What is organizational behaviour

This is a special edition of an established title widely used by colleges and universities throughout the world. Pearson published this exclusive edition for the benefit of students outside the United States and Canada. If you purchased this book within the United States or Canada, you should be aware that it has been imported without the approval of the Publisher or Author.

Every business function, from finance and accounting to management and marketing, faces challenges that hinge on the behavior of people in organizations. Essentials of Organizational Behavior is a concise, clear, and balanced overview of the ways this discipline responds to the critical issues confronting managers and employees in a diverse, connected, and globalized world. Robbins and Judge translate the most current theory and research into actionable practices, offering key insights that readers can apply to their own working experiences.

This fifteenth edition also includes the following new topics and features:

• Employability skills—Chapter 1 introduces five critical competencies that employers look for in job applicants and maps these skills onto the coverage of this text.

• Expanded coverage of major trends—Business ethics, diversity, and globalization—topics that have emerged as vital issues in OB—have been further integrated into chapter discussions and examples.

• Artificial intelligence—AI applications such as machine learning continue to sweep through organizations and revolutionize the field of OB. This edition incorporates new coverage of AI research throughout the text, including 40 applications of AI and machine learning.

• OB in times of crisis—New sections on responses to crises and extreme situations, such as the COVID-19 pandemic, have been added to select chapters.

• Latest research and updated examples—Nearly 1,000 new examples and insights from research studies touch upon every aspect of the discipline.

Available separately for purchase is MyLab Management for Essentials of Organizational Behavior, the teaching and learning platform that empowers instructors to personalize learning for every student. When combined with Pearson’s trusted educational content, this optional suite helps deliver the desired learning outcomes.

Essentials of Organizational Behavior

FIFTEENTH EDITION

Stephen P. Robbins • Timothy A. Judge

GLOBAL EDITION

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Stephen P. Robbins San Diego State University

Timothy A. Judge The Ohio State University

Essentials of Organizational Behavior

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of students to understand and apply OB concepts.

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4

BRIEF CONTENTS

PART 1 Understanding Yourself and Others 27 Chapter 1 What Is Organizational Behavior? 27 Chapter 2 Diversity in Organizations 46 Chapter 3 Attitudes and Job Satisfaction 63 Chapter 4 Emotions and Moods 75 Chapter 5 Personality and Values 91

PART 2 Making and Implementing Decisions 111 Chapter 6 Perception and Individual Decision Making 111 Chapter 7 Motivation Concepts 129 Chapter 8 Motivation: From Concepts to Applications 147

PART 3 Communicating in Groups and Teams 163 Chapter 9 Foundations of Group Behavior 163 Chapter 10 Understanding Work Teams 182 Chapter 11 Communication 199

PART 4 Negotiating Power and Politics 217 Chapter 12 Leadership 217 Chapter 13 Power and Politics 239 Chapter 14 Conflict and Negotiation 259

PART 5 Leading, Understanding, and Transforming the Organization System 279 Chapter 15 Foundations of Organization Structure 279 Chapter 16 Organizational Culture 298 Chapter 17 Organizational Change and Stress Management 321

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5

CONTENTS

Preface 18

Acknowledgments 25

About the Authors 26

PART 1 Understanding Yourself and Others 27

Chapter 1 What Is Organizational Behavior? 27 Management and Organizational Behavior 28

Effective Versus Successful Managerial Activities 29 Organizational Behavior (OB) Defined 29

Complementing Intuition with Systematic Study 30 Building on Big Data with Artificial Intelligence 31

Disciplines That Contribute to the OB Field 33 Psychology 33 Social Psychology 34 Sociology 34 Anthropology 34

There Are Few Absolutes in OB 34 Challenges and Opportunities for OB 35

Globalization 36 Workforce Demographics 37 Workforce Diversity 37 Social Media 37 Employee Well-Being at Work 38 Positive Work Environment 38 Ethical Behavior 39

Coming Attractions: Developing an OB Model 39 An Overview 40 Inputs 40 Processes 41 Outcomes 41

Employability Skills 43 Employability Skills That Apply Across Majors 43

Summary 45 Implications for Managers 45

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Chapter 2 Diversity in Organizations 46 Diversity 46

Demographic Characteristics 46 Levels of Diversity 47

Discrimination and Stereotyping 48 Stereotype Threat 48 Discrimination in the Workplace 49

Biographical Characteristics 49 Age 49 Gender 51 Race and Ethnicity 52 Disabilities 53 Hidden Disabilities 54

Other Differentiating Characteristics 54 Religion 54 Sexual Orientation and Gender Identity 55 Cultural Identity 56

Ability 57 Intellectual Abilities 57 Physical Abilities 59

Implementing Diversity Management Strategies 60 Attracting and Selecting Diverse Employees 60 Diversity in Groups 60 Diversity Programs 61

Summary 62 Implications for Managers 62

Chapter 3 Attitudes and Job Satisfaction 63 Attitudes 63 Attitudes and Behavior 64 Job Attitudes 65

Job Satisfaction and Job Involvement 66 Organizational Commitment 66 Perceived Organizational Support 67 Employee Engagement 67

Job Satisfaction 68 How Do I Measure Job Satisfaction? 68 How Satisfied Are People in Their Jobs? 68

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What Causes Job Satisfaction? 70 Job Conditions 70 Personality 70 Pay 70 Corporate Social Responsibility (CSR) 70

Outcomes of Job Satisfaction 71 Job Performance 71 Organizational Citizenship Behavior (OCB) 71 Customer Satisfaction 71 Life Satisfaction 72

The Impact of Job Dissatisfaction 72 Counterproductive Work Behavior (CWB) 73 Managers Often “Don’t Get It” 74

Summary 74 Implications for Managers 74

Chapter 4 Emotions and Moods 75 What Are Emotions and Moods? 75

Positive and Negative Affect 76 The Basic Emotions 76 Moral Emotions 78 Experiencing Moods and Emotions 78 The Function of Emotions 78

Sources of Emotions and Moods 79 Personality 79 Time of Day 79 Day of the Week 80 Weather 80 Stress 80 Sleep 82 Exercise 82 Gender 82

Emotional Labor 82 Controlling Emotional Displays 83

Affective Events Theory 83 Emotional Intelligence 84 Emotion Regulation 85

Emotion Regulation Influences and Outcomes 86 Emotion Regulation Techniques 86

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OB Applications of Emotions and Moods 87 Selection 87 Decision Making 87 Creativity 88 Motivation 88 Leadership 88 Customer Service 89 Work–Life Satisfaction 89 Deviant Workplace Behaviors 89 Safety and Injury at Work 90

Summary 90 Implications for Managers 90

Chapter 5 Personality and Values 91 Linking Individuals to the Workplace 91

Person–Job Fit 91 Person–Organization Fit 92 Other Dimensions of Fit 93

Personality 93 What Is Personality? 93

Personality Frameworks 94 The Myers–Briggs Type Indicator 95 The Big Five Personality Model 95 How Do the Big Five Traits Predict Behavior at Work? 96 The Dark Triad 98

Other Personality Attributes Relevant to OB 100 Core Self-Evaluation (CSE) 100 Self-Monitoring 101 Proactive Personality 101

Personality and Situations 101 Situation Strength Theory 102 Trait Activation Theory 103

Values 104 Terminal versus Instrumental Values 105 Generational Values 105

Cultural Values 106 Hofstede’s Framework 106 The GLOBE Framework 107

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Summary 110 Implications for Managers 110

PART 2 Making and Implementing Decisions 111

Chapter 6 Perception and Individual Decision Making 111 What Is Perception? 111

Factors That Influence Perception 112 Person Perception: Making Judgments about Others 112

Attribution Theory 112 Common Shortcuts in Judging Others 114

The Link Between Perception and Individual Decision Making 116 Decision Making in Organizations 116

The Rational Model, Bounded Rationality, and Intuition 116 Common Biases and Errors in Decision Making 117

Influences on Decision Making: Individual Differences and Organizational Constraints 120

Individual Differences 120 Organizational Constraints 122

Ethics in Decision Making 123 Three Ethical Decision Criteria 123 Choosing Between Criteria 124 Behavioral Ethics 124 Lying 124

Creativity and Innovation in Organizations 125 Creative Behavior 125 Causes of Creative Behavior 126 Creative Outcomes (Innovation) 128

Summary 128 Implications for Managers 128

Chapter 7 Motivation Concepts 129 Motivation 129 Early Theories of Motivation 130

Hierarchy of Needs Theory 130 Two-Factor Theory 130 McClelland’s Theory of Needs 131

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Contemporary Theories of Motivation 132 Self-Determination Theory 133 Goal-Setting Theory 134

Other Contemporary Theories of Motivation 137 Self-Efficacy Theory 137 Reinforcement Theory 138 Expectancy Theory 139

Organizational Justice 140 Equity Theory 140 Distributive Justice 141 Procedural Justice 141 Interactional Justice 142 Justice Outcomes 143 Culture and Justice 143

Job Engagement 144 Integrating Contemporary Theories of Motivation 144 Summary 146 Implications for Managers 146

Chapter 8 Motivation: From Concepts to Applications 147 Motivating by Job Design: The Job Characteristics Model (JCM) 147

Elements of the JCM 148 Efficacy of the JCM 148 Motivating Potential Score (MPS) 149

Job Redesign 149 Job Rotation and Job Enrichment 150 Relational Job Design 151

Alternative Work Arrangements 151 Flextime 151 Job Sharing 153 Telecommuting 154

Employee Involvement 155 Cultural EIP 155 Examples of Employee Involvement Programs 155

Using Extrinsic Rewards to Motivate Employees 156 What to Pay: Establishing a Pay Structure 156 How to Pay: Rewarding Individual Employees Through Variable-Pay Programs 157

Using Benefits to Motivate Employees 160

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Using Intrinsic Rewards to Motivate Employees 161 Employee Recognition Programs 161

Summary 162 Implications for Managers 162

PART 3 Communicating in Groups and Teams 163

Chapter 9 Foundations of Group Behavior 163 Defining and Classifying Groups 163

Social Identity 164 Ingroups and Outgroups 164

Stages of Group Development 165 Group Property 1: Roles 166

Role Perception 167 Role Expectations 167 Role Conflict 167

Group Property 2: Norms 168 Norms and Emotions 168 Norms and Conformity 169 Norms and Behavior 169 Positive Norms and Group Outcomes 170 Negative Norms and Group Outcomes 170 Norms and Culture 172

Group Property 3: Status, and Group Property 4: Size and Dynamics 172

Group Property 3: Status 172 Group Property 4: Size and Dynamics 174

Group Property 5: Cohesiveness, and Group Property 6: Diversity 174

Group Property 5: Cohesiveness 175 Group Property 6: Diversity 175

Group Decision Making 177 Groups Versus the Individual 178 Groupthink and Groupshift 179 Group Decision-Making Techniques 179

Summary 181 Implications for Managers 181

Chapter 10 Understanding Work Teams 182 Differences Between Groups and Teams 183

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Types of Teams 184 Problem-Solving Teams 184 Self-Managed Work Teams 184 Cross-Functional Teams 185 Virtual Teams 185 Multiteam Systems 186

Creating Effective Teams 187 Team Context 188 Team Composition 190 Team Processes and States 193

Turning Individuals into Team Players 196 Selecting: Hiring Team Players 196 Training: Creating Team Players 196 Rewarding: Providing Incentives to Be a Good Team Player 197

Beware! Teams Are Not Always the Answer 197 Summary 198 Implications for Managers 198

Chapter 11 Communication 199 Functions of Communication 200

The Communication Process 200 Direction of Communication 201

Downward Communication 202 Upward Communication 202 Lateral Communication 202 Formal Small-Group Networks 203 The Grapevine 203

Modes of Communication 204 Oral Communication 205 Written Communication 205 Nonverbal Communication 206

Choice of Communication Channel 206 Channel Richness 206 Choosing Communication Methods 207 Information Security 208

Persuasive Communication 208 Automatic and Controlled Processing 208 Choosing the Message 210

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Barriers to Effective Communication 210 Filtering 210 Selective Perception 210 Information Overload 210 Emotions 211 Language 211 Silence 211 Communication Apprehension 212 Lying 212 Communicating in Times of Crisis 212

Cultural Factors 213 Cultural Barriers 213 Cultural Context 214 A Cultural Guide 215

Summary 216 Implications for Managers 216

PART 4 Negotiating Power and Politics 217

Chapter 12 Leadership 217 Trait Theories of Leadership 217

Personality Traits and Leadership 218 Emotional Intelligence (EI) and Leadership 219

Behavioral Theories 219 Initiating Structure 219 Consideration 219 Cultural Differences 220

Contingency Theories 220 The Fiedler Model 221 Situational Leadership Theory 221 Path–Goal Theory 222 Leader-Participation Model 223

Contemporary Theories of Leadership 223 Leader–Member Exchange (LMX) Theory 223 Charismatic, Transformational, and Transactional Leadership Styles 225 Transactional and Transformational Leadership 227

Responsible Leadership 231 Authentic Leadership 231

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(Un)ethical Leadership 231 Servant Leadership 232

Positive Leadership 233 Trust 233 Mentoring 235 Leading in Times of Crisis 236

Challenges to Our Understanding of Leadership 236 Leadership as an Attribution 237 Neutralizers of and Substitutes for Leadership 237

Summary 238 Implications for Managers 238

Chapter 13 Power and Politics 239 Power and Leadership 239 Bases of Power 240

Formal Power 240 Personal Power 241 Which Bases of Power Are Most Effective? 241

Dependence: The Key to Power 242 The General Dependence Postulate 242 What Creates Dependence? 242 Social Network Analysis: A Tool for Assessing Resources 243

Influence Tactics 244 Using Influence Tactics 245 Cultural Preferences for Influence Tactics 246 Applying Influence Tactics 246

How Power Affects People 247 What We Can Do About Power 247 Sexual Harassment: Unequal Power in the Workplace 248

Politics: Power in Action 249 Political Behavior 249 The Reality of Politics 250

Causes and Consequences of Political Behavior 250 Factors Contributing to Political Behavior 250 How Do People Respond to Organizational Politics? 252 Impression Management 254 The Ethics of Behaving Politically 256 Mapping Your Political Career 256

Summary 256 Implications for Managers 258

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Chapter 14 Conflict and Negotiation 259 A Definition of Conflict 259

Types of Conflict 260 Loci of Conflict 262

The Conflict Process 263 Stage I: Potential Opposition or Incompatibility 263 Stage II: Cognition and Personalization 264 Stage III: Intentions 265 Stage IV: Behavior 266 Stage V: Outcomes 266

Negotiation 268 Bargaining Strategies 269

The Negotiation Process 271 Individual Differences in Negotiation Effectiveness 273 Negotiating in a Social Context 276

Reputation 276 Relationships 277

Third-Party Negotiations 277 Summary 278 Implications for Managers 278

PART 5 Leading, Understanding, and Transforming the Organization System 279

Chapter 15 Foundations of Organization Structure 279 What Is Organizational Structure? 279

Work Specialization 280 Departmentalization 280 Chain of Command 282 Span of Control 283 Centralization and Decentralization 284 Formalization 285 Boundary Spanning 285

Common Organizational Frameworks and Structures 286 The Simple Structure 286 The Bureaucracy 286 The Matrix Structure 287

Alternate Design Options 288 The Virtual Structure 288

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The Team Structure 289 The Circular Structure 290

The Leaner Organization: Downsizing 290 Why Do Structures Differ? 291

Organizational Strategies 291 Organization Size 294 Technology 294 Environment 294 Institutions 295

Organizational Designs and Employee Behavior 296 Span of Control 296 Centralization 296 Predictability Versus Autonomy 296 National Culture 297

Summary 297 Implications for Managers 297

Chapter 16 Organizational Culture 298 What Is Organizational Culture? 298

A Definition of Organizational Culture 299 Do Organizations Have Uniform Cultures? 301 Strong Versus Weak Cultures 301

How Employees Learn Culture 302 Stories 302 Rituals 302 Symbols 303 Language 303

Creating and Sustaining Culture 304 How a Culture Begins 304 Keeping a Culture Alive 305

What Do Cultures Do? 308 The Functions of Culture 308 Culture Creates Climate 308 The Ethical Dimension of Culture 310 Culture and Sustainability 310 Culture and Innovation 311 Culture as an Asset 311 Culture as a Liability 312

Influencing Organizational Culture 314 Ethical Cultures 314

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Positive Cultures 315 Spiritual Cultures 316

The Global Context 318 Summary 319 Implications for Managers 319

Chapter 17 Organizational Change and Stress Management 321 Change 321

Forces for Change 322 Reactionary Versus Planned Change 323

Resistance to Change 323 Overcoming Resistance to Change 324 The Politics of Change 326

Approaches to Managing Organizational Change 326 Lewin’s Three-Step Model 326 Kotter’s Eight-Step Plan 327 Action Research 328 Organizational Development 329

Facilitating Change 331 Managing Paradox 331 Stimulating Innovation 331 Creating a Learning Organization 333 Organizational Change and Stress 334

Stress at Work 334 What Is Stress? 335 Potential Sources of Stress at Work 336 Individual Differences in Stress 338 Cultural Differences 339

Consequences of Stress at Work 340 Managing Stress 340

Individual Approaches 341 Organizational Approaches 342

Summary 343 Implications for Managers 344

Epilogue 345 Endnotes 346 Glossary 424 Index 432

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18

PREFACE

This brief text was created as an alternative to the 600- or 700-page comprehensive text- book in organizational behavior (OB). Essentials of Organizational Behavior attempts to provide balanced coverage of all the key elements comprising the discipline of OB in a style that readers will find both informative and interesting. We’re pleased to say that this text has achieved a wide following in short courses and executive programs, as well as in traditional courses as a companion volume to experiential, skill development, case, and reading resources. It is currently used at hundreds of colleges and universities in the United States, Canada, Latin America, Europe, Australia, and Asia. It has also been translated into Spanish, Portuguese, Japanese, Chinese, Dutch, Polish, Turkish, Danish, and Bahasa Indonesian.

SOLVING LEARNING AND TEACHING CHALLENGES Students and instructors alike have expressed a need for a text on organizational behavior that is concise, clear, and focused on what matters: the Essentials. Since its first publica- tion in 1984, we have tried diligently to keep this book in the range of 325 to 450 pages to meet this need.

Essentials of Organizational Behavior provides a brief overview of the core concepts and theories within the field of OB. Our current text users rave about this approach because it gives them flexibility to include other kinds of learning experiences and content in their OB courses. As a result, this text is currently used in a wide variety of courses and programs—ranging from community colleges to graduate schools, and in both in-person and online courses.

Part of the reason we have been able to keep this book short in length is that it does not include review questions, cases, exercises, or other components. It continues to provide the basic core of OB knowledge, allowing instructors the maximum flexibility in design- ing and shaping their courses.

In addition, Essentials of Organizational Behavior focuses on translating state-of-the art theory and research on OB into actionable practices that can be directly applied by students in the world of work. (See the Implications for Managers section at the end of each chapter.) By focusing on why OB matters in the workplace, students can apply what they learn to their own working experiences, regardless of their field of study. In the next section, we describe another facet of the practicality of this book: employability skills.

EMPLOYABILITY SKILLS As a new feature in this edition, we spotlight five specific skills that research studies have identified as critical competencies that employers look for in job applicants. The competencies have been grouped together to form a broad set of “employability skills.” These skills include critical thinking, communication, collaboration, knowledge

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Preface 19

application/analysis, and social responsibility. We have included a new section in Chapter 1 that introduces employability skills, along with a matrix that identifies which employability skills are targeted by each part of the book. Explicit examples of how OB is relevant for business functions (e.g., marketing, sales) and outcomes are also highlighted in each subsequent chapter.

NEW TO THIS EDITION State-of-the-Art Research and Examples

In total, nearly 1,000 new examples, research studies, and other forms of content were added to this edition. Content coverage was expanded to include updated research, dis- cussion, and examples of current issues related to all aspects of organizational behavior. Overall, 538 contemporary examples were added to this edition.

OB in Times of Crisis

Given the unprecedented effect of the global COVID-19 pandemic on organizational behavior, new sections were added on OB topics in times of crisis. Four new “crisis” sections were added to the chapters on Decision Making, Teams, Communication, and Leadership. A discussion of COVID-19 and its effects on telecommuting was also in- cluded in the Motivation (Application) chapter.

Business Ethics

Events such as the BP Deepwater Horizon Oil spill, the Wells Fargo account fraud scan- dal, and the now infamous Enron scandal have cemented business ethics as an incredibly important topic area relevant to the study of OB. In this new edition, we have broadly increased our coverage of business ethics topics, including a new standalone section on organizational justice in the Motivation Concepts chapter, as well as new content on (un)ethical behavior (e.g., deviance) in the sections on organizations, behavioral ethics, corporate social responsibility, counterproductive work behaviors, moral emotions, the Dark Triad personality traits, (un)ethical leadership (e.g., abusive supervision), prejudice and discrimination, as well as ethical cultures and climate.

Artificial Intelligence and Machine Learning

Artificial intelligence (AI) and its applications, such as machine learning, have com- pletely revolutionized the field of OB. Given the prevalence of AI applications in orga- nizations and its status as a cutting-edge method in OB, we have included new examples of AI research and application throughout the text. In total, 40 applications of artificial intelligence and machine learning were incorporated across the chapters.

Increased Coverage on Diversity and Globalization

Diversity and globalization topics continue to be hot topics within the study of OB. Increased integration of contemporary globalization and diversity issues were added into topic discussions. Ninety-seven examples relevant to global issues, cross-cultural differ- ences, and globalization were added as well as 129 examples of how OB affects diversity in organizations.

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20 Preface

CHAPTER-BY-CHAPTER CHANGES

Chapter 1: What Is Organizational Behavior? • New content: New Trends and Limitations in “Building on Big Data With Artifi-

cial Intelligence,” Employability Skills • Newly revised sections: Learning Objectives, What Is Organizational Behavior?,

Management and Organizational Behavior, Complementing Intuition With Sys- tematic Study, Implications for Managers

• New research incorporated in the following areas: Introduction, Comple- menting Intuition With Systematic Study, Building on Big Data With Artificial Intelligence, Globalization, Workforce Diversity, Social Media, Productivity, Employability Skills

Chapter 2: Diversity in Organizations • New content: Stereotype Threat, Diversity in Groups, Diversity Programs, Gender

(the Glass Ceiling and Glass Cliff), Cultural Intelligence, Bias Against Mothers, Work-Life Balance Issues Tied to Diversity

• Newly revised sections: Diversity, Discrimination and Stereotyping, Biographi- cal Characteristics, Other Differentiating Characteristics, Implementing Diversity Management Strategies, Summary, Implications for Managers

• New research incorporated in the following areas: Demographic Character- istics, Age, Gender, Race and Ethnicity, Hidden Disabilities, Religion, Sexual Orientation and Gender Identity, Cultural Identity, Intellectual Abilities, Physical Abilities, Diversity in Groups, Diversity Programs

Chapter 3: Attitudes and Job Satisfaction • New content: Employee Engagement, updated Global Job Satisfaction Exhibits • Newly revised sections: Attitudes, Attitudes and Behavior, Job Attitudes, Job

Satisfaction, What Causes Job Satisfaction? • New research incorporated in the following areas: Attitudes, Attitudes and

Behavior, Job Attitudes, Employee Engagement, How Satisfied Are People in Their Jobs?, Job Conditions, Turnover, The Impact of Job Dissatisfaction, Managers Often “Don’t Get It”

Chapter 4: Emotions and Moods • New content: Positive and Negative Affect, Moral Emotions, Emotional

Intelligence • Newly revised sections: What Are Emotions and Moods?, Sources of Emotions

and Moods, Emotional Labor, Emotional Intelligence, Emotion Regulation Techniques

• New research incorporated in the following areas: The Basic Emotions, Expe- riencing Moods and Emotions, The Function of Emotions, Personality, Weather, Sleep, Sex, Controlling Emotional Displays, Affective Events Theory, Emotional Intelligence, Emotion Regulation, Emotion Regulation Techniques, Selection and Leadership, OB Applications of Emotions and Moods

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Preface 21

Chapter 5: Personality and Values • New content: Other Frameworks includes research on the HEXACO model,

Cultural Values, New Exhibit (5.5), Comparison of Hofstede’s Framework and the GLOBE Framework

• Newly revised sections: Linking Individuals to the Workplace (moved to intro- ductory section), Personality, Agreeableness at Work, Other Personality Attributes Relevant to OB, Personality and Situations, Values, Cultural Values, Summary, Implications for Managers

• New research incorporated in the following areas: What Is Personality?, Person–Job Fit, Person–Organization Fit, The Myers–Briggs Type Indicator, How Do the Big Five Traits Predict Behavior at Work?, The Dark Triad, Other Frame- works, Core Self-Evaluation, Self-Monitoring, Proactive Personality, Personality and Situations, Situation Strength Theory, Trait Activation Theory, Values, Termi- nal Versus Instrumental Values, Generational Values, Hofstede’s Framework

Chapter 6: Perception and Individual Decision Making • New content: The Threat of Technological Unemployment, Decision Making in

Times of Crisis, Deonance Theory • Newly revised sections: What Is Perception?, Person Perception: Making Judg-

ments About Others, Common Shortcuts in Judging Others, Decision Making in Organizations, Influences on Decision Making, Choosing Between Criteria, Causes of Creative Behavior, Summary, Implications for Managers

• New research incorporated in the following areas: Factors That Influence Perception, Attribution Theory, Stereotyping, The Link Between Perception and Individual Decision Making, Intuition, Overconfidence Bias, Confirmation Bias, Availability Bias, Risk Aversion, Hindsight Bias, Personality, Gender, Reward Systems, Behavioral Ethics, Lying, Causes of Creative Behavior

Chapter 7: Motivation Concepts • New content: Basic Psychological Needs in Self-Determination Theory, Expec-

tancy Theory, Organizational Justice • Newly revised sections: Learning Objectives, Motivation, Early Theories of Mo-

tivation, Contemporary Theories of Motivation, Other Contemporary Theories of Motivation, Job Engagement, Summary, Implications for Managers

• New research incorporated in the following areas: Motivation; Two-Factor Theory; McClelland’s Theory of Needs; Cognitive Evaluation Theory; Self- Concordance; Basic Psychological Needs; Goal Commitment, Task Character- istics, and National Culture; Goal Setting and Ethics; Individual and Promotion Foci; Equity Theory; Distributive Justice; Interpersonal Justice; Justice Outcomes; Job Engagement; Integrating Contemporary Theories of Motivation

Chapter 8: Motivation: From Concepts to Applications • New content: Job Enrichment • Newly revised sections: Learning Objectives, Motivating by Job Design, Job

Redesign, Alternative Work Arrangements, Telecommuting, Employee Involve-

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22 Preface

ment, Using Extrinsic Rewards to Motivate Employees, Using Intrinsic Rewards to Motivate Employees

• New research incorporated in the following areas: Motivating by Job Design, Efficacy of the JCM, Job Redesign, Job Rotation, Relational Job Design, Tele- commuting, Employee Involvement and Participation, Participative Management, Using Extrinsic Rewards to Motivate Employees, What to Pay: Establishing a Pay Structure, How to Pay: Rewarding Individual Employees Through Variable-Pay Programs, Piece-Rate Pay, Merit-Based Pay, Employee Stock Ownership Plan, Employee Recognition Programs

Chapter 9: Foundations of Group Behavior • New content: Groupshift, Research on Hidden Profiles and Information Sharing • Newly revised sections: Defining and Classifying Groups, Stages of Group De-

velopment, Group Roles, Group Norms, Group Size and Dynamics, Group Cohe- siveness, Group Diversity

• New research incorporated in the following areas: Social Identity, Ingroups and Outgroups, Role Perception, Role Expectations, Role Conflict, Norms and Emotions, Norms and Conformity, Positive Norms and Group Outcomes, Nega- tive Norms and Group Outcomes, Norms and Culture, Status and Group Interac- tion, Status Inequity, Status and Stigmatization, Group Size and Dynamics, Types of Group Diversity, Challenges of Group Diversity, Strengths and Weaknesses of Group Decision Making, Effectiveness and Efficiency, Groupthink

Chapter 10: Understanding Work Teams • New content: Crises and Extreme Contexts, Team Trust, Teaming • Newly revised sections: Learning Objectives, Introduction, Differences Between

Groups and Teams, Updated Exhibit 10-3, Team Context, Team Processes and States (Motivation and Mental Models), Creating Effective Teams, Turning Indi- viduals Into Team Players

• New research incorporated in the following areas: Self-Managed Work Teams, Virtual Teams, Multiteam Systems, Creating Effective Teams, Team Context (including resources, leadership, structure, culture, climate, performance evalua- tion, and reward systems), Team Composition (member abilities, personality, and team size), Team Processes and States (including a common plan, motivation, team identity, team cohesion, and mental models), Turning Individuals Into Team Players

Chapter 11: Communication • New content: Communicating in Times of Crisis • Newly revised sections: Introduction, Direction of Communication, Functions of

Communication, Modes of Communication, Persuasive Communication, Barriers to Effective Communication, Cultural Factors, Summary

• New research incorporated in the following areas: The Communication Process, Feedback, Downward and Upward Communication, Lateral Communica- tion, The Grapevine, Written and Nonverbal Communication, Choosing Commu- nication Methods, Information Security, Persuasive Communication (Automatic

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Preface 23

and Controlled Processing, Importance/Interest Level, Message Characteristics), Barriers to Effective Communication (such as Emotions, Language, and Silence), Cultural Barriers

Chapter 12: Leadership • New content: Leading in Times of Crisis, Gender and Leadership • Newly revised sections: Trait Theories of Leadership, Contingency Theories,

Contemporary Theories of Leadership, Trust, Substitutes for and Neutralizers of Leadership

• New research incorporated in the following areas: Personality Traits and Leadership (such as the Big Five Traits and Dark Triad Traits); Emotional Intel- ligence (EI) and Leadership; Leader Consideration Behaviors,;Cultural Differenc- es; Path–Goal Theory; Leader–Member Exchange (LMX) Theory; Charismatic, Transformational, and Transactional Leadership Styles; Charismatic Leadership’s Situational Contingencies; Transactional and Transformational Leadership; Full Range of Leadership Model; (Un)ethical Leadership; Servant Leadership; Trust (including Trust Propensity, The Role of Time, and Regaining Trust); Mentoring; Leadership as an Attribution

Chapter 13: Power and Politics • New content: How Power Affects People and What We Can Do About It, Sexual

Harassment: Unequal Power in the Workplace • Newly revised sections: Power and Leadership, Which Bases of Power Are Most

Effective?, Social Network Analysis: A Tool for Assessing Resources, Influence Tactics, updated Exhibit 13-2, How Power Affects People, Implications for Managers

• New research incorporated in the following areas: Power and Leadership, Which Bases of Power Are Most Effective?, Nonsubstitutability, Social Network Analysis: A Tool for Assessing Resources, Using and Applying Influence Tactics, How Power Affects People, How Power Affects People and What We Can Do About It, Sexual Harassment: Unequal Power in the Workplace, The Reality of Politics, Organizational Factors, How Do People Respond to Organizational Poli- tics?, Impression Management

Chapter 14: Conflict and Negotiation • New content: Complicating Conflict • Newly revised sections: A Definition of Conflict, Cognition and Personalization,

Managing Conflict, Negotiation, Individual Differences in Negotiation Effectiveness • New research incorporated in the following areas: Types of Conflict (includ-

ing Relationship, Task, Process, and Complicating Conflict); Potential Opposi- tion or Incompatibility (such as Structure and Personal Variables); Cognition and Personalization; Intentions (Competing and Collaborating); Managing Conflict; Functional Outcomes; Distributive and Integrative Bargaining; Preparation and Planning (for a negotiation); Clarification and Justification (during a negotiation); Personality, Moods/Emotions, Culture and Race, and Gender in Negotiations; Third-Party Negotiations

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24 Preface

Chapter 15: Foundations of Organization Structure • Newly revised sections: What Is Organizational Structure?, Common Organiza-

tional Frameworks and Structures, Alternate Design Options, The Leaner Organi- zation: Downsizing, Why Do Structures Differ?, Implications for Managers

• New research incorporated in the following areas: Organizational Structure, Departmentalization, Chain of Command, Centralization and Decentralization, Formalization, The Bureaucracy, The Virtual Structure, The Team Structure, The Leaner Organization: Downsizing, Mechanistic and Organic Models, Volatility

Chapter 16: Organizational Culture • New content: A Definition of Organizational Culture, New Exhibit (16-2) on

the effect of culture on organizational outcomes, updated Exhibit 16-6, Culture Creates Climate

• Newly revised sections: Learning Objectives, What Is Organizational Culture?, Reorganized chapter so that “How Employees Learn Culture” and “Creating and Sustaining Culture” are covered earlier, What Do Cultures Do?, Summary, Impli- cation for Managers

• New research incorporated in the following areas: Do Organizations Have Uniform Cultures?, Strong Versus Weak Cultures, Rituals, Language, Keeping a Culture Alive (Selection and Top Management’s Role), Encounter Stage (of Socialization), Hangover Phases in Socialization, The Functions of Culture, Culture Creates Climate, The Ethical Dimension of Culture, Culture and Sus- tainability, Culture and Innovation, Culture as an Asset, Barriers to (cultural) Diversity, Toxicity and Dysfunctions, Barriers to Acquisitions and Mergers, Developing an Ethical Culture, Criticism of Spirituality

Chapter 17: Organizational Change and Stress Management • New content: Criticisms of Lewin’s Three-Step Model • Newly revised sections: Learning Objectives, Change, Creating a Culture for

Change, Stress at Work, Summary • New research incorporated in the following areas: Forces for Change, Resis-

tance to Change, Overcoming Resistance to Change (including Communication, Participation, Building Support, and Developing Positive Relationships), Action Research, Process Consultation, Managing Paradox, Sources of Innovation, Con- text and Innovation, Idea Champions and Innovation, Organizational Change and Stress, What Is Stress?, Stressors, Potential Sources of Stress at Work (includ- ing Environmental, Organizational, and Personal Factors), Stressors Are Additive, Perception (of Stress), Workaholism, Physiological and Behavioral Symptoms (of Stress), Individual Approaches (to Managing Stress) (including Time-Management Techniques, Relaxation Techniques, and Social Support Networks), Goal-Setting (to Reduce Stress), Employee Sabbaticals, Wellness Programs

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25

ACKNOWLEDGMENTS

We owe a debt of gratitude to all those at Pearson who have supported this text over the past 25 years and who have worked so hard on the development of this latest edi- tion. We want to thank Senior Content Analyst Beth Kaufman, Content Strategy Man- ager Lynn Huddon, Product Manager Olutosin Aje-Adegbite, Product Marketer Nayke Heine, Managing Producer Melissa Feimer, and Content Producer Yasmita Hota. On the production side, we want to thank Gina Linko, project manager at Integra Software Services. The authors are grateful to David Glerum for his assistance in manuscript editing and preparation. Finally, we would like to thank the marketing team for promoting the book and the sales staff who have been selling this book over its many editions. We appreciate the attention you have given this book.

We would also like to thank the many reviewers who helped make this new edition as strong and solid as possible:

Eli Awtrey, University of Cincinnati Gerard Beenen, California State University, Fullerton Jon P. Briscoe, Northern Illinois University Jeff W. Bruns, Piedmont College Maryalice Citera, State University of New York at

New Paltz Jeremy Couch, Palm Beach Atlantic University R Wayne Downing, Northwood University Rita Fields, University of Michigan–Flint Kurt H. Gering, Marquette University Elissa D. Giffords, Long Island University Jerry W. Gladwell, Marshall University Matthew D. Griffith, University of Texas at El Paso Otha C. Hawkins, Alamance Community College

Larry Hodges, Fresno Pacific University David S. Jalajas, Long Island University Ralph Katerberg, University of Cincinnati Amy Kyhos, Loyola University Chicago Jamie Leddin, Vanderbilt University Ronald Lesniak, Santa Clara University Jennifer Moss Breen, Creighton University Jennifer Murnane-Rainey, Creighton University Michael Pierce, Fresno Pacific University Rudy Roberts, Fresno Pacific University Diane Roman Treuthart, Loyola University Chicago Pamela K. Sigafoose, Palm Beach Atlantic University Darren C. Treadway, Daemen College Jim Westerman, Appalachian State University

GLOBAL EDITION ACKNOWLEDGEMENTS Pearson would like to thank Ismail Hussein, Lebanese American University; Swapna Koshy, University of Wollongong; John Opute, London South Bank University; Louise Stansfield, Helsinki Metropolia University of Applied Sciences; and Jon and Diane Sutherland for their contribution to the Global Edition. We would also like to thank Charbel Aoun, Lebanese American University; Irene Ong Pooi Fong, Taylor’s Univer- sity; Khaled Haque, Management Specialist; Neelofer Mashood, Middlesex University Dubai; Stephanie Pougnet, University of Applied Sciences Western Switzerland; and Sununta Siengthai, Asian Institute of Technology for reviewing the Global Edition con- tent and providing feedback to improve it.

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26

ABOUT THE AUTHORS

Stephen P. Robbins Ph.D., University of Arizona

Stephen P. Robbins previously worked for the Shell Oil Company and Reynolds Metals Company and has taught at the University of Nebraska at Omaha, Concordia University in Montreal, the University of Baltimore, Southern Illinois University at Edwardsville, and San Diego State University. He is currently professor emeritus in management at San Diego State. A full bio is available at stephenprobbins.com. Dr. Robbins’s research interests have focused on conflict, power, and politics in organizations; behavioral deci- sion making; and the development of effective interpersonal skills. His articles on these and other topics have appeared in such journals as Business Horizons, the California Management Review, Business and Economic Perspectives, International Management, Management Review, Canadian Personnel and Industrial Relations, and The Journal of Management Education. Dr. Robbins is the world’s best-selling textbook author in the areas of management and organizational behavior. His books have sold more than 12 million copies and have been translated into 20 languages. His books are currently used at more than 1,500 U.S. colleges and universities, as well as hundreds of schools throughout Canada, Latin America, Australia, New Zealand, Asia, Europe, and the Arab World. Dr. Robbins also participates in masters’ track competition. Since turning 50 in 1993, he’s won 23 national sprint championships and 14 world sprint titles. He was in- ducted into the U.S. Masters Track & Field Hall of Fame in 2005.

Timothy A. Judge Ph.D., University of Illinois at Urbana-Champaign

Timothy A. Judge is the Joseph A. Alutto Chair in Leadership Effectiveness, and Executive Director of the Fisher Leadership Initiative, Fisher College of Business, The Ohio State Uni- versity. In the past, Dr. Judge has been a Fellow of the Cambridge Judge Business School, University of Cambridge, and Visiting Professor, Division of Psychology & Language Sci- ences, University College London. He has held academic positions at the University of Notre Dame, University of Florida, University of Iowa, Cornell University, and Charles University in the Czech Republic. Dr. Judge’s primary research interests are in (1) personality, moods, and emotions; (2) job attitudes; (3) leadership; and (4) careers. Dr. Judge has published more than 155 articles in these and other major topics in refereed journals. He is a fellow of several professional societies, including the American Psychological Association, the Academy of Management, and the International Association of Applied Psychology. Among the many professional acknowledgments of his work, Dr. Judge has received the Heneman Career Achievement Award, the Mahoney Doctoral Mentoring Award, and the Scholarly Achieve- ment Award, all from the Human Resources Division of the Academy of Management. In addition, a 2017 study identified him as the most cited out of more than 8,000 scholars in applied psychology. Dr. Judge is a co-author of Organizational Behavior with Stephen P. Robbins and Staffing Organizations with John Kammeyer-Mueller. Judge’s primary non- work passion revolves around rock climbing and mountaineering. He has climbed the three highest peaks in the United Kingdom and nearly half of the highest peaks in the lower forty- eight states. He and his wife Jill are the parents of three children.

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27

PART 1 Understanding Yourself and Others

What Is Organizational Behavior? 1

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1.1 Define organizational behavior (referred to as OB throughout the text).

1.2 Show the value of systematic study to OB.

1.3 Identify the major behavioral science disciplines that contribute to OB.

1.4 Demonstrate why few absolutes apply to OB.

1.5 Identify managers’ challenges and opportunities in applying OB concepts.

1.6 Compare the three levels of analysis in this text’s OB model.

1.7 Describe the key employability skills gained from studying OB that are applicable to other majors or future careers.

Right now, you might be wondering, “What is organizational behavior and why does it matter to me?” We will define organizational behavior (OB) very shortly, but first let us begin with the end in mind—why OB matters, and what the study of OB offers you.

Historically, business school coursework on human behavior in organizations has received relatively little attention. This might be surprising to you, because you might be thinking, but “the people make the place”;1 organizations are only as effective as the people who comprise them. Should we not try to understand people in the workplace, as well as how we make decisions, communicate, and interact with one another? Over the last several decades, business schools and organizations have realized the significant role interpersonal skills play in determining a manager’s effectiveness. Understanding OB is important to you now, more than ever. We are in the midst of an OB revolution, of sorts, that is gaining traction year by year. As noted in the 2016 Deloitte Global Business Trends report, organizations have figured out that they need to understand “what makes people join, perform well in, and stay with an organization; who will likely be successful; who will make the best leaders; and what is required to deliver the highest-quality customer service and innovation.”2

A knowledge of OB and interpersonal skills is critical for your success and advancement in the modern workplace. According to Jeff Weiner, chief executive officer (CEO) of LinkedIn, “communications is the No. 1 skills gap across. . . major cities in the

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28 Part 1 • Understanding Yourself and Others

United States.”3 It is also relevant to nearly every job: One study by Monster (a global employment company) mined nearly one million market-wide job postings to determine the most frequently desired skills in applicants.4 Communication skills was at the top of the list, followed by other OB-relevant skills, including problem-solving and influence skills. Furthermore, these skills are also necessary for your career advancement. A sur- vey of over 2,100 chief financial officers across twenty industries indicated that a lack of interpersonal skills is the top reason why some employees fail to advance.5 Ultimately, OB can equip you with tools that are critical to success and advancement in the work- place. In this text, we pay special attention to how the knowledge and practice of OB can help you (1) think analytically and critically, (2) make better decisions, (3) communicate and collaborate more effectively with others, and (4) act with a sense of social respon- sibility in the workplace. Research has demonstrated that these types of “employability skills” are highly valued and desired by employers, and a lack of these skills can lead to problems in the workplace.6

From the organizational standpoint, incorporating OB principles can help trans- form a workplace from good to great, with a positive impact on the bottom line. Com- panies known as good places to work—such as Lululemon, LinkedIn, Zoom Video, Southwest Airlines, Bain & Company, Google, the Boston Consulting Group, and Facebook7—have been found to generate superior financial performance as a result of their attention to OB.8 Second, developing managers’ interpersonal skills helps orga- nizations attract and keep high-performing employees, which is important because outstanding employees are always in short supply and costly to replace. Third, the quality of workplace relationships is strongly linked with employee job satisfaction, stress, and turnover. One study of hundreds of workplaces and more than 200,000 respondents showed that positive social relationships among coworkers and supervi- sors were strongly related to overall job satisfaction, lower stress at work, and lower intentions to quit.9 Positive work relationships help employees to f lourish, leading to improvements in job and life satisfaction, positive emotions at work, and percep- tions that one’s work has meaning.10 Fourth, an emphasis on OB in organizations can foster awareness of social responsibility. Universities have started to incorporate social entrepreneurship education into their curriculum in order to train future leaders in addressing social issues within their organizations.11 This is especially important because there is a growing need for understanding the means and outcomes of corpo- rate social responsibility (CSR).12

In today’s competitive and demanding workplace, employees and managers alike cannot succeed by virtue of their technical skills alone. They also must exhibit good peo- ple skills. This text has been written to help people in organizations develop those skills along with the knowledge that understanding human behavior provides. In so doing, we believe you will obtain lasting skills and insight about yourself and others.

MANAGEMENT AND ORGANIZATIONAL BEHAVIOR

More than ever, individuals are placed into management positions without sufficient man- agement training or informed experience. According to the US Bureau of Labor Statistics, employers with 100–500 employees provide less than one hour of management training per six-month period, on average.13 Furthermore, according to a large-scale survey, more

Telefónica This Spanish multinational broadband and telecommunications provider is one of the best places to work because of their “people” focus. Telefónica’s concerted efforts to keep its employees happy and productive includes putting in place a confidential help channel, which allows employees to clarify queries regarding operational matters and raise instances of noncompliance.

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Chapter 1 • What Is Organizational Behavior? 29

than 58 percent of managers reported they had not received any training and 25 percent admitted they were not ready to lead others when they were given the role.14 Added to that challenge, the demands of the job have increased: The average manager has seven direct reports (five was once the norm) and spends less time supervising them than managers of the past.15 Considering that a Gallup poll found organizations chose the wrong candidate for management positions 82 percent of the time,16 we conclude that the more you can learn about people and how to manage them, the better prepared you will be to be that right candidate. OB will help you get there.

Effective Versus Successful Managerial Activities

What makes one manager more effective than another? To answer this question, Fred Luthans, a prominent OB researcher, and associates looked at what managers do from a unique perspective.17 They asked, “Do managers who move up most quickly in an orga- nization do the same activities and with the same emphasis as managers who do the best job?” You might think the answer is yes, but that is not always the case.

Luthans and associates studied more than 450 managers. All engaged in four man- agerial activities:

1. Traditional management. Decision making, planning, and controlling. 2. Communication. Exchanging routine information and processing paperwork. 3. Human resources (HR) management. Motivating, disciplining, managing con-

flict, staffing, and training. 4. Networking. Socializing, politicking, and interacting with outsiders.

The “average” manager spent 32 percent of their time in traditional management activities, 29 percent communicating, 20 percent in HR management activities, and 19 percent networking. However, the time and effort different individual managers spent on those activities varied a great deal. Among managers who were successful (defined in terms of speed of promotion within their organizations), networking made the largest relative contribution to success and HR management activities made the least relative contribution. Indeed, other studies in Australia, Israel, Italy, Japan, and the United States confirm the link between networking, social relationships, and success within an organization.18 However, Luthans and associates found that among effec- tive managers (defined in terms of quantity and quality of their performance and the satisfaction and commitment of their employees), communication made the largest relative contribution and networking the least. The connection between communication and effective managers is also clear. Managers who explain their decisions and seek information from colleagues and employees—even if the information turns out to be negative—are the most effective.19

Organizational Behavior (OB) Defined

Now that we have established what managers do and why this is important for OB, we turn our focus more broadly toward how people behave in organizations.

Organizational behavior (OB) is a field of study that investigates the impact that individuals, groups, and structure have on behavior within organizations for the purpose

Organizational behavior A field of study that investigates the impact that individuals, groups, and structure have on behavior within organizations, for the purpose of applying such knowledge toward improving an organization’s effectiveness.

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30 Part 1 • Understanding Yourself and Others

of applying such knowledge toward improving an organization’s effectiveness. That is a mouthful, so let us break it down.

OB is a field of study, meaning that it is a distinct area of expertise with a com- mon body of knowledge. It focuses on three determinants of behavior in organizations: individuals, groups, and structure. In addition, OB applies the knowledge gained about individuals, groups, and the effect of structure on behavior in order to make organiza- tions work more effectively.

To sum up our definition, OB is the study of what people do in an organization and the way their behavior affects the organization’s performance. Because OB is concerned specifically with employment-related situations, it examines behavior in the context of job satisfaction, absenteeism, employment turnover, productivity, human performance, and management. Although debate exists about the relative importance of each, OB includes these core topics:20

• Motivation • Leader behavior and power • Interpersonal communication • Group structure and processes • Attitude development and perception • Change processes • Conflict and negotiation • Work design

COMPLEMENTING INTUITION WITH SYSTEMATIC STUDY

Whether you have explicitly thought about it before or not, you have been “reading” people almost all your life by watching their actions and interpreting what you see, or by trying to predict what people might do under different conditions. The casual approach to reading others can often lead to erroneous predictions, but using a systematic ap- proach can improve your accuracy.

Underlying the systematic approach is the belief that behavior is not random. Rather, we can identify consistencies underlying people’s behavior and modify them to reflect individual differences.

These fundamental consistencies are very important. Why? Because they allow predictability. Behavior is generally predictable, and the systematic study of behavior is a way to make reasonably accurate predictions. When we use the term systematic study, we mean looking at relationships, attempting to attribute causes and effects, and basing our conclusions on scientific evidence—that is, on data gathered under controlled condi- tions and measured, and interpreted, in a rigorous manner.

Evidence-based management (EBM) complements systematic study by basing managerial decisions on the best available scientific evidence. For example, we want doctors to make decisions about patient care based on the latest available evidence, and EBM argues that managers should do the same, thinking more scientifically about management problems. You might wonder what manager would not base decisions on evidence, but most management decisions are still made “on the fly,” with little to no systematic study of available evidence.21

Systematic study and EBM add to intuition, or those “gut feelings” about what makes others (and ourselves) “tick.” Of course, the things you have come to believe in

Systematic study Looking at relationships, attempting to attribute causes and effects, and drawing conclusions based on scientific evidence.

Evidence-based management (EBM) The basing of managerial decisions on the best available scientific evidence.

Intuition An instinctive feeling not necessarily supported by research.

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Chapter 1 • What Is Organizational Behavior? 31

an unsystematic way are not necessarily incorrect; one review of hundreds of studies suggest that data-driven judgments (based on algorithms) were about 10 percent more accurate than human’s intuitive judgments.22 Another study found that, contrary to con- ventional wisdom, laypeople may actually prefer data-driven judgments to judgments made by others (e.g., experts) and even to judgments made by themselves.23 Jack Welch (former CEO of General Electric) noted, “The trick, of course, is to know when to go with your gut.”24 But if we make all decisions with intuition or gut instinct, we are likely working with incomplete information—like making an investment decision with only half the data about the potential for risk and reward.

Building on Big Data with Artificial Intelligence

Data has been used to evaluate behavior since at least 1749, when the word statistic was coined to mean a “description of the state.”25 Statistics back then were used for purposes of governance, but since the data collection methods were clumsy and simplis- tic, so were the conclusions. Big data—the extensive use of statistical compilation and analysis—did not become possible until computers were sophisticated enough to both store and manipulate large amounts of information.26 Let us look at the current use of the application of big data for business, which originated in the marketing department of online retailers.

CURRENT USAGE No matter how many terabytes of data firms collect or from how many sources, the reasons for data analytics include predicting events, from a book purchase to a spacesuit malfunction; detecting how much risk is incurred at any time, from the risk of a fire to that of a loan default; and preventing catastrophes large and small, from a plane crash to the overstocking of a product.27 With big data, U.S. defense contractor BAE Systems protects itself from cyberattacks, San Francisco’s Bank of the West uses customer data to create tiered pricing systems, and London’s Graze.com analyzes customers’ preferences to select snack samples to send with their orders.28 Organizations are also beginning to focus more on fast data, drawing on a consistent influx of actionable data that can be used to guide business decisions in real time.29

NEW TRENDS The use of big data for understanding, helping, and managing people is relatively new but holds promise. It is good news for the future of business that researchers, the media, and company leaders have identified the potential of data-driven management and decision making. A manager who uses data to define objectives, develop theories of causality, and test those theories can determine which employee activities are relevant to accomplishing those objectives.30 Increasingly, big data is applied toward making effective decisions (which we discuss in the chapter on perception and individual decision making) and managing organizational change (discussed in the chapter on organizational change and stress management). Big data has enabled organizations to acquire and manage large amounts of data and information. Even more recent advancements have shifted toward how to process and analyze all this information.31 One way organizations have been able to adapt to the massive amounts of and sheer speed at which data is acquired is through artificial intelligence (i.e., machines programmed to think, work, and react like humans).32 When you think of artificial intelligence, your mind may wander to robots, regardless of your status as a Star Trek or Star Wars fan. We are certainly seeing robotics becoming used in the workplace (for example, robots can help hospital night

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32 Part 1 • Understanding Yourself and Others

staff remotely assist their patients during night rounds).33 However, much of the modern focus has been on machine learning (i.e., a subset of AI in which software is trained to perform a task, while at the same time “learning” and “improving” from incoming data and feedback).34 Indeed, 60 percent of the billions of dollars invested in AI has been allocated toward machine learning.35 Machine learning has contributed immensely to the success of a number of organizations, especially those in the e-commerce industry; one estimate suggests that over a third of Amazon transactions stem from AI-facilitated product recommendations.36 In the coming chapters, we discuss how and in what ways artificial intelligence approaches, including robotics and machine learning, have contributed to the study and practice of OB.

LIMITATIONS As technological capabilities for handling big data and artificial intelligence have increased, so have issues of privacy and appropriate application.37 This is particularly true when data collection includes surveillance instruments. For instance, an experiment in Brooklyn, New York, has been designed to improve the quality of life for residents, but the researchers will collect potentially intrusive data from infrared cameras, sensors, and smartphone Wi-Fi signals.38 Bread Winners Café in Dallas, Texas, constantly monitors all employees in the restaurant through surveillance and uses that data to promote or discipline its servers.39 These big data tactics and others might yield results—and research indicates that surveillance may increase task performance and citizenship behavior (helping behaviors toward others), at least in the short term.40 But critics point out that after Frederick Taylor introduced surveillance analytics in 1911 to increase productivity, these techniques were surpassed by Alfred Sloan’s greater success, achieved by providing meaningful work to employees.41

The use of artificial intelligence also has its own issues of privacy and appro- priate application.42 Despite traditional concerns regarding the safety and job security threats robots and automation bring to mind,43 perhaps the simplest limitation here is that machines can often fail to capture the obvious “big picture” and may ignore their own limits.44 For example, an algorithm may inadvertently include pizza topping prefer- ences in predicting which employees are more likely to steal at work (you have to watch out for those pineapple pizza lovers!). As such, it is important for machine learning to be supervised to avoid atheoretical predictions and decision making. AI may also be used to engage in unethical behaviors at work. For example, Facebook banned a large UK car insurance company from mining users’ social media information, learning their personality traits, and charging them different premiums based on their personality traits (and predictions for how safely they would drive).45

Overall, we are not advising you to throw your intuition out the window. We are also not advising you to base all your decisions on a machine learning algorithm. In dealing with people, leaders often rely on hunches, and sometimes the outcomes are excellent. At other times, human tendencies get in the way. What we are advising is to use evidence as much as possible to inform your intuition and experience. The prudent use of big data and artificial intelligence, along with an understanding of human behav- ioral tendencies, can contribute to sound decision making and ease natural biases. What we are advising is to use evidence as much as possible to inform your intuition and experience. That is the promise of OB.

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Chapter 1 • What Is Organizational Behavior? 33

DISCIPLINES THAT CONTRIBUTE TO THE OB FIELD

OB is an applied behavioral science built on contributions from several behavioral disciplines, mainly psychology and social psychology, sociology, and anthropology. Psychology’s contributions have been principally at the individual or micro-level of analysis, while the other disciplines have contributed to our understanding of macro concepts such as group processes and organization. Exhibit 1-1 is an overview of the major contributions to the study of OB.

Psychology

Psychology seeks to measure, explain, and sometimes change the behavior of humans and other animals. Contributors to the knowledge of OB are learning theorists; person- ality theorists; counseling psychologists; and, most important, industrial and organiza- tional psychologists.

Early industrial and organizational psychologists studied the problems of fatigue, boredom, and other working conditions that could impede efficient work performance. More recently, their contributions have expanded to include learning, perception, per- sonality, emotions, training, leadership effectiveness, needs and motivational forces, job

Psychology The science that seeks to measure, explain, and sometimes change the behavior of humans and other animals.

Sociology

Social psychology

Anthropology

Psychology

Behavioral science

OutputUnit of analysis

Contribution

Learning Motivation Personality Emotions Perception Training Leadership effectiveness Job satisfaction Individual decision making Performance appraisal Attitude measurement Employee selection Work design Work stress

Behavioral chang e Attitude change Communication Group processes Group decision making

Formal organization theory Organizational technology Organizational change Organizational culture

Comparative value s Comparative attitudes Cross-cultural analysis

Organizational culture Organizational environment Power

Communication Power Conflict Intergroup behavior

Study of organizational

behavior

Organization system

Individual

Group

EXHIBIT 1-1 Toward an OB Discipline

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34 Part 1 • Understanding Yourself and Others

satisfaction, decision-making processes, performance appraisal, attitude measurement, employee-selection techniques, work design, and job stress.

Social Psychology

Social psychology, generally considered a branch of psychology, blends concepts from both psychology and sociology to focus on people’s influence on one another. One major study area is change—how to implement it and how to reduce barriers to its ac- ceptance. Social psychologists also contribute to measuring, understanding, and chang- ing attitudes; identifying communication patterns; and building trust. Finally, they have made important contributions to our study of group behavior, power, and conflict.

Sociology

While psychology focuses on the individual, sociology studies people in relation to their social environment or culture. Sociologists have contributed to OB through their study of group behaviors in organizations, particularly formal and complex organizations. Perhaps most importantly, sociologists have studied organizational culture, formal organization theory and structure, organizational technology, communications, power, and conflict.

Anthropology

Anthropology is the study of societies in order to learn about human beings and their activities. Anthropologists’ work on cultures and environments has helped us understand differences in fundamental values, attitudes, and behavior among people in different countries and within different organizations. Much of our current understanding of or- ganizational culture, organizational climate, and differences among national cultures is a result of the work of anthropologists or those using their methods.

THERE ARE FEW ABSOLUTES IN OB

Laws in the physical sciences—chemistry, astronomy, physics—are consistent and apply in a wide range of situations. They allow scientists to generalize about the pull of gravity or to be confident about sending astronauts into space to repair satellites. Human beings are complex, and few, if any, simple principles explain human behavior. Because we are not alike, our ability to make generalizations about ourselves is limited. Two people often act very differently in the same situation, and the same person’s behavior changes in different situations. For example, not everyone is motivated by money, and you may behave much more differently during a job interview than you would hanging out with your friends on a Saturday morning.

This does not mean, of course, that we cannot offer reasonably accurate explana- tions of human behavior. It does mean that OB concepts must reflect situational, or contingency, conditions. We can say x leads to y, but only under conditions specified in z—the contingency variables.

OB was developed by applying general concepts to a particular situation, person, or group. For example, OB practitioners would avoid stating that everyone likes com- plex and challenging work (a generalization). Why? Because not everyone wants a chal- lenging job. Some people prefer routine over varied work, or simple over complex tasks.

Social psychology An area of psychology that blends concepts from psychology and sociology to focus on the influence of people on one another.

Sociology The study of people in relation to their social environment or culture.

Anthropology The study of societies to learn about human beings and their activities.

Contingency variables Situational factors or variables that moderate the relationship between two or more variables.

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Chapter 1 • What Is Organizational Behavior? 35

A job attractive to one person may be unattractive to another; its appeal is contingent on the person who holds it. Often, we will find both general effects (money does have some ability to motivate most of us) and contingencies (some of us are more motivated by money than others, and some situations are more about money than others). We will best understand OB when we realize how both (general effects and the contingencies that affect them) often guide behavior.

CHALLENGES AND OPPORTUNITIES FOR OB

Understanding organizational behavior has never been more important for managers. Take a quick look at the dramatic changes in organizations. The workforce is becoming increasingly diverse; and global competition requires employees to become more flex- ible and cope with rapid change.

As a result of these changes and others, employment options have adapted to include new opportunities for workers. Exhibit 1-2 details some of the types of options individuals may find offered to them by organizations or for which they would like to negotiate. Under each heading in the exhibit, you will find a grouping of options from which to choose—or combine. For instance, at one point in your career you may find yourself employed full

Employed

Underemployed/ underutilized

Re-employed

Unemployed/jobless

Entrepreneur

Retired

Furloughed

Laid off

Categories of Employment

Job seeking

Places of Employment

Anchored (office/cubicle)

Floating (shared space)

Virtual

Flexible

Work from home

Compensation for Employment

Salary

Hourly

Overtime

Bonus

Contract

Time off

Benefits

Conditions of Employment

Local

Expatriate

Flexpatriate

International business traveler

Visa employee

Short-term assignee

Union/nonunion employee

Types of Employment

Job share

Contingent

Independent contractor

Temporary

Intern

Full-time

Part-time

Flextime

Reduced hours

EXHIBIT 1-2 Employment Options

Sources: J. R. Anderson Jr., et al., “Action Items: 42 Trends Affecting Benefits, Compensation, Training, Staffing and Technology,” HR Magazine (January 2013) p. 33; M. Dewhurst, B. Hancock, and D. Ellsworth, “Redesigning Knowledge Work,” Harvard Business Review (January–February 2013), 58–64; E. Frauenheim, “Creating a New Contingent Culture,“Workforce Management (August 2012), 34–9; N. Koeppen, “State Job Aid Takes Pressure off Germany,” The Wall Street Journal (February 1, 2013), p. A8; M. A. Shaffer, M. L. Kraimer, Y,-P. Chen, and M.C. Bolino, “Choices, Challenges, and Career Consequences of Global Work Experiences: A Review and Future Agenda,” Journal of Management (July 2012), 1282–327.

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36 Part 1 • Understanding Yourself and Others

time in an office in a localized, nonunion setting with a salary and bonus compensation package, while at another point you may wish to negotiate for a flextime, virtual position and choose to work from overseas for a combination of salary and extra paid time off.

In short, today’s challenges bring opportunities for managers to use OB concepts. In this section, we review some—but not nearly all—of the critical developing issues confronting managers and employees for which OB offers solutions or, at least, mean- ingful insights toward solutions.

Globalization

Globalization has led organizations, leaders, and employees to become increasingly connected across the globe, now more than ever.46 Samsung, the largest South Korean business conglomerate, sells most of its products to organizations in other countries; Burger King is owned by a Brazilian firm; and McDonald’s sells hamburgers in 101 countries on six continents. Although globalization united the international community following the second World War, the slow recovery from the global financial crisis has caused much of the world’s population to be embittered by globalization.47 In modern times, the world is at a tension point in which societies are choosing between sectioning off their economies versus remaining open to the world, given how globalization can change the employment landscape rapidly for many communities, sometimes result- ing in poverty and economic inequality.48 Meanwhile, we are on the brink of a new Industrial Revolution that has disrupted many industries and left many without jobs.49 One of the new challenges of this tide of globalization is to forge cooperation between the public and its constituents, and between organizations and their employees across the globe, to pursue the public good with social responsibility in mind.

Furthermore, as a result of globalization, the manager’s job has changed. To be effective in the workplace, you should try to anticipate and adapt your approach to the global issues we discuss next.

WORKING WITH PEOPLE FROM DIFFERENT CULTURES In your own country or on foreign assignment, you will find yourself working with bosses, peers, and other employees born and raised in different cultures. What motivates you may not motivate them. Or your communication style may be straightforward and open, which others may find uncomfortable and threatening. To work effectively with people from different cultures, you need to understand how their culture and background have shaped them and how to adapt your management style to accommodate these differences.

ADAPTING TO DIFFERING CULTURAL AND REGULATORY NORMS To be effective, managers need to know the cultural norms of the workforce in each country where they do business. For instance, in some countries a large percentage of the workforce enjoys long holidays. There are national and local regulations to consider, too. Managers of subsidiaries abroad need to be aware of the unique financial and legal regulations applying to “guest companies” or else risk violating them. Violations can have implications for their operations in that country and for political relations between countries. Managers also need to be cognizant of differences in regulations for competitors in that country; many times, understanding the laws can lead to success or failure. For example, knowing local banking laws allowed one multinational firm—the Bank of China—to seize control of a storied (and very valuable) London building, Grosvenor House Hotel,

Globalization The process in which worldwide integration and interdependence is promoted across national borders.

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Chapter 1 • What Is Organizational Behavior? 37

from the owner, the Indian hotel group Sahara. Management at Sahara contended that the loan default that led to the seizure was a misunderstanding regarding one of their other properties in New York.50 Globalization can get complicated.

Workforce Demographics

The workforce has always adapted to variations in the economy, longevity, birth rates, socioeconomic conditions, and other changes that have a widespread impact. People adapt to survive, and OB studies the way those adaptations affect individuals’ behavior. For instance, even though the 2008 global recession ended many years ago, some trends from those years are continuing: many people who have been long unemployed have left the workforce,51 while others have cobbled together several part-time jobs52 or settled for on-demand work.53 Further options that have been particularly popular for younger educated workers have included obtaining specialized industry training after college,54 accepting full-time jobs that are lower level,55 and starting their own companies.56

Longevity and birth rates have also changed the dynamics in organizations. Global longevity rates have increased by about six years in a short time (since 2000—the fast- est increase since the 1960s),57 while birth rates are decreasing for many developed countries, trends that together indicate a lasting shift toward an older workforce. OB research can help explain what this means for employee attitudes, organizational cul- ture, leadership, structure, and communication. Finally, socioeconomic shifts have a profound effect on workforce demographics. For example, equal access to work and education, regardless of gender identity or sexual orientation, has been deemed a human rights issue by the United Nations.58 Despite increasing representation in the workforce, people of various demographic backgrounds (e.g., gender identities and sexual orienta- tions) continue to experience inequality, under-representation as managers, prejudice, and even violence.59 OB researchers study how people from diverse backgrounds fare in the workplace and the unique challenges and benefits they experience as well as how their conditions can be improved. This is just one illustration of how cultural and socio- economic changes affect the workplace, but it is one of many. We discuss how OB can provide understanding and insight on workforce issues throughout this text.

Workforce Diversity

One of the most important challenges for organizations is in managing increasing workforce diversity, a trend by which organizations are becoming more heterogeneous in terms of employees’ gender, age, race, ethnicity, sexual orientation, and other char- acteristics. Though we have more to say about it in the next chapter, diversity presents great opportunities and poses challenging questions for managers and employees. How can we recognize the strengths in our diversity? Should we treat all employees alike, or adapt to accommodate each other’s differences? What are the legal requirements in each country that protect workplaces from prejudice, discrimination, and inequality? Does workforce diversity lead to positive outcomes for employees and organizations? It is important to address the spoken and unspoken concerns of organizations today.

Social Media

As we discuss in the chapter on communication, social media in the business world is here to stay. Despite its pervasiveness, many organizations continue to struggle

Workforce diversity The concept that organizations are becoming more heterogeneous in terms of gender, age, race, ethnicity, sexual orientation, and other characteristics.

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38 Part 1 • Understanding Yourself and Others

with employees’ use of social media in the workplace. For instance, in February 2015, a Texas pizzeria fired an employee before the first day of work because of an unf lattering tweet about the job. In December 2014, Nordstrom fired an Oregon employee who had posted a personal Facebook comment seeming to advocate vio- lence against police officers.60 These examples show that social media is a difficult issue for today’s managers, presenting both a challenge and an opportunity for OB. For instance, how much should HR investigate a candidate’s social media presence? Should a hiring manager read the candidate’s Twitter feeds, or just do a quick pe- rusal of their Facebook profile? How can managers attract applicants and customers through their own social media presence?61 Managers need to adopt evidence-based policies designed to protect employees and their organizations with balance and understanding.

Once employees are on the job, many organizations have policies about accessing social media at work—when, where, and for what purposes. But what about the impact of social media on employee well-being? One recent study found that subjects who woke up in a positive mood and then accessed Facebook frequently found their mood wors- ened during the day. Moreover, subjects who checked Facebook frequently over a two- week period reported a decreased level of satisfaction with their lives.62 Managers—and OB—are trying to increase employee satisfaction and therefore improve and enhance positive organizational outcomes. We will discuss these issues further in the chapters on attitudes and job satisfaction and emotions and moods.

Employee Well-Being at Work

One of the biggest challenges to maintaining employee well-being is the reality that many workers never get away from the virtual workplace. While communication tech- nology allows many technical and professional employees to do their work at home, in their cars, or on the beach in Tahiti, it also means many feel like they are not part of a team. “The sense of belonging is very challenging for virtual workers, who seem to be all alone out in cyberland,” said Ellen Raineri of Kaplan University.63 Another chal- lenge is that organizations are asking employees to put in longer hours. According to one recent study, one in four employees shows signs of burnout, and two in three report high stress levels and fatigue.64 This may be an underestimate because workers report maintaining “always on” access for their managers through e-mail and texting. Finally, employee well-being is challenged by heavy outside commitments. Millions of single- parent employees and employees with dependent parents face significant challenges in balancing work and family responsibilities, for instance.

As you will see in later chapters, the field of OB offers several suggestions to guide managers in designing workplaces and jobs that can help employees deal with work–life conflicts. Furthermore, there are several suggestions for managing stress and preventing burnout that you can apply, both in school and in the workplace.

Positive Work Environment

A growing area in OB research is positive organizational scholarship (POS; also called positive organizational behavior), which studies how organizations develop human strengths, foster vitality and resilience, and unlock potential. Researchers

Positive organizational scholarship An area of OB research that concerns how organizations develop human strengths, foster vitality and resilience, and unlock potential.

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Chapter 1 • What Is Organizational Behavior? 39

in this area say too much of OB research and management practice has been tar- geted toward identifying what is wrong with organizations and their employees. In response, they try to study what is good about them.65 Some key subjects in positive OB research are engagement, hope, optimism, and resilience in the face of strain.

Although positive organizational scholarship does not deny the value of the nega- tive (such as critical feedback), it does challenge us to look at OB through a new lens, pushing organizations to make use of employees’ strengths rather than dwell on their limitations. One aspect of a positive work environment is the organization’s culture, the topic of the chapter on organizational culture. Organizational culture influences employee behavior so strongly that organizations have employed “culture officers” to shape and preserve the company’s personality.66

Ethical Behavior

In an organizational world characterized by cutbacks, expectations of increasing pro- ductivity, and tough competition; it is not surprising many employees feel pressured to cut corners, break rules, and engage in other questionable practices. Increasingly they face ethical dilemmas and ethical choices in which they are required to identify right and wrong conduct. Should they “blow the whistle” if they uncover illegal activities in their companies? Do they follow orders with which they do not personally agree? Should they “play politics” to advance their careers?

What constitutes good ethical behavior has never been clearly defined, and the line differentiating right from wrong is blurry. We see people all around us engaging in unethical practices: Elected officials pad expense accounts or take bribes; corporate executives inflate profits to cash in lucrative stock options; and university administra- tors look the other way when winning coaches encourage scholarship athletes to take easy courses or even, in the recent case at the University of North Carolina–Chapel Hill, sham courses with fake grades.67 When caught, we see people give excuses such as “Everyone does it” or “You have to seize every advantage.”

Today’s manager must create an ethically healthy climate for employees in which they can do their work productively with minimal ambiguity about right and wrong behaviors. Companies that promote a strong ethical mission, encourage employees to behave with integrity, and provide strong leadership can influence employee decisions to behave ethically.68 Classroom training sessions in ethics have also proven helpful in maintaining a higher level of awareness of the implications of employee choices as long as the training sessions are given on an ongoing basis.69 In upcoming chapters, we discuss the actions managers can take to create an ethically healthy climate and help employees sort through ambiguous situations.

COMING ATTRACTIONS: DEVELOPING AN OB MODEL

We conclude this chapter by presenting a general model that defines the field of OB and stakes out its parameters, concepts, and relationships. By studying the model, you will have a good picture of how the topics in this text can inform your approach to manage- ment issues and opportunities.

Ethical dilemmas and ethical choices Situations in which individuals are required to define right and wrong conduct.

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40 Part 1 • Understanding Yourself and Others

An Overview

A model is an abstraction of reality, a simplified representation of some real-world phenomenon. Exhibit 1-3 presents the skeleton of our OB model. It proposes three types of variables (inputs, processes, and outcomes) at three levels of analysis (in- dividual, group, and organizational). In the chapters to follow, we proceed from the individual level (Chapters 2 through 8) to group behavior (Chapters 9 through 14) to the organizational system (Chapters 15 through 17). The model illustrates that inputs lead to processes, which lead to outcomes; we discuss interrelationships at each level of analysis. Notice that the model also shows that outcomes can influence inputs in the future, which highlights the broad-reaching effect OB initiatives can have on an organization’s future.

Inputs

Inputs are variables like personality, group structure, and organizational culture that lead to processes. These variables set the stage for what will occur in an organization later. Many are determined in advance of the employment relationship. For example, individual diversity characteristics, personality, and values are shaped by a combina- tion of an individual’s genetic inheritance and childhood environment. Group structure, roles, and team responsibilities are typically assigned immediately before or after a group is formed. Organizational structure and culture are usually the result of years of development and change as the organization adapts to its environment and builds up customs and norms.

Model An abstraction of reality, a simplified representation of some real-world phenomenon.

Inputs Variables like personality, group structure, and organizational culture that lead to processes.

Processes

Individual Level • Emotions and moods • Motivation • Perception • Decision making

Group Level • Communication • Leadership • Power and politics • Conflict and negotiation

Organizational Level • Human resource management • Change practices

Outcomes

Individual Level • Attitudes and stress • Task performance • Citizenship behavior • Withdrawal behavior

Group Level • Group cohesion • Group functioning

Organizational Level • Productivity • Survival

Inputs

Individual Level • Diversity • Personality • Values

Group Level • Group structure • Group roles • Team responsibilities

Organizational Level • Structure • Culture

EXHIBIT 1-3 A Basic OB Model

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Chapter 1 • What Is Organizational Behavior? 41

Processes

If inputs are like the nouns in OB, processes are like verbs. Processes are actions that individuals, groups, and organizations engage in as a result of inputs and that lead to cer- tain outcomes. At the individual level, processes include emotions and moods, motiva- tion, perception, and decision making. At the group level, they include communication, leadership, power and politics, and conflict and negotiation. Finally, at the organiza- tional level, processes include HR management and change practices.

Outcomes

Outcomes are the key variables that you want to explain or predict, and that are affected by other variables. What are the primary outcomes in OB? Scholars have emphasized individual-level outcomes, such as attitudes and stress, task performance, citizenship behavior, and withdrawal behavior. At the group level, cohesion and functioning are the dependent variables. At the organizational level, we look at overall productivity and survival. Because these outcomes are covered in all the chapters, we briefly discuss each so you can understand the goal of OB.

ATTITUDES AND STRESS Employee attitudes are the evaluations that employees make, ranging from positive to negative, about objects, people, or events. For example, the statement “I really think my job is great” is a positive job attitude, while “My job is boring and tedious” is a negative job attitude. Stress is a psychological process that occurs in response to environmental pressures.

Some people might think influencing employee attitudes and stress is purely soft stuff, but as you will learn, attitudes often have behavioral consequences that directly relate to how well you do your job. Ample evidence shows that employees who are more satisfied and treated fairly are more willing to engage in the above-and-beyond citizen- ship behavior that is so vital in the contemporary business environment.

TASK PERFORMANCE The combination of effectiveness and efficiency at doing your core job tasks is a ref lection of your level of task performance. If we think about the job of a factory worker, task performance could be measured by the number and quality of products produced in an hour. The task performance measurement of a teacher would be the level of education that students obtain. The task performance measurement of consultants might be the timeliness and quality of the presentations they offer to the client. All these types of performance relate to the core duties and responsibilities of a job and are often directly related to the functions listed on a formal job description.

ORGANIZATIONAL CITIZENSHIP BEHAVIOR (OCB) The discretionary behavior that is not part of an employee’s formal job requirements, and that contributes to the psychological and social environment of the workplace, is called organizational citizenship behavior (OCB), or simply citizenship behavior. Successful organizations have employees who do more than their usual job duties—who provide performance beyond expectations. Organizations want and need employees who make positive contributions that are not in any job description, and evidence indicates organizations

Processes Actions that individuals, groups, and organizations engage in as a result of inputs and that lead to certain outcomes.

Outcomes Key factors that are affected by some other variables.

Attitudes Evaluative statements or judgments concerning objects, people, or events.

Stress A psychological process in which an individual is confronted with an opportunity, demand, or resource related to what the individual desires and for which the outcome is perceived to be both uncertain and important (e.g., stressors).

Organizational citizenship behavior (OCB) Discretionary behavior that contributes to the psychological and social environment of the workplace.

Task performance The combination of effectiveness and efficiency at doing core job tasks.

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42 Part 1 • Understanding Yourself and Others

that have such employees outperform those that do not. As a result, OB is concerned with citizenship behavior as an outcome variable.

WITHDRAWAL BEHAVIOR We have already mentioned behavior that goes above and beyond task requirements, but what about behavior that in some way is below task requirements? Withdrawal behavior is the set of actions that employees take to separate themselves from the organization. There are many forms of withdrawal, ranging from showing up late or failing to attend meetings to absenteeism and turnover. Employee withdrawal can have a very negative effect on an organization.

GROUP COHESION Although many outcomes in our model can be conceptualized as individual-level phenomena, some relate to the way groups operate. Group cohesion is the extent to which members of a group support and validate one another at work. In other words, a cohesive group is one that sticks together. When employees trust one another, seek common goals, and work together to achieve these common ends, the group is cohesive; when employees are divided among themselves in terms of what they want to achieve and have little loyalty to one another, the group is not cohesive.

GROUP FUNCTIONING In the same way that positive job attitudes can be associated with higher levels of task performance, group cohesion should lead to positive group functioning. Group functioning refers to the quantity and quality of a group’s work output. Similar to how the performance of a sports team is more than the sum of each individual player’s performance, group functioning in work organizations is more than the sum of individual task performances.

PRODUCTIVITY The highest level of analysis in OB is the organization as a whole. An organization is productive if it achieves its goals by transforming inputs into outputs at the lowest cost. Thus, productivity requires both effectiveness and efficiency.

A business firm is effective when it attains its sales or market share goals, but its productivity also depends on achieving those goals efficiently. Popular measures of organizational efficiency include return on investment, profit per dollar of sales, and output per hour of labor.

Organizations in the service industry must include customer needs and require- ments in assessing their effectiveness. Why? Because a clear chain of cause and effect runs from employee behavior to customer attitudes and profitability. For example, a recent study of over 50,000 online TripAdvisor reviews and nearly 8,000 managerial responses suggests that when managers personally respond to online reviews, financial performance (e.g., revenue per available room) increases.70

SURVIVAL The final outcome we consider is organizational survival, which is simply evidence that the organization is able to exist and grow over the long term. The survival of an organization depends not just on how productive the organization is, but also on how well it fits with its environment. A company that is very productive in making goods and services of little value to the market is unlikely to survive for long, so survival also relies on perceiving the market successfully, making good decisions about how and when to pursue opportunities, and successfully managing change to adapt to new business conditions.

Withdrawal behavior The set of actions employees take to separate themselves from the organization.

Group cohesion The extent to which members of a group support and validate one another while at work.

Group functioning The quantity and quality of a group’s work output.

Productivity The combination of the effectiveness and efficiency of an organization.

Effectiveness The degree to which an organization meets the needs of its clientele or customers.

Efficiency The degree to which an organization can achieve its ends at a low cost.

Organizational survival The degree to which an organization is able to exist and grow over the long term.

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Chapter 1 • What Is Organizational Behavior? 43

EMPLOYABILITY SKILLS

Challenges relevant to OB can be found in just about every function of business, from finance and accounting to management and marketing. Without a doubt, at some point in your career, you will come across an issue that hinges to a large degree on the behavior of people in organizations. A review of the great challenges that most businesses face reveals that OB is an essential piece of the puzzle in solving many problems that involve managing integrity/social responsibility, managing resources, competing among busi- nesses, bolstering customer and employee loyalty, reducing uncertainty, complying with government regulation, managing risks, and finding the right staff—all while growing revenue and increasing profit.71

But OB is not relevant to business majors only; it is important for all students, no matter what their majors are. At first glance, for example, it might not seem as if a university student with a microbiology degree would have any need to take an OB class. But what happens after that student graduates? Wouldn’t knowledge of OB principles and concepts help them apply to and be successful at a job as a biology technician with Battelle? What about a graduate with a nursing degree working at the Mayo Clinic? A com- puter science graduate who is about to begin work with Cisco? OB principles matter for students of all majors and can help increase employability as well as interpersonal skills in the workplace. These skills can even help you to become successful in your classes as you interact with other students and your professors! Clearly, the knowledge of OB concepts such as stress management, change, attitudes, emotions, and motivation, among others, can help you navigate your interactions with your classmates as you continue to learn.

People, along with their behaviors, differences, attitudes, emotions, moods, personalities, values, intentions, thoughts, and motivations, are inextricably linked to life in the workplace. As stated earlier in the chapter, “The people make the place.”72 Employees interact and communicate with one another within and across work groups, departments, teams, and organizations to help accomplish the organization’s goals. Leaders within these organizations (along with the employees themselves) seek to effect change, establish an organizational culture, and set policies and procedures—processes that inevitably involve leadership, politicking, conflict, and negotiation. Given the per- vasiveness of OB in organizational life, entry-level employees and working profes- sionals would therefore benefit from having solid foundational skills in OB, such as communication, collaboration, critical thinking, problem solving, social responsibility, and knowledge application and analysis.

In this section, we explore the career employability skills that a course in OB can help expand for those who select any major—from English, to engineering, to political science.

Employability Skills That Apply Across Majors

Throughout this text, you will learn and practice many skills that hiring managers iden- tify as important to success in a variety of business settings, including small and large firms, nonprofit organizations, and public service. These skills will also be useful if you plan to start your own business, for example:

Critical thinking involves purposeful and goal-directed thinking used to define and solve problems and to make decisions or form judgments related to a situation or

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44 Part 1 • Understanding Yourself and Others

set of circumstances. It involves cognitive, metacognitive, and dispositional com- ponents that may be applied differently in specific contexts.

Communication is defined as the effective use of oral, written, and nonverbal com- munication skills for multiple purposes (e.g., to inform, instruct, motivate, per- suade, and share ideas); effective listening; the use of technology to communicate; and the ability to evaluate the effectiveness of communication efforts—all within diverse contexts.

Collaboration is a skill in which individuals can actively work together on a task, constructing meaning and knowledge as a group through dialogue and negotiation that results in a final product reflective of their joint, interdependent actions.

Knowledge application and analysis is defined as the ability to learn a concept and then apply that knowledge appropriately in another setting to achieve a higher level of understanding.

Social responsibility includes skills related to both business ethics and corporate social responsibility. Business ethics includes sets of guiding principles that influ- ence the way individuals and organizations behave within the society that they operate. Corporate social responsibility is a form of ethical behavior that requires that organizations understand, identify, and eliminate unethical economic, envi- ronmental, and social behaviors.

The employability skills matrix (ESM) links the five employability skills that were just defined with sections in each chapter. Within these sections, you will be primed to think critically and apply your knowledge to consider special cases and concepts. You will also learn how to improve your collaboration and communication skills by learning what you might do or say in these given situations to navigate the work world positively and

Critical Thinking

Part 1 Part 2 Part 3 Part 4 Part 5

Communication

Collaboration

Social Responsibility

Knowledge Application and

Analysis

✓ ✓ ✓

✓ ✓

✓

✓

✓

✓✓

✓✓

✓✓

Employability Skills Matrix (ESM)

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Chapter 1 • What Is Organizational Behavior? 45

effectively. You will be confronted with ethical dilemmas in which you will consider the ethics of behaviors in the workplace. We recommend that you review and consider the ESM in advance of reading the chapter so that you have a better idea of the skills you will be developing from each section. All five of these skills are critical to success in careers that are relevant to OB and other majors alike. In the chapters to come, you will engage in a variety of activities and become exposed to several cases in which you will be developing these skills.

SUMMARY

Employees and managers alike need to develop their interpersonal, or people, skills to be effective in their jobs. OB investigates the impact that individuals, groups, and struc- ture have on behavior within an organization, and then applies that knowledge to help employees, managers, and organizations work more effectively.

IMPLICATIONS FOR MANAGERS

• Resist the inclination to rely on generalizations; some provide valid insights into human behavior, but many are erroneous. Get to know the person and understand the context.

• Use metrics rather than hunches to explain cause-and-effect relationships. • Work on your interpersonal skills to increase your leadership potential. • Improve your technical skills and conceptual skills through training and staying

current with OB trends like big data, fast data, and machine learning. • OB can improve employees’ work quality and productivity by showing you how

to empower your employees, design and implement change programs, improve customer service, and help your employees balance work–life conflicts.

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4646

Diversity in Organizations 2

DIVERSITY

Our world is getting smaller and smaller every day. With the tide of globalization discussed in the previous chapter, it is clearer more than ever that each of us is a mosaic—made up of many tiles that make us unique.1 Our uniqueness is obvious enough, but employees and managers alike sometimes forget they need to recognize, appreciate, and manage indi- vidual differences to forge productive workplaces. Consider Mughal Emperor Shah Jahan, who employed 22,000 artisans from around the world to construct and design the Taj Mahal—today, this “crown of palaces” represents myriad influences, including Islamic, Persian, Ottoman, and Indian, among others.2 In this chapter, you will learn how individ- ual characteristics like age, gender, race, identity, sexual orientation, ethnicity, and abilities can influence interactions and performance in the workplace. You will also see how man- agers can develop awareness about these characteristics and manage a diverse workforce effectively. But first, let us take an overview perspective of the changing workforce.

Demographic Characteristics

The predominantly white, male managerial workforce of the past has given way to a gender-balanced, multiethnic workforce. For instance, in 1950, only 29.6 percent of the U.S. workforce was female,3 but by 2016, women comprised 46.8 percent of the work- force.4 Both in the United States and internationally, women today are much more likely than before to be employed full time, and women’s labor force representation should continue to grow, along with the diversity of the labor force.5 In addition, the earnings

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

2.1 Demonstrate how workplace discrimination undermines organizational effectiveness.

2.2 Explain how stereotypes function in organizational settings.

2.3 Describe how key biographical characteristics are relevant to OB.

2.4 Explain how other differentiating characteristics factor into OB.

2.5 Demonstrate the relevance of intellectual and physical abilities to OB.

2.6 Describe how organizations manage diversity effectively.

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Chapter 2 • Diversity in Organizations 47

gap between whites and other racial and ethnic groups in the United States has decreased significantly, partially due to the rising number of minorities in the workforce. Hispanics will grow from 13 percent of the workforce in 2014 to 25.1 percent in 2044; blacks will increase from 12 to 12.7 percent, and Asians from 5 to 7.9 percent.6 Workers over the age of 55 are an increasingly large portion of the workforce as well, both in the United States and globally. In the United States, the 55-and-older age group will increase from 21.7 percent of the labor force in 2014 to 25 percent by 2024, a growth rate three times larger than the overall labor force.7 These changes are increasingly reflected in the makeup of managerial and professional jobs. They also indicate organizations must make diversity management a central component of their policies and practices.

Levels of Diversity

Although much has been said about diversity in age, race, gender, ethnicity, religion, and disability status, experts now recognize that these demographic characteristics are just the tip of the diversity iceberg.8 Demographics mostly reflect surface-level diversity, and not thoughts and feelings. Surface-level diversity can lead employees to make stereo- types and assumptions about others from certain demographic backgrounds. However, evidence has shown that people are less concerned about demographic differences if they see themselves as sharing more important characteristics, such as personality and values, that represent deep-level diversity.9

To understand the difference between surface- and deep-level diversity, consider an example. Some of you may have worked in a professional kitchen or as a member of the wait staff at a restaurant. You would certainly agree that these environments are often stressful: during busy periods, things can get hectic both in the kitchen and out on the floor.10 To top it all off, there are so many people you have to interact with to ensure the customer has an excellent experience: the hosting staff, management, kitchen, runners, bussers—not to mention, the most important people: the customers!

All these people bring their own set of unique characteristics “to the table.” One of the kitchen staff members, Bellamy, is a young, transgender person from a black family who grew up in Austin and is working toward an accounting degree. On the other hand, Hector is an older cisgender man who immigrated from Honduras earlier in life, con- verted to Islam in his late twenties, grew up in Seattle, and is now the general manager of the restaurant. At first, these coworkers may notice their surface-level differences in edu- cation, ethnicity, regional background, and gender identity. However, as they get to know one another, they may find they share a common way of thinking about work problems and have similar perspectives on time management. These deep-level similarities can overshadow the more superficial differences between them, and research suggests that sharing similarities (especially similar work styles) will help them work well together.11 For example, if Bellamy and Hector have similar time management styles (both get to work on time and do prep work well in advance), they will be more likely to get along together and experience less conflict.

Throughout this text, you will encounter differences between deep- and surface- level diversity in various contexts. Diversity is an important concept in OB since individual differences shape preferences for rewards, communication styles, reactions to leaders, negotiation styles, and many other aspects of behavior in organizations. Unfortunately, increased diversity may give way to discriminatory practices, which we discuss next.

Surface-level diversity Differences in easily perceived character- istics such as gender, race, ethnicity, age, or disability, that do not necessarily reflect the ways people think or feel but that may activate certain stereotypes.

Deep-level diversity Differences in values, personality, and work preferences that become progressively more important for determining similar- ity as people get to know one another better.

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DISCRIMINATION AND STEREOTYPING

Although diversity presents many opportunities for organizations, diversity management includes working to eliminate unfair discrimination. To discriminate is to note a dif- ference between things, which is not necessarily bad. Noticing one employee is more qualified is necessary for making good hiring decisions. Usually when we talk about discrimination, though, we mean allowing our behavior to be influenced by stereotypes about groups of people. Stereotyping is judging someone based on our perception of the group to which that person belongs. For example, in the 2018 U.S. Open Finals, profes- sional tennis grand champion Serena Williams was penalized several times in an escalat- ing argument with the umpire.12 Serena, along with many other experts and officials, believed that her penalties were unduly harsh, when compared with penalties that have been historically levied toward men.13 As Wharton organizational psychologist Adam Grant notes, “When a man argues with an umpire, it’s passion. When a woman does it, it’s a meltdown. When a black woman does it, it’s a penalty.”14

Stereotype Threat

Let us say you are sitting in a restaurant (perhaps the one where Hector and Bellamy work!), waiting to meet with recruiters from an organization you want to work at for an informal interview. How did you describe yourself to the recruiters so that they could find you? What identifiable characteristics would you mention so that they know a bit more about you and so that they can recognize you in the restaurant?

Chances are good that you would mention something about what you are wear- ing or your hairstyle. You might also mention how tall you are if you are remarkably tall or short. Overall, you would give cues to the recruiters about characteristics that are distinctive, or that stand out about you. However, with these characteristics follows the fear of being judged or treated negatively based on these superficial characteristics.

Stereotype threat describes the degree to which we are concerned with being judged by or treated negatively based on a certain stereotype.15 For instance, older workers applying for a job in a predominately millennial-age workforce may assume the interviewer thinks they are out of touch with current trends. What creates stereotype threat is not whether these workers are or are not up to date with trends but whether they believe the interviewer will judge them based on this stereotype.

Stereotype threat has serious implications for the workplace. Stereotype threat can occur during preemployment tests and assessments, performance evaluations, and everyday workplace exchanges. It can lead to underperformance on tests, performance evaluations, training exercises, negotiations, and everyday interactions with others as well as to disengagement, poor job attitudes, a reluctance to seek feedback, and poor performance in the employees experiencing the threat.16 Although the occurrence of stereotype threat is not inevitable and occurs infrequently in testing environments, we can combat it in the workplace by treating each other as individuals and not highlight- ing group differences.17 The following organizational changes can be successful in reducing stereotype threat: increasing awareness of how stereotypes may be perpetu- ated (especially when developing policies and practices), reducing differential and preferential treatment through objective assessments, confronting microaggressions against minority groups, and adopting transparent practices that signal the value of all employees.18

Discrimination Noting a difference between things; often we refer to unfair discrimination, which means making judgments about individuals based on stereotypes regarding their demographic group.

Stereotyping Judging someone based on one’s per- ception of the group to which that person belongs.

Stereotype threat The degree to which we are concerned with being judged by or treated negatively based on a certain stereotype.

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Discrimination in the Workplace

To review, unfair discrimination assumes that everyone in a group is the same rather than looking at the characteristics of individuals within the group. This discrimination is often very harmful for employees, as we have just discussed, and for organizations.

Exhibit 2-1 provides definitions and examples of some forms of discrimination in organizations. Although many are prohibited by law and therefore are not a part of orga- nizations’ official policies, the practices persist. Tens of thousands of cases of employ- ment discrimination are documented every year, and many more go unreported. Since discrimination has increasingly come under both legal scrutiny and social disapproval, overt forms have tended to give way to more covert forms like incivility or exclusion, which can be just as perilous.19

As you can see, discrimination can occur in many ways, and its effects can vary depending on organizational context and the personal biases of employees. Like ste- reotype threat, actual discrimination can lead to increased negative consequences for employers, including reduced productivity and organizational citizenship behavior (OCB; see Chapter 1: What Is Organizational Behavior?), more conf lict, increased turnover, and even increased risk-taking behavior.20 Unfair discrimination also leaves qualified job candidates out of initial hiring and promotions. Thus, even if an employ- ment discrimination lawsuit is never filed, a strong business case can be made for aggressively working to eliminate unfair discrimination.

Whether it is overt or covert, intentional or unintentional, discrimination is one of the primary factors that prevents diversity. On the other hand, recognizing diversity oppor- tunities can lead to an effective diversity management program and ultimately to a better organization. Diversity is a broad term, and the phrase workplace diversity can refer to any characteristic that makes people different from one another. The following section covers some important surface-level characteristics that differentiate members of the workforce.

BIOGRAPHICAL CHARACTERISTICS

Biographical characteristics, such as age, gender, race, ethnicity, and disability, are some of the most obvious ways employees differ. Let us begin by looking at factors that are easily definable and readily available—data that can be obtained, for the most part, from an employee’s human resources (HR) file. These, and several other characteristics, are what comprise surface-level diversity. Variations in these surface-level characteristics may be the basis for discrimination against classes of employees.

Age

Age in the workforce is likely to be an issue of increasing importance during the next decade for many reasons. For one, the workforce is aging worldwide in most developed countries.22 In the United States, the proportion of the workforce aged 55 and older is projected to be nearly 24.8 percent by 2024.23 Legislation has, for all intents and pur- poses, outlawed mandatory retirement. Moreover, reflecting global trends, over forty countries spanning all continents, have laws directly against age discrimination.24 Most workers today no longer have to retire at age 70, and 53 percent of workers over the age of 60 plan to delay retirement, likely due to the strong financial benefits of delay- ing retirement.25 However, one study of Dutch taxi drivers suggests that perceptions of

Biographical characteristics Personal characteristics—such as age, gender, race, and length of tenure— that are objective and easily obtained from personnel records. These characteristics are representative of surface-level diversity.

ALDI The UK branch of the multinational German supermarket discount chain recognizes the importance of equal opportunity and prevention of discrimination at work. As part of the governmental gender pay gap reporting regulations, ALDI (UK) recently reported a 4.8 percent median gender pay gap in 2018, which is considered well below the UK median gender pay gap at 18.4 percent. Furthermore, as part of its commitment to equal pay, the management has established the “Women in Aldi Forum,” which will examine diversity issues in an effort to address and further reduce the gender pay gap at ALDI in the future.21

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stereotype threat, or that colleagues/customers feel negatively about older taxi drivers in this instance, leads to higher retirement intentions.26

Stereotypes of older workers as being behind the times, grumpy, and inf lexible are changing. Managers often see a number of positive qualities that older workers bring to their jobs, such as experience, judgment, a strong work ethic, and a commitment to quality. For example, the Public Utilities Board, the water agency of Singapore, reports that 27 percent of its workforce is over age 55 and the older workers provide workforce stability.27 Industries like health care, education, government, and nonprofit service often welcome older workers.28 But older workers are still perceived as less adaptable and less motivated to learn new technology.29 When organizations seek individuals who are open to change and training, the perceived negatives associated with age clearly

Type of Discrimination Definition Examples from Organizations

Discriminatory policies or practices

Actions taken by representatives of the organization that deny equal opportunity to perform or unequal rewards for performance.

Older workers may be targeted for layoffs because they are highly paid and have lucrative benefits.

Sexual harassment Unwanted sexual advances and other verbal or physical conduct of a sexual nature that create a hostile or offensive work environment.

Salespeople at one company went on company-paid visits to strip clubs, brought strippers into the office to celebrate promotions, and fostered pervasive sexual rumors.

Intimidation Overt threats or bullying directed at members of specific groups of employees.

African American employees at some companies have found nooses hanging over their workstations.

Mockery and insults Jokes or negative stereotypes; sometimes the result of jokes taken too far.

Arab Americans have been asked at work whether they were carrying bombs or were members of terrorist organizations.

Exclusion Exclusion of certain people from job opportunities, social events, discussions, or informal mentoring; can occur unintentionally.

Many women in finance claim they are assigned to marginal job roles or are given light workloads that do not lead to promotion.

Incivility Disrespectful treatment, including behaving in an aggressive manner, interrupting the person, or ignoring varying opinions.

Female lawyers note that male attorneys frequently cut them off or do not adequately address their comments.

EXHIBIT 2-1 Forms of Discrimination in Organizations

Sources: J. Levitz and P. Shishkin, “More Workers Cite Age Bias after Layoffs,” The Wall Street Journal, March 11, 2009, D1–D2; W. M. Bulkeley, “A Data-storage Titan Confronts Bias Claims,” The Wall Street Journal, September 12, 2007, A1, A16; D. Walker, “Incident with Noose Stirs Old Memories,” McClatchy-Tribune Business News, June 29, 2008; D. Solis, “Racial Horror Stories Keep EEOC Busy,” Knight-Ridder Tribune Business News, July 30, 2005, 1; H. lbish and A. Stewart, Report on Hate Crimes and Discrimination against Arab Americans: The Post-September 11 Backlash, September 11, 2001–October 11, 2001 (Washington, DC: American-Arab Anti-Discrimination Committee, 2003); A. Raghavan, “Wall Street’s Disappearing Women,” Forbes, March 16, 2009, 72–78; L. M. Cortina, “Unseen Injustice: Incivility as Modern Discrimination in Organizations,” Academy of Management Review 33, no. 1 (2008): 55–75.

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hinder the initial hiring of older workers and increase the likelihood they will be let go during cutbacks.

Now let us look at the evidence. What effect does age have on two of our most important outcomes, job performance and job satisfaction?

AGE AND JOB PERFORMANCE The majority of studies have shown “virtually no relationship between age and job performance,” according to Director Harvey Sterns of the Institute for Life-Span Development and Gerontology.30 Indeed, some studies indicate that older adults perform better. In Munich, a four-year study of 3,800 Mercedes-Benz workers found that “the older workers seemed to know better how to avoid severe errors,” said Matthias Weiss, the academic coordinator of the study.31 Related to performance, there is a conception that creativity lessens as people age. Researcher David Galenson, who studied the ages of peak creativity, found that people who create through experimentation do “their greatest work in their 40s, 50s, and 60s. These artists rely on wisdom, which increases with age.”32 Finally, there is evidence that age-diverse teams and organizations perform better than those with similar ages, primarily because both older and younger workers bring a complementary, diverse set of knowledge, skills, and abilities to their teams.33

AGE AND JOB SATISFACTION Regarding job satisfaction, an important topic in the chapter on attitudes and job satisfaction, a review of more than 800 studies found that older workers tend to be more satisfied with their work and report better relationships with coworkers.34 However, one study drawing on over 20,000 participants spanning forty years suggests that people are becoming less satisfied with their jobs the longer they stay at any given organization—despite this finding, as people age, their job satisfaction tends to increase, most likely because their pay and benefits increase.35 So as you get older, you should expect to like your work more and more!

Gender

The best place to begin to consider this topic is with the recognition that few, if any, differ- ences between genders affect job performance.36 Reviews of hundreds of studies on job per- formance and performance appraisals suggest that there are virtually no differences between genders when it comes to performing well; however, differences in pay, benefits, and rewards are strong and substantial, up to fourteen times the size of performance differences.37

Yet biases and stereotypes persist. In the hiring realm, managers are influenced by gender bias when selecting candidates for certain positions.38 For instance, men are preferred in hiring decisions for male-dominated occupations, particularly when men are doing the hiring.39 Once on the job, men and women may be offered a similar num- ber of developmental experiences, but females are less likely to be assigned challenging positions by men, assignments that could help them achieve higher organizational posi- tions.40 Moreover, men are more likely to be chosen for leadership roles even though men and women are equally effective leaders, a phenomenon that has been referred to as the “glass ceiling” (and applies to any underrepresented group that faces obstacles to advancement).41 In fact, as of April 2020, women hold only 6 percent of CEO positions in S&P 500 companies.42 Furthermore, a study of twenty organizations in Spain suggested that women are generally selected for leadership roles that require handling organiza- tional crises—positions in which they are usually set up to fail, a phenomenon commonly

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52 Part 1 • Understanding Yourself and Others

referred to as the glass cliff.43 According to Naomi Sutherland, senior partner in diversity at recruiter Korn Ferry, “Consciously or subconsciously, companies are still hesitant to take the risk on someone who looks different from their standard leadership profile.”44

In other words, these “glass ceiling” and “glass cliff” phenomena may be due to stereotypes which depict white males as ideal leaders, as they are perceived as more agen- tic and dominating than woman.45 Furthermore, there is a stereotype that women default to a caregiving or relational role, and they are “penalized” for experiencing work-family conflict.46 As a result, women may be more likely to experience a “motherhood” bias that prevents them from advancing in their careers, affects their performance evaluations, and their salaries. The perception of this bias can even lead pregnant women on leave from their organizations to be more likely to quit.47

These stereotypes counter the evidence that suggests that females are effective lead- ers in organizations: research from hundreds of studies suggests not only that women are rated as effective leaders in organizations but that women’s representation in leadership positions is actually predictive of financial performance in hundreds of thousands of organi- zations.48 We have seen that there are many misconceptions and contradictions about male and female workers. Thankfully, many countries, including Australia, the United Kingdom, and the United States, have laws against sex discrimination. Other countries, such as Belgium, France, Norway, and Spain, are seeking gender diversity through laws to increase the percentage of women on boards of directors.49 Gender biases and gender discrimination are serious issues, but there are indications that the situation is improving.

Race and Ethnicity

In his “Address to the Nations of the World,” given in London in 1900, W. E. B. Du Bois noted that the problem of the 20th century was that of “the color-line, the question as to how far differences of race—which show themselves chiefly in the color of the skin . . . will hereafter be made the basis of denying to over half the world the right of sharing to their utmost ability the opportunities and privileges of modern civilization.”50 Although problems with discrimination and prejudice, identified earlier in this chapter, are still major societal issues, laws against race and ethnic discrimination are in effect in many countries, including Australia, the United Kingdom, and the United States.51

We define race as the heritage people use to identify themselves; ethnicity is the additional set of cultural characteristics that often overlaps with race. Typically, we asso- ciate race with biology and ethnicity with culture, but there is a history of self-identifying for both classifications. Some industries have remained less racially diverse than others. For instance, U.S. advertising and media organizations suffer from a lack of racial diver- sity in their management ranks, even though their client base is increasingly ethnically diverse.52 Race and ethnicity have been studied as they relate to employment outcomes such as hiring decisions, performance evaluations, pay, and workplace discrimination.53

Members of racial and ethnic minorities report higher levels of discrimination in the workplace.54 Black people generally fare worse than white people in employment deci- sions (a finding that may not apply outside the United States). Black people receive lower ratings in employment interviews, lower job performance ratings, less pay, and fewer pro- motions.55 Lastly, black people are discriminated against even in controlled experiments. For example, one study of low-wage jobs found that black applicants with no criminal history received fewer job offers than did white applicants with criminal records.56 Even

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applicants with black-sounding names were 50 percent less likely than those with white- sounding names to receive interview callbacks in one large randomized experiment.57

Disabilities

Workplace policies, both official and circumstantial, regarding individuals with physi- cal or mental disabilities vary from country to country. Countries such as Australia, the United States, the United Kingdom, and Japan have specific laws to protect individuals with disabilities.58 These laws have resulted in greater acceptance and accommodation of people with physical or mental impairments. In the United States, for instance, the representation of individuals with disabilities in the workforce rapidly increased with the passage of the Americans with Disabilities Act (ADA) in 1990.59 According to the ADA, employers are required to make reasonable accommodations so their workplaces will be accessible to individuals with physical or mental disabilities.

SCOPE OF DISABILITIES The U.S. Equal Employment Opportunity Commission (EEOC), the federal agency responsible for enforcing employment discrimination laws, classifies a person who has any physical or mental impairment that substantially limits one or more major life activities as disabled. One of the most controversial aspects of the ADA is the provision that requires employers to make reasonable accommodations (e.g., comfort and assistance animals) for people with psychiatric disabilities.60 Examples of recognized disabilities include missing limbs, seizure disorder, Down syndrome, deafness, schizophrenia, alcoholism, diabetes, depression, and chronic back pain. These conditions share almost no common features, so there is no specific definition about how each condition is related to employment.

DISABILITIES AND OUTCOMES The impact of disabilities on employment outcomes has been explored from a variety of perspectives. On the one hand, when disability status was randomly manipulated among hypothetical candidates in a study, individuals with disabilities were rated as having superior personal qualities like dependability.61 However, according to a review of a number of studies, individuals with disabilities tend to encounter lower performance expectations and are less likely to be hired.62 Furthermore, managers or supervisors with disabilities tend to experience lower quality relationships with their subordinates, unless policies and procedures are in place that make their workplace more inclusive.63 Mental disabilities may impair performance more than physical disabilities: Individuals with such common mental health issues as depression and anxiety are significantly more likely to be absent from work.64

The elimination of discrimination against the disabled workforce has been a rocky road. In Europe, for instance, policies to motivate employers have failed to boost the workforce participation rate for workers with disabilities, and outright quota systems in Germany, France, and Poland have backfired, although employment discrimination laws in California has met with some success.65 However, the recognition of the talents and abili- ties of individuals with disabilities has made a positive impact. In addition, technology and workplace advancements have greatly increased the scope of available jobs for those with all types of disabilities. Managers need to be attuned to the true requirements of each job and match the skills of the individual to them, providing accommodations when needed. But what happens when employees do not disclose their disabilities? Let’s discuss this next.

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Hidden Disabilities

As we mentioned earlier, disabilities include observable characteristics like missing limbs, illnesses that require a person to use a wheelchair, and blindness. Other disabilities may not be obvious, at least at first. Unless an individual decides to disclose a disability that is not easily observable, it can remain hidden at the discretion of the employee. These are called hidden disabilities (or invisible disabilities). Hidden disabilities generally fall under the categories of sensory disabilities (for example, impaired hearing), autoimmune disorders (like rheumatoid arthritis), chronic illness or pain (like carpal tunnel syndrome), cognitive or learning impairments (like attention-deficit/hyperactivity disorder), sleep disorders (like insomnia), and psychological challenges (like posttraumatic stress disorder).66

As a result of recent changes to the Americans with Disabilities Act Amendments Act (ADAAA) of 2008, U.S. organizations must accommodate employees with a very broad range of impairments. However, employees must disclose their conditions to their employers in order to be eligible for workplace accommodations and employment pro- tection. Many employees do not want to disclose their invisible disabilities, so they are prevented from getting the workplace accommodations they need in order to thrive in their jobs. Research indicates that individuals with hidden disabilities are afraid of being stigmatized or ostracized if they disclose their disabilities to others in the workplace, and they believe that their managers will think they are less capable of strong job perfor- mance.67 Add this to the challenge of receiving a diagnosis for a condition that one did not previously have and these fears are compounded even more so than if the diagnosis was made for employees when they were younger.68

In some ways, a hidden disability is not truly invisible. For example, a person with undisclosed autism will still exhibit the behaviors characteristic of the condition, such as difficulties with verbal communication and adaptability.69 You may observe behaviors that lead you to suspect an individual has a hidden disability. Unfortunately, you may attribute the behavior to other causes—for instance, you may incorrectly ascribe the slow, slurred speech of a coworker to an alcohol problem rather than to the long-term effects of a stroke.

Research suggests that disclosure helps all—the individual, others, and organiza- tions. Disclosure may increase the job satisfaction and well-being of the individual, help others understand and assist the individual to succeed in the workplace, and allow the orga- nization to accommodate the situation to achieve top performance.70

OTHER DIFFERENTIATING CHARACTERISTICS

The last set of characteristics we will look at includes religion, sexual orientation, gen- der identity, and cultural identity. These characteristics illustrate deep-level differences that provide opportunities for workplace diversity, as long as discrimination can be overcome.

Religion

Religious and nonreligious people question each other’s belief systems, and people of different religious faiths often experience conflict with one another. Furthermore, faith can be an employment issue wherever religious beliefs prohibit or encourage certain

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behaviors. There are few—if any—countries in which religion is a nonissue in the work- place. For this reason, employers are prohibited by law from discriminating against employees based on religion in many countries, including Australia, the United Kingdom, and the United States.71 Reasonable accommodation, like that stipulated in the ADA, is also required for religious exemptions in the U.S. For example, one jury awarded millions of dollars to Marie Pierre, a dishwasher at a Miami hotel, who was not accommodated (allowed to swap shifts) for needing to request Sundays off for religious reasons.72

Religious discrimination has been a growing source of discrimination claims in the United States, partially because the issues are complex. Recently, Samantha Elauf, who was turned down for employment because she wears a hijab—a head scarf—sued for religious discrimination. “I learned I was not hired by Abercrombie because I wear a head scarf, which is a symbol of modesty in my Muslim faith,” she said.73 Discrimination cases like this have also been observed in research; for example, one study found that job applicants in Muslim-identified religious attire who applied for hypothetical retail jobs had shorter, more interpersonally negative interviews than applicants who did not wear Muslim-identified attire.74

Sexual Orientation and Gender Identity

While much has changed, the full acceptance and accommodation of lesbian, gay, bisex- ual, transgender, and other gender identifications (LGBT+) employees remains a work in progress.75 In the United States, a Harvard University study sent fictitious but realistic résumés to 1,700 actual entry-level job openings. The applications were identical with one exception: Half mentioned involvement in gay organizations during college, and the other half did not. The applications without the mention received 60 percent more call- backs than the ones with it.76

Perhaps as a result of perceived discrimination, many LGBT+ employees do not disclose their status. For example, Beck Bailey, a former employee at Stouffers in the late ’80s (now deputy director of the Human Rights Campaign Workplace Equality Program), recalled what it was like identifying as a woman and a lesbian in the workplace, where it was difficult to be oneself, as well as the need to keep a picture of a “fake boyfriend” at the desk for fear of being discovered.77 However, research suggests that disclosing sexual orientation is good for reducing work-family conflict and improving partner satisfaction, physical and mental well-being, and job satisfaction.78

SEXUAL ORIENTATION LAWS As of December 2019, 145 countries have laws providing some form of employment protection for sexual orientation and gender identity—over twice the number of countries that criminalize sexual orientations and gender identities.79 In the U.S., the federal government has prohibited discrimination based on sexual orientation and gender identity against employees. In a historic ruling during June 2020, the Supreme Court ruled that discrimination against individuals based on their sexual orientation and gender identity represents gender discrimination enforceable under Title VII of the Civil Rights Act of 1964.80 The picture is also more localized at the state and municipality level: thirty-four states and hundreds of municipalities offer some form of protection for sexual orientation and/ or gender identity in the public/private sector. Across the globe, countries such as Australia and the United Kingdom have passed similar laws against discriminating on the basis of sexual preference, sexual orientation, and gender identity.81

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56 Part 1 • Understanding Yourself and Others

ORGANIZATIONAL POLICIES ON SEXUAL ORIENTATION Organizations and managers are beginning to understand, little by little, that there are both ethical and financial reasons to be more inclusive; for instance, the LGBT+ consumer base accounts for almost one trillion dollars in buying power.82 Companies like Apple are at the forefront of the corporate world in establishing policies that are sexual orientation and gender identity friendly. Apple, which boasts a 100 percent score on the 2020 Corporate Equality Index, has offered health insurance benefits to same-sex domestic partners (and has been doing so for decades) as well as six weeks of parental leave for new parents, including same-sex partners.83

Even in the absence of federal legislation, many organizations have implemented policies and procedures that cover sexual orientation. Surveys indicate that more than 90 percent of the Fortune 500 have policies that cover sexual orientation (more than 90 percent have policies covering gender identity). In 2001, only eight companies in the Fortune 500 had policies on gender identity. Some companies claim they do not need to provide LGBT+ benefits for religious reasons. Moreover, some organizations that claim to be inclusive do not live up to the claim.84 For example, a recent study of five social cooperatives in Italy indicated that these so-called inclusive organizations expect indi- viduals to remain quiet about their status.85 Thus, while times have certainly changed, sexual orientation and gender identity remain individual differences that organizations must address in eliminating discrimination and promoting diversity.

Cultural Identity

We have seen that people sometimes define themselves in terms of race and ethnicity. Many people carry a strong cultural identity as well, a link with the culture of fam- ily ancestry that lasts a lifetime, no matter where the individual may live in the world. Cultural norms influence the workplace, sometimes resulting in clashes, or fostering alienation among cultural minorities. For example, in the best-selling novel, Native Speaker, Henry Park is a Korean American industrial spy who must cope with competing cultural identities—his job requires him to interact with multiple people and he struggles with whether to act “more Korean” or “more American,” depending upon whom he is assigned to.86

Thanks to global integration, today’s organizations (and the managers and employ- ees that comprise them) do well to understand, respect, and adapt to the cultural identities of their employees, both as groups and as individuals.87 A U.S. company looking to do business in, say, Latin America, needs to understand that employees in those cultures expect long summer holidays. A company that requires employees to work during this culturally established break will meet strong resistance. An organization seeking to be sensitive to the cultural identities of its employees should look beyond accommodating its majority groups and instead create as much of an individualized approach to practices and norms as possible. Often, managers can provide the bridge of workplace flexibility to meet both organizational goals and individual needs. Furthermore, employees and man- agers alike can do well to develop their own cultural intelligence (CQ), or ability to func- tion with people of various cultural backgrounds, which can enable employees to work more effectively with one another in organizations.88

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ABILITY

Regardless of how motivated you are, you may not be able to act as well as Sarah Paulson, play basketball as well as LeBron James, or write as well as J. K. Rowling. Of course, all of us have strengths and weaknesses that make us relatively superior or inferior to others in performing certain tasks or activities. From management’s standpoint, the challenge is to understand the differences to increase the likelihood that a given employee will perform their job well. Applicants and employees, then, should market their abilities and develop skills to be successful in the jobs they want.

What does ability mean? As we use the term, ability is an individual’s current capacity to perform the various tasks of a job. Overall abilities are essentially made up of two sets of factors: intellectual and physical.

Intellectual Abilities

Intellectual abilities are abilities needed to perform mental activities—thinking, reason- ing, and problem solving. Most societies place a high value on intelligence, and for good reason. Smart people are generally better performers, earn more money, are promoted more often, and attain higher level jobs.89 However, assessing and measuring intellectual ability are not always simple, partially because people are not consistently capable of cor- rectly assessing their own cognitive ability.90 IQ tests are designed to ascertain a person’s general intellectual abilities, but the origins, influence factors, and testing of intelligence quotient (IQ) are controversial.91 So, too, are popular college admission tests, such as the SAT and ACT, and graduate admission tests in business (GMAT), law (LSAT), and medi- cine (MCAT). The firms that produce these tests do not claim they assess intelligence, but experts confirm they do.92 Many organizations use intelligence tests in hiring decisions: for example, if you want to be a professional football player in the NFL, you will have to take an intellectual abilities test!93

DIMENSIONS OF INTELLECTUAL ABILITY The seven most frequently cited dimensions making up intellectual abilities are number aptitude, verbal comprehension, perceptual speed, inductive reasoning, deductive reasoning, spatial visualization, and memory.94 Exhibit 2-2 describes these dimensions. These dimensions are positively correlated, so if you score high on verbal comprehension, for example, you are more likely to also score high on spatial visualization. The correlations are high enough that researchers also recognize a general factor of intelligence, general mental ability (GMA). Evidence supports the idea that the structures and measures of intellectual abilities can be generalized across cultures: GMA was found in 73.2 percent of countries in one study of over 50,000 individuals.95 Someone in Venezuela or Sudan, for instance, does not have a different set of mental abilities than an American or Czech individual. There is some evidence that IQ scores vary to some degree across cultures, but this gap is decreasing year by year, and those differences become much smaller when we consider educational and economic differences.96

THE WONDERLIC ABILITY TEST It might surprise you that the intelligence test most widely used in hiring decisions, the Wonderlic Ability Test, takes only twelve minutes to

Ability An individual’s capacity to perform the various tasks in a job.

Intellectual abilities The capacity to do mental activities— thinking, reasoning, and problem solving.

General mental ability (GMA) An overall factor of intelligence, as sug- gested by the positive correlations among specific intellectual ability dimensions.

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58 Part 1 • Understanding Yourself and Others

complete. There are different forms of the test, but each has fifty questions. Here are two questions to try:

1. When rope is selling at $0.10 a foot, how many feet can you buy for $0.60? 2. Assume the first two statements are true. Is the final one:

a. True. b. False. c. Not certain.

“The boy plays baseball. All baseball players wear hats. The boy wears a hat.” The Wonderlic measures both speed (almost nobody has time to answer every question) and power (the questions get harder as you go along), so the average score is quite low— about twenty-one of fifty. Because the Wonderlic can provide valid information cheaply, many organizations use it in hiring decisions, including Publix supermarkets, Manpower staffing systems, BP, and Dish satellite systems.97 Most of these companies do not elim- inate other hiring tools, such as application forms or interviews. Rather, they add the Wonderlic for its ability to provide valid data on applicants’ intelligence levels.

INTELLECTUAL ABILITY AND JOB SATISFACTION While intelligence is a big help in performing a job well, it does not make people happier or more satisfied with their jobs.98 In fact, research suggests that those with higher cognitive ability and who are high performers in the workplace might be victimized, bullied, and mistreated by their peers due to envy and social comparison.99

Dimension Description Job Example

Number aptitude Ability to do speedy and accurate arithmetic.

Accountant: Computing the sales tax on a set of items.

Verbal comprehension Ability to understand what is read or heard and the relationship of words to each other.

Plant manager: Following corporate policies on hiring.

Perceptual speed Ability to identify visual similarities and differences quickly and accurately.

Fire investigator: Identifying clues to support a charge of arson.

Inductive reasoning Ability to identify a logical sequence in a problem and then solve the problem.

Market researcher: Forecasting demand for a product in the next time period.

Deductive reasoning Ability to use logic and assess the implications of an argument.

Supervisor: Choosing between two different suggestions offered by employees.

Spatial visualization Ability to imagine how an object would look if its position in space were changed.

Interior decorator: Redecorating an office.

Memory Ability to retain and recall past experiences.

Salesperson: Remembering the names of customers.

EXHIBIT 2-2 Dimensions of Intellectual Ability

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Chapter 2 • Diversity in Organizations 59

Physical Abilities

Though the changing nature of work suggests intellectual abilities are increasingly important for many jobs, physical abilities have been and will remain valuable. Research on hundreds of jobs has identified nine basic abilities needed in the perfor- mance of physical tasks.100 These are described in Exhibit 2-3. High employee perfor- mance is likely to be achieved when the extent to which a job requires each of the nine abilities matches the abilities of employees in that job.101 For example, certain occu- pations might require more strength than others (e.g., firefighting); as such, measures of physical ability predict long-term firefighter performance in these occupations.102 Problems with discrimination can occur, however, when using physical abilities tests, as males tend to score substantially better than females on these tests. To some degree, one can improve the extent to which females meet minimum qualifications through physical fitness training.103 Therefore, if a job you are seeking employment in requires strength, f lexibility, or other physical requirements, it might be best to train to ensure you are sufficiently prepared.

In sum, organizations are increasingly aware that an optimally productive work- force includes all types of people and does not automatically exclude anyone based on broad categories of abilities. For example, a pilot program of software company SAP in Germany, India, and Ireland has found that employees with autism perform excellently in precision-oriented tasks like debugging software.104 The potential benefits of diversity are enormous for forward-thinking managers. Of course, integrating diverse people into an optimally productive workforce takes skill. We discuss how to bring the talents of a diverse workforce together in the next section.

Physical abilities The capacity to do tasks that demand stamina, dexterity, strength, and similar characteristics.

Strength Factors

1. Dynamic strength Ability to exert muscular force repeatedly or continuously over time.

2. Trunk strength Ability to exert muscular strength using the trunk (particularly abdominal) muscles.

3. Static strength Ability to exert force against external objects. 4. Explosive strength Ability to expend a maximum of energy in one or a series

of explosive acts.

Flexibility Factors

5. Extent flexibility Ability to move the trunk and back muscles as far as possible. 6. Dynamic flexibility Ability to make rapid, repeated flexing movements.

Other Factors

7. Body coordination Ability to coordinate the simultaneous actions of different parts of the body.

8. Balance Ability to maintain equilibrium despite forces pulling off balance.

9. Stamina Ability to continue maximum effort requiring prolonged effort over time.

EXHIBIT 2-3 Types of Physical Abilities

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60 Part 1 • Understanding Yourself and Others

IMPLEMENTING DIVERSITY MANAGEMENT STRATEGIES

Having discussed a variety of ways in which people differ, we now look at how organiza- tions can and should manage these differences. Diversity management makes everyone more aware of and sensitive to the needs and differences of others.105 This definition highlights the fact that diversity programs include and are meant for everyone. Diversity is much more likely to be successful when we see it as everyone’s business than when we believe it helps only certain groups of employees.

Attracting and Selecting Diverse Employees

One method of enhancing workforce diversity is to target recruitment messages to spe- cific demographic groups that are underrepresented in the workforce. This means placing advertisements in publications geared toward those groups; pairing with colleges, uni- versities, and other institutions with significant numbers of underrepresented minorities, as Microsoft is doing to encourage women to pursue technology studies;106 and form- ing partnerships with associations like the Society of Women Engineers or the National Minority Supplier Development Council.

Research has shown that women and minorities have greater interest in employ- ers that make special efforts to highlight a commitment to diversity in their recruiting materials. Diversity advertisements that fail to show women and minorities in positions of organizational leadership send a negative message about the diversity climate at an organization.107

The selection process is one of the most important places to apply diversity efforts. Hiring managers need to value fairness and objectivity in selecting employees and focus on the productive potential of new recruits. When managers use a well-defined protocol for assessing applicant talent and the organization clearly prioritizes nondiscrimination policies, qualifications become far more important factors than demographic characteris- tics in determining who gets hired.108

Diversity in Groups

As noted earlier in the chapter, working often involves interacting with a number of very diverse people. Like the staff in a restaurant, team members need to establish a common way of looking at and accomplishing major tasks, and they need to communicate with one another often. If they feel little sense of membership and cohesion in their groups, the performance of the team, and the restaurant, will likely suffer.

In some cases, diversity in various traits can hurt team performance, whereas in other cases it can facilitate performance.109 Whether diverse or homogeneous teams are more effective depends on the characteristic of interest. Demographic diversity (in gender, race, and ethnicity) does not appear to help or hurt team performance in general, although racial diversity in management groups may increase organizational performance in the right con- ditions.110 On the other hand, teams of individuals who are highly intelligent, conscien- tious, and interested in working in team settings are more effective.111 Thus, diversity in these variables is likely to be a bad thing—it makes little sense to try to form teams that mix in members who are lower in intelligence or conscientiousness, or who are uninterested in teamwork. In other cases, diversity can be a strength. Groups of individuals with different types of expertise and education are more effective than homogeneous groups.112

Diversity management The process and programs by which managers make everyone more aware of and sensitive to the needs and differences of others.

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Chapter 2 • Diversity in Organizations 61

Regardless of the composition of the group, differences can be leveraged to achieve superior team performance. Employees and team leaders should look out for faultlines, or divisive differences that may split a group into separate groups based on these char- acteristics, that can occur especially when the team is under threat or pressure.113 These effects can be ameliorated by emphasizing similarities among members, capitalizing on complementary differences, and sharing a common goal or vision.114 For example, if the restaurant staff is diverse with regard to both surface-level and deep-level characteristics, by emphasizing the similarities in shared values, goals, and other characteristics the team can develop a sense of unity and cohesion. Research on seven United Nations peace- building teams in Liberia and Haiti suggests that as teams grow and develop, they begin to forge a collective shared identity.115 Despite differences, the longer teams are together, the more of a shared identity they begin to form.

The conversation of diversity in groups does not just revolve around who makes up the team—how diversity affects interpersonal interactions is of the utmost importance.116 Ultimately, diversity in groups matters because it, in the case of deep-level characteris- tics, promotes access to diverse information and experiences while “filling the gaps” for the skills the team needs.117 Restaurant staff with different skills and experiences (e.g., customer service, bartending skills, creativity) can improve team performance by help- ing other team members learn as well as by filling in “skills gaps.” By being both similar “where it counts” (e.g., goals and values) and different “where it counts” (e.g., comple- mentary skills, experiences), employees build trust, learn to effectively communicate with one another, develop a sense of identity, and perform strategically.118

Diversity Programs

Organizations use a variety of diversity programs in recruitment and selection policies, as well as in training and development practices. Overall, diversity management programs work; reviews of hundreds of studies suggest that they are effective at improving diver- sity knowledge and representation.119 Effective, comprehensive workforce programs encouraging diversity have three distinct components. First, they teach managers about the legal framework for equal employment opportunity and encourage fair treatment of all people regardless of their demographic characteristics. Second, they teach managers how a diverse workforce will be better able to serve a diverse market of customers and clients. Third, they foster personal development practices that bring out the skills and abilities of all workers, acknowledging how differences in perspective can be a valuable way to improve performance for everyone.120

Most negative reactions to employment discrimination are based on the idea that discriminatory treatment is unfair. Regardless of race or gender, people are generally in favor of diversity-oriented programs to increase the representation of minority groups and ensure everyone a fair opportunity to show their skills and abilities. Furthermore, research on 155 Canadian firms suggests that, when incorporated as a core component of business strategy, diversity-oriented programs can increase representation of minority groups and positively affect an organization’s return on investment (ROI).121

Organizational leaders should examine their workforces to determine whether target groups have been underutilized. If groups of employees are not proportionally rep- resented in top management, managers should look for any hidden barriers to advance- ment. Managers can often improve recruiting practices, make selection systems more

Faultlines The perceived divi- sions that split groups into two or more subgroups based on individual differences such as sex, race, age, work experi- ence, language, and education.

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62 Part 1 • Understanding Yourself and Others

transparent, and provide training for those employees who have not had adequate expo- sure to diversity material in the past. The organization should also clearly communicate its policies to employees so they can understand how and why certain practices are followed. Communications should focus as much as possible on qualifications and job performance; emphasizing certain groups as needing more assistance could backfire. Employees should also confront prejudice as it happens and report instances to HR according to company policies—it is also useful to recognize that others have the capacity to change after con- fronting prejudice as this can lead to a better outlook, increased job satisfaction, and post- confrontation relations with the person committing the prejudicial act.122

Finally, research indicates a tailored approach will be needed in most organiza- tions, with an analysis of the needs of participants along with frequent feedback.123 Multinational organizations should also tailor their approach to the countries and cultures in which they operate. For instance, a case study of the multinational Finnish company TRANSCO found it was possible to develop a consistent global philosophy for diversity management. However, differences in legal and cultural factors across nations forced the company to develop unique policies to match the cultural and legal frameworks of each country in which it operated.124

SUMMARY

This chapter examined diversity from many perspectives, with a primary focus on surface- level vs. deep-level characteristics. Individual differences can lead to discrimination through activating stereotypes, which can lead to unfair working conditions and treatment, and possible legal ramifications for organizations and managers. In this chapter, we reviewed biographical characteristics and abilities and their relationship to workplace functions and outcomes. Finally, we discussed how organizations, managers, and employees can man- age diversity. Overall, diversity management must be an ongoing commitment that crosses all levels of the organization, and can be effective at improving minority representation, enhancing diversity, and helping improve employee knowledge about diversity strengths.

IMPLICATIONS FOR MANAGERS

• Increase awareness of stereotypes, how they are perpetuated, and how covert dis- crimination can manifest in organizations.

• Assess and challenge your own stereotypical beliefs to increase your objectivity. • Fully evaluate what accommodations a person with disabilities will need and then

fine-tune the job to that person’s abilities. • Seek to understand and respect the unique biographical characteristics of each indi-

vidual; a fair but individualistic approach yields the best performance. • Understand your organization’s antidiscrimination policies thoroughly and share

them with all employees. • Look beyond readily observable biographical characteristics and consider the

individual’s capabilities before making management decisions; remain open and encouraging for individuals to disclose any hidden disabilities.

• Strive to promote diversity in recruitment and selection practices. • Develop a comprehensive diversity management program that weaves diversity

considerations into the organization’s operations.

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63

Attitudes and Job Satisfaction 3

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

3.1 Contrast the three components of an attitude.

3.2 Summarize the relationship between attitudes and behavior.

3.3 Compare the major job attitudes.

3.4 Identify the two approaches for measuring job satisfaction.

3.5 Summarize the main causes of job satisfaction.

3.6 Identify three outcomes of job satisfaction.

3.7 Identify four employee responses to job dissatisfaction.

ATTITUDES

Attitudes are evaluative statements—either favorable or unfavorable—about objects, people, or events. They reflect how we feel about something. When you say, “I like my job,” you are expressing your attitude about your work.

Attitudes are complex. Let us say that you are interested in becoming an accoun- tant. If you were to ask accountants and auditors their attitudes toward their job, you may get simple responses (e.g., “No, I hate my work,” “Being an accountant is fantastic!” etc.), but the underlying reasons are likely more complicated. For example, accountants who perceive that their jobs have challenges, great benefits, and supportive management are much more likely to be happier with their jobs.1 As we will see in this chapter, how satisfied you are with what you do, how committed you are to your employer, and other attitudes are major considerations in the workplace. If you like your job, you are more willing to stay, do your work well, and even go above-and-beyond to make sure the work gets done. To fully understand attitudes, we must consider their fundamental properties or components.

Typically, researchers assume attitudes have three components: cognition, affect, and behavior.2 The statement “My pay is low” is a cognitive component of an attitude— an opinion or belief about the attitude target (e.g., your supervisor). It sets the stage for the more critical part of an attitude—its affective component. Affect is the emotional or feeling segment of an attitude reflected in the statement “I am angry over how little I’m

Attitudes Evaluative statements or judgments concerning objects, people, or events.

Cognitive component The opinion or belief segment of an attitude.

Affective component The emotional or feeling segment of an attitude.

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64 Part 1 • Understanding Yourself and Others

paid.” Affect can lead to behavioral outcomes. The behavioral component of an attitude describes an intention to behave a certain way toward someone or something—as in, “I’m going to look for another job that pays better.”

Viewing attitudes in this way helps us understand their complexity and the potential relationship between attitudes and behavior. Exhibit 3-1 illustrates how the three components of an attitude are related. Let us imagine that you did not get a pro- motion you thought you deserved. Your attitude toward your supervisor is illustrated as follows: You thought you deserved the promotion (cognition); you strongly dis- like your supervisor (affect); and you have complained and taken action, or otherwise intend to (behavior).

In organizations, attitudes are important for their behavioral component. If an accountant believes, for example, that they have no attachment to their firm and could get better opportunities with other firms, this belief could lead to whether they stay or leave their jobs. Understanding how this commitment is formed and how it might be changed is important to managers who want to reduce turnover. Interestingly, some research from the Netherlands suggests that the cognitive component is most important for predict- ing who will become committed to the organization (e.g., newcomers in an onboarding program) or uncommitted (e.g., unattached accountants considering leaving for better positions).3

ATTITUDES AND BEHAVIOR

Perhaps it is easy to think of how attitudes can cause people to behave in certain ways. Using our prior examples, accountants who are not satisfied with their jobs or committed to their organizations may start looking for work elsewhere. Research, in general, sup- ports the idea that attitudes predict future behavior.4

Behavioral component An intention to behave in a certain way toward someone or something.

Negative attitude toward

supervisor

Cognitive 5 evaluation My supervisor gave a promotion to a coworker who deserved it less than I do. My supervisor is unfair.

Affective 5 feeling I dislike my supervisor!

C o g n it io

n , a ff

ec t,

a n d b

eh a vi

o r

a re

c lo

se ly

r el

a te

d .

Behavioral 5 action I’m looking for other work; I’ve complained about my supervisor to anyone who would listen.

EXHIBIT 3-1

The Components of an Attitude

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Chapter 3 • Attitudes and Job Satisfaction 65

Several powerful characteristics change the nature of the attitudes–behavior rela- tionship: the importance of the attitude, its correspondence to behavior, its accessibility, the presence of social pressures, and whether a person has direct experience with the atti- tude.5 Important attitudes reflect our fundamental values, self-interest, or identification with individuals or groups we value. These attitudes tend to show a strong relationship to our behavior. However, discrepancies between attitudes and behaviors tend to occur when social pressures to behave in certain ways hold exceptional power, as in most orga- nizations. You are more likely to remember attitudes you frequently express, and attitudes that our memories can easily access are more likely to predict our behavior. The attitude– behavior relationship is also likely to be much stronger if an attitude refers to something with which we have direct personal experience.

Advancements in machine learning (see Chapter 1: What Is Organizational Behavior?) have enabled researchers to understand the attitude–behavior relationship even further. For example, using a machine learning algorithm enabled researchers in one study of hospital nurses to determine that their job attitudes were related to performance in certain conditions, such as when their job responsibilities were clearly defined.6

However, there are some instances in which behavior might predict future attitudes. Did you ever notice how people change what they say so that it does not contradict what they do? For example, when women come forward to call out sexual harassment in their jobs, even with clear evidence that the behavior occurred, management and harassers alike will often trivialize, minimize, ignore, or even aggressively justify their behavior.7 Cases of attitude following behavior illustrate the effects of cognitive dissonance,8 con- tradictions individuals might perceive between their attitudes and their behavior.

People seek consistency among their attitudes, and between their attitudes and their behavior.9 Any form of inconsistency is uncomfortable, and individuals will therefore attempt to reduce it. When there is dissonance, people will alter either their attitudes or their behaviors, or they will develop a rationalization for the discrepancy. For example, university faculty members who were on strike found it difficult to accept their union’s recommendation to accept the university’s offer and return to work; instead, they sought out additional information to justify their belief that the offer was unfair, instead of accepting the offer outright.10

No individual can avoid dissonance. You know texting or talking on the phone while driving is unsafe (there is research to prove it, do not try to justify your attitude or reduce your dissonance to get you out of this one!),11 but you do it anyway and hope nothing bad happens. The desire to reduce dissonance depends on three factors, including the impor- tance of the elements creating dissonance and the degree of influence we believe we have over those elements.12 Individuals are more motivated to reduce dissonance when the attitudes are important or when they believe the dissonance is due to something they can control. The third factor is the rewards of dissonance; high rewards accompanying dissonance tend to reduce tension inherent in the dissonance (e.g., dissonance is less dis- tressing if accompanied by something good, such as a higher pay raise than expected).14

JOB ATTITUDES

We have thousands of attitudes, but organizational behavior (OB) focuses on a very limited number that form positive or negative evaluations employees hold about their

Cognitive dissonance Any incompatibil- ity between two or more attitudes or between behavior and attitudes.

BMW Amid the stress and uncertainty of the COVID-19 pandemic, the German automotive giant recognized the strategic importance of maintaining a satisfied workforce, not only to ensure smooth and uninterrupted work operations but also to accelerate their digitalization strategy. According to BMW Group Asia’s managing director Christopher Wehner, many of BMW workers were forced to work from home in the light of the pandemic. A survey conducted by BMW Asia found that the majority of BMW employees working from home miss the personal interactions they used to have with their colleagues at work. To maintain their satisfaction at work, BMW responded by actively encouraging remote employees to connect with each other via phone or video conference as often as possible.13

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work. Research suggests that across all job attitudes, organizational identification, or the extent to which employees define themselves by the same characteristics that define one’s organization, forms a basis for which attitudes and behaviors are engendered.15 A review of hundreds of job attitude–behavior studies found that organizational identification strongly predicted job attitude formation across all types.16 Furthermore, drawing on artificial intelligence theory, some researchers have proposed that humans form attitudes similarly to machines in order to make predic- tions based on continuously incoming data. For example, employees may experience event (e.g., reduced pay), after event (e.g., downsizing), after event (e.g., cancelled bonuses)—from such events, employees begin to “learn” that the organization may not value paying its employees well, begin to form negative attitudes toward the orga- nization, and begin to dis-identify.17

Much of the research has looked at three attitudes: job satisfaction, job involve- ment, and organizational commitment.18 Other important attitudes include perceived organizational support and employee engagement.19 In the following section, we will describe these attitudes.

Job Satisfaction and Job Involvement

When people speak of employee attitudes, they usually mean job satisfaction, a positive feeling about a job resulting from an evaluation of its characteristics. A person with high job satisfaction holds positive feelings about the work, while a person with low satisfac- tion holds negative feelings. Because job satisfaction is one of the most important atti- tudes, we will review this attitude in detail later.

Related to job satisfaction is job involvement, the degree to which people psy- chologically identify with their jobs and consider their perceived performance levels important to their self-worth.20 Employees with high job involvement strongly identify with and care about the kind of work they do; as such, they tend to be more satisfied with their jobs.21

Another closely related concept is psychological empowerment, or employees’ beliefs regarding the degree to which they inf luence their work environment, their competencies, the meaningfulness of their job, and their perceived autonomy.22 The more “empowered” employees are, the more likely they are to perform well, engage in organizational citizenship behaviors (see Chapter 1: What Is Organizational Behavior?), be creative, and the less likely they are to intend to leave the organization.23

Organizational Commitment

An employee with strong organizational commitment identifies with their organization and its goals and wishes to remain a member. Emotional attachment to an organization and belief in its values is the gold standard for employee commitment.24

Employees who are committed will be less likely to engage in work withdrawal, even if they are dissatisfied, because they have a sense of organizational loyalty or attach- ment, they may not have other options, or it may be difficult for them to leave.25 Even if employees are not currently happy with their work, they may decide to continue with the organization if they are committed enough.

Organizational identification The extent to which employees define themselves by the same characteristics that define one’s organization, forming the basis for which attitudes are engendered.

Job satisfaction A positive feeling about one’s job resulting from an evaluation of its characteristics.

Job involvement The degree to which a person identifies with a job, actively participates in it, and considers perfor- mance important to their self-worth.

Psychological empowerment Employees’ belief in the degree to which they affect their work environment, their competence, the meaningfulness of their job, and their perceived autonomy in their work.

Organizational commitment The degree to which an employee identi- fies with a particular organization and its goals and wishes to maintain membership in the organization.

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Chapter 3 • Attitudes and Job Satisfaction 67

Perceived Organizational Support

Perceived organizational support (POS) is the degree to which employees believe the organization values their contributions and cares about their well-being. People perceive their organizations as supportive when rewards are deemed fair, when employees have a voice in decisions, and when they see their supervisors as supportive.26

POS is a predictor of employment outcomes, but there are some cultural influ- ences.27 POS is important in countries where the power distance, the degree to which people in a country accept that power in institutions and organizations is distributed unequally, is lower. In low power-distance countries like the United States, people are more likely to view work as an exchange than as a moral obligation, so employees look for reasons to feel supported by their organizations. In high power-distance countries like China, employee POS perceptions are not as deeply based on employer demonstrations of fairness, support, and encouragement.

The picture is even more complicated considering how multinational corporations often send people to work for extended periods of time at locations far away from home. In these instances, corporations can extend much-needed support to avoid failed inter- national assignments, which can be costly; they can provide logistical support (e.g., find housing, secure transportation), cultural support (e.g., provide training with how to com- municate effectively in the new country), or relationship support (e.g., programs to help these employees make friends and build a social support system).28

Employee Engagement

Employee engagement is the degree of enthusiasm an employee feels for the job.29 Employee engagement, in many ways, represents a combination of attitudes (e.g., sat- isfaction and commitment) but exceeds these, representing something like “devotion” or giving your “heart and soul” to your work.30 Highly engaged employees have a passion for their work and feel a deep connection to their companies; disengaged employees have essentially checked out, putting time but not energy or attention into their work. Engagement becomes a real concern for most organizations because disengaged employees cost organizations money—one study suggests that organizations can lose up to $550 billion annually in lost productivity.31 Employee engagement is related to job engagement, which we discuss in detail in the chapter on motivation concepts.

Engagement levels affect many organizational outcomes. Reviews of the research on employee engagement suggest that employee engagement is moderately related to employee and organizational performance. A study of nearly 8,000 business units in thirty- six companies found that units whose employees reported high-average levels of engage- ment achieved higher levels of customer satisfaction, were more productive, brought in higher profits, and experienced lower levels of turnover and accidents than at other business units.32 Molson Coors, for example, found engaged employees were five times less likely to have safety incidents, and when an accident did occur, it was much less serious and less costly for an engaged employee than for a disengaged one ($63 per incident versus $392). Caterpillar set out to increase employee engagement and recorded a resulting 80 percent drop in grievances and a 34 percent increase in highly satisfied customers.33

There is some distinctiveness among attitudes, but they overlap greatly for various rea- sons, including the employee’s personality. Generally, if you know someone’s level of job

Perceived organizational support (POS) The degree to which employees believe an organization values their contribution and cares about their well-being.

Power distance A national cul- ture attribute that describes the extent to which a society accepts that power in institutions and organizations is dis- tributed unequally.

Employee engagement The degree of enthusiasm an employee feels for the job.

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68 Part 1 • Understanding Yourself and Others

satisfaction, you know most of what you need to know about how that person sees the organi- zation. Next, we will consider the implications of job satisfaction and then job dissatisfaction.

JOB SATISFACTION

We have already discussed job satisfaction briefly. We know that it is one of the most important job attitudes, and that it predicts several important business outcomes. Now let us dissect the concept more carefully. If I am a manager and I want to get a better idea of how satisfied the people in my organization are, how do I measure job satisfaction? How satisfied are people with their jobs, in general? You may be surprised with some of the answers to these questions below.

How Do I Measure Job Satisfaction?

Two approaches are popular. The single global rating is a response to one question, such as “All things considered, how satisfied are you with your job?” Respondents circle a number between one and five on a scale from “highly satisfied” to “highly dissatisfied.” The second method, the summation of job facets, is more sophisticated. It identifies key elements in a job, such as the type of work, skills needed, supervision, present pay, pro- motion opportunities, culture, and relationships with coworkers. Respondents rate each of these on a standardized scale (e.g., from one to five, dissatisfied to satisfied), and these ratings are added to create an overall job satisfaction score.

Is one of these approaches superior? Intuitively, summing up responses to sev- eral job factors seems likely to achieve a more accurate evaluation of job satisfaction. Research, however, does not entirely support the intuition.34 This is one of those rare instances in which simplicity seems to work as well as complexity, making one method essentially as valid as the other. Both methods can be helpful. The single global rating method is not very time consuming, while the summation of job facets helps managers zero in on problems and deal with them faster and more accurately.

How Satisfied Are People in Their Jobs?

Are most people satisfied with their jobs? In the 2017 World Happiness Report, peo- ple in 160 countries worldwide (and representing 98 percent of the world’s popula- tion) were surveyed; the majority of employees in 92.5 percent of those countries were satisfied with their jobs.35 Job satisfaction levels can remain quite consistent over time. For instance, average job satisfaction levels in the United States were con- sistently high from 1972 to 2006.36 However, economic conditions tend to inf luence job satisfaction rates. In late 2007, the economic contraction precipitated a drop-off in job satisfaction; the lowest point was in 2010, when only 42.6 percent of U.S. work- ers reported satisfaction with their jobs.37 Approximately 51 percent of U.S. workers reported satisfaction with their jobs in 2017,38 but the rebound was still far off the 1987 level of 61.1 percent.39

The facets of job satisfaction levels can vary widely. As shown in Exhibit 3-2, people have typically been more satisfied with their jobs overall, the work itself, and their super- visors and coworkers than they have been with their pay and promotion opportunities.

Furthermore, one review of dozens of studies with more than 750,000 participants sug- gests that there are slight racial differences: White employees tend to be slightly more satisfied

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Chapter 3 • Attitudes and Job Satisfaction 69

than black employees in general, especially in more complex jobs.40 Regarding global differ- ences in job satisfaction, Exhibit 3-3 provides results from the 2017 World Happiness Report and, more specifically, from the twenty countries with the largest economies in the world. In these countries, over 70 percent of employees are satisfied with their jobs. It is difficult to discern all the factors influencing job satisfaction worldwide but exploring how businesses consider and address job satisfaction worldwide may provide an answer.

0 10 20 30 40 50 60

P er

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80 90

100 9 3

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.0 EXHIBIT 3-3

Average Levels of Employee Job Satisfaction by Country

Source: J-E. De Neve and G. Ward, “Happiness at Work,” in J. Helli- well, R. Layard, and J. Sachs (Eds.), World Happiness Report (World Happiness Report APPENDIX, 2017).

0

20

10

40

30

60

50

80

70

100

90

Work Itself Pay

P er

ce n ta

g e

Promotion Supervision Coworkers Overall

EXHIBIT 3-2

Average Job Satisfaction Levels by Facet

Source: Society for Human Resource Management, “2017 Employee Job Satisfaction and Engage- ment: The Doors of Opportunity are Open,” April 24, 2017, https:// www.shrm.org /hr-today/trends -and-forecasting /research-and -surveys/pages/2017 -job-satisfaction -and-engagement -doors-of-opportu nity-are-open.aspx

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70 Part 1 • Understanding Yourself and Others

WHAT CAUSES JOB SATISFACTION?

Think about the best job you have ever had. What made it great? The reasons can differ greatly. Let us consider some characteristics that likely influence job satisfaction, starting with job conditions.

Job Conditions

Generally, interesting jobs that provide training, variety, independence, and control sat- isfy most employees. Interdependence, feedback, social support, and positive interac- tions with coworkers and even customers are also strongly related to job satisfaction, even after accounting for characteristics of the work itself.41 It goes without saying that toxic workplace environments lead to dissatisfied employees. For example, if you experience workplace racial discrimination, you are likely to become dissatisfied (and some research suggests, might even experience a decline in physical and psychological health).42

As you may have guessed, managers also play a big role in employees’ job sat- isfaction. One review of nearly 70,000 employees from twenty-three countries found that the quality of exchange between the leaders and their employees is more strongly related to job satisfaction in more individualistic (e.g., Western) cultures than it is in more collectivistic (e.g., Asian) cultures.43 Furthermore, “fitting in” matters for job attitudes, worldwide. Another review of over one hundred studies in East Asia, Europe, and North America suggests that fitting in with your organization and job matters more in North America, whereas fitting in with your team or supervisor matters more in East Asia.44

Thus, job conditions—especially the intrinsic nature of the work itself, social interac- tions, and supervision—are important predictors of job satisfaction.45 Managers would do well to make sure the job conditions are satisfying enough to make employees happy. For example, Bain & Company is listed as the number one best place to work in 2019, accord- ing to Glassdoor; one employee re-emphasizes the value of social support, noting that “at a local level, my colleagues are at once my mentors, confidantes, and closest friends.”46

Personality

As important as job conditions are to job satisfaction, personality also plays an important role.47 People who have positive core self-evaluations (CSEs; see the chapter on personality and values for further discussion)—who believe in their inner worth and basic competence—are more satisfied with their jobs than people with negative CSEs. For those in collectivist cultures, those with high CSEs may realize particularly high job satisfaction.48

Pay

You have probably noticed that pay comes up often when people discuss job satisfaction. Pay does correlate with job satisfaction and overall happiness for many people, but the effect can be smaller once an individual reaches a standard level of comfortable living.49 As a corollary, money does motivate people, as we discover in the chapter on motivation applications. But what motivates us is not necessarily the same as what makes us happy.

Corporate Social Responsibility (CSR)

Would you be as happy to work for an organization with a stated social welfare mis- sion as you would for an organization without one? An organization’s commitment to

Core self-evaluation (CSE) Believing in one’s inner worth and basic competence.

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Chapter 3 • Attitudes and Job Satisfaction 71

corporate social responsibility (CSR), or its self-regulated actions to benefit society or the environment beyond what is required by law, increasingly affects employee job satisfaction. Organizations practice CSR through environmental sustainability initiatives, nonprofit work, and charitable giving.

CSR is good for the planet and good for people. Employees whose personal values fit with the organization’s CSR mission are often more satisfied. In fact, of fifty-nine large and small organizations recently surveyed, 86 percent reported they have happier employees as a result of their CSR programs.50

“The next generation of employees is seeking out employers that are focused on the triple bottom line: people, planet, and revenue,” said Susan Cooney, founder of philanthropy firm Givelocity.51 CSR allows workers to serve a higher purpose or contribute to a mission. People who view their work as part of a higher purpose often realize higher job satisfaction.52 However, an organization’s CSR efforts must be well governed, and its initiatives must be sustainable for long-term job satisfaction benefits.53

In sum, CSR is a needed, positive trend of accountability and serving. It can also contribute significantly to increased employee job satisfaction when managed well.

OUTCOMES OF JOB SATISFACTION

Having discussed some of the causes of job satisfaction, we now turn to some specific outcomes.

Job Performance

As several studies have concluded, happy workers are more likely to be productive workers. Some researchers used to believe the relationship between job satisfaction and job performance was a myth, but a review of 300 studies suggested the correla- tion is quite robust.54 Individuals with higher job satisfaction perform better, and organizations with more satisfied employees tend to be more effective than those with fewer.

Organizational Citizenship Behavior (OCB)

It seems logical that job satisfaction should be a major determinant of an employee’s orga- nizational citizenship behavior (known as OCB or citizenship behavior; see Chapter 1: What Is Organizational Behavior?).55 Evidence suggests job satisfaction is moderately correlated with OCB; people who are more satisfied with their jobs are more likely to engage in citizenship behavior.56 Why does job satisfaction lead to OCB? One reason is trust. Research in eighteen countries suggests that managers reciprocate employees’ OCBs with trusting behaviors of their own.57 Individuals who feel their coworkers support them are also more likely to engage in helpful behaviors than those who have antagonistic coworker relationships.58

Customer Satisfaction

Because service organization managers should be concerned with pleasing customers, it is reasonable to ask whether employee satisfaction is related to positive customer out- comes. For employees who have regular customer contact, the answer appears to be yes. Satisfied employees appear to increase customer satisfaction and loyalty.59

Corporate social responsibility (CSR) An organization’s self-regulated actions to benefit society or the environment beyond what is required by law.

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72 Part 1 • Understanding Yourself and Others

Several companies are acting on this evidence. Online shoe retailer Zappos is so committed to finding customer service employees who are satisfied with the job that it offers a $2,000 bribe to quit the company after training, figuring the least satisfied will take the cash and go.60 Zappos employees are empowered to “create fun and a little weirdness” to ensure that customers are satisfied, and it works: Of the company’s more than twenty-four million customers, 75 percent are repeat buyers. For Zappos, employee satisfaction has a direct effect on customer satisfaction.

Life Satisfaction

Until now, we have treated job satisfaction as if it were separate from life satisfaction, but they may be more related than you think, with evidence suggesting that they mutually influence one another.61 Furthermore, life satisfaction decreases when people become unemployed, according to research in Germany, and not just because of the loss of income.62 For most individuals, work is an important part of life, and therefore it makes sense that our overall happiness depends in no small part on our happiness in our work (our job satisfaction).

THE IMPACT OF JOB DISSATISFACTION

What happens when employees dislike their jobs? One theoretical model—the exit– voice–loyalty–neglect framework—is helpful for understanding the consequences of dis- satisfaction. The framework’s four responses differ along two dimensions: constructive/ destructive and active/passive. The responses are as follows:63

• Exit. The exit response directs behavior toward leaving the organization, including looking for a new position or resigning. To measure the effects of this response to dissatisfaction, researchers study individual terminations and collective turnover— the total loss to the organization of employee knowledge, skills, abilities, and other characteristics.64

• Voice. The voice response includes actively and constructively attempting to im- prove conditions, including suggesting improvements, discussing problems with superiors, and undertaking union activity.

• Loyalty. The loyalty response means passively but optimistically waiting for conditions to improve, including speaking up for the organization in the face of external criticism and trusting the organization and its management to “do the right thing.”

• Neglect. The neglect response passively allows conditions to worsen and includes chronic absenteeism or lateness, reduced effort, and an increased error rate.

Exit and neglect behaviors are linked to performance variables such as pro- ductivity, absenteeism, and turnover. But this model expands employee responses to include voice and loyalty—constructive behaviors that allow individuals to tolerate unpleasant situations or improve working conditions. Furthermore, some researchers have suggested the framework be expanded to include retaliatory responses, many of which are described in the next section.65 As helpful as this framework is, it is quite general.

Exit Dissatisfaction expressed through behavior directed toward leaving the organization.

Voice Dissatisfaction expressed through active and construc- tive attempts to improve conditions.

Loyalty Dissatisfaction expressed by pas- sively waiting for conditions to improve.

Neglect Dissatisfaction expressed through allowing conditions to worsen.

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Chapter 3 • Attitudes and Job Satisfaction 73

Counterproductive Work Behavior (CWB)

Substance abuse, stealing at work, undue socializing, gossiping, absenteeism, and tardiness are examples of behaviors that are destructive to organizations. They are indicators of a broader syndrome called counterproductive work behavior (CWB), also termed deviant behavior in the workplace, or simply employee withdrawal (see Chapter 1: What Is Organizational Behavior?).66 Like other behaviors we have discussed, CWB does not just happen—the behaviors often follow negative and sometimes long-standing attitudes. Therefore, if we can identify the predictors of CWB, we may lessen the probability of its effects.

Generally, job dissatisfaction predicts CWB.67 People who are not satisfied with their work become frustrated, which lowers their performance68 and makes them more likely to commit CWB.69 One important point about CWB is that dissatisfied employees often choose one or more specific behaviors due to idiosyncratic factors. One worker might quit. Another might use work time to browse Reddit. Another might take work supplies home for personal use. In short, workers who do not like their jobs “get even” in various ways. Because those ways can be quite creative, controlling only one behavior with policies and punishments leaves the root cause untouched. Employers should seek to correct the source of the problem—the dissatisfaction—rather than try to control the different responses.

As a manager, you can take steps to mitigate CWB. You can poll employee atti- tudes, for instance, and identify areas for workplace improvement. Furthermore, creating strong teams, integrating supervisors with them, providing formalized team policies, and introducing team-based incentives may help lower the CWB “contagion” that lowers the standards of the group.70

ABSENTEEISM We find that unsatisfied employees tend to be absent more often, but the relationship is not very strong.71 Generally, when numerous alternative jobs are available, dissatisfied employees have high absence rates, but when there are few alternatives, dissatisfied employees have the same (low) rate of absence as satisfied employees.72

TURNOVER The relationship between job satisfaction and turnover is stronger than between satisfaction and absenteeism.73 Overall, a pattern of lowered job satisfaction is the best predictor of intent to leave. Turnover has a workplace environment connection too. If the climate within an employee’s immediate workplace is one of low job satisfaction leading to turnover, there will be a contagion effect. This suggests managers should consider the job satisfaction (and turnover) patterns of coworkers when assigning workers to a new area.74

The satisfaction–turnover relationship is affected by alternative job prospects. If an employee accepts an unsolicited job offer, job dissatisfaction was less predictive of turnover because the employee more likely left in response to “pull” (the lure of the other job) than “push” (the unattractiveness of the current job). Similarly, job dissatisfaction is more likely to translate into turnover when other employment opportunities are plentiful. Furthermore, when employees have high “human capital” (high education, high ability), job dissatisfaction is more likely to translate into turnover because they have, or perceive, many available alternatives.75

Some factors help break the dissatisfaction–turnover relationship. Employees’ embeddedness—connections to the people or groups one is involved with at work—can help lower the probability of turnover, particularly in collectivist (group-oriented) cul- tures.76 Embedded employees seem less likely to want to consider alternative job prospects.

Counterproductive work behavior (CWB) Actions that actively damage the orga- nization, including stealing, behaving aggressively toward co-workers, or being late or absent.

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74 Part 1 • Understanding Yourself and Others

Managers Often “Don’t Get It”

Given the evidence we have just reviewed, it should come as no surprise that job sat- isfaction can affect the bottom line. One study by a management consulting firm sepa- rated large organizations into those with high morale (more than 70 percent of employees expressed overall job satisfaction) and medium or low morale (fewer than 70 percent). The stock prices of companies in the high-morale group grew 19.4 percent, compared with 10 percent for the medium- or low-morale group.77 Furthermore, companies listed within the “100 Best Companies to Work for in America” generated 2.3%–3.8% higher stock returns annually than other firms between 1984 and 2011.78 Despite these results, many managers are unconcerned about employee job satisfaction.

Others overestimate how satisfied employees are, so they do not think there is a problem when there is one. For example, in one study of 262 large employers, 86 percent of senior managers believed their organizations treated employees well, but only 55 per- cent of employees agreed; another study found 55 percent of managers, compared to only 38 percent of employees, thought morale was good in their organization.79 Regular surveys can reduce gaps between what managers think employees feel and what they really feel. A gap in understanding can affect the bottom line in small franchise sites as well as in large companies. As manager of a KFC restaurant in Houston, Jonathan McDaniel surveyed the employees every three months. Results led McDaniel to make changes, such as giving employees greater say about which workdays they had off. McDaniel believed the process itself was valuable. “They really love giving their opinions,” McDaniel said. “That’s the most important part of it—that they have a voice and that they’re heard.” Surveys are no panacea, but if job attitudes are as important as we believe, organizations need to use every reasonable method find out how they can be improved.80

SUMMARY

Managers should be interested in their employees’ attitudes because attitudes influence behavior and indicate potential problems. Creating a satisfied workforce is hardly a guar- antee of successful organizational performance, but evidence strongly suggests managers’ efforts to improve employee attitudes will likely result in positive outcomes, including greater organizational effectiveness, higher customer satisfaction, and increased profits.

IMPLICATIONS FOR MANAGERS

• Of the major job attitudes—job satisfaction, job involvement, organizational com- mitment, perceived organizational support, and employee engagement—remember that an employee’s job satisfaction level is the best single predictor of behavior.

• Pay attention to your employees’ job satisfaction levels as determinants of their performance, turnover, absenteeism, and withdrawal behaviors.

• Measure employee job attitudes objectively and at regular intervals in order to determine how employees are reacting to their work.

• To raise employee satisfaction, evaluate the fit between the employee’s work inter- ests and the intrinsic parts of the job; then create work that is challenging and interesting to the individual.

• Consider the fact that high pay alone is unlikely to create a satisfying work environment.

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75

Emotions and Moods 4

WHAT ARE EMOTIONS AND MOODS? Emotions can greatly influence our attitudes toward others, our decision making, and our behaviors. It can even spark conflict with potentially disastrous consequences. For example, after being told to “stop being a crybaby,” one Florida Taco Bell employee threw a hot bean burrito at his supervisor, snapped his headset in two, and stormed out of the building.1 In truth, we are human and cannot set aside our emotions, but we can acknowledge and work with them. And not all emotions have negative influences on us. For example, when Fausto Martinez found out about Amazon’s minimum wage hike, he was extremely happy—he looked forward to a better quality of life, more time with fam- ily, and the lack of a need for a second full-time job.2 By increasing the minimum wage, Amazon was able to improve the quality of life of its employees and stay competitive with regard to retaining them.

First, however, we need to discuss three terms that are closely intertwined: affect, emotions, and moods. Affect is a generic term that covers a broad range of feel- ings, including both emotions and moods.3 Emotions are intense, discrete, and short- lived feeling experiences that are often caused by a specific event.4 Moods are longer lived and less intense feelings than emotions and often arise without a specific event acting as a stimulus.5 Exhibit 4-1 shows the relationships among affect, emotions, and moods.

Affect A term used to describe a broad range of feelings that people experience, including emotions and moods.

Emotions Intense, discrete, and short-lived feeling experiences that are often caused by a specific event.

Moods Feelings that tend to be longer lived and less intense than emotions and that lack a contextual stimulus.

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

4.1 Differentiate between emotions and moods.

4.2 Identify the sources of emotions and moods.

4.3 Show the impact emotional labor has on employees.

4.4 Describe affective events theory.

4.5 Describe emotional intelligence.

4.6 Identify strategies for emotion regulation.

4.7 Apply concepts about emotions and moods to specific OB issues.

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76 Part 1 • Understanding Yourself and Others

As the exhibit shows, affect is a broad term that encompasses emotions and moods. Affect varies by its valence, or the degree to which the feelings are positive (e.g., excited, happy, joyous) or negative (e.g., sad, angry, frustrated). Second, there are differences between emotions and moods. Emotions are more likely to be caused by a specific event and are more fleeting than moods.

Positive and Negative Affect

As a first step toward studying the effect of moods and emotions in the workplace, we classify affect into two broad categories: positive and negative. Positive emotions—such as joy and gratitude—express a favorable evaluation or feeling. Negative emotions—such as anger and guilt—express the opposite. Keep in mind that emotions cannot be neutral. Being neutral is being non-emotional.6

The two categories of affect represent overall affective states, known as positive and negative affect (see Exhibit 4-2). So, we can think of positive affect as a mood dimension consisting of positive emotions such as excitement, enthusiasm, and elation at the high end (high positive affect). Negative affect is a mood dimension consisting of nervousness, stress, and anxiety at the high end (high negative affect).7

The Basic Emotions

You might be wondering; how many emotions are there? There are dozens—including anger, contempt, enthusiasm, envy, fear, frustration, disappointment, embarrass- ment, disgust, happiness, hate, hope, jealousy, joy, love, pride, surprise, and sadness.

Positive affect A dimension that consists of specific positive emotions such as excitement, enthusiasm, and elation at the high end and boredom, sluggishness, and tiredness at the low end.

Negative affect A dimension that consists of emotions such as nervousness, stress, and anxiety at the high end and relaxation and calm- ness at the low end.

Emotions • Caused by specific event • Very brief in duration (seconds or minutes) • Specific and numerous in nature (many specific emotions such as anger, fear, sadness, happiness, disgust, surprise) • Usually accompanied by distinct facial expressions

Moods • Cause is often general and unclear • Last longer than emotions (hours or days) • Generally not indicated by distinct expressions

Affect • Defined as a broad range of feelings that people experience. Affect can be experienced in the form of emotions or moods. • More general (two main dimensions—positive affect and negative affect—that are composed of multiple specific emotions)

EXHIBIT 4-1 Affect, Emotions, and Moods

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Chapter 4 • Emotions and Moods 77

Numerous researchers have tried to limit them to a fundamental set.8 Other scholars argue that by thinking in terms of “basic” emotions, we lose sight of the bigger picture because emotions can mean different things in different contexts and may vary across cultures.9 It is unlikely psychologists or philosophers will ever completely agree on a set of basic emotions, or even on whether there is such a thing. Still, many researchers agree on six universal emotions—anger, fear, sadness, happiness, disgust, and sur- prise.10 If you have ever held a job before, you can probably think of times in which you have experienced these emotions in the workplace; for example, after a bad per- formance review with your supervisor at the department store where you work, you might be angry with your boss, fearful of being let go, or surprised that the supervisor gave you such a poor evaluation.

Psychologists have tried to identify basic emotions by studying how we express them. Facial expressions have proved difficult to interpret.11 One problem is that some emotions are too complex to be easily represented on our faces. Second, although people can, for the most part, recognize emotions across cultures at better-than-chance levels, this accuracy is worse for cultural groups with less exposure to one another.12 Employees can also vocally express their emotions, and artificial intelligence is advancing research in this area. For example, one machine learning (see Chapter 1: What Is Organizational Behavior?) study of speeches from one hundred professional actors across various English-speaking countries found that people are better at rec- ognizing the emotions of actors who are from the same country, suggesting that there are dialect differences in verbally expressing emotions.13 Differentiating the expres- sion of emotions across cultures is quite important in this era of globalization: you may find yourself communicating with people from radically different cultures from you, and understanding the nuances in how they express emotion can be very helpful. Studying how emotions are displayed, educating yourself on culture-specific emotion expressions, and paying attention to cues when interacting with people from other cultures can help you become a better cross-cultural communicator.14

High Negative Affect

Low Positive Affect

High Positive Affect

Low Negative Affect

Tense Alert

Excited

Elated

Happy

Content

Serene

Relaxed

CalmFatigued

Bored

Depressed

Sad

Upset

Stressed

Nervous

EXHIBIT 4-2 The Affective Circumplex

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78 Part 1 • Understanding Yourself and Others

Moral Emotions

Some emotions are closely tied to our interpretations of the events that evoke them. One area in which researchers have been furthering this idea is through the study of moral emotions, that is, emotions that have moral implications because of our instant judgment of the situation that evokes them.15

Say you watched a video of a person making a sexist or racist slur. You might feel disgusted because it offends your sense of right and wrong. In fact, you might feel a variety of emotions based on your moral judgment of the situation.16 Other examples of moral emotions include sympathy for the suffering of others, guilt about our own immoral behavior, anger about injustice done to others, and contempt for those who behave unethically. Therefore, we need to be aware of the moral aspects of situations that trigger our emotions and make certain we understand the context before we act, espe- cially in the workplace.17

Experiencing Moods and Emotions

As if it were not complex enough to consider the many distinct emotions a person might experience, the reality is that we each experience moods and emotions differently. For most people, positive moods are somewhat more common than negative moods. Indeed, research finds nearly universal evidence for a positivity offset, meaning that at zero input (when noth- ing in particular is going on), most individuals experience a mildly positive mood.18 Why is it that we seem to “default” to a positive mood? In general, positive moods enable employ- ees to perform better, be more creative, be more social, as well as improve their health and longevity—for these reasons, humans may have evolved to possess a positivity offset.19

The Function of Emotions

In some ways, emotions are a mystery. What function do they serve? As we discussed, a large number of reviews suggest that happy employees tend to have positive job attitudes, engage in fewer withdrawal and counterproductive work behaviors, engage in more task and citizenship performance, and are even more successful than their unhappy counter- parts.20 Individuals who tend to experience positive affect consistently as part of their per- sonalities (see the chapter on personality and values) tend to have positive job attitudes, experience good social integration with their supervisor and coworkers, experience good treatment from their organizations, and engage in more task and citizenship performance.21

DO EMOTIONS MAKE US IRRATIONAL? How often have you heard someone say, “Oh, you’re just being emotional?” You might have been offended. Observations like this suggest that rationality and emotion are in conflict, and by exhibiting emotion, you are acting irrationally. The perceived association between the two is so strong that some researchers argue displaying emotions such as sadness to the point of crying is so toxic to a career that we should leave the room rather than allow others to witness it.22 This perspective suggests the demonstration or even experience of emotions can make us seem weak, brittle, or irrational. However, our emotions can make our thinking more rational. Why? Because our emotions provide important information about how we understand

Moral emotions Emotions that have moral implications because of our instant judgment of the situation that evokes them.

Positivity offset The tendency of most individuals to experience a mildly positive mood at zero input (when nothing in particular is going on).

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Chapter 4 • Emotions and Moods 79

the world around us and help guide our behaviors. For instance, individuals in a negative mood may be better able to discern truthful from inaccurate information than are people in a happy mood.23 Furthermore, cold rationality does not acknowledge that people are, by nature, emotional. We would do best to recognize and understand our own emotions (as well as others’) and use this information in our interactions with others.

When we can identify the sources of emotions and moods, we are better able to predict behavior and manage people well. Let us explore that topic next.

SOURCES OF EMOTIONS AND MOODS

It’s 8:15 a.m. on Monday, and you are so incredibly excited to tell your coworker, Jordan, good news about the shiny Pokémon you caught in Pokémon Go. You rush over, but Jordan immediately stops you and says, “Don’t even talk to me until I’ve had my coffee.” Defeated, you walk back to your station and continue your opening activities. You wonder where this bad mood originated from and begin to feel angry emotions toward your coworker. You mutter under your breath, “I won’t trade the extra shiny Pokémon I caught with Jordan. We’ll see who’s upset then!” We have all, no doubt, been in a similar situation before. Clearly, these negative emotions and moods are often unavoidable and have an impact on our work. Jordan hurt a coworker’s feelings, harm- ing the functioning of the f loor team that day, and now you may be preoccupied with what Jordan said and miss one of your opening tasks. We are often left wondering where these emotions and moods originated. Was it really the lack of coffee? Maybe something else was going on? Here we discuss some of the primary inf luences on emotions and moods.

Personality

Moods and emotions have a personality component, meaning that some people have built-in tendencies to experience certain moods and emotions more frequently than others do. Is Jordan frequently prone to experiencing negative emotions? It could be that Jordan’s reaction is a ref lection of personality. People also experience the same emotions with different intensities; the degree to which they experience them is called their affect intensity.24 Affectively intense people experience both positive and negative emotions deeply: When they are sad, they are really sad, and when they are happy, they are really happy. Both the tendency to experience positive and nega- tive emotions, as well as the intensity at which we feel them, affects several factors at work, such as our typical moods, job satisfaction, and engagement at work (see the chapter on attitudes and job satisfaction).25 For example, one review of over one hun- dred studies suggests that the tendency to experience positive emotions and moods is the strongest predictor of whether an employee is engaged.26

Time of Day

Maybe it was just too early for Jordan to interact with coworkers? Indeed, research does show that moods vary by the time of day. Furthermore, most of us follow the same pat- tern. Levels of positive affect tend to peak in the late morning (ten o’clock to noon) and

Affect intensity Individual differences in the strength with which individuals experience their emotions.

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80 Part 1 • Understanding Yourself and Others

then remain at that level until early evening (around seven o’clock). Starting about twelve hours after waking, positive affect begins to drop until dusk, and then, continues to accel- erate until midnight. For those who remain awake, the drop continues until positive mood picks up again after sunrise.27 As for negative affect, most research suggests it fluctuates less than positive affect,28 but the general trend is for it to increase over the course of a day, so that it is lowest early in the morning and highest late in the evening.29 A fascinat- ing study assessed patterns by analyzing millions of Twitter messages from across the globe.30 The researchers noted the presence of words connoting positive affect (happy, enthused, excited) and negative affect (sad, angry, anxious). You can see the trends they observed in the positive affect part of Exhibit 4-3.

Day of the Week

Was this just a case of the “Mondays” for Jordan? In most cultures, Mondays can be ... “problematic” for employees—for example, as shown in Exhibit 4-3, U.S. adults tend to experience their highest positive affect on Friday, Saturday, and Sunday and their lowest on Monday.31 This tends to be true in several other cultures. This is not the case in all cultures, however. In Japan, positive affect is higher on Monday than on either Friday or Saturday.32 As for negative affect, Monday is the highest negative-affect day across most cultures.33 However, in some countries, negative affect is lower on Friday and Saturday than on Sunday. It may be that while Sunday is enjoyable as a day off (and thus we have higher positive affect), we also get a bit stressed about the week ahead (which is why negative affect is higher). However, these findings may not generalize to cultures that do not follow the Monday-Friday work schedule. For example, many countries observe a Sunday-Thursday work week (e.g., Israel, Malaysia). More research is needed on whether certain days of the week influence affect in these cultures.

Weather

Maybe Jordan was feeling a little ... “under the weather”? Many people believe their mood is tied to the weather, and indeed, there are many self-proclaimed “rain haters” and “summer lovers.”34 However, a large and detailed body of evidence suggests weather has little effect on mood, at least for most people.35 Illusory correlation, which occurs when we associate two events that, in reality, have no connection, explains why people tend to think weather influences them. For example, employees may be more productive on bad weather days, as a study in Japan and the United States recently indicated, but not because of mood—instead, the worse weather removed some work distractions.36

Stress

Maybe Jordan was anxious about a worrisome meeting with the manager later that after- noon? As you might imagine, stressful events at work (a nasty e-mail, impending dead- line, loss of a sale, reprimand from the boss, etc.) negatively affect moods. The effects of stress also build over time. As the authors of one study noted, “A constant diet of even low-level stressful events has the potential to cause workers to experience gradually increasing levels of strain over time.”37 Mounting levels of stress can worsen our moods, as we experience more negative emotions. Although sometimes we thrive on it, most of us find stress usually takes a toll on our mood. In fact, when situations are overly emotionally charged and stressful, we have a natural response to disengage, to literally look away.38

Illusory correlation The tendency of people to associate two events when in reality there is no connection.

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Chapter 4 • Emotions and Moods 81

Le ve

l o f

P o si

ti ve

A ff

ec t

Time-of-Day

SAT MON THR

1 2

A M

1 A

M 2

A M

3 A

M 4

A M

5 A

M 6

A M

7 A

M 8

A M

9 A

M 1

0 A

M 1

1 A

M 1

2 PM

1 PM

2 PM

3 PM

4 PM

5 PM

6 PM

7 PM

8 PM

9 PM

1 0

PM 1

1 PM

EXHIBIT 4-3 Time-of-Day Effects on Mood of U.S. Adults as Rated From Twitter Postings

Sources: Based on S. A. Golder and M. W. Macy, “Diurnal and Sea- sonal Mood Vary with Work, Sleep, and Daylength Across Diverse Cul- tures,” Science 333 (2011), 1878–81; A. Elejalde-Ruiz, “Seize the Day,” Chicago Tribune (September 5, 2012), http:// articles.chicago tribune.com/

Note: Based on analysis of U.S. Twitter post- ings and coding of words that represent positive feelings (delight, enthusiasm) and negative feelings (fear, guilt). Lines represent percent of total words in Twitter post that convey these moods.

SAT MON THU

1 2 A

M 1 A

M 2 A

M 3 A

M 4 A

M 5 A

M 6 A

M 7 A

M 8 A

M 9 A

M 1 0 A

M 1 1 A

M 1 2 PM

1 PM

2 PM

3 PM

4 PM

5 PM

6 PM

7 PM

8 PM

9 PM

1 0 PM

1 1 PM

Le ve

l o f

N eg

a ti ve

A ff

ec t

Time-of-Day

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82 Part 1 • Understanding Yourself and Others

Sleep

Maybe Jordan was extremely tired that morning due to a lack of sleep (and, hence, the need for coffee)? Apparently, the world could use more sleep. Adults report sleeping less than adults did a generation ago.39 Data mined from millions of users of the “Sleep Cycle” application suggest that on average, sleep length and quality has diminished over the years.40 Sleep quality affects moods and decision making, and increased fatigue puts workers at risk of disease, injury, and depression.41 Poor or reduced sleep also leads to emotional changes and irritability, makes it difficult to control emotions, and can impair job satisfaction.42 On the positive side, increased regular sleep can reduce the negative effects of fatigue and stress on employees.43

Exercise

To deal with the negative emotions surrounding your interaction with Jordan, have you considered exercising after work (maybe play some more Pokémon Go)? Perhaps you have heard that people should exercise to improve their mood. Does “sweat therapy” really work? It appears so. Research consistently shows exercise enhances people’s posi- tive moods and reduces perceptions of fatigue.44 Exercise can also help protect against persistent negative moods and improve the ability to recover from negative experiences.45

Gender

You may think that Jordan’s behavior may be attributable to gender differences in emo- tions. Indeed, many people believe women are more emotional than men, but is there any truth to this? Although there have been several reviews that have found differences in emotion display across genders that tend to increase with age,46 these tend to be trivial or small, and likely reflect differences in upbringing and stereotypes, or even the way emo- tions are measured, rather than actual gender differences.47 Unfortunately, these stereo- typical perceptions of women as “emotional” and men as “angry” persist in the workplace, despite little evidence that they are true. For example, a Denver police commander filed a Civil Rights complaint against the city for gender discrimination, noting that the chief told her she was “emotional” and “immature,” denying her a promotion to deputy chief.48

Let us put together what we have learned about emotions and moods with work- place coping strategies, beginning with emotional labor.

EMOTIONAL LABOR

If you have ever had a job in retail or in sales, or waited on tables in a restaurant, you know the importance of projecting a friendly demeanor and smiling. Even though there were days when you did not feel cheerful, you knew management expected you to be upbeat when dealing with customers, so you either tried to become upbeat and cheerful, or you otherwise faked it.

When you work, you expend physical and mental labor or energy by putting your body and mind, respectively, into your job. But jobs also require emotional labor, an employee’s expression of organizationally desired emotions during interpersonal transactions at work. Emotional labor is a key component of effective job performance.50 We expect flight atten- dants to be cheerful, funeral directors to be sad, and doctors to be emotionally neutral.

Emotional labor An employee’s orga- nizationally desired emotions during interpersonal transac- tions at work.

Unilever The British-Dutch multinational consumer goods company that produces many of the world’s leading consumer brands is actively engaged in promoting physical exercise for their employees. As part of its commitment to promoting a healthy work environment, Unilever created the Lamplighter program, which aims to assess and enhance employees’ physical health, exercise, nutrition and mental resilience, mainly through individualized coaching and training. Studies have shown that the program has a clear impact on employees’ energy levels and emotional wellbeing. Unilever’s managers strongly believe that a healthy physical and mental health environment is critical for boosting employees’ productivity.49

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Controlling Emotional Displays

The way we experience an emotion is obviously not always the same as the way we show it. To analyze emotional labor, we divide emotions into felt or displayed emotions.51 Felt emotions are our actual emotions. In contrast, displayed emotions are those the orga- nization requires workers to show and considers appropriate in each job. For instance, research suggests that in U.S. workplaces, it is expected that employees should typically display positive emotions like happiness and excitement, and suppress negative emotions like fear, anger, disgust, and contempt.52

Displaying fake emotions requires us to suppress real ones. Surface acting is hid- ing feelings and emotional expressions in response to display rules. A worker who smiles at a customer even when they do not feel like it is surface acting. Deep acting is trying to modify our true feelings based on display rules. Surface acting deals with displayed emotions, and deep acting deals with felt emotions.

Displaying emotions we do not really feel can be exhausting. Surface acting is associated with increased stress and decreased job satisfaction.53 Daily surface acting can also lead to emotional exhaustion at home, work–family conflict, absenteeism, and insomnia.54 On the other hand, deep acting has a positive relationship with job satisfac- tion (especially when the work is challenging), job performance, and even better cus- tomer treatment and tips.55

The disparity between employees having to project one emotion while feeling another is called emotional dissonance. Bottled-up feelings of frustration, anger, and resentment can lead to emotional exhaustion. Long-term emotional dissonance is a pre- dictor for job burnout, declines in job performance, and lower job satisfaction.56

However, research from Germany and Australia suggests that employees who have a high capacity for self-control, who get a good night’s sleep every day, and who have strong relationships with their customers or clients tend to be buffered to some degree from the negative side effects of emotional dissonance.57

Affective events theory, discussed next, describes how emotions and moods arise from the experience of work events, and how these in turn affect job satisfaction and job performance.

AFFECTIVE EVENTS THEORY

We have seen that emotions and moods are an important part of our personal and work lives. But how do they influence our job performance and satisfaction? Affective events theory (AET) proposes that employees react emotionally to things that happen to them at work, and this reaction influences their job performance and satisfaction.58 For exam- ple, Lisamarie, a benefits administrator in North Carolina, began the in-vitro fertilization process after she was unable to conceive a child for six years and halfway through, found out her employer was dropping the benefit—she was “gutted,” “lost,” and “cried for a week,” and undoubtedly did not feel satisfied with her job following such a blow.59

Work events trigger positive or negative emotional reactions, to which employees’ personalities and moods predispose them to respond with greater or lesser intensity.60 Furthermore, some events tend to be more impactful than others, on a day-to-day basis. For example, interpersonal mistreatment by customers of part-time workers accounted for nearly 50 percent of negative affective work events.61

Felt emotions An individual’s actual emotions.

Displayed emotions Emotions that are organizationally required and consid- ered appropriate in a given job.

Surface acting Hiding one’s feelings and forgoing emo- tional expressions in response to display rules.

Deep acting Trying to modify one’s true inner feel- ings based on display rules.

Emotional dissonance Inconsistencies between the emo- tions people feel and the emotions they project.

Affective events theory (AET) A model that suggests that workplace events cause emotional reactions on the part of employees, which then influence workplace attitudes and behaviors.

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84 Part 1 • Understanding Yourself and Others

In sum, AET offers two important messages.62 First, emotions provide valuable insights into how workplace events influence employee performance and satisfaction. Second, employees and managers should not ignore emotions or the events that cause them, even when they appear minor, because they accumulate. Emotional intelligence is another framework that may help us understand the impact of emotions on job performance.

EMOTIONAL INTELLIGENCE

As the CEO of an international talent company, Terrie Upshur-Lupberger was at a career pinnacle. So why was she resentful and unhappy? A close friend observed, “Terrie, you were out on the skinny branch—you know, the one that breaks easily in a strong wind. You were so busy and overwhelmed and out of touch with your own values, cares, and guiding beliefs that you failed to pay attention to the branch that was about to break.”63 According to Upshur-Lupberger, she had failed to notice that her moods constantly swung toward frustration and exhaustion. Her job satisfaction, productivity, relation- ships, and results suffered. Worst, she was too busy to realize the deficiencies until she was completely depleted. She said, “I learned that, as a leader, you either pay attention to and manage the moods (including your own) in the organization, or ... you ignore them and pay the price.”64 Upshur-Lupberger learned the value of emotional intelligence.

Employers value emotional intelligence (EI). In one CareerBuilder survey of over 2,500 hiring managers and HR professionals, 59 percent said they would not hire some- one with high cognitive ability (e.g., IQ), but low EI, and 75 percent said they would be more likely to promote a high EI candidate over one with high IQ.65 In another study that tracked college students from graduation to over ten years after entering the workforce, EI predicted how high the their salary was ten years later, as well as whether the alumni had a mentor.66

Emotional intelligence (EI) is a person’s ability to: (1) perceive emotions in one- self and others; (2) understand the meaning of these emotions; and (3) regulate his or her own emotions accordingly, as shown in Exhibit 4-4.67 When asked why they value emo- tional intelligence over cognitive ability, the managers in the Career Builder study noted that persons with high EI are more in tune with their emotions, so they can stay calms under pressure, resolve conflict more effectively, be empathetic with coworkers and team members, and effectively regulate their emotions.68

Emotional intelligence (EI) The ability to detect and to manage emotional cues and information.

Perceive Emotions in Self and Others

Understand the Meaning of Emotions

Regulate Emotions

Conscientiousness

Cognitive

Emotional Stability

EXHIBIT 4-4 A Cascading Model of Emotional Intelligence

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Chapter 4 • Emotions and Moods 85

Several studies suggest that EI plays an important role in predicting job attitudes and facilitating academic and job performance, although the survey items are often strik- ingly similar to other items from personality, intelligence, and self-perception tests.69 Other reviews suggest that EI is related to improving teamwork effectiveness, organiza- tional citizenship behaviors (OCBs; see Chapter 1: What Is Organizational Behavior?), and career decision making, as well as reducing counterproductive work behaviors (CWBs; see Chapter 1: What Is Organizational Behavior?).70 South Korean managers with high EI tend to have better sales figures than those with low EI because they were able to create more cohesive stores and improved sales-directed behavior.71

For a leadership perspective, one research study examined eleven U.S. presidents— from Franklin Roosevelt to Bill Clinton—and evaluated them on six qualities: communica- tion, organization, political skill, vision, cognitive style, and emotional intelligence. The key quality that differentiated the successful (such as Roosevelt, Kennedy, and Reagan) from the unsuccessful (such as Johnson, Carter, and Nixon) was emotional intelligence.72 Furthermore, studies of popularity suggest that it is EI, not narcissism, that predicts long-term popularity.73 As such, leaders and employees alike who are high on EI tend to be more popular and suc- cessful because they are able to understand and manage their own, and others’, emotions.

However, it appears as if there are limits to the degree to which EI can be helpful in the workplace. For example, one study of Dutch administrative assistants suggests that EI that is focused on the self (e.g., self-understanding) decreases the experience of stress, but with physiological costs, while other-focused EI (e.g., accurately perceiving emotions in others) only weakly explained task performance.74 This suggests that EI may be costly and not as effective as we think, especially in emotionally demanding contexts. Furthermore, some research suggests that EI might even be related to how well people can fake tests (because they understand what desirable answers are on tests).75 According to this research, if you use a personality test to screen candidates for a job, those with high EI may be better at faking it.

Although the field is progressing in its understanding of EI, many questions have not been answered.76 One relates to a better understanding of EI. For example, we need to be precise when we talk about EI—are we referring to EI in general? Or to regulating emotions, understanding emotions, or perceiving emotions specifically? A second ques- tion is about the reliability of EI testing and how best to measure emotional intelligence. Several advancements have been made in this area, for example, by having test takers recognize emotions from video clips, and by having them respond with what they would do in emotionally charged situations.77 A third question is one of the most important for managers in organizations: Can EI be learned? Several reviews of dozens of studies sug- gest that EI can be trained and developed as a skill—although paradoxically, the people who need it the most are the ones least likely to actually seek it out!78

All questions aside, EI is wildly popular among consulting firms and in the popular press, and it has accumulated some support in the research literature. Love it or hate it, one thing is for sure—EI is here to stay. So might be our next topic, emotion regulation, which is increasingly studied as an independent concept.79

EMOTION REGULATION

Have you ever tried to cheer yourself up when you were feeling down, or calm your- self when you were feeling angry? If so, you have engaged in emotion regulation. The central idea behind emotion regulation is to identify and modify the emotions you feel.

Emotion regulation The process of identi- fying and modifying felt emotions.

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Recent research suggests that emotion regulation is a strong predictor of task perfor- mance for some jobs and for OCB.80

Emotion Regulation Influences and Outcomes

As you might suspect, not everyone is equally good at regulating emotions.81 Individuals who are higher in the personality trait of neuroticism (see the chapter on personality and values) have more trouble doing so and often find their moods are beyond their ability to control. Individuals who have lower levels of self-esteem are also less likely to try to improve their moods, perhaps because they are less likely than others to feel they deserve to be in a good mood.82 Finally, university seniors who are more focused on mastering the job search process were better able to regulate their emotions, and engaged in more job search behaviors as a result.83

The workplace environment influences an individual’s tendency to employ emo- tion regulation. In general, diversity in work groups increases the likelihood that you will regulate your emotions. For example, younger employees are likely to regulate their emotions when their work groups include older members.84 Racial diversity also has an effect. If diversity is low, the minority may engage in emotion regulation, perhaps to “fit in” with the majority race as much as possible; if diversity is high and many different races are represented, the majority race will employ emotion regulation, perhaps to inte- grate themselves with the whole group.85 These findings suggest a beneficial outcome of diversity—it may cause us to regulate our emotions more consciously and effectively.

While regulating your emotions might seem beneficial, research suggests there may be a downside to trying to change the way you feel. Changing your emotions takes effort, and as we noted when discussing emotional labor, this effort can be exhausting. Sometimes attempts to change an emotion actually make the emotion stronger; for exam- ple, trying to talk yourself out of being afraid can make you focus more on what scares you, which makes you more afraid.86 From another perspective, research suggests that avoiding negative emotional experiences is less likely to lead to positive moods than does seeking out positive emotional experiences.87 For example, you are more likely to experi- ence a positive mood if you have a pleasant conversation with a friend than if you avoid an unpleasant conversation with a hostile coworker.

Interestingly, some positions involve more customer incivility and mistreatment directed toward employees than do others—positions with higher levels of customer mis- treatment (e.g., call center employees) necessitate more employee emotion regulation and, as a result, can lead to higher levels of employee exhaustion.88 Do you want to make a customer service employee’s life easier? Be nice to them! One study of supermarket checkout operators found that smiling at checkout staff and engaging in short conversa- tions reduces the staff members’ emotion regulation needs, and as such reduces their emotional exhaustion and improves their performance.89

Emotion Regulation Techniques

Researchers of emotion regulation often study the strategies people employ to change their emotions. One related technique of emotion regulation is emotional suppression, literally suppressing—blocking or ignoring—initial emotional responses to situations. This response seems to facilitate practical thinking in the short term, but is generally ineffective when compared with expressing ones’ emotions.90 However, it appears to be

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Chapter 4 • Emotions and Moods 87

helpful only when a strongly negative event would elicit a distressed emotional reaction during a crisis.91 For example, a portfolio manager might suppress an emotional reaction to a sudden drop in the value of a stock and therefore be able to clearly decide how to plan. Cognitive reappraisal, or reframing our outlook on an emotional situation, is one way to regulate emotions effectively.92 Cognitive reappraisal ability seems to be most helpful to individuals in situations where they cannot control the sources of stress.93 For example, if you lost your job, reframing it as an opportunity to try the new career you always dreamed about may help you regulate your emotions. Another technique with potential for emotion regulation is social sharing, or venting. Research shows that the open expression of emotions can help individuals to regulate their emotions as opposed to keeping emotions “bottled up.” Social sharing can reduce anger reactions when people can talk about the facts of a bad situation, their feelings about the situation, or any posi- tive aspects of the situation.94 For example, venting to your coworker after work about the heated exchange with your manager in the kitchen may help you express your feel- ings and understand the situation a little better.

While there is much promise in emotion regulation techniques, the best route to a positive workplace is to recruit positive-minded individuals and train employees and leaders alike to manage their moods, job attitudes, and performance.95 The best leaders manage emotions as much as they do tasks and activities. The best employees can use their knowledge of emotion regulation to decide when to speak up and how to express themselves effectively.96 The key is to be adaptive: try to be aware of your emotions and use the regulation techniques best suited for the situation.97

Now that we have studied the role of emotions and moods in OB, let us consider the opportunities for more specific applications that our understanding provides.

OB APPLICATIONS OF EMOTIONS AND MOODS

Our understanding of emotions and moods can affect many aspects of OB. Let us think through some of them.

Selection

One implication from the evidence on EI is that employers should consider it a factor in hiring employees, especially for jobs that demand a high degree of social interaction. In fact, more employers are starting to use EI measures to hire people. For example, a study of U.S. Air Force recruiters showed that top-performing recruiters exhibited high levels of EI. Using these findings, the Air Force revamped its selection criteria. A follow- up investigation found hires who had high EI scores became 2.6 times more successful than those with lower scores. A second implication is that applicant emotions are some- times, knowingly or not, used in selection decisions. As an example, Hong Kong Chinese applicants are more likely to try to appear calm, rather than excited, during the selection process and Hong Kong Chinese employers were more likely to hire calm applicants.98

Decision Making

Moods and emotions have effects on decision making that employees and managers should understand. Positive emotions and moods seem to help people make sound decisions. Positive emotions also enhance problem-solving skills, so positive people find better solutions.99

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OB researchers continue to debate the role of negative emotions and moods in deci- sion making. One recent study suggested that people who are saddened by events may make the same decisions as before, while people who are angered by events might make stronger (though not necessarily better) choices than before.100 Another study found that participants made choices reflecting more original thinking when in a negative mood.101 Still other research indicated that individuals in a negative mood may take higher risks than when in a positive mood.102 Taken together, these and other studies suggest negative (and positive) emotions impact decision making, but that there are other variables that require further research.103

Creativity

As we see throughout this text, one goal of leadership is to maximize employee produc- tivity through creativity. Creativity is influenced by emotions and moods, but there are two schools of thought on the relationship. Much research suggests that people in good moods tend to be more creative than people in bad moods.104 People in good moods produce more ideas and more options, and others find their ideas original.105 It seems that people experiencing positive moods or emotions are more flexible and open in their thinking, which may explain why they are more creative.106 Some researchers, however, do not believe a positive mood makes people more creative. They argue that, when people are in positive moods, they may relax (“If I’m in a good mood, things must be going okay, and I don’t need to think of new ideas”) and not engage in the critical thinking nec- essary for some forms of creativity.107 Individuals who worry more may perform better on creative tasks than those who worry less.

Motivation

Several studies have highlighted the importance of moods and emotions on motivation. Giving people performance feedback—whether real or fake—influences their mood, which then influences their motivation.108 A cycle can be created in which positive moods cause people to be more creative, leading to positive feedback from those observ- ing their work. The feedback further reinforces the positive mood, which makes people perform even better, and so on. Overall, the findings suggest a manager may enhance employee motivation—and performance—by encouraging good moods.

Leadership

Research indicates that putting people in a good mood makes good sense. Leaders who focus on inspirational goals generate greater optimism, cooperation, and enthusiasm in employ- ees, leading to more positive social interactions with coworkers and customers.109 A study with Taiwanese military participants indicated that by sharing emotions, transformational leaders inspire positive emotions in their followers that lead to higher task performance.110

Leaders are perceived as more effective when they share positive emotions, and fol- lowers are more creative in a positive emotional environment. What about when leaders are sad? Research found that leader displays of sadness increased the analytic performance of followers, perhaps because followers attended more closely to tasks to help the leaders.111 Another interesting study examined over 300 halftime locker room speeches from high school and college basketball teams, finding that leaders’ sharing of negative emotions

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(e.g., anger) can help improve team performance. However, these emotions had to be at the right level of intensity—too negative and intense, and the display would backfire.112

Customer Service

Workers’ emotional states influence the level of customer service they give, which in turn influences levels of repeat business and customer satisfaction.113 This result is primarily due to emotional contagion—the “catching” of emotions from others.114 When some- one at work experiences positive emotions and laughs and smiles at you, like when they are sending you a funny meme about retail life, you tend to respond positively. Of course, the opposite is true as well.

Studies indicate a matching effect between employee and customer emotions. In the employee-to-customer direction, research finds that customers who catch the positive moods or emotions of employees shop longer. In the other direction, when an employee feels unfairly treated by a customer, it is harder for the employee to display the positive emotions the organization expects.115 High-quality customer service places demands on employees because it often puts them in a state of emotional dissonance, which can be damaging to the employee and the organization. Managers can interrupt negative conta- gion by fostering positive moods.

Work–Life Satisfaction

Ever hear the advice “Never take your work home with you,” meaning you should forget about work once you go home? That is easier said than done. The good news is that it appears a positive mood at work can spill over to your off-work hours, and a negative mood at work can be restored to a positive mood after a break. Several studies have shown people who had a good day at work tend to be in a better mood at home that eve- ning, and vice versa.116 Other research has found that although people do emotionally take their work home with them, by the next day the effect is usually gone.117 The bad news is that the moods of the people in your household may affect yours. As you might expect, one study found if one member of a couple was in a negative mood during the workday, the negative mood spilled over to the spouse at night.118

Deviant Workplace Behaviors

Anyone who has spent much time in an organization realizes people can behave in ways that violate established norms and threaten the organization, its members, or both.119 As we saw in the chapter on attitudes and job satisfaction, these CWBs can be traced to nega- tive emotions and can take many forms. People who feel negative emotions are more likely than others to engage in short-term deviant behavior at work, such as gossiping or surfing the Internet,120 though negative emotions can also lead to more serious forms of CWB.

For instance, envy is an emotion that occurs when you resent someone for having something you do not have but strongly desire—such as a better work assignment, larger office, or higher salary. It can lead to malicious deviant behaviors. An envious employee could undermine other employees and take all the credit for things others accomplished. Angry people look for other people to blame for their bad mood, interpret other people’s behavior as hostile, and have trouble considering others’ points of view.121 It’s not hard to see how these thought processes can lead directly to verbal or physical aggression.

Emotional contagion The process by which people’s emotions are caused by the emotions of others.

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One study in Pakistan found that anger correlated with more aggressive CWBs such as abuse against others and production deviance, while sadness did not. Interestingly, neither anger nor sadness predicted workplace deviance, which suggests that managers need to take employee expressions of anger seriously; employees may stay with an orga- nization and continue to act aggressively toward others.122 Once aggression starts, it is likely that other people will become angry and aggressive, so the stage is set for a serious escalation of negative behavior. Managers therefore need to stay connected with their employees to gauge emotions and emotional intensity levels.

Safety and Injury at Work

Research relating negative affectivity to increased injuries at work suggests employers might improve health and safety (and reduce costs) by ensuring workers are not engaged in potentially dangerous activities when they are in a bad mood. Bad moods can contrib- ute to injury at work in several ways.123 Individuals in negative moods tend to be more anxious, which can make them less able to cope effectively with hazards. A person who is always fearful will be more pessimistic about the effectiveness of safety precautions because she feels she will just get hurt anyway, or she might panic or freeze up when con- fronted with a threatening situation. Negative moods also make people more distractable, and distractions can obviously lead to careless behaviors.

Selecting positive team members can contribute toward a positive work environ- ment because positive moods transmit from team member to team member. One study of 130 leaders and their followers found that leaders who are charismatic transfer their positive emotions to their followers through a contagion effect.124 It makes sense, then, to choose team members predisposed to positive moods.

SUMMARY

Emotions and moods are similar in that both are affective in nature. But they are also different—moods are more general and less contextual than emotions. The time of day, stressful events, and sleep patterns are some of the many factors that influence emotions and moods. OB research on emotional labor, affective events theory, emotional intel- ligence, and emotional regulation helps us understand how people deal with emotions. Emotions and moods have proven relevant for virtually every OB topic we study, with implications for managerial practices.

IMPLICATIONS FOR MANAGERS

• Recognize that emotions are a natural part of the workplace and good management does not mean creating an emotion-free environment.

• To foster effective decision making, creativity, and motivation in employees, model positive emotions and moods as much as is authentically possible.

• Provide positive feedback to increase the positivity of employees. Of course, it also helps to hire people who are predisposed to positive moods.

• In the service sector, encourage positive displays of emotion, which make customers feel more positive and thus improve customer service interactions and negotiations.

• Understand the role of emotions and moods to significantly improve your ability to explain and predict your coworkers’ and others’ behavior.

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91

Personality and Values 5

LINKING INDIVIDUALS TO THE WORKPLACE

Years ago, organizations were concerned with personality in order to match individuals to specific jobs. That concern has expanded to include how well the individual’s person- ality and values (described in more detail later in the chapter) match the organization. Why? Because managers today are less interested in an applicant’s ability to perform a specific job than with the ability to further the organization’s mission and to retain the employee (rather than leaving for another organization). For example, Twegos, a Belgian firm that provides a person–organization value fit assessment, assesses truck driver fit with their carrier, trainers, dispatchers, and managers in order to increase engagement and reduce turnover.1 Still, one of the first types of fit managers look for is person–job fit.

Person–Job Fit

The effort to match job requirements with personality characteristics is described by John Holland’s person–job fit theory, one of the most supported OB theories in use interna- tionally.2 The Vocational Preference Inventory questionnaire contains 160 occupational titles. Respondents indicate which they like or dislike, and their answers form occupa- tion interest profiles. Holland presented six personalities and proposed that satisfaction

Person–job fit theory A theory that identi- fies six personality types and proposes that the fit between personality type and occupational environ- ment determines satisfaction and turnover.

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

5.1 Describe the differences between person–job fit and person–organization fit.

5.2 Describe personality, the way it is measured, and the factors that shape it.

5.3 Describe the strengths and weaknesses of the Myers–Briggs Type Indicator (MBTI) personality framework, the Big Five Model, and the Dark Triad.

5.4 Discuss how the concepts of core self-evaluation (CSE), self-monitoring, and proactive personality contribute to the understanding of personality.

5.5 Describe how the situation affects whether personality predicts behavior.

5.6 Contrast terminal and instrumental values.

5.7 Compare Hofstede’s five value dimensions and the GLOBE framework.

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and the propensity to leave a position depend on how well individuals match their inter- ests to a job. Exhibit 5-1 describes the six types, their personality characteristics, and examples of congruent occupations for each. Notably, this theory tends to be supported, with person–job fit strongly predicting job satisfaction, organizational commitment, and intentions to quit.3

There are cultural implications for person–job fit that speak to workers’ expecta- tions that jobs will be tailored to them. In individualistic countries where workers expect to be heard and respected by management, increasing person–job fit by tailoring the job to the person increases the individual’s job satisfaction. However, in collectivistic countries, person–job fit is a weaker predictor of job satisfaction4 because people do not expect to have jobs tailored to them, so they value person–job fit efforts less. Therefore, managers in collectivistic cultures should not violate cultural norms by designing jobs for individuals; rather, they should seek people who will likely thrive in jobs that have already been structured.5

Person–Organization Fit

Person–organization fit essentially means that people are attracted to and selected by organizations that match their values, and they leave organizations that are not compat- ible with their personalities.6 Using the Big Five terminology (discussed later in the next section), for instance, we could expect that extraverts fit well with aggressive and team-oriented cultures; people high on agreeableness match better with a supportive organizational climate; and highly open people fit better in organizations that empha- size innovation rather than standardization.7 Following these guidelines when hiring should yield employees who fit better with the organization’s culture, which should, in turn, result in higher employee satisfaction and reduced turnover.8 Research on person– organization fit has also looked at whether people’s values match the organization’s culture. A match predicts job satisfaction, commitment to the organization, and low turn- over.9 Interestingly, new research suggests that people tend to care more about how well an organization’s values would be preferred by the typical person, rather than one’s own idiosyncratic preferences for values in an organization.10

Person–organization fit A theory that people are attracted to and selected by organiza- tions that match their values and leave when there is no compatibility.

Type Personality Characteristics Congruent Occupations

Realistic: Prefers physical activities that Shy, genuine, persistent, stable, conforming, Mechanic, drill press operator, require skill, strength, and coordination practical a ssembly-line worker, farmer

Investigative: Prefers activities that involve Analytical, original, curious, independent Biologist, economist, mathematician, thinking, organizing, and understanding news reporter

Social: Prefers activities that involve Sociable, friendly, cooperative, understanding Social worker, teacher, counselor, helping and developing others clinical psychologist

Conventional: Prefers rule-regulated, Conforming, efficient, practical, unimaginative, Accountant, corporate manager, bank orderly, and unambiguous activities inflexibl teller, file clerke

Enterprising: Prefers verbal activities Self-confident, ambitious, energetic, Lawyer, real estate agent, public in which there are opportunities to domineering relations specialist, small business influence others and attain power manager

Artistic: Prefers ambiguous and Imaginative, disorderly, idealistic, emotional, Painter, musician, writer, interior unsystematic activities that allow impractical decorator creative expression

EXHIBIT 5-1 Holland’s Typology of Personality and Congruent Occupations

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Chapter 5 • Personality and Values 93

In pursuit of fit, it is more important than ever for organizations to manage their image online, since job seekers view company websites as part of their pre-application process.11 Applicants want to see a user-friendly website that provides information about company philosophies and policies. The website is so important to the development of perceived person–organization fit that improvements to its style (usability) and substance (policies) can lead to more applicants.12

Other Dimensions of Fit

Although person–job fit and person–organization fit are considered the most salient dimensions for workplace outcomes, other avenues of fit are worth examining. These include person–group fit and person–supervisor fit.13 Person–group fit is important in team settings, where the dynamics of team interactions significantly affect work out- comes. Person–supervisor fit has become an important area of research since poor fit in this dimension can lead to lower job satisfaction and reduced performance. All dimen- sions of fit are sometimes broadly referred to as person–environment fit.

Each dimension can predict work attitudes, which are partially based on culture. A recent meta-analysis of person–environment fit in East Asia, Europe, and North America suggested the dimensions of person–organization and person–job fit are the strongest pre- dictors of positive work attitudes and performance in North America. These dimensions are important to a lesser degree in Europe, and they are least important in East Asia.14

PERSONALITY

The needs of a business are broad and varied. People are needed to keep track of account- ing and finance, to ensure that the right employees are hired and that training needs are met, to market and sell the products or services the company provides, to research and develop better ways of doing things, and so on. Consider this: if every employee you hired was the same and had identical personalities, would they all be equally effective at meeting these needs?15 Before we can answer this question, we need to address a more basic one: What is personality?

What Is Personality?

When we speak of someone’s personality, we use many adjectives to describe how they act and seem to think; in fact, in one study, research participants used 624 distinct adjec- tives to describe people they knew.16 Thinking of one of your coworkers, you might think they are “fun,” “outgoing,” “nice,” “hard-working”; or maybe you think they are “lazy,” “aloof,” “closed-minded,” or “nosy.” In organizational behavior (OB) we organize these characteristics into overall traits describing a person’s personality.

DEFINING PERSONALITY For our purposes, think of personality as the sum of ways in which an individual reacts to and interacts with the world around them. We most often describe personality in terms of the measurable traits a person exhibits.

Early work on personality tried to identify and label all the enduring characteristics, such as the adjectives listed above, that describe an individual’s behavior. When someone exhibits these characteristics across many situations and when they are relatively endur- ing over time, we call them personality traits.18

Personality The sum of ways in which an individual reacts to and interacts with the world around them.

Siemens The German multinational conglomerate has three principal values that signal to all job applicants and employees the preferred employee profile at Siemens: “responsible” (commitment to ethical and responsible actions), “excellent” (achieving high performance and excellent results), and “innovative” (being innovative to create sustainable value). Recruiters at Siemens strive to attract and select employees with values compatible with those of the company. In 2020, Siemens publicly demonstrated its emphasis on responsibility by permitting 140,000 of its employees to work from home three days a week. Although this move was mainly motivated by COVID-19 as a way to minimize public interaction, it was also a response by management to offer greater flexibility in work life in line with employees’ demands.17

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Research indicates our culture influences the way we describe ourselves and others. Although many personality traits do tend to emerge across cultures (see the Five- Factor Model, later in this chapter),19 it appears that some traits do not emerge in certain cultures—moreover, certain unique personality traits might emerge.20 For instance, research in Chinese contexts has uncovered unique traits that focus on interpersonal relat- edness, as well as a relative absence of openness traits.21 As such, when interacting with people from other cultures, it is imperative to keep in mind that there may be cultural differences, even when it comes to personalities.

MEASURING PERSONALITY Personality assessments have been increasingly used in diverse organizational settings. In fact, 89 of the Fortune 100 companies and 57 percent of all large U.S. companies use them,22 including Xerox, McDonald’s, and Lowe’s.23 Schools such as DePaul University have also begun to use personality tests in their admissions process.24 Personality tests are useful in hiring decisions and help managers forecast who is best for a job.25

The most common means of measuring personality is through self-report surveys in which individuals evaluate themselves on a series of factors such as “I worry a lot about the future.”26 In general, when people know their personality scores are going to be used for hiring decisions, they rate themselves much higher on desirable traits (e.g., con- scientiousness) than if they are taking the test to learn more about themselves.27 Another problem is accuracy;28 for instance, personality ratings from someone who knows you well (e.g., someone you have worked with for five years) might be more accurate than ratings given by a relative stranger to you.29

Observer-ratings surveys provide an independent assessment of personality. Here, a coworker or another observer does the rating. Though the results of self-reports and observer- ratings surveys are strongly correlated, research suggests observer-ratings surveys predict job success more than self-ratings alone.30 However, each can tell us something unique about an individual’s behavior, so a combination of self-reports and observer-ratings predicts perfor- mance better than any one type of information. What makes for a good observer? Emotion recognition (see the chapter on emotions and moods) may play a role here: One study found that accuracy in judging negative versus positive emotional displays plays a role in how accurately observers judge emotional stability versus extraversion, respectively.31

Modern advancements in technology and artificial intelligence (e.g., machine learn- ing, see Chapter 1: What Is Organizational Behavior?) have also improved the ability to score personality tests, reduce faking, and adaptively present items for more accurate personality assessment. For example, machine learning has been used for selecting the most informative questions for traditional personality tests,32 for detecting people who fake personality tests,33 and even for scoring personal essays on job applications!34

PERSONALITY FRAMEWORKS

Throughout history, people have sought to understand what makes individuals behave in different ways. Many of our behaviors stem from our personalities, so understanding the components of personality helps us predict behavior. For example, an employee who is low on tact as a personality trait (a characteristic of “agreeableness”) may be more likely to be rude or direct at inappropriate times, which can, in turn, upset or anger coworkers.35 Theoretical frameworks and assessment tools, discussed next, help us categorize and study these dimensions of personality.

Personality traits Enduring character- istics that describe an individual’s behavior.

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The Myers–Briggs Type Indicator

The Myers–Briggs Type Indicator (MBTI) is the most widely used personality- assessment instrument in the world.36 It is a 100-question personality test that asks people how they usually feel or act in situations. Respondents are classified as extraverted or introverted (E or I), sensing or intuitive (S or N), thinking or feeling (T or F), and judging or perceiving (J or P):

• Extraverted (E) versus Introverted (I). Extraverted individuals are outgoing, sociable, and assertive. Introverts are quiet and shy.

• Sensing (S) versus Intuitive (N). Sensing types are practical and prefer routine and order, and they focus on details. Intuitives rely on unconscious processes and look at the “big picture.”

• Thinking (T) versus Feeling (F). Thinking types use reason and logic to handle problems. Feeling types rely on their personal values and emotions.

• Judging (J) versus Perceiving (P). Judging types want control and prefer order and structure. Perceiving types are flexible and spontaneous.

The MBTI describes personality by identifying one trait (e.g., extraversion) from each of the four pairs (e.g., extraversion–introversion) and combining them to form a personality type. For example, Introverted/Intuitive/Thinking/Judging people (INTJs) are visionaries with original minds and great drive. They are skeptical, critical, independent, determined, and often stubborn.

There are several potential problems with the use of the MBTI.37 First, evidence is mixed about its validity as a measure of personality; however, most of the evidence is against it.38 As Professor Dan Ariely sardonically noted about MBTI results, “Next time, just look at the horoscope. It is just as valid and takes less time.”39 Second, the MBTI forces a person into one type or another; that is, you are either introverted or extraverted. There is no in-between. Third, when people retake the assessment, they often receive different results. An additional problem is in the difficulty of interpreta- tion. There are levels of importance for each of the MBTI facets, and separate mean- ings for certain combinations of facets, all of which require trained interpretation that can leave room for error. Finally, results from the MBTI tend to be unrelated to job performance. Because results tend to be unrelated to job performance, managers should consider using the Big Five Personality Model, discussed next, as the personality selection test for job candidates instead.

The Big Five Personality Model

The MBTI may lack strong supporting evidence, but an impressive body of research supports the Big Five Model, which proposes that five basic dimensions encompass most of the differences in human personality.40 Test scores of these traits do a very good job of predicting how people behave in a variety of real-life situations41 and remain relatively stable for an individual over time, with some daily variations.42 These are the Big Five factors:

• Conscientiousness. The conscientiousness dimension is a measure of personal consistency and reliability. A highly conscientious person is responsible, organized, dependable, and persistent. Those who score low on this dimension are easily distracted, disorganized, and unreliable.

Myers–Briggs Type Indicator (MBTI) A personality test that taps four character- istics and classifies people into 1 of 16 personality types.

Big Five Model A personality model that proposes five basic dimensions encompass most of the differences in human personality.

Conscientiousness A personality dimen- sion that describes someone who is responsible, depend- able, persistent, and organized.

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• Emotional stability. The emotional stability dimension taps a person’s ability to withstand stress. People with emotional stability tend to be calm, self-confident, and secure. High scorers are more likely to be positive, optimistic, and experience fewer negative emotions (e.g., nervousness, anxiety, insecurity); they are generally happier than low scorers.

• Extraversion. The extraversion dimension captures our relational approach toward the social world. Extraverts tend to be gregarious, assertive, and sociable. They experience more positive emotions than do introverts, and they more freely express these feelings. On the other hand, introverts (low extraversion) tend to be more thoughtful, reserved, timid, and quiet.

• Openness to experience. The openness to experience dimension addresses the range of a person’s interests and their fascination with novelty. Open people are creative, curious, and artistically sensitive. Those at the low end of the category are conventional and find comfort in the familiar.

• Agreeableness. The agreeableness dimension refers to an individual’s propensity to defer to others. Agreeable people are cooperative, warm, and trusting. You might expect agreeable people to be happier than disagreeable people. They are, but only slightly. When people choose organizational team members, agreeable individuals are usually their first choice. In contrast, people who score low on agreeableness can be cold and antagonistic.

How Do the Big Five Traits Predict Behavior at Work?

There are many relationships between the Big Five personality dimensions and job per- formance,43 and we are learning more about them every day. Let us explore one trait at a time, beginning with the strongest predictor of job performance—conscientiousness.

CONSCIENTIOUSNESS AT WORK Researchers have stated, “Personal attributes related to conscientiousness and agreeableness are important for success across many jobs, spanning across low to high levels of job complexity, training, and experience.”44 Employees who score higher in conscientiousness develop higher levels of job knowledge, probably because highly conscientious people learn more (conscientiousness may be related to grade point average [GPA]),45 and these levels correspond with higher levels of job performance and organizational citizenship behavior (OCB; see Chapter 1: What Is Organizational Behavior?).46 Conscientious employees are also less likely to engage in counterproductive work behaviors CWB (see the chapter on attitudes and job satisfaction).47

Conscientiousness is the best overall predictor of job performance. However, the other Big Five traits are also related to aspects of performance and have other implica- tions for work and for life. Exhibit 5-2 summarizes these other relations.

EMOTIONAL STABILITY AT WORK Of the Big Five traits, emotional stability is most strongly related to life satisfaction and job satisfaction, as well as to reduced burnout and intentions to quit.48 People with high emotional stability can adapt to unexpected or changing demands in the workplace.49 At the other end of the spectrum, individuals with low emotional stability, who are unable to cope with these demands, may experience burnout.50 These people also tend to experience work–family conflict, which can affect

Emotional stability A personality dimen- sion that character- izes someone as calm, self-confident, and secure (posi- tive) versus nervous, anxious, and insecure (negative).

Extraversion A personality dimension describ- ing someone who is sociable, gregarious, and assertive.

Openness to experience A personality dimen- sion that character- izes someone in terms of imagination, artistic sensitivity, and curiosity.

Agreeableness A personality dimen- sion that describes someone who is good natured, cooperative, and trusting.

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work outcomes.51 Given these straining effects, employees low on emotional stability are more likely to engage in CWBs, less likely to engage in OCBs, and less likely to be motivated at work.52

EXTRAVERSION AT WORK People with extraverted personality traits tend to perform well in jobs that require interpersonal interaction. Extraversion is a relatively strong predictor of leadership emergence and behaviors in groups.53 Extraverts also experience generally high job satisfaction and reduced burnout.54 However, extraverts can appear to be dominating, which can be disadvantageous for jobs that do not require frequent social interaction.55

OPENNESS AT WORK Open people tend to be creative and innovative.56 Open people are more likely to be effective leaders and more comfortable with ambiguity—they cope better with organizational change and are more adaptable.57 While openness is not related to initial performance on a job, individuals higher in openness are less susceptible to a decline in performance over a longer time period.58 Open people also experience less work–family conflict.59

AGREEABLENESS AT WORK Agreeable individuals tend to do better in interpersonally oriented jobs such as customer service. They experience less work–family conflict and are less susceptible to turnover.60 They also engage in a high degree of OCBs and a low degree of CWBs.61 Lastly, agreeableness is associated with lower levels of career success

• Less negative thinking and fewer negative emotions • Less hypervigilant

• Higher job and life satisfaction • Lower stress levels • More adaptable to change

• Better interpersonal skills • Greater social dominance • More emotionally expressive

Extraversion • Higher performance • Enhanced leadership • Higher job and life satisfaction

• Increased learning • More creative • More flexible and autonomous

Openness • Enhanced Training performance

• Better liked • More compliant and conforming

Agreeableness • Higher performance • Lower levels of deviant behavior

• Greater effort and persistence • More drive and discipline • Better organized and planning

Conscientiousness • Higher performance • Enhanced leadership • Greater longevity

BIG FIVE TRAITS WHY IS IT RELEVANT? WHAT DOES IT AFFECT?

Emotional stability

• Enhanced leadership

EXHIBIT 5-2 Model of How Big Five Traits Influence OB Criteria

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(especially earnings), perhaps because highly agreeable people consider themselves less marketable and are less willing to assert themselves.62

Interestingly, agreeableness might be more important for organizational commit- ment (see the chapter on attitudes and job satisfaction) in some cultures, more than others. One review of research on nearly 20,000 employees worldwide found that agreeableness was more predictive of organizational commitment in collectivistic cultures, rather than individualistic cultures (see later in this chapter for more information on collectivistic versus individualistic cultures).63 Furthermore, given that more companies are sending their employees on global assignments, it is important to understand which personality traits are most important for adjusting to living in different cultures. Research suggests that extraversion is the most important trait predicting adjustment.64 A study on 2,500 international exchange students worldwide corroborated this, with extraversion signifi- cantly reducing the stress of being in a new culture and improving cultural adaptation.65

Research indicates that the Big Five traits have the most verifiable links to impor- tant organizational outcomes, but they are not the only traits a person exhibits, nor are they the only ones with OB implications. Let us discuss some other traits, known collec- tively as the Dark Triad.

The Dark Triad

Outside of the Big Five framework, researchers have identified three other socially undesirable traits, which we all have in varying degrees: Machiavellianism, narcissism, and psychopathy. Owing to their negative nature, researchers have labeled these the Dark Triad—though they do not always occur together.66 In reviewing these traits, you might remember coworkers or bosses you have had previously that might be characterized by these traits, and the consequences these traits had in your workplace. These traits can lit- erally harm an organization’s financial performance. For example, one study of 101 hedge fund managers found that those who were narcissistic and psychopathic tended to have worse financial performance than their peers.67 These traits might not be far removed as you think; after all, “not all psychopaths are in prison—some are in the board room.”68

The Dark Triad may sound sinister, but these traits are not clinical pathologies. They might be expressed particularly strongly when an individual is under stress and unable to moderate any inappropriate responses. Sustained high levels of dark personality traits can cause individuals to derail their careers and personal lives.69

MACHIAVELLIANISM Aiden is a bank manager in Shanghai. Aiden has received three promotions in the past four years and makes no apologies for using aggressive tactics. “I do whatever I have to do to get ahead,” Aiden says. Aiden would be described as Machiavellian.

The personality characteristic of Machiavellianism (often abbreviated Mach) is named after Niccolo Machiavelli, who wrote in the sixteenth century on how to gain and use power. An individual high in Machiavellianism is pragmatic, maintains emotional distance, and believes that ends can justify means. “If it works, use it” is consistent with a high-Mach perspective. High Machs manipulate more, win more, are persuaded less by others, but persuade others more than do low Machs.70 They are more likely to act aggressively and engage in CWBs as well. Surprisingly, Machiavellianism does not significantly predict overall job performance.71 High-Mach employees, by

Dark Triad A constellation of negative personality traits consisting of Machiavellianism, narcissism, and psychopathy.

Machiavellianism The degree to which an individual is pragmatic, maintains emotional distance, and believes that ends can justify means.

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manipulating others to their advantage, win in the short term at a job, but lose those gains in the long term because they are not well liked.

NARCISSISM Avery likes to be the center of attention. Avery thinks of Avery as having a very large number of talents (“See, even ‘a very’ can be found in my name!” Avery says) and as having a grandiose and profound influence on others and is very sensitive to criticism. Avery is a narcissist. The trait is named for the Greek myth of Narcissus, a youth so vain and proud he fell in love with his own image. Narcissism describes a person who has a grandiose sense of self-importance, requires excessive admiration, and is arrogant. Narcissists often have fantasies of grand success, a tendency to exploit situations and people, a sense of entitlement, and a lack of empathy.72 However, narcissists can be hypersensitive and fragile people.73

While narcissism seems to have little relationship to job effectiveness or OCB,74 it is one of the largest predictors of increased CWB in individualistic cultures—but not in collectivist cultures that discourage self-promotion.75 Narcissists commonly think they are overqualified for their positions.76 When they receive feedback about their performance, they often tune out information that conf licts with their positive self- perception, but they will work harder if rewards are offered.77 Narcissist managers are even selective about the relationships they form with their subordinates, often priori- tizing those who give positive, noncritical feedback (ultimately, reducing the voice of all subordinates).78 Research using data compiled over one hundred years has shown that narcissistic CEOs of baseball organizations generate higher levels of manager turnover, although members of external organizations see them as more inf luential.79

On the bright side, narcissists may be more charismatic than others.80 They also might be found in business more often than in other fields. They are more likely to be chosen for leadership positions, and medium ratings of narcissism (neither extremely high nor extremely low) are positively correlated with leadership effectiveness.81 Some evidence suggests that narcissists are more adaptable and make better business decisions than others when the issue is complex.82 Narcissism and its effects are not confined to CEOs or celebrities. Like the effects of Machiavellianism, those of narcissism vary by context, but are evident in all areas of life.

PSYCHOPATHY Psychopathy is part of the Dark Triad, but in OB, it does not connote clinical mental illness. In the OB context, psychopathy is defined as a lack of concern for others, and a lack of guilt or remorse when actions cause harm.83 Measures of psychopathy attempt to assess motivation to comply with social norms, impulsivity, willingness to use deceit to obtain desired ends, and a lack of empathic concern for others.

The literature is not consistent about whether psychopathy is important to work behavior. One review found little correlation between measures of psychopathy and job performance or CWBs.84 Another found antisocial personality, which is closely related to psychopathy, was positively related to advancement in the organization but unrelated to other aspects of career success and effectiveness.85 Still other research suggests psy- chopathy is related to the use of hard influence tactics (threats, manipulation) and bul- lying work behavior (physical or verbal threatening) and even suggests that they do not feel remorseful when they do it.86 The cunning displayed by people who score high on psychopathy may thus help them gain power in an organization but keep them from using it toward healthy ends for themselves or their organizations.

Narcissism The tendency to be arrogant, have a gran- diose sense of self- importance, require excessive admiration, and have a sense of entitlement.

Psychopathy The tendency for a lack of concern for others and a lack of guilt or remorse when actions cause harm.

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OTHER FRAMEWORKS The Dark Triad is a helpful framework for studying the three dominant dark-side traits in current personality research, and researchers are exploring other traits as well. One emerging framework incorporates an additional trait into the Big Five framework. The HEXACO model, which is composed of a new trait— honesty/humility (H)—and emotionality (E; i.e., emotional stability), extraversion (X), agreeableness (A), conscientiousness (C), and openness to experience (O).87 The addition of the H dimension came from cross-cultural studies that suggest that the English-centric early investigations that produced the Big 5 essentially “missed” a dimension that began to emerge with studies conducted in non-European cultures (e.g., Korean, Hungarian).88 The H dimension corresponds to people who are sincere, fair, modest, and humble. These individuals are not interested in social status, wealth, or money. Some research suggests that the addition of the H dimension meaningfully adds to the Big 5, and it has been found to predict ethically relevant outcomes, like abstaining from cheating (even in the presence of temptations or prompts to cheat).89 This additional dimension has implications for OB, considering that dishonesty and cheating are extremely important for organizations (e.g., employees may cut corners, steal from the organization, etc.).90

OTHER PERSONALITY ATTRIBUTES RELEVANT TO OB

As we have discussed, studies of traits have much to offer the field of OB. Now we will look at other attributes that are powerful predictors of behavior in organizations: core self-evaluations, self-monitoring, and proactive personality.

Core Self-Evaluation (CSE)

As discussed in the chapter on attitudes and job satisfaction, core self-evaluations (CSEs) are bottom-line conclusions individuals have about their capabilities, competence, and worth as a person. People who have positive CSEs like themselves and see themselves as effective and in control of their environment. Those with negative CSEs tend to dislike themselves, question their capabilities, and view themselves as powerless over their environment.91 As we discussed in the chapter on atttitudes and job satisfaction, CSEs relate to job satis- faction because people who are positive on this trait see more challenge in their jobs and attain more complex jobs.

People with positive CSEs perform better than others because they set more ambi- tious goals, are more committed to their goals, and persist longer in attempting to reach them.92 People who have high CSEs provide better customer service, are more popular coworkers, and may have careers that begin on better footing and ascend more rapidly over time.93 However, it is possible for one’s CSE to be too high—research suggests when CSE is too high, the person may begin to become less popular with coworkers.94

CSE also has implications for diversity, globalization, and employee effectiveness in different cultural contexts. Research suggests that employees with positive CSEs tend to more effectively adapt to changes in their careers95 and to international environments when working in new cultures.96 As some examples, one study in a Chinese vehicle manufacturing plant found that CSEs were more positively related to job performance when individualism, rather than collectivism, was valued.97 Furthermore, although one’s language proficiency and nationality set employees in multinational teams apart as

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“different” from the rest of the group, their CSEs compensated for these differentiating factors and they were able to become better leaders in their teams.98

Self-Monitoring

Riley is always in trouble at work. Although competent, hardworking, and productive, Riley receives average ratings in performance reviews and seems to have made a career out of irritating the supervisors. Riley’s problem is one of political ineptitude and an inability to adjust to changing situations. As Riley says, “I’m true to myself. I don’t remake myself to please others.” Riley is a low self-monitor.

Self-monitoring describes an individual’s ability to adjust behavior to external, situational factors.99 High self-monitors show considerable adaptability in adjusting their behavior to external situational factors. They are highly sensitive to external cues and can behave differently in varying situations, sometimes presenting striking contradic- tions between their public personae and their private selves. Low self-monitors like Riley cannot disguise themselves in that way. They tend to display their true dispositions and attitudes in every situation; hence, there is high behavioral consistency between who they are and what they do.

High self-monitor employees show less commitment to their organizations but receive better performance ratings and are more likely to emerge as leaders.100 High self-monitor managers tend to be more mobile in their careers, receive more promotions (both internal and cross-organizational), and are more likely to occupy central positions in organizations.101 However, self-monitoring can be considered a mixed blessing: despite the aforementioned positive benefits, self-monitors may be seen as inauthentic, self-serving, or unprincipled.102

Proactive Personality

Did you ever notice that some people actively take the initiative to improve their cur- rent circumstances or create new ones? These are proactive personalities.103 Those with a proactive personality identify opportunities, show initiative, take action, and persevere until meaningful change occurs, compared to others who generally react to situations. Proactive individuals have many desirable behaviors that organizations covet. They have higher levels of job performance104 and creativity105 and do not need much oversight (and are given more autonomy as a result).106 They tend to be satis- fied with their jobs, committed to their organizations, and engaged in their work.107 Proactive individuals often achieve career success, although they are also more likely to be envied by their coworkers (and prone to social undermining or the withholding of help from coworkers).108

In short, these personality traits predict many important organizational outcomes. However, there has been a renewed interest in how personality interacts with the environment, or how traits are affected by the situation or context. The next section will examine how the work environment, including contexts and situations, affect the expression of personality traits.

PERSONALITY AND SITUATIONS

Earlier, we discussed how heredity and the environment interact to form and shape per- sonality. Some personality traits tend to be effective in almost any environment or situ- ation. For example, research indicates conscientiousness is helpful to the performance

Self-monitoring A personality trait that measures an individual’s ability to adjust their behavior to external, situ- ational factors.

Proactive personality People who identify opportunities, show initiative, take action, and persevere until meaningful change occurs.

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of most jobs, and extraversion is related to emergence as a leader in most situations. However, we are learning that the effect of traits on behavior depends on the situation.

While advancements have been made in terms of mapping the personality domain, similar progress has been made in how people describe situations. One impressive study culled 146.7 billion words from several different sources that have been used to describe situations. Using artificial intelligence, these researchers found that situations can be described as either positive–negative, complex, typical, important, or humor- ous.109 Each of these characteristics can influence behavior, or even the activation of personality traits. Furthermore, the “importance” dimension clearly has implications for situational strength.

Two theoretical frameworks, situation strength and trait activation, can help describe how the context or situations can influence personality and behavior in the workplace.

Situation Strength Theory

Imagine you are in a meeting with your entire office. How likely are you to walk out, shout at a coworker, or turn your back on everyone? Probably highly unlikely. Now imag- ine working from home. You might work in your pajamas, listen to loud music, or shout at your cat walking across your keyboard. From these examples, you can see that many situations vary in their “strength.”

Situation strength theory proposes that the way personality translates into behav- ior depends on the strength of the situation. By situation strength, we mean the degree to which norms, cues, or standards dictate appropriate behavior.110 Strong situations show us what the right behavior is, pressure us to exhibit it, and discourage the wrong behav- ior. In weak situations, conversely, “anything goes,” and thus we are freer to express our personality in behavior. Personality traits better predict behavior in weak situations than in strong ones.111

COMPONENTS OF SITUATION STRENGTH Researchers have analyzed situation strength in organizations in terms of four elements:112

1. Clarity, or the degree to which cues about work duties and responsibilities are available and clear. Jobs high in clarity produce strong situations because individu- als can readily determine what to do. For example, the job of janitor probably pro- vides higher clarity about each task than that of a Hollywood actor’s agent.

2. Consistency, or the extent to which cues regarding work duties and responsibilities are compatible with one another. Jobs with high consistency represent strong situa- tions because all the cues point toward the same desired behavior. The job of acute care nurse, for example, probably has higher consistency than the job of manager.

3. Constraints, or the extent to which individuals’ freedom to decide or act is limited by forces outside their control. Jobs with many constraints represent strong situa- tions because an individual has limited discretion. Bank examiner, for example, is probably a job with stronger constraints than forest ranger.

4. Consequences, or the degree to which decisions or actions have important implica- tions for the organization or its members, clients, supplies, and so on. Jobs with important consequences represent strong situations because the environment is probably heavily structured to guard against mistakes. A surgeon’s job, for example, has higher consequences than a foreign language teacher.

Situation strength theory A theory indicat- ing that the way personality translates into behavior depends on the strength of the situation.

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Chapter 5 • Personality and Values 103

ORGANIZATIONAL SITUATIONS Some researchers have speculated that organizations are strong situations because they impose rules, norms, and standards that govern behavior. These constraints are usually appropriate. For example, we would not want an employee to feel free to engage in sexual harassment, follow questionable accounting procedures, or come to work only when the mood strikes.

Beyond the basics, though, it is not always desirable for organizations to cre- ate strong situations for their employees for several reasons. The elements of situation strength are often determined by organizational rules and guidelines, which add some objectivity to them. However, it is the perception of these rules that influences how the person will respond to the situation’s strength. For instance, imagine having a supervisor who prioritizes safety (creating a strong situation), reduces the impact of construction work insomnia on injuries, and promotes safety behaviors. Their responses (and work attitudes) will reflect their perception of and reaction to the situation.113 Second, jobs with myriad rules and tightly controlled processes can be dull or demotivating. Third, strong situations may suppress the innovation prized by some organizations. Creating strong rules to govern diverse systems might be not only difficult but also unwise. Fourth, situational strength is not an all-or-nothing characteristic—organizations can be strong in some areas and weak in others. For example, a workplace can have weak norms for how work should be done (low strength) but very strong norms against CWB (high strength).114 In sum, managers need to recognize the role of situation strength in the workplace and find the appropriate balance.

Trait Activation Theory

Another important theoretical framework toward understanding personality and situa- tions is Trait Activation Theory (TAT). TAT predicts that some situations, events, or interventions “activate” a trait more than others. Using TAT, we can foresee which jobs suit certain personalities. For example, a commission-based compensation plan would likely activate the extraversion trait because extraverts are more reward-sensitive, than, say, open people. Conversely, in jobs that encourage creativity, differences in openness may better predict desired behavior than differences in extraversion. See Exhibit 5-3 for specific examples.

TAT also applies to personality tendencies. For example, a recent study found peo- ple learning online responded differently when their behavior was electronically moni- tored. Those who had a high fear of failure had higher apprehension from the monitoring than others, and consequently learned significantly less. In this case, a feature of the environment (electronic monitoring) activated a trait (fear of failing), and the combina- tion of the two meant lowered job performance.115 TAT can also work in a positive way. One study found that when your coworkers are supportive, conscientious personality traits are activated so that you have a stronger sense of duty toward your fellow cowork- ers and, in turn, are more likely to share information with them when conflicted about whether to do so.116

Together, situation strength and trait activation theories show that the debate over nature versus nurture might best be framed as nature and nurture. Not only do both affect behavior, but they interact with one another. Put another way, personality and the situa- tion both affect work behavior, but when the situation is right, the power of personality to predict behavior is even higher.117

Trait Activation Theory (TAT) A theory that predicts that some situations, events, or interven- tions “activate” a trait more than others.

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VALUES

At the heart of all organizations lie a set of values that are central to their mission. Wells Fargo, for instance, values “what’s right for customers” and states that they “place cus- tomers at the center of everything we do. We want to exceed customer expectations and build relationships that last a lifetime.”118 However, sometimes the values or behaviors of the people who make up organizations do not match the values that they espouse. For example, employees of Wells Fargo, the same organization that values “what’s right for customers” opened millions of fake accounts, moved money into these accounts, and signed customers up for online banking without their consent to meet sales goals— opening the company up to legal troubles.119

Values represent relatively stable and enduring, basic convictions that “a specific mode of conduct or end-state of existence is personally or socially preferable to an oppo- site or converse mode of conduct or end-state of existence.”120 Values contain a judg- mental element because they carry an individual’s ideas about what is right, good, or desirable. They have both content and intensity attributes. The content attribute says a mode of conduct or end-state of existence is important. The intensity attribute specifies how important it is. When we rank values in terms of intensity, we obtain that person’s value system. We all have a hierarchy of values according to the relative importance we assign to values such as freedom, pleasure, self-respect, honesty, obedience, and equality.

Many of the values we hold are established in our early years—by parents, teachers, friends, and others. If we question our values, they may change, but more often they are reinforced. There is also evidence linking personality to values, implying our values may be partly determined by our personality traits.121 Open people, for example, may value pursuing new ideas (e.g., trying a new sales strategy rather than exercising restraint), while agreeable people may place a greater value caring for others and cooperating (e.g., being

Values Basic convictions that a specific mode of conduct or end- state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence.

Value system A hierarchy based on a ranking of an individual’s values in terms of their intensity.

Detail Orientation Required

Social Skills Required

Competitive Work

Innovation Required

Dealing with Angry People

Time Pressure (Deadlines)

Jobs scoring high (the traits listed here should predict behavior in these jobs)

Air traffic controller

Accountant

Legal secretary

Clergy

Therapist

Concierge

Coach/scout

Financial manager

Sales representative

Actor

Systems analyst

Advertising writer

Correctional officer

Telemarketer

Flight attendant

Broadcast news analyst

Editor

Airline pilot

Jobs scoring low (the traits listed here should not predict behavior in these jobs)

Forester Software engineer Postal clerk Court reporter Composer Skincare specialist

Masseuse Pump operator Historian Archivist Biologist Mathematician

Model Broadcast technician

Nuclear reactor operator

Medical technician

Statistician Fitness trainer

Jobs that score high activate these traits (make them more relevant to predicting behavior)

Conscientiousness (1) Extraversion (1) Agreeableness (1)

Extraversion (1) Agreeableness (2)

Openness (1) Extraversion (1) Agreeableness (1) Neuroticism (2)

Conscientiousness (1) Neuroticism (2)

EXHIBIT 5-3 Trait Activation Theory: Jobs in Which Certain Big Five Traits Are More Relevant

Note: A plus (+) sign means individuals who score high on this trait should do better in this job. A minus (-) sign means individuals who score low on this trait should do better in this job.

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Chapter 5 • Personality and Values 105

attracted to a collaborative, rather than competitive, work environment).122 To explore the topic further, we will discuss the importance and organization of values first.

Consider this situation: Suppose you enter an organization with the view that allocating pay based on performance is right, while allocating pay based on seniority is wrong. How will you react if you find the organization you have just joined rewards seniority and not performance? You are likely to be disappointed—this can lead to job dissatisfaction and a decision not to exert a high level of effort because “It’s probably not going to lead to more money anyway.” Would your attitudes and behavior be different if your values aligned with the organization’s pay policies? Most likely.

Terminal versus Instrumental Values

How can we organize values? One researcher—Milton Rokeach—argued that we can sepa- rate them into two categories.123 One set, called terminal values, refers to desirable end- states. These are the goals a person would like to achieve during a lifetime. The other set, called instrumental values, refers to preferable modes of behavior, or means of achieving the terminal values. Each of us places value on both the ends (terminal values) and the means (instrumental values). Some examples of terminal values are prosperity and economic success, freedom, health and well-being, world peace, and meaning in life. Examples of instrumental values are autonomy and self-reliance, personal discipline, kindness, and goal-orientation.

Building upon Rokeach’s value theory, Shalom Schwartz organized Rokeach’s val- ues into 10 dimensions: achievement, hedonism, stimulation, self-direction, universalism, benevolence, tradition, conformity, security, and power.124 Shalom provided evidence across twenty separate countries for this framework of values.125 Perhaps it is easy to see how some of these values are directly relevant to people in organizations, with some (e.g., universalism, benevolence, etc.) promoting effectiveness and treating others well, while others can cling to what is typically done (e.g., tradition, conformity, and security) or value self-enhancement (e.g., power and achievement). Perhaps Wells Fargo, although valuing benevolence toward customers, was composed of employees who valued self-enhancement?

Generational Values

Researchers have integrated several analyses of work values into groups that attempt to capture the shared views of different cohorts or generations in the U.S. workforce.126 You will surely be familiar with the labels—for example, baby boomers, gen x’ers, mil- lennials, gen z’ers—some of which are used internationally. Though it is fascinating to think about generational values, remember these classifications lack solid research support. Early research was plagued by methodological problems that made it difficult to assess whether differences exist. Reviews suggest many of the generalizations are either overblown or incorrect.127 Differences across generations often do not support popular conceptions of how generations differ. For example, the value placed on leisure has increased over generations from the baby boomers to the millennials and work cen- trality has declined, but research did not find that millennials had more altruistic work values.128 Another modern criticism of millennials is that they are entitled and remnants of the “participation trophy” generation;129 however, one study of over 10,000 people in New Zealand suggests that there are no differences between generations in entitlement, and in fact, baby boomers tend to become more entitled as they age!130 Despite the lack of support for the validity of generational values, support has been provided for differ- ences in how people perceive those of other generations—in the workplace, people place

Terminal values Desirable end-states of existence; the goals a person would like to achieve during their lifetime.

Instrumental values Preferable modes of behavior or means of achieving one’s terminal values.

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others into generational categories and apply stereotypes that affect workplace deci- sions.131 Although there is little validity to generational differences, nevertheless, these differences are still perpetuated as stereotypes that are often applied in the workplace.

CULTURAL VALUES

Unlike personality, which is largely genetically determined, values are learned. They are passed down through generations, and they vary by cultures. As researchers have sought to understand cultural value differences, two important frameworks have emerged from Geert Hofstede and the GLOBE studies.

Hofstede’s Framework

One of the most widely referenced approaches for analyzing variations among cultures was done by Geert Hofstede.132 Hofstede surveyed more than 116,000 IBM employees in seventy-two countries about their work-related values and found managers and employ- ees varied on five value dimensions of national culture:

• Power distance. Power distance describes the degree to which people in a country accept that power in institutions and organizations is distributed unequally. A high rat- ing on power distance means large inequalities of power and wealth exist and are tol- erated in the culture, as in a class or caste system that discourages upward mobility. A low power-distance rating characterizes societies that stress equality and opportunity.

• Individualism versus collectivism. Individualism is the degree to which people pre- fer to act as individuals rather than as members of groups and believe in an individual’s rights above all else. Collectivism emphasizes a tight social framework in which peo- ple expect others in groups of which they are a part to look after them and protect them.

• Masculinity versus femininity. Hofstede’s construct of masculinity is the degree to which the culture favors traditional masculine roles such as achievement, power, and control, as opposed to viewing men and women as equals. A high masculinity rating indicates the culture has separate roles for men and women, with men dominating the society. A high femininity rating means the culture sees little differentiation be- tween male and female roles and treats women as the equals of men in all respects.

It is important to note that when the masculinity/femininity dimension was first uncovered, the sample of IBM employees consisted of mostly male employees surveyed in the 1960s and 1970s.133 Since then, despite this homogenous sample, these findings have been replicated in more diverse samples from dozens of coun- tries.134 The masculinity and femininity labels are still used by Hofstede Insights (the consulting firm that administers Hofstede’s assessments) and Hofstede has suggested that they focus more on societal gender role expectations than on individuals them- selves.135 Still, however, many have advocated for the replacement of these terms with alternatives.136 These alternatives include “achievement versus relational” cultures or even the original terms for this dimension used by Hofstede, “ego versus social.” 137

• Uncertainty avoidance. The degree to which people in a country prefer structured over unstructured situations defines their uncertainty avoidance. In cultures scor- ing high on uncertainty avoidance, people have increased anxiety about uncertainty and ambiguity and use laws and controls to reduce uncertainty. People in cultures low on uncertainty avoidance are more accepting of ambiguity, are less rule ori- ented, take more risks, and more readily accept change.

Power distance A national culture attribute that describes the extent to which a society accepts that power in institutions and organizations is distributed unequally.

Individualism A national culture attribute that describes the degree to which people prefer to act as individuals rather than as members of groups.

Collectivism A national culture attribute that describes a tight social frame- work in which people expect others in groups of which they are a part to look after them and protect them. Col- lectivistic countries/ cultures are those in which people see themselves as inter- dependent and seek community and group goals. Collectivistic values are found in Asia, Africa, and South America, for example.

Masculinity A national culture attribute that describes the extent to which the culture favors traditional mascu- line work roles of achievement, power, and control. Societal values are character- ized by assertiveness and materialism.

Femininity A national culture attribute that indi- cates little differen- tiation between male and female roles; a high rating indicates that women are treated as the equals of men in all aspects of the society.

Uncertainty avoidance A national culture attribute that describes the extent to which a society feels threat- ened by uncertain and ambiguous situations and tries to avoid them.

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Chapter 5 • Personality and Values 107

others into generational categories and apply stereotypes that affect workplace deci- sions.131 Although there is little validity to generational differences, nevertheless, these differences are still perpetuated as stereotypes that are often applied in the workplace.

CULTURAL VALUES

Unlike personality, which is largely genetically determined, values are learned. They are passed down through generations, and they vary by cultures. As researchers have sought to understand cultural value differences, two important frameworks have emerged from Geert Hofstede and the GLOBE studies.

Hofstede’s Framework

One of the most widely referenced approaches for analyzing variations among cultures was done by Geert Hofstede.132 Hofstede surveyed more than 116,000 IBM employees in seventy-two countries about their work-related values and found managers and employ- ees varied on five value dimensions of national culture:

• Power distance. Power distance describes the degree to which people in a country accept that power in institutions and organizations is distributed unequally. A high rat- ing on power distance means large inequalities of power and wealth exist and are tol- erated in the culture, as in a class or caste system that discourages upward mobility. A low power-distance rating characterizes societies that stress equality and opportunity.

• Individualism versus collectivism. Individualism is the degree to which people pre- fer to act as individuals rather than as members of groups and believe in an individual’s rights above all else. Collectivism emphasizes a tight social framework in which peo- ple expect others in groups of which they are a part to look after them and protect them.

• Masculinity versus femininity. Hofstede’s construct of masculinity is the degree to which the culture favors traditional masculine roles such as achievement, power, and control, as opposed to viewing men and women as equals. A high masculinity rating indicates the culture has separate roles for men and women, with men dominating the society. A high femininity rating means the culture sees little differentiation be- tween male and female roles and treats women as the equals of men in all respects.

It is important to note that when the masculinity/femininity dimension was first uncovered, the sample of IBM employees consisted of mostly male employees surveyed in the 1960s and 1970s.133 Since then, despite this homogenous sample, these findings have been replicated in more diverse samples from dozens of coun- tries.134 The masculinity and femininity labels are still used by Hofstede Insights (the consulting firm that administers Hofstede’s assessments) and Hofstede has suggested that they focus more on societal gender role expectations than on individuals them- selves.135 Still, however, many have advocated for the replacement of these terms with alternatives.136 These alternatives include “achievement versus relational” cultures or even the original terms for this dimension used by Hofstede, “ego versus social.” 137

• Uncertainty avoidance. The degree to which people in a country prefer structured over unstructured situations defines their uncertainty avoidance. In cultures scor- ing high on uncertainty avoidance, people have increased anxiety about uncertainty and ambiguity and use laws and controls to reduce uncertainty. People in cultures low on uncertainty avoidance are more accepting of ambiguity, are less rule ori- ented, take more risks, and more readily accept change.

Power distance A national culture attribute that describes the extent to which a society accepts that power in institutions and organizations is distributed unequally.

Individualism A national culture attribute that describes the degree to which people prefer to act as individuals rather than as members of groups.

Collectivism A national culture attribute that describes a tight social frame- work in which people expect others in groups of which they are a part to look after them and protect them. Col- lectivistic countries/ cultures are those in which people see themselves as inter- dependent and seek community and group goals. Collectivistic values are found in Asia, Africa, and South America, for example.

Masculinity A national culture attribute that describes the extent to which the culture favors traditional mascu- line work roles of achievement, power, and control. Societal values are character- ized by assertiveness and materialism.

Femininity A national culture attribute that indi- cates little differen- tiation between male and female roles; a high rating indicates that women are treated as the equals of men in all aspects of the society.

Uncertainty avoidance A national culture attribute that describes the extent to which a society feels threat- ened by uncertain and ambiguous situations and tries to avoid them.

• Long-term versus short-term orientation. The degree of a society’s devotion to traditional values. All societies vary in their focus on meeting the challenges of the present and future, as opposed to maintaining a link with its past. Long-term oriented cultures tend to assume that preparation for the future is needed because the world is constantly changing. These cultures tend to value thrift, per- sistence, and pragmatism to prepare for the future. On the other hand, short-term oriented cultures prefer to maintain a link to their past by honoring traditions, fulfilling social obligations, and upholding and protecting their image.

In recent years, Hofstede has proposed an additional dimension, indulgence versus restraint, which refers to a national culture attribute that emphasizes enjoying life and having fun versus regulating conduct through strict social norms.138 Although fairly new as a dimension, some research supports its distinction from other values and shows that it is correlated with a society’s level of prosociality.139

How do different countries score on Hofstede’s dimensions? Exhibit 5-4 shows the ratings of the countries for which data are available. For example, power distance is higher in Malaysia than in any other country. The United States is very individualistic; in fact, it’s the most individualistic nation of all (closely followed by Australia and Great Britain). Guatemala is the most collectivistic nation. The country with the highest masculinity rank by far is Japan, and the country with the highest femininity rank is Sweden. Greece scores the highest in uncertainty avoidance, while Singapore scores the lowest. Hong Kong has one of the longest-term orientations; Pakistan has the shortest-term orientation.

Research across 598 studies with more than 200,000 respondents has investigated the relationship of Hofstede’s cultural values and a variety of organizational criteria at both the individual and national levels of analysis.140 Overall, the five original culture dimensions were found to be equally strong predictors of relevant outcomes. In sum, this research suggests Hofstede’s framework may be a valuable way of thinking about differ- ences among people, but we should be cautious about assuming all people from a country have the same values.

The GLOBE Framework

Founded in 1993, the Global Leadership and Organizational Behavior Effectiveness (GLOBE) research program is an ongoing cross-cultural investigation of leadership and national culture. Using data from 951 organizations in sixty-two countries, the GLOBE team built upon Hofstede’s work by identifying nine dimensions on which national cul- tures differ.141 Some dimensions—such as power distance, individualism/collectivism, uncertainty avoidance, gender differentiation (like masculinity versus femininity), and future orientation (like long-term versus short-term orientation)—resemble the Hofstede dimensions (although, notably, are defined differently in certain cases). Beyond these, the GLOBE framework added or otherwise split the Hofstede dimensions, such as humane orientation (the degree to which a society rewards individuals for being altruistic, gen- erous, and kind to others) and performance orientation (the degree to which a society encourages and rewards group members for performance improvement and excellence). In Exhibit 5-5, the linkages between dimensions from the GLOBE framework and Hofstede’s dimensions are outlined. As can be seen in the exhibit, the GLOBE also dif- ferentiated between these dimensions as they relate to practices (what is currently done) and values (what the society idealizes and aspires toward).

Long-term orientation A national culture attribute that empha- sizes the future, thrift, and persistence.

Short-term orientation A national culture attribute that empha- sizes the present and accepts change.

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108 Part 1 • Understanding Yourself and Others

Power Distance Individualism versus Collectivism

Masculinity versus Femininity

Uncertainty Avoidance

Long- versus Short-Term Orientation

Country Index Rank Index Rank Index Rank Index Rank Index Rank

Argentina 49 35–36 46 22–23 56 20–21 86 10–15 Australia 36 41 90 2 61 16 51 37 31 22–24 Austria 11 53 55 18 79 2 70 24–25 31 22–24 Belgium 65 20 75 8 54 22 94 5–6 38 18 Brazil 69 14 38 26–27 49 27 76 21–22 65 6 Canada 39 39 80 4–5 52 24 48 41–42 23 30 Chile 63 24–25 23 38 28 46 86 10–15 Colombia 67 17 13 49 64 11–12 80 20 Costa Rica 35 42–44 15 46 21 48–49 86 10–15 Denmark 18 51 74 9 16 50 23 51 46 10 Ecuador 78 8–9 8 52 63 13–14 67 28 El Salvador 66 18–19 19 42 40 40 94 5–6 Finland 33 46 63 17 26 47 59 31–32 41 14 France 68 15–16 71 10–11 43 35–36 86 10–15 39 17 Germany 35 42–44 67 15 66 9–10 65 29 31 22–24 Great Britain 35 42–44 89 3 66 9–10 35 47–48 25 28–29 Greece 60 27–28 35 30 57 18–19 112 1 Guatemala 95 2–3 6 53 37 43 101 3 Hong Kong 68 15–16 25 37 57 18–19 29 49–50 96 2 India 77 10–11 48 21 56 20–21 40 45 61 7 Indonesia 78 8–9 14 47–48 46 30–31 48 41–42 Iran 58 29–30 41 24 43 35–36 59 31–32 Ireland 28 49 70 12 68 7–8 35 47–48 43 13 Israel 13 52 54 19 47 29 81 19 Italy 50 34 76 7 70 4–5 75 23 34 19 Jamaica 45 37 39 25 68 7–8 13 52 Japan 54 33 46 22–23 95 1 92 7 80 4 Korea (South) 60 27–28 18 43 39 41 85 16–17 75 5 Malaysia 104 1 26 36 50 25–26 36 46 Mexico 81 5–6 30 32 69 6 82 18 The Netherlands 38 40 80 4–5 14 51 53 35 44 11–12 New Zealand 22 50 79 6 58 17 49 39–40 30 25–26 Norway 31 47–48 69 13 8 52 50 38 44 11–12 Pakistan 55 32 14 47–48 50 25–26 70 24–25 0 34 Panama 95 2–3 11 51 44 34 86 10–15 Peru 64 21–23 16 45 42 37–38 87 9 Philippines 94 4 32 31 64 11–12 44 44 19 31–32 Portugal 63 24–25 27 33–35 31 45 104 2 30 25–26 Singapore 74 13 20 39–41 48 28 8 53 48 9 South Africa 49 35–36 65 16 63 13–14 49 39–40 Spain 57 31 51 20 42 37–38 86 10–15 19 31–32 Sweden 31 47–48 71 10–11 5 53 29 49–50 33 20 Switzerland 34 45 68 14 70 4–5 58 33 40 15–16 Taiwan 58 29–30 17 44 45 32–33 69 26 87 3 Thailand 64 21–23 20 39–41 34 44 64 30 56 8 Turkey 66 18–19 37 28 45 32–33 85 16–17 United States 40 38 91 1 62 15 46 43 29 27 Uruguay 61 26 36 29 38 42 100 4 Venezuela 81 5–6 12 50 73 3 76 21–22 Yugoslavia 76 12 27 33–35 21 48–49 88 8 Regions: Arab countries 80 7 38 26–27 53 23 68 27 East Africa 64 21–23 27 33–35 41 39 52 36 25 28–29 West Africa 77 10–11 20 39–41 46 30–31 54 34 16 33

EXHIBIT 5-4 Hofstede’s Cultural Values by Nation

Source: Copyright Geert Hofstede BV, [email protected]. Reprinted with permission. “Index” refers to the given country’s score on the dimension, 0 = extremely low to 100 = extremely high. “Rank” re- fers to the relative ranking of the country compared to the others in Hofstede’s database, with 1 = the highest rank.

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Chapter 5 • Personality and Values 109

EXHIBIT 5-5 Adapted from R. Hadwick, “Should I Use GLOBE or Hofstede? Some Insights That Can Assist Cross-Cultural Scholars, and Others, Choose the Right Study to Support Their Work,” Paper presented at Australian & New Zealand Academy of Management, Wellington, NZ (December 2011); R. J. House, P. J. Hanges, M. Javidan, P. W. Dorfman, and V. Gupta, Culture, Leadership, and Organizations: The GLOBE Study of 62 Societies. Thousand Oaks, CA: Sage, 2004; X. Shi and J. Wang, “Interpreting Hofstede Model and GLOBE Model: Which Way to Go for Cross-Cultural Research?” International Journal of Business and Management 6, no. 5 (2011): 93–99.

Hofstede’s Dimensions GLOBE

Power Distance: Extent to which a society accepts an unequal distribution of power.

Power Distance: Extent to which a society accepts an unequal distribution of power.

Uncertainty Avoidance: Extent to which a society feels threatened by and avoids ambiguity.

Uncertainty Avoidance: Extent to which a society seeks orderliness, structure, and laws to avoid ambiguity.

Long-Term Orientation: Extent to which a society emphasizes the future and persistence (versus the present and change)

Future Orientation: Extent to which a society believes their actions can influence the future.

Collectivism: Extent to which a society emphasizes acting as a tight-knit collective (versus as independent individuals)

Institutional Collectivism: Extent to which a society supports collective action and resource distribution.

Masculinity: Extent to which a society favors traditional, masculine roles such as power and control (versus little differentiation of gender roles)

In-Group Collectivism: Extent to which a society values loyalty, pride, patriotism, and cohesion.

Gender Egalitarianism: Extent to which a society de- emphasizes traditional gender roles.

Assertiveness: Extent to which a society emphasizes confidence and advocating for what one wants.

Humane Orientation: Extent to which a society values caring, friendliness, altruism, fairness, kindness, and gener- osity.

Performance Orientation: Extent to which a society values producing results, excellence, and productivity.

Both frameworks have a great deal in common and often lead to similar con- clusions. For example, a review of the organizational commitment literature shows that both the Hofstede and GLOBE individualism/collectivism dimensions operated similarly. Specifically, both frameworks showed organizational commitment tends to be lower in individualistic countries.142 However, GLOBE expands upon the Hofstede framework in a number of ways, methodologically and theoretically. For example, as can be seen in Exhibit 5-5, various aspects of the values are disentangled into narrower dimensions.

Regardless, these dimensions of cultural values are incredibly important to be aware of in this day and age. With the advent of globalization, companies often engage in mul- tinational projects, work in multinational teams, and send their employees to work in dif- ferent cultures that may be radically different than what they are used to—understanding what is valued (and what is not valued) in each culture is very “valuable” information to have, considering the modern global climate.143

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110 Part 1 • Understanding Yourself and Others

SUMMARY

Personality matters to OB. It does not explain all behavior, but it sets the stage. Emerging theory and research reveal how personality matters more in some situations than others. The Big Five has been a particularly important advancement, although the Dark Triad and other traits matter as well. Every trait has advantages and disadvantages for work behavior, and there is no perfect constellation of traits that is ideal in every situation. Personality can help you to understand why people (including yourself!) act, think, and feel the way we do, and the astute employee or manager can put that understanding to use by taking care to place employees in situations that best fit their personalities, or by recognizing personality and value differences in coworkers, in order to work more ef- fectively together.

Values often underlie and explain attitudes, behaviors, and perceptions. Values tend to vary internationally along dimensions that can predict organizational outcomes; how- ever, an individual may or may not hold values that are consistent with the values of the national culture.

IMPLICATIONS FOR MANAGERS

• Consider applicants’ and employees’ fit to the job and organization in employment decisions. Their personalities, values, and other characteristics may be useful to understanding whether they will flourish in particular assignments, jobs, teams, or organizations.

• Consider screening job candidates for conscientiousness—and the other Big Five traits, depending on the criteria your organization finds most important. Other aspects, such as core self-evaluations or narcissism, may be relevant in certain situations.

• Emphasize the ideal personality and values of your organization in your recruit- ment materials and practices. This may help attract people whose values and per- sonality types match your organization/or job vacancies.

• Understand that situation strength and the context (e.g., trait activating features) can affect behavior. Take stock of the environmental features in your organiza- tion that may influence the behavior of applicants, customers, employees, and even leaders.

• An understanding of differences in cultural values can equip you to interact with others from cultures that are different from your own.

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PART 2 Making and Implementing Decisions

Perception and Individual Decision Making

6

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

6.1 Explain the factors that influence perception.

6.2 Describe attribution theory.

6.3 Explain the link between perception and decision making.

6.4 Contrast the rational model of decision making with bounded rationality and intuition.

6.5 Explain how individual differences and organizational constraints affect decision making.

6.6 Contrast the three ethical decision criteria.

6.7 Describe the three-stage model of creativity.

WHAT IS PERCEPTION?

Things are not always as they seem, and unfortunately our perceptions can lead to bias. Particularly nefarious, when we perceive another person as belonging to a certain ste- reotyped group, this can affect how we interact with them. For instance, weight bias and discrimination can affect everyone in the office in hurtful ways, by activating stereo- types that suggest the overweight are unmotivated and the thin are meek and unhealthy.1 Perception is a process by which we organize and interpret sensory impressions in order to give meaning to their environment. What we perceive can be substantially dif- ferent from objective reality. Why is perception important in the study of organizational behavior (OB)? People’s behavior and decisions are based on their perception of what reality is, not on reality itself. In other words, our perception becomes the reality from which we act. For instance, a Brazilian employee interacting with a Japanese employee in a virtual meeting may perceive the silence in the conversation as awkward or some- thing negative—when, in reality, silence is important and conveys good listening in some Asian cultures.2

Perception A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.

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Factors That Influence Perception

Factors shape and sometimes distort perception. These factors can reside in the perceiver, the object or target being perceived, or the situation in which the perception is made.

PERCEIVER When you look at a target, your interpretation of what you see is influenced by your personal characteristics—attitudes, personality, motives, interests, past experiences, and expectations.3 In some ways, we hear what we want to hear4 and see what we want to see—not because it is the truth, but because it conforms to our thinking. For instance, research indicates that supervisors perceive employees who start work earlier in the day as more conscientious and therefore as higher performers; however, supervisors who are night owls themselves are less likely to make that erroneous assumption.5

TARGET The characteristics of the target also affect what we perceive. Because we do not look at targets in isolation, the relationship of a target to its background influences perception, as does our tendency to group close things and similar things together.6 We can perceive members of any other group that shares some surface characteristics as alike in other, unrelated ways as well. Often, these assumptions are harmful, as when people who have criminal records are prejudged in the workplace as a result (even when it is known that they were wrongly arrested).7 Sometimes this can work in the target’s favor, in ways that can affect organizations’ bottom lines. For example, in over 10,000 microloan transactions, the more pleasant the appearance of the customer (e.g., loan-requester), the more likely the loan was to be approved, and the more quickly the approval occurred.8 Using artificial intelligence approaches, these researchers applied machine learning techniques and were able to determine that pleasant appearance could predict loan approval with about 60 percent accuracy.9

CONTEXT Context matters, too. The time at which we see an object or event can influence our attention, as can location, light, heat, or situational factors. For instance, if you invite a potential client into your office, and it is messy, they may be more likely to think you are disagreeable, not conscientious, and more neurotic than if your office was neat.10

People are usually not aware of the factors that influence their view of reality. In fact, people are not even that perceptive about their own abilities.11 Thankfully, aware- ness and objective measures can reduce our perceptual distortions. For instance, when people are more aware of their own racial biases, they are more motivated to control their own prejudice.12 Let us next consider how we make perceptions of others.

PERSON PERCEPTION: MAKING JUDGMENTS ABOUT OTHERS

The perception concepts most relevant to OB include person perceptions, or the percep- tions people form about each other. Many of our perceptions of others are formed by first impressions and small cues that have little supporting evidence. Let us unravel some of our human tendencies that interfere with correct person perception, beginning with the evidence behind attribution theory.

Attribution Theory

When we observe people, we attempt to explain their behavior. Our perception and judg- ment of a person’s actions are influenced by the assumptions we make about that per- son’s state of mind.

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Chapter 6 • Perception and Individual Decision Making 113

Attribution theory tries to explain the ways we judge people differently depend- ing on the meaning we attribute to their behavior.13 For instance, if your coworker is late to work, you might think it was because they were lazy, or partying too hard the night before—but would you say the same if you were late for work (or was it just the bad traffic)?14 Attributions also try to explain what we do as a result of our attributions. For example, recent research suggests that supervisors are more likely to exploit or treat sub- ordinates poorly (e.g., making them work extra hours, giving them tedious tasks) if they judge them as being “passionate” about their work.15 In other words, they think it is okay if they make them work harder if they see them as passionate.

INTERNAL AND EXTERNAL CAUSATION Attribution theory suggests that when we observe an individual’s behavior, we attempt to determine whether it was internally or externally caused. That determination depends largely on three factors: (1) distinctiveness, (2) consensus, and (3) consistency.16 Let us clarify the differences between internal and external causation, and then we will discuss the determining factors.

Internally caused behaviors are those an observer believes to be under the personal behavioral control of another individual (e.g., coming to work late because the coworker is lazy). Externally caused behavior is what we imagine the situation forced the indi- vidual to do (e.g., coming to work late because of the bad traffic). New research suggests that there may be another kind of external attribution, where our relationship with the other person is the reason for the behavior.17 For example, you may think a customer stopped doing business with your company because they are (1) disloyal to the company (e.g., internal), (2) cutting expenditures due to hard financial times (e.g., external), or (3) not getting along with the new employee assigned to their account (e.g., relational).

DISTINCTIVENESS, CONSENSUS, AND CONSISTENCY Exhibit 6-1 summarizes the key elements in attribution theory, described in this section. Distinctiveness refers to whether an individual displays different behavior in different situations. Is the employee who arrives late today also one who regularly “blows off” other kinds of commitments? If no, we are likely to give it an external attribution. If yes, we will probably judge the behavior to be internal.

Attribution theory An attempt to explain the ways we judge people differently, depending on the meaning we attribute to a behavior, such as determining whether an individual’s behavior is internally or externally caused.

Individual behavior

External

Internal

External

Internal

Internal

External

Distinctiveness

Observation Attribution of cause

High

Low

High

Low

High

Low

Interpretation

Consistency

Consensus

EXHIBIT 6-1 Attribution Theory

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114 Part 2 • Making and Implementing Decisions

If everyone who faces a similar situation responds in the same way, we can say the behavior shows consensus. Were all employees who took the same route also late? If yes, you would probably give an external attribution to the employee’s tardiness (e.g., traffic or weather). If no, you would be more likely to attribute his lateness to an internal cause.

Finally, an observer looks for consistency in a person’s actions. Does the person respond the same way over time? Coming in ten minutes late for work is not perceived the same for an employee who has not been late for several months as for an employee who is late three times a week. The more consistent the behavior, the more we are inclined to attribute it to internal causes.

ERRORS AND BIASES When we make judgments about the behavior of other people, we tend to underestimate the influence of external factors and overestimate the influence of internal or personal factors.18 This fundamental attribution error may explain why we might perceive the wealthy as intelligent, savvy, or innately effective, without considering the external factors that precluded their success (e.g., being born into a wealthy family)— and similarly, to discount the poor as lazy, untalented, or unintelligent.19

Similarly, people tend to attribute ambiguous information as relatively flattering, accept positive feedback, and reject negative feedback. This is called self-serving bias.20 Although much research focuses on the self-serving bias in business leaders and their negative effects, not all executives are self-serving—many studies suggest that execu- tives who are modest experience better career success and upward mobility, elicit positive investor reactions, and generally lead to higher team and firm performance.21

The evidence on cultural differences in perception is mixed, but most suggests there are differences across cultures in the attributions people make, with collectivist cultures making external attributions more frequently than internal attributions.22 These differences in attributions also influence the degree to whether attributions are made toward individuals or groups. In one study, Asian managers were more likely to blame institutions or whole organizations when things went wrong, whereas Western observers believed individual managers should get blame or praise.23 This may explain why U.S. newspapers feature the names of individual executives when firms do poorly, whereas Asian media report the firm as a whole has failed.

Common Shortcuts in Judging Others

Shortcuts for judging others often allow us to make accurate perceptions rapidly and provide valid data for making predictions. However, they can and do sometimes result in significant distortions.

SELECTIVE PERCEPTION We often choose (sometimes unconsciously) the information we take in from the environment, based on our background, motivations, and characteristics. This is called selective perception. For example, organizational leaders are motivated to focus on financial metrics and the bottom line while effectively ignoring employees and their job satisfaction, which we know from the chapter on attitudes and job satisfaction.24 Some research suggests that if we are directed to focus on more in our environment, we will; for example, if job satisfaction is emphasized as important by the top management team, then other managers will see it as important and will no longer ignore it.25

Fundamental attribution error The tendency to underestimate the influence of external factors and overesti- mate the influence of internal factors when making judgments about the behavior of others.

Self-serving bias The tendency for individuals to attribute their own successes to internal factors and put the blame for failures on external factors.

Selective perception The tendency to selectively interpret what one sees based on one’s interests, background, experi- ence, and attitudes.

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Chapter 6 • Perception and Individual Decision Making 115

HALO AND HORNS EFFECTS When we draw a positive impression about an individual based on a single characteristic, such as intelligence, sociability, or appearance, a halo effect is operating.26 The horns effect, on the other hand, is when we draw a negative impression from a single characteristic. These effects are easy to demonstrate. Imagine a recruiter meeting with two applicants for an initial interview.27 One was very friendly and sociable—it is easy for the recruiter to conclude that this applicant will also be clever, smart, or good at their job, even though they may be unrelated (e.g., the halo effect creates a positive, clouded first impression). The other applicant was loud and off-putting—it would be easy, again, to conclude that this applicant will not be clever, smart or good at their job (e.g., the horns effect creates a negative, clouded first impression).

CONTRAST EFFECTS It is performance appraisal “season,” and everyone in your workplace is anxious to receive their evaluation. The boss begins scheduling meetings, and you hear through the grapevine that Regan is going up first—Regan is the star performer in the office and will be a hard act to follow. Everyone in the office will probably look bad in comparison to Regan! This example demonstrates how the contrast effect can distort perceptions.28 We do not evaluate a person in isolation. Our reaction is influenced by other people we have recently encountered.

STEREOTYPING When we judge someone based on our perception of the group they belong to, we are stereotyping.29 Stereotyping can lead to prejudicial decision making that can mar business processes like selection and promotion. For example, in one study, over 6,500 U.S. professors were sent fake letters by fictitious students asking about graduate school and research opportunities—the contents of these letters were all the same, except the names were changed to correspond with “stereotypically” black, Chinese, Hispanic, Indian, and white names.30 These professors tended to be significantly more responsive to white males than other students. Furthermore, women and minorities are more likely to be promoted to CEO positions, but only in weakly performing firms (e.g., women and minorities may be given opportunities that set them up to fail)—if the firm performance continues to decline, they tend to be replaced by white men (a glass cliff effect as discussed in the chapter on diversity in organizations).31

It should be obvious by now that our perceptions distort our outlook. These percep- tions filter into several business processes, such as employment interviews, performance evaluations, and client interactions. Artificial intelligence (AI) has been proving useful in combatting these biases—for example, AI-driven performance assessments can help reduce these common shortcuts in judging others.32 These types of “mechanical” data analytic methods are very effective—in fact, one review of studies found that mechanical methods were 50 percent more effective than subjective methods at judging job perfor- mance.33 However, this has led many managers and other individuals to worry about AI taking over their jobs, a phenomenon referred to as the threat of technological unemployment.34

Regardless, understanding the link between perception and decision making can help us recognize when our perceptions are interfering with our ability to make effective decisions.

Halo effect The tendency to draw a positive general impression about an individual based on a single characteristic.

Horns effect The tendency to draw a negative general impression about an individual based on a single characteristic.

Contrast effect Evaluation of a person’s character- istics that is affected by comparisons with other people recently encountered who rank higher or lower on the same charac- teristics.

Stereotyping Judging someone based on one’s per- ception of the group to which that person belongs.

Threat of technological unemployment A situation in which professional decision makers resist certain decision-making improvements (e.g., AI and structured approaches alike) because they reduce the extent the deci- sion makers are relied on for expert judg- ment, lessening the value they provide the organization.

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116 Part 2 • Making and Implementing Decisions

THE LINK BETWEEN PERCEPTION AND INDIVIDUAL DECISION MAKING

Individuals make decisions, or choices from among two or more alternatives.35 Ideally, decision making would be objective rather than subjective, but the ways individuals make decisions are largely influenced by their perceptions.

Decision making occurs as a reaction to a problem. That is, a discrepancy exists between how things are and how we want them to be, requiring us to consider how we can address this discrepancy. Unfortunately, most problems do not come neatly labeled. One person’s problem might be another’s desired state. One manager may view their division’s 2 percent decline in quarterly sales to be a serious problem requiring immedi- ate action. The manager’s counterpart in another division, who also had a 2 percent sales decrease, may consider it quite acceptable.

Every decision requires us to interpret and evaluate information. We typically receive data from multiple sources that we need to screen, process, and interpret. Which data are relevant to the decision, and which are not? Our perceptions help us, accurately or inaccurately, answer that question. We must consider how our perceptions of the situ- ation influence our decisions, sometimes in ways we would not expect. For example, employees should be especially receptive to problems during times of economic instabil- ity (times are hard, and they want to do well to keep their jobs!). However, when other employment opportunities are scarce, employees may be motivated to deny or ignore information that there are problems in their organization.36

DECISION MAKING IN ORGANIZATIONS

Business schools typically train students to follow rational decision-making models. While such models have merit, they do not always describe how people make decisions. OB improves the way we make decisions in organizations by addressing both perceptual and decision-making errors. First, we describe some decision-making approaches, and then outline a few of the most common errors.

The Rational Model, Bounded Rationality, and Intuition

In OB, there are generally accepted approaches to decision making: rational decision making, bounded rationality, and intuition. However, they may not lead to the most accu- rate (or best) decisions. More importantly, there are times when one strategy may lead to a better outcome than another.

RATIONAL DECISION MAKING We often think the best decision maker is rational and makes consistent, value-maximizing choices within specified constraints.37 In other words, good decision makers consistently make choices that enable them to enjoy the most benefits, given the situation. Rational decisions follow a six-step rational decision- making model (see Exhibit 6-2).38

The rational model assumes the decision maker has complete information, can identify all relevant options without bias, and chooses the option with the highest util- ity.39 However, most decisions do not follow this model; people are usually content to find an acceptable or reasonable solution to a problem rather than an optimal one. People are remarkably unaware that they are making suboptimal decisions.40

Decisions Choices made from among two or more alternatives.

Problem A discrepancy between the current state and some desired state.

Rational A style of decision making characterized by making consistent, value-maximizing choices within speci- fied constraints.

Rational decision- making model A decision-making model that describes how individuals should behave in order to maximize some outcome.

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Chapter 6 • Perception and Individual Decision Making 117

BOUNDED RATIONALITY Often, we do not follow the rational decision-making model for a reason: Our limited abilities to process information make it impossible to assimilate all the information we need, even if it is readily obtainable.41 Because we cannot solve complex problems with full rationality, we operate within the confines of bounded rationality. We take a simplified approach, perceiving and interpreting the essential features of problems without capturing their complexity. We then behave rationally within these boundaries.

One outcome of bounded rationality is a tendency to satisfice or seek solutions that are merely sufficient (e.g., “good enough”). While the satisficing answer is accept- able but not necessarily optimal, it is not always a bad method. Often, a simple process may frequently be more sensible than the traditional rational decision-making model.42 However, bounded rationality can be a concern in ethical decision making. We are prone to make systematic and predictable errors in ethical decisions,43 and whether we have the right to behave in a particular way is bounded by our duties toward the people our actions affect.44 For example, you want to take the last doughnut in the break room but you know that you shouldn’t in case someone has not had one yet. Researchers have identified ways in which we can address bounded rationality: Be sure to ask multiple questions to understand the situation better, draw on multiple sources of information, evaluate your sources of information, and leave enough time to decide.45

INTUITION Perhaps the least rational way of making decisions is intuitive decision making, an unconscious process created from distilled experience.46 Intuitive decision making occurs outside conscious thought; relies on holistic associations, or links between disparate pieces of information; is fast; and is affectively charged, meaning it engages the emotions.47

Does intuition help effective decision making? Researchers are divided, but most are skeptical, in part because intuition is hard to measure and analyze. Furthermore, intuition can lead you to “close your eyes to follow your heart,” or ignore contradictory information to protect your intuition, even when it is not correct.48 Much of the research on dozens of decision-making studies suggests that intuition, although it “feels right,” does not correspond with rationally made decisions and perhaps leads to inaccurate decisions.49 Probably the best advice from one expert is: “Intuition can be very useful as a way of setting up a hypothesis but is unacceptable as ‘proof.’” Use hunches derived from your experience to speculate, yes, but test those hunches with objective data and rational, dispassionate analysis.50

Common Biases and Errors in Decision Making

Systematic biases and errors can creep into the judgments of decision makers.51 To minimize effort and avoid trade-offs, people tend to rely too heavily on experience, impulses, gut feelings, and convenient rules of thumb. Exhibit 6-3 provides some sug- gestions for how to avoid falling into these biases and errors.

Bounded rationality A simplified process of making deci- sions by perceiving and interpreting the essential features of problems without capturing their com- plexity.

Intuitive decision making An unconscious process created out of distilled experience.

1. Define the problem. 2. Identify the decision criteria. 3. Allocate weights to the criteria. 4. Develop the alternatives. 5. Evaluate the alternatives. 6. Select the best alternative.

EXHIBIT 6-2 Steps in the Rational Decision- Making Model

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118 Part 2 • Making and Implementing Decisions

OVERCONFIDENCE BIAS We tend to be overconfident about our abilities and the abilities of others, but we are usually not aware of this bias.52 This overconfidence can emerge in organizations, especially during informal interviews. For example, hiring managers may be overconfident about how well they evaluate candidates after an informal interview.53 Furthermore, some research shows hiring managers can be overconfident in their evaluation of stigmatized candidates (e.g., candidates with facial scars or birthmarks), even when it is clear they were prejudiced in their decisions.54

Overconfidence has a relationship with leadership emergence (which we discuss in the chapter on leadership). People are more likely to select the overconfident as leaders as they tend to ease their sense of ambiguity and overconfidence fits the perceiver’s under- standing of what it means to be a leader.55 Furthermore, overconfidence bias is more likely to emerge in leaders who are powerful, ambitious, and of a higher social class and, in some cases, lead to higher firm performance.56 However, despite initial benefits, over- confidence may eventually backfire: as overconfidence is revealed (the person’s behav- iors are not as good as they say they are or their claims are falsifiable), people begin to perceive the overconfident person negatively, which damages their reputation.57

ANCHORING BIAS Anchoring bias is a tendency to fixate on initial information and fail to adequately adjust to subsequent information.58 The mind appears to disproportionately emphasize the first information it receives. Anchors are widely used by people in professions in which persuasion skills are important—advertising, management, politics, real estate, and law.

Anytime a negotiation takes place, so does anchoring. When a prospective employer asks how much you made in your prior job, your answer typically anchors the employer’s offer. (Remember this when you negotiate your salary but set the anchor only as high as you truthfully can.) The more precise your anchor is, the smaller the adjust- ment. Some research suggests people think of making an adjustment after an anchor is set as rounding off a number: If you suggest a salary of $55,000, your boss will consider

Overconfidence bias A tendency to be overconfident about our own abilities or the abilities of others.

Anchoring bias A tendency to fixate on initial information, from which one then fails to adequately adjust for subsequent information.

Focus on Goals. Without goals, you can’t be rational, you don’t know what information you need, you don’t know which information is relevant and which is irrelevant, you’ll find it difficult to choose between alternatives, and you’re far more likely to experience regret over the choices you make. Clear goals make decision making easier and help you eliminate options that are inconsistent with your interests.

Look for Information That Disconfirms Your Beliefs. One of the most effective means for counteracting overconfidence and the confirmation and hindsight biases is to actively look for information that contradicts your beliefs and assumptions. When we overtly consider various ways we could be wrong, we challenge our tendencies to think we’re smarter than we actually are.

Don’t Try to Create Meaning out of Random Events. The educated mind has been trained to look for cause-and-effect relationships. When something happens, we ask why. And when we can’t find reasons, we often invent them. You have to accept that there are events in life that are outside your control. Ask yourself if patterns can be meaningfully explained or whether they are merely coincidence. Don’t attempt to create meaning out of coincidence.

Increase Your Options. No matter how many options you’ve identified, your final choice can be no better than the best of the option set you’ve selected. This argues for increasing your decision alternatives and for using creativity in developing a wide range of diverse choices. The more alternatives you can generate, and the more diverse those alternatives, the greater your chance of finding an outstanding one.

EXHIBIT 6-3 Reducing Biases and Errors

Source: S. P. Robbins, Decide & Conquer: Making Winning Decisions and Taking Control of Your Life (Upper Saddle River, NJ: Financial Times/ Prentice Hall, 2004), 81–84.

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Chapter 6 • Perception and Individual Decision Making 119

$50,000 to $60,000 a reasonable range for negotiation, but if you mention $55,650, your boss is more likely to consider $55,000 to $56,000 the range of likely values.59

CONFIRMATION BIAS Confirmation bias is a case of selective perception: we seek out (and accept) information that reaffirms our past choices and current views, and we discount information that challenges them.60 We even tend to seek sources most likely to tell us what we want to hear, and we give too much weight to supporting information and too little to contradictory information. The confirmation bias applies to person perception (discussed earlier in this chapter): once we settle on a trait attribution, we seek out and accept information that reaffirms this perception.61 For example, if your supervisor sees you as unreliable, they are more likely to perceive when you are unreliable than when you are reliable. Confirmation bias may be especially troublesome for entrepreneurs and startups, given the consequences of making faulty decisions in new ventures and failing to learn quickly.62

AVAILABILITY BIAS Availability bias is our tendency to base judgments on readily available information. Events that evoke emotions are particularly vivid, and those that are more recent tend to be more available in our memory, leading us to overestimate the chances of unlikely events.63 Availability bias can help explain why managers give more weight in performance appraisals to recent employee behaviors than to behaviors of six to nine months earlier.64 Because the challenges people have faced are often more salient than times when things have gone well, employees may also tend to believe they have it worse than others.65 For example, employees from older generations may discount millennial work experiences as easier because they focus more on their own challenging experiences rather than when things were easier for them.

ESCALATION OF COMMITMENT Another distortion that creeps into decisions is a tendency, often driven by nonrational reasons, to persist even when there is evidence that one should try a different approach or give up.66 Escalation of commitment refers to our staying with a decision even if there is clear evidence it is wrong. When is escalation most likely to occur? Evidence indicates it occurs when individuals view themselves as responsible for the outcome or when they feel like they will eventually succeed.67 The fear of personal failure even biases the way we search for and evaluate information so that we choose only information that supports our dedication.68 It does not appear to matter whether we chose the failing course of action or if it was assigned to us—we feel responsible and escalate in either case. Also, the sharing of decision authority—such as when others review the choice we made—can lead to higher escalation.69

We usually think of escalation of commitment as ungrounded. However, persis- tence in the face of failure is responsible for a great many of history’s greatest feats, including the building of the pyramids, the Great Wall of China, the Panama Canal, and the Empire State Building, among others. Researchers suggest a balanced approach includes frequent evaluation of the spent costs, that is, whether the next step is worth the anticipated costs.70 As such, what we want to combat is the tendency to automatically escalate commitment.

RANDOMNESS ERROR Our tendency to believe we can predict the outcome of random events is the randomness error.

Confirmation bias The tendency to seek out information that reaffirms past choices and current views, and to discount information that chal- lenges them.

Availability bias The tendency for people to base their judgments on infor- mation that is readily available to them.

Escalation of commitment An increased com- mitment to a previous decision, despite negative information.

Randomness error The tendency of indi- viduals to believe that they can predict the outcome of random events.

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120 Part 2 • Making and Implementing Decisions

Decision making suffers when we try to create meaning from random events, par- ticularly when we turn imaginary patterns into superstitions.71 These can be completely contrived (“I never make important decisions on Friday the 13th”) or they can evolve from a reinforced past pattern of behavior (Tiger Woods wears a red shirt playing golf on Sundays because he won many junior tournaments wearing red shirts).72

RISK AVERSION Mathematically speaking, we should find a fifty–fifty flip of the coin for one hundred dollars to be worth as much as a sure promise of fifty dollars. After all, the expected value of the gamble over several trials is fifty dollars. However, nearly everyone would rather have the sure thing than a risky prospect.73 For many people, a fifty–fifty flip of a coin even for two hundred dollars might not be worth as much as a sure promise of fifty dollars, even though the gamble is mathematically worth twice as much! This tendency to prefer a sure thing over a risky outcome is risk aversion. Overall, the framing of a decision has an effect on whether or not people will engage in risk-averse behavior—when decisions are framed positively, such as a potential gain of fifty dollars, people will be more risk averse (conversely, when the decision is framed in a negative manner, such as a loss of fifty dollars, people will engage in riskier behaviors).74

Chief executive officers (CEOs) at risk of termination are exceptionally risk averse, even when a riskier investment strategy is in their firms’ best interests.75 Organizations have a stronger hold on employees who are more risk averse because these employees tend to perceive that they have more to lose and are less likely to leave the organization.76

HINDSIGHT BIAS Hindsight bias is the tendency to believe falsely, after the outcome is known, that we would have accurately predicted it.77 When we have feedback on the outcome, we seem good at concluding it was obvious.

For instance, Or Shani, the founder of Albert Technologies (the maker of the first auton- omous digital marketer), notes that marketers this decade sought to create seamlessly digi- tal technologies to replace their cumbersome manual processes—it was easy to conclude in hindsight that cumbersome digital systems merely replaced cumbersome manual processes.78 The state of marketing, according to Shani, has not fully realized its digital transformation as a result (although Shani believes AI will be the final “push” that will fully bring marketing into the digital age).79 While that seems obvious now in hindsight, tempting us to think we could have predicted it, many experts have failed to predict industry trends in advance.

Though criticisms of decision makers may have merit,80 as Malcolm Gladwell, author of Blink and The Tipping Point, writes, “What is clear in hindsight is rarely clear before the fact.”81

INFLUENCES ON DECISION MAKING: INDIVIDUAL DIFFERENCES AND ORGANIZATIONAL CONSTRAINTS

Many factors, such as individual differences and organizational constraints, influence the way people make decisions and the degree to which they are susceptible to errors and biases.

Individual Differences

As we discussed, decision making in practice is characterized by bounded rationality, common biases and errors, and the use of intuition. Individual differences such as person- ality also create deviations from this rational model.

Risk aversion The tendency to prefer a sure gain of a moderate amount over a riskier outcome, even if the riskier outcome might have a higher expected payoff.

Hindsight bias The tendency to believe falsely, after an outcome of an event is known, that one would have accurately predicted that outcome.

Sony Kazuo Hirai, the former CEO of Sony, has pursued a policy of restructuring and streamlining the 70-year-old Japanese electronics conglomerate. In 2015, he divided Sony into three potentially profitable business areas, no longer pursuing growth in regions where intense competition put it at a disadvantage. Hirai’s risk aversion and downplaying of volume was in the hopes of renewing growth.

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PERSONALITY Several personality traits are related to taking on decision-making strategies, or to experiencing errors or biases during decision making. First, employees differ in the extent to which they trust their intuitions, and this can lead them to make riskier decisions or even to be harsher when condemning unethical behavior.82 Second, employees who are less closed-minded (or higher on openness) tend to be less prone toward selective perception or the confirmation bias, as they are more receptive to contradictory information.83 Narcissists (see the chapter on personality and values), naturally, tend to be prone to overconfidence or overclaiming and to self-serving biases.84 Specific facets of conscientiousness—particularly achievement striving and dutifulness—may affect escalation of commitment.85 Achievement-oriented people hate to fail, so they escalate their commitment, hoping to forestall failure. Dutiful people, however, are more inclined to do what they see as best for the organization, so they are less likely to escalate their commitment. Achievement-striving individuals appear more susceptible to hindsight bias, perhaps because they have a need to justify their actions.86

GENDER Does gender influence decision making? It depends on the situation. When the situation is not stressful, decision making by men and women is about equal in quality. In stressful situations, it appears that men make riskier decisions, while women become more empathetic and their decision making improves.87 This suggests that it might be best to have gender-diverse corporate boards: In fact, one study of Chinese firms that committed securities fraud found that gender-diverse boards are less likely to commit fraud and enjoy a better stock market response to fraud.88 Although only focusing on male-female differences here paints an incomplete picture, the state of research is evolving and we expect there to be more research in the future that is more reflective of gender diversity.

GENERAL MENTAL ABILITY We know people with higher levels of general mental ability (GMA; see the chapter on diversity in organizations) can process information more quickly, solve problems more accurately, and learn faster,89 so you might expect them to be less susceptible to common decision errors. However, GMA appears to help people avoid only some of them.90 Smart people are just as likely to fall prey, probably because being smart does not alert you to the possibility you are too confident or emotionally defensive. It is not that intelligence never matters. Once warned about decision-making errors, more intelligent people can probably learn more quickly to avoid them.

CULTURAL DIFFERENCES The cultural background of a decision maker can significantly influence the selection of problems, the depth of analysis, the importance placed on logic and rationality, and whether organizational decisions should be made autocratically by an individual manager or collectively in groups.91 Cultures differ in time orientation, the value they place on rationality, their belief in the ability of people to solve problems, and their preference for collective decision making. Second, while rationality is valued in North America, that may not be true elsewhere. In countries such as Iran, where rationality is not paramount to other factors, it is not necessary for efforts to appear rational. Third, some cultures emphasize solving problems, while others focus on accepting situations as they are. Because problem-solving managers believe they can and should change situations to their benefit, U.S. managers might identify a problem long before their Thai or Indonesian counterparts would choose to recognize it as such. Fourth, decision making in Japan, a collectivistic society, is much more group oriented than in the United States, an individualistic society.

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Organizational Constraints

Organizations can constrain decision makers, creating deviations from the rational model. For instance, managers make decisions that are influenced by the organization’s performance evaluation and reward systems, comply with formal regulations and com- pany precedents, and meet organizationally imposed time constraints.

PERFORMANCE EVALUATION SYSTEMS Managers are influenced by the criteria on which they are evaluated. If a division manager who oversees a group of manufacturing plants, believes they are operating best when there is no negative feedback from staff or auditors; the plant managers will spend a good part of their time ensuring that negative information does not reach him.

REWARD SYSTEMS The organization’s reward systems influence decision makers by suggesting which choices have better personal payoffs. For example, for over half a century (the 1930s through the mid-1980s), General Motors consistently gave promotions and bonuses to managers who kept a low profile and avoided controversy. These executives became adept at dodging tough issues and passing controversial decisions on to committees, which harmed the organization over time.

FORMAL REGULATIONS A shift manager at a Taco Bell restaurant in San Antonio, Texas, describes constraints faced on the job: “I’ve got rules and regulations covering almost every decision I make—from how to make a burrito to how often I need to clean the restrooms. My job doesn’t come with much freedom of choice.” The manager’s situation is not unique. All but the smallest organizations create rules and policies to program decisions and get individuals to act in the intended manner. In doing so, they limit decision choices.

SYSTEM-IMPOSED TIME CONSTRAINTS Almost all important decisions come with explicit deadlines. For example, a report on new product development may have to be ready for executive committee review by the first of the month. Such conditions often make it difficult, if not impossible, for managers to gather all information before making a final choice, thus harming decision performance.92

HISTORICAL PRECEDENTS Decisions are not made in a vacuum; they have context. For example, it is common knowledge that the largest determinant of the size of any given year’s budget is last year’s budget. Choices made today are largely a result of choices made over the years.

DECISION MAKING IN TIMES OF CRISIS During the COVID-19 pandemic of 2020, employees and leaders of businesses alike were forced to make extremely difficult decisions amidst chaos, confusion, and uncertainty.93 As Anjali Lai, a senior analyst at Forrester, eloquently described, “Unprecedented levels of uncertainty paired with a rapid flow of new information means [people forged] ahead with neither a template to follow, nor the luxury of pondering every decision.”94 Decision-makers are particularly susceptible to biases and distortion during times of crisis. For example, expert credit-rating agencies are more likely to provide negative or pessimistic ratings of creditworthiness during times of

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crisis, even when the creditworthiness of these target people or organizations would not be affected by the crisis.95 Furthermore, decisions made during times of crisis are more likely to be emotionally charged and intuitive.96 Not only does the strain of the crisis add an additional layer of anxiety and negative emotions to typical decisions, but the decisions in and of themselves may become highly charged, such as how doctors and nurses had to make extremely tough decisions as to who would receive treatment during the COVID-19 pandemic.97 Relatedly, justice and ethics in decision making (see the following section for more discussion) play a huge role in times of crisis. Indeed, perceptions of justice are incredibly important during times of crisis, influencing employee attitudes and customer reactions alike.98 As Lai noted, “Choices and actions expose the company’s priorities and values to ever-watchful consumers. To the business leaders navigating these decisions, our guidance is clear: treat your employers and customers as your North Star.”99

ETHICS IN DECISION MAKING

As discussed in the prior section, ethical considerations should be important to organi- zational decision making, but not just during times of crisis. In this section, we present three ways to frame ethical decisions and address the important issue of how lying affects decision making.

Three Ethical Decision Criteria

The first ethical yardstick is utilitarianism, which proposes making decisions solely based on their outcomes, ideally to provide the greatest good for all.100 This view dominates business decision making and is consistent with goals such as rationality, efficiency, productivity, and high profits.101 Keep in mind that utilitarianism is not always as objective as it sounds. One study indicated that the ethicality of utilitarianism is inf luenced in ways we do not realize. Participants were given a moral dilemma: The weight of five people bends a footbridge, so it is low to some train tracks. A train is about to hit the bridge. The choice is to let all five people perish or push the one heavy man off the bridge to save four people. In the United States, South Korea, France, and Israel, 20 percent of respondents chose to push the man off the bridge, in Spain, 18 percent, and in Korea, none. This might speak to cultural utilitarian values, but a minor change, asking people to answer in a non-native language they knew, caused more participants to push the man overboard: In one group, 33 percent pushed the man, and in another group 44 percent did.102 The emotional distance of answering in a non-native language seemed to foster a utilitarian viewpoint. It appears that even our view of what we consider pragmatic is changeable.

Another ethical criterion is to make decisions consistent with fundamental liberties and privileges, as set forth in documents such as the U.S. Bill of Rights. An emphasis on rights in decision making means respecting and protecting the basic rights of individu- als, such as the right to privacy, free speech, and due process.103 This criterion protects whistleblowers104 when they reveal an organization’s unethical practices to the press or government agencies, using their right to free speech.

A third criterion is to impose and enforce rules fairly and impartially to ensure justice or an equitable distribution of benefits and costs.105 This criterion is often approached from a deonance standpoint (employees feel as if they ought to behave in a certain way,

Utilitarianism An ethical per- spective in which decisions are made to provide the greatest good for all.

Whistleblowers Individuals who report unethical practices by their employer to outsiders.

Deonance A perspective in which ethical decisions are made because you “ought to” in order to be consistent with moral norms, principles, standards, rules, or laws.

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as laid out in rules, laws, norms, or moral principles).106 For example, some employees might feel as if they should not steal from their workplace because it is ethically “wrong” by moral norms, principles, or standards or it is forbidden by rules or laws. Notably, this “ought force” is present regardless of whether organizational rules exist; often, a decision is regarded as unfair or unjust because it violates a moral norm or principle.

Choosing Between Criteria

Decision makers, particularly in for-profit organizations, feel comfortable with utilitarianism. The “best interests” of the organization and its stockholders can justify a lot of question- able actions, such as large layoffs. However, while raising prices, selling products with questionable effects on consumer health, closing inefficient plants, laying off large numbers of employees, and moving production overseas to cut costs can be justified in utilitarian terms, there may no longer be a single measure by which good decisions are judged. This presents a challenge because satisfying individual rights and social justice creates far more ambiguities than utilitarian effects on efficiency and profits. Indeed, the ethical-decision making process itself is complex, and the traditional perspective of viewing these criteria as completely separate is giving way to one that views them as interrelated and contingent upon whether decisions are made about the self or judging others’ behavior.107

This is where corporate social responsibility (CSR) makes a difference. As we can see by looking at utilitarian ideals, organizations may approach decisions in a certain way when they are looking only at a balance sheet. However, public pressure on organiza- tions to behave responsibly has meant sustainability issues clearly affect the bottom line: Consumers increasingly choose to purchase goods and services from organizations with effective CSR initiatives, high performers are attracted to work for CSR organizations, governments offer incentives to organizations for sustainability efforts, and so forth.108

Behavioral Ethics

Increasingly, researchers are turning to behavioral ethics—an area of study that analyzes how people behave when confronted with ethical dilemmas. While ethical standards exist collectively in societies and organizations as well as individually in the form of personal ethics, we do not always follow ethical standards promoted by our organizations. Sometimes, we even violate our own standards. Our ethical behavior varies widely from one situation to the next.

Behavioral ethics research stresses the importance of culture to ethical decision making. There are few global standards for ethical decision making,109 as contrasts between cultures illustrate. What is ethical in one culture may be unethical in another. For example, because bribery is more common in countries such as China, a Canadian working in China may face a dilemma: Should I pay a bribe to secure business if it is an accepted part of that country’s culture? Without sensitivity to cultural differences as part of the definition of ethical conduct, organizations may encourage unethical conduct without even knowing it.

Lying

Although lying might depend on both situational characteristics and individual differ- ences, a large volume of research suggests that lying and dishonest behavior are very common.110 Perhaps one of the reasons we lie is that lying is difficult for others to

Behavioral ethics Analyzing how people behave when confronted with ethi- cal dilemmas.

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detect.111 In more than 200 studies, individuals correctly identified people who were lying only 47 percent of the time, which is less than random picking.112 For example, one technique police officers use is based on the theory that people look up and to the right when they lie. Unfortunately, researchers who tested the technique could not substantiate the underlying theory.113

Although people often try to justify lying as necessary in certain situations (e.g., sales) or because honesty can be difficult,114 lying is deadly to decision making. Managers and employees simply cannot make good decisions when facts are misrepresented, and people give false motives for their behaviors. Lying is a big ethical problem as well. From an organizational perspective, using fancy lie-detection techniques and entrapping liars when possible yields unreliable results.115 The most lasting solution comes from OB, which studies ways to prevent lying by working with our natural propensities to create environments that are not conducive to lying.

CREATIVITY AND INNOVATION IN ORGANIZATIONS

Although alternatives to solving problems may often be clear or readily available, sometimes a decision maker also needs creativity, the ability to produce novel and useful ideas. Novel ideas are different from what has been done before but are appropriate for the problem.

Creativity allows the decision maker to appraise and understand problems fully, including seeing problems others cannot see. Although all aspects of OB are complex, this is especially true for creativity. To simplify, Exhibit 6-4 provides a three-stage model of creativity in organizations. The core of the model is creative behavior, which has both causes (predictors of creative behavior) and effects (outcomes of creative behavior).

Creative Behavior

Creative behavior occurs in four steps, each of which leads to the next:116

1. Problem formulation. Any act of creativity begins with a problem that the behav- ior is designed to solve. Thus, problem formulation is the stage of creative behav- ior in which we identify a problem or opportunity that requires a solution that is yet unknown. For example, Marshall Carbee and John Bennett founded Eco Safety Products after discovering that even paints declared safe by the Environmental Protection Agency emitted hazardous chemical compounds.117

Creativity The ability to pro- duce novel and useful ideas.

Problem formulation The stage of creative behavior that involves identifying a problem or opportunity requir- ing a solution that is yet unknown.

Creative outcomes (Innovation)

Novelty Usefulness

Creative behavior

Problem formulation Information gathering Idea generation Idea evaluation

Causes of creative behavior

Creative potential Creative environment

EXHIBIT 6-4 Three-Stage Model of Creativity in Organizations

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2. Information gathering. Given a problem, the solution is rarely clear at the out- set. We need time to learn more and to process what we have learned. Thus, information gathering is the stage of creative behavior when knowledge is sought and possible solutions to a problem incubate. Information gathering leads us to identifying innovation opportunities.118 For example, you could have lunch with someone outside your industry to discuss the problem, forcing you to speak about the problem in new terms.119

3. Idea generation. Idea generation is the process in which we develop possible so- lutions to a problem from relevant information and knowledge. Curiosity has been found to be a driver of idea generation: when you are curious about something, you are more likely to link earlier ideas or earlier solutions to help solve the current problem.120

4. Idea evaluation. Finally, it is time to choose from the ideas we have generated. Thus, idea evaluation is the process of creative behavior in which we evaluate potential solutions to problems to identify the best one.

Causes of Creative Behavior

Having defined creative behavior, the main stage in the three-stage model, we now look back to the causes of creativity: creative potential and creative environment.

CREATIVE POTENTIAL Is there such a thing as a creative personality? Indeed. While creative genius is rare—whether in science (Stephen Hawking), the performing arts (Martha Graham), or business (Steve Jobs)—most people have some of the characteristics shared by exceptionally creative people. The more of these characteristics we have, the higher our creative potential. Consider these indicators of creative potential:

1. Intelligence and Creativity. Intelligence is related to creativity—some re- search has even shown that some degree of intelligence is necessary in order to be creative.121 Smart people are more creative because they are better at solv- ing complex problems.122 However, they may also be more creative because they have greater “working memory,” that is, they can recall more informa- tion related to the task at hand.123 Along the same lines, recent research in Europe indicates that an individual’s high need for cognition (desire to learn) and cognitive abilities geared toward updating information is correlated with greater creativity.124

2. Personality and Creativity. The Big Five personality trait of openness to expe- rience (see the chapter on personality and values ) correlates with creativity, probably because open individuals are less conformist in behavior and more divergent in thinking.125 Other traits of creative people include proactive person- ality, self-confidence, risk taking, tolerance for ambiguity, and perseverance.126 Hope, self-efficacy (belief in your capabilities), and positive affect also predict an individual’s creativity.127

3. Expertise and Creativity. Expertise is the foundation for creative work. For example, film writer, producer, and director Quentin Tarantino spent his youth working in a video rental store, where he built up an encyclopedic knowledge

Information gathering The stage of creative behavior when pos- sible solutions to a problem incubate in an individual’s mind.

Idea generation The process of creative behavior that involves developing possible solutions to a problem from relevant information and knowledge.

Idea evaluation The process of cre- ative behavior involv- ing the evaluation of potential solutions to problems to identify the best one.

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of movies. Creative experts, based on this vast knowledge, are able to vividly envision their ideas and forecast what may or may not happen as a result.128 The expertise of others is important, too. People with larger social networks have greater exposure to diverse ideas and informal access to the expertise and resources of others.129

4. Ethics and Creativity. Although creativity is linked to many desirable individual characteristics, its relationship with ethicality is unclear. People who cheat may be more creative than those who behave ethically, according to recent research. It may be that dishonesty and creativity can both stem from a rule-breaking desire.130 Some recent research has found that people who tend to have creative personalities (or who are members of more creative teams) tend to be imaginative concerning moral issues (e.g., able to better envision consequences of their actions) and, as such, are actually more ethical.131

CREATIVE ENVIRONMENT Most of us have creative potential we can learn to apply, but as important as creative potential is, by itself it is not enough. We need to be in an environment where creative potential can be realized.132 Perhaps most important, is motivation. Intrinsic motivation, or the desire to work on something because it is interesting, exciting, satisfying, and challenging (discussed in more detail in the chapters on motivation), correlates strongly with creative outcomes.133 As such, environments should foster employees’ motivations to be creative.134 What other environmental factors affect whether creative potential translates into creative behaviors?

First, it is valuable to work in an environment that rewards and recognizes creative work.135 A study of health care teams found that team creativity translated into innovation only when the climate actively supported innovation.136 The organization should foster the free flow of ideas, including providing fair and constructive judgment. Freedom from excessive rules also encourages creativity; employees should have the freedom to decide what work is to be done and how to do it. One study in China revealed that both struc- tural empowerment (in which the structure of the work unit allows sufficient employee freedom) and psychological empowerment (which lets the individual feel personally enabled to decide) were related to employee creativity.137 However, research in Slovenia found that creating a competitive climate where achievement at any cost is valued will stymie creativity.138

Second, certain job characteristics can foster creativity. Specifically, jobs that are complex, autonomous, and have clear role expectations for innovation are related to innovative behavior—these job characteristics can be especially important in inspiring creative behavior.139 Managers and leaders play a large role in establishing these char- acteristics as a part of the organizational infrastructure and culture. They may be able to heighten innovation when resources are limited by encouraging employees to find resources for their novel ideas and by giving direct attention to appropriate tools when resources are plentiful.140 Managers also serve as an important bridge role for knowledge transfer. When managers link teams to additional information and resources, radical cre- ativity (introducing creative ideas that break the status quo) is more likely.141 The weaker ties between team members and manager networks may have more impact on creativity than the direct, stronger ties that team members have with their own networks because the weaker sources provide more divergent thinking.142

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Creative Outcomes (Innovation)

The final stage in our model of creativity is the outcome. We can define creative out- comes as ideas or solutions judged to be novel and useful by relevant stakeholders. Novelty itself does not generate a creative outcome if it is not useful. Thus, “off the wall” solutions are creative only if they help solve the problem. The usefulness of the solution might be self-evident (the iPad), or it might be considered successful by only the stake- holders initially.143

An organization may harvest many creative ideas from its employees and call itself innovative. However, as one expert stated, “Ideas are useless unless used.” Soft skills help translate ideas into results. One researcher found that in a large agribusiness company, creative ideas were most likely to be implemented when an individual was motivated to translate the idea into practice—and had strong networking ability.144 These studies high- light an important fact: Creative ideas do not implement themselves; translating them into creative outcomes is a social process that requires utilizing other concepts addressed in this text, including power and politics, leadership, and motivation.

SUMMARY

Individuals base their behavior not on their external environment, but rather on the way they see it or believe it to be. An understanding of the way people make decisions can help us explain and predict behavior, but few important decisions are simple or unambiguous enough for the rational model’s assumptions to apply. We find individu- als looking for solutions that satisfice rather than optimize, injecting biases and preju- dices into the decision process, and relying on intuition. Managers should encourage ethicality and creativity in employees as well as teams to create a route to effective decision making.

IMPLICATIONS FOR MANAGERS

• Behavior follows perception, so to influence behavior at work, assess how people perceive their work. Often behaviors we find puzzling can be explained by under- standing the initiating perceptions.

• Make better decisions by recognizing perceptual biases and decision-making er- rors we tend to commit. Learning about these problems does not always prevent us from making mistakes, but it does help.

• Adjust your decision-making approach to the national culture you are operating in and to the criteria your organization values. If you are in a country that does not value rationality, do not feel compelled to follow the decision-making model or to try to make your decisions appear rational. Adjust your decision approach to ensure compatibility with the organizational culture.

• Combine rational analysis with intuition. These are not conflicting approaches to decision making. By using both, you can improve your decision-making effectiveness.

• Try to enhance your creativity. Actively look for novel solutions to problems, at- tempt to see problems in new ways, use analogies, and hire creative talent. Try to remove work and organizational barriers that might impede creativity.

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Motivation Concepts 7

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

7.1 Describe the three key elements of motivation.

7.2 Compare the early theories of motivation.

7.3 Contrast the elements of self-determination theory and goal-setting theory.

7.4 Demonstrate the differences among self-efficacy theory, reinforcement theory, and expectancy theory.

7.5 Describe the forms of organizational justice, including distributive justice, proce- dural justice, informational justice, and interactional justice.

7.6 Identify the implications of employee job engagement for managers.

7.7 Describe how the contemporary theories of motivation complement one another.

MOTIVATION

Millions of people each year spend money in the hopes that they will become more “moti- vated.” In the U.S. alone, self-improvement and motivational services is a $9.9-billion market, that is expected to grow 5.6 percent on average until 2022, when it is projected to be worth $13.2 billion.1 In the following chapters, you will see how important motivation is to performance, as well as how it is linked to well-being in the workplace.

As we analyze the concept of motivation, keep in mind that levels of motivation can vary from moment-to-moment, but also be a meaningful individual difference (see the chapter on personality and values). We define motivation as the processes that account for an individual’s intensity, direction, and persistence of effort toward attaining a goal.2 While general motivation is concerned with effort toward any goal, we will narrow the focus to organizational goals.

Intensity describes how hard a person tries. This is the element most of us focus on when we talk about motivation. However, high intensity is unlikely to lead to favorable job performance outcomes unless the effort is channeled in a direction that benefits the organization. Finally, motivation has a persistence dimension. This measures how long a person can maintain effort. Motivated individuals work intensely on an appropriate task, long enough to achieve their goals.

Motivation The processes that account for an individual’s intensity, direction, and persis- tence of effort toward attaining a goal.

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EARLY THEORIES OF MOTIVATION

Three theories of employee motivation formulated during the 1950s are probably the best known. Although they are now of questionable validity (as we will discuss), they represent a foundation of motivation theory, and many practicing managers still use their terminology.

Hierarchy of Needs Theory

The best-known theory of motivation is Abraham Maslow’s hierarchy of needs,3 which hypothesizes that there is a hierarchy of five needs humans are motivated to meet. Recently, a sixth need has been proposed for a highest level—intrinsic values—but it has yet to gain widespread acceptance.4 The original five needs are:

1. Physiological. Hunger, thirst, shelter, sex, and other bodily needs. 2. Safety-security. Security and protection from physical and emotional harm. 3. Social-belongingness. Affection, belongingness, acceptance, and friendship. 4. Esteem. Internal factors such as self-respect, autonomy, and achievement as well

as external factors such as status, recognition, and attention. 5. Self-actualization. Drive to become what we can become; includes growth,

achievement of our potential, and self-fulfillment.

According to Maslow, as each need becomes well-satisfied, the next one becomes dominant. If you want to motivate someone, you need to understand what level of the hierarchy that person is on and focus on satisfying needs at or above that level. We depict the hierarchy as a pyramid in Exhibit 7-1.

Maslow’s theory has broadly received long-standing recognition, particularly among practicing managers. It is intuitively logical and easy to understand, and some research supports it.5 Unfortunately, however, most research does not, and it has not been frequently researched since the 1960s.6 Nonetheless, it is important to be aware of the prevailing public acceptance of the hierarchy when discussing motivation.

Two-Factor Theory

Believing an individual’s relationship to work is basic, and that the attitude toward work can determine success or failure, psychologist Frederick Herzberg wondered, “What do people want from their jobs?” He asked people to describe, in detail, situations in which they felt exceptionally good or bad about their jobs. The responses differed significantly and led Herzberg to his two-factor theory (also called motivation–hygiene theory, but this term is not used much today).7

Hierarchy of needs Abraham Maslow’s hierarchy of five needs— physiological, safety, social, esteem, and self-actualization—in which, as each need is well-satisfied, the next need becomes dominant.

Two-factor theory A theory that relates intrinsic factors to job satisfaction and associates extrinsic factors with dissatis- faction. Also called motivation–hygiene theory.

Self- actualization

Safety-security

Physiological

Social-belongingness

Esteem

EXHIBIT 7-1 Maslow’s Hierarchy of Needs

Source: H. Skelsey, “Maslow’s Hierar- chy of Needs—the Sixth Level,” Psychologist (2014): 982–83.

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As shown in Exhibit 7-2, intrinsic factors such as advancement, recognition, responsibility, and achievement seem related to job satisfaction. Respondents who felt good about their work tended to attribute these factors to their situations, while dissatis- fied respondents tended to cite extrinsic factors such as supervision, pay, company poli- cies, and work conditions. To Herzberg, the data suggest that the opposite of satisfaction is not dissatisfaction, as was traditionally believed (see Exhibit 7-2). Removing dissatis- fying characteristics from a job does not necessarily make the job satisfying; managers would be placating, rather than motivating, the employees.

Conditions such as quality of supervision, pay, company policies, physical work conditions, relationships with others, and job security are hygiene factors. When they are adequate, people will not be dissatisfied; neither will they be satisfied. If we want to motivate people on their jobs, we should emphasize factors associated with the work itself or with outcomes directly derived from it such as promotional opportunities, per- sonal growth opportunities, recognition, responsibility, and achievement. These are the characteristics people find intrinsically rewarding.

Two-factor theory has not been well supported in research. Criticisms center on Herzberg’s original methodology and his assumptions, such as how the participants may be biased in thinking back to times when they felt good or bad about their jobs.8 Furthermore, if hygiene and motivational factors are equally important to a person, both should be capable of motivating.

Regardless of the criticisms, Herzberg’s theory has been quite influential and has been used in many studies in Asian countries such as Japan and India.9 Most managers worldwide are familiar with its recommendations.

McClelland’s Theory of Needs

Imagine that you are a sales manager in a well-known mountaineer outfitting company, reviewing the bonus memo you received earlier in the day. If you meet the easier, Level one sales goal, you will get a $2,000 bonus. If you meet the Level two sales goal (which only 80 percent of the people who try will attain), you will get a $4,000 bonus. Level three pays $8,000, which only half the people who try will attain. Finally, Level four pays

Hygiene factors Factors—such as company policy and administration, super- vision, and salary— that, when adequate in a job, placate workers and limit job dissatisfaction.

Satisfaction

Traditional view

Herzberg’s view

Dissatisfaction

Satisfaction No satisfaction

No dissatisfaction Dissatisfaction

Motivators

Hygiene factors

EXHIBIT 7-2 Contrasting Satisfaction and Dissatisfaction

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$32,000, but it is almost impossible to achieve. Which would you try for? If you selected level three, you are likely a high achiever.

McClelland’s theory of needs, unlike Maslow’s hierarchy, suggests that needs are more like motivating factors than strict needs for survival.10 In McClelland and col- leagues’ theory, there are three primary needs:

• Need for achievement (nAch) is the need to excel or achieve to a set of standards.

• Need for power (nPow) is the need to make others behave in a way they would not have otherwise.

• Need for affiliation (nAff) is the need to establish friendly and close interpersonal relationships.

McClelland and subsequent researchers focused most of their attention on nAch.11 In general, high achievers perform best when they perceive their probability of success as 0.5—that is, a fifty–fifty chance. They dislike gambling with high odds because they get no achievement satisfaction from success that comes by pure chance. Similarly, they dislike low odds (high probability of success) because then there is no challenge to their skills. Based on prior nAch research, we can predict some relationships between nAch and job performance. First, when employees have a high level of nAch, they tend to exhibit more positive moods and be more interested in the task at hand.12 Second, employees high on nAch tend to perform very well in high-stakes conditions on the job, like work walkthroughs or sales encounters.13

The other needs within the theory also have research support. First, the nPow con- cept also has research support, but it may be more familiar to people in broad terms than in relation to the original definition.14 We will discuss power much more in the chapter on power and politics. Second, the nAff concept is also well established and accepted in research—for example, one study of 145 teams suggests that groups composed of employees with a high nAff tend to perform the best, exhibit the most open communi- cation, and experience the least amount of conflict (compared with the other needs).15 Additional research suggests that our individual differences (discussed in the chapter on personality and values) may affect whether we can satisfy these needs. For example, a high degree of neuroticism can prevent one from fulfilling the nAff, whereas agree- ableness supports fulfillment of this need; interestingly, extraversion had no significant effect.16 Furthermore, some evidence suggests that women may be more likely to have more nAff needs than men.17

The degree to which we have each of the three needs is difficult to measure, and therefore the theory is difficult to put into practice. A behavior may satisfy many different needs, and many different behaviors may be directed at satisfying one given need, mak- ing needs difficult to isolate and examine.18 Therefore, the concepts are helpful, but they are not often used objectively.

CONTEMPORARY THEORIES OF MOTIVATION

Contemporary theories of motivation have a reasonable degree of evidence supporting them. We call them “contemporary theories” because they represent the latest think- ing in explaining employee motivation. This does not mean they are unquestionably right, however.

Need for achievement (nAch) The need to excel or achieve to a set of standards.

Need for power (nPow) The need to make others behave in a way in which they would not have behaved otherwise.

Need for affiliation (nAff) The need to establish friendly and close interpersonal rela- tionships.

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Self-Determination Theory

“It’s strange,” said Jordan. “I started work at the Humane Society as a volunteer. I put in fifteen hours a week helping people adopt pets. And I loved coming to work. Then, three months ago, they hired me full-time at eleven dollars an hour. I am doing the same work I did before. But I’m not finding it as much fun.”

Does Jordan’s reaction seem counterintuitive? One explanation can be found in self-determination theory, which proposes that employees’ well-being and perfor- mance are influenced by their motivation for certain job activities, including the sense of choice over what they do, how motivating the task is in and of itself, how rewards influence motivation, and how work satisfies psychological needs.19 This meta-theory (or a collection of related theories behind a common theme) is widely used and contains several sub-theories, including cognitive evaluation theory and self-concordance theory, discussed next.

COGNITIVE EVALUATION THEORY Much research on self-determination theory in organizational behavior (OB) has focused on cognitive evaluation theory (CET), a sub- theory that suggests that extrinsic rewards will reduce intrinsic interest in a task.20 When people are paid for work, it feels less like something they want to do and more like something they must do. For example, if a computer programmer values writing code out of a love for solving problems, a bonus for writing a certain number of lines of code every day could feel coercive, and the programmer’s intrinsic motivation could suffer.

CET suggests that some caution in the use of extrinsic rewards to motivate is wise, and that pursuing goals from intrinsic motives (such as a strong interest in the work itself) is more sustaining to human motivation than are extrinsic rewards. In support, research confirms that intrinsic motivation contributes to the quality of work, while incentives contribute to the quantity of work. Also, effects of intrinsic motivation may be weaker when incentives are directly tied to performance (such as a monetary bonus for each call made in a call center).21

SELF-CONCORDANCE An outgrowth of self-determination theory is self-concordance theory, which considers how strongly people’s reasons for pursuing goals are consistent with their interests and core values. OB research suggests that people who pursue work goals that align with their interests and values are more satisfied with their jobs, feel they fit into their organizations better, and perform better.22 Across cultures, if individuals pursue goals because of intrinsic interest, they are more likely to attain goals, are happier when they do, and are happy even if they are unable to attain them.23 Why? Because they feel like they are more competent at accomplishing the goal and like they fit better with their organization.24

BASIC PSYCHOLOGICAL NEEDS Similar to Maslow’s and McClelland’s theories, discussed in the prior section, self-determination theory also suggests that there are several basic psychological needs that affect work motivation. When they are satisfied, we tend to be more motivated; when they are frustrated, we tend to be less motivated. Need for relatedness is very similar to nAff, discussed in the prior section. However, need for autonomy and need for competence are two newer needs that correspond with the need to feel in control and autonomous at work and the need to feel like we are good at what we

Self-determination theory A meta-theory of motivation at work that is concerned with autonomy, intrinsic motivation, extrinsic motivation, and the satisfaction of psycho- logical work needs.

Cognitive evaluation theory A sub-theory of self- determination theory in which extrinsic rewards for behavior tend to decrease the overall level of moti- vation, if the rewards are seen as control- ling or reduce their sense of competence.

Self-concordance The degree to which people’s reasons for pursuing goals are consistent with their interests and core values.

Need for autonomy The need to feel in control and autono- mous at work.

Need for competence The need to feel like we are good at what we do and be proud of it.

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do and are proud of it.25 Of all the three needs, however, the autonomy need is the most important for attitudinal and affective outcomes, whereas the competence need appears to be most important for predicting performance.26 Also, when using extrinsic rewards, need satisfaction matters less for performance when the rewards are directly salient and clear.27

What does all this mean? Managers need to design jobs so that they are motivating, provide recognition, and support employee growth and development. Employees who feel autonomous and free in what they choose to do are likely to be more motivated by their work and committed to their employers. Furthermore, employees can satisfy many of these needs through helping others.28 As Walmart leadership coach, Lucy Duncan, suggests about Walmart associates, if you take the time to incorporate self-determination theory in your workplace, “you will be blown away with associate satisfaction.”29

Goal-Setting Theory

You’ve likely heard this a number of times: “Just do your best. That’s all anyone can ask.” But what does “do your best” mean? Do we ever know whether we have achieved that vague goal? Research on goal-setting theory reveals the impressive effects of goal specificity, challenge, and feedback on performance. Under the theory, intentions to work toward a goal are considered a major source of work motivation.30

SPECIFICITY, DIFFICULTY, AND FEEDBACK Goal-setting theory is well supported. Evidence strongly suggests that specific goals increase performance; that difficult goals, when accepted, produce higher performances than do easy goals; and that feedback leads to higher performance than does non-feedback.31 Why? First, goals that are specific explicitly direct attention toward what needs to be accomplished. Second, once a difficult task has been accepted, we can expect the employee to exert a high level of effort to try to achieve it. Third, people do better when they get feedback on how well they are progressing toward their goals—that is, feedback guides behavior. But all feedback is not equally potent. Self-generated feedback—with which employees can monitor their own progress or receive feedback from the task process itself—is more powerful than externally generated feedback.32

If employees can participate in the setting of their own goals, will they try harder? The evidence is mixed, although across studies it appears that they will not perform any better.33 In some studies, participatively set goals yielded superior performance; in oth- ers, individuals performed best when assigned goals by their boss. If goals are not set by the employee, then the manager needs to ensure that the employee clearly understands its purpose and importance.34

GOAL COMMITMENT, TASK CHARACTERISTICS, AND NATIONAL CULTURE Three factors influence the goals–performance relationship: goal commitment, task characteristics, and national culture.

1. Goal commitment. Goal-setting theory assumes an individual is committed to the goal and determined not to shirk or abandon it. The individual (1) believes they can achieve the goal and (2) wants to achieve it.35 Goal commitment is most likely to occur when employees expect that their efforts will pay off in goal attainment, when people of higher status are watching and aware of the goal, and when accom- plishing the goal is attractive to them.36

Goal-setting theory A theory that specific and difficult goals, with feedback, lead to higher performance.

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2. Task characteristics. Goals themselves seem to affect performance more strongly when tasks are simple rather than complex, and when the tasks are independent rather than interdependent.37 On interdependent tasks, group goals along with del- egation of tasks are preferable. Unplanned disturbances also play a role. If dis- tractions or events outside your control limit how quickly you can make progress, chances are you will become frustrated and less enthusiastic.38 For example, co- workers who constantly slow down progress on projects can be very frustrating.

3. National culture. In collectivistic and high power-distance cultures, achievable moderate goals can be more motivating than difficult ones.39 Assigned goals appear to generate greater goal commitment in high than in low power-distance cultures.40 More research is needed to assess how goal constructs might differ across cultures.

Although goal setting can be positive, employees and managers should be careful not to overdo it.41 For example, goals might impede learning because we become too focused on achievement, we may choose the wrong type or form of goal which may impede per- formance, and we may fall prey to escalation of commitment (see the chapter on percep- tion and individual decision making) if we are not careful. If you want to maximize the extent to which goal setting is successful, recent research suggests that setting a cadence of accountability can help, and monitoring of goals can lead to more frequent goal attain- ment, especially when goal progress is publicly announced.42

INDIVIDUAL AND PROMOTION FOCI Research has found that people differ in the way they regulate their thoughts and behaviors during goal pursuit.43 Generally, people fall into one of two categories, though they can belong to both. Those with a promotion focus strive for advancement and accomplishment, and approach conditions that move them closer toward desired goals. Those with a prevention focus strive to fulfill duties and obligations, as well as avoid conditions that pull them away from desired goals. Although you would be right to note that both strategies are in the service of goal accomplishment, the way they get there is quite different. As an example, consider studying for an exam. You could engage in promotion-focused activities such as reading class materials, or you could engage in prevention-focused activities such as refraining from doing things that would get in the way of studying, such as playing video games.

You may ask, “Which is the better strategy?” Well, the answer depends on the out- come you are striving for. A promotion (but not a prevention) focus is related to higher levels of task performance, citizenship behavior, well-being, and innovation; a prevention (but not a promotion) focus is related to safety performance. Ideally, it is probably best to be both promotion and prevention oriented, depending upon the situation.44 Employees and managers should set achievable goals, remove distractions, and provide structure for these individuals.45 Furthermore, research suggests that if an individuals’ focus matches their supervisor’s, they will report higher relationship quality and be more committed to the relationship.46

GOAL-SETTING IMPLEMENTATION How do managers set goals in their organizations? That is often left up to the individual manager. Some managers set aggressive performance targets—what General Electric called “stretch goals.” For example, Motorola once sought to reduce how long it took to close their year-end books from six weeks to four days.47 Some leaders, such as the CEO of Telltale Games, are known for their demanding

Promotion focus A self-regulation strategy that involves striving for goals through advancement and accomplishment.

Prevention focus A self-regulation strategy that involves striving for goals by fulfilling duties and obligations.

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136 Part 2 • Making and Implementing Decisions

performance goals—some of which even suggest game developers to weather the “crunch,” a sudden spike in work hours that require them to work as many as 20 hours a day. But many managers do not set goals. When asked whether their jobs had clearly defined goals, a minority of respondents to a survey said yes.48

A more systematic way to utilize goal setting is with management by objectives (MBO), an initiative most popular in the 1970s but still used today.49 MBO emphasizes participatively set goals that are tangible, verifiable, and measurable. As Exhibit 7-3 shows, the organization’s overall objectives are translated into specific cascading objec- tives for each level (divisional, departmental, individual). Because lower-unit managers jointly participate in setting their own goals, MBO works from the bottom up as well as from the top down. The result is a hierarchy that links objectives at one level to those at the next.

You will find MBO programs in many organizations from different industries, and many of these have led to performance gains.50 A version of MBO, called management by objectives and results (MBOR), has been used for over thirty years in the governments of Denmark, Norway, and Sweden.51 However, the popularity of these programs does not mean they always work.52 When MBO fails, the culprits tend to be unrealistic expecta- tions, lack of commitment by top management, and inability or unwillingness to allocate rewards based on goal accomplishment.

GOAL SETTING AND ETHICS If we emphasize the attainment of goals, what is the cost? The answer is probably found in the standards we set for goal achievement. For example, when money is tied to goal attainment (e.g., getting money), we may focus on the money and become willing to compromise ourselves ethically. Moreover, a focus on the outcome (especially if the goal is difficult) may make unethical behavior more likely.53 Time pressure also increases as we are nearing a goal, which can tempt us to act unethically to achieve it.54 Goal setting can lead to unethical behavior in a different way: through depletion.55 For example, if the kitchen staff is exhausted and overloaded, they might be more prone to take shortcuts in food preparation and cleaning that put food safety in danger.

Management by objectives (MBO) A program that encompasses specific goals, participatively set, for an explicit time period and including feedback on goal progress.

Overall organizational

objectives

Divisional objectives

Departmental objectives

Individual objectives

XYZ Company

Industrial products divisionConsumer products division

Production Sales Marketing Research Development Customer service

EXHIBIT 7-3 Cascading of Objectives

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OTHER CONTEMPORARY THEORIES OF MOTIVATION

Self-determination theory and goal-setting theory are well supported contemporary theo- ries of motivation. But they are far from the only noteworthy OB theories on the subject. Self-efficacy, reinforcement, and expectancy theories reveal different aspects of our moti- vational processes and tendencies.

Self-Efficacy Theory

Self-efficacy theory, a component of social cognitive theory or social learning theory, refers to an individual’s belief of being capable of performing a task.56 For example, professional basketball players with high self-efficacy believe they can play very well. In difficult situations people with low self-efficacy are more likely to lessen their effort or give up altogether, while those with high self-efficacy will try harder to master the challenge.57

Self-efficacy can (but not always) create a positive spiral in which those with high efficacy become more engaged in their tasks and then, in turn, increase performance, which increases efficacy further.58 Intelligence and personality are linked to higher self- efficacy.59 People who are intelligent, conscientious, and emotionally stable are so much more likely to have high self-efficacy that some researchers argue self-efficacy is less important than prior research suggested.60

INFLUENCING SELF-EFFICACY IN OTHERS How can managers help their employees achieve high levels of self-efficacy? By bringing goal-setting theory and self-efficacy theory together. As Exhibit 7-4 shows, employees whose managers set difficult goals for them (and, by extension, communicate their confidence in the employees) will have a higher level of self-efficacy and set higher goals for their own performance.

Research also suggests that there are four ways to increase self-efficacy: (1) Give employees relevant experiences with the task (i.e., enactive mastery), (2) Enable them to watch someone else do the task (i.e., vicarious modeling), (3) Reassure the employees, letting them know that they have “what it takes” to do the task (i.e., verbal persuasion), and (4) Tell them to “get psyched up” (i.e., arousal)—getting energized will enable the employees to approach the task more positively (although this last step is probably not a good idea if the task is “low key,” like writing a sales report. 61

One of the best ways for a manager to use verbal persuasion is through the Pygmalion effect, a term based on the Greek myth about a sculptor (Pygmalion) who fell in love with a statue he carved. The Pygmalion effect is a form of self-fulfilling prophecy in which believing something can make it true. Here, it is often used to describe “that what one person expects can come to serve a self-fulfilling prophecy.”62 For example, if we identify those in the office with the highest leadership potential, we may treat them in such a way where they eventually become a leader.63 However, we may find leaders in unexpected places, as “diamonds in the rough”—Dov Frohman notes, “Leaders are found in the strangest places. Often the best candidates turn out to be people from outside the mainstream . . . who at first glance one would never expect would have leadership poten- tial.”64 The Pygmalion approach can be effective in the workplace, with replicable results and enhanced effects when leader–subordinate relationships are strong.65

Training programs often make use of enactive mastery by having people practice and build their skills. In fact, one reason training works is that it increases self-efficacy,

Self-efficacy An individual’s belief of being capable of performing a task.

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particularly when the training is interactive and feedback is given afterward.66 However, some research suggests that if the employee is unable to see their own improvement, then they will not experience enhanced self-efficacy.67 Regardless, individuals with higher levels of self-efficacy appear to reap more benefits from training programs and are more likely to use their training on the job.68

Reinforcement Theory

Reinforcement theory takes a behaviorist approach, arguing that reinforcement condi- tions behavior.69 Reinforcement theorists see behavior as environmentally caused. You need not be concerned, they would argue, with internal cognitive events (e.g., goal set- ting); what controls behavior are reinforcers—any consequences that, when they imme- diately follow responses, increase the probability that the behavior will be repeated. For example, when you are given a compliment for doing something at work, you might be more likely to do it again.

Reinforcement theory ignores the inner state of the individual and concentrates solely on what happens when the individual acts. Although it is not strictly a motivation theory, it does provide a powerful means of analyzing what controls behavior, and there- fore we typically consider reinforcement concepts in discussions of motivation.

OPERANT CONDITIONING/BEHAVIORISM AND REINFORCEMENT Operant conditioning suggests that people learn to behave a certain way to either get something they want or to avoid something they do not want. Operant conditioning was part of B. F. Skinner’s broader concept of behaviorism, which argues that behavior follows stimuli in a relatively unthinking manner. In short, under behaviorism people learn to associate stimulus and

Reinforcement theory A theory that behav- ior is a function of its consequences.

Behaviorism A theory that behav- ior follows stimuli in a relatively unthink- ing manner.

Individual has higher level of job

or task performance

Manager sets difficult, specific

goal for job or task

Individual sets higher personal

(self-set) goal for his or her performance

Individual has confidence that given level of performance

will be attained (self-efficacy)

EXHIBIT 7-4 Joint Effects of Goals and Self-Efficacy on Performance

Source: Based on E. A. Locke and G. P. Latham, “Building a Practically Useful Theory of Goal Setting and Task Motivation: A 35-Year Odyssey,” American Psychologist 57, no. 9 (2002): 705–17.

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response, but their conscious awareness of this association is irrelevant.70 For instance, a commissioned salesperson wanting to earn a sizable income finds doing so is contingent on generating high sales, so the salesperson sells as much as possible.

SOCIAL LEARNING THEORY Individuals can learn by observing what happens to other people, as well as through direct experience. Much of what we have learned comes from watching models—coworkers, bosses, and so forth.71 The view that we can learn through both observation and direct experience is called social learning theory.72

Social learning theory, like operant conditioning, assumes behavior is a function of consequences—but it also clarifies the effects of observation and perception. People respond to the way they perceive and define consequences, not to the objective conse- quences themselves.

Expectancy Theory

One of the most widely accepted explanations of motivation is Victor Vroom’s expectancy theory.73 Although it has critics, most evidence supports the theory.74 Expectancy theory argues that the strength of our tendency to act a certain way depends on the strength of our expectation of a given outcome and its attractiveness. In practical terms, employees will be motivated to exert a high level of effort when they believe that it will lead to a good performance appraisal, that a good appraisal will lead to organizational rewards such as salary increases and/or intrinsic rewards, and that the rewards will satisfy their personal goals. The theory, therefore, focuses on three relationships (see Exhibit 7-5).

1. Expectancy. The effort–performance relationship. The probability perceived by the individual that exerting a given amount of effort will lead to performance.

2. Instrumentality. The performance–reward relationship. The degree to which the individual believes performing at a certain level will lead to the attainment of a desired outcome.

3. Valence. The rewards–personal goals relationship. The degree to which organiza- tional rewards satisfy an individual’s personal goals or needs and the attractiveness of those potential rewards for the individual.75

Expectancy theory helps explain why a lot of workers are not motivated on their jobs and do only the minimum necessary to get by. It can also explain employees’ efforts toward goal accomplishment. For example, let us consider a work contest: the prize? An employee of the month parking spot. Some may really want this, others could not care less (valence). Maybe if the business shares a parking lot with Trader Joe’s (and is, thus, frequently crowded), this spot would be more coveted. Next, what is the contest itself? Let us say it is whoever solicits the most donations to the company charity that year.

Social learning theory The view that we can learn through both observation and direct experience.

Expectancy theory A theory that the strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractive- ness of that outcome to the individual.

Individual effort

1 2 3 Individual

performance

Effort–performance relationship Performance–reward relationship Rewards–personal goals relationship

Organizational rewards

Personal goals

1

2

3

EXHIBIT 7-5 Expectancy Theory

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If an employee puts forth the effort to elicit donations, will they actually receive donations (expectancy)? Maybe people would be more likely to donate in one-dollar increments than in fifty-dollar increments. Finally, if you do get several people to donate, how likely is it that you will win the parking spot (instrumentality)? Are there multiple parking spots up for grabs? Or just one that Avery wins every year (maybe Avery knows someone who donates a ton of money every year to this contest)? Several factors play into decisions to put forth effort, and expectancy theory suggests that these may be in part explained by valence, instrumentality, and expectancy.

ORGANIZATIONAL JUSTICE

Equity Theory

Ainsley is a student working toward a bachelor’s degree in finance. Ainsley has accepted a summer internship in the finance department at a pharmaceutical company and is pleased with the pay: twenty dollars an hour is more than other students in the cohort receive for their summer internships. At work Ainsley meets Kai, a recent graduate work- ing as a middle manager in the same finance department. Kai makes thirty dollars an hour and is dissatisfied. Specifically, Kai tells Ainsley that, compared to managers at other pharmaceutical companies, this position pays much less. “It isn’t fair. I work just as hard as they do, yet I do not make as much. Maybe I should go work for the competition?”

How could someone making thirty dollars an hour be less satisfied with their pay than someone making twenty dollars an hour and be less motivated as a result? The answer lies in equity theory and, more broadly, in principles of organizational justice.76 According to equity theory, employees compare what they get from their jobs (their out- comes such as pay, promotions, recognition, or a bigger office) to what they put into it (their inputs such as effort, experience, and education). They take the ratio of their Outcomes (O) to their Inputs (I) and compare it to the ratio of others, usually someone similar like a coworker or someone doing the same job.77 This is shown in Exhibit 7-5. If we believe our ratio is equal to those with whom we compare ourselves, a state of equity exists, and we perceive our situation as fair. However, some research suggests that inputs and outputs matter as a function of age: the older you become, the more you focus on task contributions (inputs) than what you get from them (outputs).78

Based on equity theory, employees who perceive inequity will make one of six choices:79

1. Change inputs (exert less effort if underpaid or more if overpaid). 2. Change outcomes (individuals paid on a piece-rate basis can increase their pay by

producing a higher quantity of units of lower quality). 3. Distort perceptions of self (“I used to think I worked at a moderate pace, but now

I realize I work a lot harder than everyone else”). 4. Distort perceptions of others (“Mike’s job isn’t as desirable as I thought”). 5. Choose a different referent (“I may not make as much money as my brother-in-

law, but I’m doing a lot better than my dad did when he was my age”). 6. Leave the field (quit the job).

Equity theory has support from some researchers, but not from all.80 As some examples demonstrate, it seems that some employees are more sensitive to equity, with

Equity theory A theory stating that individuals compare their job inputs and outcomes with those of others and then respond to eliminate any inequities.

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some feeling more entitled and others feeling more benevolent.81 Also, if someone feels like they are being overpaid on the job, would you expect them to give back part of their salary? Although equity theory’s propositions have not all held up, the hypothesis served as an important precursor to the study of organizational justice, or more sim- ply fairness, in the workplace.82 Organizational justice is concerned broadly with how employees feel authorities and decision makers at work treat them. Research over the past several decades consistently shows that justice is critically important for maintaining the employee–organization relationship.83 For the most part, employees evaluate how fairly they are treated, as shown in Exhibit 7-6.

Distributive Justice

Distributive justice is concerned with the fairness of outcomes, such as pay and recog- nition, that employees receive.84 Outcomes can be allocated in many ways. For exam- ple, raises can be distributed equally among employees, or they can be based on which employees need money the most. As we said in our discussion about equity theory, however, employees tend to perceive their outcomes are fairest when they are distrib- uted equitably. Distributive injustice can also occur at a broader level—for example, the black–white pay gap in the U.S. has been steadily getting larger from year to year and exists even when they share educational backgrounds and come from affluent families.85

The way we have described things so far, individuals appear to gauge distributive justice and equity in a rational, calculative way as they compare their outcome–input ratios to those of others. But the experience of justice, and especially of injustice, is often not so cold and calculated. Instead, people base distributive judgments on a feeling or an emotional reaction to the way they think they are being treated relative to others, and their reactions are often “hot” and emotional rather than cool and rational.86 For example, during the 2018 U.S. government shutdown, one TSA employee noted that while others “get to stay home, enjoy their personal time with their families, and still get paid, we have to struggle and suffer ... most of us live paycheck to paycheck and cannot afford to be unpaid and still go to work for long. It is not fair.”87

Procedural Justice

While distributive justice looks at what outcomes are allocated, procedural justice examines how.88 For one, employees perceive that procedures are fairer when they are given a say in the decision-making process or when decision makers follow several rules:

Organizational justice An overall perception of what is fair in the workplace, composed of distributive, proce- dural, informational, and interpersonal justice.

Distributive justice Perceived fairness of the amount and allocation of rewards among individuals.

Procedural justice The perceived fair- ness of the process used to determine the distribution of rewards.

Ratio Comparisons* Perception

Inequity due to being underrewarded

Equity

Inequity due to being overrewarded

*Where represents the employee and represents relevant others O I B

O I A

O IB

O IA

O IB

O IA

O IB

O IA

EXHIBIT 7-6 Equity Theory

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making decisions in a timely, consistent manner (across people and over time), avoiding bias (not favoring one group or person over another), using accurate information, consid- ering the groups or people that their decisions affect, and remaining open to appeals.89

If the process is judged to be fair, then employees are more accepting of unfavor- able outcomes.90 For example, If you are hoping for a raise and your manager informs you that you did not receive one, you will probably want to know how raises were deter- mined. If it turns out your manager allocated raises based on merit and you were simply outperformed by a coworker, then you are more likely to accept your manager’s decision than if raises were based on favoritism.

Interactional Justice

Beyond outcomes and procedures, research has shown that employees care about two other types of fairness that have to do with the way they are treated during interac- tions with others. Both of these fall within the category of interactional justice (see Exhibit 7-7).91

INFORMATIONAL JUSTICE The first type is informational justice, which reflects whether managers provide employees with explanations for key decisions and keep them informed of important organizational matters. The more detailed and candid managers are with employees, the more fairly treated those employees feel.

It may seem obvious that managers should be honest with their employees and not keep them in the dark about organizational matters; however, many managers are hesitant

Interactional justice Sensitivity to the quality of interper- sonal treatment.

Informational justice The degree to which employees are pro- vided truthful explana- tions for decisions.

Organizational Justice

Definition: overall perception of what is fair in the workplace

Example: I think this is a fair place to work.

Distributive Justice Definition: perceived fairness of outcome

Example: I got the pay raise I deserved.

Procedural Justice Definition: perceived fairness of process used to determine outcome

Example: I had input into the process used to give raises and was given a good explanation of why I received the raise I did.

Interactional Justice Definition: sensitivity to the quality of interpersonal treatment

Example: When telling me about my raise, my supervisor was very nice and complimentary.

EXHIBIT 7-7 Model of Organizational Justice

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to share information. This is especially the case with bad news, which is uncomfortable for both the manager delivering it and the employee receiving it. Explanations for bad news are beneficial when they take the form of excuses after the fact (“I know this is bad, and I wanted to give you the office, but it wasn’t my decision”) rather than justifications (“I decided to give the office to Sam, but having it isn’t a big deal”).92

INTERPERSONAL JUSTICE Interpersonal justice reflects whether employees are treated with dignity and respect. Compared to the other forms of justice, interpersonal justice is unique in that it can occur in everyday interactions between managers and employees.93 This quality allows managers to take advantage of (or miss out on) opportunities to make their employees feel fairly treated. Unfortunately, some research suggests that even when minority leaders adhere to interpersonal justice rules, they can still be treated with bias in return, as stereotypes are activated.94

Justice Outcomes

How much does justice really matter to employees? A great deal, as it turns out. When employees feel fairly treated, they respond in a number of positive ways. All the types of justice discussed in this section have been linked to higher levels of task performance and citizenship behaviors such as helping coworkers, as well as lower levels of counter- productive behaviors such as shirking job duties.95 Distributive and procedural justice are more strongly associated with task performance, while informational and interpersonal justice are more strongly associated with citizenship behavior. Even physiological out- comes, such as how well employees sleep and the state of their health, have been linked to fair treatment.96

Interestingly, your coworkers’ reactions to injustice can be just as important as your own. Research is beginning to suggest that third-party, or observer, reactions to injustice can have a substantial effect. Let us say that you read about massive, unannounced layoffs at a restaurant chain you frequent. You find out that employees were let go without any warning and were not given any assistance in finding alternative arrangements. Would you continue to go to this restaurant? Research suggests that you may not.97 People also make attributions when judging justice rule violations. Research suggests that violation of justice norms is gendered: Women are judged more harshly when they violate interac- tional norms than when they violate procedural norms.98

Despite all attempts to enhance fairness, perceived injustices are still likely to occur. Fairness is often subjective: What one person sees as unfair, another may see as per- fectly appropriate. In general, people see allocations or procedures favoring themselves as fair.99 However, if an organization is not consistent in how justly it treats its employees and employees feel like they are on a roller coaster of abuse and fair treatment, then they are more likely to become detached, cooperate less, and have lower job attitudes.100

Culture and Justice

Across nations, the same basic principles of procedural justice are respected: Workers around the world prefer rewards based on performance and skills over rewards based on seniority.101 However, inputs and outcomes are valued differently in various cultures.102

We may think of justice differences in terms of Hofstede’s cultural dimensions (see the chapter on personality and values). One large-scale study of over 190,000 employees

Interpersonal justice The degree to which employees are treated with dignity and respect.

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in thirty-two countries and regions suggested that justice perceptions are most impor- tant to people in countries with individualistic, feminine, uncertainty-avoidance, and low power-distance values.103 Indeed, research demonstrates that employees react differently (e.g., with reduced trust or effort) to perceived injustice, like abusive supervision, in dif- ferent ways depending upon their culture: Employees in Confucian societies that are high power distance tend to be less affected.104

Organizations can tailor programs to meet these justice expectations. For example, in countries that are highest in individualism, such as Australia and the United States, competitive pay plans and rewards for superior individual performance may enhance feel- ings of justice. In countries dominated by uncertainty avoidance, such as France, fixed- pay compensation and employee participation may help employees feel more secure. The dominant dimension in Sweden is femininity, so organizations may therefore want to provide work–life balance initiatives and social recognition. Austria, in contrast, has a strong low power-distance value. Ethical concerns may be foremost to individuals in perceiving justice in Austrian organizations, so organizations there may want to openly justify inequality between leaders and workers and provide symbols of ethical leadership.

JOB ENGAGEMENT

When Addison reports to work as a hospital nurse, it seems that everything else melts away. Addison becomes completely absorbed in the job: all emotions, thoughts, and behavior are all directed toward patient care. In fact, Addison can get caught up in work to the point of not even being aware of the time. As a result of this state, Addison is more effective in providing patient care and feels uplifted by the work.

Addison has a high level of job engagement, the investment of an employee’s physical, cognitive, and emotional energies into job performance.105 Practicing managers and scholars have been interested in facilitating job engagement, given that disengaged employees cost U.S. businesses up to $550 billion annually in lost productivity.106 Job engagement appears to matter for organizations, and has been found to predict higher levels of task performance and citizenship behavior.107 However, the construct is partially redundant with job attitudes like job satisfaction, organizational commitment, and job involvement.108

What makes people more likely to be engaged in their jobs? One review of over 40,000 employees suggests that apart from a proactive personality, conscientiousness, and extraversion, one key trait predicts job engagement: employees’ tendencies to expe- rience positive moods and emotions (e.g., positive affectivity; see the chapter on emo- tions and moods).109 Context factors also play a role. For example, job characteristics and access to sufficient resources to work effectively, person–organization value fit, and inspirational leadership all affect job engagement as well.110

INTEGRATING CONTEMPORARY THEORIES OF MOTIVATION

Our job might be simpler if, after presenting a half-dozen theories, we could say only one was found valid. But many of the theories in this chapter are complementary. We now tie them together to help you understand their interrelationships. Exhibit 7-8 integrates much of what we know about motivation. Its foundation is the expectancy model that

Job engagement The investment of an employee’s physical, cognitive, and emo- tional energies into job performance.

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Chapter 7 • Motivation Concepts 145

was shown in Exhibit 7-7. Let us walk through Exhibit 7-8. (We will look at job design closely in the chapter on motivation.)

We begin by explicitly recognizing that opportunities can either aid or hinder indi- vidual effort. Note that the individual effort box on the left also has another arrow leading into it, from the person’s goals. Consistent with goal-setting theory, the goals–effort loop is meant to remind us that goals direct behavior.

Expectancy theory predicts employees will exert a high level of effort if they per- ceive strong relationships between effort and performance, performance and reward, and rewards and satisfaction of personal goals. Each of these relationships is, in turn, influ- enced by other factors. For effort to lead to good performance, the individual must have the ability to perform and perceive the performance appraisal system as fair and objec- tive. The performance–reward relationship will be strong if the individual perceives that performance (rather than seniority, personal favorites, or other criteria) is rewarded. If cognitive evaluation theory were fully valid in the actual workplace, we would predict that basing rewards on performance should decrease the individual’s intrinsic motiva- tion. The final link in expectancy theory is the rewards–goals relationship. Motivation is high if the rewards for high performance satisfy the dominant needs consistent with individual goals.

A closer look at Exhibit 7-8 also reveals that the model considers achievement motivation, job design, reinforcement, and equity theories/organizational justice. A high achiever is not motivated by an organization’s assessment of performance or

Individual performance

Organizational rewards

Personal goals

Opportunity Ability Performance evaluation

criteria

High nAch

Equity comparison/ Organizational justice

Objective performance evaluation

system

Individual effort

Reinforcement Dominant needs

Goals direct behavior

Job design

O IA IB

O:

EXHIBIT 7-8 Integrating Contemporary Theories of Motivation

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146 Part 2 • Making and Implementing Decisions

organizational rewards, hence the jump from effort to personal goals for those with high nAch. Remember, high achievers are internally driven if their jobs provide them with personal responsibility, feedback, and moderate risks. They are not as concerned with the effort–performance, performance–reward, or rewards–goal linkages.

Reinforcement theory enters the model by recognizing that the organization’s rewards reinforce the individual’s performance. If employees see a reward system as “paying off” for good performance, the rewards will reinforce and encourage good per- formance. Rewards also play a key part in organizational justice research. Individuals will judge the favorability of their outcomes (for example, their pay) relative to what oth- ers receive but also with respect to how they are treated: When people are disappointed by their rewards, they are likely to be sensitive to the perceived fairness of the procedures used and the consideration given to them by their supervisors. Some modern approaches to establishing reward systems might include using fair, objective, artificial-intelligence driven processes to improve employee fairness perceptions.111

SUMMARY

Motivation describes the processes underlying how employees and other individuals in the workplace direct their efforts toward a goal. Although not well supported, many early foundational theories of motivation focused on the needs that employees have along with the consequences of need satisfaction. More contemporary theories focus on topics such as intrinsic and extrinsic motivation, setting goals in organizations, self-efficacy, reinforcement, and our expectancies. Beyond these theories, various forms of organi- zational justice, all deriving from equity theory, are important in motivating employees. Motivation is key to understanding employees’ contributions to their work, including their job engagement. Overall, motivation underlies employees exert effort to engage in performance activities, which in turn meet personal or organizational goals.

IMPLICATIONS FOR MANAGERS

• Make sure extrinsic rewards for employees are not viewed as coercive but instead provide information about competence and relatedness.

• Either set or inspire your employees to set specific, difficult goals and provide qual- ity, developmental feedback on their progress toward those goals.

• Try to align or tie employee goals to the goals of your organization. • Model the types of behaviors you would like to see performed by your employees. • Expectancy theory offers a powerful explanation of performance variables such as

employee productivity, absenteeism, and turnover. • When making decisions regarding resources in your organization, make sure to

consider how the resources are being distributed (and who is affected), the fair- ness of the decision, and whether your actions demonstrate that you respect those involved.

• Try to foster conditions that help improve job engagement and harness your em- ployees’ traits to facilitate job engagement.

Coles Coles, one of the largest supermarket chains in Australia, announced in September 2020 that 100,000 of its essential workers would receive a 1.75 percent pay rise in return for their employees’ hard work. Coles hopes that this reward will motivate employees to keep up their efforts in serving their customers. The Shops, Distributive and Allied (SDA) Employees Union commended Cole’s initiative, saying that this is an acknowledgement of the important role of the supermarkets’ staff in serving customers, especially during the COVID-19 pandemic. The SDA expressed the hope that other retailers would soon follow Coles’s example.112

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Motivation: From Concepts to Applications

8

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

8.1 Describe how the job characteristics model (JCM) motivates by changing the work environment.

8.2 Compare the main ways jobs can be redesigned.

8.3 Explain how specific alternative work arrangements can motivate employees.

8.4 Describe how employee involvement measures can motivate employees.

8.5 Demonstrate how the different types of variable-pay programs can increase employee motivation.

8.6 Show how flexible benefits turn benefits into motivators.

8.7 Identify the motivational benefits of intrinsic rewards.

MOTIVATING BY JOB DESIGN: THE JOB CHARACTERISTICS MODEL (JCM)

The way work is structured has a bigger impact on an individual’s motivation than it seems. For example, one survey of nearly 3,000 working parents (despite having children to care for) in the UK found that 78 percent were working beyond their contracted hours, mainly for workload reasons, or because it was part of the culture to work overtime.1 Commenting on the results, one manager noted that employers should “really rethink job design to tackle the problem of overworking. Parents need more human-sized jobs.”2 Indeed, there may be some truth to when an employee exclaims, “this job is (literally) killing me”—one study of over 3,000 employees over a twenty-year period found that job demands are linked to mortality, with effective job design as one way in which these negative effects are buffered.3

Job design suggests that the way elements in a job are organized can influence employee effort,4 and the model discussed next can serve as a framework to identify opportunities for changes to those elements. The job characteristics model (JCM) describes jobs in terms of five core job dimensions:5

Job design The way the ele- ments in a job are organized.

Job characteristics model (JCM) A model that proposes that any job can be described in terms of five core job dimen- sions: skill variety, task identity, task sig- nificance, autonomy, and feedback.

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148 Part 2 • Making and Implementing Decisions

1. Skill variety is the degree to which a job requires a variety of activities using dif- ferent skills or talents. The work of a garage owner–operator who does electrical repairs, rebuilds engines, does bodywork, and interacts with customers scores high on skill variety. The job of a body shop worker who sprays paint eight hours a day scores low on this dimension.

2. Task identity is the degree to which a job requires completion of a whole and identifiable piece of work. A cabinetmaker who designs furniture, selects the wood, builds the objects, and finishes them has a job that scores high on task identity. A job scoring low on this dimension is operating a lathe solely to make table legs.

3. Task significance is the degree to which a job affects the lives or work of other people. The job of a nurse helping patients in a hospital intensive care unit scores high on task significance; sweeping floors in a hospital scores low.

4. Autonomy is the degree to which a job provides the worker freedom, indepen- dence, and discretion in scheduling work and determining the procedures for car- rying it out. Sales managers who schedule their own work and tailor their sales approach to each customer without supervision have highly autonomous jobs. An account representative who is required to follow a standardized sales script with potential customers has a job low on autonomy.

5. Feedback is the degree to which carrying out work activities generates direct and clear information about your own performance. A job with high feedback would be testing and inspecting iPads. Installing components of iPads as they move down an assembly line provides low feedback.

Elements of the JCM

Exhibit 8-1 presents the JCM. Note how the first three dimensions—skill variety, task identity, and task significance—combine to create meaningful work the employee will view as worthwhile. Jobs with high autonomy give employees a feeling of respon- sibility for the outcomes of work; and feedback shows them how effectively they are performing. The more these three psychological states (e.g., meaningfulness, responsi- bility, and knowledge of results) are present, the greater will be employees’ motivation, performance, and satisfaction, and the lower their absenteeism and likelihood of leaving. As Exhibit 8-1 indicates, individuals with a high growth need are more likely to experi- ence the critical psychological states when their jobs are enriched—and respond to them more positively.

Efficacy of the JCM

Much evidence supports the relationship between the presence of these job characteris- tics and higher job satisfaction and organizational commitment through increased moti- vation.6 Furthermore, although employees have noticed that jobs are becoming more autonomous, interdependent, and require more skills than before; the relationship with job satisfaction has not changed since the 1970s, suggesting that employees still value enriched work.7 In general, research supports the JCM, although some personality and context differences exist. For example, studies suggest that the link between job charac- teristics and satisfaction are highest when employees tend to regularly experience positive moods (i.e., trait positive affect; see the chapter on emotions and moods).8 Other research

Skill variety The degree to which a job requires a variety of activities using different skills or talents.

Task identity The degree to which a job requires com- pletion of a whole and identifiable piece of work.

Task significance The degree to which a job has a substantial impact on the lives or work of other people.

Autonomy The degree to which a job provides substantial freedom and discretion to the individual in schedul- ing the work and in determining the procedures to be used in carrying it out.

Feedback The degree to which carrying out the work activities required by a job results in the individual obtain- ing direct and clear information about the effectiveness of their performance.

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has explored the JCM in unique settings such as virtual work situations, finding that if individuals work together online but not in person, their experience of meaningfulness, responsibility, and knowledge of results can suffer. 9 Thankfully, managers can mitigate these outcomes for employees by consciously developing personal relationships with them and increasing their sense of task significance, autonomy, and feedback.10

Motivating Potential Score (MPS)

We can combine the core dimensions of the JCM into a single predictive index, called the motivating potential score (MPS) and calculated as follows:

MPS = Skill + Task identity + Task significance

3 * Autonomy * Feedback

To be high on motivating potential, jobs must be high on at least one of the three factors that lead to experienced meaningfulness and high on both autonomy and feed- back. If jobs score high on motivating potential, the model predicts that motivation, per- formance, and satisfaction will improve, and that absence and turnover will be reduced. Think about your job (or one you had in the past). Could you work on different tasks, or was there more of a routine? Could you work independently, or did you constantly have a supervisor or coworker looking over your shoulder? Your answers might indicate this job’s motivating potential.

JOB REDESIGN

“Every day was the same thing,” Cameron said. “Stand on that assembly line. Wait for an instrument panel to be moved into place. Unlock the mechanism and drop the panel into the Jeep Cherokee as it moved by on the line. Then I plugged in the harnessing wires. I repeated that for eight hours a day. I don’t care that they were paying me twenty-four dollars an hour. I was going crazy. Finally, I just said this isn’t going to be the way I’m

Motivating potential score (MPS) A predictive index that reflects the motivating potential in a job.

Personal and work outcomes

Skill variety Task identity Task significance

Experienced Meaningfulness of the work

High-internal work motivation

Autonomy Experienced Responsibility for outcomes of the work

High-quality work performance

High satisfaction with the work

Feedback Knowledge of the actual results of the work activities

Low absenteeism and turnover

Core job dimensions

Critical psychological states

Employee growth- need strength

EXHIBIT 8-1 The Job Characteristics Model

Source: J. R. Hack- man and G. R. Oldham, “Devel- opment of Job Di- agnostic Survey,” Journal of Applied Psychology 60, no. 2 (1975): 159–70.

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150 Part 2 • Making and Implementing Decisions

going to spend the rest of my life. My brain was turning to JELL-O. So, I quit. Now I work in a print shop, and I make less than fifteen dollars an hour. But let me tell you, the work I do is interesting. The job changes all the time, I’m continually learning new things, and the work really challenges me! I look forward every morning to going to work again.”

The repetitive tasks in Cameron’s job at the Jeep plant provided little variety, autonomy, or motivation. In contrast, Cameron’s job in the print shop is challenging and stimulating. From an organizational perspective, the failure of Cameron’s first employer to redesign the job into a more satisfying one led to increased turnover. Redesigning jobs therefore has important practical implications—reduced turnover and increased job sat- isfaction among them.11

Furthermore, societies and organizations are looking to job design as one way to improve inclusiveness in organizations. Consider Mohsin Khan, a seventy-five-year-old aircraft repair technician. As Khan’s eyesight deteriorated, the company invested in an expensive laser-marker machine with a large screen to assist Khan in how he does his job embossing numbers on metal plates.12 Singapore is helping businesses assist and retain older employees through a job redesign grant, available since 2016.13 This grant has enabled the government and businesses to care for the needs of the aging population and provide a source of life enrichment for older workers. Let us look at other ways that jobs can be re-designed to motivate employees.

Job Rotation and Job Enrichment

JOB ROTATION If employees suffer from over-routinization of their work, one alternative is job rotation, or the periodic shifting of an employee from one task to another with similar skill requirements at the same organizational level (also called cross-training).14 One survey of millennial managers and professionals suggests that job rotation is an important aspect of modern work, with roughly 70 percent of respondents rating it as important.15 Manufacturers also use job rotation as needed to respond more flexibly to the volume of incoming orders, while also enjoying reduced boredom and increased motivation.16 It may also increase safety and reduce repetitive-based work injuries, but that is currently a topic of much study and debate, with mixed findings.17

New managers are sometimes rotated through jobs, too, to help them get a pic- ture of a whole organization.18 For these reasons, job rotation can be applied in any set- ting where cross-training is feasible, from manufacturing floors to hospital wards. At Singapore Airlines, for instance, a ticket agent may temporarily take on the duties of a baggage handler, both for cross-training and to get exposure to different aspects of the organization.19

Job rotation does have drawbacks. Training costs increase when each rotation necessitates a round of training. Second, moving a worker into a new position reduces overall productivity for that role. Third, job rotation creates disruptions when members of the work group must adjust to new employees. Fourth, supervisors may have to spend more time answering questions and monitoring the work of recently rotated employees.

JOB ENRICHMENT The major focus of self-determination theory (see the chapter on motivation concepts) can be put into action through the process of job enrichment. In job enrichment, high-level responsibilities are added to the job to increase a sense of purpose, direction, meaning, and intrinsic motivation.20 Enriching a job in this way is

Job rotation The periodic shifting of an employee from one task to another.

Job enrichment Adding high-level responsibilities to a job to increase intrin- sic motivation.

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different from enlarging it (adding more tasks and requirements). It involves adding another layer of responsibility and meaning. Job enrichment has its roots in Herzberg’s theories (see the chapter on motivation concepts) of providing hygiene, or motivating factors, to the job to increase motivation.

Early reviews suggest that job enrichment can be effective at reducing turnover, almost twice as effective as giving employees a “realistic preview” of the work before they join the organization.21 In a survey of over 20,000 British employees, job enrich- ment practices were related to organizations’ financial performance, labor productivity, absenteeism, and output quality through improvements in job satisfaction.22 Regardless of these benefits, managers who are high on openness (see the chapter on personality and values) and are in autonomous jobs themselves, tend to be more likely to design jobs that are enriching.23 Regardless of personality, managers should consider the benefits of job enrichment and work against natural inclinations to micro-manage.

Relational Job Design

While redesigning jobs based on job characteristics theory is likely to make work more intrinsically motivating, research is also exploring how to make jobs more prosocially motivating to people. In other words, how can managers design work so employees are motivated to promote the well-being of the organization’s beneficiaries (customers, cli- ents, patients, and employees)? This view, relational job design, shifts the spotlight from the employee to those whose lives are affected by the job that the employee performs.24 It also motivates individuals toward increased job performance and job satisfaction, espe- cially when coupled with autonomy.25

One way to make jobs more prosocially motivating is to connect employees more closely with the beneficiaries of their work by relating stories from customers who have found the company’s products or services to be helpful. For example, researchers found that when university fundraisers briefly interacted with the undergraduates who would receive the scholarship money they raised, they persisted 42 percent longer and raised nearly twice as much money as those who did not interact with potential recipients.26 The positive impact was apparent even when fundraisers met with just a single scholarship recipient.

ALTERNATIVE WORK ARRANGEMENTS

Another approach to motivation is to consider alternative work arrangements such as flextime, job sharing, and telecommuting.27 These are likely to be especially important for a diverse workforce of dual-earner couples, single parents, and employees caring for a sick or aging relative. For example, flextime and telework can help women continue to advance their careers after childbirth.28

Flextime

Jim Ware, founder of Focus Consulting Group, notes that “if you’re trying to build a first-rate culture that attracts and retains people, you better make sure you get the rewards piece right and part of that is autonomy.”29 Flexibility is a key, attractive benefit that orga- nizations can offer employees that helps make life easier for employees.30 For example, Polen Capital Management institute doubled its workforce in three years after instituting a flextime, or “flexible work time,” policy.31

Relational job design Constructing jobs so employees see the positive difference they can make in the lives of others directly through their work.

Flextime Flexible work hours.

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In one arrangement, flextime employees work a specific number of hours per week but may vary their hours of work within limits. As in Exhibit 8-2, each day consists of a common core, usually six hours, with a flexibility band surrounding it. The core may be 9:00 a.m. to 3:00 p.m., with the office opening at 6:00 a.m. and closing at 6:00 p.m. Employees should be at their jobs during the common core period, but they may accu- mulate their other two hours around that. Some flextime programs allow employees to accumulate extra hours and turn them into days off. Some, like the Sterling-Rice Group, even allow employees to craft the nature of flexible work: they propose, after being hired, how, when and where they would like to complete the work and adjust accordingly as they work.32

Flextime has become extremely popular. According to recent surveys, a majority (57 percent) of U.S. organizations offer some form of f lextime33—and reap benefits from it as well. Thirty-three percent of organizations report an increase in participation, and 23 percent indicate an increase in productivity (conversely, 5 percent or less indi- cated a decrease in participation and productivity).34 It appears as if f lextime has become an important job design element for many employees—53 percent of employees cite

Schedule 1 Percent Time: 100% = 40 hours per week Core Hours: 9:00 A.M.–5:00 P.M., Monday through Friday

(1-hour lunch) Work Start Time: Between 8:00 A.M. and 9:00 A.M. Work End Time: Between 5:00 P.M. and 6:00 P.M.

Schedule 2 Percent Time: 100% = 40 hours per week Work Hours: 8:00 A.M.–6:30 P.M., Monday through Thursday

(1/2-hour lunch) Friday off

Work Start Time: 8:00 A.M. Work End Time: 6:30 P.M.

Schedule 3 Percent Time: 90% = 36 hours per week Work Hours: 8:30 A.M.–5:00 P.M., Monday through Thursday

(1/2-hour lunch) 8:00 A.M.–Noon, Friday (no lunch)

Work Start Time: 8:30 A.M. (Monday–Thursday); 8:00 A.M. (Friday) Work End Time: 5:00 P.M. (Monday–Thursday); Noon (Friday)

Schedule 4 Percent Time: 80% = 32 hours per week

8:00 A.M.–6:00 P.M., Monday through Wednesday (1/2-hour lunch)

Work Hours:

8:00 A.M.–11:30 A.M. Thursday (no lunch) Friday off

Work Start Time: Between 8:00 A.M. and 9:00 A.M. Work End Time: Between 5:00 P.M. and 6:00 P.M.

EXHIBIT 8-2 Possible Flextime Staff Schedules

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f lexible arrangements as a very important aspect of their job satisfaction, 55 percent of employees were unlikely to seek job opportunities elsewhere within the year, and 34 percent stated that they would remain with their current employer because of f lexible arrangements.35 In countries such as Germany, Belgium, the Netherlands, and France, by law employers are not allowed to refuse an employee’s request for either a part-time or a f lexible work schedule as long as the request is reasonable, such as to care for an infant child.36

Most of the evidence for flextime stacks up favorably. One review of over forty studies suggests that flextime is related to positive work outcomes in general, but only weakly—the effects are much stronger when considering reductions in absenteeism and, to a lesser degree, improvements in productivity and schedule satisfaction.37 Much less promising, the empirical evidence from over 100,000 employees suggests that although flextime is weakly effective at reducing the extent to which work interferes with family, it does not affect situations in which family interferes with work.38

However, flextime’s effects on work–life balance are more nuanced than they might appear. For example, two studies of German employees suggest that, although flextime leads employees to set stronger work–life boundaries (which in turn makes them happier), these boundaries are not truly “set” unless the employees complete their daily goals at work.39 Flextime’s major drawback is that it is not applicable to every job or every worker; for example, some research suggests both young, healthy employees and older, unhealthy employees benefit the most from flextime.40 It also appears that people who have a strong desire to separate their work and family lives are less apt to use flex- time.41 Those who ask for it are often stigmatized, which may be avoided if the majority of the organization’s leaders adopt flexible hours to signal that flextime is acceptable.42

Job Sharing

Job sharing allows two or more individuals to split a traditional full-time job. One employee might perform the job from 8:00 a.m. to noon, perhaps, and the other from 1:00 p.m. to 5:00 p.m., or the two could work full but alternate days. For example, actor- puppeteers Lizzie Wort and Ruth Calkin are now able to tour Britain doing what they love: performing as the Twirlywoos, puppets from a popular UK children’s TV program.43 This is now possible due to a theatre job share arrangement, which has the “potential to revolutionize” how actors approach touring, and “open up possibilities . . . for performers with children.”44

Only 18 percent of U.S. organizations offered job sharing in 2014, a 29 percent decrease since 2008.45 Reasons it is not more widely adopted include the difficulty of finding compatible partners to job share and the historically negative perceptions of job share individuals as not completely committed to their jobs and employers. However, eliminating job sharing for these reasons might be short-sighted. Job sharing allows an organization to draw on the talents of more than one individual for a given job. It opens the opportunity to acquire skilled workers—for instance, parents with young children and retirees—who might not be available on a full-time basis. From employees’ perspectives, job sharing can increase motivation and satisfaction if they can work when they would not normally be able to do so.

An employer’s decision to use job sharing is often based on policy and finan- cial reasons. Two part-time employees sharing a job can be less expensive in terms of

Job sharing An arrangement that allows two or more individuals to split a traditional full-time job.

Belgium Under Belgian law, the working day is limited to 11 hours and a maximum of 50 hours per week. Many Belgian companies operate f lexi-time arrangements. All employees are present during “block time” (usually 08.30 to 11.30 and 13.30 to 16.00). Employees can then make up their required hours by starting earlier than the block time, reducing the time they take for lunch, or work extra hours after the block time.

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salary and benefits than one full-timer, but this may not be the case because training, coordination, and administrative costs can still be high. Ideally, employers should consider each employee and job separately, seeking to match the skills, personality, and needs of the employee with the tasks required for the job and considering that individual’s motivating factors.

Telecommuting

With the COVID-19 pandemic of 2020, working from home might be the “new nor- mal.”46 During this time, a large portion of the nearly 9,000 employees from the Gallup panel indicated that they were working from home during the pandemic, especially those of middle to upper class backgrounds.47 Furthermore, a Gartner survey suggested that 74 percent of the executives surveyed would keep at least a portion of their work force remote after the pandemic.48

Although people rarely had a choice in the matter during the COVID-19 pandemic, is working from home effective? Do employees like working from home? For some, it might be close to the ideal job: no rush hour traffic, flexible hours, freedom to dress as you please, and few interruptions. Telecommuting refers to working at home—or anywhere else the employee chooses that is outside the workplace—at least two days a week on a computer linked to the employer’s office.49 (A closely related concept— working from a virtual office—describes working outside the workplace on a relatively permanent basis.)

Telecommuting has several benefits. It increases performance and job satisfaction (especially for complex, independent jobs, with low social interaction requirements); to a lesser degree, it reduces role stress and turnover intentions.50 Employees who work virtually more than 2.5 days a week tend to experience the benefits of reductions in work–family conflict more intensely than those who are in the office the majority of their workweek.51 Beyond the benefits to organizations and their employees, telecom- muting has potential benefits to society. One study estimated that if people in the United States telecommuted half the time, carbon emissions would be reduced by approximately fifty-one metric tons per year. Environmental savings could come from lower office energy consumption, fewer traffic jams that emit greenhouse gases, and a reduced need for road repairs.52

From the employee’s standpoint, telecommuting can increase feelings of isolation and reduce job satisfaction and coworker relationship quality.53 On the other hand, it can help you “get away from them all” if your working situation is emotionally exhausting.54 Research indicates that if you are forced to work from home, although you may experi- ence less work–family conflict in general, you might still experience it if you work hours beyond the contracted workweek and are constantly “on call.”55 Telecommuters are also vulnerable to the “out of sight, out of mind” effect: Employees who are not at their desks, miss impromptu meetings in the office, and do not share in day-to-day informal workplace interactions may be at a disadvantage when it comes to raises and promotions because they are perceived as not putting in the requisite face time unless telework is the norm with the organization, there is still common contact with the supervisor, and it is clear that the employee is working (e.g., they have a heavy workload and are productive).56

If telecommuting is here to stay, what can employees and employers do to ensure the arrangements are effective? Apart from ensuring the arrangement is right for the

Telecommuting Working from home at least two days a week through virtual devices that are linked to the employer’s office.

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position (as described above),57 self-leadership, including proactive, goal-setting, and personal performance management are related to success in telework.58 Further, using smart collaboration tools, communicating frequently, clear and transparent policies, and building trust among virtual team members can help improve the effectiveness of tele- work for the whole team.59

EMPLOYEE INVOLVEMENT

Employee involvement and participation (EIP)60 is a process that uses employees’ input to increase their commitment to organizational success. If workers are engaged in decisions that increase their autonomy and control over their work lives, they will become more motivated, committed to the organization, productive, and satisfied with their jobs (and less likely to leave their jobs).61 These benefits do not stop with individuals—when teams are given more control over their work, morale and performance increase as well.62

Cultural EIP

To be successful, EIP programs should be tailored to local and national norms.63 A study of four countries, including India and the United States, confirmed the importance of modifying practices to reflect national culture.64 While U.S. employees readily accepted EIP programs, managers in India who tried to empower their employees were rated low by those employees. These reactions are consistent with India’s high power-distance cul- ture, which accepts and expects differences in authority. The work culture in India may not be in as much transition as it is in China, in which some employees are becoming less high power-distance oriented. In one study, Chinese workers who were very accept- ing of traditional Chinese cultural values showed few benefits from participative deci- sion making. However, Chinese workers who were less traditional were more satisfied and had higher performance ratings under participative management.65 These differences within China may well reflect the current transitional nature of that culture. Research in urban China indicated that some EIP programs, namely, those that favor consultation and expression but not participation in decision making, yielded higher job satisfaction.66

Examples of Employee Involvement Programs

Let’s look at two major forms of employee involvement—participative management and representative participation—in more detail.

PARTICIPATIVE MANAGEMENT Common to all participative management programs is joint decision making, in which subordinates share a significant degree of decision- making power with their immediate superiors.67 This sharing can occur either formally through, say, briefings or surveys, or informally through daily consultations, as a way to enhance motivation through trust and commitment.68 For example, emergency medical service staff can meet to provide improvement opportunities based on their medical specialty areas—improvements to the process that can literally save lives.69 Participative management has, at times, been considered a panacea for poor morale and low productivity—indeed, evidence suggests that participative management reduces the negative effects of job insecurity on satisfaction and turnover intentions.70 For participative management to be effective, followers must have trust and confidence in

Employee involvement and participation (EIP) A participative process that uses the input of employees to increase employee commitment to orga- nizational success.

Participative management A process in which subordinates share a significant degree of decision-making power with their immediate superiors.

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their leaders and be prepared for the change in management style, whereas leaders should avoid coercive techniques, stress the organizational consequences of decision making to their followers, and review progress periodically.71

Studies of the participation–performance relationship have yielded mixed find- ings.72 Organizations that institute participative management may realize higher stock returns, lower turnover rates, and higher labor productivity, although these effects are typically not large.73

REPRESENTATIVE PARTICIPATION Most countries in western Europe require companies to practice representative participation.74 Representative participation redistributes power within an organization, putting labor’s interests on a more equal footing with the interests of management and stockholders by including a small group of employees as participants in decision making. In the United Kingdom, Ireland, Australia, and New Zealand, representative participation was originally the only EIP program; it was formed to allow employee representatives to discuss issues outside union agreements and the representatives were all from the union. However, representative groups are now increasingly a mix of union and non-union, or separate from the union arrangement.75

The two most common forms of representation are works councils and board rep- resentatives. Works councils are groups of nominated or elected employees who must be consulted when management makes decisions about employees. Board representa- tives are employees who sit on a company’s board of directors and represent employees’ interests.

The influence of representative participation on working employees seems to be mixed, but generally employees would need to feel that their interests were well repre- sented and make a difference to the organization for motivation to increase.

USING EXTRINSIC REWARDS TO MOTIVATE EMPLOYEES

As we saw in the chapter on attitudes and job satisfaction, pay is not the only factor driving job satisfaction. However, it does motivate people, and companies often underes- timate its importance. Although not as important as enjoyment of one’s work and the job fitting well with other areas of an employee’s life, approximately 60 percent of respon- dents to an American Psychological Association survey indicated that they were staying with their current employer because of the pay and benefits.76

In this section, we consider (1) how much employees should be paid (establishing a pay structure), and (2) how to pay individual employees (through variable-pay plans).

What to Pay: Establishing a Pay Structure

There are many ways to pay employees. The process of initially setting pay levels entails balancing internal equity—the worth of the job to the organization (usually established through a technical process called job evaluation), and external equity—the competitive- ness of an organization’s pay relative to pay in its industry (usually established through pay surveys). Obviously, the best pay system reflects what the job is worth, while also staying competitive relative to the labor market.

Pay more, and you may get better-qualified, more highly motivated employees who will stay with the organization longer, and perhaps be more likely to perform and

Representative participation A system in which workers participate in organizational decision making through a small group of representative employees.

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innovate.77 A study covering 126 large organizations found employees who believed they were receiving a competitive pay level had higher morale and were more productive, and customers were more satisfied as well.78 But pay is often the highest single operat- ing cost for an organization, which means paying too much can make the organization’s products or services too expensive. Furthermore, the salience of money may even moti- vate employees toward self-serving behavior. For example, one study of NHL and NBA players found that during the final contract year, players engage in more self-serving behaviors while in play.79 It’s a strategic decision an organization must make, with clear trade-offs.

In the case of Walmart, it appears that its strategic decision on pay did not work. While annual growth in U.S. stores slowed to around 1 percent in 2011, one of Walmart’s larger competitors, Costco, grew around 8 percent. The average worker at Costco made approximately $45,000, compared to approximately $17,500 for the average worker at Walmart-owned Sam’s Club. Costco’s strategy was that it will get more if it pays more— and higher wages resulted in increased employee productivity and reduced turnover. Given the subsequent Walmart decision to increase worker wages throughout the organi- zation, perhaps its executives agree.80

How to Pay: Rewarding Individual Employees Through Variable-Pay Programs

“Why should I put any extra effort into this job?” asked Anne, a fourth-grade elemen- tary schoolteacher in Denver, Colorado. “I can excel, or I can do the bare minimum. It makes no difference. I get paid the same. Why do anything above the minimum to get by?” Comments like Anne’s have been voiced by schoolteachers for decades because pay increases were tied to seniority. Recently, however, many states have altered their compensation systems to motivate teachers by linking pay to results in the classroom, and other states are considering such programs.81

Piece rate, merit based, bonus, profit sharing, and employee stock ownership plans are all forms of a variable-pay program (also known as pay-for-performance), which bases a portion of an employee’s pay on some individual and/or organizational measure of performance.82 The variable portion may be all or part of the paycheck, and it may be paid annually or upon attainment of benchmarks. It can also be either optional for the employee or an accepted condition of employment.83 Globally, around 84 percent of companies offer some form of variable-pay plan.84 Variable-pay plans have long been used to compensate salespeople and executives, but the scope of variable-pay jobs has broadened.

Not all employees see a strong connection between pay and performance, although it seems that the type of plan matters. As we stated, teacher pay-for-performance plans are starting to be used more frequently, particularly those that are based on student test scores. Recent research on thousands of teachers in the United States has shown that these programs (1) are not having a positive impact on teacher motivation or teaching practices and (2) have actually led to higher levels of stress, along with counterproduc- tive work behaviors such as cheating and even bullying of students to perform better on tests.85 A similar effect has been found in other workplaces: When managers are sub- ject to pay-for-performance, it leads to employer–employee relationship strain and can increase employee turnover.86 Employees in these situations may also compete with their

Variable-pay program A pay plan that bases a portion of an employee’s pay on some individual and/or organiza- tional measure of performance.

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coworkers, and may actively try to harm one another.87 Also, some employees react more negatively to pay-for-performance. For example, employees with disabilities in Britain tend to react more negatively to pay-for-performance than others.88

The results of pay-for-performance plans vary by several conditions. For instance, group-based pay-for-performance plans may have a strong positive effect on organiza- tional performance, but they may only be effective in stable economic environments and in organizations that have fair policies.89 On the other hand, research in Canada indicated that variable-pay plans increase job satisfaction only if employee effort is rewarded as well as performance.90 There are cultural differences as well: when guanxi (e.g., specific, personal connections between subordinates, supervisors, and coworkers) plays a role in human resources (HR) practices, pay-for-performance plans tend to be less effective.91

Secrecy also plays a role in the motivational success of variable-pay plans. In some government and not-for-profit agencies, pay amounts are either specifically or generally made public, but most U.S. organizations encourage or require pay secrecy.92 Is this good or bad? Unfortunately, it is bad: Pay secrecy has a detrimental effect on job performance. Even worse, it adversely affects high performers more than other employees. It very likely increases employees’ perception that pay is subjective, which can be demotivating. Individual pay amounts may not need to be broadcast to restore the balance, if general pay categories are made public and employees feel variable pay is linked objectively to their performance, the motivational effects of variable pay can be retained.93

PIECE-RATE PAY The piece-rate pay plan has long been popular as a means of compensating production workers with a fixed sum for each unit of production completed, but it can be used in any organizational setting where the outputs are similar enough to be evaluated by quantity.94 A pure piece-rate plan provides no base salary and pays the employee only for what they produce. Ballpark workers selling peanuts and soda are frequently paid piece-rate. If they sell forty bags of peanuts at one dollar each for their earnings, their take is forty dollars. The more peanuts they sell, the more they earn. Alternatively, piece-rate plans are sometimes distributed to sales teams, so a ballpark worker makes money on a portion of the total number of bags of peanuts sold by the group during a game.

Piece-rate plans are known to produce higher effort, productivity and wages, so they can be attractive to organizations and motivating for workers.95 In fact, one major Chinese university increased its piece-rate pay for articles by professors and realized 50 percent increased research productivity.96 The chief concern of both individual and team piece-rate workers is financial risk. A recent experiment in Germany found that 68 percent of risk-averse (see the chapter on perception and individual decision making) individuals prefer an individual piece-rate system and that lower performers prefer team piece-rate pay. Why? The authors suggested risk-averse and high-performing individu- als would rather take their chances on pay based on what they can control (their own work) because they are concerned others will slack off in a team setting.97 What about using both? Recent work suggests that doing so might address the limitations of using either in isolation: across more than 22,000 European establishments, using both plans (combined with an EIP approach like described earlier) led to stark increases in employee innovation.98

Organizations, on the other hand, should verify that their piece-rate plans are indeed motivating to individuals. European research has suggested that when the pace of work is determined by uncontrollable outside factors such as customer requests, rather

Piece-rate pay plan A pay plan in which workers are paid a fixed sum for each unit of production completed.

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than internal factors such as coworkers, targets, and machines, a piece-rate plan is not motivating.99 Either way, managers must be mindful of the motivation for workers to decrease quality in order to increase their speed of output.

MERIT-BASED PAY A merit-based pay plan pays for individual performance based on performance appraisal ratings.100 If designed correctly, merit-based plans let individuals perceive a strong relationship between their performance and their rewards.101

Most large organizations have merit-based pay plans, especially for salaried employees. Merit pay is slowly taking hold in the public sector. For example, New York City’s public hospital system pays doctors based on how well they reduce costs, increase patient satisfaction, and improve the quality of care.102A move away from merit pay, on the other hand, is coming from some organizations that do not feel it separates high and low performers enough. When the annual review and raise are months away, the motivation of this reward for high performers diminishes. Even companies that have retained merit pay are rethinking the allocation.103 However, some data from a service- related organization suggests that when merit pay and bonuses are used in tandem, merit raises tend to be most effective at increasing job performance and preventing turnover— although bonuses may affect future performance to a larger extent.104

Despite their intuitive appeal, merit-based pay plans have several limitations. One is that they are typically based on an annual performance appraisal and thus are only as valid as the performance ratings, which are often subjective. This brings up issues of discrimination, as we discussed in the chapter on diversity in organizations. Research indicates that black employees receive lower performance ratings than white employees, women’s ratings are higher than men’s, and there are demographic differences in the dis- tribution of salary increases, even with all other factors being equal.105 Another limitation is that the pay-raise pool of available funds fluctuates on economic or other conditions that have little to do with individual performance. Lastly, unions typically resist merit- based pay plans. For example, relatively few U.S. teachers are covered by merit pay for this reason. Instead, seniority-based pay, which gives all employees the same raises, predominates.

BONUS An annual bonus is a significant component of total compensation for many jobs.106 Once reserved for upper management, bonus plans are now routinely offered to employees in all levels of the organization. The incentive effects should be higher than those of merit pay because rather than paying for previous performance now rolled into base pay, bonuses reward recent performance (merit pay is cumulative, but the increases are generally much smaller than bonus amounts). When times are bad, firms can cut bonuses to reduce compensation costs. Firms may even cut executive bonuses when in the face of scandal, often to signal to shareholders that they are taking the scandal seriously and working to address the situation.107

Bonus plans have a clear upside: They are motivating for workers. As an example, a recent study in India found that when a higher percentage of overall pay was reserved for the potential bonuses of managers and employees, productivity increased.108 This exam- ple also highlights the downside of bonuses: They leave employees’ pay more vulnerable to cuts. This is problematic, especially when employees depend on bonuses or take them for granted. “People have begun to live as if bonuses were not bonuses at all but part of their expected annual income,” said Jay Lorsch, a Harvard Business School professor.

Merit-based pay plan A pay plan based on performance appraisal ratings.

Bonus A pay plan that rewards employees for recent performance rather than historical performance.

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PROFIT-SHARING PLAN A profit-sharing plan distributes compensation based on some established formula designed around a company’s profitability.109 Compensation can be direct cash outlays or, particularly for top managers, allocations of stock options. When you read about executives like Mark Zuckerberg, who accepts an absurdly modest one-dollar salary, remember that many executives are granted generous stock options. In fact, Zuckerberg made as much as $8.8 million in 2017 after considering other income.110 Of course, most profit-sharing plans are not so grand in scale. For example, Fiat Chrysler automobile workers averaged $7,280 in profit-sharing income in 2019.111

Studies generally support the idea that organizations with profit-sharing plans have higher levels of profitability than those without them.112 These plans have also been linked to higher levels of employee commitment, especially in small organiza- tions.113 Profit sharing at the organizational level appears to have positive impacts on employee attitudes: Employees report a greater feeling of psychological ownership.114 Recent research indicates that profit-sharing plans motivate individuals to higher job per- formance when they are used in combination with other pay-for-performance plans.115 Obviously, profit sharing does not work when there is no reported profit per se, such as in nonprofit organizations, or often in the public sector.

EMPLOYEE STOCK OWNERSHIP PLAN An employee stock ownership plan (ESOP) is a company-established benefit plan in which employees acquire stock, often at below- market prices, as part of their benefits.116 Research on ESOPs indicates they increase firm performance as well as employee innovation and organizational identification.117 ESOPs have the potential to increase job satisfaction, but only when employees psychologically experience ownership.118 Even so, ESOPs may not inspire lower absenteeism or greater motivation,119 and may also lead managers to allocate money in a way that maximizes managerial payoffs in either the long or short run, perhaps because the employee’s actual monetary benefit comes with cashing in the stock at a later date.120 Relatedly, in a study of nearly three thousand Chinese firms, ESOPs were not as strongly related with firm performance when combined with executive stock ownership plans and when employees had no control rights (e.g., no “say” in the management of the business).121 Furthermore, a study of nearly two thousand European firms suggested that the stock-ownership predicts return-on-investment only when the employees trusted the managers and were culturally low on uncertainty avoidance (see the chapter on personality and values ).122 Thus, employees need to be kept regularly informed of the status of the business and can positively influence it in order to feel motivated toward higher personal performance.123

USING BENEFITS TO MOTIVATE EMPLOYEES

Like pay, benefits are both a provision and a motivator. Consistent with expectancy theo- ry’s thesis that organizational rewards should be linked to each employee’s goals, flexible benefits individualize rewards by allowing each employee to choose the compensation package that best satisfies their own current needs and situation. Flexible benefits can accommodate differences in employee needs based on age, marital status, partner’s ben- efit status, and number and age of dependents.

Benefits in general can be a motivator for a person to go to work, and for a person to choose one organization over another. But are flexible benefits more motivating than traditional plans? It is difficult to tell. Some organizations that have moved to flexible

Profit-sharing plan An organization- wide program that distributes com- pensation based on some established formula designed around a company’s profitability.

Employee stock ownership plan (ESOP) A company-estab- lished benefits plan in which employees acquire stock, often at below-market prices, as part of their benefits.

Flexible benefits A benefits plan that allows each employee to put together a benefits package individually tailored to their own needs and situation.

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plans report increased employee retention, job satisfaction, and productivity. However, flexible benefits may not substitute for higher salaries when it comes to motivation.124 As more organizations worldwide adopt flexible benefits, the individual motivation they produce will likely decrease (the plans will be seen as a standard work provision). The downsides of flexible benefit plans may be obvious: They may be costlier to manage and identifying the motivational impact of different provisions is challenging.

USING INTRINSIC REWARDS TO MOTIVATE EMPLOYEES

We have discussed motivating employees through job design and by the extrinsic rewards of pay and benefits. On an organizational level, are those the only ways to motivate employees? Not at all! We would be remiss if we overlooked intrinsic rewards organiza- tions can provide, such as employee recognition programs.

Employee Recognition Programs

Let us start with an example. Dakota makes nine dollars per hour working at a fast-food job in Pensacola, Florida, and the job is not very challenging or interesting. Yet Dakota talks enthusiastically about the job, the boss, and the company Dakota works for. “What I like is the fact that Carroll [the supervisor] appreciates the effort I make. Carroll com- pliments me regularly in front of the other people on my shift, and I’ve been chosen as Employee of the Month twice in the past six months. Did you see my picture on that plaque on the wall?”

Organizations are increasingly realizing what Dakota knows: Recognition pro- grams increase an employee’s intrinsic motivation. An employee recognition program is a plan to encourage specific behaviors by formally appreciating specific employee contributions.125 Employee recognition programs range from a spontaneous and private thank-you to widely publicized formal programs in which the procedures for attaining recognition are clearly identified.

As companies and government organizations face tighter budgets, non financial incentives become more attractive. Everett Clinic in Washington State uses a combina- tion of local and centralized initiatives to encourage managers to recognize employees.126 Employees and managers give “Hero Grams” and “Caught in the Act” cards to colleagues for exceptional accomplishments at work. Part of the incentive is simply to receive rec- ognition, but there are also drawings for prizes based on the number of cards a person receives. Multinational corporations like Symantec Corporation, Intuit, and Panduit have also increased their use of recognition programs. Symantec, which had employees in 280 locations across fifty countries, claims it increased engagement 14 percent in less than a year due to the Applause recognition program administered by Globoforce, a corporation that implements employee recognition programs.127 Centralized programs across multiple offices in different countries can help ensure that all employees, regardless of where they work, can be recognized for their contribution to the work environment.128

Research suggests financial incentives may be more motivating in the short term, but in the long run nonfinancial incentives work best.129 Surprisingly, there is not a lot of research on the motivational outcomes or global usage of employee recognition pro- grams. However, studies indicated that employee recognition programs are associated with self-esteem, self-efficacy, and job satisfaction.130

Employee recognition program A plan to encourage specific employee behaviors by formally appreciating specific employee contributions.

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An obvious advantage of recognition programs is that they are inexpensive: Praise is free!131 With or without financial rewards, they can be highly motivating to employees. Despite the increased popularity of such programs, though, critics argue they are highly susceptible to political manipulation by management. When applied to jobs for which performance factors are relatively objective, such as sales, recognition programs are likely to be perceived by employees as fair. In most jobs, however, performance criteria are not self-evident, which allows managers to manipulate the system and recognize their favorites. Abuse can undermine the value of recognition programs, demoralize employ- ees, and even cause the person recognized to be ostracized. As one study in a northern Chinese manufacturing company showed, once a top performer was recognized, other members of the team whose contributions were not recognized may begin to distance themselves from that member.132 These members may have unfair procedural justice per- ceptions (see the chapter on motivation concepts) and begin to ostracize that employee as a result. Therefore, where formal recognition programs are used, care must be taken to ensure fairness. Where they are not, it is important to motivate employees by consistently recognizing their performance efforts.

SUMMARY

As we have seen in the chapter, understanding what motivates individuals is ultimately key to organizational performance. Employees whose differences are recognized, who feel valued, and who can work in jobs tailored to their strengths and interests will be moti- vated to perform at the highest levels. Employee participation can also increase employee productivity, commitment to work goals, motivation, and job satisfaction. However, we cannot overlook the powerful role of organizational rewards in influencing motivation. Pay, benefits, and intrinsic rewards must be carefully and thoughtfully designed in order to enhance employee motivation.

IMPLICATIONS FOR MANAGERS

• Recognize individual differences. Spend the time necessary to understand what is important to each employee. Design jobs to align with individual needs to maxi- mize their motivation potential.

• Use goals and feedback. You should give employees firm, specific goals, and em- ployees should get feedback on how well they are faring in pursuit of those goals.

• Allow employees to participate in decisions that affect them. Employees can con- tribute to setting work goals, choosing their own benefits packages, and solving productivity and quality problems.

• Link rewards to performance. Rewards should be contingent on performance, and employees must perceive the link between the two.

• Check the system for equity. Employees should perceive that individual effort and outcomes explain differences in pay and other rewards.

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163

PART 3 Communicating in Groups and Teams

Foundations of Group Behavior 9

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

9.1 Distinguish between the different types of groups.

9.2 Describe the punctuated equilibrium model of group development.

9.3 Show how role requirements change in different situations.

9.4 Demonstrate how norms exert influence on an individual’s behavior.

9.5 Show how status and size differences affect group performance.

9.6 Describe how issues of cohesiveness and diversity can be integrated for group effectiveness.

9.7 Contrast the strengths and weaknesses of group decision making.

DEFINING AND CLASSIFYING GROUPS

In organizational behavior (OB), a group consists of two or more individuals, inter- acting and interdependent, who have come together to achieve certain objectives. For example, consider a sales group from a regional office of a large insurance com- pany: The group is responsible for selling insurance to local citizens, each person on the team has come together to sell insurance for their organization.1 We belong to many groups throughout our lifetime, but some are more salient than others at certain times, and some group roles can even conf lict (e.g., being a parent and a manager).2

Groups can be either formal or informal. A formal group is defined by the organization’s structure, with designated work assignments and established tasks. In formal groups, the behaviors members should engage in are stipulated by and directed toward organizational goals. The six members of an airline f light crew are a formal group, for example. In contrast, an informal group is neither formally structured nor organizationally determined, and often meets to fulfills social needs or to bind employees with common interests. Three employees from different depart- ments who regularly have lunch or coffee together are an informal group. These types of interactions among individuals, though informal, deeply affect their behavior and performance.

Group Two or more indi- viduals, interacting and interdependent, who have come together to achieve certain objectives.

Formal group A designated work group defined by an organization’s structure.

Informal group A group that is not defined by an orga- nization’s structure; such a group appears in response to other needs, such as social clubs or interest groups.

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164 Part 3 • Communicating in Groups and Teams

Social Identity

People often feel strongly about their groups, partly because shared experiences amplify our perception of events, and can increase our sense of a bond and trust toward others.3 For example, consider Tom’s Marine Sales, a local business in Crawfordsville, Indiana.4 Celebrating their fiftieth anniversary, the company threw a party with their closest friends and employees in attendance. The employees not only appreciate the history of the com- pany and identify with its successes and losses (including the loss of Tom’s wife and co-founder, Joy), but also identify as a part of the Crawfordsville community. In fact, the mayor and county commissioners were on hand to present Tom’s with a plaque to commemorate their service to the community. Our tendency to personally invest in the accomplishments of a group can be explained by social identity theory.

Social identity theory proposes that people have emotional reactions to the failure or success of their group because their self-esteem gets tied to whatever happens to the group.5 Employees might feel proud of the company’s successes, angry and threatened when the company is threatened, or even schadenfreude (i.e., pleasure due to another’s misfortune) when competitors suffer.6 Wendy’s social media group, for example, har- nesses these emotions with Twitter “roasting wars” with fast food rivals (sassy put-downs of other companies and their products).7 Twitter fans and employees of Wendy’s, alike, feel especially proud and identify with when Wendy’s “burns” a competitor. One of our colleagues knew someone who identified so much with Wendy’s that he had a poster of Wendy’s in his room and would get furiously angry when anyone tried to say that other fast food restaurants are better!

Within our organizations and work groups, we can develop many identities through (1) relational identification, when we connect with others because of our roles, and (2) collective identification, when we connect with the aggregate characteristics of our groups. In the workplace, our identification with our workgroups is often stronger than with our organizations, but both are important to positive outcomes in attitudes and behaviors.8 If we have low identification with both our work groups and organizations, we may experience decreased satisfaction and engage in fewer organizational citizenship behaviors (OCBs; see Chapter 1: What Is Organizational Behavior?).9 Immigrant work- ers, for example, often experience strained and threatened identities when they do not have inclusive, supportive supervisors or when they do not feel like they are a part of the local community. This often leads to high turnover rates for immigrants and migrants.10 Even the words leaders use matter—when CEOs use “we” or “us” language (instead of “I” language), this signals to employees and stakeholders alike that they are a part of a group. One study of German organizations spanning sixteen years found that use of col- lective language was correlated with increased sales and return-on-investment.11

Ingroups and Outgroups

An ingroup consists of the members of a group we belong to. We tend to “play favorites” or see our ingroup as better than other people.12 Favoritism can influence discrimina- tion and prejudice in the workplace. For example, some research suggests that favoritism and not hostility, might cause most discriminatory behaviors: “hostility isn’t integral to the definition of discrimination; you can treat people differently without being hostile to anyone.”13 For example, when a person from our ingroup does something unethical, we are more likely to respond by repairing the relationship than by punishing them, even

Social identity theory A perspective that considers when and why individuals consider themselves members of groups.

Ingroup The members of a group we belong to. We tend to play favorites with our ingroup.

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if it is for a heinous crime.14 By playing favorites with your own ingroup (e.g., people of the same race/ethnicity, gender identity, etc.), employees and managers alike may be complicit in discrimination.

Whenever there is an ingroup, there is by necessity an outgroup, which is some- times “everyone else,” but it is usually an identified group known by the ingroup’s mem- bers. For example, if my ingroup as a fast food employee is Wendy’s, my outgroup might be McDonald’s, Burger King, or Taco Bell. We tend to see members of the outgroup as being “all the same” or ignore characteristics that make them different from one another. For example, voters and politicians alike are falling into the dangerous trap of believ- ing that people who belong to different, outgroup parties are “all the same” and that “they just don’t understand us,” contributing to the polarization of people in democratic societies around the world.15 Unfortunately, research suggests that people may be more likely to be disgusted with outgroup members, derogate them, and treat them as if they have little worth.16 One of the most powerful sources of ingroup–outgroup derogation regards the practice of religion, even in the workplace. One global study, for instance, found that when groups became heavily steeped in religious rituals and discussions, they became especially discriminatory toward outgroups and aggressive if the outgroups had more resources,17 likely because these outgroups threaten their sense of identity and worldview.18

On a final note, you may remember discussing the threat of technological unem- ployment in the chapter on perception and individual decision making. Despite fear of job loss to automation, recent research suggests that the rise of automation and a robot workforce may lead to a less prejudiced workforce. By classifying employees into human and non-human, a new panhumanist social identity (i.e., seeing humanity as a common social identity, where humans are a part of the ingroup) may emerge that can reduce human-to-human prejudice, discrimination, and inequality.19

STAGES OF GROUP DEVELOPMENT

Temporary groups with finite deadlines pass through a unique sequencing of actions (or inaction) called the punctuated equilibrium model, shown in Exhibit 9-1:

1. The first meeting sets the group’s direction. 2. The first phase of group activity is one of inertia and thus makes slower progress. 3. A transition takes place when the group has used up half its allotted time. 4. This transition initiates major changes. 5. A second phase of inertia follows the transition. 6. The group’s last meeting is characterized by markedly accelerated activity.20

At the first meeting, the group’s general purpose and direction is established, and then a framework emerges of behavioral patterns and assumptions through which the group will approach its project, sometimes in the first few seconds of the group’s existence. Once set, the group’s direction is solidified and is unlikely to be reexamined throughout the first half of its life. This is a period of inertia—the group tends to stand still or become locked into a fixed course of action, even if it gains new insights that chal- lenge initial patterns and assumptions.

Groups experience a transition halfway between the first meeting and the official deadline—whether members spent an hour on their project or six months. The midpoint

Outgroup The inverse of an ingroup; an outgroup can mean anyone outside the group, but more usually it is an identified other group. We tend to see anyone outside of our group as “all the same” and can derogate them or treat them as if they have little worth.

Punctuated equilibrium model A set of phases that temporary groups go through that involve transitions between inertia and activity.

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166 Part 3 • Communicating in Groups and Teams

appears to work like an alarm clock, heightening members’ awareness that their time is limited and that they need to get moving. This transition ends Phase 1 and is character- ized by a concentrated burst of changes, dropping of old patterns, and adoption of new perspectives. The transition sets a revised direction for Phase 2, a new equilibrium or period of inertia in which the group executes plans created during the transition period. The group’s last meeting is characterized by a final burst of activity to finish its work.

There are many models of group stages, but the punctuated equilibrium model tends to be a dominant theory with strong support. Keep in mind, however, that this model does not apply to all groups, but is suited to the finite quality of temporary task groups working under a time deadline.21 Alternative models suggest that teams prog- ress through a formation stage, a conflict resolution or “storming” stage, a “norming” stage where members agree on roles and make decisions, and a “performing” stage where members begin to work collaboratively. The forming, storming, norming, and performing stages may occur at phase one of the punctuated equilibrium model, while a second per- forming and conforming stage may occur in the second phase, following a short period of reforming group norms and expectations.22

Apart from the identity bestowed by group membership and the ways in which groups are formed, there are several other defining properties that are important to under- standing groups in organizations: roles, norms, status, size, cohesiveness, and diversity. We will discuss each in the sections that follow.

GROUP PROPERTY 1: ROLES

The Independent Group was formed (and dissolved) in 2019 after eleven British mem- bers of Parliament resigned from their political parties, forming a new group dedicated to reaching across party divides to further centrist political interests in the UK.23 Each member of the group brought something different to the table. As another example, in the Ocean’s movie series, each con-artist has a different role in contributing to pulling off the heist (e.g., the “drivers,” the “electronics,” the “traps,” the “grease,” etc.). All members play a role, a function assumed by someone occupying a given position in a group.

We all take on several diverse roles, both on and off our jobs (e.g., wife, mother, poker champion, editor, professor). Different groups impose different role requirements on individuals. Many of these roles are compatible; some create conflicts. For example, if you were offered a job in Phoenix, but your family wanted to stay in Orlando—can the demands

Role A function assumed by someone occupy- ing a given position in a group.

A

First Meeting

Phase 1

Completion Phase 2

Transition

(High)

(Low) (A+B)/2 Time

Pe rf or

m an

ce B

EXHIBIT 9-1 The Punctuated Equilibrium Model

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of the parent–professional role be reconciled? Furthermore, how do we come to understand others’ role requirements? We draw upon our role perceptions to frame our ideas of appro- priate behaviors and learn the expectations of our groups. We also seek to understand the parameters of our roles to minimize role conflict. Let us discuss each of these facets.

Role Perception

Our view of how we are supposed to act in a given situation is a role perception. We get role perceptions from stimuli all around us (e.g., our family, office, YouTube). For exam- ple, working, married parents identify strongly with their family roles, and positively translate these roles into work roles, such as their leadership expectations.24 However, research on marines in the U.S. military suggests that even though some role perceptions translate from context to context, some do not (with marines “protecting” their work roles from becoming a part of their family life, for example).25

Role Expectations

Role expectations are the way others believe you should act in a given context. A U.S. federal judge is viewed as having propriety and dignity, while a football coach is seen as aggressive, dynamic, and inspiring to the players. Role expectations can influence the way people perform their work. For example, creative role expectations can lead people to be more creative in their work.26

In the workplace, we often look at role expectations through the perspective of the psychological contract: an unwritten agreement between employees and employ- ers (including senior management, supervisors, coworkers, and recruiters) that estab- lishes mutual expectations.27 Management is expected to treat employees justly, provide acceptable working conditions, clearly communicate what is a fair day’s work, and give feedback on how well an employee is doing. Employees are expected to demonstrate a good attitude, follow directions, and show loyalty to the organization. Unfortunately, employees can even be expected to be unethical by their employers—if they do not com- ply, they are often met with sanctions (e.g., insults, pressure) and may be perceived as being less warm.28

What happens if management is derelict in its part of the bargain? We can expect negative effects on employee performance, turnover, and satisfaction.29 Why might employees not play their part? Loss of resources, workload, stress (e.g., family interfer- ing with work), a sense of wanting more than what the contract can offer, and other obsta- cles can limit the extent to which employees can fulfill their part of the bargain, causing their performance at work to suffer, and causing them to be potentially passed up for promotions.30 What happens if the organization fulfills its part of the bargain? Employees are likely to feel grateful and identify with their organization and will be more willing to go above and beyond by performing OCBs.31

Role Conflict

When compliance with one role requirement makes it difficult to comply with another, the result is role conflict.32 At the extreme, two or more role expectations may be clash- ing, like when professors are expected to be excellent teachers and researchers, when they normally only have enough time for one.33

Role perception An individual’s view of how they are supposed to act in a given situation.

Role expectations How others believe a person should act in a given situation.

Psychological contract An unwritten agreement between employees and employers that establishes mutual expectations.

Role conflict A situation in which an individual is con- fronted by divergent role expectations.

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168 Part 3 • Communicating in Groups and Teams

Similarly, we can experience interrole conflict34 when the expectations of the different groups we belong to are in direct opposition. As a primary example, many people hold multiple jobs, perhaps one that is primary (e.g., software engineer) and a secondary job (e.g., guitarist in a metal band). These jobs might inevitably come into conf lict, and indeed, research supports that jobs like this can interfere with the primary job.35 As a more common example, family/life roles can often conf lict with work roles. For instance, one American mother described how she was “scrambling after her son was born to accomplish two tasks: ‘knitting back together’ from her C-section and assembling a patchwork of enough disability leave, vacation and sick days, and unpaid time off, to rest brief ly and care for her infant son before returning to work.”36 Roles can often conf lict within jobs, such as when nurses unexpectedly find themselves in a disaster (e.g., a hurricane or mass shooting) where they are required to calmly provide aid for someone (their professional role) who is close to them, regulating emotions they are experiencing that stem from their attachment to that person (the relational role).37

Indeed, research demonstrates that role conflict is a significant source of stress for most employees.38 Furthermore, during global mergers and acquisitions, employees can be torn between their identities as members of their original organization and of the new parent company.39 Multi national mergers can lead to dual identification—with the employee splitting identification with the local division and with the international organization.40

GROUP PROPERTY 2: NORMS

San Francisco startup, Gusto, designed their office as if it were a living room, with a “no shoes” policy (although sandals and slippers are permitted, if you must).41 Why do we wear shoes indoors to begin with, and why do we take them off in some environments (Gusto, some people’s houses) and not in others (Best Buy)? The answer can be found in norms.

All groups have established norms—acceptable standards of behavior shared by members that express what they ought to do and ought not to do under certain circum- stances. Different groups, communities, and societies have different norms, but they all have them.42 Norms are established through the social perception of group members, such as when a group leader says, “This is what we should do” and rewards the prac- tices when they happen and the rest of the group unanimously puts the suggestion into practice.43 Norms are not just leader-established, opinion-driven policies: For them to be adopted (and not abandoned after several days), they need to be accepted by all.44

Norms and Emotions

The emotions of group members, especially those who work together daily, can amplify the power of norms. Coworkers, for example, may react negatively to you coming in sick for work and may be angry and uncivil toward you.45 Norms can even dictate which emotions individuals and their groups experience—in other words, people may grow to interpret their shared experiences in the same way.46 Employees may also see through attempts to comply with office norms, even though you may not be doing so for genuine reasons.

Interrole conflict A situation in which the expectations of an individual’s different, separate groups are in opposition.

Norms Acceptable standards of behavior within a group that are shared by the group’s members.

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Chapter 9 • Foundations of Group Behavior 169

Norms and Conformity

As a member of a group, you desire acceptance and stability. Thus, you may conform to group norms when you perceive that others are doing so or if you experience conflict or frustration.47 Considerable evidence suggests that groups can place strong pressures on members to change in order to match the group’s standard.48

The impact that group pressures for conformity can have on an individual mem- ber’s judgment was demonstrated in studies by Solomon Asch and others.49 Asch formed groups of seven to eight people who were asked to compare two cards. One card had one line, and the other had three lines of varying length, one of which was identical to the line on the one-line card, as Exhibit 9-2 shows. The difference in line length was obvious; in fact, participants were incorrect less than 1 percent of the time in announcing which of the three lines matched the single line.

The experiment began with two rounds of matching exercises, where each partici- pant was called upon to match the card to its identical counterpart. Everyone gave the right answers. On the third round, however, the first participant, who was part of the research team, gave an obviously wrong answer—for example, saying “C” in Exhibit 9-2. The next participant, also on the research team, gave the same wrong answer, and so forth. Now the dilemma confronting the participant, who did not know the others were on the research team, was this: publicly state a perception that differed from the position of the others or give an incorrect answer that agreed with the others.

The results over many experiments showed 75 percent of subjects gave at least one answer that conformed—that they knew was wrong but was consistent with the replies of other group members—and the average conformer gave wrong answers 37 percent of the time. But does that mean we are mere robots? Certainly not. Do individuals conform to the pressures of all groups to which they belong? Again, obviously not. When they do conform, it is most likely to their reference groups, important groups in which a person is aware of other members, defines themself as a member or would like to be a mem- ber, and feels group members are significant. Conformity effects are not always bad; for example, people can conform to prosocial norms, such as generosity in donating and can even feel more empathy as a result.50

Norms and Behavior

Norms can cover any aspect of group behavior.51 As we have mentioned, norms in the workplace significantly influence employee behavior. This may seem intuitive, but full appreciation of the influence of norms on worker behavior did not occur until the Hawthorne Studies, conducted between 1924 and 1932 at the Western Electric Company’s Hawthorne Works in Chicago.52

Conformity The adjustment of one’s behavior to align with the norms of the group.

Reference groups Important groups to which individuals belong or hope to belong and which adopt norms with which individuals are most likely to conform.

X A B C

EXHIBIT 9-2 Examples of Cards Used in Asch’s Study

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170 Part 3 • Communicating in Groups and Teams

In the studies, the researchers first examined the relationship between the physical environment—specifically, the amount of light on the shop floor—and productivity. As they increased the light level for the experimental group of workers, output rose for that unit and the control group. But as they dropped the light level, productivity continued to increase. In fact, productivity in the experimental group decreased only when the light intensity had been reduced to that of moonlight, leading researchers to believe that group dynamics, rather than the environment, influenced behavior.

The researchers next isolated a small group of women assembling telephones so their behavior could be more carefully observed. Over the next several years, this small group’s output increased steadily, and the number of personal and sick absences was approximately one-third of that in the regular production department. It became evident this group’s performance was significantly influenced by its “special” status. The mem- bers thought they were in an elite group, and that management showed concern about their interests by engaging in experimentation. Workers in both the illumination and assembly experiments were really reacting to the increased attention they received.

Finally, the researchers implemented a wage-incentive plan for employees in the bank wiring observation room. The most important finding was that employees did not individu- ally maximize their output. Rather, their role performance became controlled by a group norm. Members were afraid that if they significantly increased their output, the unit incen- tive rate might be cut, the expected daily output might be increased, layoffs might occur, or slower workers might be reprimanded. So, the group established its idea of a fair output— neither too much nor too little. Members helped each other ensure their reports were nearly level, and the norms the group established included several behavioral “don’ts.” Don’t be a rate buster—turning out too much work. Don’t be a chiseler—turning out too little work. Don’t squeal on any of your peers. The group enforced its norms with name calling, ridi- cule, and even punches to the upper arms of violators. The group thus operated well below its capability, using norms that were tightly established and strongly enforced.

Positive Norms and Group Outcomes

Positive group norms may very well beget positive outcomes, but only if other factors are present, too. Overall, evolutionary explanations of norms suggest they were developed so that we can observe positive outcomes: for example, groups facing a high degree of threat develop strong interaction and cooperation norms, and norms to punish deviants.53 This may be why we observe differences in cultural norms across the globe.

As an example of the positive effect of positive norms, one goal of every organi- zation with corporate social responsibility (CSR; see the chapter on attitudes and job satisfaction) initiatives is for its values to hold normative sway over employees.54 After all, if employees aligned their thinking with positive norms, these norms would become stronger and the probability of positive impact would grow exponentially. Some research in Germany indicates that this may be a function of how satisfied people are with their groups, with more satisfied employees more likely to adopt the CSR norms.55

Negative Norms and Group Outcomes

As we discussed in the chapter on attitudes and job satisfaction, work behavior (CWB), or deviant workplace behavior, is voluntary behavior that violates significant orga- nizational norms and, in so doing, threatens the well-being of the organization or its

Deviant workplace behavior Voluntary behavior that violates signifi- cant organizational norms and, in so doing, threatens the well-being of the organization or its members. Also called antisocial behavior or workplace incivility.

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Chapter 9 • Foundations of Group Behavior 171

members. Exhibit 9-3 provides a typology of deviant workplace behaviors, with exam- ples of each.

Negative norms operate to facilitate poor group outcomes and deviant behavior. As some examples, group member and supervisor absences set the tone for the office: If the team members do not show up, and if the boss does not show up, most employ- ees will probably not show up.56 One study of firefighters and nurses found that even though family-friendly benefits were intended to be used and are effective in reducing work–family conflict, the firefighters were less likely to use these benefits if they per- ceived that others in their work group did not use them.57 Interestingly, some research suggests that when trying to promote diversity in the workplace, raising awareness for the prevalence of stereotyping can backfire and can actually lead toward more stereotype- consistent behavior.58

Few organizations will admit to creating or condoning conditions that encourage or sustain deviant behaviors. Yet they exist. For one, as we discussed before, a work- group can become characterized by positive or negative attributes. When those attributes are negative, CWBs or deviant behaviors may be observed more frequently: As some researchers suggest, “bad apples” come from “bad barrels.”59 Second, employees can be mistreated by their supervisors, their coworkers, and even their customers, which can cause them to engage in unethical behaviors as a result.60 Mistreatment of this type is important to organizational retention efforts, as nearly half of employees who have suf- fered this incivility say it has led them to think about changing jobs; 12 percent actually quit because of it.61 Finally, as organizations have tried to do more with less and are pushing their employees to work extra hours, they may indirectly be facilitating deviant behavior.62

Category Examples

Production Leaving early Intentionally working slowly Wasting resources

Property Sabotage Lying about hours worked Stealing from the organization

Political Showing favoritism Gossiping and spreading rumors Blaming coworkers

Personal aggression Sexual harassment Verbal abuse Stealing from coworkers

EXHIBIT 9-3 Typology of Deviant Workplace Behavior

Sources: S. H. Appelbaum, G. D. Iaconi, and A. Matousek, “Positive and Negative Deviant Workplace Behaviors: Causes, Impacts, and Solutions,” Corporate Governance 7, no. 5 (2007), 586–98; R. W. Griffin and A. O’Leary-Kelly, The Dark Side of Organizational Behavior (New York: Wiley, 2004).

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172 Part 3 • Communicating in Groups and Teams

Norms and Culture

Do people in collectivist cultures have different norms than people in individualist cultures? Of course, they do—even to the extent that some norms are undetectable or not understood by outgroup members.63 But did you know that our orientation may be momentarily changed within a group context, even after years of living in one society? In one recent experiment, an organizational role-playing exercise was given to a neutral group of subjects; the exercise stressed either collectivist or individualist (see the chap- ter on personality and values) norms. Subjects were then given a task of their personal choice or were assigned one by an ingroup or outgroup person. When the individualist- primed subjects were allowed personal choice of the task, or the collectivist-primed sub- jects were assigned the task by an ingroup person, they became more highly motivated.64

Regardless of these temporary shifts, cultural norms can affect many behaviors in the workplace, such as which negotiation strategy to select (aggressive strategies are more often used in honor and face cultures, like Qatar and China, relative to dignity cul- tures like the U.S.).65 The negotiation results are surprising, considering that Asian cul- tures value harmony and cooperation in interpersonal interactions, but will do what they can to compete and save face in professional contexts. Cultural norms can even influence how people respond to those who violate the norm. For instance, norm violators in col- lectivist cultures (see the chapter on personality and individual differences) are seen as less powerful and evoke more moral outrage than individualistic cultures.66

GROUP PROPERTY 3: STATUS, AND GROUP PROPERTY 4: SIZE AND DYNAMICS

Have you ever noticed how groups tend to stratify into higher- and lower-status mem- bers? Sometimes the status of members reflects their status outside the group setting, but not always. Groups can also vary by size in ways that affect members’ behaviors, dynam- ics, and group outcomes. Let’s examine how these factors affect a workgroup’s efficacy.

Group Property 3: Status

Status—a socially defined position or rank given to groups or group members by others— permeates every society. Even the smallest group will show differences in member status over time. Status is a significant motivator and has major behavioral consequences when individuals perceive a disparity between what they believe their status is and what others perceive it to be.

WHAT DETERMINES STATUS? According to status characteristics theory, status tends to derive from one of three sources:67

1. The power a person wields over others. Because they likely control the group’s resources, people who control group outcomes tend to be perceived as high status.

2. A person’s ability to contribute to a group’s goals. People whose contributions are critical to the group’s success tend to have high status.

3. An individual’s personal characteristics. Someone whose personal characteristics are positively valued by the group (good looks, intelligence, money, or a friendly personality) typically has higher status than someone with fewer valued attributes.

Status A socially defined position or rank given to groups or group members by others.

Status characteristics theory A theory that states that differences in status characteristics create status hierar- chies within groups.

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Chapter 9 • Foundations of Group Behavior 173

STATUS AND NORMS High-status individuals may be more likely to deviate from norms when they have low identification (social identity) with the group.68 They also eschew pressure from lower-ranking members of other groups. High-status people are also better able to resist conformity pressures than are their lower-status peers. An individual who is highly valued by a group but does not need or care about the group’s social rewards is particularly able to disregard conformity norms.69 In general, bringing high-status members into a group may improve performance, but only up to a point, perhaps because these members may introduce counterproductive norms.70 They do not control everything, though: gossip can both confer status and damage reputations.71

STATUS AND GROUP INTERACTION People tend to become more assertive when they seek to attain higher status in a group.72 They speak out more often, criticize more, state more commands, and interrupt others more often. Conversely, some evidence suggests that those who do have higher status tend to conceal it to promote harmony.73 Lower- status members participate less actively in group discussions; when they possess insights that could aid the group, failure to fully utilize these members reduces the group’s overall performance. Supervisors can help here by encouraging these employees to speak up.74 But that does not mean a group of only high-status individuals would be preferable. Adding some high-status individuals to a group of mid-status individuals may be advantageous because group performance suffers when too many high-status people are in the mix.75 Regardless of one’s status, however, accurate knowledge of the status hierarchy (i.e., “who is who in my group”) leads to better performance and results in effective within-group networking.76

STATUS INEQUITY It is important for group members to believe the status hierarchy is equitable. Perceived inequity creates disequilibrium, which inspires various types of corrective behaviors. Hierarchy can lead to negative emotions and resentment among those at the lower end of the status continuum.77 Large differences in status within groups are also associated with poorer individual performance, lower health, and higher intentions for the lower-status members to leave the group.78 Generally, inequity in power-based forms of status tends to have more negative effects: It tends to drive interpersonal conf lict, whereas other forms promote healthy competition for status advancement.79

STATUS AND STIGMATIZATION Miriam O’Reilly sued the BBC for age discrimination, and immediately afterwards became a pariah. While being ostracized at a professional dinner, one of Miriam’s colleagues told her, “I am so sorry ... but I really can’t be seen with you. My agent said that it could have an effect on my career.”80 Although it is clear that status affects the way people perceive you, the status of people with whom you are affiliated can also affect others’ views of you. People who are stigmatized can “infect” others with their stigma.81 This “stigma by association” effect can result in negative opinions and evaluations of the person affiliated with the stigmatized individual, even if the association is brief and purely coincidental. Even if the low status, stigmatized person calls the group members out for doing so, other low status members will still tend to legitimize their beliefs and continue to withhold support to the stigmatized.82

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174 Part 3 • Communicating in Groups and Teams

GROUP STATUS Early in life, we acquire an “us and them” mentality.83 Culturally, sometimes ingroups represent the dominant forces in a society and are given high status, which can create discrimination against their outgroups. Low-status groups, perhaps in response to this discrimination, are likely to leverage ingroup favoritism to compete for higher status.84 When high-status groups then feel the discrimination from low-status groups, they may increase their bias against the outgroups.85 With each cycle, the groups become more polarized.

Group Property 4: Size and Dynamics

Does the size of a group affect the group’s overall behavior? Yes, but the effect depends on the outcomes we are interested in.86 Groups with a dozen or more members are good for gaining diverse input.87 If the goal is fact-finding or idea-generating, then larger groups should be more effective.88 Smaller groups of about seven members are better at doing something productive.89 We even hold group size stereotypes that affect our behav- iors (e.g., smaller groups are more trustworthy, larger groups are more difficult to help).90

Group dynamics are also important for characterizing groups. One of the most important findings concerning group dynamics involves social loafing, the tendency for individuals to expend less effort when working collectively than when alone.91 Social loafing directly challenges the assumption that the productivity of the group as a whole should at least equal the sum of the productivity of the individuals in it, no matter what the group size.

Social loafing appears to have a Western bias.92 It is consistent with individualis- tic cultures, such as those found in the United States and Canada, which are dominated by self-interest. It is not consistent with collectivistic societies, in which individuals are motivated by group goals. When research is compared across cultures, groups from Eastern cultures had significantly lower rates of social loafing.

Research indicates that the stronger an individual’s work ethic is, the less likely that person is to engage in social loafing.93 Also, the greater the level of conscientious- ness and agreeableness (see the chapter on personality and values) in a group, the more likely that performance will remain high whether there is social loafing or not.94 Virtual groups also may have issues with social loafing, especially if members are dissimilar and have a number of family responsibilities that detract their attention away from group performance.95 There are ways to prevent social loafing:

1. Set group goals, so the group has a common purpose to strive toward. 2. Increase intergroup competition, which focuses on the shared group outcome. 3. Engage in peer evaluations. 4. Select members who have high motivation and prefer to work in groups. 5. Base group rewards in part on each member’s unique contributions, and structure

work so that each member’s contribution can be identified.96

GROUP PROPERTY 5: COHESIVENESS, AND GROUP PROPERTY 6: DIVERSITY

For a group to be highly functioning, it must act cohesively as a unit. Furthermore, cer- tain types of diversity can enable teams to perform better in different ways. Let us discuss the importance of group cohesiveness first.

Social loafing The tendency for individuals to expend less effort when working collectively than when working individually.

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Chapter 9 • Foundations of Group Behavior 175

Group Property 5: Cohesiveness

Groups differ in their cohesiveness—the shared bond driving group members to work together and to stay in the group.97 Some workgroups are cohesive because the members have spent a great deal of time together, the group’s small size or purpose facilitates high interaction, or external threats have brought members close together.

Cohesiveness affects group productivity, and vice versa.98 However, studies consis- tently show that the relationship between cohesiveness and productivity depends on the group’s performance-related norms.99 If norms for quality, output, and cooperation with outsiders are high, a cohesive group will be more productive than a less cohesive group. But if cohesiveness is high and performance norms are low, productivity will be low. If cohesiveness is low and performance norms are high, productivity increases, but less than in the high-cohesiveness/high-norms situation. When cohesiveness and performance- related norms are both low, productivity tends to fall into the low-to-moderate range. These conclusions are summarized in Exhibit 9-4.

Beyond playing Fortnight, Minecraft, or other video games with your group;100 what can you do to encourage group cohesiveness?

1. Make the group smaller. 2. Encourage agreement with group goals. 3. Increase the time members spend together. 4. Increase the group’s status and the perceived difficulty of attaining membership. 5. Stimulate competition with other groups. 6. Give rewards to the group rather than to individual members. 7. Physically isolate the group.101

Group Property 6: Diversity

The final group property we consider is diversity in the group’s membership, or the degree to which members of the group are alike, or different from, one another. Overall, studies tend to be inconclusive, depend upon several contextual factors, and depend on how diversity is indexed and conceptualized.102 Interestingly, there is only a modest link between actual diversity and perceived diversity (and even differences between major- ity and minority perceptions of diversity!),103 and some research suggests that members seek to balance a need to belong and a need to be distinctive in group membership. This disconnect could also be because people tend to develop perceptions’ of their groups diversity and perpetuate the status quo. For example, one study of the S&P 1500 boards

Cohesiveness The shared bond driv- ing group members to work together and to stay in the group.

Diversity The extent to which members of a group are similar to, or different from, one another.

High productivity

High

High

Low

Cohesiveness

Pe rf

or m

a nc

e N

or m

s

Low productivity

Low

Moderate productivity

Moderate to low productivity

EXHIBIT 9-4 The Impact of Cohesiveness and Performance Norms on Productivity

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176 Part 3 • Communicating in Groups and Teams

found that there was a status quo norm across organizations to have two women, what the researchers referred to as “twokenism.”104

Furthermore, perceived self-to-team dissimilarity and splits lead to negative effects, and perceived group heterogeneity lead to both positive and negative effects.105 In other words, maybe the effect of diversity is more contingent on how it is framed or perceived, such as when executives adopt a “value-in-diversity” perspective.106 Despite the mixed state of things, artificial intelligence research is, yet again, helping move this area forward, and a recent appli- cation to multicultural manufacturing teams has produced a new way to assess how salient social categories (e.g., race, gender) are to individual team members’ perceptions.107

TYPES OF GROUP DIVERSITY Surface-level diversity (e.g., gender, race; see the chapter on diversity in organizations) appears to increase group conflict, especially in the early stages of a group’s tenure, which often lowers group morale and raises dropout rates.108 One study compared groups that were culturally diverse and homogeneous (composed of people from the same country). On a virtual wilderness survival test, the groups performed equally well, but the members from the diverse groups were less satisfied with their groups, were less cohesive, and had more conflict.109 Outsiders are even more likely to be biased toward racially heterogenous groups and allocate less resources toward them.110

At a deeper level, groups in which members’ values or opinions differ tend to expe- rience more conflict, but leaders who can get the group to focus on the task at hand and encourage group learning are able to reduce these conflicts and enhance discussion of group issues.111 Research in Korea indicates that putting people with a high need for power (nPow; see the chapter on motivation concepts) with those with a low need for power can reduce unproductive group competition, whereas putting individuals with a similar need for achievement may increase task performance.112 Furthermore, diversity in propensity to trust can cause downward trust spirals, which fuels conflict and further erodes trust over time.113

On the other hand, functional diversity, or differences in skills, abilities, or other characteristics needed for the job, may improve team performance and innovation, but these effects are contingent on several factors.114 For example, functional diversity can influence team creativity by facilitating knowledge sharing.115 Leadership plays a sub- stantial role in maximizing the benefits of functional diversity—great leaders bring dis- parate skills together to do great work.116

CHALLENGES OF GROUP DIVERSITY Although differences can lead to conflict, they also provide an opportunity to solve problems in unique ways. One study of jury behavior found diverse juries were more likely to deliberate longer, share more information, and make fewer factual errors when discussing evidence. Altogether, it is difficult to be in a diverse group in the short term. They tend to homogenize over time, they are fragile, and they tend to be prone to fragmentation.117 However, if members can weather their differences, over time diversity may help them to be more open-minded and creative and to do better. For example, research into the development of identification in diverse United Nations peacebuilding teams across the world shows that team members develop a sense of identification, but that this evolves over time.118

One possible negative effect of diverse teams—especially those that are diverse in terms of surface-level characteristics—is faultlines, or perceived divisions that split groups into two or more subgroups based on individual differences such as sex, race, age, work experience, language, and education.119

Faultlines The perceived divi- sions that split groups into two or more subgroups based on individual differences such as sex, race, age, work experi- ence, language, and education.

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Chapter 9 • Foundations of Group Behavior 177

For example, let us say Group A is composed of three black and three Hispanic employees. The three Hispanic employees have approximately the same amount of work experience and backgrounds in marketing. The three black employees have about the same amount of work experience and backgrounds in finance. Group B has three Hispanic and three black employees, but they all differ in terms of their experience and backgrounds. Two of the black employees are experienced, while the other is new. One of the Hispanic employees has worked at the company for several years, while the other two are new. In addition, two of the black and one of the Hispanic employees in Group B have backgrounds in marketing, while the others have backgrounds in finance. It is thus likely that a faultline will result in the subgroups of black and Hispanic employees in Group A but not in Group B, based on the differentiating characteristics.

Research on faultlines has shown that splits are generally detrimental to group functioning and performance. Subgroups may compete, which takes time away from core tasks and harms group performance. Groups that have subgroups learn more slowly, make more risky decisions, are less creative, and experience higher levels of conflict. Subgroups may not trust each other and may have low levels of cohesion.120 Finally, sat- isfaction within subgroups is generally high, but the overall group’s satisfaction is lower when faultlines are present.121 Are faultlines ever a good thing? One study suggested that faultlines regarding skill, knowledge, and expertise may be beneficial in a results-driven organizational culture. Why? A results-driven culture focuses people’s attention on what is important to the company rather than on problems arising from subgroups.122

How can faultlines be addressed or harnessed for good within organizations? Studies show that problems stemming from diversity and strong faultlines may be overcome when their roles are crosscut, the group is given a common goal to strive for, and similar pairs are recruited within a diverse group. Altogether, forced col- laboration between members of subgroups and a focus on accomplishing a goal may boost performance in certain organizations.123 Pro-diversity beliefs and open- mindedness norms also help (and training can help improve this, when they are low):124 for example, one study of international diplomats with the German Ministry of Foreign Affairs suggest that diplomat and team pro-diversity beliefs reduce the negative effect of faultlines on performance.125 Similarly, research on multicultural groups suggests that policies, practices, and procedures that welcome and accept diversity, and that assume a diversity in thought, lead to an effective exchange of thoughts and to more effective teams.126 Finally, there may be cultural differences in how group diversity affects performance: a study of over 5,000 Himalayan climbing expeditions found that collectivist values (see the chapter on personality and individual differences) blur the lines between groups, which can lead to diversity either hurting or helping the group, depending upon the task.127

GROUP DECISION MAKING

The belief—characterized by juries—that two heads are better than one has long been accepted as a basic component of the U.S. legal system and those of many other coun- tries. Many decisions in organizations are made by groups, teams, or committees. We will discuss the advantages of group decision making, along with the unique challenges group dynamics bring to the decision-making process. Finally, we will offer some techniques for maximizing the group decision-making opportunity.

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178 Part 3 • Communicating in Groups and Teams

Groups Versus the Individual

Decision-making groups may be widely used in organizations, but are group decisions pref- erable to those made by an individual alone? The answer depends on several factors. Let us begin by looking at the strengths, weaknesses, and benefits of group decision making.

STRENGTHS OF GROUP DECISION MAKING Groups generate more complete information and knowledge. By aggregating the resources of several individuals, groups bring more input as well as heterogeneity into the decision process (as long as this information is reliable).128 They offer increased diversity of views. This opens the opportunity to consider more approaches and alternatives.129 Finally, groups lead to increased acceptance of a solution. During decision making, members are more likely to be accepting when dissenting opinions are framed as debates rather than disagreements.130 Group members who participate in deciding are more likely to enthusiastically support and encourage others to accept it later.

WEAKNESSES OF GROUP DECISION MAKING Group decisions are time-consuming because groups typically take more time to reach a solution, especially for virtual groups.131 There are conformity pressures. The desire by group members to be accepted and considered an asset to the group can squash any overt disagreement and cause group members to settle for less.132 Group discussion can be dominated by one or a few members. If they are low- and medium-ability members, the group’s overall effectiveness will suffer. Interestingly, in virtual contexts, this may be addressed by allowing minority members to have secret conversations and lead to improved decision quality.133 Also, setting a norm that allows “lone dissenters,” or group members who have divergent opinions, can reduce conformity and the influence of dominating members.134 Finally, group decisions suffer from ambiguous responsibility. In an individual decision, it is clear who is accountable for the outcome. In a group decision, the responsibility of any single member is diluted.

EFFECTIVENESS AND EFFICIENCY Whether groups are more effective than individuals depends on how you define effectiveness and who is making the evaluation. As discussed in the chapter on perception and individual decision making, the accuracy of evaluators can be affected by general perceptions of group cohesion and trust.135 Group decisions are generally more accurate than the decisions of the average individual in a group, but generally less accurate than the judgments of the most accurate person.136 In terms of speed, individuals are superior. If creativity is important, groups tend to be more effective. And if effectiveness means the degree of acceptance of achievable solutions, the nod again goes to the group.137

We cannot consider effectiveness without also assessing efficiency. With few excep- tions, group decision making consumes more work hours than does having an individual tackle the same problem. The exceptions tend to be instances in which, to achieve compa- rable quantities of diverse input, the single decision maker must spend a great deal of time reviewing files and talking to other people who have unique information that could lead to a better solution.138 Research suggests that groups may be inefficient in decision making if information is heavily dispersed among group members and effectively “hidden.” It is very difficult to compile this information to make the best decision, and groups in these situations are encouraged to openly and collaboratively share information to solve the problem.139 In deciding whether to use groups, then, managers must assess whether increases in effectiveness are more than enough to offset the reductions in efficiency.

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Chapter 9 • Foundations of Group Behavior 179

Groupthink and Groupshift

Two by-products of group decision making, groupthink and groupshift, can affect a group’s ability to appraise alternatives objectively and achieve high-quality solutions.

GROUPTHINK Groupthink describes situations in which group pressures for conformity deter the group from critically appraising unusual, minority, or unpopular views. Groupthink attacks many groups and can dramatically hinder their performance.140 Groupthink appears closely aligned with the conclusions Solomon Asch drew in his experiments with a lone dissenter. Groups that are more focused on performance than on learning are especially likely to fall victim to groupthink and to suppress the opinions of those who do not agree with the majority.141 Groupthink seems to occur most often early in the group’s tenure, when there is a clear group identity, when members hold a positive image of their group they want to protect, and when the group perceives a collective threat to its positive image.142

What can managers do to minimize groupthink?143 First, they can monitor group size. People grow more intimidated and hesitant as group size increases. Managers should also encourage group leaders to play an impartial role. In addition, man- agers should appoint one group member to play the role of devil’s advocate, overtly challenging the majority position and offering divergent perspectives. Yet another suggestion is to use exercises that stimulate active discussion of diverse alternatives without threatening the group or intensifying identity protection. Have group members delay discussion of possible gains so they can first talk about the dangers or risks inherent in a decision.

GROUPSHIFT Groupshift, or group polarization, describes the way group members tend to exaggerate their initial positions when discussing a given set of alternatives to arrive at a solution. We can view this group polarization as a special case of groupthink. The group’s decision reflects the dominant decision-making norm—toward greater caution or more risk—that develops during discussion.144 In groups, discussion leads members toward a more extreme view of the position they already held.145

The shift toward polarization has several explanations.146 It has been argued, for instance, that discussion is persuasive and makes members more comfortable with each other and thus more willing to express extreme versions of their original positions. Another argument is that the group diffuses responsibility. Group decisions free any sin- gle member from accountability for the group’s final choice, so a more extreme position can be taken. It is also likely that people take extreme positions because they want to demonstrate how different they are from the outgroup.147

We now turn to the techniques by which groups make decisions. These reduce some of the dysfunctional aspects of group decision making.

Group Decision-Making Techniques

The most common form of group decision making takes place in interacting groups.148 Members rely on both verbal and nonverbal interactions to communicate. But as our discussion of groupthink demonstrated, interacting groups often censor themselves and pressure individual members toward conformity of opinion. Brainstorming and the nomi- nal group technique (discussed below) can reduce problems inherent in the traditional interacting group.

Groupthink A phenomenon in which the norm for consensus overrides the realistic appraisal of alternative courses of action.

Groupshift A change between a group’s decision and an individual decision that a member within the group would make; the shift can be toward either con- servatism or greater risk, but it generally is toward a more extreme version of the group’s original position.

Interacting groups Typical groups in which members interact with each other, relying on both verbal and nonverbal communication.

Samsung In September 2016, the South Korean corporation Samsung was forced to recall all of its Galaxy Note 7 phones. It was a financial and public relations disaster. Considering the over 450,000 employees, many commentators cited the groupthink “cannot fail” attitude within Samsung for allowing the faulty product onto the market. The negative power of groupthink has, in the past, adversely affected Nokia and Sony too.

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180 Part 3 • Communicating in Groups and Teams

BRAINSTORMING Brainstorming can overcome the pressures for conformity that dampen creativity149 by encouraging any and all alternatives while withholding criticism. In a typical brainstorming session, the group leader states the problem in a clear manner so all group members understand. Members then freewheel as many alternatives as they can in a given length of time. To encourage members to “think the unusual,” no criticism is allowed, even of the most bizarre suggestions, and all ideas are recorded for later discussion and analysis.

Brainstorming may indeed generate ideas—but not very efficiently. Research consistently shows individuals working alone generate more ideas than a group in a brainstorming session. One reason for this is “production blocking.” When people are generating ideas in a group, many are talking at once, which blocks individuals’ thought processes and eventually impedes the sharing of ideas.150

NOMINAL GROUP TECHNIQUE The nominal group technique may be more effective. This technique restricts discussion and interpersonal communication during the decision- making process. Group members are all present, as in a traditional meeting, but they operate independently. Specifically, a problem is presented and then the group takes the following steps:

1. Before any discussion takes place, each member independently writes down ideas about the problem.

2. After this silent period, each member presents one idea to the group. No discussion takes place until all ideas have been presented and recorded.

3. The group discusses the ideas for clarity and evaluates them. 4. Each group member silently and independently rank-orders the ideas. The idea

with the highest aggregate ranking determines the final decision.

The chief advantage of the nominal group technique is that it permits a group to meet formally but does not restrict independent thinking. Research generally shows nom- inal groups outperform brainstorming groups.151

Each of the group-decision techniques has its own set of strengths and weaknesses. The choice depends on the criteria you want to emphasize and the cost–benefit trade-off. As Exhibit 9-5 indicates, an interacting group is good for achieving commitment to a solution; brainstorming develops group cohesiveness; and the nominal group technique is an inexpensive means for generating many ideas.

Brainstorming An idea-generation process that specifi- cally encourages any and all alternatives while withholding any criticism of those alternatives.

Nominal group technique A group decision- making method in which individual members meet face to face to pool their judgments in a systematic but inde- pendent fashion.

Type of Group

Effectiveness Criteria Interacting Brainstorming Nominal

Number and quality of ideas Low Moderate High Social pressure High Low Moderate Money costs Low Low Low Speed Moderate Moderate Moderate Task orientation Low High High Potential for interpersonal conflict High Low Moderate Commitment to solution High Not applicable Moderate Development of group cohesiveness High High Moderate

EXHIBIT 9-5 Evaluating Group Effectiveness

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Chapter 9 • Foundations of Group Behavior 181

SUMMARY

We can draw several implications from our discussion of groups. First, norms control behavior by establishing standards of right and wrong. Second, status inequities create frustration and can adversely influence productivity and willingness to remain with an organization. Third, the impact of size on a group’s performance depends on the type of task. Fourth, cohesiveness may influence a group’s level of productivity, depending on the group’s performance-related norms. Fifth, diversity appears to have a mixed impact on group performance, with some studies suggesting that diversity can help performance and others suggesting the opposite. Sixth, role conflict is associated with job-induced tension and job dissatisfaction.152 Groups can be carefully managed toward positive or- ganizational outcomes and optimal decision making. The next chapter will explore sev- eral of these conclusions in greater depth.

IMPLICATIONS FOR MANAGERS

• Recognize that groups can have a dramatic impact on individual behavior in orga- nizations, to either a positive or negative effect. Therefore, pay special attention to roles, norms, and cohesion—to understand how these are operating within a group is to understand how the group is likely to behave.

• To decrease the possibility of deviant workplace activities, ensure that group norms do not support antisocial behavior.

• Pay attention to the status aspect of groups. Because lower-status people tend to participate less in group discussions, groups with high-status differences are likely to inhibit input from lower-status members and reduce their potential.

• Use larger groups for fact-finding activities and smaller groups for action-taking tasks. With larger groups, provide measures of individual performance.

• To increase employee satisfaction, ensure people perceive their job roles accurately.

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182

Understanding Work Teams 10

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

10.1 Contrast groups and teams.

10.2 Contrast the five types of team arrangements.

10.3 Identify the characteristics of effective teams.

10.4 Explain how organizations can create team players.

10.5 Decide when to use individuals instead of teams.

SoaPen, a product that has received a $50,000 grant from Toyota and numerous awards from organizations like UNICEF, is the product of teamwork and the entrepreneurial spirit.1 The founders (Amanat Anand, Shubham Issar, and Maria Putri), a diverse all- female minority team, designed the product (soap in the form of a thick colored pen that children can draw with) in order to make hand hygiene more accessible to children. Building their team was incredibly important, and Shubham notes that discovering people with complimentary expertise and different perspectives was critical to their success as a startup.2

Teams can sometimes achieve feats an individual could never accomplish.3 Teams are more f lexible and responsive to changing events than traditional depart- ments can be. They can quickly assemble, deploy, refocus, and disband. And finally, research indicates that our involvement in teams positively shapes the way we think as individuals, introducing a collaborative mindset about even our own personal decision making.4

The fact that organizations have embraced teamwork does not necessarily mean teams are always effective. Team members, being human, can be swayed by errors in decision-making processes and dynamics (see, for example, the chapter on foundations of group behavior) that can lead them astray from the best decisions. What conditions affect their potential? How do members work together? To answer these questions, let us first distinguish between groups and teams.

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Chapter 10 • Understanding Work Teams 183

DIFFERENCES BETWEEN GROUPS AND TEAMS

According to some scholars, groups and teams are not the same thing (although, func- tionally, they are often used to refer to the same thing).5 In the chapter on foundations of group behavior, we defined a group as two or more individuals, interacting and interde- pendent, who come together to achieve certain objectives. A work group is a group that interacts primarily to share information and make decisions to help all members perform within their respective areas of responsibility.

Work groups have no need or opportunity to engage in collective work with joint effort, so the group’s performance is merely the summation of each member’s individual contribution. There is no positive synergy that would create an overall level of perfor- mance greater than the sum of the inputs. A work group is a collection of individuals doing their work, albeit with some interaction and/or dependency.

A work team, on the other hand, generates positive synergy through coordination.6 The individual efforts result in a level of performance greater than the sum of the indi- vidual inputs. Teams are more likely to be constantly changing and adapting rather than static entities—seeing teams as dynamic systems in this way has led many to focus more on teaming as a verb (e.g., on the processes or actions involved in engaging as a team) rather than on the team itself.7

In both work groups and work teams, there are often behavioral expectations of members, collective normalization efforts, active group dynamics, and some level of decision making (even if only informally). Both may generate ideas, pool resources, or coordinate logistics such as work schedules; for the work group, however, this effort will be limited to information gathering for decision makers outside the group. Whereas we can think of a work team as a subset of a work group, the team is constructed to be purposeful (symbiotic) in its member interaction. Exhibit 10-1 highlights the differences between them.

The definitions help clarify why organizations structure work processes in the way they do. The extensive use of teams creates the potential for an organization to gen- erate greater outputs with no increase in employee headcount. There is nothing magi- cal, however, that ensures the achievement of positive synergy in the creation of teams. Merely calling a group a team does not automatically improve its performance. As we show later, effective teams have certain common characteristics. If management hopes to gain increases in organizational performance by teams, these teams should possess these characteristics.

Work group A group that interacts primarily to share information and make decisions to help all members perform within their respective areas of responsibility.

Work team A group whose indi- vidual efforts result in performance that is greater than the sum of the individual inputs.

Share information

Neutral (sometimes negative)

Individual

Random and varied

Goal

Synergy

Accountability

Skills

Work Groups Work Teams

Collective performance

Positive

Individual and mutual

Complementary

EXHIBIT 10-1 Comparing Work Groups and Work Teams

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184 Part 3 • Communicating in Groups and Teams

TYPES OF TEAMS

Teams can make products, provide services, negotiate deals, coordinate projects, offer advice, and make decisions.8 In this section, we first describe four common types of teams in organizations: problem-solving teams, self-managed work teams, cross- functional teams, and virtual teams (see Exhibit 10-2). Then we will discuss multiteam systems, which utilize a “team of teams” and are becoming increasingly widespread as work increases in complexity.

Problem-Solving Teams

Problem-solving teams such as quality-control teams have been in use for many years. Originally seen most often in manufacturing plants, these were permanent teams that generally met at a regular time, sometimes weekly or daily, to address quality standards and any problems with the products made. For example, direct-to-consumer watchmaker Vincero employs a full-time quality-control team that hand-checks every manufactured watch.9 The use of quality-control teams has since expanded into other arenas such as the medical field, where they are used to improve patient care services. Problem-solving teams like these rarely have the authority to unilaterally implement their suggestions, but if their recommendations are paired with implementation processes, some significant improvements can be realized.

Self-Managed Work Teams

As we discussed, problem-solving teams only make recommendations. Some organiza- tions have gone further and created teams that also implement solutions and take respon- sibility for outcomes. For example, self-managed teams are used in the thirteen practices of the O’Brien Veterinary Group in Chicago, where they autonomously decide how to solve problems that arise and share what they have learned from their experiences with the other work teams.10

Self-managed work teams are groups of employees (typically ten to fifteen in number) who perform highly related or interdependent jobs; these teams take on some supervisory responsibilities.11 Typically, the responsibilities include planning and sched- uling work, assigning tasks to members, making operating decisions, acting on problems, and working with suppliers and customers. Fully self-managed work teams even select their own members who evaluate each other’s performance.

When these teams are established, former supervisory positions become less impor- tant and are sometimes eliminated. However, with a lack of authority and accountability, teams may spend valuable time and resources aligning team member values and goals to “get on the same page.”12 Greg O’Brien, founder of O’Brien Veterinary Group, notes

Problem-solving teams Groups of five to twelve employees from the same department who meet for a few hours each week to discuss ways of improving quality, efficiency, and the work environment.

Self-managed work teams Groups of ten to fifteen people who autonomously imple- ment solutions and take responsibility for the outcomes (responsibilities normally given to supervisors).

?

Problem-solving Self-managed Cross-functional Virtual

Technology

EXHIBIT 10-2 Four Types of Teams

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Chapter 10 • Understanding Work Teams 185

that it is often difficult for managers to give up this kind of control: “It requires building a team of adults who want to handle problems and staying the course when things go sideways. The temptation to grab control back is big.”13

Research on the effectiveness of self-managed work teams has not been uniformly positive. Some research indicates that the effectiveness of self-managed teams is contin- gent on the degree to which team-promoting behaviors are rewarded. For example, when team members perceive that economic rewards such as pay are dependent on input from their teammates, performance improves for both the individuals and the team.14

A second area of research focus has been the impact of conflict on self-managed team effectiveness. Some research indicates that self-managed teams are not effective when there is conflict. When disputes arise, members often stop cooperating and power struggles ensue, which leads to lower group performance.15 However, other research indi- cates that conflict can be beneficial and boost team performance when members feel they can speak up without being embarrassed, rejected, or punished by other team members.16

Thirdly, research has explored the effect of self-managed work teams on member behavior. Here again the findings are mixed. Although individuals on teams report higher lev- els of job satisfaction than other individuals, studies indicate they sometimes also have higher absenteeism and turnover rates. Furthermore, one large-scale study of labor productivity in British establishments found that no evidence supported the claim that self-managed teams performed better than traditional teams with less decision-making authority.17 Finally, some research suggests that in the absence of controlled supervision, leaders may “over-emerge”: in other words, people who are not very effective as leaders can take control more readily.18

Cross-Functional Teams

Tech companies like ExtraHop and Ixia have been working to implement teams that bring employees from information technology and security operations to work together. As a result, they can meet cyber security objectives and, in so doing, consolidate their toolsets, break down silos, and formalize and automate their collaboration.19 These examples illus- trate the use of cross-functional teams: teams made up of employees from about the same hierarchical level, but from different work areas, who come together to accomplish a task.

Cross-functional teams are an effective means of allowing people from diverse areas within or even between organizations to exchange information, develop new ideas, solve problems, and coordinate complex projects. However, due to the high need for coordination, cross-functional teams are not simple to form and manage. Why? First, different expertise is needed because the members are at roughly the same level in the organization, which creates leadership ambiguity. A climate of trust thus needs to be developed before leadership shifts can happen without undue conflict.20 Second, the early stages of development are often long since members need to learn to work with higher levels of diversity and complexity. Third, it takes time to build trust and teamwork, especially among people with different experiences and perspectives.

Virtual Teams

The teams described in the preceding section do their work face-to-face, whereas virtual teams use technology to unite physically dispersed members to achieve a common goal.21 Members collaborate online using communication links such as wide-area net- works, corporate social media, videoconferencing, and e-mail; whether members are

Cross-functional teams Employees from about the same hierarchical level, but from different work areas, who come together to accom- plish a task.

Virtual teams Teams that use tech- nology to tie together physically dispersed members in order to achieve a common goal.

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186 Part 3 • Communicating in Groups and Teams

nearby or continents apart. As an example, Cisco relies on teams to identify and capital- ize on new trends in several areas of the software market. Its teams are the equivalent of social-networking groups of employees from different areas that collaborate in real time to identify new business opportunities and implement them from the bottom up.22

Virtual teams should be managed differently than face-to-face teams in an office, partially because virtual team members may not interact in the same ways. For instance, virtual environments differ from face-to-face environments in the ways they con- vey social cues and foster a sense of distance between people.23 As another example, although virtual teams may share more unique information with one another than face-to- face teams, managers should be aware that they may be less open to sharing information with one another.24 As such, for virtual teams to be effective, trust is very important.25 Management should ensure that (1) trust is established among members (one inflamma- tory remark in an e-mail can severely undermine team trust), (2) progress is monitored closely (so the team does not lose sight of its goals and no team member “disappears”), and (3) the efforts and products of the team are publicized throughout the organization (so the team does not become invisible).26

Multiteam Systems

The types of teams we have described so far are typically smaller, standalone teams, though their activities relate to the broader objectives of the organization. As tasks become more complex, teams often grow, which is accompanied by higher coordina- tion demands. This creates a tipping point at which the addition of another member does more harm than good. To solve this problem, organizations use multiteam systems, col- lections of two or more interdependent teams that share a superordinate goal. In other words, a multiteam system is a “team of teams.”27

To picture a multiteam system, consider NASA’s plans to send a team of astronauts to Mars.28 In order to make this mission a success, countless teams of researchers, sci- entists, professors, engineers, operations employees, groundcrews, and psychologists are needed. Although the research and operations teams, for example are technically indepen- dent, their activities are interdependent, and the success of one depends on the success of the others. Why? Because they all share the higher goal of sending the astronauts to Mars.

Some factors that make smaller, more traditional teams effective do not necessarily apply to multiteam systems and can even hinder their performance. One study showed that multiteam systems performed better when they had “boundary spanners” whose jobs were to coordinate efforts with all constituents. This reduced the need for some team member communication, which was helpful because it reduced coordination demands.29 Some people (“boundary spoilers”) and teams within a multiteam system may also hin- der effective communication and coordination;30 in these instances, these teams could benefit from training in which all teams adopt the same perspectives or assumptions (e.g., “getting on the same page”).31 In some cases, employees can even identify with either their own team or the multiteam system as a whole. When multiteam systems are first established, strong identification to one’s own team can lead to conflicts between teams—by developing an identification with the multiteam system as a whole, conflicts can be reduced and the performance of the whole system can be improved.32

Leadership of multiteam systems is also much different than for standalone teams. While leadership of all teams affects team performance, a multiteam leader must both

Multiteam system A collection of two or more interdependent teams that share a superordinate goal; a team of teams.

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Chapter 10 • Understanding Work Teams 187

facilitate coordination between teams and lead them.33 Research indicated teams that received more attention and engagement from the organization’s leaders felt more empow- ered, which made them more effective as they sought to solve their own problems.34

CREATING EFFECTIVE TEAMS

Teams are often created deliberately but sometimes evolve organically. For example, tech startup teams are often started naturally by friends. In Noam Wasserman’s research of over ten thousand tech startups, nearly 40 percent of founders were friends before going into business.35 Interestingly, being friends increases the likelihood of failure, and for each additional friend on the founding team, Wasserman suggests, the likelihood of the founders leaving the startup increases by nearly 30 percent.36

Many people have tried to identify factors related to team effectiveness. To help, some studies have organized what was once a large list of characteristics into a relatively focused model.37 Exhibit 10-3 summarizes what we currently know about what makes teams effective. As you will see, it builds on many of the group concepts introduced in the chapter on foundations of group behavior. We can organize the key components of effective teams into three general categories. First are resources and other contex- tual influences that make teams effective. The second relates to the team’s composition.

Team effectiveness

Processes and States • Common purpose • Motivation • Team efficacy • Conflict and Cohesion • Social loafing • Trust

Composition • Abilities of members • Personality • Allocating roles • Diversity • Size of teams • Member flexibility • Member preferences

Context • Adequate resources • Leadership and structure • Culture or Climate • Performance evaluation and reward systems • Technology/Virtuality • Interdependence • Norms • Crises and Extreme Contexts

EXHIBIT 10-3 Team Effectiveness Model

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188 Part 3 • Communicating in Groups and Teams

Finally, process and state variables are events within the team that influence effective- ness. We will explore each of these components next.

Team Context

The five contextual factors most significantly related to team performance, discussed next, are adequate resources, leadership and structure, culture or climate, a performance evaluation and reward system that reflects team contributions, and crises and extreme contexts. (Technology/virtuality was discussed earlier in this chapter; interdependence was also discussed earlier in this chapter in our discussion of self-managed teams; norms, defined as acceptable standards of behavior within a group that are shared by the group’s members, were discussed in the previous chapter).

ADEQUATE RESOURCES Teams are part of a larger organization system; every work team relies on resources outside the group to sustain it. A scarcity of resources directly reduces the ability of a team to perform its job effectively and achieve its goals. As one study concluded after looking at thirteen factors related to group performance, “perhaps one of the most important characteristics of an effective work group is the support the group receives from the organization.”38 Important resources include timely information, proper equipment, adequate staffing, encouragement, and administrative assistance.

LEADERSHIP AND STRUCTURE Teams function well if they properly allocate roles and ensure the workload is shared by all team members. This requires leadership and structure, either from management or from team members themselves. Beyond initiating structure for team members, leaders play critical motivational roles for team members. For example, well-performing teams tend to have leaders who are transformational (see the chapter on leadership) and empowering.39 Furthermore, the relationship between the leader and their team member followers has been found to be more important for job attitudes, job performance, and turnover intentions than the relationships between team members themselves.40

CULTURE OR CLIMATE As will be discussed in the chapter on organizational culture, culture (e.g., organizational values, beliefs, and assumptions) and climate (e.g., organizational policies, practices, and procedures) are very important in organizations. However, teams can have their own cultures and climates that influence their effectiveness. For example, one study of teams within a Hong Kong multinational bank found that citizenship behaviors improved team performance in those that valued collectivism, as opposed to individualism.41

Earlier research on team climates specifically focused on policies, practices, and procedures related to team effectiveness and innovation. These studies suggest that a shared sense of vision; a sense of being able to share and collaborate in a nonthreat- ening environment; a concern for performance quality; encouragement of creative and innovative solutions; and regular, frequent interaction are the most important factors for team climate.42 Research in bank teams in Spain and research and development teams in Australia have supported the importance of these factors for teams, with strong team climates leading to increased team financial performance (e.g., sales made) as well as innovation performance (e.g., speed to innovation, project completion).43 Over the

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past decade, more research has examined the effects of different climates in teams. For example, perceptions of fair and just policies, practices, and procedures have proved very important for team attitudes, conflict, and performance.44

PERFORMANCE EVALUATION AND REWARD SYSTEM Individual performance evaluations and incentives may interfere with the development of high-performance teams. So, in addition to evaluating and rewarding employees for their individual contributions, management should utilize hybrid performance systems that incorporate an individual member component to recognize individual contributions, and a group reward to recognize positive team outcomes.45 Group-based appraisals, profit sharing, small-group incentives, and other system modifications can reinforce team effort and commitment. Furthermore, when instituting a performance management system, constructive feedback can have a positive effect on team performance.46 However, one should take care to avoid bias and discrimination in implementing a team reward system: research demonstrates that teams composed of primarily black employees tend to be stigmatized to a greater degree (and paid less) than those composed of white employees.47

CRISES AND EXTREME CONTEXTS Crises and extreme contexts are a crucible in which the merits of teams can be put to the test. These contexts can unlock the potential of team members who do truly great things under stress. They can also lead to the unraveling of the team fabric, resulting in disaster. As an example, in the Mann Gulch fire of 1949, dozens of smokejumpers (i.e., elite firefighters who are airlifted to fight wildfires) led by foreman “Wag” Dodge were dispatched to an area south of the Mann Gulch valley in Montana after a lightning storm caused a wildfire.48 Illustrating how quickly crises can escalate and unravel a team, Dodge saw the fire was moving toward them at 610 feet per minute with thirty-foot-high flames. The team turned around and headed up the 76 percent grade mountain toward the ridge. They were quickly losing ground, and Dodge yelled for everyone to drop their tools, lit a fire in front of them, and told them to lie down in the area he had burned. No one listened, and they all ran for the ridge. Dodge lived by lying down in the ashes of his escape fire.49

Disasters and extreme contexts alike have attracted a lot of research attention from OB researchers in the past several decades. From astronauts in long-duration space missions to health professional teams responding to crises during a worldwide pan- demic, teams may find themselves in extreme, disastrous contexts and must act quickly together to perform their duties.50 Research on multiteam systems in disaster environ- ments demonstrate that people tend to default to gathering information rather than tak- ing action—when they do take action, they do so without deliberately considering the context or options or even forming a plan.51 Several factors play a role in inf luencing team success during crises. Leaders are extremely important in these contexts (just con- sider Dodge’s role in the Mann Gulch fire). Leaders are most effective during disas- ters when they support team problem solving, are supportive of the team members, initiate structure and planning, delegate, and coordinate as well as help team members make sense of the situation.52 Structure also plays an important role. Team scaffolds (i.e., fluid, underlying structures that establish role types, shared responsibilities, and boundaries in teams) have been shown to help support coordination during crises because they establish accountability, a shared understanding, and a sense of identity or belonging.53 Indeed, this fluidity and f lexibility are important for teams in crisis, as

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higher-performing teams tend to be adaptable and exhibit few, short, and simple interac- tion patterns.54 As for individual team members during times of crisis, positive affectiv- ity (PA; see the chapter on personality and individual differences) can help buffer the negative impact of the strain of the crisis situation.55 Finally, informed decision-making is critical, as team members should know where to target decision making (e.g., toward the problem or the coordination of team members), how to share information effectively with team members, and when to ref lect on team objectives, processes, and strategies before acting.56

Team Composition

Maria Contreras-Sweet, former head of the U.S. Small Business Administration, said, “When I’m building a team, I’m looking for people who are resourceful. I need people who are flexible, and I really need people who are discreet... . Discreetness also speaks to integrity.”57 These are good qualities, but not all that we should consider when staffing teams. The team composition category includes variables that relate to how teams should be staffed: the abilities and personalities of team members, allocation of roles, diversity (see the chapter on foundations of group behavior), cultural differences, size of the team, and members’ preferences for teamwork.

ABILITIES OF MEMBERS It is true we occasionally read about an “underdog” team of mediocre players who, because of excellent coaching, determination, and precision teamwork, beat a far more talented group. But such cases make the news precisely because they are unusual. A team’s performance depends in part on the knowledge, skills, and abilities of individual members.58 Abilities set limits on what members can do and how effectively they will perform on a team. Research suggests that a number of groups of abilities are helpful to be an effective team member, namely conflict resolution, collaborative problem solving, communication, goal setting, and planning abilities/ skills.59 In general, despite being weakly related to team performance, complementary backgrounds (e.g., education level, area of expertise, and abilities) also tend to be more strongly related to innovation and creativity in practice.60 It is also worth noting that, over time, the experiences of the team members add up to improve performance by enhancing the way problems are solved as members learn to work together.61 In other words, team members learn how to work with one another over time.

PERSONALITY OF MEMBERS We demonstrated in the chapter on personality and values that personality significantly influences individual behavior. Some dimensions identified in the Big Five personality model are particularly relevant to team effectiveness.62 Conscientiousness is especially important to teams.63 Conscientious people are good at backing up other team members and sensing when their support is truly needed.

What about the other traits? Teams that are more agreeable tend to perform bet- ter. The level of team member agreeableness matters, too: Teams do worse and are less cohesive when they have disagreeable members, and a wide span in individual levels of agreeableness can lower productivity.64 Open team members are willing to share more ideas with one another, which makes teams with open people more cre- ative and innovative.65 Teams confronted with task conf lict will likely perform better when they are composed of members with high levels of emotional stability.66 It’s

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not so much that the conf lict itself improves performance for these teams, but that teams characterized by emotional stability are able to handle conf lict and leverage it to improve performance. Research is not clear on the outcomes of extraversion, but one study indicated that a high mean level of extraversion in a team can increase the level of helping behaviors, particularly in a team climate of cooperation.67 Beyond the Big Five, recent research has suggested that team proactive personality (see the chapter on personality and individual differences) is important for team innovation.68 Thus, the personality traits of individuals are as important to teams as the overall personality characteristics of the team.

ALLOCATION OF ROLES Teams have different needs, and members should be selected to ensure all the various roles are filled.69 A study of 778 major league baseball teams over a twenty-one-year period highlighted the importance of assigning roles appropriately.70 As you might expect, teams with more skilled members performed better. However, the skill of those in core roles—those who handled more of the workflow of the team and were central to all work processes (in this case, pitchers and catchers)—were especially vital.71

We can identify nine potential team member roles (see Exhibit 10-4). Successful work teams have selected people to play all these roles based on their skills and pref- erences (On many teams, individuals will play multiple roles). To increase the likeli- hood team members will work well together, managers need to understand the individual strengths each person can bring to a team, select members with their strengths in mind, and allocate work assignments that fit with members’ preferred styles.

Team

Adviser

Creator

Promoter

Assessor

Organizer

Producer

Controller

Maintainer

Linker

Fights external battles

In iti

at es

c re

at iv

e id

ea s

Cha mpio

ns id eas

after they

’re in itiate

d

Offers insightful analysis of options

Provides

structure

Ex am

ine s d

eta ils

an d e

nfo rce

s r ule

s

Pr ov

id es

d ire

ct io

n an

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-th ro

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C oordinates and

integrates

Encourages the search

for more information

EXHIBIT 10-4 Potential Team Member Roles

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DIVERSITY OF MEMBERS In the chapter on foundations of group behavior, we discussed the effect of diversity on groups. How does team diversity affect team performance? The degree to which members of a work unit (group, team, or department) share a common demographic attribute, such as age, sex, race, educational level, or length of service in the organization, is the subject of demography. Demography research suggests that turnover will be greater among those with dissimilar experiences, as communication may be more difficult and conflict more likely.72 However, the conclusion from reviews of hundreds of studies suggests that demographic diversity has a negative (but very small) effect on team performance and creativity.73 Many of us hold the optimistic view that diversity should be a good thing—diverse teams should benefit from differing perspectives.74 But as reviewed in the chapter on foundations of group behavior, we realize that the picture is complicated by several issues, and there is not a straight answer to whether diversity is always a good thing.

CULTURAL DIFFERENCES We have discussed research on team diversity regarding several differences. But what about cultural differences? Evidence indicates cultural diversity interferes with team processes, at least in the short term,75 but let us dig a little deeper. What about differences in cultural status? Researchers in the United Kingdom, for example, found that cultural status differences affected team performance, noting that teams with more high-cultural-status members than low-cultural-status members realized improved performance—for every member on the team.76 This suggests not that diverse teams should be filled with individuals who have high cultural status in their countries, but that we should be aware of how people identify with their cultural status even in diverse group settings. In general, cultural diversity seems to be an asset for tasks that call for a variety of viewpoints. But culturally heterogeneous teams have more difficulty learning to work with each other and solving problems. The good news is that these difficulties seem to dissipate with time.

SIZE OF TEAMS Many experts believe that keeping teams small is key to improving group effectiveness.77 Amazon CEO Jeff Bezos uses the “two-pizza” rule, saying, “If it takes more than two pizzas to feed the team, the team is too big.”78 Author and Forbes publisher Rich Karlgaard writes, “Bigger teams almost never correlate with a greater chance of success” because the potential connections between people grow exponentially as team size increases, complicating communications and leading to decreased perceptions of support.79

Experts suggest using the smallest number of people who can do the task. Unfortunately, managers often err by making teams too large because they believe more people means more benefits (while increasingly underestimating the number of hours required to complete projects, and other losses associated with adding more people).80 When teams have excess members, cohesiveness and mutual accountability decline, social loafing increases, and people communicate less.81 Members of large teams have trouble coordinating with one another, especially under time pressure. When a natural working unit is larger and you want a team effort, consider breaking the group into sub- teams.82 The most effective teams have about five to nine members.

MEMBER PREFERENCES Not every employee is a team player. Given the option, many employees will select themselves out of team participation. When people who prefer

Demography The degree to which members of a work unit share a com- mon demographic attribute; such as age, sex, race, educational level, or length of service in an organi- zation.

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to work alone are required to team up, there is a direct threat to the team’s morale and to individual member satisfaction.83 This suggests that, when selecting team members, managers should consider individual preferences along with abilities, personalities, and skills. High-performing teams are likely to be composed of people who prefer working as part of a group.

Team Processes and States

The final category related to team effectiveness includes process variables and team states such as member commitment to a common plan and purpose, specific team goals, team efficacy, team identity, team cohesion, mental models, conflict, cohesion, social loafing, and trust. These characteristics tend to be excellent predictors of team performance and team member attitudes and are especially important in larger teams and in teams that are highly interdependent.84

Why are processes important to team effectiveness? Teams should create outputs greater than the sum of their inputs. Exhibit 10-5 illustrates how group processes can have an impact on a group’s actual effectiveness.85

COMMON PLAN AND PURPOSE Effective teams begin by analyzing the team’s mission, developing goals to achieve that mission, and creating strategies for achieving the goals. Teams that consistently perform better have a clear sense of what needs to be done and how.86 This sounds obvious, but many teams ignore this fundamental process. Effective teams show reflexivity, meaning they reflect on and adjust their purpose when necessary.87 A team must have a good plan, but it needs to be willing and able to adapt when conditions call for it.88 As some examples, reflexivity can help improve psychological well-being in manufacturing teams, help startup teams learn from their setbacks, and help improve performance in extreme environments like hospital emergency rooms.89 Interestingly, some evidence suggests that teams high in reflexivity are better able to adapt to conflicting plans and goals among team members.90

MOTIVATION Successful teams translate their common purpose into specific, measurable, and difficult (yet realistic) performance goals that align with team objectives.91 So, for instance, goals for quantity tend to increase quantity, goals for accuracy increase accuracy, and so on.92 Furthermore, setting goals intended to improve team member performance (instead of team performance as a whole) has the tendency to undermine group performance.93 As such, individual goals should be linked to the actual goals of the group. Furthermore, motivational factors beyond goals matter. For instance, beyond goal setting, the actual experience of striving toward a goal involves wins, setbacks, and conservation of energy. Teams that are geared toward achievement tend to perform better over time.94 Furthermore, teams that are strategic in how they allocate their resources and energy tend to perform better. For example, one study of five National Hockey League (NHL) seasons suggest that teams that are strategic in when they bench their most valuable players predicts their end-of-season record.95

Reflexivity A team characteris- tic of reflecting on and adjusting their purpose or plan when necessary.

Potential group effectiveness

1 52 Process gains

Process losses

Actual group effectiveness

EXHIBIT 10-5 Effects of Group Processes

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TEAM EFFICACY Effective teams have confidence in themselves; they believe they can succeed. We call this team efficacy.96 Teams that have been successful raise their beliefs about future success, which, in turn, motivates them to work harder. Prior research has demonstrated that team efficacy is strongly predictive of team performance, especially when team members are dependent upon one another to contribute to team goals.97 In addition, teams that have a shared knowledge of individual capabilities can strengthen the link between team members’ self-efficacy and their individual creativity because members can more effectively solicit informed opinions from their teammates.98

What can be done to increase team efficacy? Two ways might be found in help- ing the team achieve small successes that build confidence and providing training to improve members’ technical and interpersonal skills. The greater the abilities of team members, the more likely the team will develop confidence and the ability to deliver on that confidence.

TEAM IDENTITY In the chapter on foundations of group behavior, we discussed the important role of social identity in people’s lives. When people connect emotionally with the groups they are in, they are more likely to invest in their relationship with those groups. It is the same with teams.99 For example, research with soldiers in the Netherlands indicated that individuals who felt included and respected by team members became more willing to work hard for their teams, even though as soldiers they were already called upon to be dedicated to their units.100 Therefore, by recognizing individuals’ specific skills and abilities, as well as creating a climate of respect and inclusion, leaders and members can foster positive team identity and realize improved team outcomes.101

Organizational identity is important, too. Although team identification is often stron- ger than other types of identification, rarely do teams operate in a vacuum—they are part of a larger organization and interact with other units, teams, and people.102 Individuals with a positive team identity but without a positive organizational identity can become fixed to their teams and unwilling to coordinate with other teams within the organization.103 In general, however, team identity serves an instrumental role in affecting team performance, attitudes, and cooperation; in other words, more positive organizational identification tends to lead to more positive team identification, which is beneficial for team outcomes.104

TEAM COHESION Have you ever been a member of a team that really “gelled,” one in which team members felt connected? The term team cohesion means members are emotionally attached and bonded to one another and committed toward the team. Experiments on astronauts (to prepare for an eventual mission to Mars) in isolated, confined, and extreme environments such as those outside of Hawaiian volcanoes has found that cohesion tends to break down over several months into missions.105 By studying factors that lead to these breakdowns in cohesion, researchers hope to improve astronaut team functioning.

Cohesive teams tend to perform better than non-cohesive teams—evidence also suggests the reverse can be true (better performing teams can become more cohesive as a result of their successes).106 Several factors can increase team cohesion, such as shared leadership responsibilities, open information sharing among team members, and interde- pendence among team members.107 Recent research also suggests that the effects of team cohesion can last even after the team has disbanded—particularly cohesive teams may develop friendships and networks that they draw on for the rest of their lives.108

Team efficacy A team’s collective belief among team members that they can succeed at their tasks.

Team identity Team members’ affinity for and sense of belongingness to their teams.

Team cohesion When team members are emotionally attached and bonded to one another and committed toward the team.

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MENTAL MODELS The members of an effective team share accurate mental models— organized mental representations of the key elements within a team’s environment (team mission and goals pertain to what a team needs to be effective, while mental models pertain to how a team does its work).109 If team members have the wrong mental models, which is particularly likely in teams under acute stress, their performance suffers.110 One review found that teams with shared mental models engaged in more frequent interactions with one another, were more motivated, had more positive attitudes toward their work, and had higher levels of objectively rated performance.111 If team members have different ideas about how to do things, however, the team will fight over methods rather than focus on what needs to be done.112

Teams should also develop transactive memory systems, which represent a shared model of information relevant to the team. For example, these types of teams enable team members to know “who knows what and is best at what” so that the most-skilled mem- bers are assigned tasks they are best suited for and the most knowledgeable are consulted for advice on issues they are experts in.113 Transactive memory systems are important for performance, especially in collectivist and high power distance cultures and in environ- ments that are particularly volatile (e.g., times of crisis).114

An anesthetic team in a hospital is one example of an action team with shared mental models. Research in Switzerland found that anesthetic teams communicated two distinct types of messages while in an operation: vocally monitoring each other’s perfor- mance (not to criticize but to keep a vocal record of events) and “talking to the room” (announcements to everyone such as “Patient’s blood pressure is dropping”). The study found that high- and low-performing teams communicated in these ways equally often; what mattered to performance was the sequencing of the communication to maintain a shared mental model. High-performing teams followed up monitoring dialogue with assistance, instructions, and talking-to-the-room dialogue.115 The message seems simple: to maintain shared mental models and to share in conversations about what is happening while the team is in operation!

TEAM CONFLICT Conflict has a complex relationship with team performance, and it is not necessarily bad (see the chapter on conflict and negotiation).116 Relationship conflicts—those based on interpersonal incompatibility, tension, and animosity toward others—are almost always dysfunctional. However, when teams are performing nonroutine activities, disagreements about task content—called task conflicts—stimulate discussion, promote critical assessment of problems and options, and can lead to better team decisions. According to one study conducted in China, moderate levels of task conflict during the initial phases of team performance were positively related to team creativity, but both very low and very high levels of task conflict were negatively related to team performance.117 In other words, both too much and too little disagreement about how a team should initially perform a creative task can inhibit performance.

SOCIAL LOAFING As we noted in the chapter on foundations of group behavior, individuals can engage in social loafing and coast on the group’s effort when their contributions (or lack thereof) cannot be identified. Effective teams undermine this tendency by making members individually and jointly accountable for the team’s purpose, goals, and approach.118 Therefore, members should be clear on what they are individually and jointly responsible for on the team.

Mental models Team members’ knowledge and beliefs about how the work gets done by the team.

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TEAM TRUST During the COVID-19 pandemic, it was clear just how important trust is to the successful operation of teams. Lindsay Kaplan, co-founder and CEO of Chief, recounts life as a virtual manager during this time after a household emergency with her baby: “I text the marketing team that I’ll likely be late to our team meeting . . . trust in my team is what’s getting me through. I believe in hiring slowly, and it’s rewarding to see our carefully curated team operate self-sufficiently.”119 Trust in teams entails a mutual, positive state of positive expectations between team members. When you trust a team member, you believe in their reliability and dependability and are genuinely concerned for their welfare (and vice versa). Trust can be broken, but it can also be repaired.120 Team trust has been shown to have a sizeable effect on team performance, especially in virtual teams.121 Team trust evolves over time as members share with one another, put effort into the team, and monitor one another’s performance.122

TURNING INDIVIDUALS INTO TEAM PLAYERS

Many organizations have historically gone to great lengths to hire, train, and reward team players given how important teams are to the success of organizations. As some examples, Don Yaeger (author and associate editor at Sports Illustrated), notes that organizations wish to hire people “who think team first”—instead of those who engage in self-centered behavior.123 Search and rescue teams have also engaged in team training in order to hone team processes that lead to successful search and rescue missions.124 Dental teams have also implemented team bonus plans in order to reward team performance.125

Selecting: Hiring Team Players

Some people already possess the interpersonal skills to be effective team players. Therefore, managers, when hiring team members, can make certain that candidates can fulfill their team roles as well as technical requirements.126 Creating teams often means resisting the urge to hire the best talent no matter what. For example, the New York Knicks professional basketball team pays Carmelo Anthony well because he scores a lot of points for his team; but statistics show he takes more shots than other highly paid players in the league, which means fewer shots for his teammates.127 As discussed in this chapter, a number of personality traits, abilities, and other characteristics lead to effec- tive team performance—managers should be sure to hire applicants who have the highest potential to perform well in a team, and strategically place them in teams where they are most likely to work well with the other team members.128

Training: Creating Team Players

Training specialists conduct exercises that enable teams to perform more effectively by learning relevant team skills and practices. A large body of research suggests that team training is effective at improving team member attitudes, team processes, and cogni- tive aspects like developing shared mental models; and that these findings generalize to particularly important industries (e.g., medical services).129 Workshops help employ- ees improve their problem-solving, communication, negotiation, conflict-management, and coaching skills. L’Oréal, for example, found that successful sales teams required much more than a staff of high-ability salespeople. “What we didn’t account for was that many members of our top team in sales had been promoted because they had excellent

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technical and executional skills,” said L’Oréal’s senior VP David Waldock. As a result of introducing purposeful team training, Waldock said, “We are no longer a team just on paper, working independently. We have a real group dynamic now, and it’s a good one.”130 An effective team does not develop overnight—it takes time.

Rewarding: Providing Incentives to Be a Good Team Player

A traditional organization’s reward system must be reworked to encourage cooperative efforts rather than competitive ones.131 Hallmark Cards Inc. added to its basic individual- incentive system an annual bonus based on the achievement of team goals. Whole Foods directs most of its performance-based rewards toward team performance. As a result, teams select new members carefully so they will contribute to team effectiveness (and, thus, team bonuses).132 Promotions, pay raises, and other forms of recognition should be given to individuals who work effectively as team members by training new colleagues, sharing information, helping resolve team conflicts, and mastering needed new skills. Team-based rewards have been shown to positively influence team performance, espe- cially when they are distributed based on individual’s level of contribution (rather than equally distributed).133 This does not mean individual contributions should be ignored; rather, they should be balanced with selfless contributions to the team.

Finally, do not forget the intrinsic rewards, such as camaraderie, that employees can receive from teamwork. The opportunity for personal development of self and teammates can be a very satisfying and rewarding experience. Ben Affleck and Oscar Isaac, while filming Triple Frontier (about former Special Forces operatives and their difficulties in acclimating to civilian life), commented on the sense of loyalty, camaraderie, and team- work they experienced in playing those roles (even permeating into their own lives).134

BEWARE! TEAMS ARE NOT ALWAYS THE ANSWER

Teamwork takes more time and often more resources than individual work. Teams have increased communication demands, conflicts to manage, and meetings to run. So, the benefits of using teams must exceed the costs, and that is not always possible.135

How do you know whether the work of your group would be better done in teams? You can apply three tests.136 First, can the work be done better by more than one person? Good indicators are the complexity of the work and the need for different perspectives. Simple tasks that do not require diverse inputs are probably better left to individuals. Second, does the work create a common purpose or set of goals for the people in the group that is more than the aggregate of individual goals? Many service departments of new vehicle dealers have introduced teams that link customer-service people, mechan- ics, parts specialists, and sales representatives. Such teams can better manage collective responsibility for ensuring customer needs are properly met. The final test is to determine whether the members of the group are interdependent. Using teams makes sense when there is interdependence among tasks—the success of the whole depends on the success of each one, and the success of each one depends on the success of the others. Soccer, for instance, is an obvious team sport. Success requires a great deal of coordination among interdependent players. Conversely, except possibly for relays, swim teams are not really teams. They are groups of individuals performing individually, whose total performance is merely the aggregate summation of their individual performances.

Nu Skin Enterprises Nu Skin, a personal care products company, rewards top sales representatives with “success trips.” The company made history in 2013 when Nu Skin China flew out 16,000 employees for an incentive trip to the United Arab Emirates. A fleet of 40 limousines, chartered trips by Emirates airlines, gala dinners, 39,514 hotel rooms, and 409 tourist guides helped them celebrate record profits and the company’s 30th anniversary.

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SUMMARY

Working on teams requires employees to cooperate with others, share information, confront differences, and sublimate personal interests for the greater good of the team. Understanding the distinctions between problem-solving, self-managed, cross-functional, and virtual teams as well as multiteam systems helps determine the appropriate applica- tions for team-based work. Concepts such as reflexivity, team efficacy, team identity, team cohesion, and mental models bring to light important issues relating to team con- text, composition, and processes. For teams to function optimally, careful attention must be given to hiring, creating, and rewarding team players. Still, effective organizations recognize that teams are not always the best method for getting the work done efficiently. Careful discernment and an understanding of organizational behavior are needed.

IMPLICATIONS FOR MANAGERS

• Effective teams have adequate resources, effective leadership, positive cultures and climates, and a performance evaluation and reward system that reflects team contributions. These teams have individuals with technical expertise, and the right traits and skills.

• Effective teams tend to be small. They have members who fill role demands and who prefer to be part of a group.

• Effective teams have members who believe in the team’s capabilities, are commit- ted to a common plan and purpose, and have an accurate shared mental model of what it is to be accomplished.

• Select individuals who have the interpersonal skills to be effective team players; provide training to develop teamwork skills; and reward individuals for cooperative efforts.

• Do not assume that teams are always needed. When tasks will not benefit from interdependency, individuals may be the better choice.

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199

Communication 11

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

11.1 Describe the functions and process of communication.

11.2 Contrast downward, upward, and lateral communication through small-group networks and the grapevine.

11.3 Contrast oral, written, and nonverbal communication.

11.4 Describe how channel richness underlies the choice of communication channel.

11.5 Differentiate between automatic and controlled processing of persuasive messages.

11.6 Identify common barriers to effective communication.

11.7 Discuss how to overcome potential problems of cross-cultural communication.

Communication is the primary means through which people connect with one another. Communication is not only used to transmit a message or impart meaning—it is also used to bond and forge connections with others. For instance, Shelley Zalis (CEO of The Female Quotient [FQ]) has created The FQ Lounge, which has connected more than 17,500 women in the corporate world.1 According to Jocelyn Greenky, CEO of Sider Road, this network has enabled women to find their voice and “build circles of trust with one another.”2

It may surprise you that communication includes both the transfer and the understanding of meaning. Communicating is more than merely imparting meaning; that meaning must also be understood. Though it sounds elementary, perfect communication is never achieved in practice due to poor delivery of messages, misunderstandings, and other obstacles.

Communication The transfer and the understanding of meaning.

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FUNCTIONS OF COMMUNICATION

Communication serves five major functions within a group or organization: management, feedback, emotional sharing, persuasion, and information exchange.3

MANAGING BEHAVIOR Communication acts to manage member behavior in several ways.4 Organizations have formal hierarchies and guidelines for employees that guide communication. When employees comply with company policies, communication performs a management function. Informal communication can also manage behavior. When work groups tease or harass a member who produces too much (and makes the rest of the members look bad), they are informally communicating, and managing, the member’s behavior.

FEEDBACK Communication can be used to convey feedback (see the chapter on motivation concepts), such as by clarifying to employees what they must do, how well they are doing it, and how they can improve their performance. Formation of goals, feedback on progress, and reward for desired behavior all require communication and stimulate motivation. Feedback is not merely a one-way supervisor-to-subordinate transaction. Supervisors may also seek feedback from subordinate employees,5 employees may informally give feedback about organizations (e.g., on websites such as Glassdoor),6 and customers provide feedback about providers’ service (e.g., on websites like Yelp).7

EMOTION SHARING Communication is a fundamental mechanism by which members show satisfaction and frustration. Communication, therefore, provides for the sharing of feelings to fulfill social needs. For instance, Lisa Jennings, a Canadian paramedic, started a campaign in which she reached out to other first responders to share their emotions concerning how they have been affected by traumatic events at work, to raise awareness among legislators for first responder mental-health injury.8 As a second example, Starbucks had baristas write “Race Together” on coffee cups to start conversations about race relations. In both cases, the initial communications were awkward, so awkward that Starbucks pulled the campaign, but Jennings and others have forged solid relationships from their emotional sharing.9

PERSUASION Like emotional sharing, persuasion can be good or bad depending on whether, say, a leader is trying to persuade a workgroup to commit to the organization’s corporate social responsibility initiatives or to, conversely, persuade the workgroup to break the law to meet an organizational goal. These may be extreme examples, but it is important to remember that persuasion can benefit or harm an organization.

INFORMATION EXCHANGE The final function of communication is information exchange to facilitate decision making. Communication provides the information (e.g., context, situation, norms, available choices) individuals and groups need to make decisions.

The Communication Process

Before communication can occur, it needs a purpose, a message to be conveyed between a sender and a receiver. The sender encodes the message (converts it to a symbolic form) and passes it through a medium (channel) to the receiver, who decodes it. The result is a transfer of meaning from one person to another.10

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Exhibit 11-1 depicts this communication process. The key parts of this model are (1) the sender, (2) encoding, (3) the message, (4) the channel, (5) decoding, (6) the receiver, (7) noise, and (8) feedback.

The sender initiates a message by encoding a thought. The receiver is the person(s) to whom the message is directed, who must first translate the symbols into understand- able form.

The message is the actual physical product of the sender’s encoding. When we speak, the speech is the message. When we write, the writing (e.g., a letter) is the mes- sage. When we gesture, the movements of our arms and the expressions on our faces are the message.

The channel is the medium through which the message travels. The sender selects it, determining whether to use a formal or informal channel. Formal channels are estab- lished by the organization and transmit messages that are related to the professional activities of members. For example, a formal resignation letter conveys an employee’s intentions to quit. Other forms of messages, such as those that are personal or social, fol- low informal channels, which are spontaneous and subject to individual choice.11 For example, throwing your apron off and storming out of the restaurant in which you work is a more informal way of conveying an employee’s intentions to quit.

Once received, the message should be decoded. Certain factors muddle the decod- ing of the message, so that it is not decoded in the way it was intended. Noise represents communication barriers that distort the clarity of the message, such as perceptual prob- lems, information overload, semantic difficulties, or cultural differences.

The final link in the communication process is a feedback loop. Feedback is the check on how successful we have been in transferring our messages as originally intended. It determines whether understanding has been achieved. This final link may or may not be achieved, depending upon whether the receiver engages in closed-loop communication (i.e., when the receiver acknowledges, verbally or nonverbally, that they heard and/or understood the message).12

DIRECTION OF COMMUNICATION

Communication can flow vertically or laterally, through formal small-group networks or the informal grapevine. We subdivide the vertical dimension into downward and upward directions.13 For instance, you may think of a CEO or founder establishing a vision for

Communication process The steps between a source and a receiver that result in the transfer and under- standing of meaning.

Formal channels Communication channels established by an organization to transmit messages related to the profes- sional activities of members.

Informal channels Communication channels that are cre- ated spontaneously and that emerge as responses to indi- vidual choices.

Sender

Encoding message

Channel

Noise

Feedback

Message received

Receiver

Message decoding

Message to be sent

EXHIBIT 11-1 The Communication Process

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an entire organization (see the next chapter)—however, in reality, communication trans- forms this vision as it travels downward, laterally, and upward throughout the organiza- tion, resulting in separate sub-visions.14

Downward Communication

Communication that flows from one level of a group or organization to a lower level is downward communication. In downward communication, the delivery mode and the context of the information are of high importance. Group leaders and managers use it to assign goals, provide job instructions, explain policies and procedures, point out prob- lems that need attention, and offer feedback. More informally, group leaders and manag- ers may also convey signals of their rank (e.g., prestige or dominance) through downward communication.15

Consider the ultimate downward communication: the performance review. Automated performance reviews have allowed managers to review their subordinates without discussions, which is efficient but misses critical opportunities for growth, motivation, and relationship building.16 In general, employees subjected to indirect, impersonal communications are less likely to understand the intentions of the message correctly. The best communicators explain the reasons behind their downward communi- cations but also solicit communication from the employees they supervise.17

Upward Communication

Upward communication flows to a higher level in the group or organization.18 It is used to provide feedback to higher-ups, inform them of progress toward goals, and relay cur- rent problems. Upward communication keeps managers aware of how employees feel about their jobs, coworkers, and the organization in general. Managers also rely on upward communication for ideas on how conditions can be improved. When employees remain silent, they are withholding potentially useful organization for their superiors. In general, managers should consider what might get in the way of employees upwardly communicating needed information (e.g., personality, stressors, fear, rigid organizational hierarchies, detachment),19 especially if the managers are not perceived as very open to suggestions.20

Given that most managers’ job responsibilities have expanded, upward communica- tion is increasingly difficult because managers can be overwhelmed and easily distracted. To engage in effective upward communication, try to communicate in short summaries rather than long explanations, support your summaries with actionable items, and prepare an agenda to make sure you use your boss’s attention well.21 Your delivery can be as important as the content of your communication.

Lateral Communication

When communication occurs between members of the same workgroup, members at the same level in separate workgroups, or any other horizontally equivalent workers, we describe it as lateral communication.22

Lateral communication saves time and facilitates coordination. Some lateral rela- tionships are formal, such as when project teams at Social Native meet to discuss the team objectives and solve problems. (No one at Social Native has their own office, to

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inspire lateral communication!)23 On the other hand, some lateral communication can also be informal, such as when coworkers witness the emotional expression of another coworker.24 For example, witnessing a crying coworker leaving the manager’s office can be a powerful message to the rest of the office. Lateral communication occurring with management’s knowledge and support can be beneficial. But dysfunctional conflict can result when formal vertical channels are ignored, such as when managers find actions have been taken or decisions made without their knowledge. Therefore, both lateral and vertical communication should be used in organizations.

Formal Small-Group Networks

Formal organizational networks can be complicated, including hundreds of people and a half-dozen or more hierarchical levels.25 We have condensed these networks into three common small groups of five people each (see Exhibit 11-2): chain, wheel, and all channel.

The chain rigidly follows the formal chain of command; this network approxi- mates the communication channels you might find in a rigid three-level organization. The wheel relies on a central figure to act as the conduit for all group communication; it simulates the communication network you might find on a team with a strong leader. The all-channel network permits group members to actively communicate with each other; it is most often characterized by self-managed teams, in which group members are free to contribute and no one person takes on a leadership role. Many organizations today like to consider themselves all channel, meaning that anyone can communicate with anyone (but sometimes they should not).

As Exhibit 11-3 demonstrates, the effectiveness of each network is determined by the outcome you are interested in. The structure of the wheel facilitates the emergence of a leader, the all-channel network is best if you desire high member satisfaction, and the chain is best if accuracy is most important.

The Grapevine

The informal communication network in a group or organization is called the grapevine.26 Typically, the grapevine and gossip are viewed negatively by most people. Indeed, research shows that untrustworthy gossip can cause people to unfairly judge and dislike others.27 Overall, the grapevine is a mixed blessing, leading to positive per- formance because of the sense of social pressure it produces while also undermining

Grapevine An organization’s informal communica- tion network.

Chain Wheel All Channel EXHIBIT 11-2 Three Common Small Group Networks

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employee well-being.28 Furthermore, rumors and gossip transmitted through the grape- vine may be an important source of information for employees and job applicants.29 Grapevine or word-of-mouth information from peers about a company has important effects on whether job applicants join an organization,30 even over and above informal ratings on websites like Glassdoor. For employers, it is also a way to recruit from within the employees’ own networks: for example, the TWT Group (a Canadian information technology firm) recruits potential applicants from within their own networks, who they know and trust.31

The grapevine is an important part of any group or organization communication network. It serves employees’ needs: Small talk creates a sense of closeness and friend- ship among those who share information, although often at the expense of those in the outgroup.32 Managers can study the gossip driven largely by employee social networks to learn more about how positive and negative information is flowing through the organiza- tion.33 Furthermore, managers can identify influencers (highly networked people trusted by their coworkers34) by noting which individuals are small talkers (those who regularly communicate about insignificant, unrelated issues). Small talkers tend to be influencers and are significantly more likely to retain their jobs during layoffs.35 Furthermore, one study used artificial intelligence to detect small talk and follow-up questions during one- on-one conversations, and was able to demonstrate that follow-up questions predicted liking and intentions to continue to have conversations with that person in the future.36

However, the way “small talkers” go about their deeds matters: Collaborating and helping with others, rather than gossip, tends to be related to earning a “central posi- tion” in the network.37 Regardless, being an active, helpful participant in the grapevine appears to help. It can even help entrepreneurs doing business in new countries face the challenges of being labeled as an “outsider,” gaining legitimacy through attempting to be a part of local networks and communities.38 Thus, while the grapevine may not be sanc- tioned or controlled by the organization, it can be understood and leveraged a bit.

MODES OF COMMUNICATION

The choice between modes of communication can greatly enhance or detract from the way the perceiver reacts to the message. For example, consider a doctor at a hospital in California who informed a seventy-eight-year-old (surrounded by family) that he was unlikely to survive his illness. You may picture the doctor gently comforting the family of the dying man. However, the family was outraged that the doctor sent a rolling video technology robot to deliver the news instead.39 Clearly, certain modes are highly pre- ferred for specific types of communication. Aside from issues of whether to virtually or corporeally communicate, we must also draw upon oral, written, and nonverbal modes to communicate with others. We will cover the latest thinking and practical application.

Networks WheelCriteria Chain All Channel

Speed Accuracy Emergence of a leader Member satisfaction

Moderate High Moderate Moderate

Fast High High Low

Fast Moderate None High

EXHIBIT 11-3 Small Group Networks and Effectiveness Criteria

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Oral Communication

A primary means of conveying messages is oral communication. Speeches, formal one- on-one and group discussions, and the informal grapevine are popular forms of oral communication.

The advantages of oral communication are speed, feedback, and exchange. Regarding speed, we can convey a verbal message and receive a response in minimal time. If the receiver is unsure of the message, rapid feedback allows the sender to quickly detect and correct it. Unfortunately, we should acknowledge that we are usually bad lis- teners. Researchers indicate that we are prone to “listener burnout” in which we tune the other person out and rush to offer advice. “Good listeners overcome their natural inclination to fix the other’s problems and to keep the conversation brief,” said Professor Graham Bodie.40 Active listening—in which we remove distractions, lean in, make eye contact, paraphrase, and encourage the talker to continue41—helps us learn more and build trust if we are genuine and not judgmental.42 The exchange given through oral com- munication has social, cultural, and emotional components. Cultural social exchange, in which we purposefully share exchanges that transcend cultural boundaries, can build trust, cooperation, and agreement between individuals and teams.43

One major disadvantage of oral communication surfaces whenever a message must pass through several people: the more people, the greater the potential distortion. If you have ever played “Telephone,” you know the problem. Each person who receives a whis- pered message in this pass-along game interprets the message in their own way. The mes- sage’s content, when it reaches its destination, is often very different from the original, even when we think the message is simple and straightforward. For example, in product development teams, the engineers may often be so far removed from the customers that they end up building something (often quite well) that does not match the customers’ expectations.44 In these situations, the teams receive communications filtered through a number of layers without ever meeting with the customers themselves—prompting many organizations to turn to engineer teams who can effectively work with clients and be savvy engineers.

Written Communication

Written communication includes letters, e-mail, instant messaging, organizational peri- odicals, and any other method that conveys written words or symbols. Written business communication today is usually conducted via letters, PowerPoint®, e-mail, instant mes- saging, text messaging, social media, apps, and blogs. Some of these create a digital or physical long-term record, while the advantage of others is quick, fleeting information exchange. The disadvantages are also specific to each written mode.

Data mining and artificial intelligence approaches to analyzing (and learning from) data have benefited greatly from written business communication repositories. Through natural language processing, researchers can train algorithms to incorporate the actual words people use in e-mail, instant messages, social media, and other written communi- cation media (including hashtags) to measure emotions, moods, personality traits, stress, and other characteristics of employees.45 The business applications have been nearly end- less, with companies using natural language processing to better understand the types of products customers may be interested in (and to advertise accordingly) as well as cus- tomer sentiment and intentions in real time, to detect fraud and compliance in accounting,

Atos In 2011, Thierry Breton, the then CEO of Atos SE, a leading digital services company with 100,000 employees in 72 countries, introduced a company-wide zero-email policy. He believed that banning internal email would improve employee productivity. Atos’s own social network is a platform designed to facilitate group communication, resulting in more efficient collaboration and information sharing among employees—who did indeed report feeling far more productive after the email ban.

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to improve patient experience and diagnostic power in medical contexts, to intelligently detect sensitive information (and improve cybersecurity protection efforts), and to even create digital assistants to help teams manage tasks.46 The market outlook has been immense as well: The market is said to exceed 26.4 billion dollars by 2024 and to grow at a rate of 21 percent between 2019 and 2024.47

Nonverbal Communication

When we deliver a message, we also impart an unspoken message.48 No discussion of communication would thus be complete without consideration of nonverbal communica- tion; which includes body movements, the intonations or emphasis we give to words, and facial expressions.49 We could argue that every body movement has meaning, and no movement is accidental (though some are unconscious). We smile to project trustworthi- ness, uncross our arms to appear approachable, and stand to signal authority.50 We may also engage in nonverbal communication unconsciously and automatically—when events happen, we react and express our emotions—the bystanders perceiving our emotions then make appraisals based on the emotional expressions.51

If you read the minutes of a meeting, you would not grasp the impact of what was said the same way as if you had been there or could see the meeting on video. Why not? There is no record of nonverbal communication, and the emphasis given to words or phrases (intonation) is missing. Intonations can change the meaning of a message. Facial expressions also convey meaning. Facial expressions, along with intonations, can show arrogance, aggressiveness, fear, shyness, and other emotions. For example, nonverbal behaviors (e.g., handshaking) of both interviewers and applicants in job interviews sug- gests that this form of communication is important for molding and managing impres- sions.52 Nonverbal communication can affect the behavior of communication receivers. For example, racial bias can also be contagious through nonverbal communication:53 In one research study, merely watching videos of white individuals subtly treating black individuals poorly prompted observers to adopt negative racial stereotypes and form neg- ative impressions of the black person.54

CHOICE OF COMMUNICATION CHANNEL

Why do people choose one channel of communication over another? A model of channel (or media) richness helps explain channel selection among managers.55

Channel Richness

Channels differ in their capacity to convey information.56 Some are rich in that they can (1) handle multiple cues simultaneously, (2) facilitate rapid feedback, and (3) be very personal. Others are lean, in that they score low on these factors. Face-to-face con- versation scores highest in channel richness because it transmits the most information per communication episode—multiple information cues (words, postures, facial expres- sions, gestures, intonations), immediate feedback (both verbal and nonverbal), and the personal touch of being present. Other examples of media with high channel richness (in descending order) include video conferences, telephone conversations, live speeches, and voice mail. Impersonal written media such as formal reports and bulletins score lowest in richness.

Channel richness The amount of information that can be transmitted during a communication episode.

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Choosing Communication Methods

The choice of channel depends on whether the message is routine. Routine messages tend to be straightforward and have minimal ambiguity; channels low in richness can carry them efficiently. Nonroutine communications are likely to be complicated and have the potential for misunderstanding. Managers can communicate them effectively only by selecting the appropriate channel for the message.57 In the sections that follow, we describe when it is appropriate to choose oral, written, and nonverbal communication.

CHOOSING ORAL COMMUNICATION Whenever you need to gauge the receiver’s receptivity, oral communication is usually the better choice. The marketing plan for a new product, for instance, may need to be worked out with clients in person, so you can see their reactions to each idea you propose. Also consider the receiver’s preferred mode of communication; some individuals focus on content better in written form and others prefer discussion. For example, if your manager requests a meeting with you, you may not want to ask for an e-mail exchange instead. The pace of your work environment matters too. A fast-paced workplace may thrive on pop-by meetings, while a deadline- heavy team project may progress faster with scheduled Zoom videoconferences.

Much of what we communicate face-to-face is in the delivery, so also consider your speaking skills when choosing your communication method. Research indicates the sound of your voice is twice as important as what you are saying. A good speaking voice, clear and moderated, can be a help to your career. Your work teams can help you raise your awareness so you can make changes, or you may benefit from the help of a voice coach.58

CHOOSING WRITTEN COMMUNICATION Written communication is generally the most reliable mode for complex and lengthy communications, and it can be the most efficient method for short messages when, for instance, a two-sentence text can take the place of a ten-minute phone call. But keep in mind that written communication can be limited in its emotional expression.

Choose written communication when you want the information to be tangible, verifiable, and “on the record.” Letters are used in business primarily for networking and record-keeping purposes, and when signatures need to be authentic. Also, a handwritten thank-you note is never a wrong choice for an applicant to send after an employment interview, and handwritten envelopes are often put right on the receiver’s desk unopened by administrative staff. E-mails are often less formal forms of written communication and perhaps used the most frequently in business contexts. Use e-mails to informally communicate information that does not require a meeting but are too long or information- dense to be conveyed through a text or instant message. However, beware of how you word your message—nonverbal cues are often lost in these messages, and you could be perceived as rude, egocentric, or even culturally insensitive.59 In general, you should respond to instant messages only when they are professional and initiate them only when you know they will be welcome. Texts are cheap to send and receive, and the willingness to be available for quick communications from clients and managers is conducive to good business. Some of the most spectacular gains in social media are in the sales arena, both business-to-public and business-to-business. For instance, one sales representative for virtual meetings company PGi landed his fastest sale ever by instantly connecting

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with a potential client after TweetDeck alerted him that a CEO was tweeting his frustra- tion about Web conferencing.60 But be careful with your posting and commenting activ- ity; both options are more public than you may think, and your posts may leave negative impressions on hiring managers.61

CHOOSING NONVERBAL COMMUNICATION It is important to be aware of the nonverbal aspects of our communication. You should particularly be aware of contradictions between messages. For example, someone who frequently glances at their wristwatch is giving the message that they would prefer to terminate the conversation. We misinform others when we express one message verbally, such as trust, but nonverbally communicate a contradictory message that reads, “I don’t have confidence in you.” Research suggests that organizational leaders send similar mixed messages when they state that they value gender diversity, yet have male-dominated corporate boards (and, as a result, are less attractive to potential applicants).62

Information Security

Security is a huge concern for nearly all organizations with private or proprietary infor- mation about clients, customers, and employees. Organizations worry about the security of the electronic information they need to protect, such as hospital patient data.63 Most companies actively monitor employee Internet use and e-mail records, and some even use video surveillance and record phone conversations. Necessary though they may be, such practices can seem invasive to employees, who may lash out as a result.64 An organization can relieve employee concerns by engaging them in the creation of information-security policies and giving them some control over how their personal information is used.65

PERSUASIVE COMMUNICATION

We have discussed several communication methods up to this point. Now we turn our attention to one of the functions of communication—persuasion—and the features that might make messages persuasive to an audience.

Automatic and Controlled Processing

To understand the process of persuasion, it is useful to consider two different ways we process information.66 Think about the last time you were browsing a social network- ing website and came across an ad. Moments later, you did not expect to be buying a Harry Potter t-shirt that also had your college’s sports mascot on it, did you? Instead of making a concerted effort to research different t-shirt designs, you made an impulse buy that was the result of appealing advertising and a highly intelligent machine learn- ing algorithm. If we are honest, we will admit f lashy marketing can have an inf luence on our choices as consumers, and research shows that in this environment, we tend to operate in an “automatic” mode, with heart rate and skin conductance data to sup- port.67 We often rely on automatic processing, a relatively superficial consideration of evidence and information that takes little time or effort, making use of heuristics like those we discussed in the chapter on perception and individual decision making. The disadvantage is that it lets us be easily fooled by a variety of tricks, like a cute jingle or glamorous photo.

Automatic processing A relatively super- ficial consideration of evidence and information that takes little time or effort and makes use of heuristics.

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Now consider the last time you chose a place to live. You probably sourced experts who knew something about the area, gathered information about pricing, and considered the costs and benefits of renting versus buying. You were engaging in more effortful controlled processing, a detailed consideration of evidence and information, relying on facts, figures, and logic. Controlled processing requires effort and energy, and it is harder to fool someone who has taken the time and effort to engage in it.

IMPORTANCE/INTEREST LEVEL One of the best predictors of whether people will use an automatic or controlled process for reacting to a persuasive message is their level of interest in it.68 When people are very interested in the outcome of a decision, or if the decision has important implications, they are more likely to process information carefully. That is probably why people look for so much more information when deciding about something important (like where to live) than something relatively unimportant (like an impulse t-shirt buy).

One way you can enhance interest in what a sender is communicating is through storytelling. For example, even though structured job interviews are much more valid than unstructured ones, HR professionals tend to use unstructured interviews more often. Some have found that stories or testimonials about the successes of structured interviews can persuade HR professionals to adopt more structured approaches.69

PRIOR KNOWLEDGE People who are well informed about a subject area are more likely to use controlled processing strategies. They have already thought through various arguments for or against a specific course of action, and therefore will not readily change their position unless very good, thoughtful reasons are provided. On the other hand, people who are poorly informed about a topic can change their minds more readily, even in the face of superficial arguments presented without a great deal of evidence. A better- informed audience is likely to be much harder to persuade.70

PERSONALITY Do you always read countless reviews on Amazon before purchasing any product? Perhaps you even go to multiple online stores, or review websites, before deciding. If so, you are probably high in need for cognition, a personality trait of individuals who are most likely to be persuaded by evidence and facts.71 Those who are lower in their need for cognition are more likely to use automatic processing strategies, relying on intuition and emotion to guide their evaluation of persuasive messages.

MESSAGE CHARACTERISTICS Another factor that influences whether people use an automatic or controlled processing strategy is the characteristics of the message itself. For example, readers of an online blog are more likely to report increased trust in the blogger (and to evaluate the blogger more favorably) when there is a conflict of interest disclosure, but when they are prompted to think about the disclosure (priming controlled processing), they become more skeptical.72

Messages provided through relatively lean communication channels, with little opportunity for users to interact with the content of the message, encourage automatic processing. Conversely, messages provided through richer communication channels encourage more deliberative processing. These messages vary through nuanced pitch, volume, intonation, and speech rate, which can convey confidence (and thus lead the messages to be perceived as more persuasive).73

Controlled processing A detailed consider- ation of evidence and information relying on facts, figures, and logic.

Need for cognition A personality trait of individuals depicting the ongoing desire to think and learn.

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Choosing the Message

The most important implication is to match your persuasive message to the type of pro- cessing your audience is likely to use.74 When the audience is not interested in a per- suasive message topic, when they are poorly informed, when they are low in need for cognition, and when information is transmitted through relatively lean channels, they will be more likely to use automatic processing. In these cases, use messages that are more emotionally laden and associate positive images with your preferred outcome. On the other hand, when the audience is interested in a topic, when they are high in need for cognition, or when the information is transmitted through rich channels, then it is a better idea to focus on rational arguments and evidence to make your case.

BARRIERS TO EFFECTIVE COMMUNICATION

Several barriers can slow or distort effective communication. In this section, we highlight the most important.

Filtering

Filtering refers to the purposeful manipulation of information so the receiver will see it more favorably. Telling the boss what the boss wants to hear is filtering information.

The more vertical levels in the organization’s hierarchy, the more opportunities there are for filtering. But some filtering will occur wherever there are status differences. Factors such as fear of conveying bad news and the desire to please the boss often lead employees to tell their superiors what they think they want to hear, thus distorting upward communications.75

Selective Perception

Selective perception is important because the receivers in the communication process selectively see and hear based on their needs, motivations, experience, background, and other personal characteristics. Receivers also project their interests and expectations into communications as they decode them. For example, an employment interviewer who expects a female job applicant to put her family ahead of her career is likely to see that characteristic in all female applicants, regardless of whether any of the women feel that way. As we said in the chapter on perception and individual decision making, we do not see reality; we interpret what we see and call it reality.

Information Overload

Although people integrate information from multiple sources to effectively make sense of information,76 individuals have a finite capacity for processing data. When the information we must work with exceeds our processing capacity, the result is information overload.

What happens when individuals have more information than they can sort and use? They tend to select, ignore, pass over, or forget it. Or they may put off further processing until the overload situation ends. In any case, lost information and less effective commu- nication results, making it more important to deal well with overload.

More generally, as an Intel study shows, it may make sense to connect less fre- quently to technology, to, in the words of one article, “avoid letting the drumbeat of

Filtering The manipulation of information so that it will be seen more favorably by the receiver.

Information overload A condition in which information inflow exceeds an indi- vidual’s processing capacity.

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digital missives constantly shake up and reorder to-do lists.”77 One radical way is to limit the number of devices you access. For example, Coors Brewing executive Frits van Paasschen jettisoned his desktop computer in favor of mobile devices only, and Eli Lilly & Co. moved its sales teams from laptops plus other devices to just iPads. Both these moves have resulted in increased productivity.78

Emotions

Your emotion regulation and expression of emotion can have an impact on how effec- tively you can communicate. For example, one review of dozens of studies interestingly found that intentional, nonverbal communication displays had a positive effect on com- munication performance, whereas those that were more spontaneous had no effect.79 This suggests that you can alter your nonverbal communication to become an effective com- municator. Furthermore, although suppressing your emotions is generally hurtful (caus- ing negative first impressions and social outcomes), expressing negative emotions such as anger can also lead to poor social outcomes. However, the benefit to expressing your negative emotions is that others may have a better understanding of how you feel.80 What is perhaps most important is how you express your negative emotions. Ruminating or dwelling on your negative emotions might not be the best way of processing your nega- tive emotions; research suggests that when you process your emotions productively (e.g., rethinking or examining how you really feel), you may experience a sense of closure and experience better social outcomes than when you ruminate.81

You may also interpret the same message differently when you are angry or dis- traught than when you are happy. For example, individuals in positive moods are more confident about their opinions after reading a persuasive message, so well-designed argu- ments have a stronger impact on their opinions.82 People in negative moods are more likely to scrutinize messages in greater detail, whereas those in positive moods tend to accept communications at face value.83 Extreme emotions such as fury are most likely to hinder effective communication.84 In such instances, we are most prone to disregard our controlled thinking processes.

Language

Even when we are communicating in the same language, words mean different things to different people. Age and jargon are two of the biggest factors that influence such differ- ences. Sometimes the meaning of these words can change over time. For example, older employees are becoming more-and-more incensed at the use of words that bring undue attention to their age and which many consider patronizing.85 As a manager, it is prudent to be aware of the appropriate terms and vocabulary to use to effectively communicate with all members of the organization. Furthermore, it is important to select language and terminology that can connect with the most people.86 Jargon might not be accessible to everyone, as not everyone comes from the same context or background. When communi- cating with diverse audiences, often, simpler is better.

Silence

It is easy to ignore silence or lack of communication because it is defined by the absence of information. This is often a mistake—silence itself can be the message, communicat- ing non-interest or inability to deal with a topic.87 Silence can also be a simple outcome

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212 Part 3 • Communicating in Groups and Teams

of information overload, or a delaying period for considering a response. For whatever reasons (and there are many of them, including fear, resignation, and even prosocial motives),88 research suggests using silence and withholding communication are common and problematic.89 Recent research has sought to understand why employees and man- agers are silent when they probably should speak up. This research has found that per- ceptions of target openness and employee sense of powerlessness as well as a tendency to experience negative emotions (especially fear) tend to influence the decision to stay silent.90 Managers and employees alike should try to forge an environment where people are comfortable sharing and are open to other thoughts and opinions, or even to bad news.

Communication Apprehension

An estimated 5 to 20 percent of the population suffers debilitating communication apprehension.91 These people experience undue tension and anxiety in oral communica- tion, written communication, or both.92 They may find it extremely difficult to talk with others face-to-face or become extremely anxious when they have to use the phone, rely- ing on memos or e-mails when a phone call would be faster and more appropriate.

Oral-communication apprehensives avoid situations, such as teaching, for which oral communication is a dominant requirement.93 But almost all jobs require some oral communication. Of greater concern is evidence that high oral-communication apprehen- sives may distort the communication demands of their jobs in order to minimize the need for communication.

Lying

Outright misrepresentation of information, or lying, is a barrier to effective information. (It literally involves information distortion.)94 People differ in their definition of a lie. For example, is deliberately withholding information about a mistake a lie, or do you have to actively deny your role in the mistake to pass the threshold? While the definition of a lie befuddles ethicists and social scientists, there is no denying the prevalence of lying. People may tell one to two lies per day, with some individuals telling considerably more.95 Compounded across a large organization, this is an enormous amount of decep- tion happening every day.

Communicating in Times of Crisis

The final barrier to effective communication can be found in the underlying context: communication becomes more challenging during times of crisis.96 As an example, the devastation of Hurricane Katrina in August 2005 has been frequently viewed as an exemplary case in how crises can be fraught with ineffective and inefficient commu- nication.97 Government agencies at all levels were taken by surprise when confronted with the threat of Hurricane Katrina approaching the United States and had difficulty in coordinating a response to the crisis as well as coping with the uncertainty and ambiguity of the situation.

Effective communication during times of crisis involves breaking down crisis response into several stages: (1) communicating in anticipation of or preparation for cri- ses, (2) managing responses to the crises while they are occurring, (3) communicating with stakeholders after the crisis and catalyzing shared learning.98 Collective motiva- tions underlying communication change throughout these stages: people become driven

Communication apprehension Undue tension and anxiety about oral communication, writ- ten communication, or both.

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to take control and dominate during times of war, whereas crises during times of peace tend to drive people toward being self-critical and fear of negative consequences.99 These shifting motivations need to be accounted for in crisis communication—control, domina- tion, anxiety, and fear are not directly aligned with reassurance and grace under pressure.

What can be done to improve communication during times of crisis? Effective messaging that focuses on sharing facts, sharing interpretations of the facts, and projec- tions for consequences of actions at all stages can be beneficial.100 Furthermore, although motivations tend to shift more toward power and responsibility, people should try to work together in times of crisis, instead of independently. For example, research shows that people, when trying to solve a problem separately (e.g., developing a vaccine for a virus), may become overcome by confusion and an inability to learn from one another’s failures—by coordinating and collaborating, they may be able to overcome the confu- sion and learn from one another.101 Finally, technology can help communicate informa- tion rapidly and accurately to all those who may be (imminently) affected by a disaster, including apps that help provide information quickly to response teams.102 Technology can also be used to sound the crisis alarm: for instance, a Twitter alert was issued in 2018 for a potential ballistic missile threat. However, this alert proved to be a false alarm and an analysis of the 1.2 million tweets that followed suggested that anxiety remained heightened throughout the week as a result.103 Therefore, people should remain sensitive to the impact of their communications on people during crises.

CULTURAL FACTORS

Effective communication is difficult under the best of conditions. Cross-cultural factors clearly create the potential for increased communication problems. A communication approach that works for one culture may not work for another. For example, a U.S. phar- maceutical company was having trouble distributing vaccines in an area of California that was predominantly first-generation Asian American. They found that the sales and marketing team did not consider that the prospective client’s spouse was usually the deci- sion maker in the prevailing culture, as the spouse in these contexts tended to act as the office manager. After adjusting their sales approach, they were able to improve their sales in that region.104

Cultural Barriers

Several problems are related to difficulties in cross-cultural communications. First are barriers caused by semantics. Words mean different things to different

people, particularly people from different national cultures. Some words do not translate between cultures. For instance, the Finnish word sisu means something akin to “guts” or “dogged persistence” but is essentially untranslatable into English. In 1945, Kantaro Suzuki (prime minister of Japan), following an Allied ultimatum days before Hiroshima, was translated as saying “silent contempt” when he actually meant “no comment. We need more time.”105 Similarly, differences can be observed for some communicative behaviors beyond language, such as how people culturally differ in the expression of gratitude, such as the use of bodily contact in individualist cultures.106

Second are barriers caused by word connotations. Words imply different things in different languages. Negotiations between U.S. and Japanese executives can be difficult

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214 Part 3 • Communicating in Groups and Teams

because the Japanese word hai translates as “yes,” but its connotation is “Yes, I’m listen- ing” rather than “Yes, I agree.”

Third are barriers caused by tone differences. In some cultures, language is for- mal; in others, it is informal. In some cultures, the tone changes depending on the con- text: People speak differently at home, in social situations, and at work.107 For example, Mexicans are relatively formal in their dress and communication in the tire industry, compared with other countries—they also tend to use the formal version of you (usted) in the workplace rather than the informal version (tú).108 Using a personal, informal style when a more formal style is expected can be inappropriate.

Fourth are differences in tolerance for conflict and methods for resolving con- flicts. People from individualist cultures tend to be more comfortable with direct con- flict and will make the source of their disagreements overt. Collectivists are more likely to acknowledge conflict only implicitly and avoid emotionally charged disputes. They may attribute conflicts to the situation more than to the individuals and therefore may not require explicit apologies to repair relationships, whereas individualists prefer explicit statements, accepting responsibility for conflicts and public apologies to restore relationships.

Cultural Context

Cultures tend to differ in the degree to which context influences the meaning individuals take from communication.109 In high-context cultures such as China, Korea, Japan, and Vietnam, people rely heavily on nonverbal and subtle situational cues in communicating with others, and a person’s official status, place in society, and reputation carry consid- erable weight. What is not said may be more significant than what is said. In contrast, people from Europe and North America reflect their low-context cultures. They rely essentially on spoken and written words to convey meaning; body language and formal titles are secondary (see Exhibit 11-4).

Contextual differences mean quite a lot in terms of communication. Communication in high-context cultures implies considerably more trust by both parties. What may appear to be casual and insignificant conversation, in fact reflects the desire to build a relation- ship and create trust. Oral agreements imply strong commitments in high-context cultures. And who you are—your age, seniority, rank in the organization—is highly valued and

High-context cultures Cultures that rely heavily on nonverbal and subtle situational cues in communica- tion.

Low-context cultures Cultures that rely heavily on words to convey meaning in communication.

Chinese Korean Japanese Vietnamese Arab Greek Spanish Italian English North American Scandinavian Swiss German

High context

Low context

EXHIBIT 11-4 Continuum of Countries With High and Low Context Cultures

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heavily influences your credibility. Managers can therefore “make suggestions” rather than give orders. But in low-context cultures, enforceable contracts tend to be in writing, precisely worded, and highly legalistic. Similarly, low-context cultures value directness. Managers are expected to be explicit and precise in conveying intended meaning.

A Cultural Guide

There is much to be gained from business intercultural communications. It is safe to assume every one of us has a different viewpoint that is culturally shaped. Because we do have differences, we have an opportunity to reach the most creative solutions possible with the help of others if we communicate effectively.

According to Fred Casmir, a leading expert in intercultural communication research, we often do not communicate well with people outside of our culture because we tend to generalize from only their cultural origin. This can be insensitive and potentially disas- trous, especially when we make assumptions based on observable characteristics. Also, attempts to be culturally sensitive to another person are often based on stereotypes propa- gated by media. These stereotypes usually do not have a correct or current relevance.

Casmir noted that because there are far too many cultures for anyone to understand completely, and individuals interpret their own cultures differently, intercultural com- munication should be based on sensitivity and pursuit of common goals. He found the ideal condition is an ad hoc “third culture” where a group can form when they seek to incorporate aspects of each member’s cultural communication preferences. The norms this subculture establishes through appreciating individual differences create a common ground for effective communication. Intercultural groups that communicate effectively can be highly productive and innovative.

When communicating with people from a different culture, what can you do to reduce misinterpretations? Casmir and other experts offer the following suggestions:

1. Know yourself. Recognizing your own cultural identity and biases is critical to understanding the unique viewpoints of other people.

2. Foster a climate of mutual respect, fairness, and democracy. Clearly establish an environment of equality and mutual concern. This will be your “third culture” context for effective intercultural communication that transcends each person’s cul- tural norms.

3. State facts, not your interpretation. Interpreting or evaluating what someone has said or done draws more on your own culture and background than on the observed situation. If you state only facts, you will have the opportunity to ben- efit from the other person’s interpretation. Delay judgment until you have had enough time to observe and interpret the situation from the differing perspec- tives of all concerned.

4. Consider the other person’s viewpoint. Before sending a message, put yourself in the recipient’s shoes. What are their values, experiences, and frames of refer- ence? What do you know about their education, upbringing, and background that can give you added insight? Try to see the people in the group as they really are first and take a collaborative problem-solving approach whenever potential con- f licts arise.

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216 Part 3 • Communicating in Groups and Teams

5. Proactively maintain the identity of the group. Like any culture, the establishment of a common-ground “third culture” for effective intercultural communication takes time and nurturing. Remind members of the group of your common goals, mutual respect, and need to adapt to individual communication preferences.110

SUMMARY

Communication is what keeps organizations running—by managing the transmission and understanding of information, organizations can improve their processes and ulti- mately achieve better outcomes. In this chapter, you discovered that communication fol- lows a specific process that fulfills multiple functions. Communication can be directed downward, upward, or laterally. It can also occur more formally through established con- nections in a network, or more informally through the office grapevine. There are also several communication channels (e.g., oral, written, and verbal) that vary in their degree of richness, with some being more appropriate than others, given the situation. Finally, in considering the perspective of the message receiver, it is important to understand that some messages are received automatically and require little thought, whereas others in- volve more cognitive effort to decode on the part of the receiver. Communication, overall, also is limited by several barriers and cultural considerations that you should be aware of if you want to become an effective communicator.

IMPLICATIONS FOR MANAGERS

• Remember that your communication mode will partly influence communication effectiveness.

• Obtain feedback to make certain your messages—regardless of how they are communicated—are understood.

• Remember that written communication creates more misunderstandings than oral communication does; communicate with employees through in-person meetings when possible.

• Make sure you use communication strategies appropriate to your audience and the type of message you are sending.

• Keep in mind communication barriers such as gender and culture.

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PART 4 Negotiating Power and Politics

Leadership 12

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

12.1 Summarize the conclusions of trait theories of leadership.

12.2 Identify the central tenets and main limitations of behavioral theories.

12.3 Contrast contingency theories of leadership.

12.4 Describe the contemporary theories of leadership and their relationship to foun- dational theories.

12.5 Discuss the roles of leaders in creating ethical organizations.

12.6 Describe how leaders can have a positive impact on their organizations through building trust and mentoring.

12.7 Identify the challenges to our understanding of leadership.

TRAIT THEORIES OF LEADERSHIP

Gloria Boyland (vice president of Operations and Service Support at FedEx) has been referred to as one of the most powerful women in corporate America. Gloria spends much of her time coaching and guiding her direct reports, inspiring them, and re-affirming their vital role to FedEx. She also gives much autonomy to her followers: One of her guiding principles is, “Step back so others can step up.”1 She notes she has learned a lot from the FedEx founder and CEO, Fred Smith, who leads by example as a transformational, motivational leader. As a black woman, the cards are stacked against her: Corporate lead- ership is dominated by white men, and women are compelled by leader stereotypes to be both warm and tough at the same time.2

Surely, you have noticed, though, that not all leaders are managers, nor are all managers leaders. Nonsanctioned leadership—the ability to influence that arises out- side the formal structure of the organization—is sometimes more important than formal influence. For example, Marcy Shinder (now chief marketing officer at Work Market) builds relationships with coworkers at work and informally emerged as a leader shortly after being hired.3 What makes a person a leader? Gloria Boyland exhibits many of the characteristics and behaviors of a leader, while also highlighting some of the modern challenges facing leadership (e.g., a lack of ethnic and gender diversity).4 Although it

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218 Part 4 • Negotiating Power and Politics

has been defined in several ways and involves traits, behaviors, and other factors; we define leadership as the act of influencing a group toward the achievement of a vision or set of goals.

Personality Traits and Leadership

What constitutes a great leader? To begin, the trait theories of leadership focus on personal qualities, including personality traits like those in the Big Five (see the chapter on personality and individual differences), and characteristics that predict two distinct outcomes: leadership emergence and leadership effectiveness.5 Since strong leaders have been described by their traits throughout history, leadership research has sought to iden- tify the personality, social, physical, or intellectual attributes that differentiate leaders from nonleaders. Keep in mind that just because someone exhibits the right traits and others consider that person a leader does not necessarily mean they will be effective or successful at influencing the group to achieve its goals. Echoing the person-situation approach we discussed in the chapter on personality, leader behavior is a function of traits and the situation.6 In support, researchers and HR practitioners have used machine learning and AI approaches to try to predict leader effectiveness from several leader char- acteristics and found that both traits and situational features are important predictors of leader effectiveness.7

BIG FIVE TRAITS In examining personality traits, researchers have consistently found extraversion to be important for several leadership outcomes. Despite being the strongest predictor of leader emergence,8 extraversion also predicts several leadership behaviors or styles. For example, extraverted leaders are more likely to use transformational leadership styles and consideration behaviors (as described later in this chapter).9 As such, they are likely to be considered more effective leaders, although it is the agentic, bold, or assertive aspects of extraversion that account for this, not necessarily the warm, sociable, affiliative aspects.10 So although extraversion can predict effective leadership, the relationship may be due to unique facets of the trait. As a caveat, however, being “too bold” or “too warm” can also hurt your chances of emerging as a leader.11

Although agreeableness and emotional stability are important to some aspects of leadership (e.g., they predict follower satisfaction with the leader), openness to experi- ence appears to be less important as a trait, despite being a modest predictor of leader effectiveness.12 Conscientiousness, on the other hand, appears to be important for sev- eral leadership behaviors and outcomes. For example, conscientiousness predicts initi- ating structure behaviors as well as consideration behaviors (as described later in this chapter).13 Conscientiousness is also a moderate predictor of leader effectiveness and the strongest leader trait predictor of group performance.14

DARK-TRIAD TRAITS What about the Dark-Triad personality traits (see the chapter on personality and values)? Research indicates they are not all bad for leadership: normative (mid-range) scores on Dark-Triad personality traits (even psychopathy) were optimal, and low (and high) scores were associated with ineffective leadership.15 Thankfully, both this study and other international research indicate that building self-awareness and self- regulation skills may be helpful for leaders to control the effects of their Dark-Triad traits.16 This self-awareness may be difficult for leaders to achieve, especially since

Leadership The act of influenc- ing a group toward the achievement of a vision or set of goals.

Trait theories of leadership Theories that consider personal qualities and characteristics that differentiate leaders from nonleaders.

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Chapter 12 • Leadership 219

narcissists tend to engage in self-enhancement (e.g., perceive themselves more positively than others see them) and be selective in the feedback they elicit and listen to when it comes to leadership.17

Emotional Intelligence (EI) and Leadership

Another trait that may indicate effective leadership is emotional intelligence (EI), which was discussed in the chapter on emotions and moods. A core component of EI is empa- thy. Empathetic leaders can sense others’ needs, listen to what followers say (and do not say), and read the reactions of others. A leader who effectively displays and man- ages emotions will find it easier to influence the feelings of followers by expressing genuine sympathy and enthusiasm for good performance, and by showing irritation when employees fail to perform.18 Although the association between leaders’ self-reported EI and transformational leadership (to be discussed later in this chapter) is moderate, it is much weaker when followers rate their leaders’ leadership behaviors.19 Research has also demonstrated that people high in EI are more likely to emerge as leaders, even after tak- ing cognitive ability and personality into account.20

Based on the latest research literature, we offer two conclusions about personality traits and leadership: One, traits can predict leadership; and two, traits do a better job in predicting the emergence of leaders and the appearance of leadership than in distinguish- ing between effective and ineffective leaders.21

BEHAVIORAL THEORIES

Trait theories provide a basis for selecting the right people for leadership. Behavioral theories of leadership, in contrast, imply we can train people to be leaders.22

The most comprehensive behavioral theories of leadership resulted from the Ohio State Studies,23 which sought to identify independent dimensions of leader behavior. Beginning with more than a thousand dimensions, the studies narrowed the list to two that substantially accounted for most of the leadership behavior described by employees: initiating structure and consideration.

Initiating Structure

Initiating structure is the extent to which leaders define and structure their roles and those of their subordinates in pursuit of goal attainment. It includes behavior that attempts to organize work, work relationships, and goals. A leader high in initiating structure is someone who assigns followers tasks, sets definite standards of performance, and empha- sizes deadlines (you may now see why, as we mentioned earlier, conscientiousness would be an important personality trait to have here!). According to a review of hundreds of leadership studies, initiating structure is more strongly related to higher levels of group and organization productivity, and to more positive performance evaluations.24

Consideration

Consideration is the extent to which a person’s work relationships are character- ized by mutual trust, respect for employees’ ideas, and regard for their feelings. A leader high in consideration helps employees with personal problems, is friendly and

Behavioral theories of leadership Theories proposing that specific behav- iors differentiate lead- ers from nonleaders.

Initiating structure The extent to which leaders define and structure their roles and those of their subordinates in pursuit of goal attain- ment.

Consideration The extent to which a leader is likely to have job relationships characterized by mutual trust, respect for subordinates’ ideas, and regard for their feelings.

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220 Part 4 • Negotiating Power and Politics

approachable, treats all employees as equals, and expresses appreciation and sup- port (people oriented). Most of us want to work for considerate leaders—according to one study by the National Bureau of Economic Research consisting of millions of responses over several years, working with a boss like this was “equivalent to the increased satisfaction that comes from more than doubling your household income”!25 Indeed, research suggests that the followers of leaders high in consideration were more satisfied with their jobs, were more motivated, and had more respect for their leaders.26

Cultural Differences

Mixed results from behavioral theory tests may lie partly in follower preferences, par- ticularly cultural preferences. Research from the program (discussed in the chapter on personality and values) suggested there are international differences in the preference for initiating structure and consideration.27 The study found that leaders high in consider- ation succeeded best in countries where cultural values did not favor unilateral decision making, such as Brazil. As one Brazilian manager noted, “We do not prefer leaders who take self-governing decisions and act alone without engaging the group. That’s part of who we are.” A U.S. manager leading a team in Brazil would therefore need to be high in consideration—team oriented, participative, and humane—to be effective. In contrast, the French have a more bureaucratic view of leaders and are less likely to expect them to be humane and considerate. A leader high in initiating structure (relatively task-oriented) will do best there and can make decisions in a relatively autocratic manner. A manager who scores high in consideration (people-oriented) may find that the style backfires in France. In other cultures, both dimensions may be important—for example, Chinese cul- ture emphasizes being polite, considerate, and unselfish, but it has a high-performance orientation. Thus, both consideration and initiating structure may be important for a man- ager to be effective in China. Interestingly, however, research on thousands of managers in dozens of countries suggests that culture is much less important than the organization or managers themselves in determining whether they practice consideration or initiating structure behaviors.28

CONTINGENCY THEORIES

Some leaders gain a lot of admirers when they take over struggling companies and lead them out of crises. For example, Alfred Glancy III saved the Detroit Symphony Orchestra (DSO) as they teetered on the edge of failing. However, predicting lead- ership success is more complex than merely leading a group out of crisis. Alfred Glancy dealt with a lot of this complexity: refusing to spend beyond the DSO’s means, negotiating labor agreements, resolving the debt burden, and amplifying fun- draising efforts—all while staying true to the art. Importantly, the leadership style that works in very bad times does not necessarily translate into long-term success. For example, after times got better, Glancy turned to more innovative approaches to developing the DSO: upgrading the technology of their global webcast series and improving lighting and electronics in the Orchestra Hall, among other innovative approaches. As you can see, being an effective leader can be highly contingent upon situational demands.29

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Chapter 12 • Leadership 221

The Fiedler Model

Fred Fiedler developed the first comprehensive contingency model for leadership.30 The Fiedler contingency model proposes that group performance depends on the proper match between the leader’s style and the degree to which the situation gives the leader control. With the model, the individual’s leadership style is assumed to be permanent.

As a first step, the least preferred coworker (LPC) questionnaire identifies whether a person is task or relationship oriented by asking respondents to think of all the coworkers they ever had and describe the one they least enjoyed working with. If you describe this person in favorable terms (a high LPC score), you are relationship oriented. If you see your least-preferred coworker in unfavorable terms (a low LPC score), you are primarily interested in productivity and are task oriented.

After finding a score, a fit must be found between the organizational situation and the leader’s style for leadership effectiveness to be predicted. We can assess the situation in terms of three contingency or situational dimensions:

1. Leader–member relations is the degree of confidence, trust, and respect members have in their leader.

2. Task structure is the degree to which job assignments follow a specific procedure (that is, they are structured or unstructured).

3. Position power is the degree of influence a leader has over power variables such as hiring, firing, discipline, promotions, and salary increases.

According to the model, the higher the task structure becomes, the more proce- dures are added; and the stronger the position power, the more control the leader has. The favorable situations are on the left side of the model in Exhibit 12-1. A very favorable situation (in which the leader has a great deal of control) might include a payroll manager who has the respect and confidence of the employees (good leader–member relations); activities that are clear and specific, such as wage computation, check writing, and report filing (high task structure); and considerable freedom to reward and punish employees (strong position power). An unfavorable situation, to the right in the model, might be that of the disliked chairperson of a volunteer United Way fundraising team (low leader– member relations, low task structure, low position power). In this job, the leader has very little control. When faced with a category I, II, III, VII, or VIII situation, task-oriented leaders perform better. Relationship-oriented leaders, however, perform better in moder- ately favorable situations—categories IV, V, and VI.

Studies testing the overall validity of the Fiedler model were initially support- ive, but the model has not been studied much in recent years.31 While it provides some insights we should consider, its strict practical application is problematic.

Situational Leadership Theory

Situational leadership theory (SLT) suggests that successful leadership depends on selecting the right leadership style contingent on the followers’ readiness: the extent to which followers are willing and able to accomplish a specific task.32 A leader should choose one of four behaviors depending on follower readiness.

If followers are unable and unwilling to do a task, the leader needs to give clear and specific directions; if they are unable but willing, the leader needs to display a high task orientation to compensate for followers’ lack of ability, and a high relationship

Fiedler contingency model The theory that effec- tive groups depend on a proper match between a leader’s style of interacting with subordinates and the degree to which the situation gives control and influence to the leader.

Least preferred coworker (LPC) questionnaire An instrument that measures whether a person is task or rela- tionship oriented.

Leader–member relations The degree of confidence, trust, and respect subordinates have in their leader.

Task structure The degree to which job assignments follow a specific procedure.

Position power Influence derived from one’s formal structural position in the organization; includes power to hire, fire, discipline, promote, and give salary increases.

Situational leadership theory (SLT) A contingency theory that focuses on fol- lowers’ readiness, or the extent to which they are willing and able to accomplish a specific task.

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222 Part 4 • Negotiating Power and Politics

orientation to get them to “buy into” the leader’s desires. If followers are able but unwill- ing, the leader needs to use a supportive and participative style; if they are both able and willing, the leader does not need to do much.

SLT has intuitive appeal. It acknowledges the importance of followers and builds on the logic that leaders can compensate for followers’ limited ability and motivation. Yet research efforts to test and support the theory have generally been disappointing.33 Why? Possible explanations include internal ambiguities and inconsistencies in the model itself as well as problems with research methodology.

Path–Goal Theory

Path–goal theory combines elements of initiating structure and consideration with the expectancy theory of motivation.34 Path–goal theory suggests it is the leader’s job to pro- vide followers with information, support, or other resources necessary to achieve goals (the term path–goal implies that effective leaders clarify followers’ paths to their work goals and make the journey easier by reducing roadblocks). The theory makes the following predictions:

• Directive leadership yields greater employee satisfaction when tasks are ambigu- ous or stressful than when they are highly structured and well laid out.

• Supportive leadership results in high employee performance and satisfaction when employees are performing structured tasks.

• Directive leadership is likely to be perceived as redundant among employees with high ability or considerable experience.

Path–goal theory A theory that states that it is the leader’s job to assist followers by providing the necessary resources to achieve their goals, to ensure that the path to accomplish- ing these goals is understandable or clear, and to reduce any roadblocks that may be making goal accomplishment difficult.

Good

High

Strong

Good

High

Weak

Good

Low

Strong

Good

Task-oriented

Relationship-oriented

Good

Poor

Category

Leader–member relations

Task structure

Position power

Favorable Moderate Unfavorable

P er

fo rm

a n ce

Low

Weak

Poor

High

Strong

Poor

High

Weak

Poor

Low

Strong

Poor

Low

Weak

I II III IV V VI VII VIII

EXHIBIT 12-1 Findings From the Fiedler Model

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Chapter 12 • Leadership 223

Like SLT, path–goal theory has intuitive appeal, especially from a goal attain- ment perspective. For example, research on high school principals and the high school teachers they supervise suggests that principals who engage in transactional leadership behaviors (see later in this chapter) can help provide clarity on the path toward goal accomplishment.35 Also like SLT, the theory can be only cautiously adopted for application, but it is a useful framework in examining the important role of leadership.36

Leader-Participation Model

The final contingency theory we cover argues that the way the leader makes decisions is as important as what is decided. The leader-participation model relates leadership behavior to subordinate participation in decision making.37 Like path–goal theory, this model suggests that leader behavior must adjust to ref lect the task structure (such as routine, nonroutine, or in between). However, it does not cover all leadership behav- iors and is limited to recommending what types of decisions might be best made with subordinate participation. It lays the groundwork for the situations and leadership behaviors most likely to elicit acceptance from subordinates. For example, Steve Kerr, coach of the Golden State Warriors, notes that it is not enough to be a leader and man- age the players—he relies on them to be involved and set examples as well, when the situation calls for it.38

The theories we have covered to this point assume leaders use a homogeneous style with everyone in their work units. Think about your past experiences. Did leaders often act very differently toward different people?

CONTEMPORARY THEORIES OF LEADERSHIP

The understanding of leadership is a constantly evolving science. Contemporary theo- ries have built upon the foundation we have just established to discover the unique ways leaders emerge, influence, and guide their employees and organizations. Let us explore some of the leading current concepts and look for aspects of the theories we have discussed already.

Leader–Member Exchange (LMX) Theory

Think of a leader you know. Does this leader have favorites who make up an ingroup? If you answered “yes,” you are acknowledging leader–member exchange (LMX) theory.39 LMX suggests leaders and followers have unique, one-on-one relationships that vary with each follower (e.g., some are higher quality than others). It also suggests that leaders establish a special relationship with a small group of their followers. These followers make up the ingroup—they are trusted, get a disproportionate amount of the leader’s attention, and are more likely to receive special privileges. Other followers fall into the outgroup.

For the relationship to remain intact, the leader and the follower must invest in the relationship (see Exhibit 12-2). Competent, conscientious, proactive, and positive employees tend to have higher quality relationships with their leaders and are more likely to be placed in the ingroup (as well as those who are ingratiating and self-promoting).40

Leader- participation model A leadership theory that provides a set of rules to determine the form and amount of participative decision making in different situations.

Leader–member exchange (LMX) theory A theory that sug- gests (1) leaders and followers have unique relationships that vary in quality and (2) these followers comprise ingroups and outgroups; subor- dinates with ingroup status will likely have higher performance ratings, less turnover, and greater job satisfaction.

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224 Part 4 • Negotiating Power and Politics

Leaders induce higher quality LMX perceptions by engaging in transformational leader- ship behaviors, ingratiating their followers, rewarding employees with whom they want a closer linkage, and punishing those with whom they do not.41 When leaders and followers interact with one another, research suggests that leaders and followers build social capital with one another—they contribute more to the relationship when they feel obligated to and will withhold contribution when they believe they have “done enough.”42 In general, however, leaders and followers tend to develop high-quality relationships over time when the supervisor has high expectations for the follower, when they see themselves as simi- lar, when they like each other, and when they trust each other.43 Leaders and followers of the same gender tend to have closer (higher LMX) relationships than those of different genders.44 Regardless of LMX quality perceptions, it is also true that LMX more or less varies in importance for leaders and followers. (Some employees value LMX less than others.)45

Research to test LMX theory has been generally supportive, with substantive evi- dence that leaders do differentiate among followers; these disparities are far from ran- dom; and followers with ingroup status receive higher performance ratings, objectively perform better, engage in more helping or organizational citizenship behaviors (OCBs) at work, engage in less deviant behaviors, and report greater satisfaction with their superiors.46

Furthermore, the extent to which leaders “play favorites” and create explicit in- and outgroups tends to have a negative effect on group or team outcomes.47 Although LMX only has a weak effect on group performance, it negatively affects team attitudes, collec- tive efficacy, justice climate, and coordination, and can lead to conflict in teams.48 On the other hand, the overall level of LMX quality among members of the team (how strongly followers tend to see their relationships with their leaders) tends to matter more for work group or team outcomes.49 Similar to substitutes for leadership theory (discussed later in the chapter), the quality of exchange between coworkers and colleagues can often substi- tute for or offset the negative impacts of low LMX in teams.50

There are some boundary conditions for the effects of LMX, however. For example, it appears as if LMX’s relationship with perceptions of trust, job satisfaction, and justice, as well as with OCBs and turnover intentions, depends in part on the culture—in a study of nearly 70,000 employees from twenty-three countries, the researchers found that it matters more in individualistic rather than collectivistic cultures.51 Another limi- tation is that the agreement between leaders and followers on their relationship quality

Perceived similarity, liking, trust, and/or

self-promotion/ingratiation

Positive attitude Follower competence

Conscientiousness

Formal relations

Ingroup Outgroup

Subordinate A

Subordinate B

Subordinate C

Subordinate D

Subordinate E

Subordinate F

Leader

EXHIBIT 12-2 Similarity With and Interactions Between the Leader, Ingroup, and Outgroup

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(e.g., a boss might think the relationship is great, the follower might not) is not very strong—when there is disagreement between the two, this can hurt employee engage- ment (regardless of who perceives the relationship as stronger).52

Charismatic, Transformational, and Transactional Leadership Styles

There is just “something” about certain leaders that cause people to be drawn toward them. There is an undeniable presence to leaders like Rev. Martin Luther King Jr., Mahatma Gandhi, and former president Barack Obama, which can be explained in part by their abilities to unite and transform people.53 Two contemporary leadership theories— charismatic leadership and transformational leadership—share a common theme in the great leader debate: They view leaders as individuals who inspire followers through words, ideas, and behaviors.

WHAT IS CHARISMATIC LEADERSHIP? Sociologist Max Weber defined charisma (from the Greek for “gift”) as “a certain quality of an individual personality, by virtue of which the leader is set apart from ordinary people and treated as endowed with supernatural, superhuman, or at least specifically exceptional powers or qualities. These are not accessible to the ordinary person and are regarded as of divine origin or as exemplary, and based on them the individual concerned is treated as a leader.”54

According to charismatic leadership theory, followers attribute heroic or extraor- dinary leadership abilities when they observe certain behaviors (e.g., those that are values driven, symbolic, or emotion laden), and tend to give these leaders power.55 A number of studies have attempted to identify the characteristics of charismatic leaders: they have a vision, are willing to take personal risks to achieve that vision, are sensitive to follow- ers’ needs, and exhibit extraordinary behaviors56 (see Exhibit 12-3). Some research has also linked intelligence, extraversion, and agreeableness to the motivational and influen- tial factors of charismatic leadership.57 Charismatic leadership theory suggests that these personality traits enable leaders to react to work events with a positive attitude, and their emotional intelligence enables them to influence followers to unite and constructively confront the adverse work event.58

HOW CHARISMATIC LEADERS INFLUENCE FOLLOWERS Charismatic leadership has a positive effect on follower outcomes: They can, for instance, enhance follower task performance and OCB as well as reduce/reframe follower turnover and stressors.59 But how do charismatic leaders influence followers? By articulating an appealing vision, a long-term strategy for attaining a goal by linking the present with a better future for the organization.

Charismatic leadership theory A leadership theory that states that followers make attributions of heroic or extraordinary lead- ership abilities when they observe certain behaviors.

Vision A long-term strategy for attaining a goal or goals.

1. Vision and articulation. Has a vision—expressed as an idealized goal—that proposes a future better than the status quo; and is able to clarify the importance of the vision in terms that are understandable to others.

2. Personal risk. Willing to take on high personal risk, incur high costs, and engage in self- sacrifice to achieve the vision.

3. Sensitivity to follower needs. Perceptive of others’ abilities and responsive to their needs and feelings.

4. Unconventional behavior. Engages in behaviors that are perceived as novel and counter to norms.

EXHIBIT 12-3 Key Characteristics of Charismatic Leaders

Source: Based on J. A. Conger and R. N. Kanungo, Charismatic Leadership in Orga- nizations (Thousand Oaks, CA: Sage, 1998), p. 94.

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Desirable visions fit the times and circumstances, as well as reflect the uniqueness of the organization. Thus, followers are inspired not only by how passionately the leader communicates and their nonverbal cues (e.g., extended eye contact)60 but also by an appealing message. For example, research on Israeli schools suggests that charismatic principals that promote a shared vision among teachers can improve the organizational climate (see the chapter on organizational culture) and, as a result, improve school outcomes.61

A vision needs an accompanying vision statement, a formal articulation of an organization’s vision or mission. Charismatic leaders may use vision statements to imprint on followers an overarching goal and purpose. These leaders also set a tone of cooperation and mutual support. They build followers’ self-esteem and confidence with high performance expectations and the belief that followers can attain them. Through words and actions, the leader conveys a new set of values and sets an example for fol- lowers to imitate. Finally, the charismatic leader engages in emotion-inducing and often unconventional behavior to demonstrate courage and conviction about the vision.

Research indicates that charismatic leadership works as followers “catch” the emo- tions their leader is conveying.62 One study found employees had a stronger sense of personal belonging at work when they had charismatic leaders which, in turn, increased their willingness to engage in helping and compliance-oriented behavior.63

DOES EFFECTIVE CHARISMATIC LEADERSHIP DEPEND ON THE SITUATION? Charismatic leadership has positive effects across many contexts. There are, however, characteristics of followers, and of the situation, that enhance or somewhat limit its effects.

One factor that enhances charismatic leadership is stress. People are especially receptive to charismatic leadership when they sense a crisis, when they are under stress, or when they fear for their lives. We may be more receptive to charismatic leadership under crises because we think bold leadership is needed. Some of it, however, may be more primal. When people are psychologically aroused, even in laboratory studies, they are more likely to respond to charismatic leaders, especially when they use language that is constructive and “promotion-oriented” rather than that which does not propose solutions and focuses on the negative.64 Stress matters for leaders, too: When leaders are under stress, they may not have the resources to engage in charismatic behaviors.65

Another factor is ambiguity: when we cannot accurately assess or observe how someone is doing, we rely more on cues (e.g., charismatic behaviors) to assess whether they are being effective as a leader. For example, one study of both U.S. presidents and CEOs found that charisma was more likely to predict whether a leader is selected or appointed, especially when the situation was ambiguous.66

Some personalities are especially susceptible to charismatic leadership.67 For instance, individuals who lack self-esteem and question their self-worth are more likely to absorb a leader’s direction rather than establish an individual way of leading or think- ing. For these people, the situation may matter much less than the desired charismatic qualities of the leader.

THE DARK SIDE OF CHARISMATIC LEADERSHIP Unfortunately, charismatic leaders who are larger than life do not necessarily act in the best interests of their organizations.68 Commensurate with this observation, studies have indicated that individuals who are narcissistic are higher in some behaviors associated with charismatic leadership.69 Furthermore, research suggests that charismatic leadership can unduly distort follower

Vision statement A formal articulation of an organization’s vision or mission.

Richard Branson The founder of Virgin expects employees to follow his unconventional behavior and to have fun at work. He engages in “cool” stunts like jet skiing in a tuxedo and driving a tank down New York’s 5th Avenue. Risk-taking is encouraged and seen as a sign of thinking outside the box. Though paid lower than industry standards, his employees love to be part of the “cool” Virgin family.

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Chapter 12 • Leadership 227

fairness perceptions: Because they see the charismatic leader in a positive light, they may be (consciously or not) more willing to perceive them as fair.70

Many charismatic—but corrupt—leaders have allowed their personal goals to over- ride the goals of their organizations. For example, leaders at Enron, Tyco, WorldCom, and HealthSouth recklessly used organizational resources for their personal benefit, vio- lated laws and ethics to inflate stock prices, and then cashed in millions of dollars in personal stock options. It is not that charismatic leadership is not effective; overall, it is. But a charismatic leader is not always the answer. Success depends, to some extent, on the situation and on the leader’s vision, and on the organizational checks and balances in place to monitor the outcomes.

BECOMING A CHARISMATIC LEADER Anyone can develop, within our own limitations, a more charismatic leadership style. If you stay active and central in your leadership roles, you will naturally communicate your vision for achieving goals to your followers, which increases the likelihood you will be charismatic.71 To further develop an aura of charisma, use your passion as a catalyst for generating enthusiasm. Speak in an animated voice, reinforce your message with eye contact, emphatic gestures, and facial expressions. Bring out the potential in followers by tapping into their emotions and forging a unifying bond among the team. But do not overdo it: Research suggests that you can be too charismatic and be so focused on your vision that you neglect operational behavior, like initiating structure!72

Transactional and Transformational Leadership

According to a survey by Right Management, only 17 percent of employees report that their supervisors are actively engaged in developing them, and 68 percent report that their supervisors are not engaged in this way at all.73 Those in the 68 percent likely have lead- ers who primarily use transactional leadership styles.

Transactional leaders guide their followers toward established goals by clarify- ing role and task requirements, allocating rewards and punishment where needed, and (passively or actively) intervening when the situation calls for it.74 Some of the earlier leadership approaches we discussed, including path–goal theory, tend to focus on a trans- actional approach. Sometimes, transactional leadership approaches are needed.75 For example, research on offshore rig employees suggests that leaders who actively intervene when the situation calls for it led employees to become more engaged in safety behav- iors, especially given the high likelihood of accidents.76

Transformational leaders, on the other hand, inspire followers to transcend their self- interests for the good of the organization.77 Transformational leaders can have an extraor- dinary effect on their followers.78 Exhibit 12-4 briefly identifies and defines characteristics that differentiate transactional from transformational leaders. In her book, Leadership in Turbulent Times, Doris Kearns Goodwin describes the transformational qualities of past presidents such as Abraham Lincoln, Theodore Roosevelt, and Lyndon Johnson who per- sonally appealed to Americans and inspired followers to make sacrifices to pursue goals for the country.79 There is evidence that whether leaders engage in transformational behaviors depends to a large extent on culture and industry. For example, one review of dozens of studies from eighteen different countries suggests that transformational leadership may be used more often in the health and security industries, as well as in cultures worldwide that value assertiveness and egalitarianism and that are lower on power distance.80

Transactional leaders Leaders who guide or motivate their follow- ers in the direction of established goals by clarifying role and task requirements, allocating rewards and punishment where needed, and (passively or actively) intervening when the situation calls for it.

Transformational leaders Leaders who inspire followers to tran- scend their own self- interests for the good of the organization.

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228 Part 4 • Negotiating Power and Politics

FULL RANGE OF LEADERSHIP MODEL Exhibit 12-5 shows the full range of leadership model. Laissez-faire, which literally means “let it be” (do nothing), is the most passive and therefore least effective of leader behaviors.81 Management by exception, in which leaders primarily “put out fires” during crises, monitor employee performance for errors, and interact with followers only when something is wrong, is generally ineffective as a style of leadership.82 Notably, management by exception can be utilized either actively or passively, with the passive form tending to be more ineffective.83 Contingent reward leadership, which gives predetermined rewards for employee efforts, can be an effective style of leadership but will not get employees to go above and beyond the call of duty.84

Only with the four remaining styles—all aspects of transformational leadership— are leaders able to motivate followers to perform above expectations and transcend their self-interest for the sake of the organization. Individualized consideration, intellectual stimulation, inspirational motivation, and idealized influence (known as the “four I’s”) all result in extra effort from workers, higher productivity, higher creativity, higher well- being, higher morale and satisfaction, higher organizational effectiveness, lower turn- over, lower absenteeism, and greater organizational adaptability.85

Interestingly, it appears certain traits are more important than others, depend- ing upon the transformational leadership style. For example, most of the Big Five traits (except emotional stability) appear to be important for idealized inf luence, but only openness and agreeableness appear to consistently predict inspirational moti- vation and individualized consideration. Curiously, none of the Big Five predict intellectual stimulation, but perhaps this dimension is more inf luenced by intelligence than personality.86

HOW TRANSFORMATIONAL LEADERSHIP WORKS Overall, an exhaustive program of research has sought to discover why transformational is so effective.87 Researchers have

Full range of leadership model A model that depicts seven leadership styles on a con- tinuum: laissez-faire, management by exception, contingent reward leadership, individualized consideration, intel- lectual stimulation, inspirational motiva- tion, and idealized influence.

Transactional Leader Contingent Reward: Contracts exchange of rewards for effort, promises rewards for good performance, recognizes accomplishments.

Management by Exception (active): Watches and searches for deviations from rules and standards, takes corrective action.

Management by Exception (passive): Intervenes only if standards are not met.

Laissez-Faire: Abdicates responsibilities, avoids making decisions.

Transformational Leader

Idealized Influence: Provides vision and sense of mission, instills pride, gains respect and trust.

Inspirational Motivation: Communicates high expectations, uses symbols to focus efforts, expresses important purposes in simple ways.

Intellectual Stimulation: Promotes intelligence, rationality, and careful problem solving.

Individualized Consideration: Gives personal attention, treats each employee individually, coaches, advises.

EXHIBIT 12-4 Characteristics of Transactional and Transformational Leaders

Source: B. M. Bass, “From Transactional to Transformational Leadership: Learn- ing to Share the Vision,” Organiza- tional Dynamics 18, no. 3 (1990): 19–31.

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Chapter 12 • Leadership 229

found that transformational leadership is, in general, effective for five reasons (many of which correspond with various chapters in this book):88

1. Affective or Attitudinal Mechanism: Transformational approaches promote posi- tive employee moods, emotions, job satisfaction, organizational commitment, and feelings of well-being.

2. Motivational Mechanism: Transformational approaches motivate employees— they become more confident and engaged.

3. Identification Mechanism: Transformational approaches lead employees to per- sonally identify with the leader and the leader’s values and identity, as well as with the team or organization.

4. Social Exchange Mechanism: Transformational approaches improves the quality of exchange and relationship between leaders and followers (i.e., LMX, see earlier in this chapter). Followers are also more likely to perceive that they are supported by the leader, team, and/or organization.

5. Justice Enhancement Mechanism: Transformational approaches improve em- ployee fairness perceptions, motivating followers to contribute more and to trust the leader, team, and organization more.

Research suggests that the “social exchange mechanism” is the primary “reason” for why leadership behaviors and styles influence outcomes: Behaviors that improve

Idealized Influence

Inspirational Motivation

Intellectual Stimulation

Individualized Consideration

Contingent Reward

Management by Exception

Laissez-Faire

Passive Active

Ineffective

Tr an

sa ct

io na

l

Tr an

sf or

m at

io na

l

Effective EXHIBIT 12-5 Full Range of Leadership Model

Source: Adapted from B. M. Bass and B. J. Avolio, Improving Organi- zational Effective- ness Through Transformational Leadership (Thou- sand Oaks, CA: Sage, 1994).

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perceptions of leader–follower relationship quality, in turn, result in improved follower performance.89 Although the other reasons are just as important, it seems as if they oper- ate through improved social exchange. In other words, (1) transformational leadership approaches improve the leader–follower relationship, (2) then, this improved relationship paves the way for positive affective, attitudinal, motivational, identification, and justice- related changes. However, we should note that a limitation here is that it is often very difficult to differentiate transformational leadership from LMX—regardless, they should not change the mechanisms (e.g., affect, identification, justice, motivation) through which transformational leadership has been found to operate.90

TRANSFORMATIONAL VERSUS TRANSACTIONAL LEADERSHIP Transactional and transformational leadership complement each other; they are not opposing approaches to getting things done.91 Transformational leadership builds on transactional leadership and produces levels of follower effort and performance beyond what transactional leadership alone can do. Although both tend to be important, it appears that transformational leadership is more important for group performance, OCBs, and satisfaction with the leader, whereas transactional leadership (primarily contingent reward) is more important for leader effectiveness, follower performance, and follower job satisfaction.92 Also, as mentioned earlier, transformational leadership and management-by-exception (active) are both important in their own right for safety behaviors in organizations.93 However, the distinction between the two is not as clear-cut as it seems. The full range of leadership model shows a clear division between transactional and transformational leadership that may not fully exist in practice, and prior reviews of the research suggest that transformational leadership and contingent reward are very highly related—even to the point where researchers have begun questioning whether they are, in fact, identical.94

TRANSFORMATIONAL VERSUS CHARISMATIC LEADERSHIP In considering transformational and charismatic leadership, you surely noticed some commonalities. There are differences, too. As discussed in a prior section, charismatic leaders are those that make value-based appeals and communicate through symbolic and emotion-laden means.95 Charismatic leadership places somewhat more emphasis on the way leaders communicate (are they passionate and dynamic?), while transformational leadership focuses more on what they are communicating (is it individualized, intellectually stimulating, inspirational, and influential?). At their heart, both focus on the leader’s ability to inspire followers, and sometimes they do so in the same way.

EVALUATION OF TRANSFORMATIONAL LEADERSHIP In general, organizations perform better when they have transformational leaders. However, transformational leadership is not without its critics, some of who boldly claim that transformational leadership behaviors can be construed as manipulative and unduly granting power to inspirational people.96 Others have noted that transformational leadership theory could benefit from understanding which dimensions are most important, exactly “how” these combine to form transformational leadership, and “how” the dimensions of transformational leadership lead to different outcomes.97 More importantly, researchers have criticized the surveys with which transformational leadership is measured, and suggest that transformational leadership is often confounded with outcomes. (For example, are individual attention, intellectual stimulation, inspiration, and influence behaviors performed by the leader, or are they perceptions of the follower?)98

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RESPONSIBLE LEADERSHIP

Although theories have increased our understanding of effective leadership, they do not explicitly deal with the roles of ethics and trust, which some argue are essential to com- plete the picture. Here, we consider contemporary concepts that explicitly address the role of leaders in creating ethical organizations.

Authentic Leadership

Authentic leaders are self-aware (e.g., they know what is important to them, including their own strengths/weaknesses), are anchored by their mission and principles, consider others’ opinions and all relevant information before acting, and display their true selves when interacting with employees.99 The result: People have faith in them. For example, Nick Sarillo of Nick’s Pizza and Pub is authentic in how he runs his business—when one of the locations was not doing too well, he was publicly open and transparent about it, along with the need to close the store.100 Unfortunately, there appears to be a double- standard for women when it comes to authenticity: In general, women are perceived to be more authentic, especially when they engage in traditionally “feminine” hobbies and when they engage in “warm” leadership styles.101 However, if they engage in more asser- tive, transactional approaches (e.g., initiating structure, directive leadership behaviors), this goes against the stereotype and may lead some to label them as inauthentic.102 These stereotypes have led many to comment on how Hillary Clinton was mocked as “Saint Hillary” when she stood behind her message of “politics of meaning” in the 1990s, but was branded as inauthentic when she adopted more traditionally masculine approaches to leadership during her presidential campaign decades later.103

Authentic leadership strongly predicts outcomes such as group performance, OCBs, LMX, satisfaction and trust in the leader, ratings of leader effectiveness, follower atti- tudes and empowerment, and, to a lesser degree, follower creativity, engagement, devi- ance, turnover intentions, and burnout.104 Furthermore, research suggests that leaders who “practice what they preach” observe improved follower outcomes because their followers begin to trust them and become more committed to the organization.105 Authentic leaders can inspire their employees to be better: For example, research on Pakistani communica- tions employees suggests that the awareness of one’s own strengths and weaknesses that comes from authentic leadership, predicts followers’ intentions to improve themselves.106

Despite these interesting findings concerning the nature of authentic leadership, reviews of the leadership literature point to how transformational and authentic leader- ship are extremely similar in practice, to the point where many researchers consider them to be identical.107 However, some work does suggest that authentic leadership is more important for explaining team performance and whether employees engage in OCBs, because they have an internalized mission that propels the group forward.108

(Un)ethical Leadership

(Un)ethical leadership, although it has been conceptualized in many ways, refers to how leaders serve as ethical role models to followers, and thus demonstrate normatively appropriately (or inappropriate) behavior by using their power in (un)ethical ways and by treating others fairly (or unfairly).109 (Un)ethical leadership tends to affect employees in a number of ways. First, (un)ethical leadership has a direct influence on how employees

Authentic leaders Leaders who are self- aware and anchored by their mission, consider others’ opin- ions and all relevant information before acting, and display their true selves when interacting with employees.

(Un)ethical leadership The idea that leaders serve as ethical role models to followers, and thus demonstrate appropriate (or inap- propriate) behavior by using their power in (un)ethical ways and/or by treating others fairly (or unfairly).

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232 Part 4 • Negotiating Power and Politics

think about moral issues.110 Second, ethical leadership tends to improve follower job atti- tudes, job performance and perceptions of follower leaders—indeed, ethical leadership tends to increase followers’ trust in their leaders, which in turn can lead to these posi- tive outcomes.111 Third, ethical leadership sets the example for how employees should treat one another: It can lead employees to use less intimidation, fewer justifications, and fewer excuses for their behavior, and it can even improve customer service performance by clarifying moral reasons for treating customers right.112

Unfortunately, (un)ethical leadership tends to run into similar criticisms as authen- tic leadership because it is hard to disentangle it from transformational leadership in prac- tice.113 Furthermore, it is hard to be consistently ethical: leaders who were ethical on one day were more likely to be abusive the next day, often because of stressful circumstances, mental depletion, and a feeling that one has built up “credits” to behave in an unethical way.114 However, followers do not necessarily act negatively to leader unethical behavior: if the followers’ values align with the leader’s and they have a sense of mutual trust, they may be more likely to continue to support the leader.115 Furthermore, there are certain situations that reduce the effectiveness of ethical leadership. When there are too many fol- lowers, when the followers do not share the same moral perspectives as the leader (what if leaders and followers disagree on what is right and wrong?), and when followers are not in a state of mindfulness (see the chapter on organizational change and stress manage- ment), ethical leadership tends to be less effective at improving follower behaviors.116 Although every member of an organization is responsible for ethical behavior, many ini- tiatives aimed at increasing organizational ethical behavior are focused on the leaders.

When considering corporate scandals, like Wells Fargo’s unethical sales practices in 2016, it is clear that ethics-based leadership is crucial at all levels of organizations.117 Ethical top leadership influences not only direct followers, but all the way down the com- mand structure as well, because top leaders create an ethical culture and expect lower- level leaders to behave along ethical guidelines.118 Ethical leadership has implications for financial outcomes as well. For example, one study of 111 U.S. retail stores found that ethical leadership can reduce “retail shrink,” or the loss of merchandise primarily due to theft and shoplifting, because ethical leadership can reduce incivility among employees and customers.119

Servant Leadership

Servant leadership involves going beyond self-interest to focus on opportunities that help followers grow and develop.120 Characteristic behaviors include listening, empathiz- ing, persuading, accepting stewardship, and actively developing followers’ potential.121 Because servant leadership is based on the value of serving the needs of others, research has focused on its outcomes for the well-being of followers. Indeed, servant leadership is strongly related to followers’ job attitudes, as well as their trust in leadership and LMX perceptions.122 In turn, servant leadership predicts both job performance and OCB, albeit to a lesser degree than well-being and leadership quality.123 This may be due to follower feelings of gratitude that engender prosocial behavior and a need to reciprocate.124 Similar to authentic leadership, there appears to be an advantage for women who are servant lead- ers because the leadership style stereotypically matches the gender role prototype. In other words, women who draw on servant leadership techniques tend to inspire their use in their followers, which leads to higher performance than men servant leaders.125

Servant leadership A leadership style marked by going beyond the leader’s own self-interest and instead focusing on opportunities to help followers grow and develop.

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Chapter 12 • Leadership 233

Research also suggests that servant leadership may “fuel the service fire.” Research on hairstylists suggests that servant leaders help promote their sense of identity with the salon and their confidence, which in turn leads customers to rate their performance more highly.126 Furthermore, research suggests that there is a trickle-down effect: High-level managers who are servant leaders can influence low-level managers to practice servant leadership, which in turn improves employee performance.127 Although servant leadership is highly related to transformational, authentic, and ethical leadership (particularly the lat- ter), research suggests that it holds the most promise “of standing on its own” as a unique leadership style in practice, when compared with authentic and ethical leadership.128

POSITIVE LEADERSHIP

In each of the theories we have discussed, you can see opportunities for the practice of good, bad, or mediocre leadership. Now let us think about the intentional development of positive leadership states.

Trust

Trust (see also our discussion in the groups and teams chapters) is a psychological state of mutual positive expectations between people—both depend on each other and are gen- uinely concerned for each other’s welfare.129 Although you are not completely in control of the situation and sometimes under time pressures that force you to trust another,130 you are willing to take a chance that the other person will come through for you. Trust can be focused on competence (e.g., faith in the leaders’ technical skills, experience) or integrity (e.g., faith in a leaders’ motives, honesty, and character). So naturally, integrity-based trust is much more effective at reducing the costs associated with building new relation- ships (at least for establishing business connections between organizations).131

Trust is a primary attribute associated with leadership; breaking it can have serious adverse effects on a group’s performance.132 Followers who trust a leader are confident their rights and interests will not be abused.133 Leaders who trust their followers are con- fident that they will follow through and completing their duties effectively.134 Felt trust matters as well—when the leader feels trusted and the followers actually trust the leader, leaders are more effective.135

THE OUTCOMES OF TRUST Trust between supervisors and employees has several specific advantages. Here are just a few from research:

• Trust encourages taking risks. Whenever employees decide to deviate from the usual way of doing things, or to take their supervisor’s word on a new direction, they are taking a risk. In both cases, a trusting relationship can facilitate that leap.136

• Trust facilitates information sharing. When managers demonstrate they will give employees’ ideas a fair hearing and actively make changes, employees are more willing to speak out.137

• Trusting groups are more effective. When a leader sets a trusting tone in a group, members are more willing to help each other and exert extra effort, which increases trust.138

• Trust enhances productivity. Employees who trust their supervisors tend to re- ceive higher performance ratings, indicating higher productivity.139

Trust A psychological state of mutual positive expectations between people—both depend on each other and are genuinely concerned for each other’s welfare.

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234 Part 4 • Negotiating Power and Politics

TRUST DEVELOPMENT What key characteristics lead us to believe a leader is trustworthy? Evidence has identified three: integrity, benevolence, and ability (see Exhibit 12-6).140

Integrity refers to honesty and truthfulness. When 570 white-collar employees were given a list of twenty-eight attributes related to leadership, they rated honesty the most important by far.141 Integrity also means maintaining consistency between what you do and say (see prior section on authentic leadership).

Benevolence means the trusted person has your interests at heart, even if your inter- ests are not necessarily in line with theirs. Caring and supportive behavior is part of the emotional bond between leaders and followers.

Ability encompasses an individual’s technical and interpersonal knowledge and skills. You are unlikely to depend on someone whose abilities you do not believe in, even if the person is highly principled and has the best intentions.

TRUST PROPENSITY Trust propensity refers to how likely an employee is to trust a leader. Some people are simply more likely to believe others can be trusted.142 Trust propensity is closely linked to the personality trait of agreeableness, and people with lower self-esteem are less likely to trust others.143 When teams are composed of members with different propensities to trust leaders or other team members, they are more prone to spiral downward when conflict arises.144

TRUST AND CULTURE Trust in an employment relationship may be built on very different perceptions from culture to culture. For example, a study in Taiwan indicated that employees responded to paternalistic leadership, when it was benevolent and ethical, with increased trust.145 This positive response to paternalism may be unique to the collectivistic context of Taiwan, where the Confucian values of hierarchy and relationship predominate. In individualistic societies (see the chapter on personality and values), we might expect that paternalistic leadership will rankle many employees who prefer not to see themselves as part of a hierarchical family work group.

THE ROLE OF TIME We come to trust people by observing their behavior over time, such as when you are developing new relationships with people when you start a new job.146 For example, employees in newly acquired companies develop trust toward top managers in the acquiring company (especially when they institute fair procedures and when they

Trust propensity How likely an employee is to trust a leader.

Risk Taking

Information Sharing

Group Effectiveness

Productivity

Trust

Integrity

Leader Trustworthiness

Benevolence

Ability

Propensity to Trust

EXHIBIT 12-6 Model of Trust in Organizations

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are seen as competent).147 To help, leaders need to demonstrate integrity, benevolence, and ability in situations where trust is important—say, where they could behave opportunistically or let employees down. Second, research with one hundred companies around the world suggested that leaders can build trust by shifting their communication style from top-down commands to ongoing organizational dialogue. Third, when leaders regularly create interpersonal conversations with their employees that are intimate, interactive, and inclusive, and that intentionally follow an agenda, followers demonstrate trust with high levels of engagement.148 Finally, followers can experience a breach of trust when leaders replace transformational leadership with laissez-faire leadership or when they are furious in response to an unethical behavior—this breach of trust can cause followers to rate leaders as less effective as a result.149

REGAINING TRUST Managers who break the psychological contract with workers, demonstrating they are not trustworthy leaders, will find employees are less satisfied and less committed, have a higher intent toward turnover, engage in fewer OCBs, and have lower levels of task performance.150

Once it has been violated, trust can be regained through long-term and short-term strategies,151 but only in certain situations and depending on the type of violation.152 If the cause is lack of ability, it is usually best to apologize and recognize you should have done better. When lack of integrity is the problem, apologies do not do much good. Regardless of the violation, saying nothing or refusing to confirm or deny guilt is never an effective strategy for regaining trust.153

Trust can be restored when we observe a consistent pattern of trustworthy behavior by the transgressor, although time is of the essence when issuing an apology: Quicker apologies tend to be better than those that come late.154 However, if the transgressor used deception, trust never fully returns, not even after apologies, promises, or a consistent pattern of trustworthy actions.155

Mentoring

Leaders often take responsibility for developing future leaders. A mentor is a senior employee who sponsors and supports a less-experienced employee—a protégé.156 Mentoring relationships serve career and psychosocial functions.157 Successful mentors build personal relationships with protégés that are characterized by mutual trust; instill accountability and build confidence and adaptability in protégés; and seek to improve protégés’ competence and career progression (e.g., through networking).158

Are all employees in an organization likely to participate in a mentoring rela- tionship? Unfortunately, no. However, research continues to indicate that employers should establish mentoring programs because they benefit both mentors and proté- gés,159 although informal programs tend to work better.160 Furthermore, there are some gender differences: Males tend to be more likely to serve as a mentor, while females tend to both give and receive more psychosocial support in a mentoring relationship.161

You might assume mentoring is valuable for objective outcomes like compensa- tion and job performance, but research suggests the gains are primarily psychological.162 Thus, while mentoring can have an impact on career success, it is not as much of a con- tributing factor.

Mentor A senior employee who sponsors and supports a less-experienced employee, called a protégé.

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236 Part 4 • Negotiating Power and Politics

Leading in Times of Crisis

A popular English proverb states, “Cometh the hour, cometh the [wo]man,” suggesting that during times of crisis, leaders will emerge to bring order and understanding to the chaos.163 Indeed, leaders can and do emerge during times of crisis, although there is variability in how effective they are at handling the situation. For example, during the COVID-19 out- break of 2020, German Chancellor Angela Merkel has been praised for her impressive, decisive, firm, evidence-based, and effective leadership—and these are not merely attri- butions; under her leadership, Germany had one of the lowest fatality rates in the world when the virus broke out.164 During times of peace and stability, women leaders tend to under-emerge due to the glass cliff phenomenon (see the chapter on diversity for more dis- cussion).165 Because of this think female-think crisis effect, women are not seen as leaders during status-quo periods, often due to leader stereotypes of not being agentic enough that prevent their emergence (despite little evidence indicating that they are more or less effec- tive than men). This phenomenon is just one of the many indicators that leadership in crisis is not as simple as the “cometh the hour” proverb would suggest—not to mention the time pressure, complexity, and strain from the threat these stressful situations impose.166

Leaders in times of crisis, such as decorated combat heroes of World War II, are often thought of in mythical, heroic terms: eager, loyal, risk-taking, transformational, and so on.167 Interestingly, one review of historical leadership incidents across several decades suggested that much of the successful leadership episodes involved transactional behaviors, such as strategizing (e.g., analyzing the situation, delegating, planning) and coordinating (e.g., orches- trating action, managing information flow).168 Analyzing the situation appears to be particu- larly important, and research demonstrates that leaders managing crisis teams move quickly toward a shared mental model (see the chapter on teams) of the crisis with followers over time.169 Emotions also play a large role: for example, in one study, a leader responsible for a product recall that cost an organization a lot of money was rated more favorably when accept- ing responsibility and expressing sadness (as opposed to denial and anger).170 Furthermore, research in this area has yet to fully cover how gender identity relates to leadership emergence in times of crisis, but we expect progress to be made in this area moving forward.

Of all the leadership styles during times of crisis, charismatic leadership has been stud- ied the most frequently. During times of crisis, charismatic leadership can be visionary (e.g., starting with establishing a vision and then making a plea for action) or crisis-responsive (e.g., starting with a plea for action and, over time, justifying this action by communicating their effective results).171 Both forms can be effective in different ways, although the crisis- responsive approach tends to be used less frequently once the crisis ends.172 Followers are also highly attuned to the crisis, and this affects their leadership attributions. For example, analyses of presidential elections suggest that perceptions of crisis predict voters’ attributions of candidate charisma and their intentions to vote for candidates who are charismatic.173 The effects of charismatic and transformational leadership during times of crisis may even reverberate after the crisis is over. For example, in a study of U.S. Army unit leaders suggests that transformational leaders observe less unit turnover after the crisis is over and that these soldiers feel more embedded in their unit due to their shared experiences.174

CHALLENGES TO OUR UNDERSTANDING OF LEADERSHIP

Management expert Jim Collins said, “In the 1500s, people ascribed all events they didn’t understand to God. Why did the crops fail? God. Why did someone die? God. Now our all-purpose explanation is leadership.”175 This may be an astute observation from

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management consulting, but of course much of an organization’s success or failure is due to factors outside the influence of leadership. In this section, we present challenges to the accepted beliefs about the value of leadership.

Leadership as an Attribution

As you may remember from the chapter on perception and individual decision-making, attribution theory examines how people try to make sense of cause-and-effect relation- ships. The attribution theory of leadership says leadership is merely an attribution people make about other individuals.176 We attribute the following to leaders: intelligence, outgoing personality, strong verbal skills, aggressiveness, understanding, and industrious- ness.177 We also, in our day-to-day interactions with our leaders, tend to make attributions toward our relationships (e.g., my supervisors gave me a terrible performance appraisal because they hate me).178 At the organizational level, we tend, rightly or wrongly, to see leaders as responsible for both extremely negative and extremely positive performance.179

Perceptions of leaders by their followers strongly affect leaders’ ability to be effective. A study of more than three thousand employees from western Europe, the United States, and the Middle East found that people who tended to “romanticize” lead- ership in general were more likely to believe their own leaders were transformational.180 Attribution theory suggests what is important is projecting the appearance of being a leader rather than focusing on actual accomplishments. Leader-wannabes who can shape the perception that they are smart, personable, verbally adept, aggressive, hardworking, and consistent in their style can increase the probability their bosses, colleagues, and employees will view them as effective leaders. It works both ways as well—coworkers and leaders alike can see a follower engaging in OCB toward the leader as being ingra- tiating or “sucking up.”181 Similarly, attributions that suggest the leader was only acting fairly for non-benevolent motives (e.g., desiring to exercise control or maintain their image) do not influence trust in the leader like a more benevolent motive would.182

Neutralizers of and Substitutes for Leadership

One theory of leadership suggests that in many situations, leaders’ actions are irrel- evant.183 Neutralizers, such as indifference to rewards, make it impossible for leader behavior to make any difference to follower outcomes (see Exhibit 12-7). On the other

Attribution theory of leadership A leadership theory that states that leader- ship is merely an attribution that people make about other individuals.

Neutralizers Attributes that make it impossible for leader behavior to make any difference to follower outcomes.

Relationship- Oriented Leadership

Task- Oriented LeadershipDefining Characteristics

Individual Experience/training Professionalism Indifference to rewards

No effect on Substitutes for Neutralizes

Substitutes for Substitutes for Neutralizes

Jo b Highly structured task Provides its own feedback Intrinsically satisfying

No effect on No effect on Substitutes for

Substitutes for Substitutes for No effect on

Organization Explicit formalized goals Rigid rules and procedures Cohesive work groups

No effect on No effect on Substitutes for

Substitutes for Substitutes for Substitutes for

EXHIBIT 12-7 Neutralizers of and Substitutes for Leadership

Source: Based on S. Kerr and J. M. Jermier, “Substitutes for Leadership: Their Meaning and Measurement,” Organizational Behavior and Hu- man Performance (1978), p. 378.”

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238 Part 4 • Negotiating Power and Politics

hand, experience and training are among the substitutes that can replace the need for a leader’s support or ability to create structure. Organizations such as video game pro- ducer Valve Corporation, Gore-Tex maker W. L. Gore, and collaboration-software firm GitHub have experimented with eliminating leaders and management. Governance in the “bossless” work environment is achieved through accountability to coworkers, who determine team composition and sometimes even pay.184 Organizational characteristics such as explicit formalized goals, rigid rules and procedures, and cohesive workgroups can replace formal leadership. At the same time, leadership can also substitute for the effects of policies, practices, and procedures. For example, ethical leadership can substi- tute for actual justice enactment, such that perceiving your leader as ethical matters more to you than them actually enacting and enforcing justice.185

It’s simplistic to think employees are guided to goal accomplishments solely by the actions of their leaders.186 We have introduced several variables—such as attitudes, personality, ability, and group norms—that affect employee performance and satisfac- tion. Leadership is simply another variable in our overall organizational behavior model.

SUMMARY

Leadership plays a central part in understanding group behavior because it is the leader who usually directs us toward our goals. Knowing what makes a good leader should thus be valuable toward improving group performance. The Big Five personality frame- work shows strong and consistent relationships between personality and leadership. The behavioral approach’s major contribution was narrowing leadership into task-oriented (initiating structure) and people-oriented (consideration) styles. By evaluating the situation in which a leader operates, contingency theories promised to improve on the behavioral approach. Contemporary theories have made major contributions to our un- derstanding of leadership effectiveness, and studies of ethics and positive leadership offer exciting promise.

IMPLICATIONS FOR MANAGERS

• For maximum leadership effectiveness, ensure that your preferences on the initiat- ing structure and consideration dimensions are a match for your work dynamics and culture.

• Hire candidates who exhibit transformational leadership qualities and who have demonstrated success in working through others to meet a long-term vision. Personality tests can reveal candidates higher in extraversion and conscientious- ness, which may indicate leadership readiness.

• Hire candidates whom you believe are ethical and trustworthy for management roles and train current managers in your organization’s ethical standards in order to increase leadership effectiveness.

• Seek to develop trusting relationships with followers because, as organizations have become less stable and predictable, strong bonds of trust are replacing bureau- cratic rules in defining expectations and relationships.

• Consider investing in leadership training such as formal courses, workshops, and mentoring.

Substitutes Attributes, such as experience and train- ing, that can replace the need for a leader’s support or ability to create structure.

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239

Power and Politics 13

POWER AND LEADERSHIP

In organizational behavior (OB), power simply refers to the capacity, discretion, and means to enforce one’s will over others.1 Someone can thus have power but not use it; a power- ful person has discretion over when to exercise their power. Probably the most important aspect of power is that it is a function of dependence.2 The more people rely or depend upon the powerful person (who controls something the others rely on or want), the more powerful that person becomes. When people begin to have more alternatives and options, or begin to rely on themselves or different people, the powerful person loses power.

Unfortunately, we all too often hear about people using their power to unethi- cal ends. For example, people depend upon executives, managers, and even employee “superstars” (e.g., a partner in a law firm who brings in lucrative clients) for promotions, pay raises, or bringing in customers/clientele. These powerful leaders are thus unjustly empowered to enforce their will over others in several ways, including sexual harass- ment.3 Sexual harassment is a huge problem, adversely affecting employees’ mental and physical health and opportunities for advancement as well as costing organizations mil- lions of dollars in legal fees and employee turnover.4

A careful comparison of our description of power with our description of leader- ship in the previous chapter reveals that the concepts are closely intertwined. How are the two terms different? Power does not require goal compatibility, just dependence. Leadership, on the other hand, requires some congruence between the goals of the leader and those being led. A second difference relates to the direction of influence. Power

Power The capacity, discre- tion, and means to enforce one’s will over others.

Dependence The extent to which people depend or rely upon a powerful person.

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

13.1 Contrast leadership and power.

13.2 Explain the three bases of formal power and the two bases of personal power.

13.3 Explain the role of dependence in power relationships.

13.4 Identify power or influence tactics and their contingencies.

13.5 Identify the causes and consequences of abuse of power.

13.6 Describe how politics work in organizations.

13.7 Identify the causes, consequences, and ethics of political behavior.

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240 Part 4 • Negotiating Power and Politics

focuses more so on the downward influence on followers. It minimizes the importance of lateral and upward relationships, which are important in leadership. For a third differ- ence, leadership research often emphasizes style. It seeks answers to questions such as: How supportive should a leader be? How much decision making should be shared with followers? In contrast, the research on power focuses on tactics for gaining compliance.

Power relationships are possible in all areas of life, not just leadership positions, and power can be obtained in many ways. Let us explore the various sources of power next.

BASES OF POWER

Where does power come from? We answer this question by dividing the bases (or sources) of power into two general groupings, formal and personal, and breaking each of these down into more specific categories.5

Formal Power

Formal power is based on an individual’s position in an organization. It can come from the ability to coerce or reward, or from legitimate authority.

COERCIVE POWER The coercive power base depends on the target’s fear of negative results from failing to comply, or acting in a way that would anger the power holder.6 Sales consultants may remain silent after witnessing their supervisors falsify their team’s sales numbers for fear of being terminated or demoted, being assigned to undesirable regions or clients, and/or being treated in an embarrassing way in front of the rest of the team. Coercive power comes also from withholding key information. People in an organization who have data or knowledge others need can make others dependent on them. For example, the sales team lead may have valuable information on client leads— anything that might threaten obtaining this information may lead the consultant to remain silent.

REWARD POWER The opposite of coercive power is reward power, with which people comply because it produces positive benefits; someone who can distribute rewards that others view as valuable will have power over them. These rewards can be financial—such as controlling pay rates, raises, and bonuses—or nonfinancial, including recognition, promotions, interesting work assignments, friendly colleagues, and preferred work shifts or sales territories.7 Using the same example, the sales team lead who rewards compliant team members with lead information is exercising reward power.

LEGITIMATE POWER The most common way to access one or more of the power bases is probably through legitimate power. It represents the formal authority to control and use organizational resources based on the person’s structural position in the organization. In general, when school principals, bank presidents, or army captains speak, teachers, tellers, and first lieutenants usually comply. Legitimate power includes members’ acceptance of the authority of a hierarchical position.8 We associate power so closely with the concept of hierarchy that just drawing longer lines in an organization chart leads people to infer the leaders are especially powerful.9 Furthermore, legitimate power can also reduce the effect of others’ power; for example, research suggests that when

Coercive power A power base that is dependent on fear of the negative results from failing to comply.

Reward power Power based on the ability to distribute rewards that others view as valuable.

Legitimate power Power based on a person’s position in the formal hierarchy of an organization.

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Chapter 13 • Power and Politics 241

an employee stands up against something unethical, they are less likely to suffer the consequences of others’ coercive power (e.g., sanctioning, ostracism, etc.) when they, themselves, are high in legitimate power.10

Personal Power

Personal power comes from an individual’s unique characteristics.11 There are two bases of personal power: expertise and the respect and admiration of others. Some people might only have personal power, but others can also have formal power. For example, many consultants have personal power but have no formal power if they are not manag- ers. Conversely, a sales team lead may not only have formal power bases but can also be well-liked and respected.

EXPERT POWER Expert power is based on influence wielded as a result of expertise, special skills, or knowledge.12 As jobs become more specialized, we become dependent on experts to achieve goals. It is generally acknowledged that physicians have expertise and hence expert power: Most of us follow our doctor’s advice. Returning to our sales consultant example, some of the team members may wield expert power due to their strong sales skills or expertise in the area.

REFERENT POWER Referent power is based on identification with a person who has desirable resources or personal traits.13 If I like, respect, and admire you; you can exercise power over me because I want to please you. Some people who are not in formal leadership positions have referent power and exert influence over others because of their charismatic dynamism, likability, and emotional appeal.14

Referent power develops out of admiration of another and a desire to be like that person. It helps explain, for instance, why celebrities are paid millions of dollars to endorse products in commercials. Marketing research shows people such as LeBron James have the power to influence your choice of athletic shoes and credit cards.15

Which Bases of Power Are Most Effective?

Of the bases of power, which are most effective? This is a complicated question. Regarding the dependents in the power relationship, different bases of power are effective depend- ing upon the perceptions and characteristics of the dependent. For example, dependents view angry leaders as higher on formal power, and in turn are more loyal toward these leaders and perceive them as more effective.16 On the other hand, dependents are likely to perceive coercive and low-referent leaders as ineffective, become less loyal toward these leaders, and even engage in deviant behaviors directed at these leaders.

It does appear though, that referent power can be an especially powerful motivator. Consider Steve Stoute’s company, Translation, which matches pop-star spokespersons with corporations that want to promote their brands. Stoute has paired Justin Timberlake with McDonald’s, Mary J. Blige with Apple Music, and several famous rappers with shoe companies (e.g., Jay-Z and 50 Cent).17 Translation’s approach has changed with the times as well. As more/frequent content is needed in today’s day and age, Translation has worked on creating an online mini-series to promote products and to discuss cul- ture, which has reached 42.5 million people. Partnering with Dr. Dre (Beats by Dre),

Expert power Power based on influence through possessing expertise, special skills, or knowledge.

Referent power Power based on identification with a person who has desirable resources or personal traits.

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242 Part 4 • Negotiating Power and Politics

Translation created “The Shop,” a series where NBA all-stars (e.g., Kevin Durant, LeBron James) and hip-hop artists (e.g., Future) alike, all with large bases of referent power, dis- cuss several topics (e.g., sneakers, music, the game) amid a barbershop backdrop.18

DEPENDENCE: THE KEY TO POWER

The most important aspect of power is that it is a function of dependence. In this section, we show how understanding dependence helps us understand degrees of power.

The General Dependence Postulate

Let us begin with a general postulate: The greater B’s dependence on A, the more power A has over B. When you possess anything others require that you alone control, you make them dependent on you, and therefore you gain power over them.19 But if something is plentiful, possessing it will not increase your power. Therefore, the more you can expand your own options, the less power you place in the hands of others. This explains why most organizations develop multiple suppliers rather than give their business to only one.

What Creates Dependence?

Dependence increases when a resource you control is important, scarce, and nonsubstitutable.20

IMPORTANCE If nobody wants what you have, it is not going to create dependence. However, note that there are many degrees of importance, from needing the resource for survival to wanting a resource that is in fashion or adds to convenience.

SCARCITY When the supply of labor is low relative to demand, workers can negotiate compensation and benefits packages that are far more attractive than those in occupations with an abundance of candidates. For example, college administrators have no problem today finding English instructors since there is a high supply and low demand. The market for network systems analysts, in contrast, is comparatively tight, with demand high and supply limited. The resulting bargaining power of computer-engineering faculty allows them to negotiate higher salaries, lighter teaching loads, and other benefits.

NONSUBSTITUTABILITY The fewer viable substitutes for a resource, the more power a person controlling that resource has. Advancements in artificial intelligence (AI) have brought economic and philosophical issues of labor nonsubstitutability to the forefront. For example, employees with skilled trades are at risk for losing power as their skills become more efficiently and automatically handled by robotics: In other words, their skills are becoming “substitutable” (see the threat of technological unemployment in the chapter on perception and individual decision-making). Despite this fear, some economists and theorists suggest that new jobs are created as the need arises for labor that requires nonsubstitutable abilities, and we are merely enhancing productivity and making work easier through AI.21

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Chapter 13 • Power and Politics 243

Social Network Analysis: A Tool for Assessing Resources

One tool to assess the exchange of resources and dependencies within an organization is social network analysis.22 This method examines patterns of communication among organizational members to identify how information flows between them. Within a social network, or connections between people who share professional interests, each individual or group is called a node, and the links between nodes are called ties. When nodes communicate or exchange resources frequently, they are said to have very strong ties. Other nodes that are not engaged in direct communication with one another achieve resource flows through intermediary nodes. In other words, some nodes act as brokers between otherwise unconnected nodes. A graphical illustration of the associations among individuals in a social network is called a sociogram, which functions like an informal version of an organization chart. The difference is that a formal organization chart shows how authority is supposed to flow, whereas a sociogram shows how resources really flow in an organization. An example of a sociogram is shown in Exhibit 13-1.

Networks can create substantial power dynamics. Those in the position of bro- kers tend to have more power because they can leverage the unique resources they can acquire from different groups. In other words, many people are dependent upon brokers, which gives the brokers more power. Data from the United Kingdom’s National Health Service shows that change agents, people entrusted with helping an organization to make a significant change, have more success if they are information brokers.23 However, it is

Project Team

Suppliers

Operations

Albert

Thomas

AnneMartha

Eric

Sales & Marketing

Finance

Customer ServiceCustomers

EXHIBIT 13-1 Example of a Sociogram

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244 Part 4 • Negotiating Power and Politics

paradoxical how powerful brokers within marketing agency networks, even though they are more willing to leverage their power, often fail to perceive opportunities to do so.24

Some of the most powerful people within social networks are able to amass power because of their personality traits—for example, their insensitivity to rewards (making them resistant to others’ influence), extraversion, and even dark triad traits (see the chap- ter on personality and values) is positively related to their social network position and power.25 Stereotype threat (see the chapter on diversity), however, can also influence the effectiveness of women in brokerage positions. Because the agency, power, and assertive- ness (that come with the brokerage position) contradict with the feminine stereotype, women are more likely to experience anxiety about their performance and fear of nega- tive evaluation in these positions.26

The relationships brokers form within networks are also extremely important. People form relationships with their leaders and coworkers, such as friendships and partnerships, which nurture mutual reliance and obligation.27 These “ties” are important not only for getting things done in organizations, but also for employees’ well-being— employees who do not nurture these ties or who lose them over time are more likely to leave their organization (although these ties can remain dormant, even after the employee leaves!).28

There are many ways to implement a social network analysis in an organization.29 Some organizations keep track of the flow of e-mail communications or document sharing across departments. These big data tools are an easy way to gather objective infor- mation about how individuals exchange information. Other organizations look at data from human resources (HR) information systems, analyzing how supervisors and sub- ordinates interact with one another. These data sources can produce sociograms showing how resources and power flow. Leaders can then identify powerful brokers who exert the strongest influence on many groups and address these key individuals. Newer applications of AI have enabled organizations and researchers to use machine learning algorithms to model the flow of information in social networks over time (and learn from events).30

INFLUENCE TACTICS

What influence tactics do people use to translate power bases into specific action? What options do they have for influencing their bosses, coworkers, or employees? Research has identified nine distinct influence tactics:31

• Legitimacy. Relying on your authority position or saying a request accords with organizational policies or rules.

• Rational persuasion. Presenting logical arguments and factual evidence to dem- onstrate a request is reasonable.

• Inspirational appeals. Developing emotional commitment by appealing to a tar- get’s values, needs, hopes, and aspirations.

• Consultation. Increasing support by involving the target in deciding how to ac- complish your plan.

• Exchange. Rewarding the target with benefits or favors in exchange for agreeing to a request.

Influence tactics Ways in which individuals translate power bases into specific actions.

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Chapter 13 • Power and Politics 245

• Personal appeals. Asking for compliance based on friendship or loyalty. • Ingratiation. Using flattery, praise, or friendly behavior prior to making a request. • Pressure. Using warnings, repeated demands, and threats. • Coalitions. Enlisting the aid or support of others to persuade the target to agree.

Using Influence Tactics

Some tactics are more effective than others. Rational persuasion, inspirational appeal, and consultation tend to be equally effective in influencing performance at work.32 Rational persuasion, although still effective at helping build relationships at work, tends to not be as superbly effective as inspirational appeal and consultation.33 The pressure tactic tends to backfire and is typically the least effective.34 Using ingratiation can improve relational outcomes of influence at work (e.g., during job interviews),35 but perhaps only when the audience does not really care about the outcome of the request or if it is routine.36

Let us consider the most effective way of getting a raise. You can start with a ratio- nal approach—figure out how your pay compares to that of your organizational peers, land a competing job offer, gather data that testify to your performance, or use salary calculators like Salary.com to compare your pay with others in your occupation—then share your findings with your manager. The results can be impressive. Kitty Dunning, a senior vice president at Don Jagoda Associates, once landed a 16 percent raise when she e-mailed her boss numbers showing she had increased sales.37 Using rational persua- sion to make a case to your supervisor about a possible raise or even an alternative work arrangement (see the chapter on motivation applications) may be effective because it fosters a mutual sense of respect between you and your supervisor.38

While rational persuasion may work in this situation, the effectiveness of some influ- ence tactics depends to some extent on the direction of influence39 and, of course, on the audience. As Exhibit 13-2 shows, rational persuasion is the only tactic effective at both upwardly and downwardly influencing, although it is stronger when it is used for down- ward influence attempts.40 Inspirational appeals work best as a downward-influencing tactic with subordinates.41 Ingratiation is most effective as lateral influence, although it can also be effective in downward influence.42 Other factors relating to the effectiveness of influence include the sequencing of tactics, a person’s skill in using the tactic, and the orga- nizational culture. In general, you are more likely to be effective if you begin with “softer” tactics that rely on personal power, such as personal and inspirational appeals, rational persuasion, and consultation. If these fail, you can move to “harder” tactics, such as exchange and coalitions, which emphasize formal power and incur greater costs and risks.43

Upward Influence Downward Influence Lateral Influence Rational persuasion Rational persuasion

Inspirational appeals Ingratiation Legitimacy

Rational persuasion Consultation Ingratiation Exchange Legitimacy Personal appeals Coalitions

EXHIBIT 13-2 Preferred Influence Tactics by Influence Direction

ZTE Corporation Building relationships with the government and other institutions is critical in China. Zhongxing Telecommunication Equipment Co. Ltd. (ZTE) is a global provider of integrated telecommunication solutions. One of the corporation’s founders and former chairman, the legendary Hou Weigui, worked to free the company from state and collectivist management. His low-key, mild, and practical management style became the image of ZTE for most people.

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246 Part 4 • Negotiating Power and Politics

As we mentioned, the effectiveness of tactics depends on the audience.44 People especially likely to comply with soft influence tactics tend to be more reflective and intrinsically motivated; they have high self-esteem and a greater desire for control. Those likely to comply with hard influence tactics are more action-oriented and extrinsically motivated and are more focused on getting along with others than on getting their own way. Interestingly, prior research does not support differences between men and women in the effectiveness of use of influence tactics—both men and women benefit from soft or neutral tactics, as opposed to harder tactics.45

Cultural Preferences for Influence Tactics

Preference for influence tactics varies across cultures.46 Those from individualistic coun- tries tend to see power in personalized terms and as a legitimate means of advancing their personal ends, whereas those in collectivistic countries see power in social terms and as a legitimate means of helping others.47 Managers in the United States seem to prefer rational appeal, whereas Chinese managers may prefer coalition tactics.48 Reason-based tactics are consistent with the U.S. preference for direct confrontation and rational persuasion to influence others and resolve differences, while coalition tactics align with the Chinese preference for meeting difficult or controversial requests with indirect approaches.

Applying Influence Tactics

People differ in their political skill, or their ability to influence others to enhance their own objectives.49 The politically skilled are more effective users of influence tactics and draw on their knowledge of others’ demands, resources, and preferences to do so.50 Political skill is also more effective when social skills are required to do well in your job, such as in leadership positions, sales consultants, real estate agents, and other relationship- oriented occupations.51 The politically skilled can exert their influence without others detecting it, a key element in effectiveness (it is damaging to be labeled political).52

We know cultures within organizations differ markedly; some are warm, relaxed, and supportive; others are formal and conservative. Some encourage participation and consultation, some encourage reason, and still others rely on pressure. People who fit the culture of the organization tend to obtain more influence.53 Specifically, extraverts tend to be more influential in team-oriented organizations, and highly conscientious people are more influential in organizations that value working alone on technical tasks. People who fit the culture are influential because they can perform especially well in the domains deemed most important for success. Thus, the organization itself will influence which subset of influence tactics is viewed as acceptable for use. Regardless of the cul- tural fit, however, evidence suggests that in general, extraverts tend to be more prone to develop political skills, although agreeableness and conscientiousness are also important to some degree.54 But beware: political skill has been found to camouflage some negative dark triad traits, such as Machiavellianism (see the chapter on personality and values).55

Overall, political skill leads to several positive individual outcomes for employ- ees.56 Developing political skill can help you build self-efficacy and become more sat- isfied with your job and committed to your organization, and lead you to experience less stress, to a small degree. Furthermore, developing political skill can boost your performance and productivity, as well as enable you to engage in more organizational

Political skill The ability to influ- ence others in such a way as to enhance one’s objectives.

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citizenship behaviors (OCBs). Probably the most important are the career outcomes: Being politically skilled can improve your reputation and career success as you earn a higher income and a more prestigious position and are more satisfied with your career. Research suggests the reasons why political skill leads to these positive outcomes are through the reputation and confidence boosts that come along with building these skills.57

HOW POWER AFFECTS PEOPLE

To this point, we have discussed what power is and how it is acquired. But we have not yet answered one important question: Does power corrupt? For one, it is clear that power affects the power holder: It energizes people, on the one hand, but can cause the power holder to rely more on gut feelings and to become self-serving and potentially more cor- rupt.58 So all forms of power can lead to the downside of getting “caught up” in the feel- ing of power.

There is certainly evidence that there are corrupting aspects of power. Power leads people to place their own interests ahead of others’ needs or goals.59 Why does this hap- pen? Interestingly, power not only leads people to focus on their self-interests because they can; it also liberates them to focus inward and thus come to place greater weight on their own aims and interests. Power also appears to lead individuals to “objectify” others (to see them as tools to obtain their instrumental goals) and to see relationships as more peripheral.60

That is not all. Powerful people react—especially negatively—to any threats to their competence. People in positions of power hold on to it when they can, and indi- viduals who face threats to their power are exceptionally willing to take actions to retain it whether their actions harm others or not.61 Possessing formal power can alter how you perceive others’ emotions (e.g., the powerful are quicker to detect anger because this threatens their power) and cause you to behave in an ineffective way.62 Those given power are more likely to make self-interested decisions when faced with a moral hazard (such as when hedge fund managers take more risks with other people’s money because they are rewarded for gains but punished less often for losses). People in power are also more willing to denigrate others. Power also leads to overconfident decision making (although firm leader overconfidence may actually result in positive firm outcomes).63

What We Can Do About Power

Power does not affect everyone in the same way, and there are even positive effects of power. Power can cause others to view you more positively.64 Power energizes and increases motivation to achieve goals. It also can enhance our motivation to help others. One study found, for example, that a desire to help others translated into actual work behavior when people felt a sense of power.65 In general, power has been studied based on how it affects peoples’ thoughts, emotions, and behaviors.66

Power affects the cognition, or thought, as the powerful tend to simplify how they process information, rely on single sources, and use information that is easier to retrieve.67 This means that the powerful are more likely to rely on stereotypes and heuris- tic forms of processing. For example, a start-up founder who has built several successful businesses in the past may look past certain aspects of the market or the process because of the previous successes enjoyed. Although not much research has been conducted on

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how power affects emotions, some work suggests that the powerful are more inclined to express genuine positive emotions without repercussions, but less likely to “mirror” others’ emotions (e.g., not feeling distressed at witnessing another person’s distress).68 Finally, powerful people (due to enhanced confidence and a sense of volition) tend to display personal initiative and be more sensitive to potential rewards or benefits (e.g., are personally selfish), and are less sensitive to normative behaviors.69 For example, gradu- ate students at professional academic conferences often note that they can tell who has “made it” in their careers, because they are the ones showing up to presentations in jeans, rather than business attire.

So, what can we do about power? Are we “powerless” in its wake? First, the toxic effects of power depend on the wielder’s personality. Research suggests that if you have an anxious personality, power does not corrupt you because you are less likely to think that using power benefits yourself.70 Second, the corrosive effect of power can be contained by organizational systems. For example, one study found that while power made people behave in a self-serving manner, the self-serving behavior stopped when accountability for the behavior was initiated. Third, we have the means to blunt the negative effects of power. One study showed that simply expressing grati- tude toward powerful others makes them less likely to act aggressively against us. Finally, remember the saying that those with little power abuse what little they have. There seems to be some truth to this in that the people most likely to abuse power are those who start low in status and gain power. Why is this the case? It appears that having low status is threatening, and the fear this creates is used in negative ways if power is given later.71

Sexual Harassment: Unequal Power in the Workplace

Sexual harassment is defined as any unwanted activity of a sexual nature that affects an individual’s employment or creates a hostile work environment.72 According to the U.S. Equal Employment Opportunity Commission (EEOC), sexual harassment happens when a person encounters “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature” on the job that disrupts work performance or that creates an “intimidating, hostile, or offensive” work environ- ment.73 Worldwide, 35 percent of women have experienced physical or sexual vio- lence, and even larger numbers (for some countries, well over 50 percent) across the world have experienced sexual harassment.74 For example, a study in Pakistan found that up to 93 percent of female workers were sexually harassed.75 Although the defini- tion changes from country to country, most nations have at least some policies to pro- tect workers. Whether the policies or laws are followed is another question, however. Equal employment opportunity legislation is established in Pakistan, Bangladesh, and Oman, for example, but studies suggest it might not be well implemented.76 Sexual harassment is disproportionately prevalent for women in certain types of jobs. In the restaurant industry, for instance, 80 percent of female waitstaff in a study reported hav- ing been sexually harassed by coworkers or customers, compared to 70 percent of male waitstaff.77 It goes without saying that the effects of sexual harassment are deplorable and nefarious and, in large part, due to the prevailing climate in the team, organization, or region.78

Sexual harassment Any unwanted activ- ity of a sexual nature that affects an indi- vidual’s employment and creates a hostile work environment.

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Most studies confirm that power is central to understanding sexual harassment.79 This seems true whether the harassment comes from a supervisor, coworker, or employee, although it is especially pronounced for employees who have newly acquired power.80 Sexual harassment is more likely to occur when there are large power differentials. The supervisor–employee dyad best characterizes an unequal power relationship, where for- mal power gives the supervisor the capacity to reward and coerce. Because employees want favorable performance reviews, salary increases, and the like, supervisors control resources most employees consider important and scarce. When there are not effec- tive controls to detect and prevent sexual harassment, abusers are more likely to act. Relatedly, if there are not effective controls to give voice to whistleblowers and protect them from retaliation, abusers are more likely to act and continue to act.81 The #MeToo and Time’s Up movements were formed to establish a coalition giving voice to sexual harassment and abuse survivors to quell the tide of sexual harassment in organizations and communities.82

Sexual harassment can have a detrimental impact on individuals and the organiza- tion, but it can be avoided. The manager’s commitment to the process and responsibility is critical:83

• Make sure an active policy defines what constitutes sexual harassment, informs employees they can be fired for inappropriate behavior, and establishes procedures for making complaints.

• Reassure employees that they will not encounter retaliation if they file a complaint.

• Investigate every complaint and inform the legal and HR departments. • Make sure offenders are disciplined or terminated. • Set up in-house training to raise employee awareness of sexual harassment issues.

POLITICS: POWER IN ACTION

Whenever people get together in groups, power will be exerted. People in organizations want to carve out a niche to exert influence, earn rewards, and advance their careers. If they convert their power into action, we describe them as being engaged in politics. Those with good political skills will likely use their bases of power effectively.84 Politics are not only inevitable; they might be essential, too.

Political Behavior

Essentially, organizational politics focus on the use of power to affect decision mak- ing in an organization, sometimes for self-serving and organizationally unsanctioned behaviors.85 For our purposes, political behavior in organizations consists of activi- ties that are not required as part of an individual ’s formal role but that inf luence, or attempt to inf luence, the distribution of advantages and disadvantages within the organization.86

Political behavior is outside specified job requirements. It requires some attempt to use power bases. It includes efforts to influence the goals, criteria, or processes used for decision making. Our definition is broad enough to include varied political behaviors such as withholding key information from decision makers, joining a coalition, whistleblowing,

Political behavior Activities that are not required as part of a person’s formal role in the organization but that influence, or attempt to influ- ence, the distribution of advantages and disadvantages within the organization.

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spreading rumors, leaking confidential information to the media, exchanging favors with others for mutual benefit, and lobbying on behalf of or against a particular individual or decision alternative.87 In this way, political behavior is often negative, but not always.

The Reality of Politics

Research has demonstrated that there are multiple ways people construe politics: (1) some are reactive, believing that it involves engaging in destructive and manipula- tive behavior; some are (2) reluctant, viewing it as a necessary evil; still, others are (3) strategic, and view politics as a useful way of getting things done; and finally, some have more of an (4) integrated perception, viewing politics as central to the reality of decision making.88

Indeed, interviews with experienced managers show most believe political behav- ior is a major part of organizational life.89 Many managers report some use of political behavior is ethical, if it does not directly harm anyone else. They describe politics as necessary and believe someone who never uses political behavior will have a hard time getting things done. Although those with lower incomes also believe political behavior is necessary, they are more reluctant to engage in it and thus have a harder time of advanc- ing their careers.90

But why, you may wonder, must politics exist? Is it not possible for an organiza- tion to be politics-free? It is possible—if all members of that organization hold the same goals and interests, if organizational resources are not scarce, and if performance out- comes are completely clear and objective. But that does not describe the organizational world in which most of us live. Regardless, it appears as if people, although often reluc- tant to politick, will do so when it is done through prosocial means and with the goal of helping others.91

Maybe the most important factor leading to politics within organizations is the realization that most of the “facts” used to allocate limited resources are open to inter- pretation. When allocating pay based on performance, for instance, what is good perfor- mance? What is an adequate improvement? What constitutes an unsatisfactory job? It is in this large and ambiguous middle ground of organizational life—where the facts do not speak for themselves—that politics flourish.

Finally, because most decisions must be made in a climate of ambiguity—where facts are rarely objective and thus are open to interpretation—people within organiza- tions will use whatever influence they can to support their goals and interests. That, of course, creates the activities we call politicking. One person’s “self less effort to benefit the organization” is seen by another as a “blatant attempt to further his or her interest.”92

CAUSES AND CONSEQUENCES OF POLITICAL BEHAVIOR

Now that we have discussed the constant presence of politicking in organizations, let us discuss the causes and consequences of these behaviors.

Factors Contributing to Political Behavior

Not all groups or organizations are equally political. In some organizations, politicking is overt and rampant, while in others, politics play a small role in influencing outcomes. What causes this variation? Research and observation have identified several factors that

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appear to encourage political behavior. Some are individual characteristics, derived from the qualities of the people the organization employs; others are a result of the organi- zation’s culture or internal environment. Exhibit 13-3 illustrates how both individual and organizational factors can encourage political behavior and provide favorable out- comes (increased rewards and averted punishments) for individuals and groups in the organization.

INDIVIDUAL FACTORS At the individual level, researchers have identified certain personality traits, needs, and other factors likely to be related to political behavior. In terms of traits, we find that employees who are high self-monitors, possess an internal locus of control, and have a high need for power (nPow; see the chapter on motivation concepts) are more likely to engage in political behavior. The high self-monitor is more sensitive to social cues, exhibits higher levels of social conformity, and is more likely to be skilled in political behavior than the low self-monitor. Because they believe they can control their environment, individuals with an internal locus of control are more prone to take a proactive stance and attempt to manipulate situations in their favor. Not surprisingly, the Machiavellian personality (see the chapter on personality and values)— characterized by the will to manipulate and the desire for power—is consistent with using politics to further personal interests.

An individual’s investment in the organization and perceived alternatives influence the degree to which they will pursue illegitimate means of political action.93 The more a person expects increased future benefits from the organization, and the more that person has to lose if forced out, the less likely they are to use illegitimate means. Conversely, the more alternate job opportunities an individual has—due to a favorable job market, possession of scarce skills or knowledge, prominent reputation, or influential contacts outside the organization—the more likely the person is to employ politics.

Finally, some individuals engage in political behavior simply because they are better at it. Such individuals read interpersonal interactions well, fit their behavior

Political behavior Low High

Favorable outcomes • Rewards • Averted punishments

Individual factors • High self-monitors • Internal locus of control • High Mach personality • Organizational investment • Perceived job alternatives • Expectations of success

Organizational factors • Reallocation of resources • Promotion opportunities • Low trust • Role ambiguity • Unclear performance evaluation system • Zero-sum reward practices • Democratic decision making • High performance pressures • Self-serving senior managers

EXHIBIT 13-3 Antecedents and Outcomes of Political Behavior

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to situational needs, and excel at networking.94 These people are often indirectly rewarded for their political efforts. For example, a study of a construction firm in southern China found that politically skilled subordinates were more likely to receive recommendations for rewards from their supervisors, and politically ori- ented supervisors were especially likely to respond positively to politically skilled subordinates.95 Other studies from countries around the world have similarly shown that higher levels of political skill are associated with higher levels of perceived job performance.96

ORGANIZATIONAL FACTORS Although we acknowledge the role individual differences can play, the evidence more strongly suggests that certain situations and cultures promote politics. Specifically, when an organization’s resources are declining, when the existing pattern of resources is changing, and when there is opportunity for promotions, politicking is more likely to surface.97 When resources are reduced, people may engage in political actions to safeguard what they have. Also, any changes, especially those implying a significant reallocation of resources within the organization, are likely to stimulate conflict and increase politicking.

Cultures characterized by low trust, role ambiguity, unclear performance evalu- ation systems, win–lose reward allocation practices, democratic decision making, high pressure for performance, and self-serving senior managers will create breeding grounds for politicking.98 Because political activities are not required as part of the employee’s formal role, the greater the role ambiguity, the more employees can engage in unnoticed political activity. Role ambiguity means the prescribed employee behav- iors are not clear. In this situation, there are fewer limits to the scope and functions of the employee’s political actions.

Additionally, the more an organizational culture emphasizes the zero-sum or win–lose approach to reward allocations (which often begins as a result of financial vulnerability), the more employees will be motivated to engage in politicking.99 The zero-sum approach treats the reward “pie” as fixed, so any gain one person or group achieves comes at the expense of another person or group. For example, if fifteen thousand dollars is distributed among five employees for raises, any employee who gets more than three thousand dollars takes money away from one or more of the oth- ers. Such a practice encourages making others look bad and increasing the visibility of what you do.

How Do People Respond to Organizational Politics?

For most people who have modest political skills or who are unwilling to play the politics game, outcomes tend to be predominantly negative in terms of decreased job satisfaction, increased anxiety and stress, increased turnover, and reduced performance. Research has demonstrated that the more politics play a role in one’s environment, organization, or team, the more negative outcomes will be experienced (e.g., increased stress and turnover intentions as well as decreased morale and performance), regardless of how necessary people perceive them to be.100 Politics may lead to self-reported declines in employee performance, perhaps because employees perceive political environments to be unfair, which demotivates them.101 Other research suggests that it may be a “double-edged

Zero-sum approach An approach to reward allocation that treats the reward “pie” as fixed, so any gain one person or group achieves comes at the expense of another person or group.

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sword” (e.g., beneficial on the one hand, but detrimental on the other), meaning that political behaviors can empower people to do well, while at the same time draining them from emotional exhaustion.102

The politics–performance relationship appears to be moderated by an individual’s understanding of the “hows” and “whys” of organizational politics. Researchers have noted, “An individual who has a clear understanding of who is responsible for making decisions and why they were selected to be the decision makers would have a better understanding of how and why things happen the way they do than someone who does not understand the decision-making process in the organization.”103 When both politics and understanding are high, performance is likely to increase because these individuals see political activity as an opportunity. This is consistent with what you might expect for individuals with well-honed political skills. But when understanding is low, individuals are more likely to see politics as a threat, which can have a negative effect on job performance.104

When employees see change as a threat, they may respond with defensive behaviors—reactive and protective behaviors to avoid action, blame, or change.105 (Exhibit 13-4 provides some examples.) These behaviors can be a part of politick- ing, but in a destructive, negative sense. Instead of attempting to influence people in

Defensive behaviors Reactive and protec- tive behaviors to avoid action, blame, or change.

Avoiding Action Overconforming. Strictly interpreting your responsibility by saying things like “The rules clearly state ...” or “This is the way we’ve always done it.” Buck passing. Transferring responsibility for the execution of a task or decision to someone else. Playing dumb. Avoiding an unwanted task by falsely pleading ignorance or inability. Stretching. Prolonging a task so that one person appears to be occupied—for example, turning a two-week task into a four-month job. Stalling. Appearing to be more or less supportive publicly while doing little or nothing privately.

Avoiding Blame Bluffing. Rigorously documenting activity to project an image of competence and thoroughness, known as “covering your rear.” Playing safe. Evading situations that may reflect unfavorably. It includes taking on only projects with a high probability of success, having risky decisions approved by superiors, qualifying expressions of judgment, and taking neutral positions in conflicts. Justifying. Developing explanations that lessen one’s responsibility for a negative outcome and/or apologizing to demonstrate remorse, or both. Scapegoating. Placing the blame for a negative outcome on external factors that are not entirely blameworthy. Misrepresenting. Manipulation of information by distortion, embellishment, deception, selective presentation, or obfuscation.

Avoiding Change Prevention. Trying to prevent a threatening change from occurring. Self-protection. Acting in ways to protect one’s self-interest during change by guarding information or other resources.

EXHIBIT 13-4 Defensive Behaviors

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“soft,” bond-affirming ways, these behaviors protect self-interests through aggressive or avoidant means, such as withholding ideas or contributions.106 In the short run, employ- ees may find that defensiveness protects their self-interests, but in the long run it wears them down.

Impression Management

We know people have an ongoing interest in how others perceive and evaluate them. Being perceived positively by others has benefits in an organizational setting. It might, for instance, help us initially to get the jobs we want in an organization and, once hired, to get favorable evaluations, superior salary increases, and more rapid promotions. Managing how others perceive you is especially important, for example, to expatriates representing their organizations in other countries, and requires them to adapt to cul- tural norms.107 The process by which individuals attempt to control the impression others form of them is called impression management (IM).108 See Exhibit 13-5 for examples. This process can be conscious or unconscious and can be perceived as authentic or dis- ingenuous. When perceived as inauthentic or disingenuous, IM can lead to decrements in performance, increased anxiety, and negative feelings.109 When perceived as modest, authentic, and genuine (e.g., disclosing something negative and humorous about yourself to relate with another person), IM can lead others to see you more positively and lead to better relationship outcomes.110

IM research has linked IM to two criteria: interview success and performance eval- uations. Let us consider each of these.

INTERVIEWS AND IM The evidence indicates most job applicants and interviewers alike use IM techniques in interviews and that they work, in part because they increase interviewer perceptions of the applicants’ warmth and competence.111 To develop a sense of how effective different IM techniques are in interviews, one study grouped data from thousands of recruiting and selection interviews into appearance-oriented efforts (efforts toward looking professional), explicit tactics (such as flattering the interviewer or talking up your own accomplishments), and verbal cues (such as using positive terms and showing general enthusiasm).112 Across all the dimensions, it was quite clear that IM was a powerful predictor of how well people did. However, there was a twist. When interviews were highly structured, meaning the interviewer’s questions were written out in advance and focused on applicant qualifications, the effects of IM were substantially weaker. Manipulative behaviors like IM are more likely to have an effect in ambiguous and unstructured interviews.

PERFORMANCE EVALUATIONS AND IM In terms of performance evaluations, the picture is quite different. Ingratiation is positively related to performance ratings, meaning those who ingratiate with their supervisors get higher performance evaluations. However, self-promotion appears to backfire: Those who self-promote may receive lower performance ratings.113 There is an important qualifier to these general findings. It appears that individuals high in political skill are able to translate IM into higher performance appraisals, whereas those lower in political skill are more likely to be hurt by their IM attempts.114 One study of 760 boards of directors found that individuals who ingratiated themselves to current board members (expressed agreement with the director, pointed out shared attitudes and opinions, complimented the director) increased their chances of landing on a board.115 Another study found that interns who attempted to use

Impression management (IM) The process by which individuals attempt to control the impres- sion others form of them.

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Conformity Agreeing with someone else’s opinion to gain his or her approval is a form of ingratiation. Example: A manager tells his boss, “You’re absolutely right on your reorganization plan for the western regional office. I couldn’t agree with you more.

Favors Doing something nice for someone to gain that person’s approval is a form of ingratiation. Example: A salesperson says to a prospective client, “I’ve got two tickets to the theater tonight that I can’t use. Take them. Consider it a thank-you for taking the time to talk with me.”

Excuses Explaining a predicament-creating event aimed at minimizing the apparent severity of the predicament is a defensive IM technique. Example: A sales manager says to her boss, “We failed to get the ad in the paper on time, but no one responds to those ads anyway.”

Apologies Admitting responsibility for an undesirable event and simultaneously seeking to get a pardon for the action is a defensive IM technique. Example: An employee says to his boss, “I’m sorry I made a mistake on the report. Please forgive me.”

Self-Promotion Highlighting your best qualities, downplaying your deficits, and calling attention to your achievements is a self-focused IM technique. Example: A salesperson tells his boss, “Matt worked unsuccessfully for three years to try to get that account. I sewed it up in six weeks. I’m the best closer this company has.”

Enhancement Claiming that something you did is more valuable than most other members of the organizations would think is a self-focused IM technique. Example: A journalist tells his editor, “My work on this celebrity divorce story was really a major boost to our sales” (even though the story only made it to page 3 in the entertainment section).

Flattery Complimenting others about their virtues in an effort to make yourself appear perceptive and likeable is an assertive IM technique.

Example: A new sales trainee says to her peer, “You handled that client’s complaint so tactfully! I could never have handled that as well as you did.”

Exemplification Doing more than you need to in an effort to show how dedicated and hardworking you are is an assertive IM technique. Example: An employee sends e-mails from his work computer when he works late so that his supervisor will know how long he’s been working.

EXHIBIT 13-5 Impression Management (IM) Techniques

Source: Based on B. R. Schlen- ker, Impression Management (Monterey, CA: Brooks/Cole, 1980); M. C. Bolino, K. M. Kacmar, W. H. Turnley, and J. B. Gilstrap, “A Multi-Level Review of Impres- sion Management Motives and Behaviors,” Journal of Management 34, no. 6 (2008), 1080–109; R. B. Cialdini, “Indirect Tactics of Image Management Beyond Basking,” in R. A. Giacalone and P. Rosenfeld (eds.), Impression Management in the Organization (Hillsdale, NJ: Lawrence Erlbaum, 1989), 45–71.

ingratiation with their supervisors were usually disliked—unless they had high levels of political skill. For those who had this ability, ingratiation led to higher levels of liking from supervisors, and higher performance ratings.116

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The Ethics of Behaving Politically

Although there are no clear-cut ways to differentiate ethical from unethical politicking, there are some questions you should consider. For example, what is the utility of engag- ing in politicking? Sometimes we do it for little good reason. Another question is this: How does the utility of engaging in the political behavior balance out the harm (or poten- tial harm) it will do to others? Finally, does the political activity conform to justice and fairness standards?

Unfortunately, powerful people can become very good at explaining self-serving behaviors in terms of the organization’s best interests. They can persuasively argue that unfair actions are fair and just. Those who are powerful, articulate, and persua- sive are most vulnerable to ethical lapses because they are more likely to get away with them. When faced with an ethical dilemma regarding organizational politics, try to consider whether playing politics is worth the risk and whether others might be harmed in the process. If you have a strong power base, recognize the ability of power to corrupt. Remember it is a lot easier for people who are in a powerless position to act ethically, if for no other reason than they typically have very little political discre- tion to exploit.

Mapping Your Political Career

As we have seen, politics are not just for politicians. You can use the concepts presented in this chapter in some very tangible ways we have outlined in your organization. However, they also have another application: You.

One of the most useful ways to think about power and politics is in terms of your own career.117 What are your ambitions? Who has the power to help you achieve them? What is your relationship to these people? The best way to answer these questions is with a political map, which can help you sketch out your relationships with the people upon whom your career depends. Exhibit 13-6 contains such a political map.118 Let us walk through it.

Assume your future promotion depends on five people, including Jamie, your imme- diate supervisor. As you can see in the exhibit, you have a close relationship with Jamie (you would be in real trouble otherwise). You also have a close relationship with Zack in finance. However, with the others you have either a loose relationship (Lane) or none (Jia, Marty). One obvious implication of this map is the need to formulate a plan to gain more influence over, and a closer relationship with, these people. How might you do that?

One of the best ways to influence people is indirectly. What if you played in a tennis league with Mark, Jamie’s former coworker who you know remains friends with Jamie? To influence Mark, in many cases, may also be to influence Marty. You can com- plete a similar analysis for the other four decision makers and their networks.

All of this may seem a bit Machiavellian to you. However, remember that only one person gets the promotion, and your competition may have a map of their own. As we noted in the early part of the chapter, power and politics are a part of organizational life.

SUMMARY

Few employees relish being powerless in their jobs and organizations. People respond differently to the various power bases. Expert and referent power are derived from an

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Zack Finance

1

Jamie Operations

1

Jamie Operations

1

CJ Jamie’s Favorite Blogger

3

Chris Jamie’s Spouse

2

Anna Senior

VP, Jamie’s Boss

2

Area of Detail

Marty IT 3

Lane HR 2

You

Jia Sales

3

Tamar Drew’s

Best Friend

2

Mark Jamie’s Former

Coworker 1

Dark green is a close connection. Light green is a loose connection. Medium green is no connection at all.

1 - 2 - 3 -

EXHIBIT 13-6 Drawing Your Political Map

Source: Based on D. Clark, “A Campaign Strategy for Your Career,” Harvard Business Review, November 2012, 131–134.

individual’s personal qualities. In contrast, coercion, reward, and legitimate power are essentially organizationally granted. Competence especially appears to offer wide appeal, and its use as a power base results in high performance by group members.

An effective manager accepts the political nature of organizations. Some people are more politically astute than others, meaning they are aware of the underlying politics and can manage impressions. Those who are good at playing politics can be expected to get higher performance evaluations and, hence, larger salary increases and more promotions than the politically naïve or inept. The politically astute are also likely to exhibit higher job satisfaction and be better able to neutralize job stressors. However, politics may be a double-edged sword, leading to both positive and negative outcomes.

A political map can provide a good schematic from which to identify positive politicking opportunities. Finally, power and politics present significant ethical consider- ations. To accept the reality of these dimensions in organizations is to accept the respon- sibility for awareness and ethical behavior.

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IMPLICATIONS FOR MANAGERS

• When attempting to build and use power to further your teams’ or organizations’ in- terests (or, perhaps, your own), recognize that certain power bases tend to be more effective than others. You should be aware of these power bases and use them when the situation calls for it (but stay within ethical guidelines).

• In the same way, various tactics and impression management strategies are effec- tive at influencing others to comply with your requests. In general, note that you may have more success with rational persuasion, inspirational appeal, and consul- tation, and the least success with pressure and self-promotion.

• Be aware that power arises from dependence. If you feel a lack of control because you depend too much on another for resources (e.g., a supplier who charges too much), try to maximize your alternatives and seek ways to find a substitution for these resources.

• Social network positions affect power: to promote change and exercise influence, try to serve as a bridge between people and broker connections, resources, and in- formation across these boundaries.

• Recognize that power affects people in several ways. By being aware of power- granted blind spots, you may be able to circumvent some of the negative effects of power on the powerholder.

• Make sure to establish policy regarding how your organization handles sexual ha- rassment, investigate and report complaints, and appropriately discipline offenders.

• By assessing behavior in a political framework, you can better predict the actions of others and use that information to formulate political strategies that will gain advantages for you and your work unit.

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259

Conflict and Negotiation 14

A DEFINITION OF CONFLICT

Tesla, an American automotive and energy company, along with their founder and CEO, Elon Musk, have experienced conflict on several fronts. From issues with Musk’s candid Twitter posts, lawsuits, and feuds with the Securities and Exchange Commission, as well as musicians Azealia Banks and Claire Boucher (a.k.a. Grimes), Tesla, along with the board of directors and employees, have witnessed their fair share of interorganizational conflict.1

What is interesting, however, is where Tesla has not experienced conflict: within the board of directors.2 Many have accused the board of being “asleep at the wheel,” not will- ing to cause conflict where some might be needed. This might be due to loyalty to Musk, lack of time and resources (most board members are part-time), and because all the corpo- rate information they receive that affects their decision making is filtered through Musk. This has even led some to suggest using artificial intelligence in corporate board decision making, which is not limited by lack of time and resources and is perhaps more impartial.3 The case of Tesla illustrates that conflict can arise in a number of different organizational arenas, and that even the absence of conflict altogether can be a signal that perhaps impor- tant issues are not being discussed or that controversial ideas are not being challenged.

There has been no shortage of definitions of conflict,4 but common to most is the idea that conflict is a perception of differences or opposition. We define conflict broadly as a process that begins when one party perceives another party has negatively affected or is about to negatively affect something the first party cares about. People experience a

Conflict A process that begins when one party perceives that another party has negatively affected, or is about to negatively affect, something that the first party cares about.

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

14.1 Describe the three types of conflict and the three loci of conflict.

14.2 Outline the conflict process.

14.3 Contrast distributive and integrative bargaining.

14.4 Apply the five steps of the negotiation process.

14.5 Show how individual differences influence negotiations.

14.6 Describe the social factors that influence negotiations.

14.7 Assess the roles and functions of third-party negotiations.

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wide range of conflicts in organizations over an incompatibility of goals, differences in interpretations of facts, disagreements over behavioral expectations, and the like.

Contemporary perspectives classify conf lict based on its effects.5 Functional conflict supports the goals of the group, improves its performance, and, as such, is a constructive form of conflict. For example, a debate among members of a corporate board (see opening example) about the most efficient way to improve production can be functional if unique points of view are discussed and compared openly. Conflict that hinders group performance is destructive or dysfunctional conflict. A highly personal struggle for control that distracts from the task at hand in a team is dysfunctional. Exhibit 14-1 provides an overview depicting the effect of levels of conflict.

Types of Conflict

One means of understanding conflict is to identify the type of disagreement, or what the conflict is about. Is it a disagreement about goals? Is it about people who just rub one another the wrong way? Or is it about the best way to get things done? Although

Functional conflict Conflict that supports the goals of the group and improves its performance.

Dysfunctional conflict Conflict that hinders group performance.

A

(Low) (High)Level of Conflict

U ni

t P er

fo rm

an ce

(High)

B C

Situation

A

B

C

Level of Conflict

Low or

none

Optimal

High

Type of Conflict

Dysfunctional

Functional

Dysfunctional

Unit’s Internal Characteristics

Apathetic Stagnant Nonresponsive to change Lack of new ideas

Viable Self-critical Innovative

Disruptive Chaotic Uncooperative

Unit Performance Outcome

Low

High

Low

EXHIBIT 14-1 Conflict and Unit Performance

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Chapter 14 • Conflict and Negotiation 261

each conflict is unique, researchers have classified conflicts into three categories: rela- tionship, task, or process.6 Relationship conflict focuses on interpersonal relationships. Task conflict relates to the content and goals of the work. Process conflict is about how the work gets done.

RELATIONSHIP CONFLICT Studies demonstrate that relationship conflicts, at least in work settings, are almost always dysfunctional.7 Why? The friction and interpersonal hostilities inherent in relationship conflict increases interpersonal clashes and decreases mutual understanding. Of the three types, relationship conflict also appears to be the most psychologically exhausting to individuals. It tends to derail team processes by reducing the extent to which people are open toward working with one another to work collaboratively toward solutions, while increasing the extent to which they avoid and compete with one another.8 As a result, relationship conflict strongly depletes trust, cohesion (see the chapter on understanding work teams), satisfaction, job attitudes, and positive affect (see the chapter on emotions and moods) and can even lead to a reduction in organizational citizenship behaviors (OCBs) paired with an increase in deviant behavior.9 However, relationship conflict itself is only weakly related to how well the team performs—so it appears its most nefarious affects are in how it affects people psychologically, and how it reduces OCBs and increases deviance.10

TASK CONFLICT While scholars agree that relationship conflict is dysfunctional, there is considerably less agreement about whether task conflict is functional. Early research suggested that task conflict within groups correlated to higher group performance, but a review of ninety-five studies found that task conflict was essentially unrelated to group performance (although it did appear to be correlated to lower group performance in nonmanagement positions, and higher group performance in decision-making teams).11 Despite these findings, research suggests that task conflict slightly reduces the extent to which people collaborate, and moderately increases the degree to which they compete with one another.12 This, in turn, has a strong negative effect on their trust and job attitudes and, like relationship conflict, leads to a reduction in OCBs paired with an increase in deviant behavior.13

PROCESS CONFLICT Process conflicts are often about delegation and roles. Conflicts over delegation often revolve around the perception that some members are shirking, and conflicts over roles can leave some group members feeling marginalized. Thus, process conflicts often become highly personalized and quickly devolve into relationship conflicts. It is also true, of course, that arguing about how to do something takes time away from doing it. Although relatively less research has been conducted on process conflict, research suggests that it has a strong negative effect on team member trust and attitudes, as well as a weak effect on team performance (like that of relationship conflict).14

COMPLICATING CONFLICT It also appears to matter whether other types of conflict occur at the same time. If task and relationship conflict occur together, relationship conflict is more likely to have a negative effect, whereas if task conflict occurs by itself, it is more likely to have a positive effect.15 How often does this occur in practice? Research from one entrepreneurial venture suggests that although the two are initially co-occurring, over time, they tend to stabilize after some time.16 This suggests that one might expect

Relationship conflict Conflict based on interpersonal rela- tionships.

Task conflict Conflict over content and goals of the work.

Process conflict Conflict over how work gets done.

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relationship and task conflict to co-occur at the beginning of the relationship. In support, research in the Netherlands indicates that even the mere perception of relationship conflict during task conflict is enough to cause people to hold onto their initial preferences regarding the task conflict.17

Other scholars have argued that the perception of conflict is important. If task conflict is perceived as being very low, people are not really engaged or addressing the important issues; if task conflict is too high, infighting will quickly degenerate into rela- tionship conflict. Moderate levels of task conflict may thus be optimal.18 Furthermore, who perceives conflict also matters. Incompatibilities between work styles or dominat- ing personalities with little space for compromise can lead to “too many cooks in the kitchen,” resulting in relationship conflict and even abusive supervision.19 Research sug- gests that conflict is more likely to have a positive effect on performance when a few members perceive strong task disagreement, whereas most others on the team perceive weak task disagreement. This is because those in the minority are much more likely to present their disagreements in a careful, cooperative, open manner.20

Loci of Conflict

Another way to understand conflict is to consider its locus, or the framework within which conflict occurs. Here, too, there are three basic types. Dyadic conflict is conflict between two people. Intragroup conflict occurs within a group or team. Intergroup conflict is conflict between groups or teams.21

Nearly all the research on relationship, task, and process conflicts considers intra- group conflict (within the group). However, it does not necessarily tell us all we need to know about the context and outcomes of conflict. For example, research has found that for intragroup task conflict to positively influence performance within the team, it is important that the team has a supportive climate in which mistakes are not penalized and every team member “[has] the other’s back.”22 But is this concept applicable to the effects of intergroup conflict? Think about, say, NFL football. For a team to adapt and improve, perhaps a certain amount of intragroup conflict (but not too much) is good for team performance, especially when the team members support one another. But would we care whether members from one team conflicted with members from another team? Probably not. Still, it must be managed. Intense intergroup conflict can be quite stressful to group members and might well affect the way they interact.

It may surprise you that a group member’s network position (see the chapter on power and politics) is important during intergroup conflicts. One study that focused on intergroup conflict found an interplay between an individual’s position within a group and the way that individual managed conflict between groups. Group members who were relatively peripheral in their own group were better at resolving conflicts between their group and another one. But this happened only when those peripheral members were still accountable to their groups.23 Thus, being at the core of your work group does not neces- sarily make you the best person to manage conflict with other groups.

Altogether, understanding functional and dysfunctional conflict requires not only that we identify the type of conflict; we also need to know where it occurs. It is possible that while the concepts of relationship, task, and process conflicts are useful in under- standing intragroup or even dyadic conflict, they are less useful in explaining the effects of intergroup conflict.

Dyadic conflict Conflict that occurs between two people.

Intergroup conflict Conflict between different groups or teams.

Intragroup conflict Conflict that occurs within a group or team.

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THE CONFLICT PROCESS

The conflict process has five stages: potential opposition or incompatibility, cognition and personalization, intentions, behavior, and outcomes (see Exhibit 14-2).24

Stage I: Potential Opposition or Incompatibility

The first stage of conflict is the appearance of conditions—causes or sources—that create opportunities for it to arise.25 These conditions need not lead directly to conflict, but one of them is necessary if it is to surface. Apart from the obvious, which would be behaviors directly intended to provoke conflict,26 we group the conditions into three general cat- egories: communication, structure, and personal variables.

COMMUNICATION Communication can be a source of conflict in group interactions and dyadic exchanges.27 There are opposing forces that arise from semantic difficulties, misunderstandings, and “noise” in the communication channel (see the chapter on communication). These factors, along with jargon and insufficient information, can be barriers to communication and potential antecedent conditions to conflict. Even the way communication is framed can have an effect; for example, research suggests that framing task conflict as a debate increases receptivity to others’ opinions.28 The potential for conflict has also been found to increase with too little or too much communication. Communication is functional up to a point, after which it is possible to overcommunicate, increasing the potential for conflict.

STRUCTURE The term structure in this context includes variables such as size of group, degree of specialization in tasks assigned to group members, role clarity, member–goal compatibility, leadership styles, reward systems, and degree of dependence between groups or group members. The larger the group and the more specialized its activities, the greater the likelihood of intragroup conflict. Tenure and conflict are inversely related, meaning that the longer a person stays with an organization, the less likely intragroup conflict becomes.29 Therefore, the potential for intragroup conflict is greatest when group members are newer to the organization and when turnover is high. However, as far as intergroup conflict is concerned, it can self-perpetuate, actually imbuing meaning

Increased group

performance

Decreased group

performance

Overt conflict • Party’s behavior • Other’s reaction

Conflict-handling intentions • Competing • Collaborating • Compromising • Avoiding • Accommodating

Antecedent conditions • Communication • Structure • Personal variables

Perceived conflict

Cognition and personalization

Intentions Behavior OutcomesPotential opposition or incompatibility

Stage II Stage III Stage IV Stage VStage I

Felt conflict

EXHIBIT 14-2 The Conflict Process

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264 Part 4 • Negotiating Power and Politics

and identity to the groups experiencing conflict.30 Anyone familiar with the Big Ten one-hundred-plus-year rivalry between The Ohio State University and the University of Michigan can attest to this.31

PERSONAL VARIABLES Our last category of potential sources of conflict is personal variables, which include personality, emotions, and values. People high in the personality traits of disagreeableness, neuroticism, or self-monitoring (see the chapter on personality and values) are prone to spar with other people more often—and to react poorly when conflicts occur.32 Emotions can cause conflict even when they are not directed at others. For example, an employee who shows up to work irate from the hectic morning commute may carry that anger into the workday, which can result in a tension-filled meeting.33 Incompatibilities in emotions can also lead to conflict—for example, if your supervisor is more optimistic than you about your work, you are more likely (than if you had similar optimistic-pessimistic outlooks) to experience more conflict, become less engaged, and perform poorly.34 Furthermore, differences in preferences and values can generate increased levels of conflict. For example, a study in Korea found that when group members did not agree about their desired achievement levels, there was more task conflict; when group members did not agree about their desired interpersonal closeness levels, there was more relationship conflict; and when group members did not have similar desires for power, there was more conflict over status.35 Furthermore, people differ with regard to their beliefs about conflict, and which strategies of managing conflict are the best or worst, and these beliefs shape the types of conflict they perceive as well as how they react.36

Stage II: Cognition and Personalization

If the conditions cited in Stage I negatively affect something one party cares about, then the potential for opposition or incompatibility becomes actualized in the second stage.

As we noted in our definition of conflict, one or more of the parties must be aware that antecedent conditions exist. However, just because a disagreement is a perceived conflict does not mean it is personalized. It is at the felt conflict level, when individuals become emotionally involved, that they experience anxiety, tension, frustration, or hostil- ity. By making sense of the preceding events, employees perceive conflict (e.g., label it as an offense) and then recognize that the other party violated norms or did something wrong.37 Following these processes of naming and blaming, employees naturally feel the negative emotions surrounding conflict.

Stage II is important because it is where conflict issues tend to be defined, where the parties decide what the conflict is about.38 For example, the employee who was irate from the traffic jam may cause others around the office to perceive that something is up—but this conflict is not “felt” until a sour interaction with this employee (e.g., “it’s not fair the boss took the long commute out on me with extra work!”). Emotions play a major role in shaping perceptions.39 Negative emotions lead us to oversimplify issues, lose trust, and put negative interpretations on the other party’s behavior.40 When you per- ceive conflict, sometimes you may turn to a confidant within your group to vent or talk about what you are feeling. Paradoxically, if this person is responsive and reaffirming, your confidant may validate your perspective, which might undermine the resolution of conflict as a result.41 In contrast, positive feelings increase our tendency to see potential

Perceived conflict Awareness by one or more parties of the existence of conditions that create opportunities for conflict to arise.

Felt conflict Emotional involve- ment in a conflict that creates anxiety, tension, frustration, or hostility.

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relationships among elements of a problem, take a broader view of the situation, and develop innovative solutions.42 Negative emotions are natural and perhaps inevitable— before conflict escalates, taking time to reflect and reappraise how you are feeling may help you approach the conflict more constructively (but don’t ruminate!).43 Ultimately, a state of mindfulness (see the chapter on organizational change and stress management) might be a good emotional state to aspire toward, given that it facilitates constructive conflict management.44

Stage III: Intentions

Intentions intervene between people’s perceptions and emotions and their overt behav- ior. They are decisions to act in a particular way.45 Although we may decide to act in a certain way, our intentions do not always line up with what we actually do. Furthermore, intentions are not always fixed. During a conflict, intentions might change if a party is able to see the other’s point of view or respond emotionally to the other’s behavior.

Using two dimensions—assertiveness (the degree to which one party attempts to satisfy their own concerns) and cooperativeness (the degree to which one party attempts to satisfy the other party’s concerns)—we can identify five conflict-handling intentions: competing (assertive and uncooperative), collaborating (assertive and cooperative), avoiding (unassertive and uncooperative), accommodating (unassertive and cooperative), and compromising (mid-range on both assertiveness and cooperativeness).46

COMPETING When one person seeks to satisfy their own interests regardless of the impact on the other parties in the conflict, that person is competing.47 We are more apt to compete when resources are scarce, when we have competition-prone personalities, when we are close to satisfying our own interests (e.g., the “finish line is near”), or when the culture or climate supports competition.48

COLLABORATING When parties in conflict each desire to fully satisfy the concerns of all parties, there is cooperation and a search for a mutually beneficial outcome. In collaborating, parties intend to solve a problem by clarifying differences rather than by accommodating various points of view.49 If you attempt to find a win–win solution that allows both parties’ goals to be completely achieved, that is collaborating. Collaboration is more likely if the party is seen as competent, rational, and open to collaborating.50

AVOIDING A person may recognize a conflict exists and want to withdraw from or suppress it. Examples of avoiding include trying to ignore a conflict and keeping away from others with whom you disagree.

ACCOMMODATING A party who seeks to appease a negotiation partner may be willing to place the negotiation partner’s interests above their own, sacrificing to maintain the relationship. We refer to this intention as accommodating. Supporting someone else’s opinion despite your reservations about it, for example, is accommodating.

COMPROMISING In compromising, there is no winner or loser. Rather, there is a willingness to ration the object of the conflict and accept a solution with incomplete satisfaction of both parties’ concerns. The distinguishing characteristic of compromising, therefore, is that each party intends to give up something.

Intentions Decisions to act in a particular way.

Competing A desire to satisfy one’s interests, regardless of the impact on the other party to the conflict.

Collaborating A situation in which the parties to a con- flict each desires to satisfy fully the con- cerns of all parties.

Avoiding The desire to withdraw from or suppress a conflict.

Accommodating The willingness of one party in a conflict to place the negotiation partner’s interests above his or her own.

Compromising A situation in which each party to a con- flict is willing to give up something.

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A review that examined the effects of the sets of behaviors across multiple stud- ies found that collaborating was associated with superior group performance and team attitudes, whereas avoiding and competing strategies were associated with significantly worse group performance.51 This further demonstrates that it is not just the existence of conflict or even the type of conflict that creates problems, but rather the ways people respond to conflict and manage the process once conflicts arise.

Stage IV: Behavior

Stage IV is a dynamic process of interaction. For example, you make a demand on me, I respond by arguing with you, you shout at me, I yell at you back, and so on. Exhibit 14-3 provides a way of visualizing conflict behavior. All conflicts exist somewhere along this continuum. At the lower end are conflicts characterized by subtle, indirect, and highly controlled forms of tension, such as a student challenging a point the instructor has made. Conflict intensities escalate as they move upward along the continuum until they become highly destructive. Strikes, riots, and wars clearly fall in this upper range. Conflicts that reach the upper range of the continuum are almost always dysfunctional. Functional con- flicts are typically confined to the lower range of the continuum.

Stage V: Outcomes

The action–reaction interplay between conflicting parties creates consequences. As our model demonstrates (see Exhibit 14-1), these outcomes may be functional if the con- flict improves the group’s performance, or dysfunctional if it hinders performance. Realistically, however, many researchers suggest that although workplace conflict can be beneficial, this usually happens under special circumstances, and most of the time the dysfunctional outcomes outweigh the functional outcomes in severity.52 This suggests that managers will likely spend most of their time reducing dysfunctional conflict, rather than stimulating functional conflict.

Overt efforts to destroy the other partyAnnihilatory conflict

No conflict

Aggressive physical attacks

Threats and ultimatums

Assertive verbal attacks

Overt questioning or challenging of others

Minor disagreements or misunderstandings

EXHIBIT 14-3 Dynamic Escalation of Conflict

Sources: Based on S. P. Robbins, Managing Organizational Conflict: A Nontraditional Approach (Upper Saddle River, NJ: Prentice Hall, 1974): 93–97; and F. Glasi, “The Process of Conflict Escalation and the Roles of Third Parties,” in G. B. J. Bomers and R. Peterson (eds.), Conflict Management and Industrial Relations (Boston: Kluwer-Nijhoff, 1982): 119–40.

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FUNCTIONAL OUTCOMES Conflict is constructive when it improves the quality of decisions, stimulates creativity and innovation, encourages interest and curiosity among group members, provides the medium for problems to be aired and tensions released, and fosters self-evaluation and change. Indeed, research on organizations in Taiwan suggests that, over time, the right amount of task conflict (not relational conflict) can cause teams to improve their relations, the quality of social interaction, and meaningful communication.53 Mild conflicts also may generate energizing emotions, so members of groups become more active and engaged in their work.54 However, groups that are extremely polarized do not manage their underlying disagreements effectively and tend to accept suboptimal solutions, or they avoid making decisions altogether rather than work out the conflict.55 As mentioned earlier in this chapter, conflict severity plays a large role.

Conflict is an antidote for groupthink (see the chapter on foundations of group behavior). Conflict does not allow the group to passively rubber-stamp decisions that may be based on weak assumptions, inadequate consideration of relevant alternatives, or other weaknesses. Conflict challenges the status quo and furthers the creation of new ideas, promotes reassessment of group goals and activities, and increases the probability that the group will respond to change.

DYSFUNCTIONAL OUTCOMES The destructive consequences of conflict on the performance of a group or an organization are generally well known. A substantial body of research documents how dysfunctional conflicts can reduce group effectiveness.56 Among the undesirable consequences are poor communication, reductions in group cohesiveness, and subordination of group goals to the primacy of infighting among members. All forms of conflict—even the functional varieties—appear to reduce group member satisfaction and trust.57 At the extreme, conflict can bring group functioning to a halt and threaten the group’s survival.

MANAGING CONFLICT If a conflict is dysfunctional, what can the parties do to de- escalate it? Or, conversely, what options exist if conflict is too low to be functional and needs to be increased? In these situations, people can use resolution and stimulation techniques to achieve the desired level of conflict, a process known as conflict management.58 In anticipating and managing conflict, organizations can target three specific domains: strategy (e.g., designing conflict management activities with an understanding of their effect on the organization system, garnering managerial support for and application of conflict management strategies), function (e.g., encouraging the systemic adoption of conflict management practices, understanding employees’ needs, job design to reduce conflict), and worker (e.g., improving employee perceptions of conflict, fostering ties and cohesion between people, adaptively addressing conflict as it emerges).59 For example, if the conflict is expected to be perpetual and ongoing, a strategic conflict management strategy might not target resolving the conflict completely but rather how people can adaptively address the conflict over time.60

Under ideal conditions, a person’s intentions should translate into comparable behaviors. However, conditions are not always ideal, and the findings from research on conflict management have been inconsistent.61 First, strategies appropriate for resolving one form of conflict may backfire and cause more conflict in another area.62 For exam- ple, adopting a shared identity and improving relationship quality may unintentionally backfire by causing blurred distinctions between people’s roles, stimulating task conflict.

Conflict management The use of resolu- tion and stimulation techniques to achieve the desired level of conflict.

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268 Part 4 • Negotiating Power and Politics

Second, strategies appropriate for managing one form of conflict may spill over into another domain.63 For example, clearly outlining differences in what people do in the presence of task conflict can spill over to stimulate relational conflict. This is where stra- tegic conflict management (as mentioned earlier) may come into play.

One of the keys to minimizing counterproductive conflicts is recognizing when there really is a disagreement. Perhaps the most successful conflict management recognizes dif- ferent views and attempts to resolve them by encouraging open, frank discussions focused on views rather than issues, listening and understanding opposing views, and then integrat- ing them constructively.64 Another approach is to have opposing groups pick parts of the solution that are most important to them and then focus on how each side can get its top needs satisfied. Neither side may get exactly what it wants, but each side will achieve the most important parts of its agenda.65 Third, groups that resolve conflicts successfully discuss differences of opinion openly and are prepared to manage conflict when it arises.66 An open discussion makes it much easier to develop a shared perception of the problems at hand; it also allows groups to work toward a mutually acceptable solution. Fourth, managers need to emphasize shared interests in resolving conflicts, so groups that disagree with one another do not become too entrenched in their points of view and start to take the conflicts person- ally. Groups with cooperative conflict styles and a strong underlying identification with the overall group goals are more effective than groups with a competitive style.67

CULTURAL INFLUENCES Differences across countries in conflict resolution strategies may be based on collectivist versus individualist (see the chapter on personality and values) tendencies and motives. One study suggests that top management teams in Chinese high-technology firms prefer collaboration even more than compromising and avoiding. Collectivists may also be more interested in demonstrations of concern and working through third parties to resolve disputes, whereas individualists will be more likely to confront differences of opinion directly and openly.

Cross-cultural negotiations can lead to trust issues.68 One study of Indian and U.S. negotiators found that respondents reported having less trust in their cross-culture nego- tiation counterparts. The lower level of trust was associated with less discovery of com- mon interests between parties, which occurred because cross-culture negotiators were less willing to disclose and solicit information. Another study found that both U.S. and Chinese negotiators tended to have an ingroup bias, which led them to favor negotiating partners from their own cultures. For Chinese negotiators, this was particularly true when accountability requirements were high.

Having considered conflict—its nature, causes, and consequences—we now turn to negotiation, which often resolves conflict.

NEGOTIATION

Negotiation permeates the interactions of almost everyone in groups and organizations. There is the obvious: Labor bargains with management. There is the not-so-obvious: Managers negotiate with employees, peers, and bosses; salespeople negotiate with cus- tomers; purchasing agents negotiate with suppliers. Then there is the subtle: An employee agrees to cover for a colleague for a few minutes in exchange for a future favor. Clearly, negotiation skills are important in today’s workplace.

We can define negotiation as a process that occurs when two or more par- ties decide how to allocate scarce resources.70 Although we commonly think of the

Negotiation A process in which two or more parties exchange goods or services and attempt to agree on the exchange rate for them.

RAMCO In May 2020, more than 400 migrant RAMCO workers went on strike, the first of its kind in Lebanon. Many of them protested at the corporate building, blocking waste collection trucks from leaving the site. RAMCO had failed to adjust their salaries amid the recent local currency devaluation crisis, which made salaries lose most of their real value. The company, which is Lebanon’s official waste collection company in several regions, including Beirut, attributed this decision to the government, which began paying RAMCO in local currency rather than U.S. dollars. In an effort to settle the conflict, RAMCO, in coordination with the migrants’ embassy in Lebanon, reached a temporary agreement with the workers to slightly increase their salaries, resolving the problem in the short run.69

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outcomes of negotiation in one-shot transactional terms, like negotiating over one’s salary before accepting a job offer, every negotiation in organizations also affects the relationship between negotiators and the way negotiators feel about themselves.71 Depending on how much the parties are going to interact with one another, sometimes maintaining the social relationship and behaving ethically will be just as important as achieving an immediate outcome of bargaining. (Note that we use the terms negotiation and bargaining interchangeably.)

Bargaining Strategies

There are two general approaches to negotiation—distributive bargaining and integrative bargaining.72 As Exhibit 14-4 shows, they differ in their goals and motivation, focus, interests, information sharing, and duration of relationship. Let us define each and illus- trate the differences.

DISTRIBUTIVE BARGAINING Your team was not aware of a change in policy until it was already happening.73 This policy meant that your team would receive 20 percent fewer resources next fiscal year. There is nothing you can do to stop the policy from being implemented, so you negotiate with the executive team regarding these provisions. Both parties believe that any gain is made at the others’ expense, and when you try to negotiate halving this reduction in resources, the executives counter with an offer of 15 percent. The negotiating strategy you are engaging in is called distributive bargaining. Its identifying feature is that it operates under zero-sum conditions—that is, any gain I make is at your expense, and vice versa (see the chapter on power and politics). The essence of distributive bargaining is negotiating who gets what share of a fixed pie. By fixed pie, we mean a set amount of goods or services to be divvied up. When the pie is fixed, or the parties believe it is, they tend to bargain distributively.

The essence of distributive bargaining is depicted in Exhibit 14-5. Parties A and B represent two negotiators. Each has a target point that defines what he or she would like to achieve. Each also has a resistance point, which marks the lowest acceptable outcome—the point beyond which the party would break off negotiations rather than accept a less favorable settlement. The area between these two points makes up each party’s aspiration range. If there is some overlap between A’s and B’s aspiration ranges, there exists a settlement range in which each one’s aspirations can be met.

Distributive bargaining Negotiation that seeks to divide up a fixed amount of resources; a win–lose situation.

Fixed pie The belief that there is only a set amount of goods or services to be divvied up between the parties.

Bargaining Characteristic

Distributive Bargaining

Integrative Bargaining

Goal Get as much of the pie as possible

Expand the pie so that both parties are satisfied

Motivation Win–lose Win–win Focus Positions (“I can’t go

beyond this point on this issue.”)

Interests (“Can you explain why this issue is so important to you?”)

Interests Opposed Congruent Information sharing Low (Sharing information

will only allow other party to take advantage)

High (Sharing information will allow each party to find ways to satisfy interests of each party)

Duration of relationship Short term Long term

EXHIBIT 14-4 Distributive Versus Integrative Bargaining

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When you are engaged in distributive bargaining, you may want to consider making the first offer. Making the first offer can put you at an advantage because of the anchoring bias, mentioned in the chapter on perception and individual decision making. People tend to fixate on initial information. Once that anchoring point has been set, they fail to adequately adjust it based on subsequent information. A savvy negotiator sets an anchor with the initial offer, and scores of negotiation studies show that such anchors greatly favor the person who sets them.74 However, if you have a negotiation partner who is motivated to maximize their own return, a disadvantage of making the first offer is that you are conveying information about your priorities that the individual can use against you.75 Furthermore, framing mat- ters: if you frame the first proposal as a request (i.e., I request your B for my A) instead of an offer (i.e., I offer my A for your B), it can be detrimental to your negotiation success by highlighting a “loss” rather than a “gain” for the negotiation partner.76

In distributive bargaining, should you engage in hardline strategies, in which you minimize your own concessions and make extreme offers, or should you engage in soft- line strategies, where you elicit concessions from the other party through your own con- cessions? One review suggests that it depends on the outcome you want: If it is important to preserve the relationship, softline strategies might be better.77 If you want a higher economic return, than hardline strategies may be better. When is each strategy most effective? The hardline approach tends to be most effective if you are physically interact- ing with the other negotiator, when the other party is male, when both are motivated to maximize individual outcomes, and when they know what they can and cannot bargain (although, people’s perception of the bargaining zone itself is often distorted78).79 The softline approach is more effective only when you are able to adequately give conces- sions to the other party. Furthermore, some research suggests that phantom anchors (e.g., “I was going to ask for $10,000, but since you are making that concession, I will ask for $8,000 instead) can be an effective softline strategy that communicates your concession (even if the concession is overstated).80 Another soft tactic that builds upon the first offer effect mentioned earlier is the use of multiple equivalent simultaneous offers (MESOs). MESOs involve presenting multiple, equivalent first offers to the negotiating partner to choose from. This may lead the negotiation partner to perceive the offeror as flexible and sincerely trying to reach an agreement as well as increase the likelihood of the negotia- tion partner finding an option they like right away.81

INTEGRATIVE BARGAINING During her first pregnancy, one woman who worked for the federal government knew that she wanted to be able to be with her child but did not think she could do so while working full time.82 She did her research on the policies and procedures for part-time work to see how she might be able to make it happen. She then went to her supervisor and discussed possibilities for an alternative work arrangement

Party A’s aspiration range Party B’s aspiration range

Party B’s target point

Party A’s resistance

point

Party B’s resistance

point

Party A’s target point

Settlement range

EXHIBIT 14-5 Staking Out the Bargaining Zone

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and was successfully able to negotiate time with her child a couple of times each week. This employee’s attitude shows the promise of integrative bargaining. In contrast to distributive bargaining, integrative bargaining assumes that one or more of the possible settlements can create a win–win solution rather than an all-or-nothing, win–lose situation. Of course, both parties must be engaged for integrative bargaining to work.

CHOOSING BARGAINING METHODS In terms of intraorganizational behavior, integrative bargaining is preferable to distributive bargaining because the former builds long-term relationships.83 Integrative bargaining bonds negotiators and allows them to leave the bargaining table feeling they have achieved a victory. Distributive bargaining, however, leaves one party a loser. It tends to build animosity and deepen divisions when people must work together on an ongoing basis. Research shows that over repeated bargaining episodes, a losing party who feels positively about the negotiation outcome is much more likely to bargain cooperatively in subsequent negotiations.

Why, then, do not we see more integrative bargaining in organizations? The answer lies in the conditions necessary for it to succeed. Evidence from a study of nearly 200,000 people found that the financially vulnerable are more likely to construe the negotiation in zero-sum terms, curtailing their ability to come to integrative solutions.84 Furthermore, negotiating parties who are open with information and candid about concerns, are sensitive to the other’s needs and trust, and maintain flexibility tend to foster integra- tive bargaining. Although more traditional organizations may not foster these conditions, organizations with psychologically safe, open environments with positive cultures and climates and negotiating partners with integrative mindsets may perhaps do so.

THE NEGOTIATION PROCESS

Exhibit 14-6 provides a simplified model of the negotiation process. It views negotiation as comprised of five steps: (1) preparation and planning, (2) definition of ground rules, (3) clarification and justification, (4) bargaining and problem solving, and (5) closure and implementation.85

Integrative bargaining Negotiation that seeks one or more settlements that can create a win–win solution.

Preparation and planning

Definition of ground rules

Clarification and justification

Bargaining and problem solving

Closure and implementation

EXHIBIT 14-6 The Negotiation Process

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PREPARATION AND PLANNING This may be the most important part of the process. Before you start negotiating, do your homework. What is the nature of the conflict? What is the history leading up to this negotiation? Who is involved and what are their perceptions of the conflict? Then consider your goals, in writing, with a range of outcomes from “most helpful” to “minimally acceptable.” If you are a supply manager at Dell, for instance, and your goal is to get a significant cost reduction from your keyboard supplier, make sure this goal stays paramount in discussions and does not get overshadowed by other issues. Next, assess what you think are the other party’s goals. What intangible or hidden interests may be important to them? On what might they be willing to settle? Think carefully about what the other side might be willing to give up. People who underestimate their negotiating partner’s willingness to give on key issues before the negotiation even starts end up with lower outcomes.86

Once you have gathered your information, develop a strategy. You should determine your and the other side’s best alternative to a negotiated agreement, or BATNA. Your BATNA determines the lowest value acceptable to you for a negotiated agreement. Any offer you receive that is higher than your BATNA is better than an impasse. Conversely, you should not expect success in your negotiation effort unless you are able to make the other side an offer it finds more attractive than its BATNA.

In nearly all cases, the party with superior alternatives will do better in a nego- tiation, so experts advise negotiators to solidify their BATNA prior to any interaction.87 Therefore, be equipped to counter arguments with facts and figures that support your position. There is an interesting exception to this general rule—negotiators with abso- lutely no alternative to a negotiated agreement sometimes “go for broke” since they do not even consider what would happen if the negotiation falls through.88 Even though this is a safeguard against an inferior agreement, it is not a way to reach the optimal agreement—some suggest that although it is good to have this information ahead of time, you should focus on your mutual dependence (not alternatives) and positively frame the way you think about the negotiation (e.g., a learning experience with hidden potential, not a “frightening minefield”).89 Furthermore, just as phantom anchors are possible, so are phantom BATNAs. Setting a BATNA before a negotiation does not guarantee that the BATNA is probable or even possible. Those who hold a phantom BATNA may find themselves in the undesirable position of having to accept or reject a final offer from a negotiation partner, where their chosen BATNA was not possible to begin with.90

DEFINITION OF GROUND RULES Once you have done your planning and developed a strategy, you are ready to define with the other party the ground rules and procedures of the negotiation itself. Who will do the negotiating? Where will it take place? What time constraints, if any, will apply? To what issues will negotiation be limited? Will you follow a specific procedure if an impasse is reached? During this phase, the parties will exchange their initial proposals or demands.

CLARIFICATION AND JUSTIFICATION When you have exchanged initial positions, you and the other party will explain, amplify, clarify, bolster, and justify your original demands. This step need not be confrontational. Rather, it is an opportunity for educating each other on the issues, why they are important, and how you arrived at your initial demands. Provide the other party with any documentation that supports your position. It might be useful to think back to what you learned in the previous chapter (the chapter on

BATNA The best alterna- tive to a negotiated agreement; the least the individual should accept.

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power and politics) on influence, as framing can be important here. For example, some research suggests that the other party will be less likely to make concessions if you frame your position (and subsequent offers) as a request rather than an offer on your part (see earlier discussion of requests in first offers).91

BARGAINING AND PROBLEM SOLVING The essence of the negotiation process is the actual give-and-take in trying to hash out an agreement. This is where both parties need to make concessions. Relationships change as a result of negotiation, so take that into consideration. If you could “win” a negotiation but push the other side into resentment or animosity, it might be wiser to pursue a more compromising style.92 As an example, of how the tone of a relationship in negotiations matters, people who feel good about the process of a job offer negotiation are more satisfied with their jobs and less likely to turn over a year later regardless of their actual outcomes from these negotiations.93

CLOSURE AND IMPLEMENTATION The final step in the negotiation process is formalizing your agreement and developing procedures necessary for implementing and monitoring it.94 For major negotiations—from labor–management negotiations to bargaining over lease terms—this requires hammering out the specifics in a formal contract. For other cases, closure of the negotiation process is nothing more formal than a handshake.

INDIVIDUAL DIFFERENCES IN NEGOTIATION EFFECTIVENESS

Are some people better negotiators than others? The answer is complex. Although recent research suggests that the situation or relationship tends to account more for negotiation outcomes, individual differences explain to a great degree how people perceive these outcomes.95 In other words, if you tend to be low on emotional stability, you will prob- ably view an unsuccessful negotiation as much more catastrophic than it actually was. Research suggests that extraverted, open, and honest negotiators tend to have better expe- riences than others.96

Four factors influence how effectively individuals negotiate: personality, mood/ emotions, culture, and gender.

PERSONALITY TRAITS IN NEGOTIATIONS Can you predict a negotiation partner’s negotiating tactics if you know something about their personality? Because personality and negotiation outcomes are related but only weakly, the answer is, at best, “sort of.”97 Recent research on marketing managers, lawyers, and construction supervisors suggests that when it comes to negotiation effectiveness, people who are ambitious and likeable tend to fare the best.98 But most research has focused on the Big Five trait of agreeableness, for obvious reasons—agreeable individuals are cooperative, compliant, kind, and conflict averse. We might think such characteristics make agreeable individuals easy prey in negotiations, especially distributive ones. This prediction may come true, if the agreeable negotiator is bargaining with a partner who is low on honesty or humility. Furthermore, if the agreeable person seeks to preserve relationships at all costs and avoids straining them, than the person may be more likely to fare worse in a distributive negotiation.99 Overall, agreeableness is weakly related to negotiation outcomes.100

Interestingly, what seems to be more important is whether the negotiators have similar personalities (even if these traits are perceived by most people as negative!); when

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they do, they tend to reach agreement faster, perceive less conflict, display more positive emotions, and have better impressions of the other negotiation partner.101 Furthermore, when both parties seek to preserve relationships at all costs (as an element of agreeable- ness), they tend to fare much better in integrative negotiation.102

Self-efficacy (see the chapter on motivation concepts) is one individual-difference variable that consistently seems to relate to negotiation outcomes.103 This is an intuitive finding—it is not too surprising to hear that those who believe they will be more success- ful in negotiation situations tend to perform more effectively. It may be that individuals who are more confident stake out stronger claims, are less likely to back down from their positions, and exhibit confidence that intimidates others. Although the exact mechanism is not yet clear, it does seem that negotiators may benefit from trying to get a boost in confidence before going to the bargaining table. However, do not be too confident: If you have a supervisor who will be judging your performance and you are expected to do well, it would be prudent to try to prevent negative outcomes (because you have more to lose).104

Finally, some research suggests that emotional intelligence and emotion recogni- tion ability is linked to gains in negotiation performance as well as to perceptions of being more cooperative and likeable.105 In the next section, we describe how specific emotions and moods affect negotiations.

MOODS/EMOTIONS IN NEGOTIATIONS Do moods and emotions influence negotiation? They do, but the way they work depends on the emotion as well as the context.

A negotiator who shows anger can induce concessions, for instance, because the other negotiator believes no further concessions from the angry party are possible. One factor that governs this outcome, however, is power—you should show anger in nego- tiations only if you have at least as much power as your counterpart. If you have less, showing anger actually seems to provoke “hardball” reactions from the other side.106 “Faked” anger, or anger produced from surface acting, is not effective, but showing anger that is genuine (deep acting) is (see the chapter on emotions and moods).107 However, maybe you should not hold it in either: Suppressing anger hurts performance because it is distracting to the negotiator, but only when the anger is integral to the negotiation.108 Having a history of showing anger induces more concessions because the other party perceives the negotiator as “tough.”109 Research suggests if you use anger to “win” a negotiation, even though the tactic might be effective, you might lose in the long run as the other party is less likely to follow through with the deal and less likely to work with you again.110 Regardless of strictly positive or negative effects, your anger could lead the negotiating partner to try to seek more information about your preferences and priori- ties, leading to higher joint gains for both parties.111 The effects of anger in negotiations varies across cultures. For instance, one study found that when East Asian participants showed anger, it induced more concessions than when the negotiator expressing anger was from the United States or Europe, perhaps because of the stereotype of East Asians as refusing to show anger.112

Several other emotions also have effects on negotiation performance. For instance, anxiety may impact negotiation. One study found that individuals who experienced more anxiety about a negotiation used more deceptions in dealing with others.113 Another study found that anxious negotiators expect lower outcomes, respond to offers more quickly, and exit the bargaining process more quickly, leading them to obtain worse outcomes.114

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Relatedly, the expression of sadness can elicit more concessions, but only when the other negotiator perceives the expresser as lower in power and anticipates future interactions with this person, and when the relationship is collaborative.115 This illustrates why it is important in both types of negotiation for parties to display sympathy for their counter- parts, when needed, as this appeals to perceptions of rationality and fairness.116

Even emotional unpredictability affects outcomes: Researchers have found that negotiators who express positive and negative emotions in an unpredictable way extract more concessions because this behavior makes the other party feel less in control.117 As one negotiator put it, “Out of the blue, you may have to react to something you have been working on in one way, and then something entirely new is introduced, and you have to veer off and refocus.”118 However, emotional ambivalence tends to be related to more integrative agreements and concession making, as the ambivalent person is perceived as submissive.119

CULTURE AND RACE IN NEGOTIATIONS Do people from different cultures negotiate differently? The simple answer is the obvious one: Yes, they do. In general, people negotiate more effectively within cultures than between them. For example, a Colombian is apt to do better negotiating with a Colombian than with a Sri Lankan.

It appears that for successful cross-cultural negotiations, it is especially impor- tant that the negotiators be high in openness. This suggests a good strategy is to choose cross-cultural negotiators who are high on openness, and it helps to avoid factors, such as time pressure, that tend to inhibit learning about the other party.120 Second, because emotions are culturally sensitive, negotiators need to be especially aware of the emotional dynamics in cross-cultural negotiation. For example, individuals from East Asian cultures may feel that using anger to get their way in a negotiation is not a legitimate tactic, so they refuse to cooperate when their negotiation partners become upset.121

Some research on negotiations in the United States and Egypt suggest that the same language that leads to integrative agreements in Western cultures can backfire in oth- ers.122 For example, in the U.S., language that emphasizes cognitive, rational, and logi- cal gains and losses tends to promote integrative bargaining. However, in other cultures, such as Egypt, this language can backfire and what is preferable would be language that emphasizes honor, moral integrity, and protecting one’s image and strength. Furthermore, some idiosyncratic rituals that differ across cultures can improve the success of integra- tive bargaining; for example, in Western cultures, a handshake promotes integrative deal- making because it acts as a signal of cooperative intent.123

Although not much research has examined the role of race in negotiations, a recent study has found that black job seekers in America are (1) expected to negotiate less than white job seekers, (2) penalized in negotiations when they do try to negotiate, and (3) penalized more heavily when the negotiator is more racially biased.124

GENDER IN NEGOTIATIONS With regard to gender in negotiations, one stereotype is that women are more cooperative and pleasant in negotiations than men and, as a result, obtain worse outcomes. However, decades of research tends to suggest that the influence of gender in negotiations is highly context dependent.125 For example, women may be more effective negotiators in collectivist cultures with high harmony and low assertiveness norms.126

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276 Part 4 • Negotiating Power and Politics

The influence of gender on both negotiation behavior and negotiation outcomes has been examined (although more research is needed on the influence of gender identity and sexual orientation). Compared to men, women tend to behave in a slightly less assertive, less self-interested, and more cooperative manner.127 However, these differences are reduced when there are restrictions on communication. The research also suggests that women can actually be more competitive than men when the other negotiator engages in a “tit-for-tat” strategy.128 However, when it comes to initiating negotiations, women are less likely to initi- ate than men, especially when the situation is ambiguous and when gender-role reinforcing information is present in the situational context.129 A study of MBA students at Carnegie- Mellon University found that the male students took the step of negotiating their first salary offer 57 percent of the time, compared to 4 percent for the female students. The net result? A four thousand dollar difference in starting salaries.130 Although earlier research concluded that there was a slight benefit for men in negotiation outcomes,131 an updated meta-analysis has found no significant difference between men and women. Although men achieved bet- ter outcomes, on average, these differences were reduced when controlling for negotiation experience, knowledge of the zone of bargaining, when negotiating on behalf of others, and when gendered role norms were not activated in the context.132

NEGOTIATING IN A SOCIAL CONTEXT

We have mostly been discussing negotiations that occur among parties that meet only once, and in isolation from other individuals. However, in organizations, many negotia- tions are open-ended and public. When you are trying to figure out who in a work group should do a tedious task, negotiating with your boss to get a chance to travel internation- ally, or asking for more money for a project; there is a social component to the negotia- tion. You are probably negotiating with someone you already know and will work with again, and the negotiation and its outcome are likely to be topics people will talk about. To really understand negotiations in practice, then, we must consider the social factors of reputation and relationships.

Reputation

Your reputation is the way other people think and talk about you. When it comes to nego- tiation, having a reputation for being trustworthy matters. In short, trust in a negotiation process opens the door to many forms of integrative negotiation strategies that benefit both parties.133 The most effective way to build trust is to behave in an honest way across repeated interactions. Then, others feel more comfortable making open-ended offers with many different outcomes. This helps to achieve win–win outcomes, since both par- ties can work to achieve what is most important to themselves while still benefiting the other party.

Sometimes we either trust or distrust people based on word of mouth about a person’s characteristics. What characteristics help a person develop a trustworthy reputa- tion? Individuals who have a reputation for integrity can also be more effective in nego- tiations.134 They are seen as more likely to keep their promises and present information accurately, so others are more willing to accept their promises as part of a bargain. This opens many options for the negotiator that would not be available to someone who is not seen as trustworthy. Finally, individuals who have higher reputations are better liked and

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have more friends and allies—in other words, they have more social resources, which may give them more understood power in negotiations.

Relationships

There is more to repeated negotiations than just reputation. The social, interpersonal component of relationships with repeated negotiations means that individuals go beyond valuing what is simply good for themselves and instead start to think about what is best for the other party and the relationship as a whole.135 Repeated negotiations built on a foundation of trust also broaden the range of options, since a favor or concession today can be offered in return for some repayment further down the road.136 Repeated negotia- tions also facilitate integrative problem solving. This occurs partly because people begin to see their negotiation partners in a more personal way over time and come to share emo- tional bonds.137 Repeated negotiations also make integrative approaches more workable because a sense of trust and reliability has been built up.138

THIRD-PARTY NEGOTIATIONS

To this point, we have discussed bargaining in terms of direct negotiations. Occasionally, how- ever, individuals or group representatives reach a stalemate and are unable to resolve their dif- ferences through direct negotiations. In such cases, they may turn to a third party to help them find a solution. There are three basic third-party roles: mediator, arbitrator, and conciliator.

A mediator is a neutral third party who facilitates a negotiated solution by using reasoning and persuasion, suggesting alternatives, and the like. Mediators are widely used in labor–management negotiations and in civil court disputes. Their overall effectiveness is impressive. For example, the Equal Employment Opportunity Commission (EEOC) reported a settlement rate through mediation of 72.1 percent.139 But the situation is the key to whether mediation will succeed: The conflicting parties must be motivated to bargain and resolve their conflict. In addition, conflict intensity cannot be too high; mediation is most effective under moderate levels of conflict. Finally, perceptions of the mediator are important; to be effective, the mediator must be perceived as neutral and noncoercive.

An arbitrator is a third party with the authority to dictate an agreement. Arbitration can be voluntary (requested by the parties) or compulsory (forced on the parties by law or contract). The big plus of arbitration over mediation is that it always results in a settle- ment. Whether there is a downside depends on how heavy-handed the arbitrator appears. If one party is left feeling overwhelmingly defeated, that party is certain to be dissatisfied and the conflict may resurface later.

A conciliator is a trusted third party who provides an informal communication link between the negotiator and the negotiation partner. Agreeable individuals with a concern for others tend to adopt the role of conciliator, and they tend to be respected and admired by their peers as a result.140 This role was made famous by Robert Duval in the first Godfather film. As Don Corleone’s adopted son and a lawyer by training, Duval acted as an intermediary between the Corleones and the other Mafioso families. Comparing con- ciliation to mediation in terms of effectiveness has proven difficult because the two over- lap a great deal. In practice, conciliators typically act as more than mere communication conduits. They also engage in fact finding, interpret messages, and persuade disputants to develop agreements.

Mediator A neutral third party who facilitates a negotiated solution by using reason- ing, persuasion, and suggestions for alternatives.

Arbitrator A third party to a negotiation who has the authority to dic- tate an agreement.

Conciliator A trusted third party who provides an informal communica- tion link between the negotiator and the negotiation partner.

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SUMMARY

While many people assume conflict lowers group and organizational performance, this assumption is frequently incorrect. Conflict can be either constructive or destructive to the functioning of a group or unit. Levels of conflict can be either too high or too low to be constructive. Either extreme hinders performance. An optimal level is one that pre- vents stagnation, stimulates creativity, allows tensions to be released, and initiates the seeds of change without being disruptive or preventing the coordination of activities.

IMPLICATIONS FOR MANAGERS

• Always try to be aware of potential conflict between people, within teams, and be- tween groups. Recognize that relational and process conflict tends to be nefarious, while some task conflict may be beneficial in certain circumstances. You should try to maximize functional conflict and minimize the negative effects of dysfunctional conflict.

• Try to identify ahead of time conditions that can cause conflict. Engage in con- flict handling behaviors that are constructive, like the collaborating approach, but realize that conflict management strategies are often tricky as they can cause un- intended conflict in other areas. One of the most effective conflict management strategies, however, is open, interest-based discussion.

• When it comes to negotiation, we often believe that distributive bargaining is the only option; try to determine whether there are opportunities for integrative bar- gaining, as this approach is better for maintaining relationships over time. Also select hardline or softline strategies, depending upon what your goals are and what the situation calls for.

• When you expect negotiations, be sure to follow the steps of preparing, setting ground rules, clarifying and justifying your arguments, bargaining, and implement- ing. Consider developing a “best alternative to a negotiated agreement,” or BATNA, before negotiating (but make sure it is realistic).

• When selecting individuals for negotiating roles or assignments, remember that negotiators do well when they are similar to the person they are negotiating with; as well as reputable, confident, ambitious, and likeable. Also, emotionally intel- ligent negotiators who can recognize, understand, and express emotions to their advantage tend to do well in negotiations. The negotiator should also be aware of the culture within which they are negotiating.

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279

PART 5 Leading, Understanding, and Transforming the Organization System

Foundations of Organization Structure

15

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

15.1 Identify seven elements of an organization’s structure. 15.2 Identify the characteristics of the simple structure, bureaucracy, and the matrix

structure. 15.3 Identify the characteristics of the virtual structure, the team structure, and the

circular structure. 15.4 Describe the effects of downsizing on organizational structures and employees. 15.5 Contrast the reasons for mechanistic and organic structural models. 15.6 Analyze the behavioral implications of different organizational designs.

WHAT IS ORGANIZATIONAL STRUCTURE?

Google is a company that “does organizational structure right.”1 Its structure supports the innovative culture, competitiveness, and growth of the company. Although it might not seem like it at first, structure is very important for different aspects of business.2 For example, Dr. Timothy Giardino, the human resources (HR) director at Cantata Health and Meta Healthcare IT solutions suggests, “structure follows strategy ... structure con- trols behavior ... [and] structure supports execution.”3 Structure can also stand in the way of organizations fulfilling their social mission. For example, systematic biases and structural barriers can prevent women and minorities from advancing in their careers.4 Organizations have a responsibility to consider the need for organizational change and identify barriers that formally (and informally) limit their advancement.

An organizational structure defines how job tasks are formally divided, grouped, and coordinated.5 Seven key elements should be considered when designing an orga- nization’s structure: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, formalization, and boundary spanning.6

Organizational structure The way in which job tasks are formally divided, grouped, and coordinated.

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280 Part 5 • Leading, Understanding, and Transforming the Organization System

Exhibit 15-1 presents each element as the answer to an important structural question, and the following sections describe each one.

Work Specialization

Early in the twentieth century, Henry Ford became rich by building automobiles on an assembly line. Every worker was assigned a specific, specialized task such as installing the right front door. By dividing jobs into small standardized tasks that could be per- formed over and over, Ford was able to produce a car every 10 seconds using employees with relatively limited skills.7

Work specialization, or division of labor, describes the degree to which activities in any organization are divided into separate jobs, each completed by a separate individual.8 Overall, specialization is a means of making the most efficient use of employee skills and even successfully improving them through repetition. Amazon’s Mechanical Turk program, TopCoder, and others like it have facilitated a new trend in microspecialization in which extremely small pieces of programming, data processing, or evaluation tasks are delegated to a global network of individuals by a program manager who then assembles the results.9

By the 1960s, it seemed that the good news of specialization could be carried too far. Human diseconomies began to surface in the form of boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover, which more than offset the economic advantages (see Exhibit 15-2).10 Productivity could be increased now by enlarging, rather than narrowing, the scope of job activities. Giving employees a variety of activities to do, allowing them to do a whole and complete job, and putting them into teams with interchangeable skills often achieved significantly higher output with increased employee satisfaction.11

Departmentalization

Once jobs have been divided through work specialization, they must be grouped so com- mon tasks can be coordinated and complexity can be reduced. The basis by which jobs are grouped is called departmentalization.12

Work specialization The degree to which tasks in an organiza- tion are subdivided into separate jobs.

Departmentalization The basis by which jobs in an organiza- tion are grouped together.

The Key Question The Answer Is Provided by 1. To what degree are activities subdivided

into separate jobs? Work specialization

2. On what basis will jobs be grouped together?

Departmentalization

3. To whom do individuals and groups report?

Chain of command

4. How many individuals can a manager efficiently and effectively direct?

Span of control

5. Where does decision-making authority lie?

Centralization and decentralization

6. To what degree will there be rules and regulations to direct employees and managers?

Formalization

7. Do individuals from different areas need to regularly interact?

Boundary spanning

EXHIBIT 15-1 Key Design Questions and Answers for Designing the Proper Organizational Structure

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FUNCTIONAL DEPARTMENTALIZATION One of the most popular ways to group activities is by the functions performed. A manufacturing manager might organize a plant into engineering, accounting, manufacturing, HR, and supply chain departments. Functional departmentalization allows efficiencies to be gained from putting specialists who focus on similar areas together. Furthermore, the functional structure allows specialists to become experts more easily than if they worked in diversified units. Employees can also be motivated by a clear career path to the top of the organization chart specific to their specialties. The functional structure works well if the organization is focused on one product or service. However, coordination among these diverse units is a problem, and infighting in units and between units can lead to reduced motivation.

PRODUCT OR SERVICE DEPARTMENTALIZATION Jobs can also be departmentalized by the type of product or service the organization produces.13 Procter & Gamble places each major product—such as Tide, Pampers, Charmin, and Febreeze—under an executive who has complete global responsibility for it. The major advantage here is increased accountability for performance, but for this type of departmentalization to be effective, it is also important for the department or team to have a broader understanding of the organization outside their own product specialization (e.g., knowing what the other teams and departments work on over time).14

GEOGRAPHICAL DEPARTMENTALIZATION When a firm is departmentalized based on geography (or territory), each function (for example, sales) may have western, southern, northern, and eastern regions.15 This form is valuable when an organization’s customers are scattered over a large geographic area and have similar needs within their locations. For this reason, Toyota changed its management structure into geographic regions “so that they may develop and deliver ever better products,” said CEO Akio Toyoda.16 When organizations departmentalize by region, these departments and co- located teams form their own identities and practices.17 These regional teams affect the coordination and performance across locations as well as how information is acquired and shared throughout the organization.18 Organizations with geographical departmentalization should pay special care toward inter-region communication and knowledge sharing, which can be made easier through virtual communications and knowledge management systems.

Im

pa ct

fro m e

co no

mi es

o

f s pe

cia liz

at io n

Impact from

human diseconomies (Low) (High)Work specialization

P ro

d u ct

iv it y

(High)

EXHIBIT 15-2 Economies and Diseconomies of Work Specialization

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282 Part 5 • Leading, Understanding, and Transforming the Organization System

PROCESS AND CUSTOMER DEPARTMENTALIZATION Process departmentalization involves structuring employee, product, or customer processes.19 For example, information security firms may have (1) a policy management department that works with HR, legal, and project management functions to set information security policies; (2) a network security department that oversees network security, intrusion prevention, and event management; (3) an identity and access management department to oversee user credentialing, identification, and access; and (4) an operations department that oversees implementing changes and ensuring systems are up and running.20 As a user of information technology (IT) services, you often start by agreeing to an acceptable use policy, requesting access to the system as well as an online identity, and then interacting with the network, while being notified of security breaches and relevant system maintenance/outages. A final category of departmentalization uses the customer the organization seeks to reach. For example, an assessment organization may departmentalize according to government, industrial, or private consumers.

IMPLICATIONS FOR OB Organizations do not always stay with the departmentalization they adopted first. Microsoft, for instance, used customer departmentalization for years, organizing around its customer bases: consumers, large corporations, software developers, and small businesses. In June 2013, Microsoft announced a restructuring to functional departmentalization, citing a need to foster continuing innovation. The new departments grouped jobs by traditional functions including engineering, marketing, business development, strategy and research, finance, HR, and legal.21 Since then, Microsoft has restructured yet again to primarily departmentalize by product type, with smaller groups organized by function and geographic segment (U.S. and international).22

The more divisional structures (e.g., product, geographical, process, customer departmentalization) have the opposite benefits and disadvantages of the functional structure. They facilitate coordination in units to achieve on-time completion, budget tar- gets, and development and introduction of new products to market, while addressing the specific concerns of each unit. They provide clear responsibility for all activities related to a product, but with duplication of functions and costs. Sometimes this is helpful, say, when the organization has a unit in Spain and another in China, and a marketing strategy is needed for a new product. Marketing experts in both places can incorporate the appro- priate cultural perspectives into their region’s marketing campaigns. However, having marketing function employees in two different countries may represent an increased cost for the organization, in that they are doing basically the same task in two different places.

As we see throughout this text, whenever changes are deliberately made in organi- zations to align practices with organizational goals, particularly the goals of strong lead- ers, a good execution of the changes creates a much higher probability for improvement.

Chain of Command

While the chain of command was once a basic cornerstone in the design of organizations, it has far less importance today. But managers should still consider its implications, par- ticularly in industries that deal with potential life-or-death situations when people need to quickly rely on decision makers. The chain of command is an unbroken line of author- ity that extends from the top of the organization to the lowest echelon and clarifies who reports to whom. But first, we cannot discuss the chain of command without also discuss- ing authority and unity of command.

Chain of command The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom.

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AUTHORITY Authority refers to the rights inherent in a position to give orders and expect them to be obeyed.23 To facilitate coordination, each position is given a place in the chain of command, and each person is given a degree of authority in order to meet their responsibilities. In chains of command in which most of the authority is vested in one person, LMX (see the chapter on leadership) becomes more important, as the leader’s “buy-in” becomes more important to getting things done.24

UNITY OF COMMAND Unity of command states that a person should have one and only one superior to whom they are directly responsible. If the unity of command is broken, an employee might have to cope with conflicting demands or priorities from several superiors.25 Although unity of command is more common than having multiple supervisors, if you do find yourself in the situation where you report to multiple people, be aware of your own workload, conflicting messages, who has the “final say” in disputes, and loyalty expectations.26 Furthermore, you should try to be proactive about your workload, foster communication between your supervisors, and set up boundaries and norms for effective communication and workflow.

IMPLICATIONS FOR OB Times change, and so do the basic tenets of organizational design. A low-level employee today can access information in seconds that was available only to top managers a generation ago, and many employees are empowered to make decisions previously reserved for management.27 Considering the popularity of self- managed and cross-functional teams (see the chapter on understanding work teams), you can see why authority and unity of command may appear to hold less relevance.

Yet many organizations still find they can be most productive by enforcing the chain of command. Indeed, one survey of more than one thousand managers found that 59 percent agreed with the statement “There is an imaginary line in my company’s orga- nizational chart. Strategy is created by people above this line, while strategy is executed by people below the line.” However, this same survey found that lower-level employees’ buy-in (agreement and active support) to the organization’s overall, big picture strategy was inhibited by their reliance on the hierarchy for decision making.28 Maybe instead of viewing the chain of command as a line, it should be seen more as a pyramid? Indeed, one study found that people who see the chain of command in this way are more likely to acknowledge the collective contributions of lower-level employees as well as experience enhanced group performance and social relationships.29

Span of Control

How many employees can a manager direct efficiently and effectively? The span of control describes the number of levels (also referred to as layers) and managers in an organization.30 All things being equal, the wider or larger the span, the fewer the levels, and the more employees at each level, the more efficient the organization.31

Narrow or small spans have their advocates. By keeping the span of control to five or six employees, a manager can maintain close control.32 But narrow spans have three major drawbacks.33 First, they are expensive because they add levels of management. Assume two organizations each have about 4,100 operative-level employees. One has a uniform span of four and the other a span of eight. As Exhibit 15-3 illustrates, the wider span of eight will have two fewer levels and approximately 800 fewer managers. If the

Authority The rights inherent in a position to give orders and to expect the orders to be obeyed.

Unity of command The idea that a sub- ordinate should have only one superior to whom he or she is directly responsible.

Span of control The number of sub- ordinates a manager can efficiently and effectively direct.

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average manager makes $60,000 a year, the wider span will save $48 million a year in management salaries! Second, they make vertical communication in the organization more complex. The added levels of hierarchy slow down decision making and can isolate upper management. Third, narrow spans encourage overly tight supervision and discour- age employee autonomy. Supervisors no longer have time to provide subordinates with the necessary leadership and support; thus, employee performance suffers.34

The trend in recent years has been toward wider spans of control.35 However, to ensure performance does not suffer because of these wider spans, organizations have been investing heavily in employee training, because managers recognize they can han- dle a wider span best when employees know their jobs inside and out or can turn to coworkers with questions.

Centralization and Decentralization

Centralization refers to the degree to which decision making is concentrated at a single point in the organization.36 In centralized organizations, top managers make all the deci- sions, and lower-level managers merely carry out their directives. In organizations at the other extreme, decentralized decision making is pushed down to the managers clos- est to the action or to workgroups.37 The concept of centralization includes only formal authority—that is, the rights inherent to a position. Management centralization efforts are often directed toward decision making by lower-level managers, who are closer to the action and typically have more detailed knowledge about problems than top manag- ers. When Procter & Gamble empowered small groups of employees to make decisions about new-product development independent of the usual hierarchy, it was able to rapidly increase the proportion of new products ready for market.38

IMPLICATIONS FOR OB A decentralized organization can act more quickly to solve problems, more people provide input into decisions,39 and employees are less likely to feel alienated from those who make decisions that affect their work lives.40 Centralized organizations are better for avoiding commission errors (bad choices), while decentralized organizations are better for avoiding omission errors (lost opportunities).41 Concerning

Centralization The degree to which decision making is concentrated at a single point in an organization.

1

Assuming span of 4

Span of 4: Operatives Managers (Levels 1–6)

= 4,096 = 1,365

Span of 8: Operatives Managers (Levels 1–4)

O rg

an iz

at io

na l L

ev el

= 4,096 = 585

Members at each level Assuming span of 8

1

(Highest)

2 3 4 5 6 7

1 8

64

512

4,096

4 16

64

256 1,024

4,096

EXHIBIT 15-3 Contrasting Spans of Control

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creativity, research investigating a large number of Finnish organizations demonstrated that companies with decentralized research and development (R&D) offices in multiple locations were better at producing innovation than companies that centralized all R&D in a single office.42 Decentralization is often necessary for companies with offshore sites because localized decision making is needed to respond to each region’s profit opportunities, client base, and specific laws, while centralized oversight is needed to hold regional managers accountable. Failure to successfully balance these priorities can harm not only the organization, but also its relationships with foreign governments.43 Sometimes, however, decentralization can be a double-edged sword—one study of nearly three thousand U.S. Air Force officers suggests that there can sometimes be negative effects of decentralization in organizations with multiteam systems, including excessive risk seeking and coordination failures.44

Formalization

Formalization refers to the degree to which a job is standardized.45 If a job is highly formalized, the employee has a minimal amount of discretion over what to do (e.g., there are explicit job descriptions) and when and how to do it, resulting in consistent and uni- form output. Clerical workers at a publishing firm, for example, generally have very for- malized jobs in which there are standard procedures and expectations for what they do. Conversely, where formalization is low, job behaviors are relatively unprogrammed and employees have a great deal of freedom to exercise discretion in their work. For example, publishing representatives who call on college professors to inform them of their com- pany’s new publications have a great deal of freedom in their jobs. They have only a general sales pitch, which they tailor as needed, and rules and procedures governing their behavior may be little more than suggestions on what to emphasize about forthcoming titles and the requirement to submit a weekly sales report.

Research suggests that sometimes formalization can be a detriment. For example, ninety-four Chinese firms indicated that formalization is a detriment to team flexibility in decentralized organization structures, suggesting that formalization does not work as well where duties are inherently interactive, or where there is a need to be flexible and innovative.46 On the other hand, sometimes it is beneficial; for instance, formalizing pay determinations for jobs reduces gender inequality in most circumstances.47

Boundary Spanning

If there is too much division within an organization, attempts to coordinate across groups can be disastrous. One way to overcome compartmentalization and retain the positive elements of structure is to encourage or create boundary-spanning roles. Boundary spanning occurs when individuals form relationships with people outside their formally assigned groups.48 For instance, an HR executive who frequently engages with the IT group is engaged in boundary spanning. These activities help prevent formal struc- tures from becoming too rigid and, not surprisingly, enhance team creativity, decision making, knowledge sharing, and performance.49 Boundary spanning can be an excellent tool for expatriates and local workers to collaborate. For example, one global study of aid workers from nearly sixty humanitarian aid organizations found that office leaders play a boundary spanning role that serves to connect groups and facilitate joint learning and creativity.50

Formalization The degree to which a job is standardized.

Boundary spanning When individuals form relationships outside their formally assigned groups.

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Organizations can use formal mechanisms to facilitate boundary-spanning activi- ties. One method is to assign formal liaison roles or develop committees of individu- als from different areas of the organization.51 Development activities can also facilitate boundary spanning. Employees with experience in multiple functions, such as account- ing and marketing, are more likely to engage in boundary spanning.52 Many organiza- tions try to set the stage for these sorts of positive relationships by creating job rotation programs so new hires get a better sense of different areas of the organization.

COMMON ORGANIZATIONAL FRAMEWORKS AND STRUCTURES

Organizational designs are known by many names and are constantly evolving in response to changes in the way work is done. We start with three of the more common organiza- tional frameworks: the simple structure, the bureaucracy, and the matrix structure.

The Simple Structure

A simple structure is common in many startups, such as those found in Silicon Valley. The modern tech startup is driven by an entrepreneurial founder, supported by a core set of loyal employees who work long hours, that enacts a unifying vision.53 The simple structure has a low degree of departmentalization, wide spans of control (e.g., a flat orga- nization), authority centralized in a single person, and little formalization.54

Simple structures are strong because they are, well, simple. They are fast, flex- ible, and inexpensive to operate, and accountability is clear. One major weakness is that it becomes increasingly inadequate as an organization grows because its low formalization and high centralization tend to create information overload at the top. Decision making typi- cally becomes slower as the single executive tries to continue doing it all. This proves the undoing of many small businesses. If the structure is not changed and made more elaborate, the firm often loses momentum and can eventually fail.55 The simple structure’s other weak- ness is that it is risky—everything depends on one person. If the founder/manager becomes ill, it can literally halt the organization’s information and decision-making capabilities.56

The Bureaucracy

Standardization! That is the key aspect underlying all bureaucracies. Consider the gov- ernment offices that collect taxes, enforce health regulations, or provide local fire protec- tion. They all rely on standardized work processes for coordination and control.

The bureaucracy is characterized by highly routine operating tasks achieved through specialization, strictly formalized rules and regulations, departmentalization (into functional, divisional, or other structures), centralized authority, narrow spans of control, and decision making that follows the chain of command.57

Bureaucracy is a dirty word in many people’s minds. However, it does have advan- tages, primarily the ability to perform standardized activities very efficiently. Putting like specialties together in units results in economies of scale, minimum duplication of people and equipment, and a common language that employees all share. Bureaucracies can get by with less talented—and hence less costly—middle- and lower-level managers because rules and regulations substitute for managerial discretion. There is little need for innova- tive and experienced decision makers below the level of senior executives, and innovative employees often do not mesh well with bureaucracy.58

Simple structure An organization structure character- ized by a low degree of departmentaliza- tion, wide spans of control, authority centralized in a single person, and little formalization.

Bureaucracy An organization structure with highly routine operat- ing tasks achieved through specializa- tion, very formalized rules and regulations, departmentalization, centralized authority, narrow spans of control, and decision making that follows the chain of com- mand.

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The other major weakness of a bureaucracy is something we have all witnessed: obsessive concern with following the rules. When cases do not precisely fit the rules, there is no room for modification. The bureaucracy is efficient only if employees confront familiar problems with programmed decision rules.59 However, the standardization and rule adherence that benefit it also result in drawbacks: bureaucratic structures may result in diminished autonomy and motivation for employees within these systems, making it difficult to develop and maintain motivation.60

The Matrix Structure

The matrix structure combines functional and product departmentalization, and we find these types of structures in a multitude of organizations.61 Organizations with a matrix structure create a dual line of authority, so that there are multiple people accountable, depending upon their function and product. One survey by Gallup found that 84 percent of employees in the United States are in matrixed organizations.62 Companies that use matrix-like structures include Samsung, BASF, and L’Oréal.63

The most obvious structural characteristic of the matrix is that it breaks the unity- of-command concept discussed earlier. Exhibit 15-4 shows the matrix for a college of business administration. The academic departments of accounting, decision and informa- tion systems, marketing, and so forth are functional units. Overlaid on them are specific programs (that is, services). Employees in the matrix have two bosses: their functional department managers and their product managers. A professor of accounting teaching an undergraduate course may report to the director of undergraduate programs as well as to the chairperson of the accounting department.

Matrices can help facilitate coordination when the organization has several complex and interdependent activities.64 Consider the case of the terrible snow during the winter of 2018. Boston’s Logan International Airport was best equipped to deal with this disas- ter as a result of their matrix structure, whereas John F. Kennedy International Airport (JFK) in New York City was left with delays for days that made news worldwide due to over-delegated authority and reliance on third-party contractors.65 The matrix reduces so-called “bureaupathologies”—its dual lines of authority limit people’s tendency to pro- tect their territories at the expense of the organization’s goals.66 A matrix also achieves

Matrix structure An organization structure that creates dual lines of authority and combines func- tional and product departmentalization.

Accounting

Finance

Management

Decision and Information Systems

Marketing

Programs

Undergraduate Master’s Ph.D. Research Community Service Executive

DevelopmentAcademic Departments

EXHIBIT 15-4 Matrix Structure for a College of Business Administration

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economies of scale and facilitates the allocation of specialists by both providing the best resources and ensuring that they are efficiently used.67 However, some disadvantages of the matrix structure are found in the confusion it creates, its tendency to foster power struggles, and the stress it places on individuals.68 For individuals who desire security and less ambiguity, this work climate can be stressful.

Some of these disadvantages can be offset through culture (see the chapter on orga- nizational culture), especially one that values agility, flexibility, fluidity, collaboration, and a clear direction. For example, Spotify espouses these key values, while organizing individuals into “squads,” “guilds,” “chapters,” and “tribes” that fulfill the mission of Spotify through so-called agile matrices.69 Loosely speaking, the “tribes” and the teams that comprise them (e.g., “squads”) are focused on specific products or services Spotify provides. “Chapters” are made up of people who do similar jobs across products/services (e.g., database administrators, front office developers). The cross-section of tribes and chapters make up the traditional matrix, like the one in Exhibit 15-4. However, where things truly get interesting is with the formation of “guilds.” “Guilds” are amorphous collections of members who merely share the same interests and want to consistently improve upon their shared interests. Organizing in this way has enabled Spotify to quickly throw together squads to accomplish temporary objectives, without needing to worry about who reports to whom.

ALTERNATE DESIGN OPTIONS

With the increasing trend toward flatter structures, many organizations have been devel- oping alternative options with fewer layers of hierarchy and more emphasis on opening the boundaries of the organization.70 In this section, we describe three such designs: the virtual structure, the team structure, and the circular structure.

The Virtual Structure

Why own when you can rent? That question captures the essence of the virtual struc- ture (also sometimes called the network, or modular, structure), typically a small, core organization that outsources its major business functions.71 The virtual structure is highly centralized, with little or no departmentalization.

Exhibit 15-5 shows a virtual structure in which management outsources all the primary functions of the business. The core of the organization is a small group of exec- utives whose job is to oversee directly any activities done in-house and to coordinate relationships with organizations that manufacture, distribute, and perform other crucial functions.

Network organizations often take many forms.72 Some of the more traditional forms include the franchise form, in which there are managers, systems, and other experts in the central node (i.e., executive group), and customer sales and services are carried out by franchise units. This popular form of network organization is very common in service business models such as 7-Eleven, McDonald’s, Jimmy John’s, and Dunkin’ Donuts. In this form, however, franchisees do not tend to collaborate or coordinate with one another, are difficult to influence by the executive group, and may even be in direct competition for resources from the executive group. For instance, one study of franchises found that there is variability in how mission statements are formed at each franchise along with

Virtual structure A small, core organi- zation that outsources major business func- tions.

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how well they consider ethical standards. These differences subsequently impact how much discrimination is experienced at each franchise.73 Another example is the starburst form, in which a parent firm splits off one of its functions into a spinoff firm.74 For exam- ple, in 2012, Netflix split off its DVD function into a separate entity, now DVD.com.75

Virtual structures offer flexibility, which allows individuals with an innovative idea and little money to successfully compete against larger, more established organizations. The structure also saves a great deal of money by eliminating permanent offices and hier- archical roles for outsourced functions.76 On the other hand, the drawbacks have become increasingly clear as popularity has grown.77 Virtual organizations are in a state of per- petual flux and reorganization, which means roles, goals, and responsibilities are unclear, setting the stage for political behavior. Looking back to the earlier example of the winter of 2018 snow emergency, JFK utilized more of a virtual organization structure, which (during crisis), limited communication and agility.78

The Team Structure

The team structure seeks to eliminate the chain of command and replace departments with empowered teams.79 This structure removes vertical and horizontal boundaries in addition to breaking down external barriers between the company and its customers and suppliers.

By removing vertical boundaries, management flattens the hierarchy and mini- mizes status and rank. A recent review of nearly 14,000 teams suggests that hierarchy can engender conflict, which can, in turn, limit how effective teams can be.80 Cross- hierarchical teams (which include top executives, middle managers, supervisors, and operative employees), participative decision-making practices, and the use of 360-degree performance appraisals (in which peers and others evaluate performance) can be used. For example, at the Danish firm Oticon A/S, the world’s largest hearing aid manufacturer, all traces of hierarchy have disappeared.81 Everyone works at uniform mobile worksta- tions, and project teams, not functions or departments, coordinate work.

When fully operational, the team structure may break down geographic barriers. Today, most large U.S. companies see themselves as team-oriented global corporations;

Team structure An organizational structure that replaces departments with empowered teams, and that eliminates horizontal boundaries and external barriers between customers and suppliers.

Advertising agency

Factories in

South Korea

Executive group

Commissioned sales

representatives

Independent research and development consulting

firm

EXHIBIT 15-5 A Virtual Organization

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many, like Coca-Cola and McDonald’s, do as much business overseas as in the United States, and some struggle to incorporate geographic regions into their structure. In other cases, the team approach is need based. Such is the case with Chinese companies that, together, made ninety-three acquisitions in the oil and gas industry in five years— incorporating each acquisition as a new team unit—to meet forecasted demand that their resources in China could not meet.82 The team structure provides a solution because it considers geography as more of a tactical, logistical issue than a structural one. In short, the goal may be to break down cultural barriers and open opportunities. Some organiza- tions create teams incorporating their employees and their customers or suppliers. For example, to ensure important product parts are reliably made to exacting specifications by its suppliers, Honeywell International partners some of its engineers with managers at those suppliers.

The Circular Structure

Picture the concentric rings of an archery target. In the center are the executives; radiat- ing outward in rings grouped by function are the managers, then the specialists, then the workers. This is the circular structure.83 There is still a hierarchy, but top management is at the very heart of the organization, with its vision spreading outward.

The circular structure has intuitive appeal for creative entrepreneurs, and some small innovative firms have claimed it. However, as in many of the current hybrid approaches, employees are apt to be unclear about whom they report to and who is run- ning the show. We are still likely to see the popularity of the circular structure spread. The concept may have intuitive appeal for spreading a vision of corporate social responsibil- ity (CSR) initiatives, for instance.

THE LEANER ORGANIZATION: DOWNSIZING

The goal of some organizational structures we have described is to improve agility by creating a lean, focused, and flexible organization. Downsizing is a systematic effort to make an organization leaner by closing locations, reducing staff, de-layering (e.g., nar- rowing of span of control by reducing the number of levels in a hierarchy), or selling off business units that do not add value.84

Some firms downsize to direct all their efforts toward their core competencies. American Express claims to have been doing this in a series of layoffs over more than a decade; each layoff was accompanied by a restructuring to reflect changing customer preferences, away from personal customer service and toward online customer ser- vice. According to former CEO Ken Chennault, “Our business and industry continue to become transformed by technology. As a result of these changes, we have the need and the opportunity to evolve our organization and cost structure.”85 However, other firms do not have a choice and implement downsizing measures because of outside forces. For example, organizations may engage in downsizing, along with work restructuring, wage, and employment freezes during times of natural disaster, pandemics (such as those that occurred during the COVID-19 pandemic), and economic recessions.86

Despite the advantages of being a lean organization, the impact of downsizing on organizational performance is not without controversy. Reducing the size of the work- force perhaps has positive outcomes in the long run, although most of the evidence

Circular structure An organizational structure in which executives are at the center, spreading their vision outward in rings grouped by function (managers, then specialists, then workers).

Downsizing A systematic effort to make an organization leaner by closing locations, reducing staff, or selling off business units that do not add value.

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suggests that downsizing has a negative impact on stock returns the year of downsizing. However, this may be contingent on the organization’s goals for downsizing along with other contextual factors).87 An example of these contingencies can be found in the case of Russia’s Gorky Automobile Factory, which realized a profit for the first time in many years after President Bo Andersson fired fifty thousand workers, half the workforce.88 Eventually, however, the rampant downsizing policy caught up with Andersson when he was CEO of Russia’s largest car maker, AvtoVAZ. From 2014 to 2016, downsizing at its plant in Togliatti led to tens of thousands of workers losing their jobs. At the time, Sergei Chemezov, an ally of President Vladmir Putin, told Andersson that he was “playing with fire.”89 Eventually, Andersson was removed as CEO for his tactics in 2016—what tended to be standard practice in the West (downsizing) was frowned upon in Russia, where the auto industry is revered with nationalistic pride and jobs tend to be preserved rather than cut.90

Part of the problem is the effect of downsizing on employee attitudes.91 From a broad perspective, many have argued that the prominence of downsizing has led employ- ees across the world to be insecure about their jobs and uncertain about their careers.92 Employees who remain often feel worried about future layoffs, may be less committed to the organization, and may experience a greater amount of stress and strain.93 Downsizing can also lead to more voluntary turnover, so vital human capital is lost.94 The result is a company that is more anemic than lean.

WHY DO STRUCTURES DIFFER?

Exhibit 15-6 differentiates between two extreme models of organizational design.95 One is the mechanistic model, which is generally synonymous with the bureaucracy in that it has highly standardized processes for work, high formalization, and more managerial hierarchy. The other extreme is the organic model, which is flat, has fewer formal proce- dures for making decisions, has multiple decision makers, and favors flexible practices.96 Whether the organization is more mechanistic or organic has implications for which behaviors are most effective. For example, research suggests that political behaviors tend to be more effective in mechanistic organizations,98 whereas transformational leadership and empowerment tend to be more effective in organic organizations.99

With these two models in mind, why are some organizations more mechanistic whereas others are more organic? What forces influence the choice of design? In this sec- tion, we present major causes or determinants of an organization’s structure.100

Organizational Strategies

Because structure is a means to achieve objectives, and objectives derive from the orga- nization’s overall strategy, it is only logical that structure should follow strategy. If man- agement significantly changes the organization’s strategy or its values, the structure must also change to accommodate. For example, recent research indicates that aspects of organizational culture may influence the success of CSR initiatives.101 If the culture is supported by the structure, the initiatives are more likely to have clear paths toward application. Regarding strategy, most current frameworks focus on three dimensions— innovation, cost minimization, and imitation—and a structural design that works best with each.102

Mechanistic model A structure character- ized by extensive departmentalization, high formalization, a limited information network, and central- ization.

Organic model A structure that is flat, uses cross- hierarchical and cross- functional teams, has low formalization, possesses a compre- hensive information network, and relies on participative decision making.

Virgin Atlantic The COVID-19 pandemic brought the airline industry to a virtual standstill, and Virgin Atlantic was no exception. In mid-2020, the airline cut more than 3,000 jobs in the United Kingdom to reduce costs and announced that it was restructuring its loans. In September, the company announced that it also planned to cut 1,150 jobs after it had completed a £1.2 billion bailout deal approved by the UK courts. CEO Shai Weiss stated that reducing the number of staff has been “heart-breaking” but maintained that this action was necessary for survival, at least until demand picked up again.97

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INNOVATION STRATEGY To what degree does an organization introduce major new products or services? An innovation strategy strives to achieve meaningful and unique innovations.103 Innovative firms use competitive pay and benefits to attract top candidates and motivate employees to take risks. Some degree of the mechanistic structure can benefit innovation. Well-developed communication channels, policies for enhancing long-term commitment, and clear channels of authority all may make it easier for rapid changes to occur smoothly. Obviously, not all firms pursue innovation. Tesla, Amazon, and Netflix do,104 but some other firms do not.

Arguably, some degree of innovation is needed if the firm is to stay ahead of the competition. We can recall several instances in which companies failed to innovate, caus- ing them to lose position in the market (e.g., Kodak, Blockbuster).105 Steve Sasson, an engineer at Kodak, invented the first digital camera in 1975. When Sasson showed the camera to management, their response was, “That’s cute—but don’t tell anyone about it.” Former Kodak executives noted that although they developed this, leadership was too focused on the success of film to notice the digital revolution and too afraid of how this innovation would affect the film market.106 However, sometimes innovation does not work out in the face of competitors. For instance, My Space’s response to Facebook’s popularity in the mid-2000s was to change its niche to entertainment and music, eventu- ally leading to its decline as a social network.107

COST-MINIMIZATION STRATEGY An organization pursuing a cost-minimization strategy tightly controls costs, refrains from incurring unnecessary expenses, and cuts prices in selling a basic product.108 For example, India’s Jet Airways did away with the first class section in its Boeing 777 planes, enabling it to increase revenue by adding an additional fifty-four seats per plane in 2019.109 But sometimes, cost minimization can hurt customer loyalty and perceptions of product quality, such as when you notice

Innovation strategy A strategy that emphasizes the introduction of major new products and services.

Cost-minimization strategy A strategy that emphasizes tight cost controls, avoidance of unnecessary innova- tion or marketing expenses, and price cutting.

The Organic ModelThe Mechanistic Model

High specialization Rigid departmentalization Clear chain of command Narrow spans of control Centralization High formalization

Cross-functional teams Cross-hierarchical teams Free flow of information Wide spans of control Decentralization Low formalization

• • • • • •

• • • • • •

EXHIBIT 15-6 Mechanistic Versus Organic Models

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the paper products in restrooms are of low quality (as one marketing author notes).110 But even further, sometimes the public is unaware of these cost-cutting measures or remains “blissfully ignorant,” as is the case with historical ethical and quality concerns levied toward major American meat suppliers.111 Regardless, with the advent of machine learning and artificial intelligence (AI), thought leaders have proposed a new philosophy that is not so focused on price cutting.112 This strategy, cost-optimization, focuses on looking at the bigger picture and making sure expenditures maximize long-term growth and profits. AI can empower organizations to quickly collect, process, and learn from mountains of data, all while forecasting future returns.

IMITATION STRATEGY Organizations following an imitation strategy try to both minimize risk and maximize opportunity for profit, moving new products or entering new markets only after innovators have proven their viability.113 On a smaller scale, companies within the same industry share best practices and benchmarking data in order to advance the industry. More overt imitation strategies suggest organizations follow smaller and more innovative competitors with superior products, but only after competitors have demonstrated the market is there. One modern example is how Instagram released its own version of “Stories,” a feature nearly identical to the one Snapchat introduced: Since its release, Instagram added 250 million users.114

However, the imitation strategy does have its drawbacks. As some examples, imi- tation can cause firms to imitate the effects of success rather than its causes, imitation often ignores the luck and serendipity that caused the imitated to become successful, and imitation can lead to long-term decline if the imitating company does not have the capacity or resources to scale.115 Interestingly, there appears to be an ethical component as well: Imitation can lead some companies today to get a “bad reputation” for partnering up with firms, learning from them, and then “stabbing them in the back” once they have developed their own version of the product or service.116

STRUCTURAL MATCHES Exhibit 15-7 describes the structural option that best matches each strategy. Innovators need the flexibility of the organic structure (although, as we noted, they may use some elements of the mechanistic structure as well), whereas cost minimizers seek the efficiency and stability of the mechanistic structure. Imitators combine the two structures. They use a mechanistic structure to maintain tight controls and low costs in their current activities but create organic subunits in which to pursue new opportunities.

Imitation strategy A strategy that seeks to move into new products or new mar- kets only after their viability has already been proven.

Strategy Structural Option Innovation Organic: A loose structure; low specialization, low formalization,

decentralized

Cost minimization Mechanistic: Tight control; extensive work specialization, high formalization, high centralization

Imitation Mechanistic and organic: Mix of loose with tight properties; tight controls over current activities and looser controls for new undertakings

EXHIBIT 15-7 The Strategy- Structure Relationship

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Organization Size

An organization’s size significantly affects its structure.117 Organizations that employ two thousand or more people tend to have more specialization, more departmentaliza- tion, more vertical levels, and more rules and regulations than do small organizations. However, size becomes less important as an organization expands. Why? At around two thousand employees, an organization is already mechanistic; 500 more employees will not have much of an impact. But adding 500 employees to an organization of only 300 is likely to significantly shift it toward a more mechanistic structure.

Technology

Technology describes the way an organization transfers inputs into outputs.118 Every orga- nization has at least one technology for converting financial, human, and physical resources into products or services. For example, the Chinese consumer electronics company Haier (the owners of GE Appliances) uses an assembly-line process for mass-produced prod- ucts, which is complemented by more flexible and innovative structures to respond to customers and design new products.119 Regardless, organizational structures adapt to their technology—and vice versa.120 Organizational structure and culture can become inscribed in the data structure, software, and hardware that an organization uses.121

Environment

An organization’s environment includes outside institutions or forces that can affect its structure, such as suppliers, customers, competitors, and public pressure groups.122 Dynamic environments create significantly more uncertainty for managers than do static ones. To minimize uncertainty in key market arenas, managers may broaden their struc- ture to sense and respond to threats. For example, most companies have added social networking departments not only to promote their products/services to more people, but to also find and respond to negative information (e.g., reviews) posted online.123

Any organization’s environment has three dimensions: capacity, volatility, and complexity.124 Let us discuss each separately.

CAPACITY Capacity refers to the degree to which the environment can support growth. Rich and growing environments generate excess resources, which can buffer the organization in times of relative scarcity. One example of how capacity plays a role in strategic decisions is how Amazon sought to build a second headquarters in a major US city, considering several environmental factors (including capacity) in its decision.125

VOLATILITY Volatility describes the degree of instability in the environment. A dynamic environment with a high degree of unpredictable change makes it difficult for management to make accurate predictions. Because information technology changes at such a rapid pace, most organizations’ environments are volatile. The characteristics of firms, their teams, and their leaders often affect how well firms weather the storms of volatility.126 For example, research on top executives in China point to the Chinese concept of negotiable fate (i.e., the belief that personal actions can shape outcomes); when executives hold this belief, they tend to be more entrepreneurial in how they approach volatility, which in turn predicts’ their firm’s innovation and financial performance.127

Technology The way in which an organization trans- fers its inputs into outputs.

Environment Forces outside an organization that potentially affect the organization’s structure.

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COMPLEXITY Finally, complexity is the degree of heterogeneity and concentration among environmental elements. Environments characterized by heterogeneity and dispersion are complex and diverse, with numerous competitors. For example, information security firms operate in an incredibly complex environment: Competitors are widely dispersed and different from one another, the way people interact with technology and the Internet is diverse, and adversaries (e.g., attackers, hackers, and cyber-criminals) also use several methods to complete their work.128

THREE-DIMENSIONAL MODEL Exhibit 15-8 summarizes our definition of the environment along its three dimensions. The arrows indicate movement toward higher uncertainty. Thus, organizations that operate in environments characterized as scarce, dynamic, and complex face the greatest degree of uncertainty because they have high unpredictability, little room for error, and a diverse set of elements in the environment to monitor constantly. Given this three-dimensional definition of environment, we can offer some general conclusions about environmental uncertainty and structural arrangements. The more scarce, dynamic, and complex the environment, the more organic a structure should be. The more abundant, stable, and simple the environment, the more the mechanistic structure will be preferred.

Institutions

Another factor that shapes organizational structure is institutions. These are cultural fac- tors that act as guidelines for appropriate behavior.129 Institutional theory describes some of the forces that lead many organizations to have similar structures and, unlike the theo- ries we have described so far, focuses on pressures that are not necessarily adaptive. In fact, many institutional theorists try to highlight the ways corporate behaviors sometimes seem to be performance oriented but are really guided by unquestioned social norms and conformity.

The most obvious institutional factors come from regulatory pressures; certain industries under government contracts, for instance, must have clear reporting relation- ships and strict information controls. Sometimes simple inertia determines an organi- zational form—companies can be structured in a particular way just because that is the way things have always been done, or what others are doing. Organizations in countries

Institutions Cultural factors, especially those factors that might not lead to adaptive consequences, that lead many organiza- tions to have similar structures.

Abundant

Stable

Dynamic

ComplexSimple

Scarce

EXHIBIT 15-8 The Environment Along Three Dimensions

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with high power distance might have a structural form with strict authority relationships because it is seen as more legitimate in that culture. Some have attributed problems in adaptability in Japanese organizations to the institutional pressure to maintain authority relationships.

ORGANIZATIONAL DESIGNS AND EMPLOYEE BEHAVIOR

A review of the evidence on how organizational designs affects employees leads to a clear conclusion:130 You cannot generalize! Not everyone prefers the freedom and flex- ibility of organic structures. Several factors stand out in different structures as well. In highly formalized, heavily structured, mechanistic organizations, the level of fairness in formal policies and procedures (organizational justice) is a very important predictor of satisfaction. In more personal, individually adaptive organic organizations, employees value interpersonal justice more.131 Some people are most productive and satisfied when work tasks are standardized and ambiguity is minimized—that is, in mechanistic struc- tures. So, any discussion of the effect of organizational design on employee behavior must address individual differences.132

Span of Control

It is probably safe to say no evidence supports a relationship between span of control and employee satisfaction or performance. Although it is intuitively attractive that large spans might lead to higher employee performance because they provide more distant supervi- sion and more opportunity for personal initiative, research fails to support this notion.133 Some people like to be left alone; others prefer the security of a boss who is always quickly available. Consistent with several of the contingency theories of leadership dis- cussed in the leadership chapter, we would expect factors such as employees’ experiences and abilities, and the degree of structure in their tasks, to explain when wide or narrow spans of control are likely to contribute to performance and job satisfaction. However, some evidence indicates that a manager’s job satisfaction increases as the number of employees supervised increases.134

Centralization

We find fairly strong evidence linking centralization and job satisfaction.135 In general, less centralized organizations have a greater amount of autonomy, and autonomy appears positively related to job satisfaction. But again, while one employee may value freedom, another may find autonomous environments frustratingly ambiguous.

Predictability Versus Autonomy

We can draw one obvious insight: People do not select employers randomly. They are attracted to, are selected by, and stay with organizations that suit their personal character- istics.136 Thus, the effect of structure on employee behavior is undoubtedly reduced when the selection process facilitates proper matching of individual characteristics with orga- nizational characteristics. Furthermore, companies should strive to establish, promote, and maintain the unique identity of their structures since skilled employees may quit as a result of dramatic changes.137

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National Culture

Research suggests national culture influences the preference for structure.138 Organizations that operate with people from high power-distance cultures, such as Greece, France, and most of Latin America, often find their employees are much more accepting of mechanistic structures than are employees from low power-distance coun- tries. So, consider cultural differences along with individual differences when predicting how structure will affect employee performance and satisfaction.

SUMMARY

The theme of this chapter is that an organization’s internal structure contributes to ex- plaining and predicting behavior. That is, in addition to individual and group factors, the structural relationships in which people work have a bearing on employee attitudes and behavior. What is the basis for this argument? To the degree that an organization’s structure reduces ambiguity for employees and clarifies concerns such as “What am I supposed to do?” “How am I supposed to do it?” “To whom do I report?” and “To whom do I go if I have a problem?” it shapes their attitudes and facilitates and motivates them to higher levels of performance.

IMPLICATIONS FOR MANAGERS

• Design the structure of your organization, unit, or team so that it follows strategy, supports execution, and elicits desired behaviors and outcomes. In other words, your structure should be purpose driven.

• Consider the design features that relate to specialization, departmentalization, au- thority, formalization, and boundary spanning to implement your strategy.

• There are several common organizational structures that you can implement, and most organizations today use hybrid structures with a matrix format. However, you should always match your decision to your strategy (for example, flatter organiza- tions tend to elicit more innovation) and what you expect to encounter in the orga- nization’s environment (e.g., scarcity, volatility, complexity).

• Downsize only if necessary, because downsizing can have a significant negative impact on employee attitudes/motivation and customer perceptions.

• Generally, aim for an organic structure if your strategy prioritizes innovation, a mechanistic structure if your strategy prioritizes cost minimization, and a combina- tion of the two if your strategy prioritizes imitation.

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298298

Organizational Culture 16

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

16.1 Describe the common characteristics of organizational culture.

16.2 Show how culture is transmitted to employees.

16.3 Identify the factors that create and sustain an organization’s culture.

16.4 Compare the functional and dysfunctional effects of organizational culture on people and the organization.

16.5 Describe the similarities and differences in creating an ethical culture, a positive culture, and a spiritual culture.

16.6 Show how national culture can affect the way organizational culture is interpreted in another country.

WHAT IS ORGANIZATIONAL CULTURE?

Would you spend $10,000 on a guitar without even playing it? Customers of Chicago- based Reverb.com, an online musical instrument marketplace, are willing to do so. Why do they keep coming back, rather than going to competitors such as eBay? The answer may be found in its organizational culture.1

We have all felt an indescribable essence about the organizations we have experi- enced. This pervasive atmosphere can have a strong and measurable impact on behavior. Reverb.com has created an organization and a brand, founded on a passion for music and a drive to create a wonderful customer experience for musicians. Employees and custom- ers alike share values, beliefs, and traditions centered around music and its performance.2 As you will see in this chapter, organizational culture can have a profound effect on orga- nizational effectiveness. Notably, 88 percent of millennials surveyed by Gallup (a polling company) stated that they would remain in their jobs for more than five years if they were satisfied with the company’s purpose, or mission.3

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A Definition of Organizational Culture

Organizational culture refers to a system of shared meaning held by members that distinguishes the organization from other organizations.4 This system of shared mean- ing includes values, beliefs, material symbols, and assumptions that characterize the organization.5 These values, beliefs, and assumptions, when put into practice, (1) filter what employees pay attention to, (2) are physically manifested as material symbols (for example, uniforms, statues) and stories, and (3) form the foundation for shared meaning amongst members of an organization.6

Organizational culture shows how employees perceive the essence of an organiza- tion, not whether they like them—that is, it is a descriptive term. Research on organi- zational culture has sought to measure how employees see their organization: Does it encourage teamwork? Does it reward innovation? Does it stifle initiative? In contrast, job satisfaction is an evaluative term: it seeks to measure how employees feel about the organization’s expectations, reward practices, and the like. See Exhibit 16-1 for a contrast of two companies with very different organizational cultures.

Organizational culture A system of shared meaning held by members that distinguishes the organization from other organizations. This system is char- acterized by values, beliefs, and underly- ing assumptions that serve several purposes.

Organization A

This organization is a manufacturing firm. Managers are expected to fully document all deci- sions, and “good managers” are those who can provide detailed data to support their rec- ommendations. Creative decisions that incur significant change or risk are not encouraged. Because managers of failed projects are openly criticized and penalized, managers try not to implement ideas that deviate much from the status quo. One lower-level manager quoted an often-used phrase in the company: “If it ain’t broke, don’t fix it.”

There are extensive rules and regulations in this firm that employees are required to fol- low. Managers supervise employees closely to ensure there are no deviations. Management is concerned with high productivity, regardless of the impact on employee morale or turnover.

Work activities are designed around individuals. There are distinct departments and lines of authority, and employees are expected to minimize formal contact with other employees outside their functional area or line of command. Performance evaluations and rewards emphasize individual effort, although seniority tends to be the primary factor in the deter- mination of pay raises and promotions.

Organization B

This organization is also a manufacturing firm. Here, however, management encourages and rewards risk taking and change. Decisions based on intuition are valued as much as those that are well rationalized. Management prides itself on its history of experimenting with new technologies and its success in regularly introducing innovative products. Managers or employees who have a good idea are encouraged to “run with it.” And failures are treated as “learning experiences.” The company prides itself on being market driven and rapidly responsive to the changing needs of its customers.

There are few rules and regulations for employees to follow, and supervision is loose because management believes that its employees are hardworking and trustworthy. Management is concerned with high productivity but believes that this comes through treating its people right. The company is proud of its reputation as being a good place to work.

Job activities are designed around work teams, and team members are encouraged to interact with people across functions and authority levels. Employees talk positively about the competition between teams. Individuals and teams have goals, and bonuses are based on achievement of these outcomes. Employees are given considerable autonomy in choosing the means by which the goals are attained.

EXHIBIT 16-1 Contrasting Organizational Cultures

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Organizational cultures are extremely difficult to define and characterize, and over the years, many people sought to understand the meaning of culture in organizations.7 Many have asked, do organizations have cultures? These researchers have tried to figure out what makes cultures different from one another. Still others have asked, what are organizations’ cultures? These researchers are more concerned with describing specific cultures and understanding what makes one particular organization tick. As an example, followers of the have perspective might try to figure out what values and beliefs that descriptively separate Reverb.com from, say, eBay. On the other hand, followers of the are perspective would only try to understand what Reverb.com is, for what it is, by study- ing the stories, rituals, material symbols, and language used at Reverb.com. Notably, these latter forms (described later in the next section) are notoriously hard to measure and interpret. Although sometimes observable by outsiders, they tap into deep underlying assumptions that are sometimes only capable of being fully grasped and experienced by an “insider.”8

Regardless of the many ways of conceptualizing varying “types” of culture by val- ues or beliefs, one of the most common frameworks describes organizational cultures as possessing several competing values.9

• “The Clan.” A culture based on human affiliation. Employees value attachment, collaboration, trust, and support.

• “The Adhocracy.” A culture based on change. Employees value growth, variety, attention to detail, stimulation, and autonomy.

• “The Market.” A culture based on achievement. Employees value communica- tion, competence, and competition.

• “The Hierarchy.” A culture based on stability. Employees value communication, formalization, and routine.

The differences between these cultures are reflected in their internal versus exter- nal focus and their flexibility and stability.10 For instance, clans are internally focused and flexible, adhocracies are externally focused and flexible, markets are externally focused and stable, and hierarchies are internally focused and stable. Reviews of hun- dreds of studies have helped summarize the findings on the cultures from the competing values framework.11 As shown in Exhibit 16-2, the various cultures differ regarding how they influence organizational outcomes. Although we note that many of these outcomes are also heavily influenced by leadership and organizational structure (see their respec- tive chapters for more information), culture adds more to the picture than leadership or structure. A strategic approach to culture would suggest that cultures would ideally match one’s objectives. Although most cultures have a positive effect on employee attitudes, performance, innovation, product/service quality, and operational efficiency, it is clear that a clan or market culture is perhaps best aligned with customer-oriented outcomes and that a hierarchical culture is best for profitability and revenue growth.

Although the competing values approach is one of the most frequently studied ways of examining organizational culture, other frameworks have been introduced. For example, the Organizational Culture Inventory groups cultures into three categories: (1) constructive cultures that value affiliation, encouragement, and achievement; (2) passive-defensive cultures that avoid accountability, seek validation and approval from others, and are conventional; and (3) aggressive-defensive cultures that are competitive, perfectionist, and power-oriented.12

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Another widely used framework is the Organizational Culture Profile (OCP).13 The OCP draws upon a novel survey method in which employees sort a set of values based on how closely they represent their organization. The OCP suggests an organi- zational culture can be described by eight dimensions: (1) innovation, (2) attention to detail, (3) decisiveness, (4) team orientation, (5) outcome orientation, (6) aggressiveness, (7) supportiveness, and (8) rewards emphasis.

Do Organizations Have Uniform Cultures?

Organizational culture represents a perception that the organization’s members hold in com- mon. Statements about organizational culture are valid only if individuals with different backgrounds or at different levels in the organization describe the culture in similar terms.14

The dominant culture expresses the core values most members share and that give the organization its distinct personality.15 Subcultures tend to develop in large orga- nizations in response to common problems or experiences a group of members face in the same department or location.16 Most large organizations have a dominant culture and numerous subcultures.17 Sometimes the subcultures can be so strong, however, that they subtly reject the “official” culture and do not conform.18 If organizations were composed only of subcultures, the dominant organizational culture would be significantly less pow- erful. It is this “shared meaning” aspect of culture (in both dominant and subcultures) that makes it a potent device for guiding and shaping behavior. Subcultures have even been detected at the country or nation level, with subcultures forming because of immigration, assimilation of new immigrants, or class differences amongst the people.19

Strong Versus Weak Cultures

It is possible to differentiate between strong and weak cultures.20 If most employees (responding to surveys) have the same opinions about the organization’s mission and values, the culture is strong; if opinions vary widely, the culture is weak.

Dominant culture A culture that expresses the core values that are shared by most of the orga- nization’s members.

Core values The primary or domi- nant values that are accepted throughout the organization.

Subcultures Minicultures within an organization, typically defined by department designa- tions or geographical separation.

EXHIBIT 16-2 The Effect of Culture on Organizational Outcomes

Note: + corresponds with a positive effect on the outcome, - corresponds with a negative ef- fect on the outcome, 0 corresponds with a zero, or null, effect on the outcome, * suggests the culture is strongly related to the outcome.

Sources: Based on findings from C. A. Hartnell, A. Y. Ou, A. J. Kinicki, D. Choi, and E. P. Karam, “A meta-analytic test of organizational culture’s association with elements of an organization’s system and its relative predictive validity on organizational outcomes,” Journal of Applied Psychology 104, no. 6 (2019): 832–850.

Culture Employee Attitudes

& Performance Innovation High Quality Products/Services

& Operational Efficiency Customer Satisfaction

& Market Share Profitability &

Revenue Growth

Clan +* +* 0 +* -

Adhocracy +* + +* - 0

Market 0 + +* +* 0

Hierarchy +* - +* 0 +*

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In a strong culture, the organization’s core values are both intensely held and widely shared.21 The more members who accept the core values and the greater their commitment, the stronger the culture and the greater its influence on member behavior. David Rodriguez, Marriott executive vice president and chief human resources officer, emphasizes that it really is the people who forge a strong culture: “If you don’t have the courage and wisdom to release control of the culture to your associates and employees, it won’t work.” Instead, Marriott enlists the help of over 15,000 volunteer employees to champion the company’s culture.22

A strong culture should reduce employee turnover because it demonstrates high agree- ment about what the organization represents. Such unanimity of purpose builds cohesive- ness, loyalty, and organizational commitment. These qualities, in turn, lessen employees’ propensity to leave. Indeed, a study of nearly 90,000 employees from 137 organizations found that culture strength or consistency was related to numerous financial outcomes when there was a strong sense of mission and high employee involvement.23 A strong culture has enabled companies like Ace Hardware to thrive in an extremely competitive market, a market in which many other companies have folded or declared bankruptcy.24

HOW EMPLOYEES LEARN CULTURE

Culture is transmitted in several forms, the most potent being stories, rituals, material symbols, and language.

Stories

When Henry Ford II was chairman of Ford Motor Company, you would have been hard pressed to find a manager who had not heard how he reminded his executives when they got too arrogant, “It’s my name that’s on the building.” The message was clear: Henry Ford II ran the company.

Today, several senior Nike executives spend much of their time serving as corporate storytellers.25 When they tell how cofounder (and Oregon track coach) Bill Bowerman went to his workshop and poured rubber into a waffle iron to create a better running shoe, they are talking about Nike’s spirit of innovation. The elderly man running in their first commercial in 1988 marks the first use of their slogan “just do it,” and continues the story that anyone, despite their differences, can strive for and achieve their athletic goals.26

Stories such as these circulate through many organizations, anchoring the present to the past and legitimizing current practices.27 They typically include narratives about the organization’s founders, rule breaking, rags-to-riches successes, workforce reduc- tions, relocations of employees, reactions to past mistakes, and organizational coping.28 Employees also create their own narratives about how they came to either fit or not fit with the organization during the process of socialization, including first days on the job, early interactions with others, and first impressions of organizational life.29

Rituals

Rituals are repetitive sequences of activities that express and reinforce the key values of the organization—what goals are most important and/or which people are important ver- sus which are expendable.30 Some companies have nontraditional rituals to help support the values of their cultures. Kimpton Hotels & Restaurants, one of Fortune’s 100 Best

Strong culture A culture in which the core values are intensely held and widely shared.

Rituals Repetitive sequences of activities that express and reinforce the key values of the organization, which goals are most impor- tant, which people are important, and which are expendable.

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Companies to Work For, maintains its customer-oriented culture with traditions like a Housekeeping Olympics that includes blindfolded bedmaking and vacuum races.31 Some companies have also been using rituals to “convert” potential customers, clients, and inves- tors. For example, Ontario cool climate wineries have been using rituals in order to inspire and rouse emotional experiences among wine enthusiasts to identify with the winery and their product.32 Why do rituals work in reinforcing values and placating supervisors, employees, and customers alike? Recent research suggests that rituals work because they inspire a sense of control in their participants and, as a result, reduce anxiety.33

Symbols

The layout of corporate headquarters, the types of automobiles top executives are given, and the presence or absence of corporate aircraft are a few examples of material symbols, sometimes also known as artifacts.34 Others include the size of offices, the elegance of furnishings, perks, and attire.35 These convey to employees who is important, the degree of egalitarianism top management desires, and the kinds of behavior that are appropriate, such as risk taking, conservative, authoritarian, participative, individualistic, or social behavior. Material symbols also offer a sense of connection and stir emotions in employees who make sense of the symbols.36

At some firms, like Chicago shirt maker Threadless, an “anything goes” atmo- sphere helps emphasize a creative culture. Threadless meetings are held in an Airstream camper parked inside the company’s converted FedEx warehouse, while employees in shorts and flip-flops work in bullpens featuring disco balls and garish decorations chosen by each team.37 As another example, the Palo Alto office of IDEO has an airplane wing sticking out of one of the walls—which may symbolize IDEO’s playful experimentation and free expression values.38

Some cultures are known for the perks in their environments, such as Google’s bocce courts, FACTSET Research’s onsite pie/cheese/cupcake trucks, software designer Autodesk’s bring-your-dog office, SAS’s free health care clinic, Microsoft’s organic spa, and adventure-gear specialist REI’s free equipment rentals. Other companies communi- cate the values of their cultures through the gift of time to think creatively, either with leaders or offsite. For instance, Biotech leader Genentech and many other top compa- nies provide paid sabbaticals. Genentech offers every employee six weeks’ paid leave for every six years of service to support a culture of equitability and innovative thinking.39

Language

Many organizations and subunits within them use language to help members identify with the culture, attest to their acceptance of it, and help preserve it.40 Unique terms describe equipment, officers, key individuals, suppliers, customers, or products that relate to the business. New employees may at first be overwhelmed by acronyms and jargon that, once assimilated, act as a common denominator to unite members of a given culture or subculture. As an idea of how expansive the terminology used in the U.S. government is, one librarian created a comprehensive dictionary and guide (GovSpeak) to non-military acronyms, abbreviations, and terms.41

Despite providing a unique, descriptive window into the culture of organizations, values and beliefs can be conveyed through stories, rituals, material symbols, and lan- guage. For example, in one study of Fortune 500 mission statements, organizations that

Material symbols Physical objects, or artifacts, that symbol- ize values, beliefs, or assumptions inherent in the organization’s culture.

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communicated that they believe people can grow and improve tended to have more posi- tive culture ratings on Glassdoor than companies that believe people do not change. In subsequent studies of employees at Fortune 1000 companies, this perception of culture impacted employee trust and commitment.42

CREATING AND SUSTAINING CULTURE

An organization’s culture does not pop out of thin air, and once established it rarely fades away. What influences the creation of a culture? What reinforces and sustains it once in place?

How a Culture Begins

An organization’s customs, traditions, and general way of doing things are largely due to what it has done before and how successful it was in doing it. This leads us to the ultimate source of an organization’s culture: the founders.43 Founders have a vision of what the organization should be, and a firm’s initially small size makes it easy to enact that vision with all members.

Culture creation occurs in three ways.44 First, founders hire and keep only employees who think and feel the same way they do. Second, they socialize employees to their way of thinking and feeling. And finally, the behavior of the founder(s) encourages employees to identify with them and internalize their beliefs, values, and assumptions. When the organi- zation succeeds, the personality of the founder(s) becomes embedded in the culture.

For example, the fierce, competitive style and disciplined, authoritarian nature of Hyundai, the giant Korean conglomerate, exhibits the same characteristics often used to describe founder Chung Ju-Yung.45 Other founders with sustaining impact on their organi- zation’s culture include Bill Gates at Microsoft, Ingvar Kamprad at IKEA, Herb Kelleher at Southwest Airlines, Fred Smith at FedEx, and Richard Branson at the Virgin Group.

Exhibit 16-3 summarizes how an organization’s culture is established and sus- tained. The original culture derives from the founders’ philosophy and strongly influ- ences hiring criteria as the firm grows.46 The success of socialization depends on the deliberateness of matching new employees’ values to those of the organization in the selection process and on top management’s commitment to socialization programs. Top managers’ actions signal what is valued, including what is acceptable behavior and what is not, thus directly influencing the socialization process and the culture.47 The culture then becomes linked and entrenched within the organizational structures and systems and is perpetuated by leadership. In the most comprehensive study of organizational culture to-date (an impressive study of more than 500,000 employees from over 26,000 organiza- tions), culture was found to be strongly related to the current leadership, practices, and structures that comprise the organization.48

Philosophy of organization’s

founders

Selection criteria

Organizational culture

Socialization

Top management

EXHIBIT 16-3 How Organizational Cultures Form

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Keeping a Culture Alive

Once a culture is in place, practices within the organization maintain it by giving employ- ees a set of similar experiences.49 The selection process, performance evaluation criteria, training and development activities, and promotion procedures ensure those hired fit in with the culture, reward those employees who support it, and penalize (or even expel) those who challenge it.50 Three forces play a particularly important part in sustaining a culture: selection practices, actions of top management, and socialization methods (e.g., onboarding, teaching, and including new employees).

SELECTION The explicit goal of the selection process is to identify and hire individuals with the knowledge, skills, and abilities to perform successfully. The final decision, because it is significantly influenced by the decision maker’s judgment of how well candidates will fit into the organization, identifies people whose values are consistent with at least a good portion of the organization’s.51 The selection process also provides information to applicants. Those who perceive a conflict between their values and those of the organization may remove themselves from the applicant pool or even fake their way into the organization by feigning that they share the organization’s values.52 Selection thus becomes a two-way street, with both employers and applicants as active participants in determining the value fit between the applicant and the organization. For example, in W. L. Gore & Associate’s selection process, teams put job applicants through extensive interviews to ensure that they can deal with the level of uncertainty, flexibility, and teamwork that is normal in Gore plants. Not surprisingly, W. L. Gore appears regularly on Fortune’s list of “100 Best Companies to Work For” (number eighty-three in 2020) partially because of its selection process emphasis on culture fit.53

TOP MANAGEMENT The actions of top management have a major impact on the organization’s culture.54 Through words and behavior, senior executives establish norms that filter through the organization about, for instance, whether risk taking is desirable; how much freedom managers give employees; the uniforms employees should wear; and what behavior is desired and rewarded. Interestingly, research on hundreds of CEOs and top management team members suggests that organizational culture and leadership can be complementary: It is not always best if they focus on the same values.55 In other words, one can fill in where the other fails.

SOCIALIZATION No matter how good a job the organization does in recruitment and selection, new employees need help adapting to the prevailing culture. This help comes in the form of socialization.56 Socialization can help alleviate the problem many employees report when their new jobs are different than they expected. For example, Clear Channel Communications, Facebook, Google, and other companies are adopting fresh onboarding (new hire assimilation) procedures, including assigning “peer coaches,” holding socializing events, personalizing orientation programs, and giving out immediate work assignments. “When we can stress the personal identity of people, and let them bring more of themselves at work, they are more satisfied with their job and have better results,” researcher Francesca Gino of Harvard said.57

We can think of socialization as a process with three stages: prearrival, encounter, and metamorphosis.58 This process, shown in Exhibit 16-4, has an impact on the new employee’s work productivity, commitment to the organization’s objectives, and decision to stay with the organization.

Socialization A process that enables new employ- ees to acquire the social knowledge and necessary skills in order to adapt to the organization’s culture.

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1. Prearrival stage. The prearrival stage recognizes that everyone arrives with a set of values, attitudes, and expectations about both the work and the organization. One major purpose of a business school, for example, is to socialize students to the attitudes and behaviors companies want. Newcomers to high-profile organizations with strong market positions have their own assumptions about what it is like to work there.59 Most new recruits will expect Nike to be dynamic and exciting and a stock brokerage firm to be high in pressure and rewards. How accurately people judge an organization’s culture before they join the organization, and how positive, adaptive, and proactive their personalities are, become critical predictors of how well they adjust.60

2. Encounter stage. The selection process can help inform prospective employees about the organization. Upon entry into the organization, the new member enters the encounter stage and confronts the possibility that expectations—about the job, coworkers, boss, and organization in general—may differ from reality.61 If expec- tations were accurate, this stage merely cements earlier perceptions. However, this is not often the case. At the extreme, a new member may become disillusioned enough to resign. Proper recruiting and selection should significantly reduce this outcome, along with encouraging friendship ties in the organization—newcomers are more committed when friendly coworkers help them “learn the ropes.”62 For better or worse, learning, unlearning, and relationship building are key during this stage:63 If newcomers are not proactive enough in learning about the organization and helping out where they can, if supervisors and coworkers do not do their due diligence in socializing the newcomer and fulfilling promises made during recruit- ment, or if the exchange between the newcomer and the employees is not good, newcomers may become disillusioned.64 However, it is also possible for undesir- able behaviors that may be an aspect of the organization’s culture such as CWBs to be transmitted to employees during the encounter stage. For example, one study of manufacturing sales departments in southern China found employees may model undesirable behaviors, such as heavy drinking with clients, that may result in in- creased work-family conflict and turnover risk over time.65

3. Metamorphosis stage. Finally, to work out any problems discovered during the encounter stage, the new member changes or goes through the metamorphosis stage.66 The options presented in Exhibit 16-5 are alternatives designed to bring about metamorphosis. Most research suggests two major “bundles” of socialization practices.67 The more management relies on formal, collective, fixed, and serial socialization programs while emphasizing divestiture, the more likely newcomers’ differences will be stripped away and replaced by standardized predictable

Prearrival stage The period of learning in the socialization process that occurs before a new employee joins the organization.

Encounter stage The stage in the socialization process in which a new employee sees what the organization is really like and con- fronts the possibility that expectations and reality may diverge.

Metamorphosis stage The stage in the socialization process in which a new employee changes and adjusts to the job, workgroup, and organization.

Commitment

Socialization process Outcomes

Turnover

Productivity

Prearrival Encounter Metamorphosis

EXHIBIT 16-4 A Socialization Model

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behaviors. These institutional practices are common in police departments, fire departments, and other organizations that value rule following and order. Programs that are informal, individual, variable, and random while emphasizing investiture are more likely to give newcomers a sense of their roles and methods of working. Creative fields such as research and development, advertising, and filmmaking rely on these individual practices.68 Most research suggests that high levels of institu- tional practices encourage person–organization fit, high levels of commitment, and improved role clarity, whereas individual practices produce more role innovation, improve motivation, and lead to social integration.69

Researchers examine how employee attitudes change during socialization by mea- suring it at several time points over the first few months. Several studies have now docu- mented patterns of “honeymoons” and “hangovers” for new workers, showing that the period of initial adjustment is often marked by decreases in job satisfaction as idealized hopes come into contact with the reality of organizational life.70 Newcomers may find that the level of social support they receive from supervisors and coworkers is gradu- ally withdrawn over the first few weeks on the job, as everyone returns to “business as usual.”71 Role conflict and role overload may rise for newcomers over time, and workers with the largest increases in these role problems experience the largest decreases in com- mitment and satisfaction.72 It may be that the initial adjustment period for newcomers presents increasing demands and difficulties, at least in the short term. What can super- visors and coworkers do to address “hangovers”? Research suggests that “too many” socialization practices can make things worse but providing a great deal of social support helps newcomers deal with their increasing demands and decreasing attitudes.73

Formal Versus Informal The more a new employee is segregated from the ongoing work setting and differentiated in some way to make explicit their newcomer’s role, the more socialization is formal. Specific orientation and training programs are examples. Informal socialization puts the new employee directly into the job, with little or no special attention.

Individual Versus Collective New members can be socialized individually. This describes how it is done in many professional offices. They can also be grouped together and processed through an identical set of experiences, as in military boot camp.

Fixed Versus Variable This refers to the time schedule in which newcomers make the transition from outsider to insider. A fixed schedule establishes standardized stages of transition. This characterizes rotational training programs. It also includes probationary periods, such as the eight- to ten-year “associate” status used by accounting and law firms before deciding on whether or not a candidate is made a partner. Variable schedules give no advance notice of their transition timetable. Variable schedules describe the typical promotion system, in which one is not advanced to the next stage until one is “ready.”

Serial Versus Random Serial socialization is characterized by the use of role models who train and encourage the newcomer. Apprenticeship and mentoring programs are examples. In random socialization, role models are deliberately withheld. New employees are left on their own to figure things out.

Investiture Versus Divestiture Investiture socialization assumes that the newcomer’s qualities and qualifications are the necessary ingredients for job success, so these qualities and qualifications are confirmed and supported. Divestiture socialization tries to strip away certain characteristics of the recruit. Fraternity and sorority “pledges” go through divestiture socialization to shape them into the proper role.

EXHIBIT 16-5 Entry Socialization Options

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WHAT DO CULTURES DO? The Functions of Culture

Culture defines “the rules of the game.” First, it has a boundary-defining role: It creates distinctions between organizations. Second, it conveys a sense of identity for organization members. Third, culture facilitates commitment to something larger than individual self- interest. Fourth, it enhances the stability of the social system. Culture is the social glue that helps hold the organization together by providing standards for what employees should say and do. Finally, it is a sense-making and control mechanism that guides and shapes employees’ attitudes and behavior. This last function is of interest to us in the study of OB.74

A strong culture ensures employees will act in a relatively uniform and predictable way. For example, research has shown that a positive organizational culture improves employee job attitudes and, as such, bolsters talent attraction and retention.75 As another example, a study of the top 100 Taiwanese financial enterprises in 2005 demonstrated that those companies that valued innovation as a component of their culture were able to learn more and more quickly in order to drive innovation.76

Today’s trend toward decentralized organizations makes culture more impor- tant than ever, but ironically, it also makes establishing a strong culture more difficult. When formal authority and control systems are reduced through decentralization, cul- ture’s shared meaning can point everyone in the same direction. Decentralization also highlights the role climate plays in linking organizational culture to organizational and employee outcomes.

Culture Creates Climate

Organizational climate refers to the shared perceptions organizational members have about their organization’s policies, procedures, and practices.77 Although it may appear difficult on the surface to distinguish organizational culture from climate, culture and climate are “two crucial building blocks for organizational description.”78 In our discus- sion of culture so far, we have referred to culture as something that is difficult to measure and somewhat esoteric. For instance, an employee of an organization for many years may have a much better understanding of an organization’s culture than someone who just found out about the organization. Today, researchers agree that organizational climate represents the more readily observable “behavioral evidence” for an organization’s cul- ture.79 It directly links what the organization values and believes with explicit practices, policies, and procedures. In other words, it puts the “what we believe and value” (like what you would find in a mission statement) and links it to what employees perceive is actually supported, rewarded, and practiced. If an organization is like an onion, the cul- ture is at the core, and the climates are on the surface layers.

An example might help illustrate this culture–climate distinction.80 Let us say the captain of a cargo ship was running behind in departing from port. The captain tried to increase speed and take a more direct course to make up for the delay. On its way to the destination, the ship ran aground and was damaged, and thousands of dollars in expen- sive cargo was damaged. If we were to interview the captain, the captain might say, “I feel a tremendous sense of pressure to make sure the cargo gets to where it needs to be on time. Our company values timeliness above everything else, and top management con- stantly reiterates this to us.” These statements reflect the underlying value of timeliness

Organizational climate The shared percep- tions organizational members have about their organization’s policies, procedures, and practices.

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that underlies the company’s culture. “Besides, we are rewarded for getting to the port on time, policy permits us to increase speed and alter routes to get to port on time, and every other captain I work with at this company makes similar decisions when we’re run- ning behind!” These statements reflect the policies, practices, and procedures that reflect a timeliness climate. At the same time, when asked about safety, the captain’s shoulder shrug and “it’s just not important to them” says a lot. An organization with a strong safety culture (valuing safety and believing safety matters) and a strong safety climate (prohibiting speed and direction changes, incorporating technology to detect and prevent collisions, using proper safety equipment, and requiring safety training for captains) may have avoided this incident altogether.

Dozens of dimensions of climate have been studied, including innovation, creativ- ity, communication, warmth and support, involvement, safety, justice, diversity, and cus- tomer service.81 For example, strong safety climates (like the one described earlier) lead to high levels of job satisfaction, organizational commitment, and healthier employees.82 Climate influences the habits people adopt. In an organization with a strong safety cli- mate, everyone wears safety gear and follows safety procedures even if individually they would not normally think very often about being safe—indeed, many studies have shown that a safety climate decreases the number of documented injuries on the job.83 In gen- eral, one meta-analysis found that across dozens of different samples, positive climates (e.g., innovation, warmth and support, etc.) were strongly related to individuals’ levels of job satisfaction, involvement, commitment, and motivation.84 Positive workplace cli- mates have also been linked to higher customer satisfaction and organizational financial performance.85

Exhibit 16-6 depicts the impact of organizational culture. Employees form an over- all subjective perception of the organization based on leader and member behaviors, the organizational structure, and the organization’s values and beliefs as well as artifacts, sto- ries, and symbols. This overall perception represents, in effect, the organization’s culture, which varies in its strength (or degree to which others perceive the culture in the same way). The culture is then revealed through organizational climates, which manifest the culture’s underlying values and beliefs. The climates then affect employee performance and satisfaction, along with other outcomes relevant to organization.

In the following sections, we describe several cultures (and their corresponding climates) that affect attitudes and behavior in organizations.

Strength

Perceived as Organizational Climate

Observed factors • Leader and member behaviors • Organizational structure • Organizational mission, values, beliefs • Organizational artifacts, stories, symbols

Organizational culture

Performance

Satisfaction

High

Low

EXHIBIT 16-6 How Organizational Cultures Have an Impact on Employee Performance and Satisfaction

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The Ethical Dimension of Culture

Organizational cultures are not neutral in their ethical orientation, even when they are not openly pursuing ethical goals. Ethical culture develops over time as the shared concept of right and wrong behavior in the workplace. Ethical culture reflects the true values of the organization and shapes the ethical decision making of its members.86 Research on public sector organizations in Finland suggests that ethical culture is important for orga- nizations to reduce employee burnout and bolster employee engagement, in both manag- ers and employees.87

Researchers have developed ethical climate theory (ECT) to measure the shared perceptions of ethical policies, practices, and procedures.88 Ethical climates are heavily influenced by the values and beliefs leaders hold about ethical behavior as well as the col- lective sense of identity people forge around their shared ethics89 manual. Organizations often progress through different categories as they move through their business life cycle.

An organization’s ethical climate powerfully influences the way its individual members feel they should behave, so much so that researchers have been able to predict organizational outcomes.90 Ethical climates that emphasize self-interest are negatively associated with employee job satisfaction and organizational commitment, even though those climates appeal to helping oneself vs. others. These climates are also positively associated with turnover intentions, workplace bullying, and deviant behavior.91 Ethical climates that emphasize caring for one another and establishing rules may bring greater job satisfaction, as well as reduce employee turnover intentions, workplace bullying, and dysfunctional behavior. Research also suggests ethical climates have a strong influence on sales growth over time when there is also a customer service climate to support it.92

Culture and Sustainability

Sustainability refers to maintaining practices over very long periods of time, because the tools or structures that support the practices are not damaged by the processes.93 Jeffrey Hollender created an organization that literally embodies the concept of sustainability: Seventh Generation. Founded in 1988, the company’s name is based on an Iroquois prov- erb: In our every deliberation, we must consider the impact of our decisions on the next seven generations.”94 The name serves as a symbol reflecting the value of sustainability to Seventh Generation. When we engage in business practices (e.g., enacting a sustainability climate), we do so sustainably when we ensure that our practices can be continued and that we use resources responsibly, minimizing waste, maximizing reusability, and ensuring continued efficiency. Social sustainability practices address the ways social systems are affected by an organization’s actions over time and, in turn, how changing social systems may affect the organization. Here, organizations should consider the effect of their labor practices on people over time, such as how job design (e.g., working hours) affects stress and health, how layoff policies and health insurance affect employees’ well-being, etc.96

One survey found that a great majority of executives saw sustainability as an important part of future success.97 Indeed, research has demonstrated that sustainability practices can affect organizations’ reputation, productivity, talent acquisition, retention, engagement, cost efficiency, innovation, and financial performance.98 Concepts of sus- tainable management have their origins in the environmental movement, so processes that are in harmony with the natural environment are encouraged. For example, farm- ers in Australia have been working collectively to increase water use efficiency, mini- mize soil erosion, and implement tilling and harvesting methods that ensure long-term

Ethical culture The shared concept of right and wrong behavior in the work- place that reflects the true values of the organization and shapes the ethical decision making of its members.

Sustainability Organization practices that can be sustained over a long period of time because the tools or structures that support them are not damaged by the processes.

H&M In September 2020, the French branch of multinational Swedish clothing company H&M announced a partnership with EcoTree, a non- profit organization concerned with promoting biodiversity. The deal involves supporting EcoTree in identifying places in France for various environmental initiatives. One of the planned projects includes planting nectar-producing bushes for bees to pollinate. H&M will fund the projects by selling paper bags for 15 eurocents, and the proceeds will go to EcoTree.95

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viability for their farm businesses.99 In a very different context, Siemens has a com- prehensive sustainability strategy that uses the United Nation’s sustainable development goals as a guideline, focusing on improving peoples’ health and well-being, taking action for clean energy and climate, as well as furthering education, peace, and justice across the globe.100 With such a comprehensive focus on sustainability, it is no wonder that Siemens was ranked in the Top Ten Most Sustainable Companies in the world in 2018, according to Forbes.101

To create a truly sustainable business, an organization must develop a long-term culture and put its values into practice through climate.102 In other words, there needs to be a sustainable system for creating sustainability! In one study, a company seeking to reduce energy consumption found that soliciting group feedback reduced energy use significantly more than simply issuing reading materials about the importance of conservation.103 In other words, talking about energy conservation and building the value into the organiza- tional culture resulted in positive employee behavioral changes. The leader plays a large role, too: In one study of British and Italian firms in the cultural/creative industry, leaders can engage in several behaviors to help build a sustainable culture.104 Like other cultural practices we have discussed, sustainability needs time and nurturing to grow.

Culture and Innovation

The most innovative companies are often characterized by their open, unconventional, collaborative, vision-driven, and accelerating cultures.105 Start-up firms often have inno- vative cultures because they are usually small, agile, and focused on solving problems in order to survive and grow. Consider ad agency Droga5, recently bought by Accenture. As a start-up, Droga5 sought to “redefine advertising, making it viral and into a union of marketing and entertainment instead of a ‘disruption model of uninvited guests’” (e.g., intrusive or annoying commercials, ad spots).106 Both Accenture and Droga5 have been listed on most innovative company lists, so the fit seemed to be a good one.107 Because of the similar organizational cultures, the two may be able to continue their start-up level of innovation. Research on companies such as these has found that innovation-friendly practices (support for new ideas, openness to change, and providing resources to be cre- ative) leads to boosts in creativity at work, the creation and implementation of novel ideas, and increased performance.108

At the other end of the start-up spectrum, consider Netflix. They went from a tra- ditional mail-order DVD service to video-on-demand, even when they were the leader in their already large business. Netflix embodies, as Gary Pisano (professor at Harvard) notes, the “no, it doesn’t have to be that way” culture. When others were predicting their downfall when trying to innovate while they already “had a good thing going,” they succeeded.109 Innovation can also come from subcultures. For example, during the 2013–2018 period, researchers at NASA’s Johnson Space Center documented a subcul- ture group that became known as the “Pirates.” They were known for directly opposing NASA’s early values of hierarchy, and revolutionizing the way employees ran mission control, resulting in an innovative and cost-focused culture.110

Culture as an Asset

As we have discussed, organizational culture can foster a positive environment, with organizational climates that put values in action. Culture can also significantly contribute to an organization’s bottom line in many ways.111

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One strong example can be found in the case of ChildNet.112 ChildNet is a nonprofit child welfare agency in Florida whose organizational culture was described as “grim” from 2000 (when one of its foster children disappeared) through 2007 (when the CEO was fired amid FBI allegations of fraud and forgery). “We didn’t know if we would have jobs or who would take over,” employee Maggie Tilelli said. However, after intense turn- around efforts aimed at changing the organizational culture, ChildNet became Florida’s top-ranked agency within four years and Workforce Management’s Optima award winner for General Excellence in 2012.

While ChildNet demonstrates how an organizational culture can positively affect outcomes, Dish Network illustrates the elusiveness of matching a particular culture to an industry or organization.113 By every measure, Dish Network is a business success story—it is the second-largest U.S. satellite TV provider and it has made its founder one of the richest men in the world. Yet Dish had been ranked as the worst U.S. company to work for at one point, and employees say that this is due to the culture. Employees recounted various practices that suggest undesirable climates, including arduous manda- tory overtime, fingerprint scanners to record work hours to the minute, public berating from leadership, management condescension and distrust, quarterly “bloodbath” layoffs, and no working from home. One employee advised another online, “You’re part of a poisonous environment . . . go find a job where you can use your talents for good rather than evil.”

At ChildNet, positive changes to the organization’s performance have been clearly attributed to the transformation of its organizational culture. Dish, on the other hand, may have succeeded despite its culture. We can only wonder how much more successful it could be if it reformed its toxic culture. There are many more cases of business success stories due to excellent organizational cultures than there are of success stories despite bad cultures, and almost no success stories because of bad ones. Research suggests that part of the reason why culture affects an organization’s performance is through customer satisfaction: One study of nearly one hundred automobile dealerships over a six-year timeframe found that a positive culture leads to improved sales performance because it increases customer satisfaction.114

Culture as a Liability

Culture can enhance organizational commitment and increase the consistency of employee behavior, which clearly benefits an organization. Culture is valuable to employ- ees too, because it spells out what is important. But we should not ignore the potentially dysfunctional aspects of culture, especially a strong one, on an organization’s effective- ness. Hewlett-Packard, once known as a premier computer manufacturer, rapidly lost market share and profits as dysfunction in its top management team trickled down, leav- ing employees disengaged, uncreative, unappreciated, or in a polarized environment.115 Let us unpack some of the major factors that signal a negative organizational culture, beginning with institutionalization.

INSTITUTIONALIZATION When an organization undergoes institutionalization—that is, it becomes valued for itself and not for the goods or services it produces—it takes on a life of its own, apart from its founders or members.116 Institutionalized organizations often do not go out of business even if the original goals are no longer relevant. Acceptable

Institutionalization A condition that occurs when an organization takes on a life of its own, apart from any of its mem- bers, and acquires immortality.

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modes of behavior become largely self-evident to members, and although this is not entirely negative, it does mean behaviors and habits go unquestioned, which can stifle innovation and make maintaining the organization’s culture an end in itself.

BARRIERS TO CHANGE Culture is a liability when shared values are not aligned with those that further the organization’s effectiveness. This is most likely when an organization’s environment is undergoing rapid change and its entrenched culture may no longer be appropriate.117 Consistency of employee behavior, which is an asset in a stable environment, may then burden the organization and make it difficult to respond to changes. Cultural change is possible, however.118 Consider the case of the joint auto plant where GM, whose workforce was struggling, teamed up with Toyota. Within just a year’s time, GM’s product quality increased, absenteeism dropped by 18 percent to near-zero levels, strikes stopped, counterproductive work behaviors were squelched, and employees passionately embraced the change.119

BARRIERS TO DIVERSITY Hiring new employees who differ from the majority in race, age, gender, disability, or other characteristics creates a paradox:120 Management wants to demonstrate support for the differences these employees bring to the workplace, but newcomers who wish to fit in are usually pressured to accept the organization’s core culture. Second, because diverse behaviors and unique strengths are likely to diminish as people assimilate, strong cultures can become liabilities when they effectively eliminate the advantages of diversity. Third, a strong culture that condones prejudice, supports bias, or becomes insensitive to differences can undermine formal corporate diversity policies or the positive effects of demographic diversity.121 It seems that these barriers to diversity can start at the community level: One study of nearly 150 retail bank locations in the United States found that the demographic composition of the community serves as an important signal in setting the diversity norms that are adopted and made part of an organization’s culture and climate.122Barriers to diversity can, in part, be addressed through cultures and climates of inclusion—by showing the organization values and enacts an inclusive environment, diversity may flourish within the organization, and employees may be more committed to the organization.123 On the other hand, people from various backgrounds may perceive the culture and climates differently, undermining the effect positive cultures and climates may have on organizational outcomes.124

TOXICITY AND DYSFUNCTIONS We have discussed cultures that generally cohere around a positive set of values and beliefs. This consensus can create a powerful forward momentum. However, coherence around negative and dysfunctional values in a corporation can produce downward forces that are equally powerful yet toxic. For example, research on 862 bank employees in about 150 branches of a large bank in the United States suggests that branch managers model conflict management styles, which then shape conflict cultures within each branch.125 Collaborative cultures (i.e., encouraging proactive, constructive, and collaborative conflict resolution) tended to increase the cohesion and satisfaction of the branch and decrease levels of burnout. Dominating cultures (i.e., encouraging active confrontation and aggressive competition among employees when there is conflict) tend to reduce branch cohesion and customer service performance. Avoidance cultures (i.e., those that passively avoid conflict) tended to be less creative.

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BARRIERS TO ACQUISITIONS AND MERGERS Historically, when management looked at acquisition or merger decisions, the key decision factors were potential financial advantage and product synergy. In recent years, cultural compatibility has become the primary concern.126 All things being equal, whether the acquisition works seems to have much to do with how well the two organizations’ cultures match up. When they do not mesh well, the organizational cultures of both become a liability to the whole new organization. A study conducted by Bain and Company found that 70 percent of mergers failed to increase shareholder values, and Hay Group found that more than 90 percent of mergers in Europe failed to reach financial goals.127 Considering this dismal rate of success, Lawrence Chia from Deloitte Consulting observed, “One of the biggest failings is people. The people at Company A have a different way of doing things from Company B . . . you can’t find commonality in goals.” For example, one employee (of a creative company acquired by a larger one), who was transplanted from the East Village to Wall Street (in New York City), suggested the move was “more than physical, representing the scrappy creative adolescent putting on a tie.”128 In order for mergers or acquisitions to be successful, cultural integration is essential, as well as flexibility and complementarity in employee skills (think back to the chapters on foundations of group behavior and understanding work teams and what we know about team diversity).129

INFLUENCING ORGANIZATIONAL CULTURE

As we discussed, the culture of an organization is set by its founders and is often difficult to change. It is true that the ideal scenario is a strong founder (or founders) who carefully plans the organization’s culture beforehand. That is seldom the case, though; organiza- tional culture usually grows organically over time. When we think of the development of culture as ongoing and conducted through each employee, we can see ways to increase the ethical, positive, and/or spiritual aspects of the environment, as discussed next.

Ethical Cultures

Despite differences across industries and cultures, ethical organizational cultures share some common values and processes.130 Therefore, managers can create a more ethical culture and more ethical climates by adhering to the following principles:131

• Be a visible role model. Employees will look to the actions of top management as a benchmark for appropriate behavior, but everyone can be a role model to posi- tively influence the ethical atmosphere. Send a positive message.

• Communicate ethical expectations. Whenever you serve in a leadership capacity, minimize ethical ambiguities by sharing a code of ethics that states the organiza- tion’s primary values and the judgment rules employees must follow.

• Provide ethical training. Set up seminars, workshops, and training programs to reinforce the organization’s standards of conduct, clarify what practices are permis- sible, and address potential ethical dilemmas.

• Visibly reward ethical acts and punish unethical ones. Evaluate subordinates on how their decisions measure up against the organization’s code of ethics. Review the means as well as the ends. Visibly reward those who act ethically and conspicu- ously punish those who do not.

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• Provide protective mechanisms. Seek formal mechanisms so everyone can dis- cuss ethical dilemmas and report unethical behavior without fear of reprimand. These might include identifying ethical counselors, ombudspeople, or ethical of- ficers for liaison roles.

A widespread positive ethical climate must start at the top of the organization.132 When top management emphasizes strong ethical values, supervisors are more likely to practice ethical leadership. Clear expectations transfer down to line employees, who show lower levels of deviant behavior and higher levels of cooperation and assistance. Several other studies have come to the same general conclusion: The values of top man- agement are a good predictor of ethical behavior among employees. For example, one study involving auditors found perceived pressure from organizational leaders to behave unethically was associated with increased intentions to engage in unethical practices.133 Clearly, the wrong type of organizational culture can negatively influence employee ethi- cal behavior. Conversely, ethical leadership has been shown to improve group ethical voice, or the extent to which employees feel comfortable speaking up about issues that seem unethical to them, through improvements in ethical culture.134 Finally, employees whose ethical values are similar to those of their department are more likely to be pro- moted, so we can think of ethical culture as flowing from the bottom up as well.135

Positive Cultures

At first blush, creating a positive culture may sound hopelessly naïve or like a Dilbert-style conspiracy. The one thing that makes us believe this trend is here to stay, however, are signs that management practice and OB research are converging. A positive organizational culture values building on employee strengths, rewards more than it punishes, and encourages individual vitality and growth.136 Let us consider each of these areas.

BUILDING ON EMPLOYEE STRENGTHS Although a positive organizational culture does not ignore problems, it does emphasize showing workers how they can capitalize on their strengths. As management guru Peter Drucker said, “Most Americans do not know what their strengths are. When you ask them, they look at you with a blank stare, or they respond in terms of subject knowledge, which is the wrong answer.” Wouldn’t it be better to be in an organizational culture that helped you discover your strengths and how to make the most of them?

REWARDING MORE THAN PUNISHING Although most organizations are sufficiently focused on extrinsic rewards such as pay and promotions, they often forget about the power of smaller (and cheaper) rewards such as praise. Part of creating a positive organizational culture is “catching employees doing something right.” Many managers withhold praise because they are afraid employees will coast or because they think praise is not valued. Employees generally do not ask for praise, and managers usually do not realize the costs of failing to give it.

ENCOURAGING VITALITY AND GROWTH No organization will get the best from employees who see themselves as mere cogs in the machine. A positive culture recognizes the difference between a job and a career. It supports not only what the

Positive organizational culture A culture that values building on employee strengths, rewards more than it punishes, and encourages individual vitality and growth.

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employee contributes to organizational effectiveness but how the organization can make the employee more effective—personally and professionally.

LIMITS OF POSITIVE CULTURE Is a positive culture a cure-all? Though many companies have embraced aspects of a positive organizational culture, it is a new enough idea for us to be uncertain about how and when it works best.

Not all national cultures value being positive as much as the U.S. culture does and, even within U.S. culture, there surely are limits to how far organizations should go. The limits may need to be dictated by the industry and society. For example, Admiral, a British insurance company, has established a Ministry of Fun in its call centers to organize poem writing, foosball, conkers (a British game involving chestnuts), and fancy-dress days, which may clash with an industry value of more serious cultures.137 When does the pur- suit of a positive culture start to seem coercive? As one critic notes, “Promoting a social orthodoxy of positiveness focuses on a particular constellation of desirable states and traits but, in so doing, can stigmatize those who fail to fit the template.”138 There may be benefits to establishing a positive culture, but an organization also needs to be objective and not pursue it past the point of effectiveness.

Spiritual Cultures

What do Southwest Airlines, Hewlett-Packard, Ford, The Men’s Wearhouse, Tyson Foods, Wetherill Associates, and Tom’s of Maine have in common? They are among a growing number of organizations that have embraced workplace spirituality.

WHAT IS SPIRITUALITY? Workplace spirituality is not about organized religious practices. It is not about God or theology. Workplace spirituality recognizes that people have an inner life that nourishes and is nourished by meaningful work in the context of community.139 Organizations that support a spiritual culture recognize that people seek to find meaning and purpose in their work and desire to connect with other human beings as part of a community. Many of the topics we have discussed—ranging from job design to corporate social responsibility (CSR)—are well matched to the concept of organizational spirituality. When a company emphasizes its commitment to paying third-world suppliers a fair (above-market) price for their products to facilitate community development—as did Starbucks—or encourages employees to share prayers or inspirational messages through e-mail—as did Interstate Batteries—it may encourage a more spiritual culture and climate.140

WHY SPIRITUALITY NOW? As noted in our discussion of emotions in the chapter on emotions and moods, the myth of rationality assumed the well-run organization eliminated people’s feelings. Concern about an employee’s inner life had no role in the perfectly rational model. But just as we realize that the study of emotions improves our understanding of OB, an awareness of spirituality can help us better understand employee behavior.

Of course, employees have always had an inner life. So why has the search for mean- ing and purposefulness in work surfaced now? We summarize the reasons in Exhibit 16-7.

Workplace spirituality The recognition that people have an inner life that nourishes and is nourished by meaningful work that takes place in the context of com- munity.

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CHARACTERISTICS OF A SPIRITUAL ORGANIZATION The concept of workplace spirituality draws on our previous discussions of values, ethics, motivation, and leadership. Although research remains preliminary, several cultural values tend to be evident in spiritual organizations:141

• Benevolence. Spiritual organizations value kindness toward others and the happiness of employees and other organizational stakeholders.

• Strong sense of purpose. Spiritual organizations build their cultures around a meaningful purpose. Although profits may be important, they are not the primary value.

• Trust and respect. Spiritual organizations are characterized by mutual trust, honesty, and openness. Employees are treated with esteem and are valued, consistent with the dignity of each individual.

• Open-mindedness. Spiritual organizations value flexible thinking and creativity among employees.

ACHIEVING SPIRITUALITY IN THE ORGANIZATION Many organizations have grown interested in spirituality but have had trouble putting principles into practice. Several types of practices can facilitate a spiritual climate,142 including those that support work– life balance. Leaders can demonstrate values, attitudes, and behaviors that trigger intrinsic motivation and a sense of fulfilling a calling through work.143 Encouraging employees to consider how their work provides a sense of purpose can help achieve a spiritual workplace; often this is done through group counseling and organizational development, a topic we take up in the chapter on organizational change and stress management. Third, a growing number of companies, including Taco Bell, offer employees the counseling services of corporate chaplains. Many chaplains are employed by agencies, such as Marketplace Chaplains USA, while some corporations, such as Tyson Foods, employ chaplains directly. The workplace presence of corporate chaplains, who are often ordained Christian ministers, is obviously controversial, although their role is not to increase spirituality but to help human resources departments serve the employees who already have Christian beliefs.144 Similar roles for leaders of other faiths certainly must be encouraged.

Spirituality can counterbalance the pressures and stress of a turbulent pace of life. Contemporary lifestyles—single-parent families, geographic mobility, the temporary nature of jobs, new technologies that create distance between people—underscore the lack of community many people feel and increase the need for involvement and connection.

•

•

Formalized religion hasn’t worked for many people, and they continue to look for anchors to replace a lack of faith and to fill a growing feeling of emptiness.

• Job demands have made the workplace dominant in many people’s lives, yet they continue to question the meaning of work.

• People want to integrate personal life values with their professional lives.

• An increasing number of people are finding that the pursuit of more material acquisitions leaves them unfulfilled.

EXHIBIT 16-7 Reasons for the Growing Interest in Spirituality

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CRITICISMS OF SPIRITUALITY Critics of the spirituality movement in organizations145 have focused on three issues. First is the question of scientific foundation. What is workplace spirituality, exactly? Is it just a buzzword? Second, an emphasis on spirituality can clearly make some employees uneasy. Critics have argued that secular institutions, especially business firms, should not impose spiritual values on employees.146 This criticism is undoubtedly valid when spirituality is defined as bringing religion and God into the workplace. However, it seems less stinging when the goal is limited to helping employees find meaning and purpose in their work lives. Finally, whether spirituality and profits are compatible objectives is a relevant concern for managers and investors in business. Although there has been relatively little research on this topic in recent years, some research does suggest that it can help address some of the negative effects of emotional labor in Chinese service workers.147 In another study, organizations that provided their employees with opportunities for spiritual development outperformed those that did not.148 Other studies reported that spirituality in organizations was positively related to creativity, employee satisfaction, job involvement, and organizational commitment.149

THE GLOBAL CONTEXT

We considered global cultural values (collectivism–individualism, power distance, and so on) in the chapter on personality and values. Here our focus is a bit narrower: How is organizational culture affected by the global context? Organizational culture is so power- ful that it often transcends national boundaries.150 But that does not mean organizations should ignore national and local culture.

One of the primary things U.S. employees can do is be culturally sensitive. The United States is a dominant force in business and in culture—and with that influence comes a reputation. “We are broadly seen throughout the world as arrogant people, totally self-absorbed and loud,” says one U.S. executive. Some ways in which U.S. employees can be culturally sensitive include being aware of one’s actions and how they may be per- ceived by others and to consider others’ backgrounds, perspectives, and emotions before speaking or acting.

The management of ethical behavior is one area where national culture can rub against corporate culture.151 U.S. managers and employees often endorse the supremacy of anonymous market forces as a moral obligation for business organizations. This world- view sees bribery, nepotism, and favoring personal contacts as highly unethical. They also value profit maximization, so any action that deviates from profit maximization may suggest inappropriate or corrupt behavior. In contrast, managers in developing economies are more likely to see ethical decisions as embedded in the social environment. That means doing special favors for family and friends is not only appropriate but possibly even an ethical responsibility. Managers in many nations view capitalism skeptically and believe the interests of workers should be put on a par with the interests of shareholders, which may limit profit maximization. Creating a multinational organizational culture can initiate strife between employees of traditionally competing countries. As national orga- nizations seek to employ workers in overseas operations, top management must decide whether to standardize many facets of organizational culture. At this point, there is no clear consensus on the best course of action, but the first step is for companies to be sen- sitive to differing standards.

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SUMMARY

Organizational cultures have an immense impact on behavior in organizations. Although the “essence” of an organization is often hard to describe, we can peer into the world of organizational life by examining an organization’s shared values and beliefs, material symbols, rituals, stories, and language. Several culture frameworks have demonstrated that values and beliefs can have a substantial effect on organizational outcomes and that different cultural values affect different strategic outcomes. Cultures can also cut across organizations because employees differ in how strongly they agree on their organization’s culture—these differences can lead to the creation of subcultures, which have implica- tions for why people do things differently in different branches, departments, or teams.

The influence of founders on organizations’ cultures is strong and undeniable. Founders set the tone and establish the foundation for what is valued, which leads them to hire people who share these values (and exclude those who do not). Over time, support from top management and socialization processes perpetuate the organizational culture, making it very difficult to change.

Cultures serve several functions for organizations. They define boundaries, convey a sense of identity, facilitate commitment to something larger than the self, and enhance the stability of the organizational system (acting as the “glue that holds the organization together”). The way the culture establishes tangible, concrete roots in organizations is through the establishment of climates, or policies, practices, and procedures that rein- force cultural values and beliefs. These climates then influence organizational outcomes such as performance and attitudes. Notably, a plethora of types of cultures and climates have been studied in OB to date. Of these, safety, ethical, sustainable, and innovation cul- tures and climates are particularly important and relevant for organizations. Furthermore, cultures and climates can be construed as both assets and liabilities, depending upon the values and practices considered. To enhance their value as assets, managers and em- ployees alike can seek to foster positive, ethical, and spiritual cultures and climates that may help make their organization a reaffirming and positive place to work. As a caveat, you should always be aware of how national and organizational cultures may sometimes clash, especially when it comes to ethical issues.

IMPLICATIONS FOR MANAGERS

• Realize that organizational culture is a complex, descriptive, and information-rich aspect of organizations that has a major influence on important outcomes, although is relatively fixed in the short term. To affect change, involve top management and strategize a long-term plan for culture and climate transformation.

• Hire individuals whose values align with those of the organization (unless the ob- jective is to introduce a diversity of perspectives); these employees will tend to re- main committed and satisfied. Not surprisingly, “misfits” have considerably higher turnover rates.

• Understand that employees’ performance and socialization depend to a consider- able degree on their knowing what is valued and what is practiced in the organiza- tion. Train your employees well and keep them informed of changes to their job roles.

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• You can shape the culture of your work environment, sometimes as much as it shapes you. All managers can do their part to create the desired culture by focus- ing on establishing policies, practices, and procedures that reinforce the desired or emphasized values.

• Realize that although culture change often begins with managers, it is most directly a function of the people who make up the company. You must involve and engage employees to be active participants in the organizational culture to create, sustain, or change culture.

• Be aware that your company’s organizational culture may not be “transportable” to other countries. Understand the cultural relevance of your organization’s norms before introducing new plans or initiatives overseas.

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Organizational Change and Stress Management

17

CHANGE

During the fourth quarter of 2016, 77 million iPhones were sold, compared with 76.8 million Samsung sales.1 Contrast this with the fourth quarter of 2015, in which con- siderably fewer (71.5 million) iPhones were sold versus considerably more (83.4 million) Samsung phones.2 At the same time, the Chinese mobile phone company Oppo and its parent company, BBK Electronics, had been moving rapidly into the market: Collectively they held only 6 percent less market share than either Samsung or Apple.3 A look just a few years further back shows formerly dominant players like Nokia or Research in Motion (makers of the Blackberry) shrinking dramatically in size. In this and many mar- kets, competitors are constantly entering and exiting the field, gaining and losing ground quickly. It seems that change is a constant in this and many other environments.

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

17.1 Contrast the forces for change and planned change.

17.2 Describe ways to overcome resistance to change.

17.3 Compare the four main approaches to managing organizational change.

17.4 Demonstrate three ways of facilitating change.

17.5 Identify the potential environmental, organizational, and personal sources of stress at work as well as the role of individual and cultural differences.

17.6 Identify the physiological, psychological, and behavioral symptoms of stress at work.

17.7 Describe individual and organizational approaches to managing stress at work.

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Forces for Change

There are several forces that drive change in today’s modern workplace. Below, we summarize six of these forces that stimulate change:

1. The changing nature of the workforce is evident across industries. As we have discussed throughout the text, almost every organization must adjust to a multicul- tural environment, demographic changes, immigration, and outsourcing.

2. Technology is continually changing jobs and organizations.4 For example, machine learning and artificial intelligence are revolutionizing many aspects of organiza- tions: how business is conducted, how decisions are made, how information is collected and acted on, even how organizations structure themselves.5 And with advancements in virtual communication, it is not difficult to imagine the idea of an office soon becoming an antiquated concept.6

3. Economic shocks also have a huge impact on organizations, leading to job loss, the death of organizations, and a long road to recovery, such as with the Great Recession of 2007–2009.7 Economic shocks are a serious driver for change in orga- nizations and society at large: For example, economic shocks are the primary force behind food shortages and insecurity for over 10 million people, such as those in Sudan, Burundi, and Zimbabwe.8 Often, as the name suggests, these are difficult to forecast and happen suddenly: As former Federal Chairman Ben Bernanke stated, “I don’t think economic expansions just die of old age ... they get murdered.”9 Some of the culprits here are international and national crises (such as the COVID-19 pandemic), overbuilding, rising inflation, speculative pricing, and debt accumula- tion (and its resulting spending cuts).10

4. Competition precipitates change. Today, competitors are as likely to be across the ocean as across town. Successful organizations are fast on their feet, capable of developing new products rapidly and getting them to market quickly. In other words, they are flexible and require an equally flexible and responsive workforce. Juliet Bourke, Deloitte partner, recently has articulated that the right kind of diver- sity approaches can help organizations become more flexible and agile (they are six times more likely to be innovative and agile).11

5. Social trends do not remain static. Organizations must therefore continually ad- just product and marketing strategies to be sensitive to changing social trends. For example, most consumers nowadays want personalized experiences.12 One survey found that 80 percent of consumers are more likely to make a purchase when the experience is personalized to them.14 Dunkin’ Donuts used geofencing to deliver personalized ads and coupons to people near competitor’s coffee shops—they found that over a third of recipients clicked on the offer, with some saving the coupon or redeeming it right away.15 Consumers, employees, and organizational leaders are also becoming increasingly sensitive to environmental concerns. “Green” practices seem like they are now expected rather than optional.16

6. World politics also affect changes in organizations. Not even globalization’s stron- gest proponents could have imagined the change in world politics in recent years. We have seen a major set of financial crises that have rocked global markets, a worldwide pandemic,17 a dramatic rise in the power and influence of China, and intense shakeups in governments across the Arab world. For example, Britain’s exit from the European Union (and the political turmoil surrounding it) have led to changes that affect organizations across the globe.18

Mitsubishi Like several other automakers, Mitsubishi’s car sales were significantly impacted by the COVID-19 pandemic, with an estimated net loss of ¥360 billion (about £2.67 billion) in the financial year ending March 2021. As part of its response to the downturn, the company made plans to cut 20 percent of its fixed costs over the next two years by decreasing its workforce by 500–600 employees, mostly in management positions, and by closing unprofitable dealerships. In addition, Mitsubishi decided that it would stop the planned production of its Pajero SUV in the forthcoming year and would shut down the factory manufacturing the vehicle in Japan.13

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Reactionary Versus Planned Change

Change is simply when things become different than the way they are. Oftentimes, changes are unplanned and happen naturally—however, certain situations involve proactive, intentional, and goal-oriented efforts to realize change, which all describe planned change.19

What are the goals of planned change? First, it seeks to improve the ability of the organization to adapt to changes in its environment. Second, it seeks to change employee behavior.

Who in organizations are responsible for managing change activities? The answer is change agents.20 They see a future for the organization others have not identified, and they are able to motivate, invent, and implement this vision.21 Change agents can be managers or non-managers, current or new employees, or outside consultants. Some change agents look to transform old industries to meet new capabilities and demands. For instance, Sandy Jen, Cameron Ring, Monica Lo, and Seth Sternberg are working together to apply social marketplace concepts to online business—a concept exemplified by crowdfunding firm Kickstarter. The group has created an innovative service for senior care called Honor.22 In contrast to older methods of matching seniors and their families with services through nursing facilities, Honor uses an online marketplace.

RESISTANCE TO CHANGE

Our egos are fragile, and we often see change as threatening. Even when employees are shown data that suggest they need to change; they latch onto whatever information they can find that suggests they are okay and do not need to change.23 Employees who feel negatively about a change cope by not thinking about it or even leaving the organization. These reactions can sap the organization of vital energy when it is most needed.24 Indeed, resisting change can be emotionally exhausting for employees.25

Resistance to change does not just come from lower levels of the organization. In many cases, higher-level managers will resist changes proposed by subordinates, espe- cially if these leaders are focused on immediate performance. Conversely, when leaders are more focused on mastery and exploration, they are more willing to hear and adopt subordinates’ suggestions for change.26 Furthermore, during an acquisition, employee and middle manager resistance to change can be reduced through a slow, rather than fast, transition.27

Resistance to change can be positive if it leads to open discussion and debate.28 These responses are usually preferable to apathy or silence and can indicate that mem- bers of the organization are engaged in the process, providing change agents an opportu- nity to explain the change effort. Change agents can also monitor resistance in order to modify the approach to fit the preferences of members of the organization.

Resistance does not necessarily surface in standardized ways. It can be overt, implicit, immediate, or deferred.29 It is easiest for management to deal with overt and immediate resistance such as complaints, a work slowdown, or a strike threat. The greater challenge is managing resistance that is implicit or deferred because these responses— loss of loyalty or motivation, increased errors, or absenteeism—are more subtle and more difficult to recognize for what they are. Deferred actions also cloud the link between the change and the reaction to it, sometimes surfacing weeks, months, or even years later. Or a single change of little inherent impact may be the straw that breaks the camel’s back because resistance to earlier changes has been deferred and stockpiled.

Change When things become different from the way they were.

Planned change Change activities that are proactive, intentional, and goal oriented.

Change agents People who act as catalysts and assume the responsibility for managing change activities.

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Exhibit 17-1 summarizes major forces for resistance to change, categorized by their sources. Individual sources reside in human characteristics such as perceptions, per- sonalities, and needs. Organizational sources reside in the structural makeup of organiza- tions themselves.

Overcoming Resistance to Change

Eight tactics can help change agents deal with resistance to change.30 Let us review them briefly.

COMMUNICATION Communication is more important than ever in times of change. One study of German companies revealed changes are most effective when a company communicates a rationale that balances the interests of various stakeholders (shareholders, employees, community, customers) rather than those of shareholders only.31 Other research on a changing organization in the Philippines found that formal information sessions decreased employees’ anxiety about the change, and that providing high-quality information about the change increased their commitment to it.32 Framing may also play a role, as research in France and Spain suggests that if the changes are framed (and perceived) as threatening, people may not comply, whereas if they are seen as a challenge, they are more likely to champion the change, comply with it, and become engaged with their work.33

Individual Sources Habit—To cope with life’s complexities, we rely on habits or programmed responses. But when confronted with change, this tendency to respond in our accustomed ways becomes a source of resistance.

Security—People with a high need for security are likely to resist change because it threatens their feelings of safety.

Economic factors—Changes in job tasks or established work routines can arouse economic fears if people are concerned that they will not be able to perform the new tasks or routines to their previous standards, especially when pay is closely tied to productivity.

Fear of the unknown—Change substitutes ambiguity and uncertainty for the unknown.

Selective information processing—Individuals are guilty of selectively processing information in order to keep their perceptions intact. They hear what they want to hear, and they ignore information that challenges the world they have created.

Organizational Sources Structural inertia—Organizations have built-in mechanisms—such as their selection processes and formalized regulations—to produce stability. When an organization is confronted with change, this structural inertia acts as a counterbalance to sustain stability.

Limited focus of change—Organizations consist of a number of interdependent subsystems. One cannot be changed without affecting the others. So limited changes in subsystems tend to be nullified by the larger system.

Group inertia—Even if individuals want to change their behavior, group norms may act as a constraint.

Threat to expertise—Changes in organizational patterns may threaten the expertise of specialized groups.

Threat to established power relationships—Any redistribution of decision-making authority can threaten long-established power relationships within the organization.

EXHIBIT 17-1 Sources of Resistance to Change

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PARTICIPATION It is difficult to resist a change decision in which we have participated. Assuming participants have the expertise to make a meaningful contribution, their involvement can reduce resistance, obtain commitment, and increase the quality of the change decision. One study of the Sicilian anti-Mafia organization, the Addiopizzo, found that by involving organizations in directly questioning the pizzo (i.e., paying protection money to the Mafia) through an appeal to values (e.g., critical consumption, integrity, pride) they were able to successfully challenge the Mafia.34 However, against these advantages are the negatives: the potential for a poor solution and a great consumption of time.

BUILDING SUPPORT AND COMMITMENT When managers or employees have low emotional commitment to change, they resist it and favor the status quo.35 Employees are also more accepting of changes when they are committed to the organization as a whole.36 So, providing organizational support (e.g., coaching and training programs to cope with the change) and developing a positive climate can enable employees to emotionally commit to the change rather than embrace the status quo.37 Counseling and therapy, new-skills training, or a short paid leave of absence may facilitate adjustment to change when employees’ fear and anxiety are high.

DEVELOPING POSITIVE RELATIONSHIPS People are more willing to accept changes if they trust the managers implementing them and see them as legitimate.38 One study surveyed 235 employees from a large housing corporation in the Netherlands that was experiencing a merger. Those who had a more positive relationship with their supervisor, and who felt that the work environment supported development, were much more positive about the change process.39 There is also a contrast effect, with research at a large Chinese hospitality organization showing that people are more willing to accept changes from a new leader when the older leader was ineffective, abusive, or too hands-off.40 Underscoring the importance of social context, other work shows that even individuals who are generally resistant to change will be more willing to accept new and different ideas when they feel supported by their coworkers and believe the environment is safe for taking risks.41

IMPLEMENTING CHANGES FAIRLY One way organizations can minimize negative impact is to make sure change is implemented fairly for coworkers, the organization, and other parties.42 As we saw in the chapter on motivation concepts, procedural fairness is especially important when employees perceive an outcome as negative, so it is crucial that employees see the reason for the change and perceive its implementation as consistent and fair.43

MANIPULATION AND COOPTATION Manipulation refers to covert influence attempts.44 Twisting facts to make them more attractive, hiding behind false truisms, withholding information, and creating false rumors to get employees to accept change are all examples of manipulation. For example, when Billy McFarland (co-founder of the Fyre Festival) was exposed for fraudulent practices, he told them that “work is your family.” As one employee recounted, “We’re not a family. You won’t even tell me anything!”45 Cooptation, on the other hand, combines manipulation and participation. It seeks to buy off members of a resisting group by giving them a key role, seeking their advice not to find a better solution but to get their endorsement. For example, the “right to repair” movement opposes manufacturing companies’ monopolization of product repairs: Companies like Samsung co-opt by allowing customers to seek out “authorized

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repair providers,” but they still can block repairs or decide the terms for the repair. As Nathan Proctor, director of the Right to Repair campaign, emphasizes, “First they ignore you, then they laugh at you, then they fight you . . . but then, as a last-ditch effort, they co-opt you.” Both manipulation and cooptation are relatively inexpensive ways to gain the support of adversaries, but they can backfire if the targets become aware they are being tricked or used. Once that is discovered, the change agent’s credibility may drop to zero.

SELECTING PEOPLE WHO ACCEPT CHANGE Research suggests the ability to easily accept and adapt to change is related to personality—some people simply have more positive attitudes toward change.46 Individuals who are open to experience, are willing to take risks, and are flexible in their behavior are prime candidates.47 One study of managers in the United States, Europe, and Asia found those with a positive self-concept and high risk tolerance coped better with organizational change. Individuals higher in general mental ability are also better able to learn and adapt to changes in the workplace.48 In sum, an impressive body of evidence shows organizations can facilitate change by selecting people predisposed to accept it.

COERCION Last on the list of tactics is coercion, the application of direct threats or force on dissenters (see the chapter on power and politics).49 Examples include threatening employees with forced transfers, blocked promotions, negative performance evaluations, and poor letters of recommendation. Coercion is most effective when some force or pressure is enacted on at least some resisters—for instance, if an employee is publicly refused a transfer request, the threat of blocked promotions will become a real possibility in the minds of other employees.

The Politics of Change

No discussion of resistance would be complete without a mention of the politics of change. Because change invariably threatens the status quo, it inherently implies political activity.

Politics suggests the impetus for change is more likely to come from outside change agents, employees new to the organization (who have less invested in the status quo), or managers who are slightly removed from the main power structure. Managers who have spent a long time with an organization and achieved a senior position in the hierarchy are often major impediments to change. Of course, as you might guess, these longtime power holders tend to implement incremental changes when they are forced to introduce change. This explains why boards of directors that recognize the imperative for rapid and radical change frequently turn to outside candidates for new leadership.50

APPROACHES TO MANAGING ORGANIZATIONAL CHANGE

We now turn to several approaches to managing change: Lewin’s classic three-step model of the change process, Kotter’s eight-step plan, action research, and organizational development.

Lewin’s Three-Step Model

Kurt Lewin argued that successful change in organizations should follow three steps: unfreezing the status quo, movement to a desired end state, and refreezing the new change to make it permanent51 (see Exhibit 17-2).

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By definition, status quo is an equilibrium state. To move from equilibrium—to over- come the pressures of both individual resistance and group conformity—unfreezing must happen in one of three ways (see Exhibit 17-3). For one, the driving forces, which direct behavior away from the status quo, can be increased. For another, the restraining forces, which hinder movement away from equilibrium, can be decreased. A third alternative is to combine the first two approaches. Companies that have been successful in the past are likely to encounter restraining forces because people question the need for change.52

Once the movement stage begins, it is important to keep the momentum going. Organizations that build up to change do less well than those that get to and move through the movement stage quickly. When change has been implemented, the new situation must be refrozen so it can be sustained over time. Without this last step, change will likely be short lived, and employees will attempt to revert to the previous equilibrium state.

Scholars in recent years have criticized Lewin’s model for several reasons.53 First, like Maslow’s hierarchy of needs (see the chapter on motivation concepts), Lewin assumes that change happens sequentially, in order, always progressing. Second, the model implies a sense of perfect agency for managers; in other words, do change agents really know where they are, where the people in the organization are, and where they are going? Organizations are so fluid that it may be impossible to do this in real life. Still others have mentioned that the “freezing” language is somewhat problematic: Time keeps moving, freezing may never really happen, and new changes interrupt current changes dynamically. Indeed, more mod- ern approaches to understanding change in organizations consider issues such as timing, pacing, rhythm, and the nature of the change agents involved.54

Kotter’s Eight-Step Plan

John Kotter built on Lewin’s three-step model to create a more detailed approach for implementing change.55 Kotter began by listing common mistakes managers make when trying to initiate change. They may fail to create a sense of urgency about the need for change, a coalition for managing the change process, or a vision for change. They also may fail to effectively communicate it, and/or to anchor the changes into the organization’s culture. They also may fail to remove obstacles that could impede the vision’s achievement and/or provide short-term and achievable goals. Finally, they may declare victory too soon.

Driving forces Forces that direct behavior away from the status quo.

Restraining forces Forces that hinder movement from the existing equilibrium.

Unfreezing RefreezingMovement EXHIBIT 17-2 Lewin’s Three- Step Change Model

Restraining forces

Desired state

Status quo

Time

Driving forces EXHIBIT 17-3

Unfreezing the Status Quo

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Kotter established eight sequential steps to overcome these problems. They are listed in Exhibit 17-4. Notice how Kotter’s first four steps essentially extrapolate Lewin’s “unfreezing” stage. Steps 5, 6, and 7 represent “movement,” and the final step works on “refreezing.” Kotter’s contribution lies in providing managers and change agents with a more detailed guide for successfully implementing change.

Action Research

Action research is a change process based on the systematic collection of data and selec- tion of a change action based on what the analyzed data indicate.56 Its value is in pro- viding a scientific methodology for managing planned change. Action research consists of five steps (note how they closely parallel the scientific method): diagnosis, analysis, feedback, action, and evaluation. Applications of action research in Britain have been successful at improving the engagement of nursing staff,57 as well as in making supply chain systems more sustainable.58 In the United States, action research has been uti- lized by Optum, a health care company, through involving customer service specialists in determining more effective ways of engaging with customers.59

Action research provides at least two specific benefits. First, it is problem focused. The change agent objectively looks for problems, and the type of problem determines the type of change action. A second benefit of action research is the lowering of resistance. Because action research engages employees so thoroughly in the process, it reduces resistance to change. Once employees have actively participated in the feedback stage, the change process typically takes on a momentum of its own. However, organizations may resist participating in action research when their legitimacy is potentially or already at risk.60

Action research A change process based on the system- atic collection of data and the selection of a change action based on what the analyzed data indicate.

1. Establish a sense of urgency by creating a compelling reason for why change is needed.

2. Form a coalition with enough power to lead the change.

3. Create a new vision to direct the change and strategies for achieving the vision.

4. Communicate the vision throughout the organization.

5. Empower others to act on the vision by removing barriers to change and encouraging risk taking and creative problem solving.

6. Plan for, create, and reward short-term “wins” that move the organization toward the new vision.

7. Consolidate improvements, reassess changes, and make necessary adjustments in the new programs.

8. Reinforce the changes by demonstrating the relationship between new behaviors and organizational success.

EXHIBIT 17-4 Kotter’s Eight-Step Plan for Implementing Change

Source: Based on M. du Plessis, “Re-implementing an Individual Performance Management System as a Change Intervention at Higher Education Institutions Overcoming Staff Resistance,” Proceedings of the 7th European Conference on Management Leadership and Governance, 2011, 105–15.

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Organizational Development

Organizational development (OD) is a collection of change methods that try to improve organizational effectiveness and employee well-being.61

OD methods value human and organizational growth, collaborative and participa- tive processes, and a spirit of inquiry.62 Contemporary OD borrows heavily from post- modern philosophy in placing heavy emphasis on the subjective ways people see and make sense of their work environment. The change agent may take the lead in OD, but there is a strong emphasis on collaboration.

What are some OD techniques or interventions for bringing about change? Here are six.

SENSITIVITY TRAINING A variety of names—sensitivity training, laboratory training, encounter groups, and T-groups (training groups)—all refer to an early method of changing behavior through unstructured group interaction.63 Current organizational interventions such as diversity training, executive coaching, and team-building exercises are descendants of this early OD intervention technique. With all forms of OD, caution must be taken so the unstructured groups are not intimidating, chaotic, and damaging to work relationships.

SURVEY FEEDBACK One tool for assessing the attitudes of organizational members, identifying discrepancies among member perceptions, and solving differences is the survey feedback technique.64 Basically, data collected from strategic surveys in work units is then used as a springboard to spur problem identification and discussion. Answers should lead the group to commit to various remedies for the problems.

The survey feedback approach can be helpful to keep decision makers informed about the attitudes of employees toward the organization. However, individuals are influ- enced by many factors when they respond to surveys, which may make some findings unreliable. Managers who use the survey feedback approach should therefore monitor their organization’s current events and employee response rates.

PROCESS CONSULTATION Managers often sense their unit’s performance can be improved but are unable to identify what to improve and how. The purpose of process consultation (PC) is for an outside consultant to assist a client, usually a manager, through crafting “a relationship through a continuous effort of ‘jointly deciphering what is going on’ . . . to make co-authored choices about how to go on.”65 These events might include those surrounding the workflow, informal relationships among unit members, and formal communication channels.

PC is similar to sensitivity training in assuming we can improve organizational effectiveness by dealing with interpersonal problems and in emphasizing involvement. But PC is more task directed, and consultants do not solve the organization’s problems, but rather guide or coach the client to solve their own problems after jointly diagnosing what needs improvement. The client develops the skill to analyze processes within their unit and can therefore use the skill long after the consultant is gone. Because the client actively participates in both the diagnosis and the development of alternatives, they arrive

Organizational development (OD) A collection of planned change interventions, built on humanistic–demo- cratic values, that seeks to improve organizational effectiveness and employee well-being.

Sensitivity training Training that seeks to change behavior through unstructured group interaction.

Survey feedback technique The use of question- naires to listen to members and identify discrepancies among member perceptions; discussion follows and remedies are suggested.

Process consultation (PC) A meeting in which a consultant assists clients in understand- ing process events with which they must deal and identifying processes that need improvement.

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at a greater understanding of the process and the remedy and becomes less resistant to the action plan chosen.

TEAM BUILDING We have noted throughout this text that organizations increasingly rely on teams to accomplish work tasks. Team building uses high-interaction group activities to increase trust and openness among team members, improve coordination efforts, and increase team performance.66 For example, a number of companies are turning to “escape rooms” as a team-building method (where members have to work together and solve puzzles in order to escape a themed room).67 As one Baltimore employee who participated in an escape room team-building exercise noted, “what comes out of an experience like that is a depended sense of relationship and community . . . once inside, it’s when fun and team building intersect at a high level.”68

Team building typically includes goal setting, development of interpersonal rela- tions among team members, role analysis to clarify each member’s role and responsibili- ties, and team process analysis. It may emphasize or exclude certain activities, depending on the purpose of the development effort and the specific problems the team is confront- ing. Basically, however, team building uses high interaction among members to increase trust and openness. In these times when organizations increasingly rely on teams, team building is an important topic.

INTERGROUP DEVELOPMENT A major area of concern in OD is dysfunctional conflict among groups. Intergroup development seeks to change groups’ attitudes, stereotypes, and perceptions about each other.69 Here, training sessions closely resemble diversity training, except rather than focusing on demographic differences, they focus on differences among occupations, departments, or divisions within an organization. Once they have identified the causes of discrepancies, the groups move to the integration phase—developing solutions to improve relations between them. Subgroups can be formed of members from each of the conflicting groups to conduct further diagnoses and formulate alternative solutions.

Among several approaches for improving intergroup relations, a popular one emphasizes problem solving.70 Each group meets independently to list its perceptions of itself and another group and how it believes the other group perceives it. The groups then share their lists, discuss similarities and differences, and look for causes of disparities.

APPRECIATIVE INQUIRY Most OD approaches are problem centered. They identify a problem or set of problems, then look for a solution. Appreciative inquiry instead accentuates the positive.71 Rather than looking for problems to fix, it seeks to identify the unique qualities and special strengths of an organization, which members can build on to improve performance. It has been demonstrated to be an effective change strategy in organizations such as GTE, Roadway Express, American Express, and the U.S. Navy.72 The U.S. dairy industry used it to transform their sustainability efforts, resulting in nearly $300 million in projects that were singled out as models for other industries.73

The appreciative inquiry process consists of four steps—discovery, dreaming, design, and destiny—often played out in a large-group meeting over two to three days and overseen by a trained change agent. Discovery sets out to identify what people

Team building High interaction among team members to increase trust and openness.

Intergroup development Organizational devel- opment efforts to change the attitudes, stereotypes, and per- ceptions that groups have of each other.

Appreciative inquiry An approach that seeks to identify the unique qualities and special strengths of an organization, which can then be built on to improve performance.

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think are the organization’s strengths. Employees recount times they felt the organiza- tion worked best or when they specifically felt most satisfied with their jobs. In dream- ing, employees use information from the discovery phase to speculate on possible futures, such as what the organization will be like in five years. In design, participants find a common vision of how the organization will look in the future and agree on its unique qualities. For the fourth step, participants seek to define the organization’s destiny or how to fulfill their dream, and they typically write action plans and develop implementation strategies.

FACILITATING CHANGE

We have considered how organizations can adapt to change. But recently, some OB scholars have focused on a more proactive approach—how organizations can embrace change by transforming their cultures. In this section, we review three approaches: man- aging paradox, stimulating innovation, and creating a learning organization. We also address the issue of organizational change and stress.

Managing Paradox

Managers can learn a few lessons from paradox theory,74 which states the key paradox in management is that there is no final optimal status for an organization.75 In a paradox situation, we are required to balance tensions across various courses of action, which are caused by resource scarcity.76 There is a constant process of finding a balancing point, a dynamic equilibrium, among shifting priorities over time.77 The first lesson is that as the environment and members of the organization change, different elements take on impor- tance. For example, sometimes a company needs to acknowledge past success and learn how it worked, while at other times looking backward will only hinder progress. There is some evidence that managers who think holistically and recognize the importance of balancing paradoxical factors are more effective, especially in generating adaptive and creative behaviors in those they are managing.78 However, leaders who adopt paradoxical approaches may fall into the trap of escalation of commitment (see the chapter on percep- tion and decision making) given that they may be more optimistic that the current state of affairs will swing toward a more desirable one.79

Stimulating Innovation

How can an organization become more innovative? Although there is no guaranteed formula, certain characteristics—in structure, culture, and climate—surface repeatedly when researchers study innovative organizations (see the chapter on organizational culture). Let us first clarify what we mean by innovation.

DEFINITION OF INNOVATION We said change refers to making things different. Innovation, a specialized kind of change, is applied to initiating or improving a product, process, or service.80 So all innovations imply change, but not all changes introduce new ideas or lead to significant improvements. Innovations can range from incremental improvements, such as tablets, to radical breakthroughs, such as the electric car.

Paradox theory The theory that the key paradox in management is that there is no final optimal status for an organization.

Innovation A new idea applied to initiating or improving a product, process, or service.

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SOURCES OF INNOVATION Structural variables are one potential source of innovation.81 A comprehensive review of the structure–innovation relationship leads to the following conclusions:

1. Organic structures positively influence innovation. Because they are lower in vertical differentiation, formalization, and centralization; organic organizations facilitate the flexibility, adaptation, and cross-fertilization that make the adoption of innovations easier.82

2. Contingent rewards positively influence innovation. When creativity is rewarded, firms tend to become more innovative—especially when employees are given feedback on their performance in addition to autonomy in doing their jobs.83

3. Innovation is nurtured when there are slack resources. Having an abundance of resources allows an organization to afford to purchase or develop innovations, bear the cost of instituting them, and absorb failures.84

4. Interunit communication is high in innovative organizations. These organiza- tions are heavy users of committees, task forces, cross-functional teams, and other mechanisms that facilitate interaction across departmental lines.85

CONTEXT AND INNOVATION National cultures have an effect on innovation in organizations.86 One study using global data from a crowdsourcing company suggests that the more a country is characterized by strong social norms and low tolerance for any deviation from the norm, innovation tends to be stifled more often.87 Cultural diversity at the local level also has an impact. Having close, interpersonal relationships (both romantic and friendship) with those from different culture backgrounds (such as those from international assignments) sparks innovation and entrepreneurship.88

As described in the chapter on culture, innovative organizations encourage experi- mentation and reward both successes and failures.89 Unfortunately, in too many organi- zations, people are rewarded for the absence of failures rather than for the presence of successes. Such cultures extinguish risk taking and innovation.90 Innovative organiza- tions have a shared sense of purpose91 and also tend to be cohesive, mutually supportive, and encouraging of innovation.92 Innovative organizations actively promote the train- ing and development of their members so they keep current, offer high job security so employees do not fear getting fired for making mistakes, and encourage individuals to become champions of change.93 These practices should be mirrored for workgroups as well. One study of 1,059 individuals on over 200 different teams in a Chinese high-tech company found that work systems emphasizing commitment to employees increased cre- ativity in teams.94 These effects were even greater in teams where there was cohesion among coworkers. Furthermore, research from Spain suggests that hotel teams deliver better customer service when innovation is supported by their organization, perhaps because they are empowered to provide the best service to accommodate each guest.95

IDEA CHAMPIONS AND INNOVATION Once a new idea has been developed, idea champions actively and enthusiastically promote it, build support, overcome resistance, and ensure it is implemented.96 Champions often have similar personality characteristics:97 extremely high self-confidence, persistence, energy, and a tendency to take risks. They may display traits associated with transformational leadership—they inspire and energize others with their vision of an innovation’s potential and their strong personal conviction

Idea champions Individuals who take an innovation and actively and enthusi- astically promote the idea, build support, overcome resistance, and ensure that the idea is implemented.

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about their mission. Managers and change agents alike should also be aware of the other types of reactions employees can have to the idea over time. For example, doubters will probably never get on board with the new idea, converts will start to like the idea more and more, and defectors are more likely to dislike the idea over time.98 Keeping in mind these audiences, change agents can vary their message to try to obtain the best result.

Situations can also influence the extent to which idea champions are forces for change. For example, passion for change among entrepreneurs is greatest when work roles and the social environment encourage them to put their creative identities forward. On the flip side, work roles that push creative individuals to do routine management and administration tasks will diminish both the passion for and successful implementation of change. 99 Idea champions are good at gaining the commitment of others, and their jobs should provide considerable decision-making discretion. This autonomy helps them introduce and implement innovations when the context is supportive.100

Do successful idea champions do things differently in varied cultures? Generally, people in collectivist cultures prefer appeals for cross-functional support for innovation efforts; people in high power-distance cultures prefer champions to work closely with those in authority to approve innovative activities before work has begun; and the higher the uncertainty avoidance of a society, the more champions should work within the orga- nization’s rules and procedures to develop the innovation.101

Creating a Learning Organization

Another way an organization can proactively manage change is to make continuous growth part of its culture—to become a learning organization.102

WHAT’S A LEARNING ORGANIZATION? Just as individuals learn, so do organizations. A learning organization has developed the continuous capacity to adapt and change. The Dimensions of the Learning Organization Questionnaire has been adopted and adapted internationally to assess the degree of commitment to learning organization principles.103

Exhibit 17-5 summarizes the five basic characteristics of a learning organization— one in which people put aside their old ways of thinking, learn to be open with each other, understand how their organization really works, form a plan or vision everyone can agree on, and work together to achieve that vision.104

MANAGING LEARNING What can managers do to make their firms learning organizations? Here are some suggestions:

• Establish a strategy. Management needs to make explicit its commitment to change, innovation, and continuous improvement.

• Redesign the organization’s structure. The formal structure can be a serious im- pediment to learning. Flattening the structure, eliminating or combining depart- ments, and increasing the use of cross-functional teams reinforces interdependence and reduces boundaries.

• Reshape the organization’s culture. To become a learning organization, man- agers must demonstrate by their actions that taking risks and admitting failures are desirable. This means rewarding people who take chances and make mistakes. Management needs to encourage functional conflict.

Learning organization An organization that has developed the continuous capacity to adapt and change.

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Organizational Change and Stress

Think about the times you have felt stressed during your work life. Look past the every- day stress factors that can spill over to the workplace, like a traffic jam that makes you late for work. What have been your more memorable and lasting stressful times at work? For many people, they were those caused by organizational change. Researchers are increasingly studying the effects of organizational change on employees. We are interested in determin- ing the specific causes and mitigating factors of stress to learn how to manage organizational change effectively.105 The overall findings demonstrate that organizational changes that incorporate OB knowledge of how people react to stressors may yield more effective results than organizational changes that are managed only objectively through goal-setting plans.106

STRESS AT WORK

Stress comes in many forms at work. Racial prejudice is one particularly nefarious form that has left professionals such as Jessica Jackson, a black, female clinical psychologist with the Department of Veterans Affairs, strained. Ever since her high school days, when her teacher said she was in the wrong room and gave her lower grades than the other classmates (even on group projects), Jackson has had the stressful and frustrating task of proving her place.107

Stress is (quite literally) a killer, and the statistics on workplace stress are shock- ing.108 One compilation of statistics suggests that (1) 83 percent of workers in the U.S. are stressed, (2) stress results in $300 billion in losses annually, (3) it accounts for 60 to 80 percent of workplace accidents, (4) it causes one million people to miss work daily, and (5) 29 percent of workers (that is almost a third!) have admitted to wanting to punch a coworker because of stress.109 Harris, Rothenberg International, a leading provider of employee assistance programs, finds that employees are having mental breakdowns and needing professional help at higher rates than ever.110 Indeed, as Exhibit 17-6 shows, work is a major source of stress in most people’s lives. (Recent surveys also show that access to health care and the threat of sexual harassment are also major sources of stress.)111 What are the causes and consequences of stress, and what can individuals and organizations do to reduce it?

1. There exists a shared vision that everyone agrees on.

2. People discard their old ways of thinking and the standard routines they use for solving problems or doing their jobs.

3. Members think of all organizational processes, activities, functions, and interactions with the environment as part of a system of interrelationships.

4. People openly communicate with each other (across vertical and horizontal boundaries) without fear of criticism or punishment.

5. People sublimate their personal self-interest and fragmented departmental interests to work together to achieve the organization’s shared vision.

EXHIBIT 17-5 Characteristics of a Learning Organization

Source: Based on P. M. Senge, The Fifth Discipline: The Art and Practice of the learning Organization (New York: Doubleday, 2006).

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What Is Stress?

Stress is a psychological process in which an individual is confronted with an opportu- nity, demand, or resource related to what the individual desires and for which the outcome is perceived to be both uncertain and important (e.g., stressors).112 Then, as a result, an individual experiences strain, or a psychological and physical unpleasant response due to an appraisal of the stressor.113 In a nutshell, stress is a process in which we are exposed to stressors that cause us to experience strain. Although stress is typically discussed in a negative fashion (as most of the time it is harmful), it can serve positive purposes, such as supplying you with a boost to cope with stressful situations (e.g., when professional athletes are “down to the wire”) or enhancing the quality of your work when you are up against a challenge.

STRESSORS Researchers have argued that challenge stressors—or stressors associated with workload, pressure to complete tasks, and time urgency—operate quite differently from hindrance stressors—or stressors that keep you from reaching your goals (for example, red tape, office politics, confusion over job responsibilities).114 Evidence suggests that both challenge and hindrance stressors lead to strain, although hindrance stressors lead to increased levels of strain.115 Challenge stressors (when they are stable over time) lead to more motivation, engagement, and performance than hindrance stressors.116 Hindrance stressors, on the other hand, appear to have more of a negative effect on safety compliance and participation, employee engagement, job satisfaction, organizational commitment, performance, and withdrawal than do challenge stressors.117

Researchers have sought to clarify the conditions under which each type of stress exists. It appears that time pressure and learning demands both act as challenge stressors that can help employees learn and thrive in organizations.118 Unnecessary tasks block the potentially positive, challenging nature of the normally challenging stressors, such as time pressure.119 Hindrances (e.g., a lack of resources to complete your job) serve to block goal attainment and should be distinguished from threats, which can result in per- sonal harm (e.g., corrections officers fearing harm from inmates).120 Interestingly, recent research suggests that each type of stressor is amplified by given risk factors to produce negative health effects: Challenge stressors are amplified when coupled with alcohol con- sumption, and hindrance stressors are amplified when coupled with food consumption and smoking.121

Stress A psychological pro- cess in which an indi- vidual is confronted with an opportunity, demand, or resource related to what the individual desires and for which the outcome is perceived to be both uncertain and important (e.g., stressors).

Strain A psychological and physical unpleas- ant response due to an appraisal of the stressor.

Challenge stressors Stressors associ- ated with workload, pressure to complete tasks, and time urgency.

Hindrance stressors Stressors that keep you from reach- ing your goals (for example, red tape, office politics, confusion over job responsibilities).

What area of your life causes you the most stress?

Area Causes Most Stress

Nation’s future 63%

Money 62%

Work 61%

Political climate Crime (e.g., violence)

57% 51%

EXHIBIT 17-6 Work Is a Top Source of Stress

Source: “Stress in America: The State of Our Nation,” American Psychological Association, November 1, 2017, https://www.apa.org/news/press/releases/stress/2017/state-nation.pdf

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DEMANDS AND RESOURCES Typically, stress is associated with demands and resources. Demands are responsibilities, pressures, obligations, and uncertainties individuals face in the workplace. Resources are things within an individual’s control that they can use to resolve the demands. Let us discuss what this demands–resources model means.122

When you undergo your annual performance review at work, you feel stress because you confront opportunities and performance pressures. A good performance review may lead to a promotion, greater responsibilities, and a higher salary. A poor review may prevent you from getting a promotion. An extremely poor review might even result in your being fired. To the extent you can apply resources to the demands on you—such as preparing for the review, putting the review in perspective (it’s not the end of the world), or obtaining social support—you will feel less stress.123 In fact, this last resource—social support—may be more important on an ongoing basis than anything else. Overall, under the demands–resources perspective, having resources to cope with stress is just as impor- tant in offsetting stress as demands are in increasing it.124

ALLOSTASIS So far, what was discussed may give you the impression that individuals are seeking a steady state in which demands perfectly match resources. While early research tended to emphasize such a homeostatic, or balanced equilibrium, perspective; it has now become clear that no single ideal state exists. Instead, it is more accurate to talk about allostatic models, in which demands shift, resources shift, and systems of addressing imbalances shift.125 Through allostasis, we work to find stability by changing our behaviors and attitudes. It all depends on the allostatic load, or the cumulative effect of stressors on us given the resources we draw upon.126 For example, if you are feeling especially confident in your abilities and have lots of support from others, you may increase your willingness to experience strain and be better able to mobilize coping resources. This would be a situation where the allostatic load was not too great; in other cases where the allostatic load is too great and too prolonged, we may experience psychological or physiological stress symptoms.

Potential Sources of Stress at Work

What causes stress? Let’s examine the model in Exhibit 17-7.

ENVIRONMENTAL FACTORS Just as environmental uncertainty influences the design of an organization’s structure; it also influences stress levels among employees in that organization. Indeed, uncertainty is the biggest reason people have trouble coping with organizational changes, and why decisions made under stress deteriorate decision quality.127 There are three main types of environmental uncertainty: economic, political, and technological.

Changes in the business cycle create economic uncertainties. When the economy is contracting, for example, people become increasingly anxious about their job security. Political uncertainties do not tend to create stress among North Americans as much as they do for employees in countries such as Haiti or Venezuela. The obvious reason is that the United States and Canada have more stable political systems, in which change is typically implemented in an orderly manner. Yet political threats and changes in all countries can induce stress. Because innovations can make an employee’s skills and experience obsolete

Demands Responsibilities, pressures, obliga- tions, and even uncertainties that individuals face in the workplace.

Resources Things within an individual’s control that can be used to resolve demands.

Allostasis Working to change behavior and attitudes to find stability.

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in a very short time, keeping up with new computer programs, robotics, automation, and similar forms of technological change are a further challenge to many people at work that cause them stress. However, newer research suggests that people are most uncomfortable with technological changes and uncertainty when artificial intelligence replaces jobs that require some form of emotion or feeling.128 Interestingly people also prefer when more “cognitively demanding” jobs are outsourced to people in other countries.129

ORGANIZATIONAL FACTORS There is no shortage of factors within an organization that can cause stress. Pressures to avoid errors or complete tasks in a limited time, work overload, a demanding and insensitive boss, and unpleasant coworkers are a few examples. We have categorized these factors around task, role, and interpersonal demands.

1. Task demands relate to a person’s job. They include the design of the job (includ- ing its degree of autonomy, task variety, and automation), the working conditions, and the physical work layout. The single factor most consistently related to stress in the workplace is the amount of work that needs to be done, followed closely by the presence of looming deadlines.130 Working in an overcrowded room or visible location where noise and interruptions are constant can also increase anxiety and stress.131

2. Role demands relate to pressures placed on a person as a function of the role they play in the organization.132 Role conflicts create expectations that may be hard to reconcile or satisfy. Role overload occurs when the employee is expected to take on too much. Role ambiguity means role expectations are not clearly understood and the employee is not sure what to do. Unfortunately, individuals who face high situational constraints in their roles (such as fixed work hours or demanding job

Physiological symptoms • Immediate effects • Illness • Chronic health conditions

• Anxiety • Lower emotional well-being • Lower job satisfaction

Psychological symptoms

Behavioral symptoms • Lower job performance • Higher absenteeism • Higher turnover

Potential sources Consequences

Experienced stress

Cultural differences

• Task demands • Role demands • Interpersonal demands

Environmental factors • Economic uncertainty • Political uncertainty • Technological change

Personal factors • Family problems • Economic problems

Individual differences • Perception • Job experience • Social support • Personality traits

Organizational factors

EXHIBIT 17-7 A Model of Stress

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responsibilities) are less able to engage in proactive coping behaviors, like taking a break, which can reduce stress levels.133

3. Interpersonal demands are pressures created by other employees. Some pressures are expected, but a rapidly growing body of research has shown that negative co- worker and supervisor behaviors, including fights, bullying, incivility, racial harass- ment, and sexual harassment, are especially and strongly related to stress at work.134 Interpersonal mistreatment can have effects at a physiological level, with one study finding that unfair treatment in a controlled setting triggers the release of cortisol, a hormone involved in the stress-reaction process.135 Individuals who believe they are experiencing a social climate of discrimination or social exclusion from multiple sources over time have higher levels of psychological strain, even after accounting for differing baseline levels of well-being.136 Interpersonal demands from outside of work can also have a reciprocal effect: In other words, your family can interfere with your work and your work can interfere with your family, causing strain all-around.137

PERSONAL FACTORS The typical individual may work between 40 and 50 hours a week. But the experiences and problems people encounter in the other 120-plus hours in the week can spill over to the job. For example, the quality and quantity of sleep an individual gets can adversely affect the amount of strain they experience.138 The final category of sources of stress at work includes factors of an employee’s personal life: family issues and personal economic problems.

National surveys consistently show people hold their families dear.139 Family issues, even good ones, can cause stress that significantly impacts individuals.140 Family issues are often closely related to work–life conflict, and work–life conflict is a major source of strain.141

Regardless of income level, financial issues can be a major source of stress. People who make $100,000 per year seem to have as much trouble handling their finances as those who earn $20,000, although recent research indicates that those who make under $50,000 per year do experience more stress.142 The personal economic problems of over- extended financial resources create stress and siphon attention away from work.

STRESSORS ARE ADDITIVE When we review stressors individually, it is easy to overlook that stress is an additive phenomenon—it builds up.143 For example, when you experience incivility from customers or coworkers, this can lead you to have a poor night’s sleep and experience additional strain beyond the incivility you just experienced.144 Each new and persistent stressor adds to an individual’s stress level. A single stressor may be relatively unimportant in and of itself, but if added to an already high level of stress, it can be too much. To appraise the total amount of stress an individual is under, we must sum up all the sources and severity levels of that person’s stress. Since this cannot be easily quantified or observed, managers should remain aware of the potential stress loads from organizational factors. Many employees are willing to express their perceived stress load at work to a caring manager.

Individual Differences in Stress

Some people thrive on stressful situations, while others are overwhelmed by them. What differentiates people in terms of their ability to handle stress? What individual variables moderate the relationship between potential stressors and experienced stress? At least four are relevant—perception, job experience, social support, and personality traits.

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PERCEPTION In the chapter on perception and individual decision making, we demonstrated that employees react in response to their perception of reality, rather than to reality itself. Perception, therefore, will moderate the relationship between a potential stress condition and an employee’s reaction to it. Layoffs may cause one person to fear losing a job, while another sees it as an opportunity to get a large severance allowance and start a new business. Those who perceive a stressful event as a small blip in an otherwise long timeline (and who take to heart phrases such as “this, too, shall pass” and “time heals all wounds”) tend to cope better than those who focus on immediate circumstances.145 So, stress potential does not lie in objective conditions; rather, it lies in an employee’s interpretation of those conditions.

JOB EXPERIENCE Experience on the job tends to be negatively related to work stress. Why? Two explanations have been offered.146 First is selective withdrawal. Voluntary turnover is more probable among people who experience more stress. Therefore, people who remain with an organization longer are those with more stress-resistant traits or those more resistant to the stress characteristics of the organization. Second, people eventually develop coping mechanisms to deal with stress. Because this takes time, senior members of the organization are more likely to be fully adapted and should experience less stress.

SOCIAL SUPPORT Social support—collegial relationships with coworkers or supervisors—can buffer the impact of stress.147 This is one of the best-documented relationships in the stress literature. Social support acts as a palliative, mitigating the negative effects of even high-strain jobs.148

PERSONALITY TRAITS Stress symptoms expressed on the job may originate from the person’s personality.149 Perhaps the most widely studied personality trait in research on stress is emotional stability, which we discussed in the chapter on personality and values. As you might expect, individuals low on emotional stability are more prone to experience psychological strain.150 Evidence suggests that they are more likely to find stressors in their work environments, so they believe their environments are more threatening. They also tend to select less adaptive coping mechanisms, relying on avoidance as a way of dealing with problems rather than attempting to resolve them.151 Workaholism is another personal characteristic related to stress levels.152 Workaholics are people obsessed with their work; they put in an enormous number of hours, think about work even when not working, and create additional work responsibilities to satisfy an inner compulsion to work more.

Cultural Differences

Research suggests that the job conditions that cause stress show some differences across cultures. One study revealed that whereas U.S. employees were stressed by a lack of control, Chinese employees were stressed by job evaluations and lack of training.153 It does not appear that personality effects on stress are different across cultures, however. A study of 5,270 managers from twenty countries found individuals from individualistic countries such as the United States, Canada, and the United Kingdom experienced higher levels of stress due to work interfering with family than did individuals from collectiv- ist countries in Asia and Latin America.154 The authors proposed that this may occur because, in collectivist cultures, working extra hours is seen as a sacrifice to help the fam- ily, whereas in individualistic cultures, work is seen as a means to personal achievement that takes away from the family.

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CONSEQUENCES OF STRESS AT WORK

Strain manifests in several ways, such as high blood pressure, ulcers, irritability, dif- ficulty making routine decisions, changes in appetite, accident proneness, and the like. Refer to Exhibit 17-7. These symptoms fit under three general categories: physiological, psychological, and behavioral symptoms.

PHYSIOLOGICAL SYMPTOMS Most early concerns with stress were directed at physiological symptoms because most researchers were specialists in the health and medical sciences. Their work led to the conclusion that stress could create changes in metabolism, increase heart and breathing rates and blood pressure, bring on headaches, and induce heart attacks.155 Evidence now clearly suggests stress may have other harmful physiological effects, including backaches, headaches, eye strain, sleep disturbances, dizziness, fatigue, loss of appetite, and gastrointestinal problems.156 Other research has found that stress, in general, impairs episodic memory (but enhances memory after a stressful event).157

PSYCHOLOGICAL SYMPTOMS Job dissatisfaction is an obvious symptom of stress. But strain manifests itself in other psychological states—for instance, tension, anxiety, irritability, boredom, and procrastination. One study that tracked physiological responses of employees over time found that stress due to high workloads was related to lower emotional well-being.158

Jobs that make multiple and conflicting demands or that lack clarity about the incumbent’s duties, authority, and responsibilities increase both strain and dissatisfac- tion.159 Similarly, the less control people have over the pace of their work, the greater their strain and dissatisfaction. Jobs that provide a low level of variety, significance, autonomy, feedback, and identity appear to create strain and reduce satisfaction and involvement in the job.160 Not everyone reacts to autonomy in the same way, however. For those with an external locus of control, increased job control increases the tendency to experience strain and exhaustion.161

BEHAVIORAL SYMPTOMS Research on behavior and stress has been conducted across several countries and over time, and the relationships appear relatively consistent. Behavior-related stress symptoms include reductions in productivity; increases in absences and turnover; and personal changes in eating habits, increased smoking or consumption of alcohol, rapid speech, fidgeting, and sleep disorders.162 As we mentioned earlier, researchers have begun to differentiate challenge and hindrance stressors, showing that these two forms of stress have opposite effects on job behaviors, especially job performance. A meta-analysis of responses from more than 35,000 individuals showed role ambiguity, role conflict, role overload, job insecurity, environmental uncertainty, and situational constraints were all consistently and negatively related to job performance.163 There is also evidence that challenge stress improves job performance in a supportive work environment, whereas hindrance stress reduces job performance in all work environments.164

MANAGING STRESS

It is not unlikely for employees and management to have different notions of what con- stitutes an acceptable level of stress on the job. What management may consider to be “a positive stimulus that keeps the adrenaline running” is very likely to be seen as “excessive

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pressure” by the employee. Keep this in mind as we discuss individual and organizational approaches toward managing stress.165

Individual Approaches

An employee can effectively take personal responsibility for reducing stress levels through coping practices and recovery experiences, and doing so can have a downstream effect on performance, OCB, CWB, attitudes, and health at work.166 Developing resil- ience, or a resistance to the adverse effects of stress and strain, has been shown to be pos- sible over time through practice, coaching, and training.167 Individual strategies within a resilience program that have proven effective include time-management techniques, physical exercise, relaxation techniques, and social support networks.168 But before we proceed, it is important to note that the way you approach stress management matters: You should not be trying to actively prevent or avoid stress, but instead, you should be trying to actively recover, relax, and refresh.169

TIME-MANAGEMENT TECHNIQUES Many people manage their time poorly. The well- organized employee can often accomplish twice as much as the person who is poorly organized. Time-management skills can help minimize procrastination by focusing efforts on immediate goals and boosting motivation even in the face of tasks that are less enjoyable.170 Furthermore, psychological techniques such as self-distancing from future stressors can help you adaptively cope with time pressure.171

PHYSICAL EXERCISE Physicians have recommended noncompetitive physical exercise, such as aerobics, walking, jogging, swimming, and riding a bicycle, to deal with excessive stress levels. These activities decrease the detrimental physiological responses to stress and allow us to recover from stress more quickly.172

RELAXATION TECHNIQUES Individuals can teach themselves to reduce tension through relaxation techniques such as mindfulness, meditation, hypnosis, and deep breathing.173 The objective is to reach a state of deep physical relaxation, in which you focus all your energy on the release of muscle tension.174 Interestingly, the body’s natural response of crying may help induce a state of self-soothing through deep breathing and heart rate regulation.175 Deep relaxation for fifteen or twenty minutes a day releases strain and provides a pronounced sense of peacefulness, as well as significant changes in heart rate, blood pressure, and other physiological factors.176 A growing body of research shows that simply taking breaks from work at routine intervals (e.g., lunch breaks, walks in the park) can facilitate psychological recovery and reduce stress significantly and may improve job performance, and these effects are even greater if relaxation techniques are employed.177 Indeed, reviews of research on thousands of employees suggest relaxation techniques can help manage stress and reduce burnout.178 Furthermore, use of relaxation techniques during the day (and a lack of frustrating events) can help you relax when you get home—otherwise, you may have trouble doing so.179

SOCIAL SUPPORT NETWORKS As we have noted, friends, family, or work colleagues can provide an outlet when stress levels become excessive.180 Expanding your social support network provides someone to hear your problems and offer a more objective perspective on a stressful situation than your own. Sometimes, however, these networks

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produce the opposite effect: If you do not try to expand your network and instead ruminate with similarly stressed friends, you can get caught in a vicious cycle.181 That is why it is so important to be proactive and try to address your stress head on. But apart from rumination, support from family, friends, or spouses who help you recover from stressful work experiences can be mutually beneficial.182

Organizational Approaches

Several organizational factors that cause stress—particularly task and role demands—are controlled by management. Strategies to consider include improving employee selec- tion and job placement, training, goal setting, redesigning jobs, increasing organizational communication and involvement, and providing employee sabbaticals and corporate wellness programs.

SELECTION, PLACEMENT, AND TRAINING Certain jobs are more stressful than others, but as we have seen, individuals differ in their response to stressful situations. We know individuals with little experience or an external locus of control tend to be more prone to stress. Obviously, management should not hire only experienced individuals with an internal locus, but such individuals may adapt better to high-stress jobs and perform those jobs more effectively. Similarly, training can increase an individual’s resilience and thus lessen job strain.183

GOAL SETTING As discussed in the chapter on motivation concepts, individuals perform better when they have specific and challenging goals and receive feedback on their progress toward these goals. Goals can reduce stress as well as provide motivation.184 Employees who are highly committed to their goals and see purpose in their jobs experience less stress because they are more likely to perceive stressors as challenges rather than hindrances. The type of goal also matters: When given a developmental, learning goal after negative feedback, employees tend to experience less tension and better performance than when they are given a performance target goal.185 The employee’s personality also matters: Goal setting and goal-focused leadership tend to be more successful in reducing stress for the conscientious but not for those who are low on emotional stability.186

REDESIGNING JOBS Redesigning jobs to give employees more responsibility, more meaningful work, more autonomy, and increased feedback can reduce stress because these factors give employees greater control over work activities and lessen dependence on others.187 But not all employees want enriched jobs. The right redesign for employees with a low need for growth might include less responsibility and increased specialization. If individuals prefer structure and routine, reducing skill variety should reduce uncertainties and stress levels.

EMPLOYEE INVOLVEMENT Role stress is detrimental to a large extent because employees feel uncertain about goals, expectations, how they will be evaluated, and the like. By giving these employees a voice in the decisions that directly affect their job performance, management can increase employee control and reduce role stress. Thus, managers should consider increasing employee involvement in decision making because evidence clearly shows that increases in employee empowerment reduce psychological strain.188

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ORGANIZATIONAL COMMUNICATION Increasing formal organizational communi- cation with employees reduces uncertainty by lessening role ambiguity and role conflict.189 Given the importance that perceptions play in moderating the stress– response relationship, management can also use effective communication to shape employee perceptions. Remember that what employees categorize as demands, threats, or opportunities at work is an interpretation; that interpretation can be affected by the symbols and actions communicated by management.

EMPLOYEE SABBATICALS Some employees need an occasional escape from the frenetic pace of their work. Companies including Genentech, the Container Store, REI, PricewaterhouseCoopers, Goldman Sachs, The Cheesecake Factory Inc., VMware, and Adobe Systems have begun to provide extended voluntary leaves.190 These sabbaticals— ranging in length from a few weeks to several months—allow employees to travel, relax, or pursue personal projects that consume time beyond normal vacations. One study of university faculty members suggests that sabbaticals increase job resources and well- being, especially when they have greater autonomy in how they spend their sabbatical.191

WELLNESS PROGRAMS Our final suggestion is to create organizationally supported wellness programs. These typically provide workshops to help people quit smoking, control alcohol use, lose weight, eat better, and develop a regular exercise program; they focus on the employee’s total physical and mental condition.192 Some programs help employees improve their psychological health as well. A meta-analysis of thirty- six programs designed to reduce stress (including wellness programs) showed that interventions that helped employees reframe stressful situations and use active coping strategies appreciably reduced stress levels.193 Most wellness programs assume employees need to take personal responsibility for their physical and mental health and that the organization is merely a means to that end.

Most firms that have introduced wellness programs have observed significant benefits. Johnson & Johnson reported that their wellness program has saved the organiza- tion $250 million in health care costs in ten years, and research has indicated that effective wellness programs significantly decreased turnover rates for most organizations.194 Indeed, the accumulated research suggests that organizations that implement wellness programs (1) observe a $5.93 to $1.00 savings-to-cost ratio, (2) reduce health costs by 26 percent and workers’ compensation claims by 30 percent, and (3) observe a 28 percent reduction in sick days used.195 However, the benefits workers experience appear to be contingent on how much they put into the program, the extent to which they participate, and their attitudes upon entering the program.196

SUMMARY

The need for change has been implied throughout this text. For instance, think about at- titudes, motivation, work teams, communication, leadership, organizational structures, and organizational cultures. Change was an integral part in our discussion of each. If environments were perfectly static, if employees’ skills and abilities were always up to date and incapable of deteriorating, and if tomorrow were always the same as today, organizational change would have little or no relevance to managers. But the real world

Wellness programs Organizationally supported programs that focus on the employee’s total physical and mental condition.

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is turbulent, requiring organizations and their members to undergo dynamic change if they are to perform at competitive levels. Coping with all these changes can be a source of stress, but with effective management, challenge can enhance engagement and fulfill- ment, leading to the high performance that is one major goal of the study of organiza- tional behavior (OB), as you have discovered in this text.

IMPLICATIONS FOR MANAGERS

• You are a change agent in your organization. The decisions you make and your role-modeling behaviors will help shape the organization’s change culture.

• Management policies and practices will determine the degree to which the organi- zation learns and adapts to changing environmental factors.

• Some stress is good. Increasing challenges brought by autonomy and responsibility at work will lead to some stress but also increase feelings of accomplishment and fulfillment. Hindrance stressors like bureaucracy and interpersonal conflicts, on the other hand, are entirely negative and should be eliminated.

• You can help alleviate harmful workplace stress for your employees by accurately matching workloads to employees, providing employees with stress-coping re- sources, and responding to their concerns.

• You can identify extreme stress in your employees when performance declines, turnover increases, health-related absenteeism increases, and engagement declines. However, by the time these symptoms are visible, it may be too late to be helpful, so stay alert for early indicators and be proactive.

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EPILOGUE

The end of a book typically has the same meaning to an author that it has to the reader: it generates feelings of both accomplishment and relief. As both of us rejoice at having completed our tour of the essential concepts in organizational behavior, this is a good time to examine where we’ve been and what it all means.

The underlying theme of this book has been that the behavior of people at work is not a random phe- nomenon. Employees are complex entities, but their attitudes and behavior can nevertheless be explained and predicted with a reasonable degree of accuracy. Our approach has been to look at organizational behavior at three levels: the individual, the group, and the organization system.

We started with the individual and reviewed the major psychological contributions to understanding why individuals act as they do. We found that many of the individual differences among employees can be systematically labeled and categorized, and therefore generalizations can be made. For example, we know that individuals with a conventional type of personality are better matched to certain jobs in corporate management than are people with investigative personalities. So placing people into jobs that are compatible with their personality types should result in higher-performing and more satisfied employees.

Next, our analysis moved to the group level. We argued that the understanding of group behavior is more complex than merely multiplying what we know about individuals by the number of members in the group, because people act differently in a group than when they are alone. We demonstrated how roles, norms, leader- ship styles, power relationships, and other similar group factors affect the behavior of employees.

Finally, we overlaid system-wide variables on our knowledge of individual and group behavior to fur- ther improve our understanding of organizational behavior. Major emphasis was given to showing how an organization’s structure, design, and culture affect both the attitudes and the behavior of employees.

It may be tempting to criticize the stress this book placed on theoretical concepts, but as noted psycholo- gist Kurt Lewin is purported to have said, “There is nothing so practical as a good theory.” Of course, it’s also true that there is nothing so impractical as a good theory that leads nowhere. To avoid presenting theories that lead nowhere, this book included a wealth of examples and illustrations and we regularly stopped to in- quire about the implications of theory for the practice of management. The result has been the presentation of numerous concepts that, individually, offer some insights into behavior; but when taken together, provide a complex system to help you explain, predict, and control organizational behavior.

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12. L. Festinger, A Theory of Cognitive Dissonance. 13. Mint Kang, “‘Leadership and a Strong Team Are Essential’: BMW

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14. Ibid. 15. J. E. Dutton, J. M. Dukerich, and C. V. Harquail, “Organizational

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27. W. Fleeson and P. Gallagher, “The Implications of Big Five Standing for the Distribution of Trait Manifestation in Behavior: Fifteen Expe- rience-Sampling Studies and a Meta-Analysis,” Journal of Personality and Social Psychology 97, no. 6 (2009): 1097–114.

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29 See, for instance, Barrick, Mount, and Judge, “Personality and Perfor- mance at the Beginning of the New Millennium.”

30. P. R. Sackett and P. T. Walmsley, “Which Personality Attributes Are Most Important in the Workplace?” Perspectives on Psychological Sci- ence 9, no. 5 (2014): 538–51.

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32. M. R. Barrick and M. K. Mount, “The Big Five Personality Dimen- sions and job Performance: A Meta-Analysis,” Personnel Psychology 44 (1991): 1–26; D. S. Chiaburu, I-S. Oh, C. M. Berry, N. Li, and R. G. Gardner, “The Five-Factor Model of Personality Traits and Organi- zational Citizenship Behaviors: A Meta-Analysis,” Journal of Applied Psychology 96, no. 6 (2011): 1140–66; A. Furnham and C. Fudge, “The Five Factor Model of Personality and Sales Performance,” Jour- nal of Individual Differences 29, no. 1 (2008): 11–16.

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34. T. A. Judge, D. Heller, and M. K. Mount, “Five-Factor Model of Per- sonality and Job Satisfaction: A Meta-Analysis,” Journal of Applied Psychology 87, no. 3 (2002): 530–41; B. W. Swider and R. D. Zimmer- man, “Born to Burnout: A Meta-Analytic Path Model of Personality, Job Burnout, and Work Outcomes,” Journal of Vocational Behavior 76 (2010): 487–506; R. Zimmerman, “Understanding the Impact of Personality Traits on Individuals’ Turnover Intentions,” Personnel Psy- chology 61 (2008): 309–48.

35. J. L. Huang, A. M. Ryan, K. L. Zabel, and A. Palmer, “Personality and Adaptive Performance at Work: A Meta-Analytic Investigation,” Journal of Applied Psychology 99, no. 1 (2014): 162–79.

36. Swider and Zimmerman, “Born to Burnout.” 37. B. Wille, F. De Fruyt, and M. Feys, “Big Five Traits and Intrinsic Suc-

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69. Ibid. 70. B. Wille, F. De Fruyt, and B. De Clercq, “Expanding and Reconcep-

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73. Ibid.

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2. C. C. Pinder, Work Motivation in Organizational Behavior, 2nd ed. (New York, NY: Psychology Press, 2008).

3. A. H. Maslow, “A Theory of Human Motivation,” Psychological Review 50 (1943), 370–96; R. J. Taormina and J. H. Gao, “Maslow and the Motivation Hierarchy: Measuring Satisfaction of the Needs,” American Journal of Psychology 126, no. 2 (2013): 155–57.

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5. Guest, “Maslow’s Hierarchy of Needs”; J. A. Krems, D. T. Ken- rick, and R. Neel, “Individual Perceptions of Self- Actualization: What Functional Motives Are Linked to Fulfilling One’s Full Poten- tial?” Personality and Social Psychology Bulletin 43, no. 9 (2017): 1337–52.

6. T. R. Mitchell and D. Daniels, “Motivation,” in W. Borman, D. Ilgen, and R. Klimoski (eds.), Handbook of Psychology: Industrial/Organi- zational Psychology, Vol. 12 (New York: Wiley, 2002): 225–54.

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9. See, for instance, V. S. R. Vijayakumar and U. Saxena, “Herzberg Revisited: Dimensionality and Structural Invariance of Herzberg’s Two Factor Model,” Journal of the Indian Academy of Applied Psychology 41, no. 2 (2015): 291–98; R. Worthley, B. MacNab, R. Brislin, K. Ito, and E. L. Rose, “Workforce Motivation in Japan: An Examination of Gender Differences and Management Perceptions,” The International Journal of Human Resource Management 20, no. 7 (2009): 1503–20.

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11. See, for instance, M. G. Koellner and O. C. Schultheiss, “Meta-Ana- lytic Evidence of Low Convergence between Implicit and Explicit Measures of the Needs for Achievement, Affiliation, and Power,” Frontiers in Psychology 5, no. 826 (2014): 1–20; T. Bipp and K. van Dam, “Extending Hierarchical Achievement Motivation Mod- els: The Role of Motivational Needs for Achievement Goals and Academic Performance,” Personality and Individual Differences 64 (2014): 157–62.

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33. Society for Human Resource Management (SHRM), 2018 Employee Benefits: The Evolution of Benefits. (Alexandria, VA: SHRM, 2018)

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35. Society for Human Resource Management (SHRM), Employee Job Satisfaction and Engagement: Revitalizing a Changing Workforce ( Alexandria, VA: SHRM, 2016).

36. R. Waring, “Sunday Dialogue: Flexible Work Hours,” The New York Times, January 19, 2013, www.nytimes.com

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60. J. Cotton, Employee Involvement: Methods for Improving Performance and Work Attitudes (Newbury Park, CA: Sage, 1993); A. Cox, S. Zagel- meyer, and M. Marchington, “Embedding Employee Involvement and Participation at Work,” Human Resource Management Journal 16, no. 3 (2006): 250–67.

61. See, for example, A. Kim and K. Han, “All for One and One for All: A Mechanism Through Which Broad-Based Employee Stock Ownership and Employee-Perceived Involvement Practice Create a Productive Workforce,” Human Resource Management 58 (2019): 571–584.

62. See, for example, the literature on empowerment, such as S. E. Seib- ert, S. R. Silver, and W. A. Randolph, “Taking Empowerment to the Next Level: A Multiple-Level Model of Empowerment, Performance, and Satisfaction,” Academy of Management Journal 47, no. 3 (2004): 332–49; M. M. Butts, R. J. Vandenberg, D. M. DeJoy, B. S. Schaffer, and M. G. Wilson, “Individual Reactions to High Involvement Work Processes: Investigating the Role of Empowerment and Perceived Organizational Support,” Journal of Occupational Health Psychol- ogy 14, no. 2 (2009): 122–36; M. T. Maynard, L. L. Gilson, and J. E. Mathieu, “Empowerment—Fad or Fab? A Multilevel Review of the Past Two Decades of Research,” Journal of Management 38, no. 4 (2012): 1231–81.

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