take it personally.

Be prepared for constructive criticism and encouragement to do the best job possible.

Provide your boss with frequent updates about your progress on the project.

Deliver the finished project on time. Don’t miss the deadline or ask for an extension.

If you boss displays group maintenance behaviors, then…

Share more freely about personal challenges you are facing at work.

Expect your boss to ask for your opinion about how to solve challenges at work.

Try to be a good team player and seek a consensus with others on key decisions.

Expect your boss to treat you and your co-workers in a fair and consistent manner.

Communicate in an open and transparent manner with others in the work environment.

Do not be surprised if your boss takes a personal interest in your growth and development.

Give credit to team members for helping with projects and problem solving.

Sources: Adapted from J. Misumi and M. Peterson, “The Performance- Maintenance (PM) Theory of Leadership: Review of a Japanese Research Program,” Administrative Science Quarterly 30, June 1985, pp. 199–223; T. Judge, R. Piccolo, and R. Ilies, “The Forgotten Ones? The Validity of Consideration and Initiating Structure in Leadership Research,” Journal of Applied Psychology 89 (2004), pp. 36–51; T. Hammer and J. Turk, “Organizational Determinants of Leader Behavior and Authority,” Journal of Applied Psychology 72 (1987), pp. 674–683.

Exhibit 10.2 Relating to your boss’s leadership style

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228 PART 4 | Leading

initiating structure ). Supervisors high on this dimension had more grievances and higher turnover rates.

When maintenance and performance leadership behaviors were considered together, the results were more complex. But one conclusion was clear: when a leader rates high on performance-oriented behaviors, he or she should also be main- tenance oriented. Otherwise the leader will face high levels of employee turnover and grievances.

At about the same time the Ohio State studies were being con- ducted, a research program at the University of Michigan was studying the impact of the same leader behaviors on groups’ job performance. 63 Among other things, the researchers concluded that the most effective managers engaged in what they called task-oriented behavior: planning, scheduling, coordinating, providing resources, and setting performance goals. Effective managers also exhibited more relationship-oriented behavior: demonstrating trust and confidence, being friendly and considerate, showing appreciation, keeping people informed, and so on. As you can see, these dimensions of leader behavior are essentially the task performance and group maintenance dimensions.

After the Ohio State and Michigan findings were published, it became popular to talk about the ideal leader as one who is always both performance and maintenance oriented. The best- known leadership training model to follow this style is Blake and Mouton’s Leadership Grid ®. 64 In grid training, managers are rated on their performance-oriented behavior (called concern for pro- duction ) and maintenance-oriented behavior (concern for people). Then their scores are plotted on the grid shown in Exhibit 10.3 . The highest score is a 9 on both dimensions. Managers who score less than a 9,9—for example, those who are high on concern for people but low on concern for production—would then receive training on how to become a 9,9 leader.

For a long time, grid training was warmly received by U.S. business and industry. Later, however, it was criticized for embracing a simplistic, one-best-way style of leadership and ignoring the possibility that 9,9 is not best under all circum- stances. For example, even 1,1 leadership can be appropriate if employees know their jobs (so they don’t need to receive direc- tions). Also, they may enjoy their jobs and coworkers enough that they do not care whether the boss shows personal concern for them. Still, if the manager is uncertain how to behave, it probably is best to exhibit behaviors that are related to both task performance and group maintenance. 65

In fact, a wide range of effective leadership styles exists. Organizations that understand the need for diverse leadership styles will have a competitive advantage in the modern busi- ness environment over those in which managers believe there is only “one best way.”

Participation in Decision Making How should a leader make decisions? More specifically, to what extent should lead- ers involve their people in making decisions? 58 As a dimension of leadership behavior, participation in decision making can range from autocratic to democratic:

• Autocratic leadership makes decisions and then announces them to the group.

• Democratic leadership solicits input from others. Democratic leadership seeks information, opinions, and preferences, some- times to the point of meeting with the group, leading discussions, and using consensus or majority vote to make the final choice.

Effects of Leader Behavior How the leader behaves influ- ences people’s attitudes and performance. Studies of these effects focus on autocratic versus democratic decision styles or on performance- versus maintenance-oriented behaviors.

Decision styles. The classic study comparing autocratic and democratic styles found that a democratic approach resulted in the most positive attitudes, but an autocratic approach resulted in somewhat higher performance. 59 A laissez-faire style, in which the leader essentially made no decisions, led to more negative attitudes and lower performance. These results seem logical and probably represent the prevalent beliefs among managers about the general effects of these approaches.

Democratic styles, appealing though they may seem, are not always the most appropriate. When speed is of the essence, democratic decision making may be too slow, or people may want decisiveness from the leader. 60 Whether a decision should be made autocratically or democratically depends on the char- acteristics of the leader, the followers, and the situation. 61 Thus a situational approach to leader decision styles, discussed later in the chapter, is appropriate.

Performance and maintenance behaviors. The perfor- mance and maintenance dimensions of leadership are indepen- dent of each other. In other words, a leader can behave in ways that emphasize one, both, or neither of these dimensions. Some research indicates that the ideal combination is to engage in both types of leader behaviors.

A team of Ohio State University researchers investigated the effects of leader behaviors in a truck manufacturing plant of International Harvester. 62 Generally, supervisors scoring high on maintenance behaviors (which the researchers termed consideration ) had fewer grievances and less turnover in their work units than supervisors who were low on this dimension. The opposite held for task performance behaviors (called

autocratic leadership a form of leadership in which the leader makes decisions on his or her own and then announces those decisions to the group

democratic leadership a form of leadership in which the leader solicits input from subordinates

laissez-faire a leadership philosophy characterized by an absence of managerial decision making

situational approach leadership perspective proposing that universally important traits and behaviors do not exist, and that effective leadership behavior varies from situation to situation

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CHAPTER 10 | Leadership 229

4.3 | The Best Way to Lead Depends on the Situation

According to proponents of the situational approach to leadership, universally important traits and behaviors don’t exist. Rather, effective leader behaviors vary from situation

Source: The Blake Mouton Managerial Grid from MindTools.com. Reproduced with permission.

Exhibit 10.3 The leadership grid ®

High

Low

C o

n ce

rn fo

r p

eo p

le 1,9 Country Club Management Thoughtful attention to needs of people for satisfying relationships leads to a comfortable, friendly organization atmosphere and work tempo.

1,1 Impoverished Management Exertion of minimum effort to get required work done is appropriate to sustain organization membership.

9,1 Authority Compliance Efficiency in operations results from arranging conditions of work in such a way that human elements interfere to a minimum degree.

9,9 Team Management Work accomplishment is from committed people; interdependence through a “common stake” in organization purpose leads to relationships of trust and respect.

5,5 Middle of the Road Management Adequate organization performance is possible through balancing the necessity to get out work with maintaining morale of people at a satisfactory level.

1 2 3 4 5 6 7 8 9

Low HighConcern for production

to situation. The leader should first analyze the situation and then decide what to do. In other words, look before you lead.

A head nurse in a hospital described her situational approach to leadership this way: “My lead- ership style is a mix of all styles. In this environment I normally let people participate. But in a code blue situation where a patient is dying I automatically become very autocratic: ‘You do this; you do that; you, out of the room; you all better be quiet; you, get Dr. Mansfield.’ The staff tell me that’s the only time they see me like that. In an emergency like that, you don’t have time to vote, talk a lot, or yell at each other. It’s time for someone to set up the order.

“I remember one time, one person saying, ‘Wait a minute, I want to do this.’ He wanted to do the mouth-to-mouth resuscitation. I knew the person behind him did it better, so I said, ‘No, he does it.’ This fellow told me later that I hurt him so badly to yell that in front of all the staff and doctors. It was like he wasn’t good enough. So I explained it to him: that’s the way it is. A life was on the line.

I couldn’t give you warm fuzzies. I couldn’t make you look good because you didn’t have the skills to give the very best to that patient who wasn’t breathing anymore.” 66 This nurse has her own intuitive situational approach to leadership. She knows the potential advan- tages of the participatory approach to decision making, but she also knows that in some circumstances she must make decisions herself.

The first situational model of leadership was proposed in 1958 by Tannenbaum and Schmidt. In their classic Harvard Business Review article, these authors described how managers should consider three factors before deciding how to lead: 67

1. Forces in the manager include the manager’s personal values, inclinations, feelings of security, and confidence in subordinates.

2. Forces in the subordinate include his or her knowledge and expe- rience, readiness to assume responsibility for decision making, interest in the task or problem, and understanding and acceptance of the organization’s goals.

3. Forces in the situation include the type of leadership style the orga- nization values, the degree to which the group works effectively as a unit, the problem itself and the type of information needed to solve it, and the amount of time the leader has to make the decision.

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230 PART 4 | Leading

The styles indicate that there are several shades of participa- tion, not just autocratic or democratic.

Of course not every managerial decision warrants this com- plicated analysis. But the model becomes less complex after you work through it a couple of times. Also, using the model for major decisions ensures that you consider the important situa- tional factors and alerts you to the most appropriate style to use.

Fiedler’s Contingency Model According to Fiedler’s contingency model of leadership effectiveness , effective- ness depends on two factors: the personal style of the leader and the degree to which the situation gives the leader power, con- trol, and influence over the situation. 70 Exhibit 10.6 illustrates this model. The upper half of the exhibit shows the situational

Consider which of these forces makes an autocratic style most appropriate and which dictates a democratic, participative style. By engag- ing in this exercise, you are constructing a situational the- ory of leadership.

Although the Tannenbaum and Schmidt article was pub- lished a half century ago, most of its arguments remain valid. Since that time, other situa- tional models have emerged. We will focus here on four:

the Vroom model for decision making, Fiedler’s contingency model, Hersey and Blanchard’s situational theory, and path– goal theory.

The Vroom Model of Leadership In the tradition of Tannenbaum and Schmidt, the Vroom model emphasizes the participative dimension of leadership: how leaders go about making decisions. The model uses the basic situational approach of assessing the situation before determining the best leadership style. 68 The following situational factors are used to analyze problems: 69

• Decision significance —The significance of the decision to the suc- cess of the project or organization.

• Importance of commitment —The importance of team members’ commitment to the decision.

• Leader’s expertise —Your knowledge or expertise in relation to this problem.

• Likelihood of commitment —The likelihood that the team would commit itself to a decision that you might make on your own.

• Group support for objectives —The degree to which the team sup- ports the organization’s objectives at stake in this problem.

• Group expertise —Team members’ knowledge or expertise in rela- tion to this problem.

• Team competence —The ability of team members to work together in solving problems.

Each of these factors is based on an important attribute of the problem the leader faces and should be assessed as either high or low.

The Vroom model, shown in Exhibit 10.4 , operates like a funnel. You answer the questions one at a time, choosing high or low for each, sometimes skipping questions as you follow the appropriate path. Eventually you reach one of 14 possible endpoints. For each endpoint, the model states which of five decision styles is most appropriate. Several different decision styles may work, but the style recommended is the one that takes the least time.

The five leader decision styles are defined in Exhibit 10.5 .

Exhibit 10.4 Vroom’s model of leadership

P R O B L E M

S T A T E M E N T

HH H

H H

- - -

----

- -

- - -

- - - - -

- -

L L

Time-Driven Model

Decide

Delegate

Consult (Group)

Facilitate

Consult (Individually)

Facilitate

Consult (Group)

Decide

Facilitate

Instructions: The matrix operates like a funnel. You start at the left with a specific decision problem in mind. The column headings denote situational factors which may or may not be present in that problem. You progress by selecting high or low (H or L) for each relevant situational factor. Proceed down from the funnel, judging only those situational factors for which a judgement is called for, until you reach the recommended process.

Li ke

lih oo

d of

om m

itm en

Le ad

er E

xp er

tis e

Im po

rt an

ce o

f C

om m

itm en

D ec

is io

n S

ig ni

fic an

G ro

up E

xp er

tis e

Te am

C om

pe te

nc e

G ro

up S

up po

Vroom model a situational model that focuses on the participative dimension of leadership

Fiedler’s contingency model of leadership effectiveness a situational approach to leadership postulating that effectiveness depends on the personal style of the leader and the degree to which the situation gives the leader power, control, and influence over the situation

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CHAPTER 10 | Leadership 231

These three sequential ques- tions create a decision tree (from top to bottom in the exhibit) in which a situation is classi- fied into one of eight catego- ries. The lower the category number, the more favorable the situation is for the leader; the higher the number, the less favorable the situation. Fiedler originally called this variable “situational favorableness” but now it is “situational control.” Situation 1 is the best: relations are good, task structure is high, and power is high. In the least favorable situation (8), in which the leader has very little situational control, relations are poor, tasks lack structure, and the leader’s power is weak.

Different situations dictate different leadership styles. Fiedler measured leadership styles with an instrument assess- ing the leader’s least preferred coworker (LPC)—that is, the attitude toward the follower the leader liked the least. This was considered an indication more generally of leaders’ attitudes toward people. If a leader can single out the person she likes the least, but her attitude is not all that negative, she receives a high score on the LPC scale. Leaders with more negative atti- tudes toward others would receive low LPC scores. Based on the LPC score, Fiedler considered two leadership styles:

1. Task-motivated leadership places primary emphasis on complet- ing the task and is more likely exhibited by leaders with low LPC scores.

2. Relationship-motivated leadership emphasizes maintaining good interpersonal relationships and is more likely from high-LPC leaders.

analysis, and the lower half indicates the appropriate style. In the upper portion, three questions are used to analyze the situation:

1. Are leader–member relations good or poor? (To what extent is the leader accepted and supported by group members?)

2. Is the task structured or unstructured? (To what extent do group members know what their goals are and how to accomplish them?)

3. Is the leader’s position power strong or weak (high or low)? (To what extent does the leader have the authority to reward and punish?)

1. Decide. You make the decision alone and either announce or “sell” it to the group. You may collect information relevant to the problem from the group or others.

2. One-on-one consultation. You meet individually with group members, get their suggestions, and then make a decision.

3. Consult the group. You present the problem to the group members in a meeting, get their suggestions, and then make a decision.

4. Facilitate. You present the problem to the group at a meeting, provide boundaries within which the decision must be made, and facilitate the decision-making process in an unbiased manner until consensus is reached.

5. Delegate. You encourage the group to make the decision within prescribed limits. Members identify the problem, and develop and evaluate alternative solutions. Your role is behind the scenes, providing resources and encouragement.

Exhibit 10.5 Vroom’s leader decision styles

Exhibit 10.6 Fiedler’s analysis of situations in which the task- or relationship-motivated leader is more effective

Leader– member relations

Task structure

Leader position power

Type of leader most effective in the situation

Unfavorable for leader

Favorable for leader

Good

Structured Unstructured

High Low High Low

1 2 3 4 5 6 7 8

Task- motivated

Relation- ship-

motivated

Task- motivated

Relation- ship-

motivated

Relation- ship-

motivated

Relation- ship-

motivated

Poor

UnstructuredStructured

High Low High Low

task-motivated leadership leadership that places primary emphasis on completing a task

relationship-motivated leadership leadership that places primary emphasis on maintaining good interpersonal relationships

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232 PART 4 | Leading

training seminars. Regardless of its scientific validity, Hersey and Blanchard’s model provides a reminder that it is important to treat different people differently. Also, it suggests the impor- tance of treating the same individual differently from time to time as he or she changes jobs or acquires more maturity in her or his particular job. 72

Path–Goal Theory Perhaps the most comprehensive and generally useful situational model of leadership effectiveness is path–goal theory. Developed by Robert House, path–goal theory gets its name from its concern with how leaders influ- ence followers’ perceptions of their work goals and the paths they follow toward goal attainment. 73

Path–goal theory has two key situational factors:

1. Personal characteristics of followers.

2. Environmental pressures and demands with which followers must cope to attain their work goals.

These factors determine which leadership behaviors are most appropriate.

The theory identifies four pertinent leadership behaviors:

1. Directive leadership, a form of task performance-oriented behavior.

2. Supportive leadership, a form of group maintenance-oriented behavior.

3. Participative leadership, or decision style.

4. Achievement-oriented leadership, or behaviors geared toward motivating people, such as setting challenging goals and reward- ing good performance.

These situational factors and leader behaviors are merged in Exhibit 10.7 . As you can see, appropriate leader behaviors— as determined by characteristics of followers and the work environment—lead to effective performance.

The theory also specifies which follower and environmen- tal characteristics are important. Three key follower charac- teristics determine the appropriateness of various leadership styles:

1. Authoritarianism is the degree to which individuals respect, admire, and defer to authority. Path–goal theory suggests that leaders should use a directive leadership style with subordi- nates who are highly authoritarian because such people respect decisiveness.

2. Locus of control is the extent to which individuals see events as under their control. People with an internal locus of control believe that what happens to them is their own doing; people with an exter- nal locus of control believe that it is luck or fate. For subordinates who have an internal locus of control, a participative leadership style is appropriate because these individuals prefer to have more influence over their own lives.

3. Ability is people’s beliefs about their own capabilities to do their assigned jobs. When subordinates’ ability is low, a directive style will help them understand what has to be done.

These leadership styles correspond to task perfor- mance and group maintenance leader behaviors, respectively.

The lower part of Exhibit 10.6 indicates which style is situationally appropriate. For situations 1, 2, 3, and 8, a task-motivated leader- ship style is more effective. For situations 4 through 7, relationship- motivated lead- ership is more appropriate.

Fiedler’s theory was not always supported by research. It is better supported if we replace the eight specific levels of situational control with three broad levels: low, medium, and high. The the- ory was controversial in aca- demic circles, partly because it assumed leaders cannot change their styles but must be assigned to situations that suit their styles. However, the model has withstood the test of time and still receives

attention. Most important, it brought a focus on the signifi- cance of finding a fit between the situation and the leader’s style.

Hersey and Blanchard’s Situational Theory Hersey and Blanchard developed a situational model that added another factor the leader should take into account before deciding whether task performance or maintenance behaviors are more important. In their situational theory , originally called the life-cycle theory of leadership, the key situational factor is the maturity of the followers. 71 Job maturity is the level of the followers’ skills and technical knowledge relative to the task being performed; psychological maturity is the followers’ self-confidence and self-respect. High-maturity followers have the ability and the confidence to do a good job.

The theory proposes that the more mature the followers, the less the leader needs to engage in task performance behaviors. Maintenance behaviors are not important with followers with low or high maturity but are important for followers of moder- ate maturity. For low-maturity followers, the emphasis should be on performance-related leadership; for moderate-maturity followers, performance leadership is somewhat less import- ant and maintenance behaviors become more important; and for high-maturity followers, neither dimension of leadership behavior is important.

Little academic research has been done on this situ- ational theory, but the model is popular in management

Hersey and Blanchard’s situational theory a life cycle theory of leadership postulating that a manager should consider an employee’s psychological and job maturity before deciding whether task performance or maintenance behaviors are more important

job maturity the level of the employee’s skills and technical knowledge relative to the task being performed

psychological maturity an employee’s self-confidence and self-respect

path–goal theory a theory that concerns how leaders influence subordinates’ perceptions of their work goals and the paths they follow toward attainment of those goals

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CHAPTER 10 | Leadership 233

closely knit group, they have a professional orientation, the job is inherently satisfy- ing, or there is great physical distance between leader and followers. So physicians who are strongly concerned with professional conduct, enjoy their work, and work independently do not need social support from hospital administrators.

Task performance leadership is less important and will have less of a positive effect if people have a lot of experience and ability, feedback is supplied to them directly from the task or by computer, or the rules and procedures are rigid. If these fac- tors are operating, the leader does not have to tell people what to do or how well they are performing.

The concept of substitutes for leadership does more than indicate when a leader’s attempts at influence will and will not work. It provides useful and practical prescriptions for how to manage more efficiently. 75 If the manager can develop the work situation to the point where a number of these substitutes for leadership are operating, the leader can spend less time attempting to influence people and will have more time for other important activities.

Research indicates that substitutes for leadership may be better predictors of commitment and satisfaction than of per- formance. 76 These substitutes are helpful, but you can’t put substitutes in place and think you have completed your job as leader. And as a follower, consider this: If you’re not getting good leadership, and if these substitutes are not in place, cre- ate your own “substitute” for leadership—self-leadership. Take the initiative to motivate yourself, lead yourself, create positive change, and lead others.

Appropriate leadership style is also determined by three important environmental factors:

• Tasks —Directive leadership is inappropriate if tasks already are well structured.

• Formal authority system —If the task and the authority or rule system are dissatisfying, directive leadership will create greater dissatisfaction. If the task or authority system is dissatisfying, sup- portive leadership is especially appropriate because it offers one positive source of gratification in an otherwise negative situation.

• Primary work group —If the primary work group provides social support to its members, supportive leadership is less important.

Path–goal theory offers many more propositions. In gen- eral, the theory suggests that the functions of the leader are to (1) make the path to work goals easier to travel by providing coaching and direction, (2) reduce frustrating barriers to goal attainment, and (3) increase opportunities for personal satisfac- tion by increasing payoffs to people for achieving performance goals. The best way to do these things depends on your people and on the work situation. Again, analyze, and then adapt your style accordingly.

Substitutes for Leadership Sometimes leaders don’t have to lead, or situations constrain their ability to lead effectively. The situation may be one in which leadership is unnecessary or has little impact. Substitutes for leadership can provide the same influence on people as leaders otherwise would have.

Certain follower, task, and organizational factors are sub- stitutes for task performance and group maintenance leader behaviors. 74 For example, group maintenance behaviors are less important and have less impact if people already have a

Exhibit 10.7 The Path–Goal Framework

Determine the appropriateness

of leader behaviors

Helping their employees achieve

higher levels of 1. Directive 2. Supportive 3. Participative 4. Achievement

Job satisfaction and

performance

Characteristics of followers

Environmental factors

substitutes for leadership factors in the workplace that can exert the same influence on employees as leaders would provide

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234 PART 4 | Leading

According to one definition, “Charisma packs an emotional wallop for followers above and beyond ordinary esteem, affec- tion, admiration, and trust . . . The charismatic is an idolized hero, a messiah and a savior.” 77 Many people, particularly North Americans, value charisma in their leaders. But some people don’t like the term charisma; it can be associated with the negative charisma of evil leaders whom people follow blindly. 78 Yet charismatic leaders who display appropriate val- ues and use their charisma for appropriate purposes serve as ethical role models for others. 79

Charismatic leaders are dominant and exceptionally self-confident, and they have a strong conviction in the moral righteousness of their beliefs. 80 They strive to create an aura of competence and success and communicate high expectations for and confidence in followers. Ultimately, charismatic lead- ers satisfy other people’s needs. 81

The charismatic leader articulates ideological goals and makes sacrifices in pursuit of those goals. 82 Martin Luther King Jr. had a dream for a better world, and John F. Kennedy spoke of landing a human on the moon. In other words, such leaders have a compelling vision. The charismatic leader also arouses a sense of excitement and adventure. He or she is an eloquent speaker who exhibits superior verbal skills, which help communicate the vision and motivate followers. Walt

5 | CONTEMPORARY PERSPECTIVES ON LEADERSHIP

So far, you have learned the major classic approaches to under- standing leadership, all of which remain useful today. Several new developments are revolutionizing our understanding of this vital aspect of management.

5.1 | Charismatic Leaders Inspire Their Followers

Like many great leaders, Ronald Reagan had charisma. So does Barack Obama. In business, Oprah Winfrey, Thomas Watson, Indra Nooyi, Alexis Ohanian, and Richard Branson also have been charismatic leaders.

Charisma is an elusive concept—easy to spot but hard to define. What is charisma, and how does one acquire it?

LO5 Understand the important contemporary perspectives on leadership

Each year, the U.S. Environmental Protection Agency (EPA) chooses a small number of organizations to receive the “Green Power Partner of the Year” award. This award recognizes organizations that distinguish themselves through their green power use, leadership, overall strategy, and impact on the green power market. The 2013 award winners were Cisco Systems, Georgetown University, Microsoft Corporation, and Ohio State University.

Cisco Systems, a worldwide leader in networking, realizes that green power plays a critical role in the company’s envi- ronmental sustainability strategy. Not only has Cisco set aggressive emission reduc- tion goals for the next three years, it has convinced more than 80 percent of its ven- dors, business partners, and supply chain to join in the green effort. Recently, the company launched a “Cisco Green” online

community to boost employee enthusi- asm for green initiatives and to recognize green champions within the company.

Committed to reducing its carbon foot- print by 50 percent by 2020, Georgetown University cut emissions by 20 percent “through a combination of demand reduc- tion, efficiency, and use of cleaner fuels.” The university’s goal is to be a leader in the use of green power, and it joined several universities from around the world when it signed the International Sustainable Campus Charter—a pledge to integrate sustainability into all buildings, operations, and planning.

Microsoft reduced its 2012 carbon emissions by 30 percent by increasing its “energy efficiency initiatives and invest- ments in high-quality, externally-verified renewable energy and carbon reduc- tion projects.” In 2013, Microsoft used 73 percent more green power, earning

it the number 2 spot on the EPA’s Top 50 list. The company motivates its managers to be energy efficient by holding them financially accountable for their unit’s

Organizations Earn Prestigious Green Leadership Award

In 2012, Georgetown Energy secured $50,000 to be directed toward building “Solar Street” on a block of university-owned townhouses. The 18 kW worth of solar photo-voltaic panels reverts electricity savings back to students. Approximately $100,000 in savings is projected over the next 20 years.

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CHAPTER 10 | Leadership 235

charismatic leader a person who is dominant, self-confident, convinced of the moral righteousness of his or her beliefs, and able to arouse a sense of excitement and adventure in followers

● Martin Luther King Jr. was a charismatic leader with a compelling vision: a dream for a better world.

emissions of carbon pollution. In this way, Microsoft “encourages employees to reduce emissions while raising funds for energy efficiency and renewable energy projects.” Microsoft set the ambitious goal of achieving carbon neutrality for all of its data centers, software development labs, offices, and employee air travel.

Ohio State University, by signing the American College & University Presidents’ Climate Commitment in 2008, declared its commitment to climate neutrality. Further, it adopted a Green Build and Energy Policy, which has led to (1) all new con- struction and major renovations will meet LEED Silver environmental standards and (2) the completion of a 450-well geother- mal system to heat and cool residence halls. In addition, the university signed a 20-year agreement to buy 50 megawatts of wind power each year from the Blue Creek

• It takes strong leadership to con- vince stakeholders to engage in the green initiatives under way at Cisco, Georgetown University, Microsoft, and Ohio State University. Based on your understanding of this chapter, how might leaders at these organiza- tions have persuaded stakeholders to embrace these green initiatives?

• Can green energy eventually make up 100 percent of many organizations’ energy usage? What obstacles or

challenges do you think will need to be surmounted for this transformation to green energy to occur?

SOURCES: News release, “Green Power Partnership 2013 Award Winners,” United States Environmental Protection Agency, www.epa.gov ; Company web- site, www.cisco.com ; L. Westergaard, “GU Earns EPA Green Award,” The Hoya (online), October 1, 2013, www.thehoya.com ; and News release, “Ohio State Receives Green Power Partner of the Year Award from U.S. EPA,” Office of Energy and Environment, September 23, 2013, http://oee.osu .edu/green-power-partner-2013.html .

Discussion Questions

Wind Farm in northwestern Ohio. Not only will this help ensure the wind farm’s survival, but it also allow the university’s

researchers to analyze data regarding rotor blade and wind energy markets, soil preservation, and noise optimization.

Disney mesmerized people with his storytelling; had enormous creative talent; and instilled in his organization strong values of good taste, risk taking, and innovation. 83

Leaders who possess these characteristics or do these things inspire in their followers trust, confidence, acceptance,

obedience, emotional involve- ment, affection, admiration, and higher performance. 84 For example, having charisma not only helps CEOs inspire other employees in the organization but also may enable them to influence external stakehold- ers, including customers and investors. 85 Evidence for the positive effects of charismatic leadership has been found in a wide variety of groups, orga- nizations, and management levels, and in countries including India, Singapore, the Netherlands, China, Nigeria, Japan, and Canada. 86

Charisma has been shown to improve corporate financial performance, particularly under conditions of uncertainty— that is, in risky circumstances or when environments are chang- ing and people have difficulty understanding what they should do. 87 Uncertainty is stressful, and it makes people more recep- tive to the ideas and actions of charismatic leaders. By the way, too, as an organization’s (or team’s) performance improves under a person’s leadership, others see that person as increas- ingly charismatic as a result of the higher performance. 88

5.2 | Transformational Leaders Revitalize Organizations

Charisma can contribute to transformational leadership. Transformational leaders get people to transcend their

transformational leaders leaders who motivate people to transcend their personal interests for the good of the group

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236 PART 4 | Leading

3. Building trust —Being consistent, dependable, and persistent, leaders position themselves clearly by choosing a direction and staying with it, thus projecting integrity.

4. Having positive self-regard —Leaders do not feel self-important or complacent, but rather recognize their personal strengths, com- pensate for their weaknesses, nurture and continually develop their talents, and know how to learn from failure. They strive for success rather than merely try to avoid failure.

Transformational leadership has been identified in indus- try, the military, and politics. 95 Examples of transformational leaders in business include Henry Ford (founder of Ford Motor Company), Herb Kelleher (former CEO of Southwest Airlines), Jeff Bezos (founder of Amazon.com), David Neeleman (in his former role as leader of JetBlue), and Lee Iacocca (who led Chrysler’s turnaround during the 1980s). 96 As with studies of charisma, transformational leadership and its positive impact on follower satisfaction and performance have been demonstrated in countries the world over, including India, Egypt, Germany, China, England, and Japan. 97 A study in Korean companies found that transformational leadership predicted employee motivation, which in turn predicted creativity. 98 Under trans- formational leadership, people view their jobs as more intrinsi- cally motivating (see Chapter 11 for more on this) and are more strongly committed to work goals. 99 And top management teams agree more clearly about important organizational goals, which translates into higher organizational performance. 100

Transforming Leaders Importantly, transformational lead- ership is not the exclusive domain of presidents and chief exec- utives. In the military, leaders who received transformational leadership training had a positive impact on followers’ personal development. They also were successful as indirect leaders: military recruits under the transformational leaders’ direct reports were stronger performers. 101 Don’t forget, though: the best leaders are those who can display both transformational and transactional behaviors. 102

Ford Motor Company, in collaboration with the University of Michigan School of Business, put thousands of middle managers through a program designed to stimulate transfor- mational leadership. 103 The training included analysis of the changing business environment, company strategy, and per- sonal reflection and discussion about the need to change. Participants assessed their own leadership styles and developed

personal interests for the sake of the larger community. 89 They generate excitement and revitalize organizations. At Google, the ability to gener- ate excitement is an explicit criterion for selecting manag- ers. In the United Kingdom, Richard Branson of Virgin

Group is a transformational leader who built a global business empire. 90

The transformational process moves beyond the more tra- ditional transactional approach to leadership. Transactional leaders view management as a series of transactions in which they use their legitimate, reward, and coercive powers to give commands and exchange rewards for services rendered. Unlike transformational leadership, transactional leadership is dis- passionate; it does not excite, transform, empower, or inspire people to focus on the interests of the group or organization. However, transactional approaches may be more effective for individualists than for collectivists. 91 Also, some managers may use both approaches to leadership, depending on the situation.

Generating Excitement Transformational leaders generate excitement in several ways: 92

• They are charismatic, as described earlier.

• They give their followers individualized attention. They delegate challenging work to deserving people, keep lines of communication open, and provide one-on-one mentoring to develop their people. They do not treat everyone alike because not everyone is alike.

• They are intellectually stimulating. They arouse in their followers an awareness of problems and potential solutions. They articulate the organization’s opportunities, threats, strengths, and weak- nesses. They stir the imagination and generate insights. As a result, problems are recognized, and high-quality solutions are identified and implemented with the followers’ full commitment.

Skills and Strategies At least four skills or strategies con- tribute to transformational leadership: 94

1. Having a vision —Leaders have a goal, an agenda, or a results ori- entation that grabs attention.

2. Communicating their vision —Through words, manner, or symbol- ism, leaders relate a compelling image of the ultimate goal.

transactional leaders leaders who manage through transactions, using their legitimate, reward, and coercive powers to give commands and exchange rewards for services rendered

“Employees, especially young people, want more than a paycheck ... They want to feel as though their work has

meaning.” 93 — Marissa Mayer , CEO of Yahoo!

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CHAPTER 10 | Leadership 237

Chapman’s leadership but then plunged as demand dried up.

Chapman reacted by assem- bling his management team to evaluate what had gone wrong. The group determined that the earlier growth had been “undisciplined,” not directed to areas where long-term success would be most likely. The team developed a company vision aimed at balanced and sustain- able growth. Since then, says Chapman, the company has “never varied” from “executing our vision with discipline and passion.”

The passion comes from a commitment to “people-centric lead- ership.” Under Chapman, B-W managers must care about their employees, give them authority to make important decisions, and clarify how their contributions enhance the company’s vision. An Organizational Empowerment Team develops leaders and applies methods such as lean manufacturing through which employees con- tribute to improved operations.

“We measure success by the way we touch the lives of peo- ple” captures Chapman’s belief that companies can change the world through their impact on individual employees. “The usual corporate-culture buzzwords, like engagement, pro- ductivity, and performance, are self-serving to companies,” says Bob Chapman. “We want to release human potential.” Challenging employees to contribute to the corporate vision gives them a chance to feel that their efforts matter; recogni- tion programs show them that they are appreciated. The result is what Chapman calls an “inspirational environment.” With recent sales revenue of $1.7 billion, the company is realizing its potential, too. 106

5.3 | Authentic Leadership Adds an Ethical Dimension

In general, authentic leadership is rooted in the ancient Greek philosophy “To thine own self be true.” 107 In your own lead- ership, you should strive for authenticity in the form of hon- esty, genuineness, reliability, integrity, and trustworthiness. Authentic transformational leaders care about public interests (community, organizational, or group), not just their own. 108 They are willing to sacrifice their own interests for others, and they can be trusted. They are ethically mature; people view leaders who exhibit moral reasoning as more transformational than leaders who do not. 109

Pseudotransformational leaders are the opposite: they talk a good game, but they ignore followers’ real needs as their own self-interests (power, prestige, control, wealth, fame) take precedence. 110

a specific change initiative to implement after the training—a change that would make a needed and lasting difference for the company.

Over the next six months, the managers implemented change on the job. Almost half of the initiatives resulted in transfor- mational changes in the organization or work unit; the rest of the changes were smaller, more incremental, or more personal. Whether managers made small or transformational changes depended on their attitude going into the training, their level of self-esteem, and the amount of support they received from others on the job. Although some managers did not respond as hoped, almost half embraced the training, adopted a more transformational orientation, and tackled significant transfor- mations for the company.

Level 5 leadership , a term well known among executives, is considered by some to be the ultimate leadership style. Level 5 leadership is a combination of strong professional will (determination) and personal humility that builds endur- ing greatness. 104 Thus a Level 5 leader is relentlessly focused on the organization’s long-term success while behaving with modesty, directing attention toward the organization rather than him- or herself. Examples include John Chambers, CEO of Cisco Systems, Darwin E. Smith, ex-CEO of Kimberly Clark, and IBM’s former chief executive, Louis Gerstner. Gerstner is widely credited for turning around a stodgy IBM by shifting its focus from computer hardware to business solu- tions. Following his retirement, Gerstner wrote a memoir that details what happened at the company but says little about himself. Although Level 5 leadership is seen as a way to trans- form organizations to make them great, it requires first that the leader exhibit a combination of transactional and transforma- tional styles. 105

Before his 30th birthday, Robert Chapman stepped into the job of chief executive of his family’s business, Barry-Wehmiller Companies (B-W), following the sudden death of his father. Revenues at B-W, which makes packaging equipment and sells related services, grew rapidly during the early years of

● Jeff Bezos, CEO of Amazon, introduced Kindle Fire HD Family during a press conference in Santa Monica, CA.

level 5 leadership a combination of strong professional will (determination) and humility that builds enduring greatness

authentic leadership a style in which the leader is true to himself or herself while leading

pseudo- transformational leaders leaders who talk about positive change but allow their self-interest to take precedence over followers’ needs

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238 PART 4 | Leading

complex times, leaders cannot and need not act alone. Business guru John Hersey advises today’s leader to be a “SAGE.” The letters in sage remind leaders to seek out other people, ask good questions that focus on the other person, get involved with other people, and enrich people’s lives. That outward-looking approach helps leaders identify fresh solutions to vexing prob- lems and invites followers to engage fully with the cause. 111

Effective leadership must permeate the organization, not reside in one or two superstars at the top. The leader’s job becomes one of spreading leadership abilities throughout the firm. 112 Make people responsible for their own performance. Create an environment in which each person can figure out what needs to be done and then do it well. Point the way and clear the path so that people can succeed. Give them the credit they deserve. Make heroes out of them. Thus what is now required of leaders is less the efficient management of resources and more the effective unleashing of people and their intellectual capital.

This perspective uncovers a variety of nontraditional lead- ership roles that are emerging as vitally important. 113 The term servant–leader was coined by Robert Greenleaf, a retired AT&T executive. The term is paradoxical in the sense that “leader” and “servant” are usually opposites; the servant– leader’s relationship with employees is more like that of serv- ing customers. For the humble and accepting individual who wants to both lead and serve others, servant–leadership is a way of relating to others to serve their needs and enhance their personal growth while strengthening the organization. 114 A first step is to ask your employees what problems they have or how you can help them. For example, when David Wolfskehl, founder of Action Fast Print, stopped telling his employees what to do and instead asked how he could help them solve their problems, productivity jumped 30 percent. 115

A number of other nontraditional roles provide leadership opportunities. Bridge leaders are those who leave their cul- tures for a significant period of time. 116 They live, go to school, travel, or work in other cultures. Then they return home, become leaders, and through their expanded repertoire they serve as bridges between conflicting value systems within their own cultures or between their culture and other cultures.

With work often being team based, shared leadership occurs when leadership rotates to the person with the key knowledge, skills, and abilities for the issue facing the team at a particular time. 117 Shared leadership is most important when tasks are inter- dependent, are complex, and require creativity. High-performing teams engaged in such work exhibit more shared leadership than poor-performing teams. In consulting teams, the greater the shared leadership, the higher their clients rated the teams’ per- formance. 118 The role of formal leader remains important—the formal leader still designs the team, manages its external bound- aries, provides task direction, emphasizes the importance of the shared leadership approach, and engages in the transactional and transformational activities described here. But at the same time, the metaphor of geese in V-formation adds strength to the group: the lead goose periodically drops to the back, and another goose moves up and takes its place at the forefront.

6 | YOU CAN LEAD Every organization has plenty of leadership opportunities avail- able. Employees, team leaders, and higher-level managers alike can work with others within the organization to get things done.

6.1 | Today’s Organizations Offer Many Opportunities to Lead

A common view of leaders is that they are superheroes act- ing alone, swooping in to save the day. But especially in these

LO6 Identify types of opportunities to be a leader in an organization

Lead a Study Group Study Tip 7 pointed out the benefits of forming a study group. One way to get more out of this experience is for you to take the lead in forming and managing the group, which should help you build servant–leadership and group maintenance leadership skills. The first step might be to recruit three or four students from your class to join the group. Next, ask them when and where they would like to meet. During the first meeting, ask the attendees in which areas of the course they are struggling and what topics they think the group should spend time reviewing. Be sure to make notes of the ideas so you can provide feedback to the members summa- rizing the group’s needs and study objectives. Based on the newly defined direction of the group, ask members what they want to accomplish in the next meeting and then set a date, time, and place to meet.

study tip 10

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CHAPTER 10 | Leadership 239

carry out every procedure— and that the agency fund them. In the end, the mission actually exceeded expecta- tions, including finding evi- dence that salt water had once been present on the planet. 120

Fast forward to today. The most recent phase of the Mars Exploration Program involves having the rover Curiosity explore the Red Planet to investigate whether condi- tions have been favorable for microbial life. After reaching the surface of Mars on August 6, 2012, via a complex land- ing procedure, the 10-foot- long robotic geologist has been working diligently to collect and analyze soil and rock samples. About 8 months into

its mission, Curiosity fulfilled its major objective of find- ing evidence of a past environment well suited to support-

ing microbial life. From its first sample, the rover found “evidence of conditions favorable for life in

Mars’ early history: geological and mineralog- ical evidence for sustained liquid

water, other key elemental ingredients for life, a chemi- cal energy source, and water not too acidic or too salty.” 121

Specifically, fulfilling your vision will require some of the following acts of courage: 123

Lateral leadership does not involve a hierarchical, superior– subordinate relationship but instead invites colleagues at the same level to solve problems together. 119 You alone can’t pro- vide a solution to every problem, but you can create processes through which people work collaboratively. If you can get peo- ple working to improve methods collaboratively, you can help create an endless stream of innovations. In other words, it’s not about you providing solutions to problems; it’s about creating better interpersonal processes for finding solutions. Strategies and tactics can be found throughout this book, including the chapters on decision making, organization structure, teams, communication, and change.

6.2 | Good Leaders Need Courage To be a good leader, you need the courage to create a vision of greatness for your unit; identify and manage allies, adversaries, and fence sitters; and execute your vision, often against oppo- sition. This does not mean you should commit career suicide by alienating too many powerful people; it does mean taking reasonable risks, with the good of the firm at heart, in order to produce constructive change.

For example, Charles Elachi needed courage when he took the position of director of NASA’s Jet Propulsion Laboratories (JPL) at the beginning of the decade, when a series of budget cuts and efforts to cut corners had resulted in two failed attempts to gather data from Mars explora- tion projects. In that envi- ronment, morale was poor, and public support for JPL was weak. But rather than looking for people to blame,

Elachi, a physicist and JPL veteran, got everyone focused on the ambitious next project, the Mars Exploration Program, that successfully landed two robotic geologists (rovers) named Spirit and Opportunity on Mars’ surface in January of 2004. Undaunted by the two previous failures, Elachi clearly but politely communicated to everyone that another failure was out of the question. At the beginning of the project, he had team leaders list every test that would be necessary before the first spacecraft was sent into orbit. Two years later, he pulled out his “Incompressible Test List” and insisted that team members

servant–leader a leader who serves others’ needs while strengthening the organization

“When you connect with a purpose greater than yourself, you are fearless; you think big.”

— Nancy Barry , on leaving her executive position at the World Bank to become president of Women’s World Banking, which makes microloans to impoverished women around the world. 122

lateral leadership style in which colleagues at the same hierarchical level are invited to collaborate and facilitate joint problem solving

shared leadership rotating leadership, in which people rotate through the leadership role based on which person has the most relevant skills at a particular time

bridge leaders leaders who bridge conflicting value systems or different cultures

● At the end of 2012, Curiosity’s two-year mission was extended indefinitely. In June 2014, Curiosity completed a Martian year (687 Earth days) after finding that Mars once had environmental conditions favorable for microbial life.

• Seeing things as they are and facing them head-on, making no excuses and harboring no wishful illusions.

• Saying what needs to be said to those who need to hear it.

• Persisting despite resistance, criticism, abuse, and setbacks.

Courage includes stating the realities, even when they are harsh, and publicly stating what you will do to help and what you want from others. This means laying the cards on the table honestly: here is what I want from you . . . What do you want from me? 124

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240 PART 4 | Leading

Take Charge of Your Career Develop your leadership skills

A s with other things, you must work at actively developing your leadership abil- ities. Great musicians and great athletes don’t become great on natural gifts alone. They also pay their dues by practicing, learning, and sacrificing. Leaders in a variety of fields, when asked how they became the best leader possible, offered the following comments:

• “I’ve observed methods and skills of my bosses that I respected.”

• “By taking risks, trying, and learning from my mistakes.”

• “Lots of practice.”

• “By making mistakes myself and trying a different approach.”

• “By purposely engaging with others to get things done.”

• “By being put in positions of responsibility that other people counted on.”

• “Reading autobiographies of leaders I admire to try to understand how they think.”

How do you go about developing your leadership abilities? You don’t have to wait until you land a management job or even finish your education. First, you can begin establishing credibility by practicing honesty, learning from your mistakes, and becoming competent in your chosen field. Second, you should learn to manage your time well so that you will set a good example for others and help them achieve your group’s goals. Third, look for—and then seize—opportunities to take actions that will help the groups to which you already belong. Fourth, even before you are a supervisor, you can practice listening carefully when you are in a group and sharing what you know so that the whole group will be better informed. Finally, begin building a network of personal contacts by reaching out to others to offer help, not just to request it.

When you are searching for your next job, look for a position with an employer that

is committed to developing leadership talent. Best practices include using self-assessments to identify specific areas for development and combining classroom training with individu- alized coaching. Ideally, leadership develop- ment is connected to opportunities to practice the skills you are learning about, so ask about chances to lead a project or a team, even for short periods of time.

More specifically, here are some develop- mental experiences you should seek:

• Assignments: building something from nothing; fixing or turning around a failing operation; taking on project or task force responsibilities; accepting international assignments.

• People: having exposure to positive role models; increasing visibility to others; work- ing with people of diverse backgrounds.

• Hardships: overcoming ideas that fail and deals that collapse; confronting others’ performance problems; breaking out of a career rut.

• Other events: formal courses; challeng- ing job experiences; supervision of others; experiences outside work.

The most effective developmental experi- ences have three components: assessment, challenge, and support. Assessment includes information that helps you understand where you are now, what your strengths are, your current levels of performance and leadership effectiveness, and your primary development needs. You can think about your previous successes and failures, and your personal goals. You can seek answers from your peers at work, bosses, family, friends, customers, and anyone else who knows you and how you work. The information you collect will help clarify what you need to learn, improve, or change.

The most potent developmental experi- ences provide challenge —they stretch you. We all think and behave in habitual, com- fortable ways. But you’ve probably heard people say how important it can be to get out

of your comfort zone—to tackle situations that require new skills and abilities, that are confusing or ambiguous. Sometimes the chal- lenge comes from lack of experience; other times, it requires changing old habits. It may be uncomfortable, but this is how great man- agers learn. Make sure you think about your experiences along the way and reflect on them afterward, introspectively and in discus- sion with others.

You receive support when others send the message that your efforts to learn and grow are valued. Without support, challeng- ing developmental experiences can be over- whelming. With support, it is easier to handle the struggle, stay on course, open up to learn- ing, and actually learn from experiences. Support can come informally from family members or friends, or more formally through the procedures of the organization and con- versations with mentors or colleagues.

What results from leadership devel- opment? Through such experiences, you can acquire more self-awareness and self-confidence, a broader perspective on the organizational system, creative thinking, the ability to work more effectively in complex social systems, and the ability to learn from experience—not to mention leadership skills.

Sources: Adapted from S. Allen and M. Kusy, “Leaders Building Leaders,” Leadership Excellence 28, 7 (July 2011), pp. 10–11; L. W. Boone and M. S. Peborde, “Developing Leadership Skills in College and Early Career Positions,” Review of Business, Spring 2008; A. Gaines, “Straight to the Top,” American Executive, August 2008; S. J. Allen and N. S. Hartman, “Leadership Development: An Exploration of Sources of Learning,” SAM Advanced Management Journal, Winter 2008, pp. 10–19, 62–63; M. McCall, High Flyers (Boston: Harvard Business School Press, 1998); E. Van Velsor, C. D. McCauley, and R. Moxley, “Our View of Leadership Development,” in Center for Creative Leadership Handbook of Leadership Development, ed. C. D. McCauley, R. Moxley, and E. Van Velsor (San Francisco: Jossey-Bass, 1998), pp. 1–25; and J. Kouzes and B. Posner, The Leadership Challenge, 2nd ed. (San Francisco: Jossey-Bass, 1995).

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CHAPTER 10 | Leadership 241

Study Che klist Did you tear out the perforated student review card at

the back of the text to revisit learning objectives and key terms and definitions?

Connect ® Management is available for M Management. Additional resources include: Interactive Applications: • Drag & Drop: Contemporary Leadership • Self-Assessment: Are You Ready for a Leadership Role? • Sequencing/Timeline: The Paths Leaders Take • Video Case: Leadership at Pike Place

LearnSmart—Multiple choice questions help you determine what you already know, are not sure about, or need to practice based on your score. And with SmartBook, you can read the relevant section in the eBook as well as practice and recharge what you’ve learned.

Chapter Video: Leadership at Japan Airlines

Young Manager Speaks Out: Brian Min, Kitchen Manager

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242 PART 4 | Leading

After studying Chapter 11, you will be able to

LO1 Understand principles for setting goals that motivate employees.

LO2 Give examples of how to reward good performance effectively.

LO3 Describe the key beliefs that affect people’s motivation.

LO4 Explain ways in which people’s individual needs affect their behavior.

LO5 Define ways to create jobs that motivate.

LO6 Summarize how people assess and achieve fairness.

LO7 Identify causes and consequences of a satisfied workforce.

Learning Objectives

11 chapter

Motivating People

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CHAPTER 11 | Motivating People 243

3. Come to work regularly.

4. Perform—that is, work hard to achieve high output (productivity) and high quality.

5. Exhibit good citizenship by being committed and performing above and beyond the call of duty to help the company.

On the first three points, you should reject the common recent notion that loyalty is dead and accept the challenge of creating an environment that will attract and energize people so that they commit to the organization. 4 The importance of citi- zenship behaviors may be less obvious than productivity, but these behaviors help the organization function smoothly. They also make managers’ lives easier.

Many ideas have been proposed to help managers motivate people to engage in these constructive behaviors. The most use- ful of these ideas are described in the following pages. We start with the most fundamental processes that influence the motiva- tion of all people. These processes—described by goal-setting, reinforcement, and expectancy theories—suggest actions for

Understanding why people do the things they do on the job is not an easy task for a manager. Predicting their response to management’s latest productivity program is harder yet. Fortunately, enough is known about motivation to give the

thoughtful manager practical, effective techniques for increas- ing people’s effort and performance.

Motivation refers to forces that energize, direct, and sustain a person’s efforts. All behavior, except involuntary reflexes like eye blinks (which have little to do with management), is moti- vated. A highly motivated person will work hard to achieve performance goals. With adequate ability, understanding of the job, and access to the necessary resources, such a person will be highly productive.

To be effective motivators, managers must know what behav- iors they want to motivate people to exhibit. Although productive people do a seemingly limitless number of things, most of the important activities can be grouped into five general categories: 3

1. Join the organization.

2. Remain in the organization.

his chapter tackles an age-old question: How

can a manager motivate people to work hard and

perform at their best levels? Tony Hsieh, CEO of

online shoe seller Zappos (a subsidiary of Amazon), believes

happy employees are the key to creating happy customers

because they are motivated to deliver excellent customer ser-

vice. Zappos selects employees with a passion for service and

then sets them free to be themselves and use their best judg-

ment, rather than constraining them with scripted responses

and time limits on customer calls. How can Hsieh ensure a sup-

ply of such highly motivated employees? Inspired by the cre-

ative campuses of Google and Facebook, he is in the process

of moving 2,000 employees to the company’s new headquar-

ters in the renovated old town hall building in downtown Las

Vegas. Using $350 million of his own money, Hsieh is pursuing

his dream of converting the depleted area of downtown Las

“The reward of a thing well done is to have done it.”

— Ralph Waldo Emerson

motivation forces that energize, direct, and sustain a person’s efforts Vegas into “a bustling retail

and technology hub spanning

20 square blocks where resi-

dents walk to restaurants, bars, and gyms in a live-work com-

munity.” By catering to employees who want to integrate work

and play, Zappos and the tech hub will undoubtedly attract and

motivate talent for the foreseeable future. 1

A sales manager in one company had another unique

approach to this question. Each month, the person with the

worst sales performance took home a live goat for the week-

end. The manager hoped the goat-of-the-month employee

would be so embarrassed that he or she would work harder the

next month to increase sales. 2 If this sales manager is graded

by results, as he grades his salespeople, he will fail. He may

succeed in motivating a few of his people to increase sales, but

some good people will be motivated to quit the company.

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managers to take. Then we discuss the content of what people want and need from work, how indi-

viduals differ from one another, and how under- standing people’s needs leads to prescriptions for designing motivating jobs and empowering people to perform at the highest possible levels. Finally, we discuss the most important beliefs and perceptions about fairness that people hold toward their work, and the implications for motivation.

1 | SETTING GOALS Providing work-related goals is an extremely effective way to stimulate motivation. In fact, it is perhaps the most important, valid, and useful approach to motivating performance.

Goal-setting theory states that people have conscious goals that energize them and direct their thoughts and behaviors toward a partic- ular end. 6 Keeping in mind the principle that goals matter, managers set goals for employ- ees or collaborate with them on goal setting. For example, a satellite TV company might set goals for increasing the number of new subscribers, the number of current subscribers who pay for premium channels, or the time- liness of responses to customer inquiries. 7

Goal setting works for any job in which people have control over their performance. 8 You can set goals for performance quality and quan- tity, plus behavioral goals like cooperation or teamwork. 9 In fact, you can set goals for what- ever is important. 10

1.1 | Well-Crafted Goals are Highly Motivating

As illustrated in Exhibit 11.1 , motivational goals share four characteristics. The most powerful goals are meaningful; noble purposes that appeal to people’s “higher” values add

extra motivating power. 11 TOMS pursues profit, but the com- pany also donates one pair of shoes or glasses to the underpriv- ileged for each pair that is purchased at regular prices. Madcap

goal-setting theory a motivation theory stating that people have conscious goals that energize them and direct their thoughts and behaviors toward a particular end

Exhibit 11.1 Motivational goals possess four characteristics

Meaningful Acceptable

Challenging but

attainable

Specific and quantifiable

LO1 Understand principles for setting goals that motivate employees

LISTEN & LEARN ONLINE

YOUNG MANAGERS

Speak Out! “You want to be able to affect their (employees) atti- tude towards their job in a positive way . . . You want to encourage them to do good work . . . It helps to make sure that they care about the specific things they are dealing with in their daily job.”

—HerbSteward, Dock Foreman/Supervisor

Approximately two- thirds of workers under the age of 25 are dissatisfied with their current jobs, and 44 percent are seriously considering leaving their organizations. Some of the reasons for their wanting to leave include boring work, flat pay, and escalating cost of health benefits. 5

Did You Know?

244

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CHAPTER 11 | Motivating People 245

history by being the first pri- vate vehicle to deliver a cargo payload to the International Space Station and return safely to Earth. Since then, the Dragon has resupplied the space station numerous times for NASA. SpaceX has another goal as it continues to revolutionize space technology: “to enable people to live on other planets.” 16

Ideal goals do not merely exhort employees in general terms to improve performance and start doing their best. Instead goals should be specific and quantifiable, more like GM’s goal of sell-

ing 5 million four-door com- pact sedans in the fast-growing Chinese automotive market by 2016. The sedan, the Baojun 630, is a product of the SAIC- GM-Wuling joint venture. 17 Bringing these principles together, Microsoft uses the acronym SMART to create motivating goals: specific, measurable, achievable, results based, and time specific. 18

1.2 | Stretch Goals Help Employees Reach New Heights

Some firms today set stretch goals —targets that are excep- tionally demanding and novel, and that some people would never even think of. 19 There are two types of stretch goals: 20

1. Vertical stretch goals are aligned with current activities, including productivity and finan- cial results.

2. Horizontal stretch goals involve people’s professional develop- ment, such as attempting and learning new, difficult things.

Coffee works side-by-side with farmers in Colombia and El Salvador to grow and process high-quality coffee beans; higher quality beans means higher pay for the farmers. 12 Huntsman Chemical has goals of paying off corporate debt but also reliev- ing human suffering—it sponsors cancer research and treat- ment through its Cancer Institute and hospitals. Meaningful goals also may be based on data about competitors; exceeding competitors’ performance can stoke people’s competitive spirit and desire to succeed in the marketplace. 13 This point is not just about the values companies espouse and the lofty goals they pursue; it’s also about leadership at a more personal level. Compared with followers of transactional leaders, follow- ers of transformational lead- ers (recall Chapter 10) view their work as more important and as highly congruent with their personal goals. 14

Goals also should be acceptable to employees. This means, among other things, that they should not conflict with people’s personal values and that people should have reasons to pursue the goals. Allowing people to partic- ipate in setting their work goals—as opposed to having the boss set goals for them— tends to generate goals that people accept and pursue willingly.

Acceptable, maximally mo- tivating goals are challeng- ing but attainable. In other words, they should be high enough to inspire better per- formance but not so high that people can never reach them. United Way has raised bil- lions of dollars for thousands of nonprofits in local commu- nities throughout the United States. 15 Each year leaders, staff, and volunteers from each local United Way carefully decide their fund-raising goal. If they make the goal too low, then there may be less funding available for good causes. A goal that is too challenging may overwhelm or turn off potential donors. Setting the right goal is important.

Founded in 2002, SpaceX designs, manufactures, and launches rockets and spacecraft. Guided by Elon Musk, the com- pany’s CEO, one of the company’s key goals is to develop reus- able and reliable rockets in order to make space exploration less costly. In 2012, one of SpaceX’s spacecraft—Dragon—made

stretch goals targets that are particularly demanding, sometimes even thought to be impossible

Impossible though stretch goals may seem to some, they often are in fact attainable.

Stretch goals can shift people away from mediocrity and toward major achievement. But if someone tries in good faith yet doesn’t meet a stretch goal, don’t punish—remember how difficult these goals are! Base your assessment on how much performance has improved, how the performance compares with that of others, and how much progress has been made. 21

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246 PART 4 | Leading

I n 1979, Samuel and Louise Kaymen founded The Rural Education Center (TREC) at Stonyfield Farm in Wilton, New Hampshire. Relying on philanthropy for a significant part of its financial support, the nonprofit center taught rural and homesteading skills to hun- dreds of students. Meanwhile, Samuel, a diabetic, experimented with milk from the cows on the farm to produce wholesome, creamy, and delicious yogurt that didn’t require added sugar. In 1982, as funds for TREC began to dry up, Samuel recruited Gary Hirshberg to join the board of directors to help implement a business strategy for TREC. Gary was an entrepreneur with expe- rience in developing alternative technolo- gies, including solar greenhouses, organic gardening, and a water-pumping windmill.

In order to earn revenue for the educa- tion center, Kaymen and Hirshberg decided to expand the dairy herd in order to pro- duce and sell more yogurt. As demand for the organic yogurt exploded, the company began buying milk from local dairy farmers. In 1984, Hirshberg became Stonyfield’s president and “CE-Yo” and four years later, Stonyfield built a modern plant in Londonderry, New Hampshire, where it continues to produce a variety of organic yogurts and smoothies. After ini- tially investing in Stonyfield in 2001, French food company Groupe Danone now owns the company. Early in 2012, Hirshberg became chairman and passed his presi- dent and CE-Yo roles to Walt Freese, the former global CEO of Ben & Jerry’s.

Stonyfield’s mission is very motiva- tional: “We’re committed to healthy food, healthy people, a healthy planet and healthy business.” An early pioneer of socially and environmentally responsible

business, Stonyfield believes that “dedica- tion to health and sustainability enhances shareholder value.” Also, Stonyfield’s mis- sion has inspired the company to estab- lish a “Profits for the Planet” program, which commits $2 million to organizations dedicated to restoring and protecting the environment. Stonyfield’s plant engineers have reduced the energy used to make yogurt, and recycle as much waste as pos- sible, keeping tens of millions of pounds of waste from being added to landfills. Stonyfield continues to support hundreds of organic farmers, and keeps over 200,000 agricultural acres free of persistent pesti- cides and other chemicals commonly used on nonorganic farms.

Given its mission, it comes as no surprise that Stonyfield Farm expects its employees to contribute to the company’s environ- mental efforts. The company supports its employees with “education, training, and opportunities to merge the environmental knowledge they’ve gained at work with the decisions they make and actions they take in their personal lives.” Some examples of training include general environmental,

climate change, and organic farming ori- entations for new hires. And, ongoing environmental education is provided for all employees through regular “munch and learns” (informational presentations delivered over lunch hours) and bi-weekly “green tips” (an internal e-mail newsletter).

For the past 30 years, Stonyfield’s founders, managers, and employees have been inspired by their entrepreneurial spirit and the mission of the company to do well by doing good.

Stonyfield Farm Motivates through Its Mission

Cofounder and Chairman of Stonyfield Farm, Gary Hirshberg, believes in socially and environmentally responsible business.

DISCUSSION QUESTIONS • What factors motivated Kaymen and

Hirshberg to switch their focus from operating The Rural Education Center (TREC) to becoming full-time manufac- turers of organic yogurt?

• Stonyfield’s mission inspires and moti- vates the company’s leaders, employ- ees, and suppliers to behave in ways that support its socially and environmentally

friendly business practices. What are some of the challenges the firm may face over the next several years with regard to maintaining this “green” business strategy?

SOURCES: Company website, http://www.stonyfield .com ; and K. McCormack, “Stonyfield CEO Resigns to Focus on Food Policy,” Bloomberg Businessweek, January 12, 2012, www.businessweek.com .

1.3 | Goal Setting Must Be Paired with Other Management Tools

Goal setting is an extraordinarily powerful management tech- nique. But even specific, challenging, attainable goals work bet- ter under some conditions than others. For example, if people lack relevant ability and knowledge, managers might get better

results from simply urging them to do their best or setting a goal to learn rather than a goal to achieve a specific performance level. 22 Individual performance goals can be dysfunctional if people work in a group and cooperation among team members is essential to team performance. 23 Individualized goals can create competition and reduce cooperation. If cooperation is important, performance goals should be established for the team.

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it is particularly true when peo- ple fall just short of reaching their goals. 26

Another familiar example comes from the pages of finan- cial reports. Some executives have mastered the art of “earnings management”—precisely meeting Wall Street analysts’ earnings estimates or beating them by a single penny. 27 The media trumpet, and investors reward, the company that meets or beats the estimates. People sometimes meet this goal by either manipulating the numbers or initiating whispering campaigns to persuade analysts to lower their estimates, making them more attainable. The marketplace wants short-term, quarterly performance, but long-term viabil- ity is ultimately more important to a company’s success.

It is important not to establish a single productivity goal if there are other important dimensions of performance. 28 For instance, if the acquisition of knowledge and skills is important, you can also set a specific and challenging learning goal like “identify 10 ways to develop relationships with users of our products.” Productivity goals will likely enhance productiv- ity, but they may also cause employees to neglect other areas, such as learning, tackling new projects, or developing creative solutions to job-related problems. A manager who wants to motivate creativity can establish creativity goals along with productivity goals for individuals or for brainstorming teams. 29

1.4 | Set Your Own Goals, Too Goal setting works for yourself as well—it’s a powerful tool for self-management. Set goals for yourself; don’t just try hard or hope for the best. Create a statement of purpose for yourself comprising an inspiring distant vision, a mid-distant goal along the way, and near-term objectives to start working on imme- diately. 30 So if you are going into business, you might articu- late your goal for the type of businessperson you want to be in five years, the types of jobs that could create the opportunities and teach you what you need to know to become that business- person, and the specific schoolwork and job search activities that can get you moving in those directions. And on the job, apply this chapter’s goal-setting advice to yourself.

2 | REINFORCING PERFORMANCE

Goals are universal motivators. So are the processes of rein- forcement described in this section. In 1911 psychologist Edward Thorndike formulated the law of effect : behavior that is followed by positive consequences probably will be repeated. 31 This powerful law of behavior laid the founda- tion for countless investigations into the effects of the positive

Goals can generate manipulative game playing and uneth- ical behavior. People sometimes find ingenious ways to set easy goals and convince their bosses that they are difficult. 24 Or they may find ways to meet goals simply to receive a reward, without necessarily contributing to the company’s success. For example, one measure of an instructor’s success is high ratings from participants when they fill out questionnaires after a train- ing program. To meet the goal of achieving a high score, some instructors hand out treats or prizes or end sessions early— practices that are unlikely to add to what trainees actually learn. Even more perversely, when Rockford Acromatic Products Company promoted employee health by offering bonuses to employees who quit smoking for several months, several work- ers first started smoking so they could quit and earn the bonus. 25 In addition, people who don’t meet their goals are more likely to engage in unethical behavior than are people who are trying to do their best but have no specific performance goals. This is true regardless of whether they have financial incentives, and

LO2 Give examples of how to reward good performance effectively

Set mini-goals to study more efficiently During this course, try setting mini-goals on a weekly basis to help you stay motivated and get your work done on time. Over the weekend, review the course syllabus and make a “to do” list of what needs to get done during the upcoming week. Update your planner with any important due dates. Next, each time you sit down for a study session, take a few goals from your list that you think you can complete, like finishing a homework assignment, reading a chapter, com- pleting an online Connect assignment, and so forth. As you complete each task, place a checkmark next to it or cross it off the list. Setting specific, challenging, but attainable study goals (and keeping track of your progress) will help you stay motivated and perform better.

study tip 11

law of effect a law formulated by Edward Thorndike in 1911 stating that behavior that is followed by positive consequences will likely be repeated

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248 PART 4 | Leading

3. Punishment —administering an aversive consequence. Examples include criticizing or shouting at an employee, assign- ing an unappealing task, and sending a worker home without pay. Negative reinforcement can involve the threat of punishment by not delivering punishment when employees perform satisfactorily. Punishment is the actual delivery of the aversive consequence. Managers use punishment when they think it is warranted or when they believe others expect them to, and they usually concern them- selves with following company policy and procedure. 35

4. Extinction —withdrawing or failing to provide a reinforcing con- sequence. When this occurs, motivation is reduced, and the behav- ior is extinguished, or eliminated. Managers may unintentionally extinguish desired behaviors by not giving a compliment for a job well done, forgetting to say thanks for a favor, setting impossible performance goals so that the person never experiences success, and so on. Extinction may be used to end undesirable behaviors, too. The manager might ignore long-winded observations during a meeting or fail to acknowledge unimportant e-mail in the hope that the lack of feedback will discourage the employee from continuing.

The first two consequences, positive and negative reinforce- ment, are positive for the person receiving them—the person either gains something or avoids something negative. As a result, the person who experiences these consequences will be moti- vated to behave in the ways that led to the reinforcement. The last two consequences, punishment and extinction, are negative outcomes for the person receiving them: motivation to repeat the behavior that led to the undesirable results will be reduced.

consequences, called reinforcers , that motivate behavior. Organizational behavior modification attempts to influence people’s behavior and improve performance 32 by systemati- cally managing work conditions and the consequences of peo- ple’s actions.

2.1 | Behavior Has Consequences Four key consequences of behavior either encourage or dis- courage people’s behavior (see Exhibit 11.2 ):

1. Positive reinforcement —applying a consequence that increases the likelihood that the person will repeat the behavior that led to it. Examples of positive reinforcers include compliments, letters of commendation, favorable performance evaluations, and pay raises. Jim Goodnight, CEO of business analytics software company SAS, encourages employee retention by providing a great workplace culture with generous benefits, including a free on-site healthcare center (with doctors), a free 66,000-square-foot recreation and fitness center, subsidized Montessori childcare, a beauty salon, and an on-site pharmacy. 33

2. Negative reinforcement —removing or withholding an undesir- able consequence. For example, each team at Whole Foods votes to decide whether a new hire who has completed a 30- to 90-day probationary period can remain on the team. New hires require a two-thirds positive vote from team members. 34 For those new hires who earn their teammates’ approval, the negative reinforcer (i.e., probationary status) is removed.

Exhibit 11.2 The consequences of making a sales presentation

A coworker makes a

sales presentation

It’s an effective presentation

It’s a poor presentation

Negative reinforcement Manager doesn’t

criticize it

Positive reinforcement Manager says

“good job”

Extinction Manager offers no

praise

Punishment Manager gives

reprimand

reinforcers positive consequences that motivate behavior

organizational behavior modification (OB MOD) the application of reinforcement theory in organizational settings

positive reinforcement applying a consequence that increases the likelihood of a person repeating the behavior that led to it

negative reinforcement removing or withholding an undesirable consequence

punishment administering an aversive consequence

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discourage. Michael LeBoeuf, a writer of popular business books, said the greatest management principle is “The things that get rewarded get done.” LeBoeuf advises rewarding the kinds of activities illustrated in Exhibit 11.3 . 40

Also, the reward system has to support the firm’s strategy, defining people’s performance in ways that pursue strate- gic objectives. 41 Organizations should reward employees for developing themselves in strategically important ways—for building new skills that are critical to strengthening core capa- bilities and creating value.

Managers should use reinforcers creatively. California-based staffing agency Akraya Inc. helps its hardworking employees relax on the weekends by sending a cleaning service to employ- ees’ homes twice a month. 42 For Greg Dalmotte, vice president

at Bank Atlantic, the challenge is to increase employees’ engage- ment by “creating an environment where people like coming to work.” 43 He oversees a program that encourages managers and associates to pass out “WOW! Bucks” to colleagues who have done something outstanding at work. The bucks can be used to buy DVD players, Coach handbags, and other items. Dalmotte says, “Words of encouragement have created associates who perform at a higher level.” 44

Innovative managers use nonmonetary rewards, includ- ing intellectual challenge, greater responsibility, autonomy, recognition, flexible benefits, and greater influence over decisions. Top-level managers at U.S. Bancorp invite young employees to form the “Dynamic Dozen.” When they’re not doing their regular jobs, these Gen Y employees help the bank figure out how to appeal to similarly aged customers, potential recruits, and other young employees in the bank. The “dozen” are rewarded by gaining exposure to senior man- agers and learning more about the bank’s business. 45 These and other rewards for high-performing employees, when cre- atively devised and applied, can continue to motivate when pay and promotions are scarce. Managers at Cleveland Clinic are taking another approach to motivating many of its 29,000 employees. Employees who enroll in the company’s Healthy Choice wellness program and engage in weight management, yoga classes, and so forth, pay less for insurance premiums than their less healthy coworkers. 46

2.3 | Should You Punish Mistakes? How a manager reacts to people’s mistakes has a big impact on motivation. Punishment is sometimes appropriate, as when

Managers should be careful to match consequences to what employees will actually find desirable or undesirable. At Staker & Parson, a supervisor once made the mistake of “pun- ishing” an employee for tardiness by suspending him for three days during fishing season. The employee was delighted. 36

2.2 | Be Careful What You Reinforce You’ve learned about the positive effects of a transformational leadership style, but giving rewards to high-performing people is also essential. 37 Unfortunately, sometimes organizations and managers reinforce the wrong behaviors. 38 For example, compen- sation plans that include stock options are intended to reinforce behaviors that add to the company’s value, but stock options also can reinforce decisions that artificially deliver short-term gains in stock prices, even if they hurt the company in the long run.

At some companies, employees are reinforced with admira- tion and positive performance evaluations for multitasking— say, typing e-mail while on the phone or checking text messages during meetings. This behavior may look efficient and send a signal that the employee is busy and valuable, but a growing body of research says multitasking actually slows the brain’s efficiency and can contribute to mistakes. 39 Scans of brain activity show that the brain is not able to concentrate on two tasks at once; it needs time to switch among the multitasker’s activities. So managers who praise the hard work of multitask- ers may be unintentionally reinforcing inefficiency and failure to think deeply about problems.

To use reinforcement effectively, managers must iden- tify which kinds of behaviors they reinforce and which they

“I am not a product of my circumstances. I am a product of my decisions.”

— Stephen Covey

Solid solutions instead of quick fixes.

Risk taking instead of risk avoiding.

Applied creativity instead of mindless conformity.

Decisive action instead of paralysis by analysis.

Smart work instead of busywork.

Simplification instead of needless complication.

Quietly effective behavior instead of squeaky wheels.

Quality work instead of fast work.

Loyalty instead of turnover.

Working together instead of working against.

Exhibit 11.3 Activities that should be rewarded

extinction withdrawing or failing to provide a reinforcing consequence

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250 PART 4 | Leading

performance, pay full attention when employ- ees ask for feedback or want to discuss perfor- mance issues, and give feedback according to the guidelines you read about in Chapter 8.

Feedback can be offered in many ways. 50 Customers sometimes give feedback directly; you also can request customer feedback and give it to the employee. You can provide statistics on work that the person has directly influenced. A manufacturing firm can put the phone number or website of the production team on the product so that customers can contact the team directly. Performance reviews should be conducted reg- ularly. And bosses should give regular, ongoing feedback—it helps correct problems immedi- ately, provides immediate reinforcement for good work, and prevents surprises when the for- mal review comes.

For yourself, try not to be afraid of receiving feedback; instead, you should actively seek it. Paralleling the firm’s online “status update” concept, employees at Facebook are encouraged to request and provide brief feedback to colleagues on a regular basis. According to Lori Goler, vice president of human resources, it should be a 45-second conversation where employees ask, “How did that go?” and “What could be done better?” 51 When you get feedback, don’t ignore it. Try to avoid negative emotions like anger, hurt, defensiveness, or resigna- tion. Think It’s up to me to get the feedback I need; I need to know these things about my performance and behavior; learn- ing about myself will help me identify needs and create new opportunities; it serves my interest best to know rather than not know; taking initiative on this gives me more power and influ- ence over my career. 52

3 | PERFORMANCE- RELATED BELIEFS

In contrast to reinforcement theory, which describes the pro- cesses by which factors in the work environment affect peo- ple’s behavior, expectancy theory considers some of the cognitive processes that go on in people’s heads. According to expectancy theory , the person’s work efforts lead to some level of performance. 53 Then performance results in one or more outcomes for the person. This process is shown in Exhibit 11.4 . People develop two important kinds of beliefs linking these three events:

1. Expectancy, which links effort to performance.

2. Instrumentality, which links performance to outcomes.

people violate the law, ethical standards, important safety rules, or standards of interpersonal treatment, or when they fail to attend or perform like a slacker. But sometimes managers pun- ish people when they shouldn’t—when poor performance isn’t the person’s fault or when managers take out their frustrations on the wrong people.

Managers who overuse punishment or use it inappropriately create a climate of fear in the workplace. 47 Fear causes peo- ple to focus on the short term, sometimes creating problems in the longer run. Fear also creates a focus on oneself, rather than on the group and the organization. B. Joseph White, pres- ident emeritus of the University of Illinois, recalls consulting for a high-tech entrepreneur who heard a manager present a proposal and responded with brutal criticism: “That’s the . . . stupidest idea I ever heard in my life. I’m disappointed in you.” According to White, this talented manager was so upset she never again felt fully able to contribute. 48

For managers to avoid such damage, the key is how to think about and handle mistakes. Recognize that everyone makes mistakes and that mistakes can be dealt with constructively by discussing and learning from them. Don’t punish, but praise people who deliver bad news to their bosses. Treat failure to act as a failure but don’t punish unsuccessful, good-faith efforts. If you’re a leader, talk about your failures with your people, and show how you learned from them. Give people second chances, and maybe third chances. Encourage people to try new things, and don’t punish them if what they try doesn’t work out.

2.4 | Feedback Is Essential Reinforcement

Most managers don’t provide enough useful feedback, and most people don’t receive or ask for feedback enough. 49 As a manager, you should consider all potential causes of poor

● Mark Zuckerberg, CEO and cofounder of Facebook, encourages employees to request feedback about their performance and behavior from fellow employees on a regular basis. Facebook employees are expected to take the time to provide this feedback to their colleagues.

LO3 Describe the key beliefs that affect people’s motivation

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(1) a competitive victory, (2) the free trip to Hawaii, (3) feelings of achievement, (4) recognition from the boss, (5) prestige throughout the company, and (6) resentment from other salespeople.

But how certain is it that perfor- mance will result in all of those out- comes? Will winning the contest really generate resentment? Will it really lead to increased prestige?

These questions address the second key belief described by expectancy the- ory: instrumentality. 54 Instrumentality is the perceived likelihood that perfor- mance will be followed by a particular

outcome. Like expectancies, instrumentalities can be high (up to 100 percent) or low (approaching 0 percent). For example, you can be fully confident that if you get favorable customer reviews, you’ll get a promotion, or you can feel that no matter what your customers say, the promotion will go to someone else.

Also, each outcome has an associated valence. Valence is the value the person places on the outcome. Valences can be positive, as a Hawaiian vacation would be for most people, or negative, as in the case of the other salespeople’s resentment.

3.3 | All Three Beliefs Must Be High For motivation to be high, expectancy, instrumentalities, and total valence of all outcomes must all be high. A person will not be highly motivated if any of the following conditions exist:

• He believes he can’t perform well enough to achieve the pos- itive outcomes that he knows the company provides to good performers (high valence and high instrumentality but low expectancy).

• He knows he can do the job and is fairly certain what the ultimate outcomes will be (say, a promotion and a transfer). However, he doesn’t want those outcomes or believes other, negative outcomes outweigh the positive (high expectancy and high instrumentality but low valence).

• He knows he can do the job and wants several important outcomes (a favorable performance review, a raise, and a promotion). But he believes that no matter how well he performs, the outcomes will not be forthcoming (high expectancy and positive valences but low instrumentality).

3.1 | If You Try Hard, Will You Succeed?

The first belief, expectancy , is people’s perceived likelihood that their efforts will enable them to attain their performance goals. An expectancy can be high (up to 100 percent), such as when a student is confident that if she studies hard, she can get a good grade on the final exam. An expectancy can also be low (down to a 0 percent likelihood), such as when a suitor is con- vinced that his dream date will never go out with him.

All else equal, high expectancies create higher motivation than do low expectancies. In the preceding examples, the stu- dent is more likely to study for the exam than the suitor is to pursue the dream date, even though both want their respective outcomes.

Expectancies can vary among individuals, even in the same situation. For example, a sales manager might initiate a compe- tition in which the top salesperson wins a free trip to Hawaii. In such cases, the few top people, who have performed well in the past, will be more motivated by the contest than will the his- torically average and below-average performers. The top peo- ple will have higher expectancies—stronger beliefs that their efforts can help them turn in the top performance.

3.2 | If You Succeed, Will You Be Rewarded?

The example about the sales contest illustrates how perfor- mance results in some kind of outcome , or consequence, for the person. Actually, it often results in several outcomes. For example, turning in the best sales performance could lead to

Effort Performance Outcome valence

Expectancy How confident am I

that my effort will lead to good performance?

Instrumentality Will my good performance be rewarded with desired

outcomes?

Exhibit 11.4 Basic concepts of expectancy theory

expectancy theory a theory proposing that people will behave based on their perceived likelihood that their effort will lead to a certain outcome and on how highly they value that outcome

expectancy employees’ perception of the likelihood that their efforts will enable them to attain their performance goals

outcome a consequence a person receives for his or her performance

instrumentality the perceived likelihood that performance will be followed by a particular outcome

valence the value an outcome holds for the person contemplating it

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252 PART 4 | Leading

4 | UNDERSTANDING PEOPLE’S NEEDS

So far we have focused on processes underlying motivation. The manager who appropriately applies goal-setting, rein- forcement, and expectancy theories is creating essential moti- vating elements in the work environment. But motivation also is affected by characteristics of the person. The second type of motivation theory, content theories, indicates the kinds of needs that people want to satisfy. People have different needs energizing and motivating them toward different goals and reinforcers. The extent to which and the ways in which a per- son’s needs are met or not met at work affect his or her behav- ior on the job.

3.4 | Expectancy Theory Identifies Leverage Points

Expectancy theory helps the manager zero in on key lever- age points for influencing motivation. Three implications are crucial:

1. Increase expectancies. Provide a work environment that facilitates good performance, and set realistically attainable performance goals. Provide training, support, required resources, and encour- agement so that people are confident they can perform at the expected levels. Recall that charismatic leaders excel at boosting their followers’ confidence.

2. Identify positively valent outcomes. Understand what people want to get out of work. Think about what their jobs do and do not (but could) provide them. Consider how people may differ in the valences they assign to outcomes. Know the need theories of motivation, described in the next section, and their implications for identifying important outcomes.

3. Make performance instrumental toward positive outcomes. Make sure that good performance is followed by personal recognition and praise, favorable performance reviews, pay increases, and other positive results. Also, ensure that working hard and perform- ing well will have as few negative results as possible. The way you emphasize instrumentality may need to be tailored to employees’ locus of control. For people who have an external locus of control, tending to attribute results to luck or fate, you may need to rein- force behaviors (more than outcomes) frequently so that they see a connection between what they do and what you reward. It is useful to realize, too, that bosses usually provide (or withhold) rewards, but others do so as well. 55 Peers, direct reports, customers, and others can offer compliments, help, and praise. Organizations may set up formal reward systems as well. Umpqua Bank in Roseburg, Oregon, set up a link called “Brag Box” on its intranet, where employees can post comments about good deeds by their cowork- ers. Umpqua’s vice president for rewards and recognition regularly checks the Brag Box and notifies managers when their employees have received a compliment, so the managers can further reinforce compliments with praise. 56

Many companies, in an effort to manage rising health care costs, are using monetary incentives to motivate their employees to live healthier lives. Research suggests that, at least in the short run, incentives can motivate employees to take their medication, com- plete a health assessment, and participate in weight loss, smoking cessation, or cholesterol reduction programs. More companies are offering incentives. A survey found that in 2012, four out of five companies planned to offer financial rewards to employees who participated in their wellness or health management programs. David Hunnicutt, CEO of the Wellness Council of America, explains why incentives are effective: “Wellness incentives can sig- nificantly increase participation and improve the likelihood that employees will embrace, and ultimately adopt, healthier behav- iors.” This can be a win–win for employees, who become health- ier, and their employers, who can use the savings in health-related costs to invest in their businesses. 57

● Employees are increasingly participating in yoga classes and other wellness activities. In order to manage rising health care costs, companies are offering financial incentives to employees who live healthier lifestyles.

LO4 Explain ways in which people’s individual needs affect their behavior

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CHAPTER 11 | Motivating People 253

felt fear, denial, and anger— especially women, people with children, and those close to the events. 59 To deal with such safety issues, managers can show what the firm will do to improve security and manage employee risk, including crisis management plans.

Once a need is satisfied, it is no longer a powerful motivator. For example, labor unions negotiate for higher wages, benefits, safety standards, and job security. These bargaining issues relate directly to the satisfaction of Maslow’s lower-level needs. Only after these needs are reasonably satisfied do the higher-level needs—social, ego, and self-actualization—become dominant concerns.

Maslow’s hierarchy is a simplistic and not altogether accurate theory of human motivation. 60 For example, not everyone pro- gresses through the five needs in hierarchical order. But Maslow made three important contributions. First, he identified important need categories, which can help managers create effective posi- tive reinforcers. Second, it is helpful to think of two general lev- els of needs, in which lower-level needs must be satisfied before higher-level needs become important. Third, Maslow alerted man- agers to the importance of personal growth and self-actualization.

Self-actualization is the best-known concept arising from this theory. According to Maslow, the average person is only 10 percent self-actualized. In other words, most of us are living and working with a large untapped reservoir of potential. The implication is clear: managers should help create a work envi- ronment that provides training, resources, autonomy, responsi- bilities, and challenging assignments. This type of environment gives people a chance to use their skills and abilities creatively and allows them to achieve more of their full potential.

So treat people not merely as a cost to be controlled but as an asset to be developed. Many companies have embarked on programs that offer their people personal growth experiences. An employee at Federal Express said, “The best I can be is what I can be here. Federal Express . . . gave me the confidence

The most important theories describing the content of peo- ple’s needs are Maslow’s need hierarchy, Alderfer’s ERG the- ory, and McClelland’s needs.

4.1 | Maslow Arranged Needs in a Hierarchy

Abraham Maslow organized five major types of human needs into a hierarchy, as shown in Exhibit 11.5 . 58 The need hierarchy illustrates Maslow’s conception of people satisfying their needs in a specified order, from bottom to top. The needs, in ascending order, are as follows:

1. Physiological —food, water, sex, and shelter.

2. Safety or security —protection against threat and deprivation.

3. Social —friendship, affection, belonging, and love.

4. Ego —independence, achievement, freedom, status, recognition, and self-esteem.

5. Self-actualization —realizing one’s full potential; becoming every- thing one is capable of being.

According to Maslow, people are motivated to satisfy the lower needs before they try to satisfy the higher needs. In today’s workplace, physiological and safety needs generally are well satisfied, making social, ego, and self-actualization needs pre- eminent. But safety issues are still very important in manufac- turing, mining, and other work environments. And for months after the terrorist attacks of September 2001, employees still

Maslow’s need hierarchy a human needs theory postulating that people are motivated to satisfy unmet needs in a specific order

● A FedEx worker unloads packages from his delivery truck in San Francisco, CA.

Exhibit 11.5 A conception of human needs organizing needs into a hierarchy of five major types.

Self- actualization

Ego

Social

Safety

Physiological

Source: J. Richard Hackman, et al., “A New Strategy for Job Enrichment,” California Management Review, vol. 17, no. 4, Summer 1975. © 1975 by the Regents of the University of California. Republished by permission of the University of California Press.

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254 PART 4 | Leading

needs can be operating at once. So while Maslow would say that self-actualization is important to people only after other sets of needs are satisfied, Alderfer maintains that people—par- ticularly working people in our postindustrial society—can be motivated to satisfy existence, relatedness, and growth needs at the same time.

Companies can use this knowledge as they design compensation or benefits programs. Kahler Slater Architects, a 150-employee architecture and design firm, faced economic pressures, causing a rollback of employee benefits, including health care coverage. But to tailor the cutbacks to its staff, company principals found out

from employees exactly which benefits meant the most to them. Then the managers came up with a package that worked for all.

Employees reported that one of their most val- ued benefits was paid time off, but they gave up less important perks like free pastries in the com- pany office. They also contributed more to their health care coverage. To boost morale and help build camaraderie, the owners reduced their own salaries by 25 percent, and began hosting after- work social gatherings. It also offered employees more options for working from home to help them manage their schedules and conflicts. Trusting their employees to get their jobs done from home or work has helped Kahler Slater earn a spot on Great Places to Work’s list of Best Small Workplaces for 10 consecutive years. 65

Consider which theory best explains the motives identified by Diane Schumaker-Krieg to describe her successful career in the financial services industry. Schumaker-Krieg says she was “driven . . . by fear” in October 1987, when she was working for investment firm Dillon Read at the time of the stock market crash. Layoffs were spreading throughout the indus- try, jobs were scarce, and she was supporting her son following a divorce. Out of determina- tion to take care of her son, Schumaker-Krieg reacted to being laid off by writing a business plan to adapt research for sale to small cus- tomers. She persuaded Dillon Read to fund the

idea for a year, began building the business, moved it to Credit Suisse, and within years was earning $150 million in profits for her employer. During that time she remarried and earned enough to retire, but she continues working, now as global head of research and economics of Wells Fargo Securities. She sees her current motivation as enjoyment of her accomplishments, her business relationships, and opportunities to continue inno- vating. 67 Certainly, lower-level needs dominated the early years of Schumaker-Krieg’s career, but did the basis for her motiva- tion move one step at a time through all the levels of Maslow’s hierarchy?

and self-esteem to become the person I had the potential to become.” 61

Individual managers also can promote employee growth. Senior faculty and leaders at

M.D. Anderson Cancer Center believe that employee growth is best supported through a formal mentoring program. The pro- gram matches mentors to junior faculty from the Department of Cancer Biology until they are promoted to associate professor. After a settling-in period, the junior faculty member chooses a senior faculty member to chair and two additional faculty mem- bers to serve on the mentoring committee. The committee provides the junior faculty member with guidance and advice regarding academic challenges and research ideas. 62

Organizations gain by fully using their human resources. Employees gain by capitalizing on opportunities to meet their higher-order needs on the job. At Campbell Soup Company, managers are rewarded for developing their employees, and Lisa Walker, business director of Campbell USA’s wellness team, rises to the challenge. She helped one employee learn to collaborate better so that he would be seen as a team player with promotion potential. Walker’s employee appreciated that her coaching gave him an opportunity for greater achievement, status, and self-esteem. 63

4.2 | Alderfer Identified Three Work-Related Needs

A theory of human needs that is more advanced than Maslow’s is Alderfer’s ERG theory. 64 Maslow’s theory has general applicability, but Alderfer aims expressly at understanding peo- ple’s needs at work. ERG theory postulates three sets of needs can operate simultaneously:

1. Existence needs are all material and physiologi- cal desires.

2. Relatedness needs involve relationships with other people and are satisfied through the process of mutually sharing thoughts and feelings.

3. Growth needs motivate people to productively or creatively change themselves or their environment. Satisfaction of the growth needs comes from fully utilizing personal capacities and developing new capacities.

What similarities do you see between Alderfer’s and Maslow’s needs? Roughly speaking, existence needs subsume physiological and security needs, relatedness needs are similar to social and esteem needs, and growth needs correspond to self-actualization. ERG theory proposes that several different

Alderfer’s ERG theory a human needs theory postulating that people have three basic sets of needs that can operate simultaneously

Yarde Metals, a $500 million company with 700 employees spread across multiple manufacturing locations, encourages employees to use its napping rooms when they feel tired. The company’s founder, Craig Yarde, believes: “Without a question, [naps] improve productivity.” Evidence suggests that short power naps can help employees improve their focus and morale, while also reducing absences and health care costs. 66

Did You Know?

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4.4 | Do Need Theories Apply Internationally?

How do the need theories apply abroad? 72 Although manag- ers in the United States care most strongly about achievement, esteem, and self-actualization, managers in Greece and Japan are motivated more by security. Social needs are most important in Sweden, Norway, and Denmark. “Doing your own thing”— the phrase from the 1960s that describes an American culture oriented toward self-actualization—is not even translatable into Chinese. Being from a collectivist culture, the Chinese are more likely to value belongingness. 73 “Achievement,” too, is difficult to translate into most other languages. Researchers in France, Japan, and Sweden would have been unlikely to even conceive of McClelland’s achievement motive because people of those countries are more group-oriented than individually oriented.

Clearly achievement, growth, and self-actualization are profoundly important in the United States, Canada, and Great Britain. But these needs are not universally important. Every manager must remember that need importance varies from coun- try to country and that people may not be motivated by the same needs. One study found that employees in many countries are highly engaged at companies that have strong leadership, work/ life balance, a good reputation, and opportunities for employ- ees to contribute, while another found variations from country to country: 74 employees in Canada were attracted by competi- tive pay, work/life balance, and opportunities for advancement; workers in Germany by autonomy; in Japan by high-quality coworkers; in the Netherlands by a collaborative work environ- ment; and in the United States by competitive health benefits. Generally no single way is best, and managers can customize their approaches by considering how individuals differ. 75

5 | DESIGNING JOBS THAT MOTIVATE

Here’s an example of a company that gave a “reward” that didn’t motivate. One of Mary Kay Ash’s former employers gave her a sales award: a flounder fishing light. Unfortunately she doesn’t

Maslow’s theory is better known to American managers than Alderfer’s, but ERG theory has more scientific support. 68 Both have practical value in that they remind managers of the types of reinforcers or rewards that can be used to motivate people. Regardless of whether a manager prefers the Maslow or the Alderfer theory of needs, he or she can motivate peo- ple by helping them satisfy their needs, particularly by offering opportunities for self-actualization and growth.

4.3 | McClelland Said Managers Seek Achievement, Affiliation, and Power

David McClelland also identified a number of basic needs that guide people. According to McClelland, three needs are most important for managers: 69

1. The need for achievement —a strong orientation toward accom- plishment and an obsession with success and goal attainment. Most managers and entrepreneurs in the United States have high levels of this need and like to see it in their employees.

2. The need for affiliation —a strong desire to be liked by other people. Individuals who have high levels of this need are oriented toward getting along with others and may be less concerned with perform- ing at high levels.

3. The need for power —a desire to influence or control other people. This need can be a negative force (termed personalized power ) if it is expressed through the aggressive manipulation and exploitation of others. People high on the personalized-power need want power purely for the pursuit of their own goals. But the need for power also can be a positive motive, called socialized power, which is channeled toward the constructive improvement of organizations and societies.

Different needs predominate for different people. Now that you have read about these needs, think about yourself—which one(s) are most and least important to you?

Low need for affiliation and moderate to high need for power are associated with managerial success for both higher- and lower-level managers. 71 One reason the need for affiliation is not necessary for leadership success is that managers high on this need have difficulty making tough but necessary decisions that will upset some people.

“ The degree to which you will find the right recognition [of employees’ successes] is equal to the degree to which you know the employee[s], you know their wants and needs.”

— Erika Anderson , organizational development consultant 70

LO5 Define ways to create jobs that motivate

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256 PART 4 | Leading

simple and routine result in employee dissatisfaction, absentee- ism, and turnover.

Especially in industries that depend on highly motivated knowledge workers, keeping talented employees may require letting them design their own jobs so that their work is more interesting than it would be elsewhere. 82 Jobs can be designed in the following ways to increase intrinsic rewards and there- fore motivation.

5.1 | Managers Can Make Work More Varied and Interesting

With job rotation , workers who spend all their time in one rou- tine task can instead move from one task to another. Rather than dishing out the pasta in a cafeteria line all day, a person might work the pasta, then the salads, and then the vegetables or desserts. Job rotation is intended to alleviate boredom by giving people different things to do at different times.

As you may guess, job rotation may simply move the person from one boring job to another. But job rotation can benefit every- one when done properly, with people’s input and career inter- ests in mind. At General Electric, new hires and high-potential employees can rotate among jobs within a broad functional area of their choosing, including finance, engineering, operations management, or human resources. While completing these job rotations, they receive classroom training, mentoring, and per- formance feedback. 83 Austria-based Vienna Insurance Group (VIG) also uses job rotation for its high-potential employees. Program participants spend between 1 and 12 months working in their area of expertise in multiple VIG companies located in Austria and other countries in Europe. The goal of the program is for participants to develop practical know-how, international operations knowledge, and a professional network throughout the company’s dispersed locations. 84

Job enlargement is similar to job rotation in that people are given different tasks to do. But while job rotation involves doing one task at one time and changing to a different task at a different time, job enlargement assigns the worker multi- ple tasks at the same time. Thus an assembly worker’s job is enlarged if he or she is given two tasks to perform rather than one. In a study of job enlargement in a financial ser- vices organization, enlarged jobs led to higher job satisfac- tion, better error detection by clerks, and improved customer service. 85

fish. Fortunately she later was able to design her own organi- zation, Mary Kay Cosmetics, around two kinds of motivators that mattered to her people: 76

1. Extrinsic rewards are given to people by the boss, the com- pany, or some other person. Examples include pay, benefits, business class airline travel, or a large office.

2. An intrinsic reward is a reward the person derives directly from performing the job itself. This occurs when you feel a sense of accom- plishment after completing a challenging task.

An interesting project, an intriguing subject that is fun to study, a completed sale, and the discovery of the perfect solu- tion to a difficult problem all can give people the feeling that they have done something well. This is the essence of the moti- vation that comes from intrinsic rewards.

Intrinsic rewards are essential to the motivation underlying creativity. 77 A challenging problem, a chance to create some- thing new, and work that is exciting can provide intrinsic moti- vation that inspires people to devote time and energy to the task. So do managers who allow people some freedom to pur- sue the tasks that interest them most. The opposite situations result in routine, habitual behaviors that interfere with creativ- ity. 78 A study in manufacturing facilities found that employees initiated more applications for patents, made more novel and useful suggestions, and were rated by their managers as more creative when their jobs were challenging and their managers did not control their activities closely. 79

Conversely, some jobs and organizations create environ- ments that quash creativity and motivation. 80 The classic exam- ple of a demotivating job is the highly specialized assembly-line job; each worker performs one boring operation before passing the work along to the next worker. Such specialization, or the “mechanistic” approach to job design, was the prevailing prac- tice through most of the 20th century. 81 But jobs that are too

Traditional Thinking Extrinsic rewards like pay are enough to motivate employees.

The Best Managers Today Use both extrinsic and intrinsic rewards to energize, direct, and sustain employee effort.

extrinsic rewards rewards given to a person by the boss, the company, or some other person

intrinsic reward reward a worker derives directly from performing the job itself

job enlargement giving people additional tasks at the same time to alleviate boredom

job rotation changing from one routine task to another to alleviate boredom

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CHAPTER 11 | Motivating People 257

1. Hygiene factors are characteristics of the workplace: company pol- icies, working conditions, pay, coworkers, supervi- sion, and so forth. These factors can make people unhappy if they are poorly managed. If they are well managed, and viewed as positive by employees, the employees will no longer be dissatisfied. However, no matter how good these factors are, they will not make people truly satis- fied or motivated to do a good job.

With job enlargement, the person’s additional tasks are at the same level of responsibility. More profound changes occur when jobs are enriched. Job enrichment means that jobs are restructured or redesigned by adding higher levels of responsi- bility. This practice includes giving people not only more tasks but higher-level ones, such as when decisions are delegated downward and authority is decentralized. Efforts to redesign jobs by enriching them are now common in American industry. The first approach to job enrichment was Herzberg’s two-factor theory, followed by the Hackman and Oldham model.

5.2 | Herzberg Proposed Two Important Job-Related Factors

Frederick Herzberg’s two-factor theory distinguished between two broad categories of factors that affect people working on their jobs: 86

Take Charge of Your Career Will you be motivated in the new job?

A ssume you are about to graduate from college and just received a job offer. Before accepting it, you decide to find out if the new job will offer you an appropriate level of extrinsic and intrinsic rewards. Most hiring managers will provide you with basic infor- mation during the interview process, or when they make you the offer. The essentials usu- ally cover the starting salary, benefits, sched- ule, job description, working conditions, and so forth. What hiring managers typically do not tell you is their opinion about whether the starting salary is fair or whether after accept- ing the job, you will get to do work that is sat- isfying and intrinsically motivating.

You think about the job offer. The starting salary seems reasonable, but you suspect it may be a little lower than the going rate. You wonder if you should ask for a higher salary, but don’t want to be perceived as pushy or unreasonable; after all, you have yet to work a single day for the company. Where should you turn for information on salaries?

There are websites available that can help you find current salary information for a vari- ety of jobs worldwide. Glassdoor.com allows

users to view salaries of actual positions at companies. Current and former employees of the companies, as well as other job applicants, can post salaries anonymously. Glassdoor.com has salary reports and company reviews from over 165,000 people working at approximately 19,000 companies in 100 countries. It also pro- vides salary information for part-time jobs and

internships. Users can access this salary infor- mation for free as long as they submit (anony- mously) their own salary to the website. Other websites that provide salary information are Salary.com and Payscale.com.

In contrast, it may prove more challenging for you to ascertain how intrinsically motivat- ing the new job will be. However, websites like Glassdoor.com include detailed reviews (and photos) from company insiders that describe the positive aspects of the organi- zation, areas for improvement, and advice for senior management. Another way to learn about whether you will feel motivated in the job is to talk with anyone you can who has dealt with the people from the organization, including professors who have consulted there, customers, vendors, current or former employees, and so forth. Ultimately you will never be 100 percent sure that you will be a happy, motivated employee for the next few years at the organization, but you can at least do enough homework to tilt the odds in your favor that it will be a good fit for the near term.

Sources: Adapted from www.glassdoor.com ; www.salary.com ; www.payscale.com ; J. Eckle, “Peering through the Glass Door,” Computerworld 43, no. 8, (February 23, 2009), pp. 36–37; and L. Wolgemuth, “Using What You Know about Coworker’s Pay,” U.S. News & World Report 145, no. 1 (July 7, 2008), pp. 69–70.

Glassdoor is a job and career site where employees anonymously dish on the pros and cons of their companies and bosses.

job enrichment changing a task to make it inherently more rewarding, motivating, and satisfying

two-factor theory Herzberg’s theory describing two factors affecting people’s work motivation and satisfaction

hygiene factors characteristics of the workplace, such as company policies, working conditions, pay, and supervision, that can make people dissatisfied

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258 PART 4 | Leading

such as the Hackman and Oldham model, that explain more precisely how managers can enrich people’s jobs.

5.3 | Hackman and Oldham: Meaning, Responsibility, and Feedback Provide Motivation

Following Herzberg’s work, Hackman and Oldham proposed a more complete model of job design. 88 Exhibit 11.6 illustrates their model. As you can see, well-designed jobs lead to high motivation, high-quality performance, high satisfaction, and low absenteeism and turnover. These outcomes occur when people experience three critical psychological states (noted in the middle column of the figure):

1. They believe they are doing something meaningful because their work is important to other people.

2. They feel personally responsible for how the work turns out.

3. They learn how well they performed their jobs.

These psychological states occur when people are working on enriched jobs—that is, jobs that offer the following five core job dimensions:

2. Motivators describe the job itself —that is, what people do at work. Motivators are the nature of the work itself, actual job responsibilities, opportu- nity for personal growth and recognition, and the feelings of achievement the job provides. According to Herzberg, the key to true job satisfaction and

When employees are fully engaged, they are satisfied with their jobs and employer, and they are enthusiastic about and committed to their work. Their personal goals are aligned with their organization’s goals. A recent study by the consulting firm Blessing White investigated the percentage of employees in several countries and regions of the world who are fully engaged. 87

Did You Know?

0 20 Percent

42%

40%

31%

22%

India

Employees who are fully engaged (%)

North America

31%All employees

Europe

China

motivators factors that make a job more motivating, such as additional job responsibilities, opportunities for personal growth and recognition, and feelings of achievement

motivation to perform lies in this category of factors. When motiva- tors are present, jobs are presumed to be satisfying and motivating for most people.

Herzberg’s theory has been criticized by many scholars, so we will not go into more detail about his original theory. But Herzberg was a pioneer in the area of job design and still is a respected name among American managers. In addition, even if the specifics of his theory do not hold up to scientific scrutiny, he made several important contributions. Herzberg’s theory highlights the important distinction between extrinsic rewards (from hygiene factors) and intrinsic rewards (from motivators). It also reminds managers not to count solely on extrinsic rewards to motivate workers but to focus on intrin- sic rewards as well. Finally, it set the stage for later theories,

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CHAPTER 11 | Motivating People 259

“I love the outdoors and I love feeling that I have a part in protecting the pub- lic lands out there.” 91

4. Autonomy —independence and discre- tion in making decisions. In a research hospital, a department administrator told her people to do the kinds of research they wanted as long as it was within bud- get (and legal). With no other guidelines— that is, complete autonomy— productivity increased sixfold in a year. 92

5. Feedback —information about job performance. Many companies post charts or provide computerized data indicating productivity, number of rejects, and other data. At Whole Foods Market, teams are responsible for hir- ing and scheduling in their area of the store. Team leaders get information about each month’s payroll expense versus the budgeted amount. If the team comes in under budget, everyone knows because everyone gets a share of the savings. This practical feedback inspires teams to hire carefully and work hard. 93

1. Skill variety —different job activities involving several skills and talents. For example, management trainees at Enterprise Rent-A- Car try their hands at every area of the business, including hiring employees, washing cars, waiting on customers, working with body shops, and ordering supplies. Assistant manager Sarah Ruddell defines the broad responsibilities as a plus: “You’re not stuck doing the same thing over and over again.” 89

2. Task identity —the completion of a whole, identifiable piece of work. At State Farm Insurance, agents are independent contrac- tors who sell and provide service for State Farm products exclu- sively. They have built and invested in their own businesses. As a result, agent retention and productivity are far better than industry norms. 90

3. Task significance —an important, positive impact on the lives of others. Fire fighters have very hazardous jobs. In 2013, 19 mem- bers of Prescott’s Granite Mountain Hotshots died while fighting a blaze on a ridge located near Yarnell, Arizona. In the aftermath of their tragic deaths, some people wondered why Hotshots take such extreme risks to battle fires and protect strangers’ homes and businesses. As a relatively small group of highly qualified, rugged, and self-sufficient individuals employed by the U.S. Forest Service and its interagency partners, Hotshots do what they do because they feel their work matters. Brandon Hess, superintendent of the Tatanka Interagency Hotshot Crew out of Custer, South Dakota, does his job out of a sense of duty. Speaking from the front line of a wildfire in Colorado, Hess summarized his passion for the work:

growth need strength the degree to which individuals want personal and psychological development

Skill variety Task identity Task significance

Experienced meaningfulness of the work

Experienced responsibility for outcome of the work

Autonomy

Knowledge of the actual results of the work activities

Feedback

High internal work motivation

High-quality work performance

Low absenteeism and turnover

High satisfaction with the work

Core job dimensions

Critical psychological

states

Personal and work outcomes

Employee growth need strength

Exhibit 11.6 The Hackman and Oldham model of job enrichment

Source: From “A New Strategy for Job Enrichment” by J. Richard Hackman et al., California Management Review. Copyright © 1975 by the Regents of the University of California. Reprinted from the California Management Review, vol. 17, no. 4. By permission of The Regents.

The most effective job enrichment increases all five core dimensions.

A person’s growth need strength will help determine just how effective a job enrichment program might be. Growth need strength is the degree to which individuals want per- sonal and psychological development. Job enrichment would be more successful for people with high growth need strength. But very few people respond negatively to job enrichment. 95

● Fulton hotshots (L-R) Daniel Hammond and Jake Cagle both of Bakersfield, CA set a back burn to help contain a fire in Glacier National Park, MT.

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260 PART 4 | Leading

Exhibit 11.7 includes comments from peo- ple when they were feeling empowered and disempowered.

To foster empowerment, management must create an environment in which all the employ- ees feel they have real influence over perfor- mance standards and business effectiveness within their areas of responsibility. 102 An empowering work environment provides peo- ple with information necessary for them to perform at their best, knowledge about how to use the information and how to do their work, power to make decisions that give them control over their work, and the rewards they deserve for the contributions they make. 103 Such an environment reduces costs because fewer peo- ple are needed to supervise, monitor, and coor- dinate. It improves quality and service because high performance is inspired at the source—the people who do the work. It also allows quick action because people on the spot see problems, solutions, and opportunities for innovation on which they are empowered to act.

It is essential to give people clear strate- gic direction but to leave some room for flexi- bility and calculated risk taking. For example, Southwest Airlines’ strategic principle of “meet customers’ short-haul travel needs at fares com- petitive with the cost of automobile travel” helps employees keep strategic objectives in mind and use their discretion in making complicated deci- sions about service offerings, route selection, cabin design, ticketing procedures, and pricing. 104

More specific actions include increasing signa- ture authority at all levels; reducing the number

of rules and approval steps; assigning nonroutine jobs; allowing independent judgment, flexibility, and creativity; defining jobs

5.4 | To Motivate, Empowerment Must Be Done Right

Today many managers talk about “empowering” their people. Individuals may—or may not—feel empowered, and groups can have a “culture” of empowerment that enhances work unit perfor- mance. 96 Empowerment is the process of sharing power with employees, thereby enhancing their confidence in their ability to perform their jobs and their belief that they are influential contrib- utors to the organization. Unfortunately empow- erment doesn’t always live up to its hype. One problem is that managers undermine it by sending mixed messages like “Do your own thing—the way we tell you.” 97 But empowerment can be profoundly motivating when done properly. 98

Empowerment changes employees’ beliefs— from feeling powerless to believing strongly in their own personal effectiveness. 99 As a result, people take more initiative and persevere in achieving their goals and their leader’s vision even in the face of obstacles. 100 Specifically, empowerment encourages the following beliefs among employees: 101

• They perceive meaning in their work; their job fits their values.

• They feel competent, or capable of performing their jobs with skill.

• They have a sense of self-determination, of hav- ing some choice in regard to the tasks, methods, and pace of their work.

• They have an impact —that is, they have some influence over important strategic, administrative, or operating decisions or out- comes on the job.

CareerBliss analyzed more than 100,000 employee-generated reviews to create a ranking of jobs in which employees are happiest. Respondents identified software quality assurance engineer as the “happiest” job, followed by executive chef, property manager, bank teller, and warehouse manager. Other jobs that made the top 20 list included electrician, HR manager, and financial analyst. 94 Do the most satisfying jobs have more of Hackman and Oldham’s job characteristics?

Did You Know?

When Feeling Empowered, People Had the Following Comments:

I was able to make a large financial decision on my own. I got to write a large check without being questioned.

After having received a memo that said, “Cut travel,” I made my case about why it was necessary to travel for business reasons, and I was told to go ahead.

My president supported my idea without question.

All the financial data were shared with me.

When Feeling Disempowered, People Had the Following Comments:

I had no input into a hiring decision of someone who has to report directly to me. I didn’t even get to speak to the candidate.

I worked extremely hard—long hours and late nights—on an urgent project, and then my manager took full credit for it.

My suggestions, whether good or bad, were either not solicited or, worse, ignored.

The project was reassigned without my knowledge or input.

Exhibit 11.7 Reactions to feeling empowered and disempowered

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CHAPTER 11 | Motivating People 261

beneficial exchange. As peo- ple work and realize the out- comes or consequences of their actions, they assess how fairly the organization treats them.

The starting point for under- standing how people inter- pret their contributions and outcomes is equity theory. 110 Equity theory proposes that when people assess how fairly they are treated, they consider two key factors:

1. Outcomes, as in expectancy theory, refer to the various things the person receives on the job: recognition, pay, bene- fits, satisfaction, security, job assignments, punishments, and so forth.

2. Inputs refer to the contributions the person makes to the organi- zation: effort, time, talent, performance, extra commitment, good citizenship, and so forth.

People generally expect that the outcomes they receive will reflect, or be proportionate to, the inputs they provide—a fair day’s pay (and other outcomes) for a fair day’s work (broadly defined by how people view all their contributions).

But this comparison of outcomes to inputs is not the whole story. People also pay attention to the outcomes and inputs oth- ers receive. At salary review time, for example, most people— from executives on down—try to pick up clues that will tell them who got the biggest raises. As described in the following section, they compare ratios, try to restore equity if necessary, and derive more or less satisfaction based on how fairly they believe they have been treated.

more broadly as projects rather than tasks; and providing more access to resources and people throughout the organization. 105

Empowerment does not mean allowing people to decide trivial things like what color to paint the lunchroom. For empowerment to make a difference, people must have an impact on things they care about, such as quality and produc- tivity. 106 Companies that have successfully used empowerment programs include Lord Corporation in Dayton, Ohio (which produces engine mounts for aircraft), and Herman Miller (the Michigan-based furniture manufacturer). 107

Empowerment seems to be at the heart of motivation for employees of Google. Rather than just guessing what employees want, Google has applied its commitment to careful analysis. The company developed a computer algorithm (mathematical procedure) to see where its challenges lie in retaining its best talent. The algorithm evaluates data from employee surveys, performance reviews, pay histories, and peer reviews to identify which employees are most at risk of leaving the company.

A key lesson has already emerged: employees are most likely to leave Google if they believe the company is not fully tapping into their expertise. Most likely, this issue will continue to be signifi- cant. In Google’s early years, employees enjoyed the thrill of being part of something new and rapidly expanding. The growth offered seemingly limitless possibilities, and employees had exceptional leeway to work on projects of their own invention. After more than a decade, the company has almost 25,000 employees and a greater need to coordinate their work and set priorities for allocat- ing resources. To motivate employees to stay, Google will have to figure out how it can continue offering flexibility for learning and experimentation, perhaps coupled with more formal structures such as career paths. 108

You should not be surprised when empowerment causes some problems, at least in the short term. Problems accom- pany virtually any change, including changes for the better. It’s important to remember that empowerment brings responsibil- ity, and employees don’t necessarily like the accountability at first. 109 People may make mistakes, especially until they have had adequate training. Because more training is needed, costs are higher. Because people acquire new skills and make greater contributions, they may demand higher wages. But if they are well trained and truly empowered, they will deserve the pay— and they and the company will benefit.

6 | ACHIEVING FAIRNESS Ultimately one of the most important issues in motivation sur- rounds people’s view of what they contribute to the organiza- tion and what they receive from it. Ideally they will view their relationship with their employer as a well-balanced, mutually

LO6 Summarize how people assess and achieve fairness.

empowerment the process of sharing power with employees, thereby enhancing their confidence in their ability to perform their jobs and their belief that they are influential contributors to the organization.

equity theory a theory stating that people assess how fairly they have been treated according to two key factors: outcomes and inputs

● Employees who lack the power to do their jobs effectively are less likely to feel motivated at work.

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262 PART 4 | Leading

their executives in the top one-fourth of the group. The drive to keep everyone’s pay above average means the average keeps climbing.

Assessments of equity are not made objectively. They are subjective perceptions or beliefs. In the preceding example of the two managers, the one who got the bigger raise probably felt she deserved it. Even if she admits to working fewer hours, she may convince herself she can because she is more efficient. In the example of the students, the one who scored higher may believe the outcome was equitable because (1) she worked harder over the course of the semester, and (2) she’s smart (ability and expe- rience, not just time and effort, can be seen as inputs).

6.2 | People Who Feel Inequitably Treated Try to Even the Balance

People who feel inequitably treated and dissatisfied are moti- vated to do something to restore equity. They have a number of options that they carry out to change the ratios or to reevaluate the situation and decide it is equitable after all.

The equity equation shown earlier indicates people’s options for restoring equity when they feel inequitably treated:

• Reducing their inputs —giving less effort, performing at lower lev- els, or quitting: “Well, if that’s the way things work around here, there’s no way I’m going to work that hard (or stick around).”

• Increasing their outcomes: “My boss is going to hear about this. I deserve more; there must be some way I can get more.”

• Decreasing others’ outcomes: For example, an employee may sab- otage work to create problems for his company or boss. 113 People can change their perceptions of an outcome, not just the outcome itself: “That promotion isn’t as great a deal as she thinks. The pay is not that much better, and the headaches will be unbelievable.”

• Increasing others’ inputs —Here, too, the change may be in perceptions: “The more I think about it, the more I see he deserved it. He’s worked hard all year, he’s competent, and it’s about time he got a break.”

Thus a person can restore equity in a number of ways by behav- iorally or perceptually changing inputs and outcomes. On the positive side, people may care about group equity and may even increase their inputs to keep a situation equitable for the group. In the first few months of each year, many accountants face a flood of work related to annual reports and tax preparation. At Gramkow, Carnevale, Seifert & Company, an accounting firm in Oradell, New Jersey, Kenneth Benkow works six days a week and many evenings during tax time. He explains, “What helps motivate me is that I look around the office and I see people who are working as hard or harder than I am. You feel guilty if you’re not pulling your own weight.” 114

6.3 | Procedures—Not Just Outcomes—Should Be Fair

Inevitably managers make decisions that have outcomes more favorable for some than for others. Those with favorable out- comes will be pleased; those with worse outcomes, all else equal, will be more displeased. But managers desiring to put salve on the wounds—say, of people they like or respect or want to keep

6.1 | People Assess Equity by Making Comparisons

Equity theory suggests that people compare the ratio of their own outcomes to inputs against the outcome-to-input ratio of some comparison per-

son. The comparison person can be a coworker, a boss, or an aver- age industry pay scale. Stated more succinctly, people compare

Their own Outcomes

Inputs versus Other’s

Outcomes Inputs

If the ratios are equivalent, people believe the relationship is equitable, or fair. Equity causes people to be satisfied with their treatment. But the person who believes his or her ratio is lower than another’s will feel inequitably treated. Inequity causes dissatisfac- tion and leads to an attempt to restore balance to the relationship.

Inequity and the negative feelings it creates may appear any- where. As a student, perhaps you have been in the following situ- ation. You stay up all night and get a C on the exam. Meanwhile, another student studies a couple of hours, goes out for the rest of the evening, gets a good night’s sleep, and gets a B. You perceive your inputs (time spent studying) as much greater than the other student’s, but your outcomes are lower. You are displeased at the seeming unfairness. In business, the same thing sometimes hap- pens with pay raises. One manager puts in 60-hour weeks, earned a degree from a prestigious university, and believes she is destined for the top. When her archrival—whom she perceives as less deserving (“she never comes into the office on weekends, and all she does when she is here is butter up the boss”)—gets the higher raise or the promotion, she experiences severe feelings of inequity. In the world of sports, motivation problems resulting from perceived pay inequities may be the reason major league baseball teams that have great differences in their player salaries tend to win fewer games. 111

Many people have felt inequity when they learn about large sums paid to high-profile CEOs. Ironically, one reason for rising CEO pay is an effort to set pay using a method that looks something like the equity comparison: the board of directors compares the CEO’s pay with that of chief executives at organizations in a “peer group.” Until 2006 companies did not have to disclose which companies were in the peer group, but one example exposed in the courtroom has sug- gested how inequity can arise. Richard A. Grasso received $140 mil- lion in compensation as chair of the New York Stock Exchange. A compensation expert hired by New York’s attorney general learned that the companies of the peer group used as a basis for setting Grasso’s pay had median revenues more than 25 times that of the NYSE, media assets 125 times the NYSE’s, and a median number of employees that was about 30 times that of the NYSE. 112 Even when a company chooses an appropriate peer group, many boards try to pay

procedural justice using a fair process in decision making and making sure others know that the process was as fair as possible

quality of work life (QWL) programs programs designed to create a workplace that enhances employee well-being

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CHAPTER 11 | Motivating People 263

7 | JOB SATISFACTION If people feel fairly treated from the outcomes they receive or the processes used, they will be satisfied. A satisfied worker is not nec- essarily more productive than a dissatisfied one; sometimes people are happy with their jobs because they don’t have to work hard! But job dissatisfaction, aggregated across many individuals, creates a workforce that is more likely to exhibit the following characteristics:

• Higher turnover and absenteeism.

• Less good citizenship (going the “extra mile” and helping others at work) among employees. 120

• More grievances and lawsuits.

• Strikes.

• Stealing, sabotage, and vandalism.

• Poorer mental and physical health (which can mean higher job stress, higher insurance costs, and more lawsuits). 121

• More injuries. 122

• Poor customer service. 123

• Lower productivity and profits. 124

All of these consequences of dissatisfaction, either directly or indirectly, are costly. Sadly, a recent survey reported that 74 percent of individuals would consider leaving their cur- rent jobs, while 32 percent are actively searching. A survey by Accenture found that the top contributors to employee dissat- isfaction are (1) lack of recognition (43 percent), (2) internal politics (35 percent), (3) dislike of their boss (31 percent), and (4) lack of empowerment (31 percent). 125

Job satisfaction is especially important for relationship-oriented service employees such as real estate agents, hair stylists, and stockbrokers. Customers develop (or don’t develop) a commit- ment to a specific service provider. Satisfied service providers are less likely to quit the company and more likely to provide an enjoyable customer experience. 126

7.1 | Companies Are Improving the Quality of Work Life

Quality of work life (QWL) programs create a workplace that enhances employee well-being and satisfaction. The general goal of QWL programs is to satisfy the full range of employee needs. People’s needs apparently are well met at First Horizon National, which offers a flexible benefits package including health, den- tal, and vision insurance; paid vacation; tuition reimbursement; discounts for child care and financial products; a wellness pro- gram; and reimbursement for adoption-related expenses. More unusually, First Horizon extends those benefits to workers who telecommute and work part-time. The company has appeared on

and motivate—still can reduce the dissatisfaction. They do this by demonstrating that they provide procedural justice —using a fair process in decision making and helping others know that the process was as fair as possible. When people perceive pro- cedural fairness, they are more likely to support decisions and decision makers. 115 For example, one year after layoffs, man- agers’ use of procedural justice (in the form of employee par- ticipation in decisions) still predicted survivors’ organizational commitment, job satisfaction, and trust toward management. 116

Even if people believe that their outcome was inequitable and unfair, they are more likely to view justice as having been served if the process was fair. You can increase people’s beliefs that the process was fair by making the process open and visible, stating decision criteria in advance rather than after the fact, making sure that the most appropriate people—those who have valid informa- tion and are viewed as trustworthy—make the decisions, giving people a chance to participate in the process, and providing an appeal process that allows people to question decisions safely and receive complete answers. 117 This kind of treatment is expressed by Deere and Company’s former chief executive, Bob Lane. Lane says that even when “we have to let people go” because the company is struggling, “each and every individual has inherent worth,” so management must treat employees with dignity and help them understand the reasons behind the actions. 118

In contrast, at an elevator plant in the United States, an army of consultants arrived one day, without explanation. 119 The rumor mill kicked in; employees guessed the plant would be shut down or some of them would be laid off. Three months later, management unveiled its new plan, involving a new method of manufacturing based on teams. But management did not adequately answer ques- tions about the purpose of the changes, employees resisted, con- flicts arose, and the formerly popular plant manager lost the trust of his people. Costs skyrocketed, and quality plummeted.

● Former John Deere CEO Robert Lane stands next to an 8530 Row Crop Tractor in Moline, IL. Deere & Company is the world’s leading manufacturer of agricultural machinery as well as a leading supplier of construction equipment and riding lawn mowers.

LO7 Identify causes and consequences of a satisfied workforce.

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264 PART 4 | Leading

of perceptions of what they owe their employers and what their employers owe them. 130 This contract, whether it is seen as being upheld or violated—and whether the parties trust one another or not—has important implications for employee satisfaction and motivation and the effectiveness of the organization.

Historically, in many companies the employment relationship was stable and predictable. Now mergers, layoffs, outsourcing, and other disruptions have thrown asunder the “old deal.” 131 In traditionally managed organizations, employees were expected to be loyal, and employers would provide secure employment. Today the implicit contract goes something like this: 132 if people stay, do their own job plus someone else’s (who has been down- sized), and do additional things like participating in task forces, the company will try to provide a job (if it can), provide gestures that it cares, and keep providing about the same pay (with peri- odic small increases). The likely result of this not-very-satisfying arrangement: uninspired people in a struggling business.

But a better deal is possible for both employers and employ- ees. 133 Ideally your employer will provide continuous skill updating and an invigorating work environment in which you can use your skills and are motivated to stay even though you may have other job options. 134

Consider how business coach Ram Charan assumed this new psychological contract in advising a frustrated HR manager. 135 The manager had asked Charan for guidance in coping with bureaucratic red tape that frustrated the entire group, including the manager himself. Charan encouraged the manager to reframe the situation as a need for learning, creativity, and leadership. The manager, said Charan, should investigate what the managers in other departments need from HR, so that his people would truly be serving business needs and helping to solve business problems. Charan also encouraged the manager to learn about his employ- ees’ career goals and interests so that he can focus on ways to develop his people’s strengths through assignments and greater decision-making authority within the department. If the HR man- ager accepts Charan’s guidance, he and his people will face more difficult yet more interesting challenges than they would by sim- ply defining themselves as a static part of a bureaucracy.

Fortune ’s list of the 100 Best Companies to Work For, but more important is the impact on workers like Brenda Fung, a part-time designer of the com-

pany’s intranet. Fung told a reporter, “This company has been so generous to me. There’s no way I could even think of leaving.” 127

QWL addresses eight categories: 128

1. Adequate and fair compensation.

2. A safe and healthy environment.

3. Jobs that develop human capacities.

4. A chance for personal growth and security.

5. A social environment that fosters personal identity, freedom from prejudice, a sense of community, and upward mobility.

6. Constitutionalism—the rights of personal privacy, dissent, and due process.

7. A work role that minimizes infringement on personal leisure and family needs.

8. Socially responsible organizational actions.

Organizations differ drastically in their attention to QWL. Critics claim that QWL programs don’t necessarily inspire employees to work harder if the company does not tie rewards directly to individual performance. Advocates of QWL claim that it improves organizational effectiveness and productivity. The term productivity, as applied by QWL programs, means much more than each person’s quantity of work output. 129 It also includes turnover, absenteeism, accidents, theft, sabotage, creativity, innovation, and especially the quality of work.

7.2 | Psychological Contracts Are Understandings of Give-and-Take

The relationship between individuals and employing organiza- tions typically is formalized by a written contract. But in employ- ees’ minds there also exists a psychological contract —a set

psychological contract a set of perceptions of what employees owe their employers, and what their employers owe them

Study Che klist Did you tear out the perforated student review card at

the back of the text to revisit learning objectives and key terms and definitions?

Connect ® Management is available for M Management. Additional resources include:

Interactive Applications: • Comprehension Case: The Electricity of Job Enrichment • Drag & Drop: What Motivation Theory Fits? • Self-Assessment: Your Personality and Goal Setting • Video Case: Passion for Hot Topic

Chapter Video: The Container Store

Young Manager Speaks Out: Herb Steward, Dock Foreman/Supervisor

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Practice and Apply your Management knowledge through

Connect Go to: McGrawhillconnect.com

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10 Leadership

1. | VISION
2. | LEADING AND MANAGING

2.1 | �Comparing Leaders and Managers
2.2 | �Good Leaders Need Good Followers

3. | POWER AND LEADERSHIP
4. | TRADITIONAL APPROACHES TO UNDERSTANDING LEADERSHIP

4.1 | �Certain Traits May Set Leaders Apart
4.2 | �Certain Behaviors May Make Leaders Effective
4.3 | �The Best Way to Lead Depends on the Situation

5. | CONTEMPORARY PERSPECTIVES ON LEADERSHIP

5.1 | �Charismatic Leaders Inspire Their Followers
5.2 | �Transformational Leaders Revitalize Organizations
5.3 | �Authentic Leadership Adds an Ethical Dimension

6. | YOU CAN LEAD

6.1 | �Today’s Organizations Offer Many Opportunities to Lead
6.2 | �Good Leaders Need Courage

Take Charge of Your Career // Develop your leadership skills
Organizations Earn Prestigious Green Leadership Award

11 Motivating People

1. SETTING GOALS

1.1 | �Well-Crafted Goals Are Highly Motivating
1.2 | �Stretch Goals Help Employees Reach New Heights
1.3 | �Goal Setting Must Be Paired with Other Management Tools
1.4 | �Set Your Own Goals, Too

2. | REINFORCING PERFORMANCE

2.1 | �Behavior Has Consequences
2.2 | �Be Careful What You Reinforce
2.3 | �Should You Punish Mistakes?
2.4 | �Feedback Is Essential Reinforcement

3. | PERFORMANCE-RELATED BELIEFS

3.1 | �If You Try Hard, Will You Succeed?
3.2 | �If You Succeed, Will You Be Rewarded?
3.3 | �All Three Beliefs Must Be High
3.4 | �Expectancy Theory Identifies Leverage Points

4. | UNDERSTANDING PEOPLE’S NEEDS

4.1 | �Maslow Arranged Needs in a Hierarchy
4.2 | �Alderfer Identified Three Work-Related Needs
4.3 | �McClelland Said Managers Seek Achievement, Affiliation, and Power
4.4 | �Do Need Theories Apply Internationally?

5. | DESIGNING JOBS THAT MOTIVATE

5.1 | �Managers Can Make Work More Varied and Interesting
5.2 | �Herzberg Proposed Two Important Job-Related Factors
5.3 | �Hackman and Oldham: Meaning, Responsibility, and Feedback Provide Motivation
5.4 | �To Motivate, Empowerment Must Be Done Right

6. | ACHIEVING FAIRNESS

6.1 | �People Assess Equity by Making Comparisons
6.2 | �People Who Feel Inequitably Treated Try to Even the Balance
6.3 | �Procedures—Not Just Outcomes—Should Be Fair

7. | JOB SATISFACTION

7.1 | �Companies Are Improving the Quality of Work Life
7.2 | �Psychological Contracts Are Understandings of Give-and-Take

Take Charge of Your Career // Will you be motivated in the new job?
Stonyfield Farm Motivates through Its Mission